Expansion Realty Co. v. Geren

170 S.W. 928, 185 Mo. App. 440, 1914 Mo. App. LEXIS 732

• Court: Missouri Court of Appeals
• Decided: November 14, 1914
• Status: Published

Opinion

OPINION.

FARRINGTON, J.

It will he remembered that on the evening of Novemeber 14, 1912, after Spiva had left the office of Douglass, two letters were written by Douglass to Spiva confirming their agreement adjusting the controversy between plaintiff and Geren & Company. Spiva admits receiving them, using the one that he had asked for along with the escrow agreement with Lord, and admits that he made no answer to either of these letters. He does not state why he did not answer them.

It could be possible that although plaintiff had all along, as the correspondence shows, contended that defendants had no rights under the contract of September, 1910, and that if any lease was made by it as a compromise it must know all the facts and the consideration to be received for the assignment, and still, on November 14, 1912, through its agent Douglass, have agreed to settle everything and make the lease and assignment for $750, having no concern in what defendants- might get from Lord as compensation. But if the s.econd letter of November 14th is any competent evidence of the agreement that was made, then Spiva’s version must fail and Douglass be believed, as that letter confirmed the position the plaintiff was taking up to the time of the conference, as shown by the correspondence, confirms what Douglass testified took place at the conference, and confirms what Douglass testified he thought the deal was that he was making when he sent the lease to Spiva to be used only for a lease to Lord or his corporation, which lease was mailed on November 21st, a week after the letter was written.

The letter of November 14th accompanying the one that Spiva used in the trade with Lord is as follows :

“Mr. Geo. N. Spiva,

“Joplin, Mo.

“My dear Sir: I have prepared and herewith enclose a letter to you respecting the -leasing of the east fifteen acres, and as a part of the transaction I write this letter to avoid any possible misunderstanding.

“As stated to you today in my office, the Expansion Realty Company does not recognize any legal or equitable right on the part of Geren and his associates entitling them to a lease of this property, and hence, for the purposes of the present deal, this leasing will have to be considered a new transaction, and by way of a compromise adjustment of any and all differences or controversies between Geren and his associates and said company, to the end that when this lease is made upon satisfactory terms, the old Geren contract dated September 9, 1910, and all matters growing thereout, shall be considered as adjusted as between the parties in interest. To be explicit, it must be distinctly understood that in case the proposed leasing shall not for any reason be consummated, the negotiations relative thereto, and the execution of such lease, shall not in anywise be construed as an admission that Geren and his associates, or any of them, are entitled to a mining lease pursuant to said contract of September 9, 1910, or otherwise. You have stated to me that the Geren syndicate is .to receive $6500 as compensation for turning over to the Chicago parties, or their representatives, a mining lease conveying said fifteen acres, and that no other consideration of any kind will accrue to said syndicate. I stated to you in our conference today that my company and myself should have at least $1000 out of the $6500, as partial compensation for the damage done to the company by reason of Geren’s delays and his withholding the possession of the property for nearly two years, and also by reason of the time and money necessarily expended by the company and myself in trying to adjust the differences between him and it. You offered a less sum, and we finally agreed upon $750, the same to be paid to me at the time of and as a part of the - transaction in which the proposed lease shall be turned over to you, or to such person as shall be designated by you. As to the balance of the $6500, my company has no claim. If, however, a deal shall finally be made upon a different basis, then a different arrangement will have to be made between us.

“In order to obviate all possible misunderstanding between Mr. Geren and my company, I will expect the proper releases to be executed by Geren and his associates so that all alleged claims on his or their part arising out of said contract and matters growing out of the same, shall be fully and finally adjusted between them and my company; but in case the proposed leasing shall not be carried out, then nothing heretofore or hereafter said or done by- me on the part of my company shall be construed as an admission by it or me to the effect that said Geren or his associates have any legal rights under said contract or otherwise. If you were the only person I had to deal with in this matter, I would not have taken the time to write this letter, but in view of the fact that you are representing others, I think it best to be explicit and thereby avoid any misunderstandings. If anything further occurs to me, I will write you again. Keep me advised of developments. With best wishes I remain,

“Yours truly,

“S. C. Douglass.”

The evidence, as we view it, is convincing that Donglass was misled by Spiva into executing this lease and assignment (and Spiva admits that Douglass did not know the consideration was $12,000) and that this information was withheld and misrepresented for the purpose of obtaining the lease and the assignment on better terms than they could have been acquired had the full facts been known to Douglass.

It must be borne in mind that Spiva, when he left the office of Douglass in Kansas City on November 14th, had no contract (whatever it was) that could have been enforced because it involved the leasing of land for a term of eight years and hence was within the Statute of Frauds; and the first time that he did have a contract that plaintiff could be held to an execution of the lease and assignment under was when on November 15th he received the letters written by Douglass the evening of the 14th.

This letter of November 14th explaining the deal to Spiva referred to the letter used by .Spiva in the deal with Lord, and was, so far as plaintiff and defendants are concerned, a part .of their agreement. [Sexton v. Anderson, 95 Mo. 373, 8 S. W. 564; Houck v. Frisbee, 66 Mo. App. 16; Jennings v. Todd, 118 Mo. 296, 24 S. W. 148; 9 Cyc. 581; Keagle v. Pessell, 91 Mich. 622, 52 N. W. 58.]

We agree with appellant that the letters of November 14th are each a part of the res gestae involving the lease negotiations beginning on October 16, 1912, when Spiva first wrote to Douglass, and continuing until the delivery of the lease on November 22d. [Corbett v. Railway Co., 26 Mo. App. 621; Harriman v. Stowe, 57 Mo. 96; Stoeckman v. Railroad, 15 Mo. App. 515; The Travelers’ Ins. Co. v. Mosley, 8 Wall. 397, 19 L. Ed. 437; Cunningham v. Parks, 97 Mass. 172; Rogers v. Manhattan Life Ins. Co., 138 Cal. 285, 71 Pac. 348; Thayer v. Burchard, 99 Mass. 517.]

The use of oue of these letters by Spiva and remaining silent as to the other is evidence corroborating the version of Douglass as to the fraud perpetrated on him. [DeBerry v. Wheeler, 128 Mo. 84, 30 S. W. 338; Acton v. Dooley, 74 Mo. 67.]

Defendants should not be permitted to accept the benefits of their contract and then repudiate the obligations they owe to the plaintiff. [Tureman v. Stephens, 83 Mo. 218.]

• When Spiva and Douglass reached the agreement, which was a compromise of their differences, they then were acting together for the purpose of getting the consideration for the lease and assignment out of Lord or his corporation, and from November 14th on Spiva was acting in a trust capacity to plaintiff so far as carrying out the deal with the purchaser was concerned. Douglass was sending to Spiva the lease and the consent for an assignment thereof and Spiva was acting for both in getting, as Douglass understood, it, $5750 for Geren & Company and $750 for plaintiff. He therefore was acting as the agent of the plaintiff so far as that transaction was involved and this relationship required the utmost good faith on his part.

In Perry on Trusts and Trustees (6 Ed.), Vol. 1, sec. 166, the rule is announced that if a person obtains the legal title to property by such arts or acts or circumstances of circumvention, imposition, or fraud, or if he obtains it by virtue of a confidential relation and influence under such circumstances that he ought not, according to the rules of equity and good conscience as administered in chancery, to hold and enjoy the beneficial interest of the property, courts of equity, in. order to administer justice between the parties, will raise a trust by construction out of such circumstances or relations; and this trust they will fasten upon the conscience of the offending party, etc.

In Pomeroy’s Equity Jurisprudence (3 Ed.), Vol. 3, sec. 1047, the law is thus declared: “By the well-settled doetrin.es of equity, a constructive trust arises whenever one party has obtained money which does not equitably belong to him, and which he cannot in good conscience retain or withhold from another who is beneficially entitled to it; as, for example, when money has been paid by accident, mistake of fact, or fraud, or has been acquired through a breach of trust,’ or violation of fiduciary duty, and the like. It is true that the beneficial owner- can often recover the money due to him by a legal action upon an implied assumpsit; but in many instances a resort to the equitable jurisdiction is proper and even necessary.”

It does not matter whether the plaintiff had a just cause to controvert the right of Geren & Company to a lease under the contract of September, 1910. The fact is undisputed that they were asserting that they bad not forfeited their right to a lease thereunder, and even where a doubtful claim is asserted in good faith it will support a compromise contract. [Livingston v. Dugan, 20 Mo. 102; Hill v. Atoka Coal and Min. Co., 124 Mo. 153, 25 S. W. 926; 32 S. W. 111; Brownlow v. Wollard, 66 Mo. App. 636.]

On the other hand, suppose Geren & Company were entitled to a lease under the contract of September, 1910; they were not entitled to assign it without the written consent to do so from the plaintiff. The testimony of Douglass, corroborated by the letter of November 14th, clearly shows that the assignment was procured by a misrepresentation as to the amount the assignee was paying. A fraud, therefore, was perpetrated on the plaintiff not only in procuring the lease but in the assignment as well.

The hill charged fraud, asked for an accounting, and sought an equitable garnishment by impounding the fund supposed to be held by Lord and the Conqueror Trust Company. This makes equitable jurisdiction.

Plaintiff was not required to return the $750 which it received because it was not in position, so far as the assignee of the lease was concerned, to rescind the contract. Plaintiff had agreed to the making and assignment of the lease and the corporation taking it over had acted upon that agreement and had purchased ánd paid for rights under it.

As before stated, there is no charge nor any evidence that the assignee of the lease who paid $12,000 to Greren'& Company owed any duty whatever to the plaintiff or was in any way connected with or aided Spiva and his associates in procuring the lease from the plaintiff.

Plaintiff was entitled under the contract as shown by the evidence to all the fruits derived from the assignment of the lease above $5750, less, in our judgment, any necessary expense paid out by Greren & Company in procuring and closing the transaction with Lord.

The bill was merely dismissed by the trial court, and the evidence is not sufficiently plain for this court to render a decree as to the full amount of the $5500 excess paid by the Lord company. There is some evidence of' commissions and expenses paid out of the $12,000 received which did not go to Greren & Company and which in an accounting between the parties would be a proper item of adjustment. We are, however, convinced that plaintiff is entitled to the $2521 impounded and held at this time by the Conqueror Trust Company. Therefore, if within ten days from the date of the filing of this opinion the appellant shall file with the clerk of this court a written remittitur of all sums in excess of $2521, the amount now held by the Conqueror Trust Company, the decree of this court will be a judgment for that amount; otherwise, a decree will be entered reversing the judgment and remanding the cause for a new trial in accordance with the views herein expressed to the end that the evidence may be made more definite and certain as to tbe commissions and expenses above referred to.

Respondents’ motion asking that tbis appeal be dismissed because a complete copy of tbe evidence was not printed in the abstract is not well taken. Our rules 9 and 12 provide for tbe abstracting of tbe evidence both in equity and law cases. There was no dispute as to tbe admissibility or legal effect of any of tbe documents in tbis case that were abstracted. "Whether, under tbe terms of tbe contract of September, 1910, tbe defendants were entitled to a lease is not a question on tbis appeal, tbe question being whether there was a bona-fide contention on tbe part of tbe plaintiff that under that contract they were not entitled to a lease. There is no doubt that a controversy bad existed for a long time prior to tbe execution of tbe lease in which it was claimed by plaintiff that tbe defendants bad no rights under tbe contract of September, 1910. Tbis controversy and not tbe effect of tbe contract of September, 1910, made tbe consideration for tbe compromise agreement. Our rules 9 and 15 therefore contemplate tbe abstracting in tbe narrative form of testimony both in law and equity cases and rule 12 provides a remedy for tbe respondent where be is dissatisfied with tbe abstract presented by tbe appellant.

The order will stand as above indicated.

Robertson, P. J., and Sturgis, J., concur.