Court Opinion

ID: 7278806
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:03:33.054696+00
Date Added: 2024-06-11T16:18:58.402416
License: Public Domain

Mr. Justice Bonn
dissenting:
I find no fault with the abstract legal principles as stated in the majority opinion, but rather with their application - to the facts of this case, which has resulted in placing duplicity at a premium and good faith at a discount. While such a result always may not be avoided, even in a court of justice, I think it is easily avoidable here. That such was the view of the experienced trial judge and the twelve disinterested jurors who passed upon the evidence adds cogency to my position. The case is unique in that not an exception was reserved' to the introduction of evidence, and not a word of fault found with the charge of the court.
That Mr. McHarg was employed -to negotiate a bond issue *401for appellants is admitted. It also is admitted that appellants furnished him a signed statement containing “full data concerning the transaction.” In this signed statement it was represented that appellants owned 30,000 acres of hard wood timber land in North Carolina; that the assets of the Ililey Intmber Company consisted of this land; that Riley “owns the company himself, excepting the few shares necessary to be held by others for the purpose of creating his hoard of directors;” that his financial standing “would he rated at about $100,000.” The loan then desired was $650,000. Mr. McIIarg immediately commenced negotiations with New York hankers. He then went to Chicago, and, after spending some time with parties there who handled timber bonds, wrote Riley’s agent here, Mr. Rankin, under date of March 13, 1913, and in the letter said:
“The people here take the same view of the matter that 1 have expressed to you from the beginning, namely, that the property would not carry a $050,000 bond issue. * * *
“'My conclusion upon the whole matter was that they would handle the transaction if the bond issue did not exceed $500,000. In this connection, however, they will expect that your client in lien of the separate guaranty for the full amount Of the bond issue will give his personal guaranty on the issue. I understood you to say that lie was worth outside of this property from $100,000 to $150,000. It will be necessary in addition to furnish information in detail upon the following points.”
In substance tlio points were as follows: First, a statement as to the titles; second, the experience of Riley in timber and lumber business; third, details of two cruises represented to have been made; fourth, the cost of a spur railroad to the proposed mill site; fifth, the cost of the necessary logging road; sixth, Riley's experience in marketing lumber; seventh, information as to acreage and location of lands upon which Riley hud represented he held options. In short, these points merely covered statements Riley already had made. The letter concluded :
“I expect now to he in New York by the first of next week. I am planning to get there by Monday morning.
*402“I have written at this length so that you can- transmit the transaction in all its bearings to your client, and secure his consent to letting us work the matter out,on the above lines. If he cannot see his way clear to let us work the matter out on substantially the lines above set out, it will be necessary for .me to drop out of the transaction.”
Evidently Ranldn was expecting a letter from Mcllarg, for on the next day, or March 14th, he wired Mcllarg at Chicago: “Letter not received. Will wire answer same address soon as received unless otherwise instructed.” On the next, day Rankin, having received Mcllarg’s letter of the 13th and submitted it to his client Riley, telegraphed Mcllarg at Chicago as follows: “Riley accepts proposition your letter 13th with one or two immaterial modifications writing you fully New York.”
Upon receipt of this telegram Mr. McTTarg went to the, bonding house with which he had been negotiating, “and told them the proposal they had authorized him to make had been accepted, and showed them this telegram.” A representative of this banking house testified that Mcllarg came to him and presented the outlines of a timber bond issue, and stated the representations made by Riley, and that he informed Mcllarg he would negotiate a bond issue totaling half a million dollars “if it could be shown that the representations made by Riley were true * * * that be told Ormsby Mcllarg that at that time he was prepared, ready, and able to negotiate said $500,000 issue of bonds on the above conditions, and requested Mcllarg' to have the questions answered, and'gave him a form of contract to be signed by Thomas R. Riley and the Thomas R. Riley Lumber Company; that he never received any answer to these questions; that he held himself in readiness to negotiate said bond issue until be received a letter April 12, 1913, from Mcllarg, stating that the people who had employed him (MeLIarg) to negotiate this bond issue were not the owners of the land and timber in question, although written representations had been made to him that the titles were in fee simple and perfect.”
When Mr. McTIarg reached New York he received three *403letters from .Rankin, the first of which was dated March 11th and in which a willingness was expressed to accept a loan of $500,000 provided the lenders would agree to have the bonds secured by the timber and jjlant only. In the second letter, dated March 3 5th and written after receipt of Mellarg’s letter of the Idth, Mellarg’ was told that if he could secure a bond issue of $500,000 or $525,000 .Riley would pay him $5,000 cash and give him two notes, each for $10,000, payable in one and two years. The letter also contained the following: “The foregoing supersedes and takes the place of all previous verbal or written propositions concerning compensation to you; and is to constitute; your entire fee or commission in the matter so far as either the company, Mr. .Riley, or myself is concerned.’’ In the third letter, written the same day and apparently contemporaneously with the second, Rankin said: “Your letter of the 1 -3fli instant did not reach me until this morning, and after consulting with Mr. Riley I have sent you the following telegram.” Then followed the telegram accepting the proposition submitted in MeJlarg’s letter. Tlie letter then gave detailed answers to the questions asked in MelLarg’s letter, and then there were made known the “one or two immaterial modifications” mentioned in his telegram to Mellarg, which were that the bond bo secured by the standing timber and plant only, and that if a new cruise should show more than 200,000,000 feet a proportionately larger amount be loaned.
Mr. Mellarg, responding to these letters, acknowledged receipt of the answers to the questions previously submitted, and then said: “I also note what you have to say about the bonds being secured by the timber plant oidy, and not by the land. This cannot be done. * * * 1 consider your letter of the 11th instant has so materially modified your first representations to me, that I must hear from you in response to this letter before I can submit any of your data to the Chicago brokers.” Rankin, on the day after the receipt of this letter, wrote Mc-Uarg that lie had submitted it to Riley; that he “hoped to have the matter in much better shape within a few days.” On March 17th Mellarg received from the Chicago brokers a form of contract and a supplemental list of questions, both of *404which, he immediately forwarded to Rankin, who under date of March 19th replied that within two or three days he would prepare and send to Mcllarg “a full statement in response to the list of questions.” Let it be noted here that, notwithstanding the attitude of the majority of the court with reference to the questions submitted by the brokers, neither Riley nor his agent Rankin ever expressed the slightest objection to them. On March 29th Rankin again wrote Mcllarg that “some domestic complications” had arisen between the parties which he thus far had been unable to straighten out, but that he hoped they would “come around in satisfactory shape, in a very few days;” and if they did he thought there would be “no trouble whatever in completing it (the transaction) with your people.” It soon developed that the Riley Lumber Company, which had been represented as the owner of the 30,000 acres of land, did not own a foot of it, and that the whole scheme was to borrow the money and buy the land, rather than to cut and market the timber on land already owned. Naturally the transaction ended there.
Of course Mcllarg had a right to rely upon the representations which had been made to him hy Riley and his agent Rankin. lie went to Chicago, and made known those representations to the bonding house, and was told that if they could be substantiated a bond issue of $500,000 would be negotiated. Thereupon Mcllarg submitted the proposition in detail to his client, and received in reply a telegram accepting it “with .one or two immaterial modifications.” Surely Mcllarg had a right to take his client at his word, and to assume that the “immaterial” modifications related to matters of detail only, and not to substance. lie went back to the bonding house with the telegram, and a representative of that bonding house under oath says that he was “prepared, ready, and able to negotiate said $500,000 issue of bonds” on the conditions mentioned in Mcllarg's letter to his client. Had this telegram read, “Riley accepts proposition your letter 13th writing you fully New York,” could it be doubted for a moment that Mcllarg would have been entitled to his commission when the bonding house received notice of it? Questions had been submitted *405with Mc.IIarg’s letter, and Mcllarg had a right to understand that answers to those questions would be found in the letter which was to be forwarded to New York. The purpose of the telegram very evidently was to enable Mcllarg to close the deal before; leaving (’hicago, and this lie did so far as he was concerned. Surely it may not be said that a failure thereafter on Riley’s part to make good the representations upon which he had authorized Mcllarg to act released him from responsibility to Mcllarg. This is an issue between Mcllarg and Riley, not between. Riley and the bonding house, a point the majority opinion entirely overlooks and disregards. In Dotson v. Milliken, 209 U. S. 237, 52 L. ed. 768, 28 Sup. Ct. Rep. 489, the syllabus reads in part as follows: “A broker employed to sell land subject to a requirement of the purchaser which the vendor declares will be complied with is entitled to his commissions if the sale falls through solely because the vendor’s representations are inaccurate.” In the opinion the court says: “It is urged, faint heartodlv, that a binding agreement was necessary before a commission was earned. This is not the prevailing view, and could not be the law in a case like this, where the jury must have found the defendant liable on a contract with the broker that might be performed before an absolute agreement with the purchaser should be reached.” In the preseut caste the most material representations made to Mr. Mcllarg were false, and known to be false by Mr. Riley when he made them. Mr. Mcllarg, on the contrary, acted throughout in good faith. The reason, and the sole reason, for the failure of the enterprise, was the bad faith of Riley, and yet he has been permitted to escape the consequences. The exceptionally clear, fair, and comprehensive charge of the learned trial justice, to which, as I have said, no exception was taken, renders it unnecessary for me further to extend tins discussion.
I dissent from the opinion and judgment of the court.
A motion for rehearing was denied March 30, 1918.
Mr. Justice Siudons, of the Supreme Court of the District of Columbia, sat with the Court in the hearing and determination of this appeal, in, the place of Mr. Justice Van Oiisdet..