Case ID: va_38/html/0607-01.html
Source: Caselaw Access Project
Author: {"author": "PER CURIAM,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Segar v. Edwards and Wife.
    April, 1840,
    Richmond.
    (Absent Brooke and Parker, ,1.)
    {Fiduciaries — Fraudulent Purchase of Agent from Principal-Case at Bar. — A claim to the land bounty to which a pilot in the revolutionary war was entitled, being established by his heirs, they employ an agent to do the best he can with the warrant, and write to him, stating that a far better price than 75 cents per acre was expected, but as it has been left to him, he must act for them. A sale is afterwards made, through the agent, at 75 cents per acre, and a conveyance is made to T. G. as the purchaser. On a bill filed by the heirs against the agent and T. G. it appears that T. G. had authorized the same agent to purchase warrants, and agreed to allow him, for his trouble, one half of any profit that might be made after refunding the purchase money and interest; that the agent had informed T. G. that a pilot warrant was offered at 75 cents per acre, and enqnired whether that price should be given; and that T. G. did not know whose warrant was the subject of the treaty till after the purchase had been concluded. The circuit court, holding that the agent ought not to have been concerned in the purchase, decreed against him for so much of the profit resulting therefrom as he had received: and the court of appeals affirmed the decree.
    Thomas Butler having' been a pilot in the navy of Virginia during the revolutionary war, and Mary the wife of (Siles Edwards being his heir, Joseph Segar was employed on behalf of Edwards and wife, as their attorney or agent to prosecute their claim to such land bounty as Butler was entitled to, and it was stipulated that Segar should receive for his services one third of what might be recovered.
    The claim was established before the executive of Virginia prior to the 28th of June 1832, that being the date of a letter from Segar to Edwards communicating the fact, and stating that he would proceed immediately to Richmond and take out the warrant. The warrant being issued by the register of the land office of Virginia, 'was forwarded to Washington by Segar, to be commuted for scrip. Segar wrote to Edwards soon afterwards, and Edwards, in reply, wrote to him on the 15th of August 1832 as follows: “You will do the best you can with the warrant, and after satisfying yourself, send me the balance by the first opportunity; though I expected to have got a far better price than 75 per acre; but as I have left it to you, you must act for me. As it respects an heir on the eastern shore, I know not where he came from; and when he or she proves their right to claim, then they can come in for shares. Settle it as soon as you can.”
    On the 30th of August 1832, Edwards executed a writing under his hand and seal, acknowledging that he had borrowed of Segar 130 dollars, which he bound himself to return whenever scrip should issue upon the warrant, and declaring that if, from any cause, the warrant should not be converted into scrip, he was responsible to Segar for the amount so borrowed.
    On the 19th of September 1832, a deed was executed by Edwards and wife to Thomas Green for 1778 acres of land scrip due upon the warrant, in consideration of the sum of 1130 dollars paid in hand to Edwards and wife, and the farther consideration of 200 dollars more to be paid to Edwards when the scrip should have been issued. In this deed Edwards and wife bind themselves that they will defend their title to the scrip; but it is stated that they “are to incur no risk or sustain no loss by the reduction of the price of public lands.”
    Afterwards the following letter, dated Hampton, November 25, 1832, and postmarked Hampton, December 18, was written by Segar to Edwards: “I am sorry to inform you that the claim of Thomas Butler is contested and suspended on several grounds, which the department at Washington will not communicate. One is, however, that other persons are entitled; and whether this be true or not, the claim must be much embarrassed. *1 hope you will make enquiry of all the old persons who can give information on the subject of the heirship, and communicate with me. So soon as the claim shall have been safe, I will pay you the remaining 200 dollars.”
    This letter was followed by one from mrs. Edwards to mr. Haywood, of the general land office. Mrs. Edwards received from mr. Haywood the following reply, dated the 11th of January 1833:
    “Madam, In compliance with your request of the 5th inst. I inform you that scrip amounting to 3333 dollars, equal to 2666 acres of land, was issued in your name as only heir of Thomas Butler, and delivered to mr. Segar on the 15th of November last. I am not enabled to say whether you are entitled to other moneys as heir of Butler, but I presume you could obtain information as to the fact from the state authorities in Richmond.”
    At July rules 1833, Edwards and wife filed their bill in the circuit court of Norfolk county against Segar, charging, that “notwithstanding the perfect security of the claim (as they have since understood), the said Segar, regardless of the duties attaching to his agency, taking advantage of the knowledge he had acquired in that character, and bent upon turning that knowledge, and the ignorance and necessities of the complainants, to the utmost possible advantage of himself, induced the complainants, by falsely representing that the claim was in jeopardy, to assign, by indenture executed in the month of September last (the exact date not remembered), the said claim to him for the sum of 1330 dollars, 1130 dollars of which was settled for at the execution of the indenture; the remaining 200 dollars was paid afterwards. This contract, the complainants aver, was entered into under a belief, arising from the representations of the said Segar, that the female complainant was not the sole heir of said Butler, and that obstacles had been thrown in the way at the land office at Washington; representations entirely at variance with *the truth of the matter, as the complainants have since ascertained.”
    Segar answered, that finding Edwards determined to sell, and not feeling himself at liberty, as his agent, to disregard his instructions, he applied tofThomas Green of Richmond, the only purchaser of land warrants known to him; to whom he sold the interest of Edwards for 75 cents per acre, which was all that he could procure; that the complainants executed to Green, and not the respondent, a deed for their interest, which was read both to Edwards and his wife, and her privy examination duly taken; and that after the execution of the deed, he drew an order on Green for the 1130 dollars, and the amount of the order was received by the complainants. He ‘ 'positively denies that he made any misrepresentations, at any time, to induce the said complainants to sign the deed executed to Thomas Green. He suggested no difficulties, and said not a word about the female .complainant not being the legal heir of the said Thomas Butler. He had candidly communicated to the said Edwards the male complainant, as he was in duty bound to do, all the difficulties threatening his claim, long before the sale was made; but so far from using these as expedients to induce the sale of the warrant, he advised them, whenever consulted, most strenuously against it; first, because, as their agent, he was bound to make the best sale of it for them he could, if entrusted with the management of it; and secondly, because his interest would not be promoted in any way hy the sacrifice of it.” The respondent then proceeded to state the facts in relation to the delivery of the scrip, and the letter written by him on the 25th of November 1832. On or about the 15th of November 1832, he received the warrant from the chief clerk of the land office, for the purpose of making the proper assignment of the same to the purchaser. It was then returned to the land office for the final certificate *of the commissioner, and detained some days. As a letter had been received at the land office,' requesting the commissioner to delay the delivery of the warrant until evidence should be furnished to shew that the persons in whose name the scrip was made out were not the true heirs of Butler, he feared that the detention was in consequence of this letter, or that, during the detention, evidence adverse to the claim might arrive, and determined to leave Washington and prepare himself with fuller evidence of the title of the complainants. On his arrival at Hampton, he wrote the letter of the 25th of November 1832. Eor the manner in ' which this letter was delayed, he cannot account. He then went to the eastern shore, and a few days after his arrival there, received a letter from Henry Stanberry, which is filed with the answer.
    The letter from Stanberry to Segar bears date the 25th of November 1832. ‘‘The day” (says he) “after you left, I received your scrip on the "Butler and Williams warrants, and it is now in the far west, beyond the reach of all difficulty and interference. ’ ’
    Segar, in the conclusion of his answer, says that the scrip was purchased by Stan-berry from Thomas Green at the price of 1 dollar 12 cents, or 1 dollar 15 cents; “that this respondent received no portion of the money, except for his own compensation, the one third of the 2666% acres, which this respondent sold to the said Henry Stanberry at the price of 1 dollar 10 cents. ’ ’
    The plaintiffs, t>3r leave of the court, filed an amended bill, alleging “that they were entirely ignorant that the conveyance of September 1832, mentioned in their original bill, was taken by the said Segar in the name of Thomas Green; for they aver that that gentleman, who resides in Richmond, was never mentioned to them as the purchaser of the said scrip. Whether the conveyance however was in mr. Green’s or mr. Segar’s name, they are advised does not vary the true aspect *of the case, except so far as to require of your complainants that they should make Thomas Green a party to this suit. They are advised that the purchase of the said scrip, though in the name of mr. Green, was equally a fraud on the rights of your complainants, and as inconsistent with the duties arising out of the agency of Joseph Segar as if the conveyance had been taken in his own name. Eor your complainants charge that at that verjr time, and long before, the said Thomas Green and Joseph Segar were and had been connected, either as partners or as agent and principal, in the recovery and purchase of revolutionary claims, and that the name of Thomas Green, instead of Green and Segar, or Segar alone, in the conveyance from your complainants, was inserted merely to give colour of fair dealing to a transaction which otherwise on its face might have been void.”
    The answer of Green stated, that “in December 1831, mr. Segar and this respondent did make an agreement by which this respondent was to be interested in the claims and agencies procured by said Segar, expecting certain cases; and when the claim of Thomas Butler, a pilot, was allowed and converted into scrip, the whole compensation for establishing it was received by said Segar, as being among the exceptions. Not a cent was ever received by this respondent. The purchase of the 1778 acres, which was made of the complainants, was made under the following circumstances. This respondent had authorized mr. Segar to purchase warrants that might be in market. On the 20th of August 1832, mr. Segar informed this respondent that a pilot warrant for 1800 acres was offered at 75 cents per acre, and en-quired whether that price should be given. This respondent’s reply to the enquiry was, ‘I reckon you would not do amiss to purchase the 1800 acres at 75 cents, provided the warrant be already registered at Washington, or *can be so registered in a few days after you get this. There is some danger, but I think the purchase would be judicious.’ On the 20th of September 1832, mr. Segar informed this respondent of the purchase, as made the day before, at 75 cents, of Giles Edwards, whose wife was the sole heiress of Thomas Butler, pilot, as he stated.” In answer to special interrogatories, the respondent states “that he had authorized mr. Segar to purchase warrants, and agreed to allow him for his trouble one half of any profit that might be made after refunding the purchase money and interest, the purchases being considered as respondent’s, though in fact the interests were joint. This respondent did not know from whom the purchase was to be made, till it was actually concluded.” He then believed, and was afterwards confirmed in the belief, that there was a hazard of nearly a total loss of the purchase money. The opinions of the different members of the executive had undergone repeated changes about the right of pilots to claim the 2666% acres of land bounty. They finally settled down into a determination that pilots were not entitled to draw more than 200 acres. And the probability is that this claim would have been defeated, if that determination had been made known at Washington before the scrip issued. It was however received, and sold lor 1 dollar 16 or 1 dollar 17 cents.
    The affidavit to Green’s answer bears date the 25th of October 1834. Segar’s second answer was sworn to the 8th of November 1834.
    After denj'ing that the complainants could have been deceived in relation to the person to whom the deed was executed, and stating the understanding between him and Green in relation to the prosecution of military claims, as Green had done, and the fact that Green had no share of the compensation in this case, he proceeds x'as follows: “This respondent was also authorized and empowered by said Green to purchase land warrants for him, who agreed to allow this respondent, for his trouble, one half of the profits accruing from the purchases after repaying the purchase money and interest. Under this regulation the claim of Thomas Butler was purchased, this respondent being entitled to one half of the profits in this as in all other cases of purchases made by him. This respondent did not intend to be understood, from any thing contained in his original answer, as intimating that he had no interest whatever in the purchase of the land warrant of Thomas Butler. He did have an ultimate interest depending upon the contingency of the final success of the purchase. At the time of said purchase, he had had no settlement with Thomas Green, and had received not one cent from him in consideration of the purchase. A settlement took place between this respondent and said Green in December 1833, when said Green accounted to said Segar for his share of the profits in all cases of purchases made by this respondent, among them that of Thomas Butler, his compensation in which case amounted to between 300 and 350 dollars according to the best recollection of this respondent. The interest of this respondent was not such as to disqualify him from acting as the agent of the vendors. He acted as the instructed agent of the complainants, having given them his best advice to take the chances of obtaining the whole amount of their claim. This respondent did not consult with Thomas Green until he had applied to every purchaser known to this respondent; and it is due to Thomas Green to say, that he did not even know whose warrant he had through this respondent’s purchase. According to the recollection of this respondent, said Green was not informed that the warrant to be purchased was that of Thomas Butler.”
    *James Wilkins deposed, that in August 1832 he went with Edwards to the house of Segar; that Edwards went for the purpose of selling to Segar his land claim, and manifested very great anxiety to sell it; that he offered to sell it to Segar, but Segar declined purchasing, saying that he was averse to purchases of that kind; that upon Edwards remarking he was in want of money, Segar offered to lend him, and Edwards accepted the offer; and that he understood Segar distinctly to advise Edwards not to sell his claim until the scrip should be obtained, unless he could obtain at least one dollar per acre, and put all risk upon the purchaser.
    Henry Stanberry deposed, that in August 1832, he contracted with Segar for all the scrip of which he might have the control, or to which he then was or might be entitled under the then existing appropriation. Eor a part of this scrip (in which part the scrip to be issued to Thomas Butler’s heirs was not included) he paid Segar in advance at the rate of one dollar per acre, he guaranteeing the delivery of the scrip, and against a reduction in the price of public lands. Segar also agreed to sell him his proportion of his other cases, including his proportion of the Butler scrip, at the rate of 1 dollar 10 cents per acre, to be paid on the first delivery ol the scrip, subject to the same provision as to the reduction of the public lands.
    Stanberry further deposed, that in November 1832 (about the 10th, he thought) Segar came to Washington ; that it ‘ was understood the scrip issuable on the Butler warrant had been suspended, but how long or for what cause he does not recollect; that Segar remained in Washington a,bout a week; and that while he was there, to wit, on the 16th of November 1832, they stated an account of their scrip transactions, the substance of which is stated in the deposition.
    One of the items in the account, is “Butler’s case, 2666% acres, before the commissioner, of which 1777 78-100 x‘acres belong to mr. Green, and the balance to mr. Segar, viz. 888 88-100 acres.” The scrip sold at a higher price than 1 dollar per acre embraced 3961 87-100 acres, of which it is stated that Stanberry was to have 777 66-100 acres at 1 dollar 10 cents per acre, amounting to 855 dollars 42 cents, and 3184 21-100 acres at 1 dollar 15 cents per acre, amounting to 3661 dollars 84 cents, making together 4517 dollars 26 cents. Of this, it is stated, 2000 dollars was paid by Stanberry to Segar the 16th of November 1833, and the balance due Segar, viz. 2517 dollars 26 cents, was payable after delivery of the scrip, on demand. The part of the scrip put at 1 dollar 15 cents per acre was so much as Segar informed Stanberry was beyond his own proportion of the cases; and Stanberry agreed to allow him for this part 1 dollar 15 cents, that being the then market price at Washington. Stanberry further deposed, that at the departure (pf Segar from Washington, the scrip- issuable on the Butler warrant was' before the commissioner of the general land office, for his certificate to the validity of the assignment. Shortly afterwards, it was handed to him (Stanberry) at the land office, which was the delivery contemplated in his contract with Segar. The balance of 2517 dollars 66 cents before mentioned was paid by him to Segar in February 1833. For the 1777 78-100 of the Butler scrip, Thomas Green drew upon him (Stanberry) on the 19th of November 1832, at 60 days, and his draft was retired on the 21st of January 1833.
    Vespasian Ellis deposed, that after Thomas Butler’s claim was allowed and before the scrip was received, he was employed to attend to the interests of persons who claimed to be the heirs of Butler; that he wrote to Segar on the subject, giving information of his being so employed; and he believed that a letter was written to the commissioner of the general land office, asking a suspension of the scrip.
    *Th$ allegations in the answer of the defendant Green, as to the fluctuating decisions of the executive of Virginia in relation to the quantity of land to which pilots were entitled, and the consequent hazard in purchasing such claims, were proved by several'witnesses.
    On the 18th of November 1834, the cause was heard. The circuit court .was of opinion that, upon the principles of equity applicable to contracts between the agent and his cestui que trust, the defendant Segar was to be considered as holding the fund, which he acknowledged he received as his portion of the sales of the scrip, as a trustee for the plaintiffs, and that he should be held responsible for the same: but as the defendant Green appeared, from the papers and proofs in the record, to be a purchaser without notice of the fraud implied by law as the consequence of the contract between the plaintiffs and the other defendant, the court was farther of opinion that no decree should be made against that defendant. Whereupon the court, valuing the 1778 78-100 acres, which belonged to the plaintiffs, at 1 dollar 15 cents according to the deposition of Stanberry, and fixing the 31st of December 1833 as the period when the defendant Segar, according to his answer, settled with Green, decreed that the plaintiffs recover of the said defendant Segar the. sum of 357 dollars 21 cents, with interest thereon from the 31st of December 1833 till payment, and the costs of this suit, and that the bill be dismissed as to the defendant Green, with costs.
    From this decree, an appeal was allowed on the petition of Segar.
    Johnson for the appellant.
    The judge of the court below appears to have been satisfied that the sale was fair in fact, yet he has adjudged it fraudulent in law. In this he has gone beyond the decisions in Virginia, which have modified the doctrines of the english courts. Thus in England it is laid down as a general principle *that persons acting in a confidential character are disqualified from purchasing. But the courts of Virginia have refused to act on this principle against executors whose conduct in all other respects has been fair. Anderson &c. v. Fox &c., 2 Hen. & Munf. 245; M’Key executor of Fuqua v. Young, 4 Hen. & Munf. 430. Chief justice Marshall has reviewed the authorities applicable to such a sale as this, in the case of Teakle v. Bailey, 2 Brock. R. 43, and has come to the conclusion that a contract between an agent and his employer is not void per se, but watched with considerable jealousy. It is desirable, he says, that the circumstances attending the transaction should be so clearly stated, as to leave no doubt that the principal entered into the agreement with full knowledge of them, or at least of such of them as were essential to the contract into which he had entered. But what information could Segar possess that his clients did not possess? None whatever that was essential to the contract. Although then the court shall look with jealousy upon the purchase made by Segar, yet when it finds that the purchase was fair, and for a price which at the time was adequate, it must refuse to set aside the sale.
    Robinson for the appellees.
    It is not necessary to examine the cases cited by the appellant’s counsel as to sales by executors, publicly and fairly made, at which they purchased. This is a private sale by Segar as agent for Edwards, to Segar as agent for Green; Segar having besides an interest not to act faithfully to Edwards: as to which the doctrine in 2 Tuck. Comm. 458-60, and the opinion of judge Carr in Carter &c. v. Harris, 4 Rand. 204, are applicable. Judge Carr cites with approbation the case Ex parte James, 8 Ves. 345, 348. The authorities are examined by chancellor Desaussure in Butler &c. v. Haskell, 4 Desauss. 702, and by -chancellor Kent in Davoue v. Fanning, 2 Johns. Ch. Rep. 255-271. To the authorities which they have cited may *be added Wood-house v. Meredith, 1 Jac. & Walk, 213, 218, 224. In the case of Teakle v. Bailey, 2 Brock. R. 43, cited on the other side, judge Marshall (p. 51) uses this strong language : “That an agent to sell cannot be himself the purchaser under the power to sell, is well settled. Such a purchase is absolutely void.” The doctrine of the chief justice, applied to this case, is this: that if there be a sale by Segar as agent of Edwards, and Segar himself purchases, or is interested in Green’s purchase, the purchase is absolutely void.. The only part of the opinion on which the appellant’s counsel can rely, is that applicable to a contract between the agent and his employer. Now here Segar had been employed by Edwards to sell, and he professes to have acted as Edwards’s agent when the sale was made to Green; it is not pretended in his answer that the relation of principal and agent had ceased. But if it had, still it must appear affirmatively that the agent had furnished his principal with all the knowledge acquired by the agent, and that the confidence reposed in him has in no respect been abused. It has been asked, what information could Segar possess that his clients did not possess? He possessed information as to the value of the subject. He had sold bis third of the scrip at 1 dollar 10 cents, and might have informed his clients of that fact. It is incumbent on him to prove that he did inform them; and there is no such proof. The inference is, that when he got them to sell their part for 75 cents, he had never told them that he had sold his for 1 dollar and 10 cents; and that the sale would never have been made, if that information had been given. It is then very clear that Segar has abused his trust; and upon the very principles laid down in the case which his counsel relies on, he can derive no benefit from his purchase. But even if Segar had taken no advantage of the confidence reposed in him, had done no injury to the party who trusted him, it is enough that *he had an opportunity of taking such advantage and doing such injury. The ground taken by lord Wynford (formerly chief justice Best) in Rothschild v. Brookman, 5 Bligh N. S. 190, is, that mr. Rothschild had an opportunity, from the nature of his employment and the manner in which he conducted himself, of taking advantage of the person with whom he was dealing, if he was disposed to take that advantage; and though lord Wynford was willing to say that he did not believe mr. Rothschild to be capable of doing that, yet, he said, the court must deal with him as it would with any other individual, and say that he ought not to have been concerned in such transactions, under such circumstances.
    
      
      Fiduciaries — Purchase of Trust Subject. — On this question, see trie principal case cited in foot-note to Bailey v. Robinsons, 1 Gratt. 4; foot-note to wellford v. Chancellor, 5 Gratt. 39; Newcomb v. Brooks, 1 W. Va. 59, 60; Feamster v. Feamster, 35 W. Va. 13, 13 S. E. Rep. 57.
    
   PER CURIAM,

Decree affirmed.