Court Opinion

ID: 8764327
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:19:10.626189+00
Date Added: 2024-06-11T17:01:46.258352
License: Public Domain

SANBORN, Circuit Judge
(dissenting). All agree that the contract was that the lands should be put into a joint account of Corbin and Bowman, and that they should remain there for 10 years. The question is, what were the rights and remedies of the parties at the expiration of this 10 years? The court below found that at the end of the 10 years this joint account had to its credit 6,445 acres of land worth $32,225, and notes and mortgages worth $11,600.55, and that it was indebted to Corbin in the sum of only $16,079.26, so that by the sale of the lands and notes it could be wound up, Corbin could get his money out and profits to the amount of $27,746.25 could be realized, and. it held that the agreement of the parties was that in this state of the facts Bowman was entitled to have these profits divided. After a studious consideration of the record and of the opinion of my associates to the contrary, I am unable to agree with them, and I concur with the court below in its construction of this agreement. The question is, did these parties agree that if the joint account operated at the end of 5 years, and if at the end of 10 years it could be wound up so that Corbin could get his money out, Bowman should have half the profits ? My views upon this question are these:
The question is, what was the contract? and there is no question whether or not time was its essence. If the contract was that if at the expiration of the 10 years Corbin had not got his money out Bowman should have nothing but 5 per cent, on his sales, he is entitled to that only. But if it was that, if at the expiration of the 10 years the joint account and the contract which created it could not be wound up so that Corbin could get his money out, he should have the 5 per cent., but that if it could be so wound up he should have half the profits,, then he is entitled to half the profits, because it could have been thus wound up.
What might have been the rights of the parties if the joint account had not operated within the first five years, or if Bowman had not faithfully performed his part of the agreement, is irrelevant to the consideration or decision of this issue, because the joint account did operate within the five years, and Bowman did perform his part of the .contract, and the true answer to it is in these words of the letter of May 12, 1877, which contain the proposition of Corbin that Bowman accepted :
“I will figure up exactly the cost as allowed the doctor, put them in to you on joint account to run 10 years at 10% annual.interest; I to have my money out first, and when it comes out you to have half the profits. I want this limited to 10 years, because I don’t want it running indefinitely in case it don’t work. ⅜ * * But the contract shall run for ten years. Then if at the expiration of ten years it cannot be wound up, and I get my money out, I will agree that you will have 5% allowed on all sales that have bean made, so that you will, in any event, not be doing this absolutely for nothing.”
Bowman by his answer to this letter of May 21, 1877, did not intend to change, and did npt reject or modify, any part of the provision of this proposition relative to the continuance and the winding up of the joint account. When he wrote in that letter the words, “I am to sell the lands and turn over all the proceeds to him until all his money invested with 10 fo interest is paid, etc., that at the end of the 10 years. *603if he shall not have received all his money and interest out of the sales, the joint account shall be wound up and I shall have 5°/o for all the lands I have sold, etc., etc., as will more fully appear by reference to the copy of the letter on your books,” he was simply identifying the proposition he was accepting as the one contained in the letter of May 18, 1877, as it was copied on the books of Corbin, and he was neither attempting to accurately state the proposition, as clearly appears by his repeated use of “etc.,” and his reference to Corbin’s books, nor to in an}'' way reject or modify it. That he was not attempting to change and did not change it, but that he accepted it as it was written in Cor-bin’s letter to which he referred, is demonstrated by these words in a later part of his letter:
“You may settle it down that I will accept'that, proposition fully and will do my lore! host to sell the land and look after the taxes and do everything' such a proposition implies whether expressed in it or not.”
The gist of the proposition and of the contract was that the lands should be put into a joint account of Corbin and Bowman, that Bowman should sell these lands, that out of this joint account Corbin should be first paid his advances and interest, and that the profits should be divided between them. All the other provisions of the contract, the 10 years during which the account and the sales should continue, its winding up, the payment of the 5 per cent, if upon its winding up it failed to pay out, were subordinate, modal, and incidental to this main purpose and substance of the contract.
When Corbin’s proposition was accepted, the lands were placed in the joint account of Bowman and himself. From the moment of the acceptance of this proposition by Bowman, Corbin held these lands in trust for the joint account of himself and Bowman, to permit the latter to sell them for 10 years, to reimburse himself from the joint account for his advances, and to divide the profits of the sales and of the property in the joint account equally between himself and Bowman. When the 10 years expired he held them subject to this trust in this joint account under this contract. In the absence of an agreement relative to the rights and remedies of the parties at the expiration of this 10 years, there could be no doubt that any court of equity on the application of cither of the cestuis que trust, Corbin or Bowman, would have decreed a winding up of the joint account, a sale of the trust property therein, the payment of Corbin’s advances out of its proceeds, and the equal division of the remainder between them. The lands, notes, and mortgages in this joint account were charged with a trust to pay these advances and one half the remainder to Corbin, and by the same trust and to the same extent to pay the other half of the remainder to Bowman. Seymour v. Freer, 75 U. S. 202, 203, 206, 207, 213, 214, 215, 19 L. Ed. 306; Shaeffer v. Blair, 149 U. S. 248, 256, 257, 258, 13 Sup. Ct. 856, 37 L. Ed. 721. In Seymour v. Freer, the agreement was that Price should buy the lands, that Seymour should pay for them and take the title in his name, that the lands should lie sold within five years, and that Price should have one-half the profits. Price bought the lands, Seymour paid for them and took the title in his name, none of them were sold within the five years, and if they had *604been sold at the expiration of the five years there would have been no profit. Nevertheless, the court held that Price was entitled to the enforcement of the trust and to his share of the profits. It said:
“We tliink Seymour took the legal title in trust for the purposes specified. A trust is where there are rights, titles, and interests in property distinct from the' legal ownership. In such cases, the legal title, in the eye of the law, carries with it, to the holder, absolute dominion; but behind it lie beneficial rights and interests in the same property belonging to another. These rights, to the extent to which they exist, are a charge upon the property, and constitute an equity which a court of equity will protect and enforce whenever its aid for that purpose is properly invoked. Interests in real estate, purely contingent, may be made the subjects of contract and equitable cognizance, as between the proper parties. The object of the trust here -was to sell the property within the time limited, and, after deducting from the proceeds the outlay, with interest and taxes, to pay over to Price one-half of the residue. To this extent, Seymour was a trustee, and Price the cestui que trust. They had a joint interest in the property. Seymour held the legal title, but the rights of Price were as valid in equity as those of Seymour were at law.
“If Seymour, -within the five years, had conveyed the property to one of his children, by way of advancement, or to a stranger, otherwise than upon a bona fide sale for its fair value, the grantee would have taken the title subject to the trust upon which Seymour held it, and a court of equity would have followed the property -and dealt with it in all respects as if the title had still remained in Seymour. If a valid sale had been made, the trust would have followed and bound the proceeds in like manner as it bound the property.”
So here at the expiration of the 10 years the lands and notes were charged with a trust to pay Bowman for the services he had rendered one-half of the profits, and were subject to his right to enforce the execution of this trust in equity by a sale-of the property and the application of the proceeds according to its terms, unless there was some clear and unequivocal agreement that this trust was discharged and that this right to enforce it in equity and to receive the benefit of it was forfeited. There was no such agreement.
There was a provision that the joint account and the contract should run and be limited to 10 jrears, that Corbin should have his money out first) and that Bowman should have half the profits. But there was no stipulation in this agreement that, if at the expiration of the 10 years Corbin’s money had not been paid out, Bowman should not receive or should forfeit his half of the profits or his equitable right to the customary ,sale of the trust property in chancery to pay the claim with which it was charged and to distribute the remainder among those who were equitably entitled thereto. On the other hand, the agreement was made in recognition of this right and on the assumption that it would be enforced. It reads:
“Tben, if at tbe expiration of ten years it cannot.be wound up, and I get my money out. I will agree that you will have 5% allowed on all sales that have been made¡ so that you will, in any event, not be doing this absolutely for nothing.”
The contract was that Bowman should have the right, and should discharge the duty, to sell these lands for 10 3^ears, and should have for his compensation one-half the profits; that to accomplish this result Corbin should put these lands into a joint account of Corbin and Bowman, and should thereby hold them and their proceeds in trust to repay his advances and interest and to divide the profits *605equally between himself and Bowman; and that, if at the expiration of the 10 years this joint account and trust could not be wound up so that Corbin could get his money out, he would pay Bowman 5 per cent, on the sales he made so that he would “not be doing this absolutely for nothing.” At the expiration of the 10 years the joint account, the trust property, and the contract which created it could be wound up in the customary method pursued by courts of equity to wind up trusts, joint accounts, and contracts of this, nature by a sale of the property involved, Corbin could get his money out, and profits to the amount of $27,7-16.25. Why was not Bowman entitled to one-half of these profits? The parties contemplated and agreed that at the expiration of the 10 years the joint account and the trust property therein should first be wound up and closed out; that, if its proceeds paid Corbin’s money back and left a profit, Bowman should have one-half of it. If they failed to pay Corbin’s advances so that no profits accrued, and so that Bowman could get nothing from the joint account, then, and in no other event, in order that Bowman might not do his work for nothing whatever, Corbin would pay him the 5 per cent, on the sales. As at the expiration of the 10 years the joint account and the trust property therein could be wound up, and Corbin could get his money out and a large profit thereby, Bownnan was entitled to one-half of this profit, and he was not entitled to 5 per cent, upon his sales.
One of the prayers of the hill is that the complainant may have “such other and further relief as may he just.” The rights and equities of Bowman and his successor in interest, the complainant, were created and fixed by the contract of May, 1877, and in my opinion they have neither been forfeited nor destroyed by any of the misstatements relative to their existence or extent found in the negotiations for a settlement in 1886, or in the pleadings of the complainant made at the time when the counsel who drew them was evidently erroneously informed and hence alleged that Corbin’s money and interest had been paid back to him before the expiration of the 10 years. In that supposed state of the facts the rights of the parties, in case it had not been so paid back, were immaterial, and an erroneous statement regarding them could not have worked an estoppel in any event, because Corbin knew the contract as well as Holmes. Courts of equity do not forfeit just claims for thousands of dollars on account of exaggerated or mistaken statements of the rights or equities of litigants in their negotiations or pleadings, where they have not misled their opponents to their injury. Nor are these various statements persuasive to my mind of the meaning or effect of this contract, because, for the reasons which have been stated, the plain words of the agreement, in the light of the established rules and practice in equity, are in my judgment unambiguous, clear, and conclusive upon that question.
In the discussion of the vital question in this case the amounts found by the'court below have been used because it was immaterial to the argument whether Corbin should be allowed 7 per cent, or 10 per cent, upon the disbursements mentioned in the opinion of the majority. 1 egree with them that he should be allowed 10 per cent., and with this modification the decree ought, in my opinion, to be affirmed.