Smith v. Glover

52 N.W. 210, 50 Minn. 58, 1892 Minn. LEXIS 246

• Court: Supreme Court of Minnesota
• Decided: May 24, 1892
• Status: Published

Opinions

Gtlfillan, C. J.

Tbis case was here before on an appeal from an order overruling a demurrer to the amended complaint, and the order was affirmed. 44 Minn. 260, (46 N. W. Rep. 406.) That decision must be taken to have established these propositions: First. Under the contract between Page and Pereles, of the first part, and Glover and McClure, of the second part, the latter parties had an equitable interest in the lands. Second. Plaintiffs succeeded to the rights of Glover and McClure. Third. When Glover purchased from the representatives of Page and Pereles, causing the conveyances to be made to Goss, the legal title passed, subject to the rights of plaintiffs; and when he caused Goss to convey to bona fide purchasers, who took the lands discharged of plaintiffs’ interests, he incurred the same liability to them which Page and Pereles would have incurred, had they made similar conveyances to bona fide purchasers, — that is, the liability to account to plaintiffs for one half the proceeds of the sales. Fourth. The failure of McClure to visit the lands each yea.r did not extinguish the rights of Glover and McClure. Fifth. Plaintiffs’ action is not barred by the statute of limitation. Sixth. Plaintiffs have not lost their right to relief by laches, so far as the same appears by the amended complaint. These propositions cover nearly the whole case, as now presented.

It is unnecessary to reconsider any of them.

To determine the extent of the interest of Glover and McClure, ana the conditions under which they held it, and how the land might be sold by Page and Pereles, we will consider .some of the features of the contract. It declares its purpose to be “entering into the business, of entering and selling pine timber lands.” It is beyond question that the lands were to be entered on behalf, and for the interest, of all the parties to it, though the titles were to be taken in the names of Page and Pereles. Towards acquiring the lands, Glover and McClure were to contribute, and they did contribute, their time, labor, and skill in selecting and locating them; and Page and Pereles were to enter and advance the money to pay for them, and they did so enter and advance the money. After they were acquired, Page and Pereles were to pay the taxes on them, and hold them “until such time, not exceeding three years, as may seem advisable to all parties concerned.” On September 1st in each year, Glover and McClure were to pay Page and Pereles interest at the rate of ten per cent, per annum on one-half the money invested by them “as long as the same remains invested.” There is no express stipulation that Glover and McClure should at any time repay to Page and Pereles any part of the principal sums disbursed by them. There are stipulations that, after enough lands have been sold to repay those disbursements and interest, Page and Pereles shall convey an undivided half of the lands remaining to Glover and McClure, and that Page and Pereles shall convey none of the lands within three years from the entry without the consent of the other parties, and then only enough to repay such disbursements and interest, and that at the expiration of said time, (three years,) if the parties cannot agree to sell or hold said lands, then the same shall be divided by lot, and Page and Pereles shall convey to Glover and McClure the land falling to them by said lot, in fee. No mention is made of sales after the three years, except as the parties may then agree to sell. When that time has expired, whether they shall hold or sell the lands is to be determined by agreement of the parties then to be made; and, upon failure to make such agreement, they are to be divided by lot.

When, pursuant to a valid agreement, parties purchase property for their common benefit, the legal title to be taken in the name of one of them, they are all, in equity, owners of the property; and, unless their agreement otherwise provide, they are to be regarded as equal owners, just as in ease of a partnership the partners are. deemed equal partners unless their partnership articles otherwise provide. In such cases the holder of the legal title holds it in trust, and if, under the agreement, he has a power to sell, that power is a power in trust for the purposes contemplated by the agreement. As these lands were acquired for the benefit of all the parties to the contract, they were all, in equity, owners of the lands so acquired, and, unless otherwise provided in the contract, they were equal owners ; that is, the parties of the first part owned an undivided half, and the parties of the second part the other undivided half. There is nothing in the contract to indicate that the parties were to be interested in any different proportions. It clearly indicates that they were to be equal owners, subject to a charge or lien in behalf of Page and Pereles. This must be kept ñi view, in construing the different provisions of the contract, especially those in regard to sales, and in determining the rights of the parties thereunder.

In respect to the right or power of Page and Pereles to make sales the defendant makes these propositions: That their power to sell was derived, not from the contract, but from the patents to them,— that is, from their legal ownership; that when the absolute owner of property enters into a contract with another, giving him rights in the property, and containing provisions in respect to sales to be made by the owner, those provisions are not a grant of power, but are limitations or restrictions upon an absolute power already existing; and that Page and Pereles having been the absolute owners, and having had an absolute power to sell, they could exercise it, except in so far as it was limited or restricted by the contract. The error in applying the general proposition thus stated to this case arises from assuming that Page and Pereles were the absolute owners, with an absolute power to sell, dependent on such ownership. They never were, in equity, the absolute owners. Simultaneously with the vesting of the legal title in them, Giover and McClure’s equitable title vested. Therefore they never had an absolute power to sell, or any power to sell, so as to pass the equitable title to Glover and McClure, except such as the contract conferred on them; and that, so far, at any rate, as it might affect that equitable title, was a power in trust. And here it may be noted that the contract does not expressly give any power to sell, except with the consent of Glover and McClure, and within three years, and for the purpose of making the disbursements of Page and Pereles out of the lands to be sold. Defendant claims that from the restriction that sales during the three years shall be made only by consent of Glover and McClure a power to sell after that time, without such consent, is to be implied. In view of the provisions as to what shall be done at the end of the three years, that implication could be made only because the contract gives Page and Pereles a lien for their disbursements and interests, and the power of sale, so far as given, was to enable them to enforce the lien, and that it would be unreasonable to suppose the parties intended the power to expire before the lien should be satisfied. The question is a very close one, but we shall assume that the power survived so long as the disbursements and interests had not been made out of the lands.

Question is made as to the character of the relations between the parties, which the contract created, — whether that of mortgagors and mortgagees, or of partners, or of vendor^ and vendees in a contract for the conveyance of real estate. The fact and the extent of the equitable interest .of Glover and McClure appearing, it does not matter, so far as concerns this case, how the relations between the parties shall be designated. The main purpose of the contract was the acquisition of the lands for the common benefit of all the parties. But Page and Pereles were to advance all the money necessary to purchase the lands, and for their security they were to take and hold the legal title. That they were to take and hold it solely as security is indisputable from the provision that, as soon as enough lands should be sold to repay the disbursements and interest, they should convey an undivided half of the remaining lands to Glover 'and McClure. That condition might arise at any time, even immediately after the lands were acquired.

The contract certainly contemplated private sales, and we shall assume that, if they were otherwise such as the contract contemplated, the sales by the representatives of Page and Pereles to defendant were effectual to pass the plaintiffs’ interest in the lands. We will assume that the power of sale, though in trust, would on the deaths of Page and Pereles pass to their heirs, and even assume that a power given by one of them in his will to his executor to sell and convey his real estate would enable the executor to join in executing the power contained in this contract. Whoever (if any one) after the deaths of Page and Pereles might execute the power, he or they would have to do it just as would have been required of Page and Pereles had they attempted to execute it. The contract certainly does not contemplate any but sales such as would be most for the interest of all the parties to it, such as would pass the entire estate — all the interests of all the parties — in each tract sold. The claim of Page and Pere-les, to satisfy which, sales might be made, was a joint claim. They were joint trustees, and to execute the power they would have to join in any sale. It cannot be inferred that, under the power, Page might sell an undivided half to one person at one time, and Pereles might sell the other undivided half to another person at another time. It can hardly be questioned that such separate sales would not be so advantageous to the parties interested — would not be likely to produce so much — as sales passing each by itself the entire interest in the land sold. Of course, each party to the contract might sell his own interest in the lands. Page and Pereles might each sell without reference to the power in the contract, — might sell merely his own interest. The difference between such sales and one made under the power would be that the latter would pass all the interest of all the parties, even to a purchaser with notice, while the former would pass to a purchaser with notice only the interest of the party selling. The sales by the representatives of Page and Pereles to defendant were of such a character. They were not made under or with reference to the power. They were separate sales. Separate deeds were executed at different times for different considerations, and apparently, at least, as the result of separate and independent, negotiations. By each deed the grantors did “remise, release, and quitclaim ” an undivided half of the lands; from which it is apparent that each set of grantors assumed to sell only the interest of the-estate which they represented. They could not by separate sales sell any other interest. The defendant acquired, therefore, by those-sales, as decided when the case was here before, only the legal title», subject to the equitable interests of the plaintiffs.

Much evidence was offered at the trial, and rejected, tending to prove a proper reason for selling the lands en masse. Had the objection to the sales been merely that they were en masse instead of in separate parcels, the evidence would have been proper; but it would have no tendency to show that there was a joint and so a valid sale, and it could not have changed the result.

The defendant alleges as a defense that in consequence of business depression between 1874 and 1880, and owing to the fact that there was during said period no margin of profit, but an actual net loss, in said venture, the plaintiffs actually abandoned their interest under said contract, and wrongfully neglected and refused to do anything called for by or on their part, notwithstanding performance by them was often duly demanded, and also that during such period the plaintiffs from time to time represented to defendant that they had abandoned their rights, and did not intend to have anything more to do with, or to do anything more under, said contract. What plaintiffs may have said to defendant on the subject constitutes no defense unless an estoppel can be based on it, and sufficient facts to make an estoppel are not pleaded. However, the court below seems to have admitted whatever evidence was offered of such 'representations, and also admitted whatever evidence was offered of acts or declarations of plaintiffs indicating abandonment of their rights, and finds as a fact that there was no abandonment.

The evidence offered of the financial depression and the condition of the market for such lands between 1874 and 1880 would, of itself, be no evidence of abandonment. The most that could be claimed for it would be that, as showing a condition that might have induced the parties to abandon, it was admissible for the purpose of giving character to evidence, introduced, directly tending to show abandonment in fact. Even for that purpose, it would be somewhat remote.

But as in such a ease the question of abandonment is one of the intent with which acts are done or omitted, or declarations made, we think it was proper to show, in connection with acts, omissions, or declarations indicating an abandonment in fact, a motive or reason for abandoning, such as that the rights claimed to have been abandoned were of no value. We think, therefore, that the evidence offered ought to have been admitted.

It appears that under some arrangement between defendant and one Phipps the profits upon a resale of the lands were divided between them, and it is therefore claimed that in this action, which is for an accounting, defendant ought not to be charged with the share of the profits received by Phipps. If defendant, having notice of plaintiffs’ interest in the land, caused that interest to be transferred by causing Goss to convey to bona fide purchasers, he is chargeable with whatever may be deemed to have been received for it, to wit, one-half the proceeds of such sales, after deducting the claim that Page and Pereles had upon the land; and it is immaterial what he, ■did with such proceeds, — whether he appropriated them himself, or turned them over to some other person. On the proposition made by defendant, had he turned over all the proceeds to Phipps, then, as plaintiffs could have no recourse against the latter, because he had no notice of their interest, they would be entirely remediless.

(Opinion published 53 N. W. Rep. 210.)

It is also claimed that in the accounting the court ought to have credited defendant with the considerations ha paid to the representatives of Page and Pereles, instead of the amount of the disbursements of those parties, with interest. The most that defendant can insist on, he having bought with notice of plaintiffs’ interest, is that he succeeded to the interest of Page and Pereles, to wit, an undivided half of the land, and a charge upon the whole for their disbursements and interest. What he paid for the interest of those parties would neither add to nor diminish the amount of that charge, and in no way affected the rights of these plaintiffs.

As we have seen, there was error in excluding evidence offered on the issue of abandonment. As to all the other issues the cause was properly tried and decided. As the issue of abandonment is independent of the other issues in the case, and may be adequately tried without reference to such other issues, we order a new trial as to that issue only; and if, on such trial, it shall be found that plaintiffs did abandon their rights under the contract, then the court below will render judgment for the defendant; but, if it be found that they did not abandon such rights, then it will cause judgment to be entered for the plaintiffs as by it directed on the trial already had.