Watkinson v. Ellsworth

27 Conn. 209

• Court: Supreme Court of Connecticut
• Decided: February 15, 1858
• Status: Published

Opinion

Sanford, J.

Sometime before the 15th of May, 1836, the parties in this case embarked in a speculation in western lands. The plaintiff furnished the capital, and the defendant made the investment, taking the title in the plaintiff’s name.

The property remained unsold until October 1845. The sale of it was then commenced by the defendant, and after-wards prosecuted until it was all disposed of. And from time to time the defendant paid over to the plaintiff portions of the proceeds of his sales, until October 1854, when, it being supposed that one thousand dollars at least was due to the plaintiff, the note in suit was given on that account, but no settlement of the account was ever made.

Before the auditor, the defendant, admitting that he had received for the property more than he had paid over to the plaintiff, claimed thathe had a right to retain forhisown usethe whole balance in his hands at the time the note was given, and so the note was given by mistake and without consideration ; and in support of this defence he offered the written instrument appended to the auditor’s report with evidence of his sales under it. The plaintiff objected to the evidence, the auditor admitted it, and the superior court approved the ruling of the auditor. The admission of that evidence is the principal error complained of in the motion, and the only one to which our attention has been particularly directed on the argument of the case.

.The question arises upon the construction of the contract. The defendant claiming that that contract secured to him one half of the net profits of the whole adventure ; and the plaintiff contending that “ it had ceased to be operative by its own limitation before the debt for which the action was brought had accrued in favor of the plaintiff.”

The original agreement under which the investment was made is recited in the preamble to the written contract. It provided that the plaintiff should furnish the capital, pay one half of the expenses of purchasing or locating the land, hold the title, reimburse himself for all his advancements with interest thereon at six per cent., and convey to the defendant half of the profits after deducting his capital and interest, at the end of five or ten years, “ as most agreeable to himself;” and that the defendant should make the investment in the plaintiff’s name and pay the other half of the expenses of the purchase or location.

It is conceded that the defendant performed his part of that agreement in a satisfactory manner. Under that agreement then the defendant acquired an interest of some kind in the property and its proceeds which a court of equity would recognize and protect. This the plaintiff’s counsel admit, but they insist that, by the terms of the contract, the defendant’s interest was limited to such profits only as should accrue within the period in the contract specified; which period they claim was five years, (afterwards enlarged to six ;) and that within that period no profits whatever had accrued, because, (as it is found by the auditor) none of the land had then been sold, and all of it “ could not have been sold for enough to pay the advancements of the plaintiff, with six per cent, interest thereon.” Now it is to be observed, that by the original agreement no specific period is fixed for the continuance of the connection or the division of the profits. . That was to be determined by the plaintiff “as most agreeable to himself.” The whole legal title was in him, and he could dispose of it at pleasure. He might sell at once and reimburse himself, or he might hold the property unsold for five or ten years, “ as most agreeable to himself.” And it nowhere appears that he ever declared or made his election to terminate the connection, until after all the land was sold, nor even then.

On the 16th of August, the parties ascertained the amount of money which bad been invested, and agreed upon the time from which the plaintiff’s interest should be computed, and then they assumed toward each other, in relation.to this property, the new and additional obligations contained in the instrument of that date. But no where in that instrument do we find any provision for the closing up of the concern at the end of five years, or any other definite period, except by the conveyance of all the property to the defendant upon the terms stated in his proposition. In that instrument, indeed, the plaintiff covenants that he will not sell any of the land (without the defendant’s approbation and concurrence) within five years; that is, he submits to the specified restriction upon his absolute power over the property for the period mentioned, and with the expiration of that period his absolute power revived. And that is the whole extent and operation of the covenant.

I can discover no such limitation as the plaintiff claims, either in the original agreement as recited in the preamble to the written contract, or in any of the provisions of that instrument. Indeed, the construction contended for by the plaintiff seems to me alike uncalled for by the language, and inconsistent with some of the essential provisions, of the instrument itself. Thus, the plaintiff covenants “ to hold the land for the purposes above mentioned,” (that is, for the purposes specified in the recited contract under which it was acquired,) “ for the term of five years,” unless he and the defendant shall agree upon an earlier sale, and that “ whenever his advancements and interest shall be reimbursed by public sale or otherwise,” he will pay over half of the surplus profits to the defendant. Now the plaintiff’s capital was to be reimbursed by sale:—that was the mode agreed upon, and the mode in which the question whether profits had accrued or not was to be determined. But the great object of this new contract seems to have been to provide for the holding of the land unsold for five years at least, in order that time might be allowed for it to rise in value, so that the time referred to in connection with the fact of reimbursement by the word “ whenever,” must be after the five years mentioned should have elapsed. As if the plaintiff in terms had said, “ I am to be reimbursed by the sale of land; a sale shall not be made (unless we both agree to it,) within five years at least; but whenever I am reimbursed, and therefore, whenever the sale necessary to produce such reimbursement shall be made, I will pay over to the defendant one-half of the surplus profits of the investment.”

In view of the fact that the question whether profits had accrued or not could be determined only by a sale of the land, or so much of it as to reimburse the plaintiff’s capital and interest, it seems unreasonable to suppose that the parties intended to make the defendant’s right to profits dependent upon a sale within a period during which the plaintiff, at the defendant’s instance, covenanted to withhold the property from the market altogether.

Again, the condition annexed to the defendant’s proposition to take the land at the end of five years,—provided the plaintiff should “.prefer it,” (that is, prefer his whole advancements and compound interest thereon at ten per cent, at once) “ to the chance of profits which might accrue to him the said Eobert after closing the sales of said land,”—upon the plaintiff’s construction would be altogether out of place. It carries the implication, that the non-acceptance of the proposition involves the alternative of a future sale, and that alternative alone. But upon the plaintiff’s theory,—that in the event supposed the land was to become the absolute property of the plaintiff, discharged from the defendant’s-original claims upon it and its proceeds,—the natural, and indeed the only alternative which such non-acceptance would involve, would be, not a sale only, or “ the closing of the sales,” but whatever disposition an absolute owner, under any circumstances, might choose to make of his own estate.

If, therefore, the parties had intended that the defendant’s interest in the property should become extinct unless within five years some profits should have been realized, the idea that then the plaintiff must either convey all the unsold property to the defendant upon the terms proposed in the instrument or sell it in some other manner and “ close the sales ” of it, or that he should look to that issue as the sole foundation for his preference, I think would never have occurred to them. But upon the defendant’s construction, the condition and the implication which it carries are both pertinent and natural.

Considerable stress has been placed upon the expression— provided the said Eobert or his heirs ” “ shall prefer it to the chance of profits which might accrue to him the said Eobert”—as indicating that all the profits accruing from sales after the expiration of the five years would be his. In our judgment the plaintiff derives little aid from this expression. The sentence is incumbered with a reference to the plaintiff’s heirs, which gave occasion for the employment of the word “ the,” where but for such reference “ his ” would naturally have been used, and relieved the sentence from much if not all of its obscurity. It would then have read— “ provided the said Robert shall request it and prefer it to his chance of profits which might accrue to him,” &c. And the inquiry would have been what his ehance was or would be, —for the whole of the.profits, or for half? And we think it is doing no violence to the language used, and is more in accordance with the general scope and tenor of the instrument) to make the construction of this sentence, as it stands, depend upon an answer to the same inquiry :—what was the chance for profits which might accrue to him the said Robert, &c. ?—the answer to the inquiry in both cases being,—that chance to which he was entitled by the contract,—a chance for those profits and those only, whether the whole surplus or only half of it, to which the contract gave him right. Those only could accrue to him.

It was admitted in the argument, that the property being by the plaintiff’s covenant locked up from market for five entire years, might have been sold for the benefit of both parties within a reasonable time thereafter, if any profits could have been produced thereby. And it does not appear that all the property was not in fact sold within such reasonable time. What is reasonable time ” is a question always dependent upon circumstances. And in this case it is to be recollected that abundant security for the return of his whole advancements and compound interest thereon at ten per cent, had been tendered to the plaintiff, and that the property in question was of a kind which could not be forced upon the market but at the hazard of a ruinous sacrifice. And it is to be recollected also, that after the close of the period in question, the plaintiff’s power of sale, as well as his power to revoke the authority of the defendant, was unlimited. But he did nothing. For more than three years no sale was made, and the revocation of the defendant’s power was never attempted. The instrument evidencing his appointment remained in his hands uncanceled and unrevoked ; and, until the property was all disposed of, the defendant, authorised by that instrument alone, continued to execute all the powers which it purported to confer, not only without rebuke but with the plaintiff’s approbation.

There is certainly great force in the plaintiff’s argument from the defendant’s charges of commissions on his sales and collections and for drawing deeds, that the defendant’s “ practical construction ” was then the same as the plaintiff contends for now. And we are by no means sure, that if the question of fact in this part of the case had been submitted to us, upon this evidence alone, we should have come to the same conclusion as the auditor. But the auditor, as we presume upon adequate evidence, has found that “ the defendant did not, when he made those charges, suppose that he was making charges for personal services.” And, sitting here, we have no authority upon a question of fact to reverse or disregard the finding of the auditor. And we think, that in holding that the mistake of the defendant in regard to the meaning of the term “ personal services ” in the contract, upon the meaning of which expression depended his right to make the charges alluded to, was not such a violation of the contract as worked a forfeiture of his right to profits under it, the auditor was clearly right.

The authorities cited by the plaintiff’s counsel have not been overlooked, but their bearing upon the questions under discussion in the ease at bar is not in our judgment so obvious or important as to require any particular discussion of them in this opinion.

The judgment of the superior court must be affirmed.

In this opinion Hinman, J., concurred ; Storrs, C. J., dissented ; Ellsworth, J., being disqualified by relationship to the defendant, did not sit, Judge Sanford taking his place.

Judgment affirmed.