Carhart's Appeal

78 Pa. 100, 1875 Pa. LEXIS 103

Opinion

Mr. Justice Woodward

delivered the opinion of the court, May 10th 1875.

It is indispensable to the success of the plaintiffs in this suit, that the instrument executed by George F. Power on the 17th of September 1866, the day of the sheriff’s sale of the property of Caleb Barstow, should be connected with the agreement alleged to-have been made between Power and the other creditors of Barstow, on the 3d of June 1866, at the office of Mr. Rawle. A large mass of details, tending to establish such a connection, was presented to the master. The whole history of the efforts of the creditors to collect their debts, and of the legal proceedings employed for that purpose, from the time of Mr. Barstow’s failure, was disclosed. But the general evidence was of a character to corroborate and strengthen direct testimony of the essential fact, rather than to afford independent proof of its existence. At the last, the disposition of the questions in dispute must depend upon the statement of Mr. Rawle. From the multiplied details that are grouped in the record around the main point of dispute, it is believed that if he had been able to say, from a distinct recollection, that the agreement of the 17th of September was the execution of the agreement of the 3d of June, the duty of the master would have consisted in finding the allegations of the bill sustained. There is, fortunately, no embarrassment in dealing with his testimony. Just what he meant to say was said in unmistakable and distinct terms, and the exact extent of his knowledge, and the precise limits to which his recollection went, were accurately defined.

In his examination in chief, Mr. Rawle said: “If I remember rightly, the projected sheriff’s sale was the result of an arrangement, and was not what is commonly called an adversary proceeding. Besides, the fact that the property was held in common with John Egerton, who was not only supposed to be affected in his mind, but had made a peculiar conveyance to his brother-in-law, there were complications as to the Barstow moiety which it was thought this sale would correct, and all parties were acting'in harmony and for the benefit of the Barstows, for whom much sympathy was felt. All considered that if properly managed and nursed, the property would not only pay its debts, but leave a handsome balance to the Barstows. It was therefore agreed by all, that instead of my bidding up the property so as to protect the $75,000 judgment, after the payment of Mr. Power’s judgment and the arrears of the ground-rent, which I think were due, Mr. Power should become the purchaser at the sheriff’s sale, and should hold the property after its purchase in trust, 1st, to pay his judgment; 2d, to pay my $75,000 judgment; and 3d, to pay the Barstow creditors. Such an agreement was reduced to writing, signed by Mr. Power, and witnessed by Mr. Gummey and Mr. Warriner, on the day of the sale. * * * The paper to which I have referred, as executed by Mr. Power, is Exhibit B. of the bill. I cannot swear that I was present at its execution; or, indeed, that I ever saw it, but I think it very probable. Until the night before last, when, for the first time, I carefully read the answer in this case, and when, for the first time, I saw all the evidence, I had never known that the effect and validity of that instrument depended on any contingency whatsoever, or that it meant anything other than -what was expressed on its face. Had it been so, my course of action would have been very different. * * * I have already said that the averment in the answer that Exhibit B. was not intended by either party as a declaration of trust; that it was not intended to be recorded ; that it was recorded through a mistake; and that it was dependent for its validity upon the purchase of Mr. Eosdick, or any one else, of other property, there or elsewhere, or upon any contingency whatsoever, struck me with the greatest surprise. In all the numerous interviews with all these parties and their counsel, no such suggestion was ever made or intimated. I never heard of it before.”

If the testimony of Mr. Rawle had closed at this point, it would probably, in its connection with the statements he had made of the result of the meeting of creditors in his office, with the terms of the paper in question, and with the voluminous corroborative proofs produced before the master, have been controlling in the decision of the cause. But it is clear from his answers on the cross-examination, that his impressions were derived from his participation in isolated transactions, and that he had not kept himself familiar with the current details of the proceedings in the interval between the meeting in June and the sale in September. In answer to the question whether his interviews and conversations with Mr. Warriner were not confined to the subjects of the American Car Company’s property, and the ground-rents binding this and other property, Mr. Rawle said: “It is impossible for me to say. The interests were very numerous, and more than proportionally complicated, and I cannot discriminate.” He was unable to say positively whether he had ever met Mr. Power before the meeting of the 3d of June 1866; he could not say whether that meeting referred to in his note to Mr. Gummey, was in reference to the Car Company’s property; he could not say who were present on that occasion; and he stated that he should have utterly forgotten that. interview if his memory had not been refreshed by that note. He added: “ The first line of the note is, ‘ we are all sorry,’ &c. Who the ‘ all’ were I cannot now say. Possibly, Mr. Aaron Thompson, who represented a judgment, and probably one of the Barstows. I think it unlikely that there were only Mr. Power and our two selves,” (Mr. Warriner and the witness). In answer to a subsequent question, whether he could now state from recollection that the conversation was on any subject other than the ground-rents, he said: “I cannot answer more particularly than I have already done. I have no recollection of any precise word or sentence, nor even the subject of conversation at that interview. Referring to my note, I see that it says, ‘Mr. Eosdick will be here to-morrow,’ so that, of course, he was not at that interview.” He could not remember when he next saw Mr. Power, nor whether he met him until after the sheriff’s sale in September 1866. He said that to the best of his recollection he saw him on the day when Exhibit B. was executed, but was not certain, and could mention no circumstance other than the general facts he had stated, which induced him to believe he saw Mr. Power that day. He could not remember whether Mr. Power and Mr. Eosdick had called on him together at any time on business, and thought they might have called often, and might never have called at all. In answer to the question, whether he had anything to do with the ground-rent suit brought by Mr. Outerbridge, he said his answer would be a mere matter of inference, connecting the agreement or plan referred to in the postscript of his note with the commencement of the suit ten days afterwards. His recollection, he said, was that of a professional man who remembers results, and sometimes that which led to them, without being able to identify those antecedents. So far as his recollection was distinct, however, he stated that his knowledge of Exhibit B. was not derived purely from hearsay, but from the paper itself. No steps were taken by him to enforce the trust, as he felt that Mr. G-ummey had the matter primarily under his charge. In a later stage of the cross-examination, in answer to the question, “ Can you say that you saw Mr. Power or Mr. Warriner in September 1866, in relation to these matters,” he said, “I can neither affirm nor deny your question, I have no memory whatever on the subject, except a general professional one, which is made up more from inference than direct recollection.”

On the part of the defendants, the whole theory of the plaintiffs 'that the instrument executed on the day of the sheriff’s sale was to be treated as having been made in pursuance of an agreement entered into in the previous June, was contested from the outset. The evidence they gave tended to show that the stipulations the paper contained, were agreed upon at the time of its execution; that Mr. Power and Mr. Fosdick were the only parties to it; that when it was signed no persons were present except Messrs. Power, Fosdick, Grummey and "VVarriner; that the consideration of the agreement for the creation of the contemplated trust was to move from Mr. Fosdick, and that the consideration subsequently failed. If this evidence exhibits the true state of the facts, and the master has found it to be entitled to full credit, it is clear that the plaintiffs cannot hold the defendants liable to account to them by reason of the existence of any such trust as the bill asserts. The plan of action, whatever it may have been, which was settled on the 3d of June, must have been materially modified before the 17th of September 1866. No sales were made on any ground-rent judgments until the autumn of 1868, when the property (embracing both the Barstow and Drayton moieties) was purchased by Mr. Morrill. The sheriff’s sale of 1866 was made on a judgment against Mr. Barstow, which Mr. Power had obtained in the June Term of that year in the District Court.

That Mr. Barstow was active in promoting some arrangements by which, after satisfying his creditors, something could be saved out of this property for himself, and that he hoped, to secure this result through the aid of Mr. Fosdick and Mr. Power, is sufficiently obvious. This appears from the whole tenor of his correspondence, and especially from the terms of his letter to Mr. Rawle, of the 14th of September 1866. But the facts found by the master show that he was not a party to the agreement made on the day of sale, and the evidence indicates that he had no personal knowledge of it. There were obvious reasons why his general creditors in New York would not have been likely to inter: fere. His interest in the property was an undivided moiety, and was encumbered to the extent of'$235,000. Its value, at the time of these proceedings, was purely conjectural. In December 1867, after the partition had been completed, Mr. Rawle wrote to Messrs. Spalding and Richardson, that the whole property had then been recently estimated at $300,000, making the value of the Barstow moiety $150,000. “But,” Mr. Rawle added, “ this estimate is based upon the careful management of the property for probably several years to come. It might be doubtful whether, at a forced sale, it would bring one-sixth of this estimated value. The property has always been unlucky, though it is valuable, and directly opposite the heart of the city, near the Schuylkill.” In this connection, as showing the probable relation of the New York creditors to the transactions by which the title was vested in Mr. Power, a passage in the letter from Messrs. Yose and McDaniel, to Mr. Rawle, dated the 21st of April 1871, is significant. They wrote as follows: “ If this property has really become valuable, and you, after investigation, think money would result from resisting Power and the other people, we might get the parties interested to arouse themselves for a fee.”' The letter from Messrs. Barstow & Pope to Caleb Barstow, written on the 6th of December 1866, affords ground for a legitimate inference that both they and he were in ignorance of the actual arrangement under which the sale had been made in September. It said: “We infer from what you have confidentially communicated to us, that some sort of reciprocal understanding exists between Mr. George E. Power and Mr. W. E. Eosdick. * * * We infer from what you have said as to those two gentlemen being checks on each other, that Mr. Eosdick’s purchase of the American Car Company, was to cover payments he has made, including the satisfying of certain judgments then hanging over the company; also, to pay certain obligations secured by hypothecation of the certificates of the stock of the car company, and then any remaining balance to go towards the payment of the debts of yourself and John Egerton, in such manner as Mr. E. may find advisable. Now, this is probably all very well, but in view of the uncertainties of life, these matters had better be thrown into a safer form. We should, for instance, like to have Mr. Power execute a deed of trust in favor of Mr. Eosdick, as was originally contemplated, declaring the nature of his purchase, and authorizing Mr. Eosdick to act as trustee, and follow out the payment in the order that -was originally contemplated, commencing with Mr. Power’s judgment of $19,000 to $20,000, and so on to the end, and have such writing put on record in Philadelphia, according to law.” It is scarcely credible that such a letter would have been written, if Caleb Barstow, or Barstow & Pope, for whom Mr. Rawle had acted as counsel, had been aware of the existence of the agreement which Mr. Power had executed less than three months before.

No distinct evidence — none that would intelligibly define the rights of any of the parties — was given before the master as to any specific terms agreed upon, or any specific interests to be affected at the meeting on the 8d of June 1866. The view of the plaintiff as to the effect of the agreement then made, could be supported only by affirmative proof that, in pursuance of that agreement, the paper of the 17th of September, was executed by Mr. Power. Such proof has not been made, and the evidence of the defendants, direct and circumstantial, supports the conclusion which the master reached, that the transaction was exclusive of any participation by the general creditors of Mr. Barstow, and independent of any action they had taken.

If the proceedings resulting in the sheriff’s sale were adversary as to all parties except Mr. Eosdick, and the consideration for the agreement which Mr. Power executed emanated solely from him, it is manifest that no duty was created by the agreement towards the general creditors of Mr. Barstow, that can be now enforced. As to them, the instrument was voluntary. It stipulated that, on the happening of certain contingencies, a trust should be declared, and the contingencies did not happen. “ A trust will be executed wherever there is a valuable consideration; but where the settlement is merely voluntary, it is commonly supposed that to attract the jurisdiction of the court, there must be what is called a transmutation of the possession — that is, the legal estate must be put out of the settlor; but, perhaps, upon examination of the authorities, the validity of the trust will be found to resolve itself into the question whether or not the trust was at first perfectly created:” Lewin on Trusts 110. In Ellison v. Ellison, 6 Vesey 662, Lord Eldon said: “ If you want the assistance of the court to constitute you cestui que trust, and the instrument be voluntary, you shall not have that assistance; as, upon a covenant to transfer stock, if it rest in covenant and be purely voluntary, the court will not execute it; but if the party have completely .transferred stock, though it be voluntary, yet the legal conveyance being effectually made, the equitable interest will be enforced in this court.” The same rule is applied to imperfect gifts, not testamentary, inter vivos, to imperfect volunteer assignments of debts and other property; to voluntary executory trusts; and to voluntary conveyances: 1 Story’s Eq., sect. 793-6. “Unless the contract has been founded on a valuable or other meritorious consideration, or what is so considered in a court of equity, as the payment of debts, a specific performance will not be decreed. In general, a court of equity will not interfere to carry into effect unexecuted voluntary contracts inter vivos, but will leave the parties to their remedies of law:” Brightly’s Eq., sect. 244; Yard v. Patton, 1 Harris 285; Read v. Robinson, 6 W. & S. 331. An executory contract must have a consideration to support it, without which equity will no more execute it than the law would make the breach of it the subject of compensation: Brightly’s Eq., sect. 244,. citing Kennedy v. Ware, 1 Barr 450; Campbell’s Estate, 7 Barr 100, and Greenlee v. Greenlee, 10 Harris 235.

The remaining question is subsidiary to that which has been discussed. The master has found, as a fact, that no fraud was practised by Mr. Power in the purchase of the property. He made no promise by which any creditor was deceived, misled, or induced either to act or to forbear action. A simple avowal of acquisition for the use of another, whether made cotemporaneously with or subsequently to the fact, will not of itself support an allegation of a trust: Robertson v. Robertson, 9 Watts 32. The later propositions and negotiations between the parties cannot stand in the place of proof of some distinct fact requisite to fix on Mr. Power the responsibilities of a trustee. “An attempt to create and enforce a specific trust,” it was said by Mr. Justice Washington, in Slocum et ux. v. Marshall, 2 Wash. C. C. 397, “from the loose expressions of parties made at different times and on different occasion^, would be inconsistent not only with the spirit and policy of the Statute of Frauds, but with the general rules of evidence.” Owing no duty to Mr. Barstow’s creditors, and, so far as they were concerned, dealing with the property as his own, Mr. Power was subject to no imputation of bad’ faith, and the case before the master was not one requiring that he should be held accountable as a trustee ex maleficio, at the instance and for the benefit of the present plaintiffs.

.The evidence before him justified the master in finding that the conveyances of the Drayton moiety of the land, by Borland and Morrill to Marston, were made in good faith and independently of any ownership, interest or control of Mr. Power; and in finding that the allegation iii the bill that the conveyance from Power to Marston of the 16th of October 1868, was made for fraudulent purposes, was unfounded. Indeed, it is believed that the rulings of the master were essentially accurate throughout his comprehensive and satisfactory report.

Decree affirmed and appeal dismissed, at costs of appellant.