1. In May, 1835, an agreement was entered into between Price and
Seymour which provided on the part of Price that be should devote
his time and best judgment to the selection and purchase of land to
an amount not exceeding five thousand dollars in certain designated
states and territories or in such of them as he might find most
advantageous to the interest of Seymour; that the purchases should
be made during the then existing year, and that the contracts of
purchase should be made, and the conveyances taken in the name of
Seymour; and on the part of Seymour that he should furnish the five
thousand dollars; that the lands purchased should be sold within
five years afterwards, and that of the profits made by such
purchase and sale, one-half should be paid to Price and be in full
for his services and expenses. Under this agreement, lands having
been purchased by Price and the title taken in the name of
Seymour.
Held:
i. That Seymour took the legal title in trust for the purposes
specified -- that is, 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, and that,
to this extent, Seymour was a trustee, and Price the
cestui que
trust.
ii. That the trust continued after the expiration of the five
years, unless Price subsequently relinquished his claim, the burden
of proof as to such relinquishment resting with the heirs of
Seymour.
iii. That the principle of equitable conversion being applied to
the case, and the land which was to be converted into money, being
regarded and treated in equity as money, the personal
representative of Price was the proper person to maintain this
suit, and it was not necessary that his heirs-at-law should be
parties.
2. The statute of limitations has no application to an express
trust where there is no disclaimer.
On the 9th of May, 1835, Henry Seymour, residing at Utica, New
York, and Jeremiah Price residing at Chicago, Illinois, entered in
New York, into a contract, thus:
"The said Price agrees that he will
forthwith devote
his time and attention, and exercise his best judgment, in
exploring and purchasing land, to an amount not exceeding $5,000,
in the States of Illinois, Indiana, and Ohio, and in the
Territories of Michigan and Wisconsin, or in such of them as he may
find most
Page 75 U. S. 203
advantageous
to the interest of said Seymour, in whose
name the contracts and conveyances shall be made and taken. The
purchases shall be made after full and careful searches and
explorations, for the most profitable investments, on or near the
sites or expectant sites of towns or places of business, and, in
general, in tracts of ground of moderate extent; and the said
Seymour covenants, on his part, to furnish $5,000 for the above
contemplated purchases, and that the lands, purchased as aforesaid,
shall be sold within five years from the present time and
out of the profit which may be made by such purchase and
sale (after charging to the investment, the taxes and other
charges, if any, together with 7 percent interest on the investment
and the charges last mentioned), there shall be paid to the said
Price one-half of the same,
which one-half of the profit shall
be in full of his services and expenses of every kind in
making the aforesaid explorations, searches, and in doing all such
other things as may be requisite and proper in making the
contemplated purchases. It is understood that the purchases shall
be made during the
present year, and that no payment for
services or expenses will be made by said Seymour,
except
from the profits made
as aforesaid."
Contemporaneously with the making of the contract, Seymour
placed into the hands of Price the $5,000 mentioned in it. And
between June and October, 1835, Price bought about thirty pieces of
land in Illinois, thus using all the money.
The lands were unproductive, and consisted, in their sundry
parcels, of two thousand four hundred and forty acres and some
village lots, situate in Joliet. It was all conveyed to
Seymour.
In August, 1837, Seymour died; he left two sons,
viz.,
Horatio and John F., and four daughters, two of them being, at his
death, and at the expiration of the five years mentioned in the
contract, infants. By his will, he appointed Horatio, John F., and
another, his executors, and his real estate, under the directions
of his will, went to his heirs, except the share of one daughter,
which was vested in trustees.
No part of the land was sold during the five years specified in
the contract. It was admitted of record that, at the expiration of
the time for sale, stated in the contract (May,
Page 75 U. S. 204
1840), the lands were unsalable, and that it was entirely
uncertain how much they could have been sold for, or whether they
would ever have brought enough to repay the original investment and
interest.
During the five years, there were no taxes upon, or expenses as
to the lands purchased, except taxes upon the lots in Joliet,
amounting, in all, to $19.33. These were paid by Price with money
furnished by Seymour. Subsequently to the five years, Price till
his own death, in 1854, paid the taxes on the lands; Seymour's
executors furnishing him the money to pay them, as also to pay any
small expenses he was put to.
The accounts of Price (independently of the outlay for the
purchase, and in which all the taxes and expenses just spoken of
were entered), began March 4, 1837. They were headed:
"Account of payments on account of H. Seymour."
They began 24 December, 1841, comprised eighty-four items
amounting to $2,054, and ran to near the date of Price's death in
July, 1854, terminating 16th June, 1854. The items were chiefly of
taxes on the different pieces of property. But there were several
charges for postage on letters, for a small item of traveling
expense in paying taxes, for interest on small sums advanced to pay
taxes &c., and one in March, 1845, of $1.53 paid as a charge
for advertising a county tax, "because," said the account,
"funds not sent." But there was no charge or claim for
services by Price or any other person as agent. In fact, in one or
more instances he apparently suffered lands to be sold for taxes.
At the date of Price's death all Price's charges for taxes paid and
for these small outlays had been settled, Seymour's executors
having sent him, from time to time, and apparently as informed of
them, checks for the sums due. Between December, 1841, and Price's
death in July, 1854, the executors had thus sent him about sixteen
different checks.
Price as already said, died in July, 1854, in Illinois. John
High became his administrator. High now looked
Page 75 U. S. 205
after the lands; under what exact source of interest was a
matter disputed. His accounts of money received and of lands sold
were thus headed:
"Account of money received from heirs and devisees of Henry
Seymour, deceased (after his decease and after decease of Jeremiah
Price), by John High, Jr., as agent for heirs and devisees, to pay
taxes and other expenses on lands aforesaid."
"Account of sales made by John High, Jr., as agent for estate,
heirs and devisees of Henry Seymour, deceased, from lands purchased
by Jeremiah Price deceased."
In 1855 and 1856, High negotiated sales of portions of the land,
which were consummated by contracts executed by the heirs and the
purchasers. The sales were profitable. Two hundred acres were sold
for $69,200; and High now, as administrator of Price alleging that
the original outlays, costs, and interest had been repaid, claimed
one-half the surplus; contending that he was entitled to it under
the contract of 1835. The representatives of Seymour not being of
this opinion, High (who dying in the course of the suit was
succeeded by Freer), now, February, 1857, filed a bill in the court
below against all the executors of Seymour, his heirs-at-law, and
the trustees of the
cestui que trust's daughter.
The bill set out the contract, stated that no sales had been
made within the five years, and that Price had not insisted on
their being so made, because it was thought that the interest of
all parties would be promoted by holding on for better times, but
that nothing was done to release Seymour or his representatives
from their original obligations; that High, after Price's death,
had acted at agent of Seymour's representatives, and effected
sales; and that the original $5,000, interest &c., being all
refunded, and the surplus being clear profits, he, High, as
administrator, claimed one-half of it for the estate of Price and
that he had always been and was now ready to agree upon and define
the relative rights of the two estates, and divide the profits, but
that
Page 75 U. S. 206
in consequence of the number of the parties interested, on Mr.
Seymour's part, the distance of their residence from the subject
matter, the death of the original party, and the intervention of
descents, marriages &c., and from the refusal of several of the
parties so in interest to admit Price's rights, he was afraid that
in case the residue of the lands should be sold out, and the whole
converted into money and be allowed to go into the hands of
Seymour's representatives, he would, owing to their number and to
the fact of their residence being without the jurisdiction of the
courts of the state where the whole profits had been made, lose
Price's share; on which account as he conceived the interposition
of a court of equity was necessary.
Price's heirs were not made
parties to the bill.
The answer, admitting the agreement, purchase, and advance of
money, stated that the lands were situated near Price's residence
and being wild required no particular care; that during the five
years Price did nothing except what was required of him by his
agreement; that at the death of Seymour one of the defendants was a
married woman, and two others were infants. It denied that the
omission to sell during the five years was for the benefit of the
defendants, but averred, on the contrary, that both Seymour, in his
lifetime, and the defendants, afterwards, had at all times been
anxious to sell if they could do so without loss. It denied that
Price did not waive a right to have the property sold within five
years, but averred, on the contrary, that he did. It averred
moreover that Price always treated the defendants as the sole
owners, and solely entitled to the proceeds, and never pretended to
have any interest; that he refused to pay the taxes or any portion
of them, "but claimed that he ought to be allowed a reasonable
compensation for his services as agent, and not under the
contract;" that the defendants had always been willing to allow him
such compensation. It set up further that by the legal effect of
the agreement Price's interest was to be half the profits to be got
upon a sale to be made in five years, and averred that no profits
on sales could be made or were made within
Page 75 U. S. 207
that time, and averred that the defendants had in no way
continued or extended the agreement with Price.
As to any claim for a breach of the agreement in not selling in
five years, the answer pleaded the statute of limitations.
As to the agency and the expenditures of High, it stated that
after the death of Price he, High, was requested by Horatio and
John F. Seymour to find purchasers for the land if he could, but
that he had no other power respecting the lands; that the contracts
for the parcels sold were executed by the defendants and not by
High; that the negotiations for such sales were made by the
defendants through High, and were subject to the ratification of
the defendants, and that High was not employed in consequence of
any relationship which he had to Price or to his estate, or on
account of the agreement between Henry Seymour and Price.
Finally, it denied that any cause existed for the interposition
of a court of equity, submitted that the defendants were improperly
joined, for the want of a common interest among them, and asserted
that no receiver was wanted, the devisees of Seymour being all well
known as citizens of New York, and fully competent to dispose of
the lands without the aid of a receiver, and not wanting in ability
to refund &c.
General replications were filed. No proofs were taken, nor did
it appear from the evidence, that any letters from either side were
called for or produced. Certain facts were admitted.
An interlocutory decree making a reference to a master adjudged
that Price by virtue of the agreement of 1835, was "entitled, as an
equal co-partner" in the property to one equal half of the net
profits made, or to be made from the sales; that the lands having
been purchased by Price as an "adventure or investment on joint
account of himself and said Seymour," the sales already made and
the sales yet to be made were to be deemed and taken as made, and
to be made "on joint account" of the estates of Seymour and
Price.
The final decree recited the former decree and a master's
Page 75 U. S. 208
report made to enable the court to administer the property on
"just partnership principles," and, after making a disposition of
the proceeds of sales of the lands, it provided that
"the balance which shall remain thereof being clear profits of
the partnership land purchase and sale up to the present time, be
equally divided between the parties in this suit: one-half to the
complainant, and the other half to be held by the heirs and
devisees of Henry Seymour, deceased."
And it spoke of "closing and selling the partnership accounts so
far as the sales and collections have progressed."
The solicitor of the complainants, by consent of parties, was
appointed receiver, with an agreement that he might sell at private
sale.
The representatives of Seymour brought the case by appeal
here.
Page 75 U. S. 211
MR. JUSTICE SWAYNE delivered the opinion of the Court.
The contract which lies at the foundation of this suit, was
entered into by Jeremiah Price and Henry Seymour on the 9th of May,
1835. Upon looking into it carefully, we find it contains the
following provisions:
Price agreed that he would devote his time and attention and
exercise his best judgment, in purchasing lands to an amount not
exceeding $5,000, in the States of Indiana, Illinois, and Ohio, and
in the Territories of Michigan and Wisconsin, or in such of them as
he should find most advantageous
Page 75 U. S. 212
for the interest of Seymour; the contracts were to be made and
the conveyances to be taken in Seymour's name; the purchases were
to be made after full and careful search for the most profitable
investments "in or near the sites or expected sites of towns or
places of business," and in general in tracts of land of moderate
extent. Seymour agreed to furnish $5,000 wherewith to make the
purchases contemplated; that the land so purchased should be sold
within five years from the date of the contract; that after
charging the investment, the taxes, and 7 percent interest on the
investment, there should be paid to Price one-half of the profits
which should be made; it was agreed that this half of the profits
should be in full for Price's services and expenses of every kind
in making the explorations and searches, and in doing all such
other things as should be requisite and proper in making the
purchases; the purchases were to be made during the current year;
nothing was to be paid by Seymour for Price's services or expenses
except from the profits as aforesaid. The premises in controversy
were bought by Price and the titles vested in Seymour pursuant to
the contract. The property consisted of 2440 22/100 acres of land
in the State of Illinois and several lots in the Village of Joliet,
in that state.
It was agreed by the parties to this suit, that at the
expiration of the five years within which the premises were to be
sold, they were unsalable,
"and that it is entirely uncertain how much they could have been
sold for, or whether they would even have brought enough to pay the
original investment and interest."
Before the commencement of the suit, the property had become
very valuable; 200 acres had been sold for $69,200.
Seymour died in 1837, and Price in 1854. The five years within
which the property was to be sold, expired in 1840.
The duties and obligations with which the contract clothed Price
were those of an agent. He was to make the requisite searches and
explorations in the states and territories named, and to receive
and invest the money of Seymour as he might deem best for Seymour's
interest. He was to contribute his
Page 75 U. S. 213
time, labor, skill, and judgment, but no money except what might
be expended in the service he had undertaken to perform. The titles
were all to be taken in the name of the principal, who was to
advance the money. These functions were performed by Price. His
duties and responsibilities thereupon came to an end, and those of
Seymour to him commenced. For his expenditures, whatever they might
be, he was to receive no immediate or certain return. The same
remark is applicable in respect to his labor and services, and the
exercise of his skill and judgment. Everything to be done by the
agent he was to do, without any charge to his principal.
Seymour was to receive the titles of the property purchased, as
if the purchases had been made by himself at home. All the burdens
incident to the acquisition of the property were to be borne by
Price with only the contingency of reimbursement and compensation
provided in the contract.
The lands were to be sold within five years. It is not stated by
whom, but as the legal title was vested in Seymour, the duty of
selling, by the clearest implication, devolved upon him. Price had
no power to move in the matter, nor to exert any control, except
the right to insist that the property should be sold by Seymour,
within the time limited, and that the sales should be fairly
conducted. [
Footnote 1] By an
implication equally clear, Seymour was to pay all the taxes upon
the property which might accrue.
It is proper here to consider the legal and equitable relations
of the parties arising out of the contract.
We think 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
Page 75 U. S. 214
which a court of equity will protect and enforce whenever its
aid for that purpose is properly invoked. [
Footnote 2] Interests in real estate, purely
contingent, may be made the subjects of contract and equitable
cognizance, as between the proper parties. [
Footnote 3] 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. [
Footnote
4]
Upon the death of Seymour, the legal estate passed to his
devisees.
The principle of equitable conversion has an important bearing
upon the case. Equity considers that as done which is agreed to be
done. Money which, according to a will or agreement, is to be
invested in land, is regarded, in equity, as real estate; and land
which is to be converted into money, is regarded as money, and
treated accordingly. [
Footnote
5] In this view of the subject, the personal representative of
Price is the proper person to maintain this suit, and it is not
necessary that his heirs-at-law should be parties.
There is another view of the subject, which we think may
Page 75 U. S. 215
properly be taken. The agreement, that the property should be
sold, and half of the profits paid to Price was a charge upon the
property, and gave him a lien to the extent of the amount to which
he should be found entitled upon the execution of the agreement,
according to its terms. The principle involved in this proposition,
is a familiar one in equity, and constantly applied in the
administration of its jurisprudence. [
Footnote 6]
It is insisted by the appellees that the contract made the
parties co-partners in respect to the lands to be bought. We cannot
adopt that view of the subject. The adjudications which bear upon
it are conflicting and irreconcilable. The case of
Berthold v.
Goldsmith [
Footnote 7] is
conclusive in this forum against the proposition. We deem it
sufficient to refer to that authority, without reproducing the
considerations which control the judgment of the court.
But the result is the same as if we held that the parties were
co-partners. In that event, Seymour would still have held the
property as trustee for the firm, according to the rights of the
respective members. [
Footnote
8]
The appellants contend, that for any violation of the contract
to the injury of Price he had a remedy at law, and that neither he
nor his legal representative could have any other.
An action at law, sounding in damages, may, undoubtedly, be
maintained in such cases for the breach of an express agreement by
the trustee, but this in nowise affects the right to proceed in
equity to enforce the trust and lien created by the contract. They
are concurrent remedies. Either, which is preferred, may be
selected. The remedy in equity is the better one. The right to
resort to it, under the circumstances of this case, admits of no
doubt, either upon principle or authority. Such, in our judgment,
were the effect and consequences of the contract.
Page 75 U. S. 216
At the end of the five years, limited for its complete
fulfillment, a new element, not anticipated by the parties, and,
hence, not provided for, intervened. The property, if then sold,
would have afforded no profit. There would have been nothing to
divide. It is uncertain whether it would have yielded enough to
reimburse the cost and interest. According to the views we have
expressed, there was a trust and lien for the benefit of Price.
They could be destroyed only by some thing subsequently to occur.
Either Price or Seymour's devisees might have insisted upon the
sale of the property according to the contract. This would have
extinguished the rights of both parties touching the lands, but it
would have benefited neither. There would have been no profit for
either party. Price would have lost his expenditures of time,
money, and skill. The devisees might have lost the interest upon
the investment, and, perhaps, a part of the principal.
The devisees might have held the property, and denied that,
under the circumstances, the trust subsisted any longer. If Price
acquiesced, his rights would have been at an end.
Price might also have expressly or tacitly abandoned his claim.
This would have worked the same result. Both parties might have
concluded to continue their existing relations, and to wait for a
more auspicious period for the disposition of the property. Their
interests were the same. What would benefit or injure one could not
fail to have the same effect upon the others. If the purchases were
judiciously made, the course last suggested was obviously the
wisest and best for both parties. Was either of the alternatives
adopted, and if so, which one?
This is the turning point of the case.
The burden of the proof as to the two former rests upon the
appellants.
Upon a careful examination of the record we have failed to find
the slightest proof of any disclaimer by the devisees, or of any
renunciation by Price. If such evidence exist we must suppose it is
contained in the correspondence between the parties. They are
annexed to the bill accounts, showing the
Page 75 U. S. 217
receipts and disbursements of Price down to the time of his
death. The receipts, after the death of Seymour, commence on the
24th December, 1841, and terminate on the 16th of June, 1854. All
the moneys were received from Messrs. John F. and Horatio Seymour.
It appears, by a stipulation in the record, that the sums with
which Price debited himself had all been verified by comparing them
with the original receipts in the possession of the counsel of the
appellants. The Messrs. Seymour lived in the State of New York, and
Price at Chicago. The moneys were all remitted by checks. It is
apparent, from the face of the accounts, that the receipt of the
money, in many instances, if not in all, must have been
acknowledged by letter. None of these letters has been produced.
Why not? The inference is a fair one, to say the least, that they
contain nothing unfavorable to the claim of the appellee. This
negative feature of the case is not undeserving of consideration.
If Price neither by expression nor acquiescence did anything to
impair his rights, they must still subsist in full force.
We think there is proof in the record that he and his personal
representative considered the time within which the sales were to
be made, prolonged until they could be made profitably, and, that
in all other respects, the contract remained as if it had
originally contained this modification.
We can hardly conceive how the devisees, who advanced the money
to pay the taxes, and with whom Price must have corresponded, could
have understood his position differently. It is admitted that from
the time of the purchases down to the time of his death, Price had
the care and charge of the property, and paid the taxes upon it,
the devisees furnishing the money. His accounts are long, and the
items numerous. There is no proof that he ever made any charge, or
claimed anything for his services. His accounts are silent upon the
subject. How can this be accounted for, unless he expected to be
compensated by his share of the profits of the lands, to be
realized when the proper time for selling should arrive?
Upon his death, High, his administrator, succeeded to the
Page 75 U. S. 218
agency. He was employed by the devisees, and performed the same
duties as his predecessor. He negotiated the sales mentioned in the
bill, and at once claimed a share of the profits for Price's
estate, according to the contract. The claim was resisted by the
devisees, and he thereupon instituted this suit.
The theory insisted upon by the appellees is consistent with all
the evidence in the case. It is in conflict with nothing which has
been developed. It is alleged in one of the answers that Price
"never pretended to the defendants to have any interest, . . .
but claimed that he ought to be allowed a reasonable compensation
for his services as agent, and not under the contract."
When, where, and how was the claim made? If by letter, why is
not the letter produced? The fact is important, but the allegation
is wholly unsupported by anything in the record.
The answers set up the bar of the statute of limitations. Where
there is no disclaimer the statute has no application to an express
trust, such as we have found to exist in this case.
It is said there is a misjoinder of parties in the bill with
respect to the executors of Seymour. The doctrine of equitable
conversion renders their presence in the case necessary, if not
indispensable. If the objection were well taken, the bill as to
them would be dismissed. The error would have no other effect.
It is alleged, also, that there is a defect of nonjoinder as to
the heirs-at-law of Price. The application of the same doctrine is
a sufficient answer to this objection.
Conceding that the appellee is entitled to have the contract
specifically executed, the appellants insist that the court below
erred in decreeing that it should be done by a receiver instead of
themselves. There being a trust and a lien a court of equity had
unquestionable authority to apply its flexible and comprehensive
jurisdiction in such manner as might be necessary to the right
administration of justice between the parties. The devisees are
numerous. The
Page 75 U. S. 219
death of anyone of them might seriously retard and embarrass the
execution of a decree shaped as the appellants suggest. The
appointment of the solicitor of the appellants as receiver, and the
stipulation, which appears in the record, that he might sell at
private sale, protects in the best manner the interests of all
concerned.
The court below held that the contract made the parties to it
co-partners, and the decree was framed accordingly. But as the
provisions of the decree conform in all respects to our views, this
theoretical error constitutes no ground of reversal. A wrong reason
was given for what was properly done.
The litigation appears to have been conducted in a spirit of
candor and fairness on both sides, which is eminently creditable to
the parties.
We find no error in the record, and the decree of the circuit
court is
Affirmed
[
Footnote 1]
Mann v. Butler, 2 Barbour's Chancery 368.
[
Footnote 2]
2 Story's Equity § 964;
Sturt v. Mellish, 2 Atkyns
612.
[
Footnote 3]
Phyfe v. Wardell, 5 Paige 268;
Armour v.
Alexander, 10
id. 571.
[
Footnote 4]
Oliver v.
Piatt, 3 How. 401;
Taylor v. Plumer, 3
Maule & Selwyn 562;
Sweet v. Jacocks, 6 Paige 355;
Wylie v.
Coxe, 15 How. 416.
[
Footnote 5]
Anstice's Administrator v. Brown, 6 Paige 448.
[
Footnote 6]
Pinch v. Anthony, 8 Allen 539;
Legard v.
Hodges, 1 Vesey Jr. 477;
Roundell v. Breary, 2 Vernon
482;
Gardner v. Townshend, Cooper's Equity Cases, 303; 2
Story's Equity § 1, 214-117;
Denston v. Morris, 2
Edwards' Chancery 37.
[
Footnote 7]
65 U. S. 24 How.
536.
[
Footnote 8]
Anderson v. Lemon, 4 Selden 236.
MR. JUSTICE FIELD delivered the following dissenting
opinion.
MR. JUSTICE NELSON, MR. JUSTICE GRIER, and myself dissent from
the judgment of a majority of the Court in this case.
The decrees appealed from are founded upon the theory that, by
the agreement of May, 1835, Price and Seymour became co-partners,
and that the property purchased was co-partnership property. The
interlocutory decree declares that Price by virtue of that
agreement, "was entitled, as an equal co-partner in the property,
to one equal half of the profits made, or to be made, from the sale
of the lands;" that the lands were purchased by Price as an
"investment on joint account of himself and said Seymour," and that
the sales made and to be made were "to be deemed and taken as made,
and to be made, on joint account." And in the final decree the
court administers the property on what it declares to be "just
partnership principles." It provides for the payment out of the
fund of all the costs and expenses,
Page 75 U. S. 220
and that
"the balance which shall remain [of the funds then on hand],
being clear profits of the partnership land purchase and sale up to
the present time, be equally divided."
And it speaks of "closing and settling the partnership land
accounts, so far as the sales and collections have progressed."
And the case was presented to this Court both in the oral and
printed arguments of counsel upon the question whether a
co-partnership was created between Price and Seymour by the
agreement of 1835, or any interest vested in Price in the lands
purchased.
We shall consider at some length both parts of this question,
and in disposing of them, we shall dispose, in our judgment, of the
entire merits of the case.
We do not consider the agreement as creating any partnership
between the parties, or as vesting in Price any interest, legal or
equitable, in the lands purchased. It provides simply for services
to be rendered by Price for Seymour, and a contingent compensation
to be made to him for such services. It stipulates on the part of
Price that he shall devote his time and best judgment to the
selection and purchase of land to an amount not exceeding five
thousand dollars, in certain designated states and territories, or
in such of them as he may find most advantageous to the interest of
Seymour; that the purchases shall be made during the then existing
year, and that the contracts of purchase shall be made and the
conveyances taken in the name of Seymour; and on the part of
Seymour, that he shall furnish the five thousand dollars, that the
lands purchased shall be sold within five years afterwards, and
that of the profits made by such purchase and sale, one-half shall
be paid to Price and be in full for his services and expenses. And
as if to prevent any possible misconstruction, the agreement closes
with a declaration that no payment for those services or expenses
shall be made except from such profits.
By the express terms of the agreement the ownership of the
property was to be in Seymour; the lands were to be selected and
purchased for his general interest, and the title
Page 75 U. S. 221
was to be taken in his name. The special interest of Price was
only in the profits as a means of compensation for his services;
and the interest was not in profits which might be made at any
time, upon any future sale, however remote, but upon a sale within
five years. He was to receive for his compensation one-half that
might be realized above cost, interest, and taxes, from the rise of
the property within that period. If language is to be interpreted
in its natural and ordinary sense, the contract means that, and
means nothing more nor less. The purchases, it says, shall be made
during the present year. The sale shall be made within five years
from that time, and one-half the profits from such purchase and
sale, not from purchases or sales made at any other time, shall be
paid to Price not as profits, but as compensation for his
services.
The provision for the sale in five years was not merely
directory and modal, which might be waived by Price without
affecting his rights. The subsequent clauses securing a
compensation to him are limited to a sale within the period
designated. He was to have half of the profits arising upon
such sale; the moiety of the profits made upon such sale
was to be in
full for his compensation, and he was not to
receive anything for services or expenses, except a participation
in the profits made
"as aforesaid."
To one who is familiar with the history of the growth of the
West, there is nothing singular or even unusual in a contract of
this kind. With the immense tide of immigration setting in that
direction, lands of comparatively little value one day sometimes in
a few months become the sites of villages and cities, and the
source of affluence to their possessors. It is not strange,
therefore, that in 1835, a year somewhat noted for its speculative
tendencies, a gentleman of capital should propose to one of energy
and experience in such matters, that he advance the money, and the
latter invest it in lands in the states and territories of the
West, "on or near the sites, or expected sites, of towns or places
of business," upon a consideration that the latter should receive
by way of compensation one-half of the profits which might
Page 75 U. S. 222
be made from the rise of the property in value within a
designated period.
Nor is there anything in contracts of this character which
imposes the obligations or confers the rights of co-partners
between the parties. There is no co-partnership where the
relationship between the parties is that of master and servant, or
of employer and employee, though the compensation of the latter may
be in proportion to the profits, or be paid entirely out of them.
Under some circumstances, parties thus receiving a portion of the
profits may be held, as respects third persons, subject to the
liabilities of partners; but as between themselves, and in the
adjustment of their respective rights, no such relation obtains.
This has been settled law for more than half a century. Thus, in
Hesketh v. Blanchard, [
Footnote 2/1] decided in 1803, the plaintiff had
furnished goods purchased by him on credit, to one Robinson the
testator of the defendants, to take to Africa for purposes of
trade, upon an agreement that if any profit should arise from the
adventure, he should have one-half for his trouble. The plaintiff
having paid for the goods, brought an action for the amount. It was
objected in defense that as the parties were to divide the profits,
if any, they must be equally liable for any loss, and that
therefore a partnership was constituted between them. But the
objection was not sustained, and Lord Ellenborough said that
"
Quoad third parties, it [the agreement] was a
partnership, for the plaintiff was to share half the profits; but
as between themselves, it was only an agreement for so much as a
compensation for the plaintiff's trouble, and for lending Robinson
his credit."
In
Hazard v. Hazard, [
Footnote 2/2] this doctrine was applied to a case where
one of two parties agreed to devote his time to the management of
the concerns of factories belonging to the other party, for
one-fourth of the profits of the business for the first year and
one-third of the profits for each year after until the expiration
of the agreement, which portion of the profits was to be the sole
reward for his services. It was held that there was no partnership
between the parties. "A mere
Page 75 U. S. 223
participation in the profits," said Mr. Justice Story
"will not render the parties partners
inter sese,
whatever it may do as to third persons, unless they so intend it.
If A. agrees to give B. one-third of the profits of a particular
transaction or business for his labor and services therein, that
may make both liable to third persons as partners, but not as
between themselves,"
and he refers in support of the doctrine to the case already
cited of
Hesketh v. Blanchard.
Similar adjudications have been repeatedly made, we believe, in
the highest courts of every state in the Union. Some slight
differences exist in them as to the extent in which a participation
in the profits of a business, by way of compensation, will render a
party liable as a partner to third persons; but there is entire
concurrence in the conclusion that such participation alone does
not create a partnership between the parties.
In
Denny v. Cabot, [
Footnote 2/3] the question presented to the Supreme
Court of Massachusetts was, whether the defendant Cooper was a
partner with Cabot, Appleton & Co. The agreement between them
was substantially this: Cabot, Appleton & Co. were to furnish
Cooper stock to be manufactured into cloth at his mill on their
account, and Cooper was to manufacture the cloth and deliver it to
them, and was to receive from them a stipulated sum per yard, and
one-third part of the net profits of the business. It was held that
the parties were not partners, either between themselves or as to
third persons; that the agreement only provided the manner in which
the compensation to Cooper for his services in manufacturing the
cloth was to be ascertained, and that he had no title to any share
of the cloth or any lien thereon.
In
Loomis v. Marshall, [
Footnote 2/4] a case, in some respects, similar to that
of
Denny v. Cabot, was before the Supreme Court of
Connecticut, and the liability of a party who receives a portion of
the profits of a business as compensation for his services was very
elaborately and ably considered. The agreement in the case was
substantially this: A. was to furnish B., who occupied a factory, a
supply of wool for two years,
Page 75 U. S. 224
to be manufactured into cloths. B. agreed to manufacture the
cloths, and to devote the use of the factory to that purpose, and
the net proceeds of the cloths, after deducting incidental expenses
and charges of sale, were to be divided so that A. should have
fifty-five percent and B. forty-five percent. The cost of the warp
used, and the expense of insurance on the wool or cloths, were to
be borne by them in the same ratio, and in case of destruction of
wool or cloth by fire, the amount received from the insurance was
to be divided between them, according to the loss of each. It was
held that the agreement did not create a partnership between the
parties; that the case was properly referable to that class of
cases in which one party receives a share of the profits or avails
as a compensation for services rendered, labor performed, and
expenses incurred in the business; and the court observed that if
it should hold that the agreement constituted a partnership, it
would change the existing law as to factors, brokers, agents,
shipmasters, and seamen, who share in the profits by way of
compensation, or in lieu of wages, and introduce great perplexity
in the adjustment of their legal rights and remedies.
Now if a party does not become a partner with others in
business, general or special, as is above clearly established by
the authorities, from the fact that by way of compensation he
participates with them in the profits of the business, it follows
that he does not, by reason of such participation, acquire any
interest, legal or equitable, in the property which constitutes the
basis of the business. It is only upon the theory that the services
rendered by one party are to be considered as an equivalent to the
capital advanced by the other, that a common interest of both in
the property can be asserted. This theory, not resting upon any
solid foundation, the inference deduced therefrom, of course,
fails. The sharing of the profits not changing the relation of the
party as agent to the one who furnishes the capital, the ownership
of the property acquired by such capital is not affected. The case
of
Smith v. Watson [
Footnote
2/5] is conclusive upon this point. In that case,
Page 75 U. S. 225
one Sampson (whose assignees in bankruptcy were the plaintiffs)
employed one Gill, a broker, to purchase whalebone, and by
agreement was to pay him one-third of the profits made on the sale
of it for his trouble. The defendants were bankers, with whom
Sampson kept his account; and the suit was brought to recover an
amount in the defendant's hands, which was the proceeds of a bill
drawn by Sampson on account of a parcel of whalebone which he had
sold. Gill claiming to be a partner of Sampson, by means of the
agreement, indemnified the bankers and received the money. It was
held that the plaintiffs, as assignees of Sampson, were entitled to
recover. Bayley, J., said:
"A right to share in the profits of a particular adventure may
have the effect of rendering a person liable to third persons as a
partner in respect of transactions arising out of the particular
adventure, in the profits of which he is to participate; but it
does not give him any interest in the property itself which was the
subject matter of the adventure. Gill's right to claim property in
the whalebone must arise out of the terms of the bargain with
Sampson; and looking to them, it appears clearly that it was not
joint property. It may be assumed that it was purchased in the name
of Sampson only, for Gill was a mere agent, and was to have a
proportion of the profits in lieu of brokerage. Considering the
question in this view, I am clearly of opinion that Gill had no
property in the whalebone, or in the proceeds of the bill."
Holroyd, J., said:
"Assuming it to have been agreed between Sampson and Gill that
the latter should make purchases of whalebone, and in lieu of
brokerage, should have one-third of the profits arising out of the
sales, and that he should even bear a certain proportion of the
losses, I am of opinion that although such an agreement might make
Gill liable as a partner to third persons, yet that it did not vest
in him any interest in the whalebone purchased with the money of
Sampson. Such an agreement would not convert that which was
obtained by the separate property of Sampson into the joint
property of Sampson and Gill. It may be collected from the
evidence, that the latter did not furnish any part of the money
required to pay for the whalebone, and that the contracts
Page 75 U. S. 226
for sale were made not in his name, but in that of Sampson, for
Gill was to act as a broker only, and to receive a share of the
profits in lieu of his brokerage. The money paid for the whalebone
being, therefore, Sampson's separate property, and the contracts
being made in his name as the purchaser, the property in the thing
purchased would vest, by virtue of the contracts, in him
alone."
There is no difference in principle between this case and the
one under consideration. Price was employed to purchase land, and
Gill was employed to purchase whalebone. Price was to receive
one-half of the profits made upon a sale of the land for his
services and expenses, and Gill was to receive one-third of the
profits on the sale of the whalebone for his trouble. Gill was held
not to be a partner with Sampson who employed him, or to have any
joint interest with him in the whalebone; and upon the same
principle it should be held in our judgment that Price was not a
partner with Seymour, and did not possess any joint interest with
him in the land purchased.
If the decision in the case of
Smith v. Watson is sound
law, and it has not, that we are aware of, ever been questioned,
but, on the contrary, has been uniformly approved by the highest
courts of England and of the United States, it is impossible for
the complainants to sustain the present suit. The suit proceeds and
the decree is rendered, as we have here already stated, upon the
theory that Price and Seymour were co-partners, and that the
property purchased was co-partnership property.
We have shown, as we think conclusively, that Price was not a
co-partner with Seymour under the contract between them, and that
he did not possess any interest with him in the lands purchased,
but that the lands constituted the separate property of Seymour.
Price was, it is true, interested in the profits to be made in the
sale of the land, according to the terms of the agreement. It was
not, however, the interest of a partner, but the interest which
every party to an executory contract has in having the stipulations
in his favor
Page 75 U. S. 227
performed by the other party. A personal action against the
delinquent party, or his personal representatives, is the remedy
for the breach of an agreement of this character. Resort can be had
to equity only when special circumstances intervene to render the
action at law unavailable. Undoubtedly Price could have maintained
an action at law against the representatives of Seymour had a sale
of the property been refused within the five years specified in the
agreement, and recovered, as damages, a sum equal to one-half the
difference between the value of the property and the amount of its
cost, interest thereon, and expenses. That he did not institute any
such action, or make any claim upon them, is explained by the
admission accompanying the record, that the property was at that
time unsalable, and that it was uncertain whether, if a sale could
have been made, it would have brought enough to repay the original
investment and interest. The subsequent conduct of Price shows very
clearly that he regarded his right to compensation dependent upon
the possibility of effecting a sale at a profit at that time. He
lived until July, 1854, more than fourteen years after the
expiration of the five years, and he never asserted any claim under
the contract. He never requested that the lands be sold, or
asserted any interest in them or their proceeds. He uniformly
treated the contract as at an end, and the heirs of Seymour as the
exclusive owners of the land and its proceeds. He subsequently
acted as agent for them in paying taxes upon the property. He lived
near the property, and it was natural that he should be employed
for that purpose. But if funds, even of trifling amounts, were not
forwarded to him, he did not advance the money, but allowed the
property to be sold. It is difficult to reconcile this conduct with
the theory that he considered himself at the time as having a claim
either upon the land or its proceeds. And it is still more
difficult to account for his entire silence to all the world, to
his own relatives and agents, as well as to the heirs of Seymour,
respecting any claim upon the property or its proceeds, if he
considered that in fact he possessed any. It remained for the
administrator of his
Page 75 U. S. 228
estate, nearly three years after his death, to discover that he
possessed, during his life, unknown to himself, large and valuable
interests in property which he had purchased for others, and in
their name, twenty-two years before. The claim now asserted is
contrary to the express terms of the contract, and the construction
given to it by Price himself. And even the administrator acted as
agent for the heirs in paying taxes upon the property and in
negotiating sales for them until he made the discovery of the
supposed rights of his intestate.
It is urged as an objection to the case made by the defendants
that they did not produce the letters of Price to them. It is
assumed without any intimation to that effect on the part of the
complainant, that these letters might have contained, and not being
produced, must be presumed to have contained something against the
interests of the defendants. The objection may be answered by the
suggestion that the complainant did not produce the letters of the
heirs of Seymour to Price. If they had contained any recognition of
the claim now asserted on behalf of Price's estate, there can be no
doubt that they would have been brought forth. If it be proper to
invoke presumptions in respect to the contents of papers not
produced, even when not called for, the presumption against the
claim of the complainant must be regarded as very great. It is
highly improbable that no allusion would be made by the heirs of
Seymour to the interest of Price in the property, or to his
claiming an interest, during a correspondence of fourteen years,
if, in truth, he possessed or claimed any.
The case of
Stow v. Robinson [
Footnote 2/6] decided by the Supreme Court of Illinois,
presents similar features to the one under consideration, and is
authority upon the point, that the remedy of Price if a sale within
the five years had been refused, was at law, for breach of the
contract, and not in equity. The case was this: Robinson was the
owner of a block of land in or near Chicago, and it was agreed
between
Page 75 U. S. 229
him and one Rathway that the block should be subdivided, and
that Rathway should dispose of the lots for one-fourth cash, the
remainder to be secured by notes payable in one, two, and three
years, with interest, Robinson to give bonds for deeds on receiving
the notes, and to execute conveyances when the notes were paid. Out
of the proceeds obtained Robinson was to receive the purchase money
of the block, with interest, and the balance was to be equally
divided between the parties; and for his share upon this division,
Rathway was to plat, survey, or subdivide the block, and advertise
and sell the same at his own expense. Rathway, under the agreement,
subdivided the block into lots, and sold a portion of them, when
Robinson stopped the sale, and refused to allow any further sale,
or to execute any more title papers. Rathway having died, his heirs
and personal representatives filed their bill to compel a
performance of the agreement. The court held that by the agreement
Rathway did not acquire any vested interest in the land itself, and
if he was prevented from executing his part of the agreement, he
had his remedy by an action at law for damages, and that his remedy
was clearly not in equity.
The difference between this case and the one under consideration
is circumstantial; the principle is the same in both. The services
rendered in each were the meritorious cause for the compensation to
be made by the owner of the land. In the case cited it was the
platting, surveying, subdividing, advertising, and selling the
land; in the case at bar it was the selection and purchase of the
land. The difference in the services is not material. The contract
stipulating for the services in the case cited created in Rathway
no interest in the land held by Robinson; and for the same reason
the contract in the case at bar, in our judgment, created in Price
no interest in the land held by Seymour. If Price possessed no such
interest, there can be no pretense that the land was subject to any
trust for his benefit.
In our judgment, the decree below should be reversed and the
bill dismissed.
[
Footnote 2/1]
4 East 144.
[
Footnote 2/2]
1 Story 371.
[
Footnote 2/3]
6 Metcalf 83.
[
Footnote 2/4]
12 Conn. 69.
[
Footnote 2/5]
2 Barnewall & Cresswell 401.
[
Footnote 2/6]
24 Ill. 532.
