Ingerson v. Starkweather

1 Walk. Ch. 346

• Court: Michigan Court of Chancery
• Decided: February 15, 1844
• Status: Published

Opinion

The Chancellor.

The complainant is entitled to relief. Starkweather represented himself as the owner of the lot, or that it belonged to himself and Norton, when he sold it to complainant. In what way, according to his own statement, did they acquire an interest in it? Ry purchasing it at a public auction conducted by himself, as agent and auctioneer for the state. He could not, without a breach of his duty to the state, purchase at such sale. It is contrary to every sound principle of equity, to allow an agent, who is authorized to sell property for the best price that can be obtained for it, to become the purchaser himself. It is immaterial whether the sale be public or private; whether the agent purchase in his own name or that of another. The object of the rule is to secure fidelity on the part of the agent to his principal; and it is as applicable to public agents as others, and should, if any thing, be enforced more rigidly against them, as they have greater opportunities of abusing their trust.

Starkweather appears to have been aware of the impropriety of his appearing as a purchaser at the sale, for the lot was bid off in Norton’s name alone, although Stark-weather was to have an interest in it. Was Norton at the sale, and did he bid it off? The answer is silent on this point. Defendant was interrogated by the bill as to what persons were present at the sale; — he names some two or three, but, says not a word about Norton. Neither does he say in express terms Norton was the purchaser. His language is that “the land was struck off to John Norton, Junr., as the purchaser, for the benefit of himself the said defendant, and John Norton, Junr.”

Suppose the sale genuine: Norton and Starkweather, by omitting to comply with the terms of the sale, had ceased to have any interest in the lot, when it was sold to complainant. The law required one tenth of the purchase money to be paid in cash, and the remainder of it in annual instalments of ten per cent, at an interest of seven per cent, to be paid annually. R. S. 251. The first payment was not made at the sale, nor until Starkweather had sold to complainant. This is clearly to be inferred from Starkweather’s answer, and if the fact had been otherwise, he would probably have stated it. The public sale was on October 17th, 1838; and on the 8th day of April, 1839, nearly six months after, when he sold to complainant, he and Norton had not procured a certificate; In his answer, he says, he proposed to sell the lot to complainant, “ subject to all payments excepting the first, to he made to said Superintendent.” In another part of his answer he says that “ he paid to the said Superintendent the sum of sixty-four dollars, being the first payment to be made on the purchase of lands, according to the law regulating the sale of said school lands; but at what time, whether before, or after he sold to complainant, he does not state. The certificate to complainant is dated April 8th, 1839, instead of October 17th, 1838, when the public sale took place; the state thereby losing nearly six months’ interest. Why was not the certificate dated back to the time of the public sale ? Why does it state the land was sold “at a private sale”?

I do not rest my decision on this ground alone, but on another and stronger ground; that the sale of October 17th was not a hona fide sale, but intended to stand as such if the land could be sold to advantage; otherwise to be abandoned. The circumstances already stated show this pretty conclusively to my mind, but there are others. Norton does not appear to have ever had any thing to do with the purchase. He was not at the public sale, nor does it appear that he had an agent there. He had nothing to do in making the bargain with complainant; the notes were made payable to Starkweather, or order, and were afterwards transferred by him to Willard, under circumstances that exclude all idea of Norton’s having any interest in them. We hear nothing of Norton in these transactions, or in the payment of the sixty-four dollars to the Superintendent.

The land having been twice offered for sale at public auction, without being in fact sold, was subject to private sale, at the minimum price of eight dollars per acre; and complainant, or any other person wishing to purchase it, was entitled to it at that price. Complainant was induced to pay more for it by reason of the representations of Starkweather, that it belonged to him, when in fact it belonged to the state.

Willard cannot be regarded as the holder of the notes for a valuable consideration, and without notice, to a greater amount than the value of the services rendered by him, under the agreement with Starkweather, before he had notice of the manner in which they had been obtained. He gave neither money nor property for them. He took them in payment of an antecedent debt, and professional services to be rendered. So far as such services were rendered before notice to him, he is entitled to the protection of the Court; but no further. To cut off the equities of the original parties to a note, in the hands of a third person, the holder must not have received it in payment of an antecedent debt, but he must have parted with something for it at the time, or incurred responsibilities to a third person on the credit of it. Rosa v. Brotherton, 10 Wend. R. 85; Wardell v. Howard, 9 Wend. R. 170; Codington v. Bay, 20 J. R. 637; Hart v. Palmer, 12 Wend. R. 523.

The services rendered by Willard before notice cannot amount to a great deal, but there must be a reference to a Master to ascertain the amount.