Court Opinion

ID: 8847654
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:02:39.724095+00
Date Added: 2024-06-11T17:05:23.638884
License: Public Domain

WOODS, Circuit Judge,
(dissenting.) The question in tbe case is of the validity and effect of the deed of December 11, 1866. I think it invalid, both for lack of consideration, and for want of authority in Ewing’s executors to make it. That the deed was made without consideration is clearly enough proven, and is put beyond question by the bill and answer. In considering the evidence, it is not necessary fo go beyond the statement ma,de by the chief justice1, which is full and fair.
The position of the appellants as defendants should not be confused with their position as cross complainants. As defendants, they are not chargeable with laches, and their claims, if not barred by statutory limitation, — of which there is no pretense, — should not be regarded with less favor on account of lapse of time, death of witnesses, destruction of papers, or other supposed ’oss or lack of evidence, for which they are not responsible. The appellee was not, an innocent purchaser, nor the grantee of one. Its immediate grantors, who bought out the Sweetsers, made the purchase for the appellee, and, recognizing the defective character of the title obtained, sought to perfect it by means of a quitclaim from the appellants. They refused to convey, and if, from the time of that refusal, there was negligence in bringing a suit to determine the ownership, it is attributable to tbe appellee, rather than to the appellants, who — -some of them being under legal disability — lived wide apart, and far from the land which 'is the subject of dispute. There is no apparent reason why the appellee should not have brought an early suit to establish its title, and its delay to do. so until after Miner and Lytle, whose importance as witnesses was as plain then as now, had died, demonstrates either its own negligence, or a prudent purpose on its part to profit by postponing the issue. It is not probable, however, as we shall see, that, if living, Miner and Lytle could have put in a different light any essential point which the pleadings have left open to controversy. Neither is it probable that the books and papers of Ewing, which Holladay and Miner destroyed as “being of no value” would have been of value to either party, and especially to the appellee. That the litigation was likely to come, and would turn upon the deed of December 11th, Holladay and Miner well understood ; and as one of them was interested to overthrow, and the other bound in honor to uphold, the deed, it is not to be presumed *794that they joined, either purposely or carelessly, in the destruction of important evidence. It is in proof that the memorandum book to which reference has been made was prepared by Lytle for the purpose of showing Ewing’s advances and expenditures in the joint transactions in land, and that the amount, as footed, exceeded $65,000. The loss of that book, therefore, did not harm the appellee. So, too, the nonproduction of “Sweetser’s receipts for advances referred to in the agreement of August 12, 1857,” is unimportant, because the amount of those advances is stated i& that agreement; and, there being in the record undisputed copies of the deeds of December 8th and 11th, it is not easy to see what use there could have been for putting in evidence “the executor’s book of deeds prior to October, 1870, in which,” it is said, “the conveyances in question were recorded for the information of all concerned.” There is no evidence that anybody was ever denied access to the book, or that it would not have been produced upon request.
There is, however, in the case, a notable omission of evidence, which the appellee ought to have supplied or explained. Sweetser was to be the active man in the business, and the contract of May 25, 1855, in terms, required him “to open and keep a set of joint land books, and to keep regular accounts showing all' proper ex-. penses and costs of making purchases, securing claims, etc., and to take necessary vouchers, etc.” It is to be presumed that Sweetser complied with that requirement of thfe contract, find that his books showed at least his own receipts and expenditures, and that, if favorable to its contention, the appellee would have produced them,1 or offered some excuse for the failure.
But, passing by matters of conjecture and suspicion, and considering the case as the record presents it, we find no lack of convincing evidence upon the one essential point of inquiry. The contract between the parties shows the original expectation to have been that Ewing would advance ihe money necessary for the prosecution of the scheme; and it is as clear as could well be — in fact, Sweetser’s letters imply, if they do not admit — that the advances which Ewing made far exceeded those of Sweetser, even if his salary for the entire time be included. And the great probability 'is that the one-half of his salary which was chargeable to Ewing did not remain unpaid. There is no claim to that effect in Sweetser’s letters. The supplemental agreement of August 12, 1857, shows that at that time Ewing’s advances had amounted to $8,000 or more, — a much larger amount of money than it was at first supposed would be needed,— and, there being no mention of anything due Sweetser, the fair inference is that nothing worthy of mention was then owing to him. It is little less certain that the money expended in the subsequent conduct of the business came from Ewing. Late in 1865, being anxious to have the business wound up; or off his hands, Ewing-proposed to sell his share in the property for original cost and interest, and, by his letter of January 7th, Sweetser accepted the offer.' This acceptance, though afterwards withdrawn, was equivalent to-an admission that Ewing’s interest in the property was worth what *795it tad cost. Of the entire correspondence which followed, it may be said, without quoting, that it shows that Ewing had made large advances -without receiving anything in return; that he considered and Sweetser conceded his interest in the lands to be of substantial value; that Swuetser, for himself and another, hv his letter of March 30th, offered to pay Ewing for his share his entire advancement, with interest, paying $5,000 in hand, etc., and on April 8th made a definite offer of $20,000 for all Ewing’s interest in “Ewing and Sweetser affairs,” paying down $4,000 or $5,000, and Ewing releasing a morrgage on his home, or himself to give up all papers, and release all interest, if placed in money and property where he commenced, with the loss of his labor for 12 years, claiming to “have borrowed some money, say $3,000, which had been expended in and about that business.” Now, if to this sum of $3,000 Sweetser’s salary from May 25, 1855. to May 25, 1800, he added, as if no part of it had been paid him, his entire expenditure in the joint business falls far short of the sum which he was offering to pay Ewing, that sum being far less than Ewing’s expenditures are fairly shown to have been. It is therefore morally certain that, upon a just settlement of their accounts and dealings in land, there could have been found nothing due from Ewing to Sweetser, and that, for the conveyance made by the executors to Sw-eetser on December 11th for the Ewing half of the lands, there could have been no consideration, unless it was Sweetser’s promise to pay the debts of the concern. But outside of the funds advanced by either party, which by the contract were to he refunded, with interest, as soon as the same could he realized from sales of any of the joint property, and were therefore debts of the concern, there were no considerable liabilities. The only unpaid debt, of which proof has been made, was for less than $40 due an agent on account of taxes which he had paid; and from the nature of the business, if there had been liabilities to third persons, — as, for instance, for lands bought on a credit, or for costs or attorney’s fees incurred in litigation, or for taxes, or of whatever character, — the proof of them, and that Sweetser had paid them, if he had. would not have been difficult. Creditors, knowing Ewing’s responsibility, would not have failed to present their demands, and demands presented Ewing would have paid. Besides, if the liabilities liad been considerable, it was not business-like on the part of the executors to accept Sweetser's unsecured promise to discharge them.
The debts referred to in .the correspondence between Ewing and Sweetser, for the payment of which it was said the lands should he sold, were, without doubt, for the advances made by Ewing. So Miner understood, when, on January 30th, he said of a proposed sale of part of the' lands to Sweetser, “the proceeds will he used to refund to Ool. Ewing * * i:' the large sum of money which he has furnished juu from time to time for investment in that country.” In short, Ewing, while in life, with the knowledge and assistance of Miner, whom he appointed one of his executors, was demanding, and Sweetser was conceding to be due, and was will*796ing to pay Mm, for Ms interest in their joint property, as much as $15,000; but a few months later, when nothing had happened to change the respective rights of the parties, except Ewing’s death, Miner and his coexecutor, if their deed is to be upheld, gave to Sweetser for nothing the Ewing interest in all of the lands, except 110 acres, upon which no value has been set. That this was done, the living executor, Ewing, has testified, and the fact is otherwise sufficiently proven.
But, if the evidence left the question open to doubt, it is established by the undenied averments of the bill that the deed of, December 11, 1866, was without consideration. It is alleged in the bill, not only “that the deed of December 8th was executed and delivered on that day,” but that thereafter “on the 11th day of December, -the deed bearing that date was executed;” and, without direct averment of the time when the release was executed, that paper is referred to in the bill as “Sweetser’s agreement and release executed -and dated December 8, 1866.” Undenied, these averments must be taken as true, and given full effect. They make it impossible to concur with the circuit court in saying “that these papers are all to be taken together, and form parts of one and the same transaction.” Wo matter what evidence to the contrary, the averments must prevail.
The contrary evidence, however, is not strong. The giving of the note for $100 was a small matter, and may have been overlooked on the 8th. The cancellation of the contracts and declaration of trust, after the - execution of the deed and release of December 8th, was a useless matter of form, evidently not done before, the 11th, but affording no proof of the time when other papers were delivered. The recitals of the second deed are, that “on the 8th of December” the executors made the first deed, and that Sweetser “has taken upon himself, and assumed to pay,” etc., “as per his agreement and release dated December 8, 1866.” The release itself bears date December 8, 1866. The cancellation of the revenue stamp is of the same date. The conveyance of April 30th is recited as a past or completed transaction, (made so, doubtless, by delivery on that day,) and there follows the recital that “on further settlement” the executors “have this day conveyed to me certain lands” described; and then follow the declaration that the contract of May 25th and the supplemental agreement are ended, and Sweetser’s agreement to- discharge the executors and the Ewing estate and heirs, and to take upon himself all liabilities, in terms quite as comprehensive as the conditions and obligations which the second deed purports to impose upon him. It was proper, as the parties evidently assumed, that the deed of December 8th should be made under the sixth clause of the will, “in compliance with the declaration of trust;” and the execution of the release by Sweetser at the same time was manifestly just and right, because the liabilities he assumed, it is clear, were less than the amount due from him to Ewing for the excess of the latter’s advancements over his own.
*797It being established, as it is both by tbe pleadings and the evidence, that the deed and release of December 8th were delivered as a consummated transaction separate from the conveyance of December lltli, there remained nothing further to he settled concerning the dealings in land; and it follows that the second deed was without consideration, and clothed the grantee with neither legal nor equitable interest.
Aside from, as well as because of, its lack of consideration, there was, in my opinion, a want of power in the executors to execute that deed.' It is not to he questioned that, by their contracts, Ewing and Sweetser, in their land transactions, were partners, because the partnership is alleged both in the bill and the answer; and it is well settled that “real estate purchased with partnership funds for partnership uses, though the title he taken in the name of one partner, is, in equity, treated as personal property, so far as necessary to pay the debts of the partnership, and to adjust the equities of the partners.” “But,” as is added in Riddle v. Whitehill, 135 U. S. 621, 10 Sup. Ct. Rep. 924, whence the quotation is taken, “the principle of equitable conversion has no further application.” And none of the cases cited go to the extent. that the surviving partner, without the aid of a court of equity, can take possession of lands, of which both the title and possession were in his co-partner at the time of his death, and dispose of the same as personalty belonging to the firm.
It is not necessary here, however, to inquire into the powers of a surviving partner over partnership property, whether real or personal. Conceding his power to sell to third persons, he could not sell to himself, and if, by the deed in question, Sweetser acquired any interest, it was because of the power of the executors to make die grant. For their powers, we must look to the provisions of the will, as was done in Valentine v. Wysor, 123 Ind. 47, 23 N. E. Rep. 1076, or, if the* will is silent, to such statutes as may be applicable. The provision in Ewing’s will for the sale and disposition of personal property does not apply, and the direction given “to make sale of such of my real estate in the states of Ohio, Indiana, Illinois, Missouri, Minnesota, Wisconsin, and Kansas as shall he necessary to carry out and effect the objects and purposes of this will,” and the further provision that no sale should be made without appraisement, it is manifest, do apply to these lands; and this conveyance, treated as a conveyance of land, was not'only not authorized, it was forbidden, by the will.
“But,” it is said, “the executor of a deceased partner, if not a member of the firm, may agree with the survivor that the share of the deceased may he ascertained in a particular way, or be taken at a, certain value; and if the executor and the survivor, in good faith, come to an accounting respecting the partnership affairs, and settle the same as a. final account, such settlement cannot be overhauled except on the ground of fraud (or such unfairness as is equivalent thereto) or mistake.” Even by that rule, this settlement should not stand; but the doctrine stated rests on the com*798mon-law rule, — prevalent in some of the states, but not applicable to this case, — that the executor or administrator takes the title to the personal estate, and may deal - with it .substantially as the owner could when in life.
The law of Indiana since 1852, if not longer, has been different; and, if these lands are to he treated as personalty, it is the law of Indiana, where Ewing lived and died, that must govern. By that law the title of personalty, as well as of real estafe, descends to the heir at law, unless otherwise; directed by will; and as the executor or administrator has statutory authority to sell only ai; public auction, unless otherwise ordered by the court, it is held that a private 'sale, without order of court or testamentary authority, confers no title. Weyer v. Bank, 57 Ind. 198.
It may he conceded that the executors in this case had authority to make a settlement with Sweetser, and, if a balance was found due him, to pay it with money of the estate in their hands, of which it is shown they had an abundance; hut, even if they were Avithout money, they had no authority, Avithout an order of court, to discharge the debt owing to Sweetser, or to other creditors, by transfer of property, Avhether personal or real, and especially not by a transfer of land, though capable, if there was necessity for it, of being treated as personalty, because it is the policy of the law, in Indiana, to protect the interests of the widow and heir at law in real estate, and to that end the personal estate of a decedent is made the primary fund for the payment of all debts, including mortgages and other liens upon real estate. Hunsucker v. Smith, 49 Ind. 114; Elliott v. Cale, 113 Ind. 383, 404, 14 N. E. Rep. 708, and cases cited. Indeed, the statute in force since 1852 requires the payment of “debts secured by liens upon the personal and real estate of the decedent, created or suffered by him in his lifetime,” before the payment of general debts and legacies. BeAdsion 1881, § 2378. It Avas therefore the duty of these executors, under the law, as Avell as by the requirements of the will, to pay Sweetser whatever was ascertained to he due him, out of moneys of the trust in their hands, and thereby preserve the land in question as real estate, and, if they had not ready money for that purpose, to obtain it out of the personal estate proper under the authority giAren them by the sixth clause of the will. They had no more right (unless given in the will, which is not pretended) to pay Mm by transferring Ewing’s interest in the partnership lands than they would Imve had to pay him by transferring real estate which had never belonged to the partnership.
■It is further to he obseded that by an act of the Indiana legislature approved March 5, 1859, (Ress. Laws 1859, p. 134,) which remained in force until 1877, when it was amended, a surviving partner Avas required, within 60 days after the death of the co-partner, to make a full, true, and complete inventory of the estate, goods, chattels, rights, credits, and effects within his knowledge, and to cause the same to be appraised, and to file with the clerk of the court an affldaAÚt that the schedule filed hv the ap*799jtraisers contained a full and. true statement of the partnership property. This si atufe was not complied with by Sweetsei1.
There is another reason why it was not competent,, on the 11th day of December, 1866, to treat, this huid as personalty. If that x-ight ever existed, it was extinguished by the transaction of December 8th. By the deed of that date, Sweeter accepted a conveyance of the undivided one-half of the land described, including That in suit, in discharge of the trust under which Ewing had held the title, thereby becoming tenant in common with the legatees of Ewing. By that act the partnership character of the land was lost', and if (he account between the partners was not then or thereby settled, or if “Sweetser’s agreement and release’’ of that, date was not delivered till later, the account then became a personal one, into the adjustment of which the lands could not be drawrn on the theory of being partnership assets. If the title and trust had been in Hweeter, instead of Ewing, and, in execution of the trust, he had conveyed the half interest to the Ewing legatees, he might (hereafter, with equal propriety, have taken a conveyance from the executors in adjustment of the partnership accounts and liabilities.
Upon no view of the case can T think the appellee entitled to affirmative relief in equity. If, by lapse of time or otherwise, it had acquired a legal right against the appellants, ox* any of them, before the suit for partition was brought, it may be set up as a defense to that px-ocedure.