Grinton v. Strong

45 Ill. App. 82

• Court: Appellate Court of Illinois
• Decided: May 20, 1892
• Status: Published

Opinion

Mr. Justice Hariceb.

This was a bill by appellant against the executors of the estate of Martin C. Bissell for an accounting and to charge the estate with the value of an interest claimed by him in certain real estate of which Bis-sell died seized. The suit is based upon a contract, alleged to have been entered into on the 21st of November, 1877, but not reduced to writing until the 8th of February, 1879, whereby appellant undertook the management of Bissell’s property and investments. As compensation for services it was provided in the contract that appellant should have three per cent of all rents collected, and one-fifth of the net income of the personal capital of every transaction. The value of Bissell’s property at the time was between $150,000 and $200,000. Something more than one-half was in real estate, located in Joliet chiefly, and yielding a rental income. The remainder was in cash, mortgages, bonds, stocks and other interest-bearing securities. It appears that while operating under the contract a part of the personal capital became invested in real estate, through foreclosure proceedings, execution sales in the enforcement of the collection of debts due, and by direct purchase. The title to such real estate was taken in Bissell and remained in him until his death.

The position assumed by appellant is that the contract created the relation of copartners; that by reason of this relation all real estate which resulted from personal capital placed under his control and management, as between the parties, continued personal property; that as against Bissell, in his lifetime, he had an interest to the extent of a one-fifth in value of the real estate so acquired, over and above its cost, and that such real estate passed to the executors of Bissell’s will subject to such interest.

lie further claims that there was an understanding between him and Bissell, not set out in the written contract, that whenever their business connections terminated, then in adjusting the matters between them the value of the real estate in which they were interested under the contract was to be determined by mutual agreement, if they should be able to agree, and the interest of each in the several pieces of property computed on the basis of such agreed valuation; and if they could not agree upon the value of any piece of such real estate, then the value should be determined in some other manner, and the several-interests of the parties computed on thé basis of such value, so determined, and that Bissell was then at liberty to retain such real estate, free from any lien of Grinton, by first making payment to Grinton of liis interest therein under the contract, as computed on such' valuation at the date of making the same.

Such is the construction of the contract set up in the bill of complainant. That it is the true construction, counsel for appellant contends appears, first, from the language employed in the writing itself, unaided by extrinsic evidence; second, from a consideration of the contract with reference to the situation of the parties, their relation to the subject-matter of the contract and the attendant circumstances existing at the time of its execution; third, from the construction adopted by the parties themselves from its date to the time of Bissell’s death; fourth, from acts, statements and admissions of Bissell frequently made after the date of its execution.

The Circuit Court adopted an adverse construction, and, as we understand it, the only substantial error complained of here is the denial to Grinton of the one-fifth of the increase in value of the real estate acquired by Bissell as above indicated, and remaining undisposed of at the time of his death.

We do not deem it necessary to consider in this opinion all the numerous points discussed in the very prolix printed arguments filed, occupying, as they do, over four hundred pages. We shall be content to discuss the leading features of the case.

We think the court was warranted in finding that a full settlement wras had between appellant and Bissell on the 8th of February, 1879, when the balance of $151.56 was found to be due appellant. The real controversy, therefore, is confined to the charges contained in the original bill and is dependent upon the construction to be given to the contract of February 8, 1879. Does the construction contended for arise from the language employed in the written instrument itself % Does appellant’s equitable lien find an existence there \ The language is plain and simple and certainly allows no room for doubt in any part appearing before paragraph sevenj which reads as follows :

(7) “ In consideration of the party of the second part’s faithful performance of the agreements above specified, he is to receive three (3) per cent on all amounts collected for rents, said rent account to be kept separate from other transactions; is also to receive from the net income of the personal capital one-fifth (1-5) of every transaction which is to be entered in the proper accounts, said accounts to be balanced on the first of every month, one-fifth of said balance to be charged to party of the first part and credited to the party of the second part, and whenever the party of the second part shall receive any or all of his interest of the net proceeds realized from the transactions before specified, it shall be upon the check of the party of the first part.”

This paragraph fixes appellant’s compensation. While it. is proper that the contract be construed as a whole, yet this paragraph must contain in substance the construction insisted upon or resort must be had to extrinsic evidence. The paragraph next following relates only to his compensation in cases of sale after a mutual valuation, and has no reference to this one. The ninth paragraph provides for Grinton collecting up all transactions made by him and making good to Bissell one-fifth of all losses sustained. The tenth paragraph provides for Grinton making complete and detailed entries in the books of each transaction, and limits the payment to him of his claim to the time of its being paid in. The eleventh and twelfth paragraphs relate entirely to the incidental business of the office and the taxes on personal capital employed under the contract. The next paragraph, which is the only remaining one, simply provides that the contract may be terminated on either party giving to the other thirty days’ notice.

In .paragraph seven there is no semblance of a covenant that personal capital shall not be merged into real estate, or if so, merged shall retain the character of personal capital for the purpose of fixing Grinton’s compensation or interest in deals made by him. Neither in this paragraph nor in any part of the contract appears any agreement that upon the termination of the contract, the value of such real estate should be determined by mutual consent or otherwise, and that Bissell should be allowed to retain it free from any lien of Grinton only upon payment to Grinton of one-fifth of its increased value. There is nothing in the instrument to show that the parties ever contemplated such a contingency as a termination of the contract with a portion of the personal capital invested in real estate. As to appellant’s compensation and share in the business relating to deals on transactions concluded in the lifetime of Bissell, we are satisfied they are so plainly and clearly set forth in the written contract as to preclude any resort to extrinsic evidence. Where a written contract speaks plainly the thought of the parties as to their mutual obligations and rights under it, a resort to extrinsic evidence is unnecessary and improper. Stettauer v. Hamlin, 97 Ill. 312; Bearss v. Ford, 108 Ill. 16. A careful perusal of the contract leaves us in doubt as to but one thing, and that is as to what interest or claim, if any, Grintop should have in real estate resulting from personal capital undisposed of on the termination of the contract.

To aid appellant in hi's construction he introduced in evidence the books of account kept by him, a book identified as the “ statement book,” a paper signed by Bissell on the 18th of August, 1887, whereby he stipulated that a certain deed executed by Grinton on that day to a certain lot in Joliet should not have the effect of defeating any interest which Grinton had in the property, and the testimony of Grinton, Yose and Hunter of statements and declarations made by Bissell in conversations had with them.

Before considering this extrinsic evidence we deem it proper to say that we are not inclined to the opinion that the written contract created the relation of copartners between Bissell and Grinton, but are disposed to regard it as a contract of employment. Mor are we disposed to regard this question as a controlling one in the case, because if there was any such understanding and agreement with reference to the determination of appellant’s claim or interest in the real estate acquired by personal capital as is set forth in the bill of complaint, appellant was entitled to the relief sought, even though the relation was that of employer and employe. The importance of the question arises in considering the books of account kept by Grinton and- offered in evidence. It is a well established doctrine that partnership books of account, kept during the continuance of the copartnership, are evidence for and against the different members of the firm in subsequent litigation between them. The books are presumed to contain a true history of the business, and a true record of the transactions between the partners. The reason which supports the rule is that the books are at all times open to the inspection of the individual partners and that they are considered as having acquiesced in the various entries made. While the books of account are proper as evidence in a suit for a partnership settlement, we apprehend the chancellor in deciding to what extent the entries and recitals made therein by one partner shall bind the other, will be governed largely by the peculiar circumstances of the case. He certainly would make a difference in the case of an active, intelligent business man, in the prime of life, from that of an uneducated man, burdened with the infirmities of extreme old age. It should be borne in mind that the introduction of the books in this case was for the purpose of aiding a proper construction of the contract, to ascertain Bissell’s understanding and interpretation of the agreement. The entries were made by Grinton himself; they contained no word from the hand of Bissell; they show no affirmative act on his part. They are of no value as indicating Bissell’s understanding of the contract, except where it is shown that the entries were brought specifically to his notice. To support his construction of the contract, appellant showed by the books that the account with each piece of real estate acquired after the contract, was kept separately, so as to show at all times the actual investment of personal capital therein, and that all sales of real estate showing gain, were carried to discount and divided, one-fifth to Grinton and four-fifths to Bissell. Each piece so acquired was debited with first cost and each subsequent item of expense, such as taxes, repairs, etc. It was credited with receipts of rent, if any. The balance constituted the investment of personal capital. If sold above the investment and expense, the excess was claimed as “ income ” under paragraph seven of the contract, to be divided one-iiftli and fourfi hs respectively.

To be of much value to appellant as showing a mutual interpretation of the contract, this system of bookkeeping should be directly traceable to the contract and should apply to realty acquired after February 8, 1879. The evidence shows that this system of bookkeeping had been adopted by.Grinton long before the contract of February 8, 1879, and was applied to all real estate acquired and held by Bis-sell. Bissell had but little, if any, personal knowledge of entries made by G-rinton after they began operating under tin's contract. Seventy-seven years of age at its date and eiglity-six years of age at his death, he was in his dotage. He was illiterate, and ignorant of accounts, and an inspection of the hooks by him would have given him but little understanding of their contents. His knowledge of the manner in which the books were kept was necessarily confined to what was told him by Grinton, Yose, Ilurlbut and Hunter.

Counsel for appellant place great reliance on what is known as the “ statement book.” The entries made therein were made chiefly by an accountant named Ilurlbut, whom Bissell employed a few months before his death to overhaul Grinton’s books and make statements of the accounts. There were some entries made by both Hunter and Yose, but those which are at all pertinent to the particular question involved, appear in the handwriting of the accountant, Ilurlbut. ¡None were made by Bissell. It is headed “ Schedule of real estate and personal estate of Martin C. Bissell, February 8, 1877.” Then follows a description of such property of that date. On page 79, which is a part of the statement for that date, is an entry showing how profits and losses of transactions prior to that date were to be divided. Being of the same date as the contract and relating to prior transactions, they are not valuable as aiding a proper construction of the contract. Then follow statements of the property on hand July 1, 1881, March 1, 1884, February 18, 1884, and October 3, 1887. On page 136 is the following entry: “ All profits or losses on the following real estate to be divided as follows, to wit: M. C. Bissell, four-fifths; Wm. Grinton, one-fifth; the Al. Stevens lots, see inv. July 1, ’81; the Smith Lawrence lots, see inv. July 1, ’81; the L. K. Stevens lots, see inv. July 1, ’81.”

This book is nothing more than a compendium of the account books kept by Grinton. It was made up in Grinton’s office and from those books. Considering Bissell’s extreme age and the infirmities under which he was laboring at the time, we are not disposed to consider the entries made therein as indicating his interpretation of the contract.

The instrument signed by Bissell on the 18th of August, 1887, was executed under peculiar circumstances. The property described in it was worth $30,000. A foreclosure decree had been rendered against it and a sale had thereunder in August, 1880. There was no redemption, and Bis-sell was entitled to a master’s deed in ¡November, 1881. It was Grinton’s duty under the contract to see that such deed was obtained. He failed to do so and allowed the statute of limitations to run against the execution of a master’s deed. Owing to his age and infirmities, Bissell was at that time giving but little attention to such matters. He relied entirely upon Grinton. He supposed the deed had been procured and the title to the property in himself. When he discovered that such was not the case and that the title was in Grinton, who had obtained a quit-claim deed to himself, the old man’s state of mind can well be imagined. In such a condition of things it is not at all strange that Grinton and his attorney were able to procure from him the instrument of August 18, 1887, as the condition upon which Grinton would convey the property to him. We are disposed to give it but little weight, as evincing Bissell’s interpretation of the contract.

The other extrinsic evidence relied upon is found in the testimony of Grinton, Yose and Hunter. They testify to conversations had with Bisse-ll, in which he acknowledged (.Trillion’s interest in the property as contended for. Appellees insist that neither Grinton nor Vose are competent witnesses. Their testimony was heard subject to objection. Clearly Grinton is not a competent witness. He is complainant in a suit where the defendants are the executors of a deceased person, and comes directly within the provision of section two of chapter fifty-one of the Revised Statutes. Hot so with Vose. Although he had a similar suit pending against the executors, and the record shows his strong sympathy with Grinton, he was not so directly interested in this suit as to render him incompetent as a witness. Ho one can read Vose’s testimony without being impressed with the decided leaning of that witness to the cause of Grinton, his friend, and main reliance in his suit. He is flatly contradicted, too, by Miss Weed, a disinterested witness, in a very material part of his testimony. In view of his feeling for Grinton, his contradiction by Miss Weed and connection with the case, we are not favorably impressed with this witness. The substance of the testimony of Hunter, a brother-in-law of Grinton, was that Bissell understood the contract so far as it related to Grinton’s interest in real estate arising from personal capital, the same as Grinton did. In the conversations had, Bissell expressed himself as being dissatisfied because Grinton was getting rich too fast under the contract, on account of the rapid advance of real estate in Joliet. He at such times fully recognized Grin-ton’s interest as contended for. His testimony was taken six years after the alleged conversations. While he appears to have retained a very distinct recollection of Bissell’s statements regarding Grinton’s interest, he has a very indistinct and uncertain recollection as to what particular pieces of real estate were embraced, and of certain missing pages from the “ statement book,” at that time in his charge for the purpose of making the schedule of March 1,1881. However, giving to the testimony of Vose and Hunter the greatest credence, it falls far short of establishing that there was an “understanding and agreement between Bissell and Grinton that whenever their business connections were terminated, then in adjusting the matters between them, the value of the real estate in which they were interested under the contract should be determined by mutual consent, if possible, and if not by mutual consent, then in some other proper manner, and the several interests of the parties computed on the basis of the value then determined, and that Bissell was then at liberty to retain such real estate, free from any lien of Grinton, by first making payment to Grin-ton of his interest, therein, the equitable lien of Grinton to continue to his benefit and security until complete adjustment and payment to him of his interest therein.”

The entire extrinsic evidence will be searched in vain for proof of such an agreement. It does not seem to have been contemplated at any time. On the other hand, paragraph ten of the contract provided that Grinton was not entitled to his share of the proceeds of a transaction until paid in, the evident meaning of which was that upon the closing of a transaction and the money being paid in, Grinton was entitled to receive one-fifth of the net proceeds, and not before.

Appellant set up such an agreement in his bill. Without establishing it he was not entitled to the relief sought.

The decree was fully as favorable to appellant as the evidence would warrant.

Deoree affirmed.