Case Name: Sangston, Cor. Sec., &c., v. Gordon & Riely
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1872-10
Citations: 22 Gratt. 755
Docket Number: 
Parties: *Sangston, Cor. Sec., &c., v. Gordon & Riely.
Judges: 
Reporter: Virginia Reports
Volume: 63
Pages: 271–275

Head Matter:
*Sangston, Cor. Sec., &c., v. Gordon & Riely.
October Term, 1872.
Winchester.
1. Voluntary Associations—De Facto Officer.—Bonds are given to S. secretary &c., of, a voluntary association, and a deed of trust executed to secure them. And S is directed by the association to proceed to collect all the debts belonging to them. Though by the by-laws the secretary was to be elected annually, yet as S continued to act as such, and was so recognized by the association, it was competent for him to direct the enforcement of the deed of trust.
2. Same—Same—Presumption.—It is not competent for the grantors in the deed of trust to question the authority of S to take the deed as a security forthe bond; that will be presumed until his principals disavow his act. ‘
3. Bonds and Deeds of Trust—Parol Evidence. —Parol evidence is not admissible to prove that the bonds and deed of trust were not to be paid andr executed according to their terms, but were only to be paid out of the profits of the property for the price of which they were given.
This is a bill in the Circuit court of Frederick county, filed in April 1869, by George M. Gordon and J. Chap. Riely, against Lawrence Sangston, secretary of the Baltimore Agricultural Aid Society, and James H. Williams and John J. Williams, trustees, to enjoin the sale of a steam saw mill conveyed by them, with other property, intrust to secure the payment of two bonds given by the plaintiffs to Sangston, secretary, &c., for the price of said mill. The bill, after stating that the plaintiffs had received the mill from the said society, and that the object of the society, as set out by them, was to aid the people of the South in their destitute condition, by furnishing them with machines and implements for the cultivation of their lands, says that before entering into any engagement with the society, they had endeavored to inform themselves as to the terms upon which the '^society was furnishing the machines and implements to the people of the South ; and they were furnished for that purpose with a copy of the preamble and by-laws of the society; which they exhibit. That though said society was benevolent in its intention, they expected to be amply repaid for what they furnished by the increased supplies which would be raised in the country and sent to the Baltimore market ; for the preamble expressly confines the distribution of the benefits to that “portion of the South which has heretofore been commercially connected with this city.” Plaintiffs received the mill, and on the 15th of October 1865; executed their notes for the purchase money. They aver that in the execution of these notes, as well as in the execution of the deed of trust, they were induced by the representations made to them, not only by the society’s agent at the time, but also by the express and explicit language of the preamble and by-laws of the society, that “the obligation of the purchasers are to be taken, to be repaid out of the proceeds of the first crop, or as soon thereafter as possible.” Which provision was, in substance, stated to them by the agent of the society as forming the terms of their contract at the time of the execution, of the notes’, and but for this statement of the agent and language of the preamble, the plaintiffs aver they would not have embarked in the undertaking
The bill further states that one of the persons connected with them withdrew, and as they had given no security on the notes, it was suggested by the agent of the society, and assented to by them, that the deed of trust should be given, which was accordingly done ; plaintiffs thinking it but fair the society should have a right to the mill against their other creditors. They aver that they have made no profits by the mill, though they have given to it their constant care; and they state the difficulties they have had to contend with. They insist that Sangston, under article 7 of the by-laws of *the society, had no power, of his own motion, to direct the enforcement of their claim against the plaintiffs without the order of the executive and finance committee ; which order they believe has never been given ; and they call for proof of it. They charge that the beneficiaries of this trust are individuals scattered all over the State of Maryland, who contributed sums of various amounts to purchase the articles distributed by the society, with no intention of ever claiming the repayment of the amounts advanced. And they insist that having been unable, out’ of the receipts of the mill,, to make any payments upon it, and it having been impossible otherwise for them to pay for the same, in whole or in part, up to this time, the society has no right, according to the published exposition of its views and objects, to enforce the collection by sale under the trust, or by suit at law upon the notes of the amounts so secured. They say they are willing, and have proposed to the society, to return the mill to them, together with the appurtenances which the plaintiffs have supplied at a cost of from three to four hundred dollars, if the society would return their notes and have their real estate released; but the proposition has not been accepted. They pray that the sale of the mill may be erijoined, and for general relief.
Sangston answered the bill. He says, he was, upon the organization of the Baltimore Agricultural Aid Society, elected the corresponding secretary, and has ever since continued to act as such; and was, during its active operations, the active,managing agent, and is entirely familiar with the organization and purposes of the society. That it never was the object of the society to dispense charities or bounties ; but to render aid to needy, honestpersons, engaged in agriculture ; 'expecting that the obligations taken by the society would be paid as soon as the persons so aided would be able; which it was contemplated would be out of the first *crop. The society was careful not to place the persons aided in the attitude of paupers receiving charity, but to furnish at cost such articles as were required, and take a bond for paynent out of the next crop, or as soon as possible. And the subscribers to the fund were assured that there would be paid back at least eighty per cent, of their subscriptions.
He further says, that upon the organization of the society it was not contemplated to furnish large sums of money or costly implements or machinery, or anything not directly needed and used in agricultural pursuits, and did not even embrace threshing machines, as no one farmer had need or exclusive use for one for his own crop. That furnishing steam saw mills was not within the scope of the purposes and objects of the society at the time of its organization, or adoption of the preamble and by-laws. That upon the first application of the plaintiffs for mills, the society refused to furnish any, because they were too expensive, and not within its plans and purposes; and that after-wards, upon the personal importunities of one or both of the complainants, the executive board of said society decided to furnish two steam mills for the valley ; one for the lower, the other for the upper valley ; but then and there determined, that inasmuch as these machines were only indirectly connected with agricultural pursuits, and were sought by complainants and others for purposes of speculation and gain, and were to be operated for purposes of making money, good security should be required for the payment of the purchase money of the same. That no other obligation, either for loans or purchases, except for threshing machines and the two mills aforesaid, were required to be secured. And he denies that plaintiffs ever understood from him, or any one else, so far as he can learn, that they were to have said mill to be paid for out of the profits of the operation. He says that no one acting for said society, so far as he can learn and believes, *ever had any authority to enter into or make any such agreement or arrangement; and he believes none such was ever made. That neither the terms of the deed of trust, made some months after complainants were operating the mill, nor the obligations given by them, contain any such provision. That whatever may have been the previous understanding or misunderstanding of the parties, the whole matter was merged in the written contract; and he denies that the only object was to protect the society against creditors, and avers that the security was given only to provide for the debt contracted in the purchase of the mill, and to effect this, other property was embraced in the deed of trust.
He further says, he has full authority to enforce the payment of this claim, and any and all other claims due the society ; that as early as July 5th, 1866, the bonds of the said society were placed in the hands of respondent for ’collection, by direction of the executive committee of said society. That in pursuance of said authority he has placed the bonds of said society in the hands of agents and attorneys, and has been distributing the proceeds so collected among the subscribers.
The preamble to the by-laws of the society says: “Thissociety has been organized for the purpose of supplying such persons in the South, in that portion of it which has heretofore been commercially connected with this city, and within easy reach of it, who, from the ravages of war, have been deprived of the necessary agricultural and farming implements, tools, seed'And stock,.to enable them to cultivate their land, and are without the means of purchasing them. It proposes to supply such as may be.in that condition, and on enquiry may be deemed worthy of assistance, with such necessary articles, at or near the cost thereof, taking the obligations of the parties, to be repaid out of the proceeds of the first crop, or as soon thereafter as possible.”
*The by-laws provide for the annual election of officers and directors of the society; that the directors should, at their first meeting, appoint an executive and finance committee, which should exercise a general control and supervision over the fund of the society; and the corresponding secretary, among other things, should receive the notes and obligations for the goods sold, and hold them subject to the orders of the executive and finance committee, and report his action at each monthly meeting of the directors.
It appears from the evidence that the primary object Of the society was to furnish articles which would enable the farmers to cultivate their land, such as farming implements, seeds and horses. When the application to them to furnish a steam saw mill was made, the society seemed disinclined to do it; but on being pressed to do it, they determined to furnish two, one for the lower and the other for the upper part of the valley. But the money, about $59,000, which had been subscribed for the uses of the society, being nearly exhausted, some four or five of the persons who had interested themselves in the matter, borrowed from the bank in Baltimore, on their own notes, some $17,000 to enable the society to furnish the mills and other implements, with the understanding that this sum was to be a prior claim on the assets of the society; and it was by means of this fund that the mill in question was purchased and paid for.
There being a number of applicants for the mill intended for the lower valley, these applications were referred to the agent of the society at Winchester and two other gentlemen, to determine which of these applicants should have it. Among these applicants were Gordon, Price & Riely ; and whilst the applications were pending before this committee, Gordon, Price & Riely handed to the committee the names of four men who would become their securities for the price of the *mill; and the committee awarded the mill to them. After this had been done, Price withdrew from the concern, and the persons whose names had been given declined to become their securities. And then Gordon & Riely proposed in writing to J. H. Burgess, the agent of the society at Winchester, to secure the money which was the price of the mill by giving a deed of trust upon the mill, and upon the undivided interest of each of them in the estate of their father-in-law, James P. Riely, deceased. This proposition was accepted, and the deed hereinbefore referred to was executed by them. This deed bears date the 27th of January 1866, and reciting that Riely and Gordon are indebted to Sangston, secretary of the Baltimore Agricultural Aid Society, in the sum of $2,000, payable the 17th of October 1866, with interest from 17th October 1865, and in the further sum of $1,993.62, payable on the 17th of October 1867, with interest, &c., being the price of a steam saw mill and fixtures, they convey to Philip Williams the said saw mill and fixtures and their undivided interest in the estate of James P. Riely, deceased, real and personal, being two-tenths thereof; and the deed sets out the real estate, which embraces a house and lot in Winchester, a tract of land in Frederick county, and numerous tracts in Iowa, Illinois and Missouri ; upon trust that if the notes were not paid as they became due, the trustee should, upon request, proceed to sell at auction first the mill and fixtures ; and if that was not sufficient to pay the notes, then to sell the two undivided tenth parts of the land in Frederick county; and then, if necessary, the lands in Iowa, &c., or with the consent of Gordon & Riely, he might sell these western lands at private sale; and lastly, the interest in the house and lot in Winchester. And out of the proceeds of sales pay, &c. And in conclusion, it was agreed that if the heirs of James P. Riely shall choose to make sale of the western lands privately, the trustee may unite in the *sale, and the proceeds of the said two-tenths to be applied to the payment of the debts secured by the deed.
There is a great deal of testimony in the record which it is impossible to state; the plaintiffs and others who were examined say that they were induced by publications they saw in the papers and the preamble of the society to believe that the articles furnished were only expected to be paid for out of the profits made in the use of them, and indeed, that it was a charitable society veiled under the form of sales, but the payments were to be optional.
On the other hand, the testimony of Sangston and other members of the society was, that whilst their purpose was to render a service to the persons to whom they sold articles, they expected to be paid generally, and the estimate when the subscriptions were made was that they would get back probably eighty dollars in the hundred. And they were decided in their testimony that the mills were not embraced in their original object, and that they were sold with the understanding that the purchasers should give security for the purchase money.
It appears also that Sangston, the secretary, was authorized by the directors to collect the debts due.
The cause came on to be heard on the 2d of July 1869, when the court perpetuated the injunction. And thereupon Sangston applied to this court for an appeal; which was allowed.
Williams & Williams, for the appellants.
R. Y. Conrad & Son, for the appellees.
See principal case cited in Peyton v. Stuart, 88 Va. 76, 16 S. E. Rep. 160.

Opinion:
STAPDFS, J.
This is an appeal from a decree of the Circuit court of Frederick county in a suit wherein the appellees were complainants and the appellant, Sangston, was defendant. The history of the transactions in which this controversy originated, very briefly stated, is as follows:
*In the month of October 1865, the appellees purchased from the Baltimore Agricultural Aid Society -a steam saw-mill, with its fixtures and appurtenances, at the price, in round numbers, of four thousand dollars, for which they executed their bonds payable to L. Sangston, "Secretary of the Baltimore Agricultural Aid Society." To secure the payment of these bonds, the appellees, in January 1866, conveyed in trust the said saw-mill, with all its fixtures and appurtenances, and also certain real-and personal estate. Default being made in the payment of the debt, the trustee was instructed by Sangston to make sale of the mill. The appellees applied for and obtained an injunction to this sale, which was after-wards perpetuated by a decree of the said Circuit court. It is from this decree an appeal was taken to this court.
Various grounds have been urged by the appellee against the deed of trust and the proposed sale under it, which will be briefly considered.
It is objected, first, that as Sangston was elected corresponding secretary for one year only, and as his term of office had expired when the sale was directed, he was not then authorized to enforce the collection of this debt. Sangston, both in his answer and in his deposition, states that he was elected secretary at the organization of the society; and that he has ever since held the office without interruption. There is nothing in the record contradicting or tending tp contradict this statement; and we must therefore regard it as true. By a resolution of the board of directors of the 1st July 1866, he, Sangston, was authorized to collect the debts due the society. Under that resolution he took possession of its bonds and notes, and has been ever since engaged'in collecting the same, without objection from the society or any of its members. As before stated, the bonds are payable to "L. Sangston, secretary of Baltimore Agricultural Aid Society" ; the deed recites that the appellees are indebted to him the amount of these *bonds, and that the property is conveyed to secure their payment to him. This form of security was no doubt adopted to enable him to sue for and collect the debts due the society, without the expense and inconvenience of his bringing before the courts the numerous parties interested in the proceeds of sale. It is clear that the legal interest in these bonds is vested in Sangston alone. Upon well settled principles the descriptive words used in the instruments may be rejected, and suits at law or in equity may be maintained thereon in his name, without the addition of other parties. Porter v. Nekervis, 4 Rand. 359; Clarksons v. Doddridge & al., 14 Gratt. 42; Sangston v. Coffman, 21 Gratt. 263.
It is next objected that Sangston, in taking the deed of trust, acted without instructions or authority from the society. The doctrine of ultra vires relied on in support of this proposition, has no application to the case. That doctrine only applies when the principal is sought to be charged with the unauthorized act of an agent, and not where a debtor has given a security to the agent for the benefit of the principal. The appellees had the right to secure the payment of the debt they had contracted. The society, though not expressly authorizing the act in the first instance, might at any time ratify it, and claim the benefit of the security thus given. It will be presumed to have done so until some distinct disavowal is made to appear. Nothing of the kind is shown in this case. And it could never be endured that in a controversy between appellees and the agent alone, the principal should be deprived of this only security for his debt, without evidence of his dissent, and without even an opportunity of being heard.
Having disposed of these preliminary objections, I come now to consider very briefly, the main question in the case. It is insisted, that a sale of the property conveyed in trust, would be a fraud upon the appellees ; *that they purchased the steam saw mill with the express understanding that it was only to be paid for out of the profits, if any, realized from the mill itself ; that the deed was given at the suggestion of Sangston, because of the persons associated with the appellees—a man of large experience and influence in the county—had withdrawn.from the adventure; and the real and indeed sole object of the deed was to furnish the secretary, Sangston, some security against the claims of other creditors and purchasers. This is substantially the ground upon which it is sought to arrest the sale by the trustee. If successful, the effect will be to vacate the bonds and deed for all practical purposes. The bonds on their face are payable absolutely. It is proposed to show, by parol evidence, they were only to be paid out of the profits of the mill, if any were realized. The deed provides, that if the bonds are not paid at maturity, the property therein conveyed shall be sold. It is proposed to show, by parol, that the property' was not to be sold under any circumstances. And thus it is to be made to appear, that an instrument of writing which on its face was intended as a valid security is, in fact, no security at all'. No argument is necessary to show that this is an attempt to contradict or vary the express terms of a written agreement by proof of a prior or cotemporaneous parol agreement. The admission of such evidence as a foundation of relief in any court, violates the best established principles of the common law. When parties have deliberately put their engagements into writing, in such terms as import a legal obligation, it is conclusively presumed that their whole engagement, the extent and manner of their undertaking, are embodied in the instrument. The cases of Towner v. Lucas, 13 Gratt. 705; Woodward, Baldwin & Co. v. Foster, 18 Gratt. 200; affirm these principles, and are decisive against the pretensions of the appellees.
This is the aspect of the case when considered with '^reference to the conclusive effect of the written contracts. If, however, we go farther, and give due weight to all the evidence adduced by the appellees, I do pot perceive the result would be different. It will be observed, that the appellees do not pretend there was any special contract or understanding between them and the society, or its agents, by which the steam saw mill was not to be paid for, unless out of the profits realized. They aver that such was their understanding, derived from various newspaper publications and the pamphlets of the society, one of which is filed with the bill. What these newspaper publications were, does not appear; as they are no part of the record. The pamphlets filed with the bill show that the main purpose of the society was the distribution of agricultural and farming implements, tools, seed and stock ; to be paid for out of the first crops, or as soon thereafter as possible.
It is clear, that the general scope and design of the society did not extend to the sale or donation of steam saw mills and articles of like character. This could not have been done without seriously diminishing the resources of the society and impairing its capacity for good. In this case, the mill, with its fixtures, was purchased by certain members of the society, at a cost of near four thousand dollars, and paid for with means borrowed from bank upon their individual credit and responsibility. It can be well understood, therefore, how it was, and why it was, the committee to award the mills was instructed to make known to all applicants, that in no case would the mill be awarded except to parties givinggood and satisfactory security. The appellees understood these terms, and attempted to comply with them by a proposition in writing, to give a bond with satisfactory securities. Upon the faith of this undertaking, the mill was awarded to them; and actually placed in their possession. Some of the parties, however, offered as sureties or endorsers, declined to *assume the liability ; and this part of the arrangement was defeated. Appellees then proposed in writing, to execute the trust deed, and that proposition was accepted, in lieu of the personal security.
This latter arrangement was a matter of favor to them, as they had not complied with the terms of the sale, and were liable at any time to surrender the possession of the mill. The deed was accordingly executed. It conveys the mill, with all its fixtures and appurtenances, a house and lot in Winchester, and more than a dozen tracts of land, containing not less than three thousand acres, situated in a half dozen different States. It directs with great minuteness, the order in which the property shall be sold, if default is made in the payment of the debts. And at the conclusion, this -provision is added, "It is agreed that if the heirs of the said James P. Riely shall choose to make sale of the western lands privately, that they may do so ; and the trustee shall unite in the sale; and the proceeds of the said two-tenths to be applied to pay the debts hereby secured.
Now, it is inconceivable that such a deed, with such provisions, drawn with so much precision and accuracy; evincing the greatest care and foresight in regard to the property conveyed and the proceeds of sale, should have been deliberately executed and placed on record, with an understanding that it should never be enforced, or if enforced at all, only on certain contingences wholly omitted in the deed. The evidence does not warrant any such conclusion ; on the contrary, I think it plainly shows that the bonds and the deed contain the true contract of the parties; and there is not in this case the slightest foundation for the charge of fraud against the appellant or the society he represents.
For these reasons, I think the decree of the Circuit court should be reversed, the injunction dissolved and the bill dismissed.
The other judges concurred in the opinion of Staples, J.
*The decree was as follows:
The court is of opinion, for reasons stated in writing and filed with the record, that the said decree is erroneous. Therefore, it is ordered and decreed that the same be reversed and annulled, and that the appellees George M. Gordon and J. C. Riely, do pay unto the appellant his costs by him expended in the prosecution of his appeal aforesaid here.
And this court proceeding to pronounce such decree as the said Circuit court ought to have rendered, it is further decreed and ordered that the-injunction awarded the plaintiffs, J. Chap. Riely and George M. Gordon, on the 30th day of April 1869, "restraining John J. and James H. Williams, trustees, from selling the steam saw mill in the proceedings mentioned until the further order of the court," be dissolved, the bill of the plaintiffs dismissed, and that' they do pay unto the defendants their costs by them about their defence in the said Circuit court expended. Which is ordered to be certified to the said Circuit court of Frederick county.
Decree reversed.