By a contract in writing, A and B agreed that certain lands, for
the sale and conveyance of most of which A held agreements of third
persons, should be purchased for the mutual interest of A and B,
and the legal title taken in A's name, and conveyed by him to B;
that B should advance to A the sums required to pay the purchase
money, as well as other expenses to be mutually agreed upon from
time to time, and be repaid his advances, with interest out of the
net proceeds of sales; that A should attend to preparing the lands
for sale, and sell them, subject to B's approval at prices mutually
agreed upon, and retain a commission of five percent on the gross
amount of sales, and, until B was reimbursed for his advances,
deposit the rest of the proceeds to B's credit in a bank to be
mutually agreed upon; that when B had been so reimbursed, "then the
remainder of the property shall belong sixty percent to B and forty
percent to A," and that the property should be prepared for sale
"by A or assigns" within a certain time unless extended by mutual
agreement. A fraudulently obtained from B much larger sums of
money
Page 149 U. S. 249
than were needed to pay for the lands, procured conveyances of
the lands to himself, and refused to convey them to B.
Held that whether the contract did or did not create a
partnership (and it seems that it did not), the equitable title in
the lands; after reimbursing B for his advances with interest,
belonged three fifths to B and two fifths to A, and that A's
fraudulent misconduct, while it deprived him of the right to the
stipulated commissions, did not divest him of his title in the
lands.
This was a bill in equity filed December 8, 1885, by John I.
Blair, a citizen of New Jersey, against Samuel C. Shaeffer, a
citizen of Ohio, and other persons, citizens of other states,
claiming under him, setting forth a contract in writing between the
plaintiff and Shaeffer, dated February 4, 1884 (which is copied in
the margin
*), and praying
that Shaeffer might be
Page 149 U. S. 250
ordered to convey to the plaintiff the lands described in that
contract, and that it be adjudged that the defendants had no title
or interest therein, and for further relief.
Page 149 U. S. 251
At the hearing in the circuit court, upon pleadings and proofs,
the case appeared to be in substance as follows: in February, 1884,
Shaeffer obtained and received from the plaintiff sums of money
amounting to $92,882.70, upon fraudulent representations that they
were needed to pay for the lands described in the contract, and,
within a month after its date, procured conveyances of those lands
to himself by paying therefor sums amounting to $59,789.30 only,
and paid $500 for taxes and other necessary expenses, leaving the
sum of $32,593.40 due to the plaintiff, and afterwards refused,
on
Page 149 U. S. 252
demand, to convey the lands to the plaintiff.
The three tracts of land described in the contract contained
respectively about 36 1/2 acres, about 138 acres, and 69 acres,
near Kansas City, in the State of Missouri, and were worth more at
the time of the contract than the sums paid by the plaintiff, and
greatly increased in value afterwards.
In an action at law against Shaeffer, submitted to the circuit
court without a jury at the same time with the present suit in
equity, the plaintiff recovered judgment for the aforesaid sum of
$32,593.40. Upon that judgment no writ of error was sued out.
In the present suit, the circuit court held that the contract
sued on created no partnership between the plaintiff and Shaeffer,
and conferred on Shaeffer only the right of an agent to sell, with
a share in the profits by way of compensation, and that Shaeffer,
by his fraudulent conduct, had forfeited all his rights under the
contract, including not only the five percent commission on sales,
but the share of forty percent in the net profits remaining after
payment of the sums advanced by the plaintiff, and entered a decree
for the plaintiff as prayed for. 33 F. 218. From this decree
Shaeffer appealed to this Court.
Page 149 U. S. 255
MR. JUSTICE GRAY, after stating the case, delivered the opinion
of the court.
The decision of this case turns upon the construction of the
contract of February 4, 1884, by which the parties agreed to buy
certain lands, and to sell them again for the joint benefit of
both.
The provisions of that contract were, in substance, that those
lands, in the greater part of which Shaeffer already had an
equitable title under agreements of third persons to sell and
convey them to him, should be purchased for the mutual interest of
the parties; that the legal title in all the lands should be taken
in Shaeffer's name, and be conveyed by him to Blair; that Blair
should advance the sums required to enable Shaeffer to pay the
purchase money of the lands, as
Page 149 U. S. 256
well as the necessary expenses of preparing them for sale and
selling them, and should be repaid his advances, with interest, out
of the net proceeds of sales; that Shaeffer should stake out the
lands for sale, make the necessary improvements, sell them, retain
a commission of five percent upon the gross amount of sales, and,
until Blair should should have been reimbursed for his advances,
deposit the rest of the proceeds in a bank to Blair's credit; that
the expenses of improving and selling the lands, the time within
which they must be prepared for sale, the price at which they might
be sold, and the bank in which the proceeds should deposited by
Shaeffer, should be mutually agreed upon between him and Blair, and
all contracts of sale by Shaeffer should be approved by Blair, and
that, when Blair should have been reimbursed for all his advances,
"then the remainder of the property shall belong sixty percent to
said Blair and forty percent to said Shaeffer," and be divided
between them accordingly, either by Blair's conveying the title in
two-fifths of the lands to Shaeffer, or by Shaeffer's selling the
lands and paying sixty percent of the proceeds to Blair.
The contract evidently contemplated that, while the sales to be
made by Shaeffer should be subject to Blair's approval, no sales
should be made by Blair without Shaeffer's consent. This clearly
appears from several provisions of the contract. It is by Shaeffer,
or, as said in the last clause of the contract, "by said Shaeffer
or assigns," that the lands are to be staked out into lots and
prepared for sale.
"Said Shaeffer is to deduct and receive five percent commission
upon gross sales of all lots sold at the agreed price of over made
by said Blair and Shaeffer"
-- that is to say, "of all lots sold" by Shaeffer "at the agreed
price or over," the price (not the sales) being "made by said Blair
and Shaeffer." The provision that all contracts of sale shall be
made in triplicate, and approved in writing by Blair, and one copy
retained by Shaeffer, clearly implies that all contracts of sale
shall be initiated by Shaeffer, and after Blair shall have been
reimbursed his advances, then, if the lands are not themselves
divided between them, it is Shaeffer who is to sell them and divide
the proceeds.
Page 149 U. S. 257
In short, Shaeffer was to contribute to the venture his
equitable title in the greater part of the lands to be purchased,
as well as his own services. Blair was to contribute all the money
required to carry out the enterprise. The legal title was to be
taken in Shaeffer's name, and conveyed by him to Blair. Shaeffer
was to attend to preparing the lands for sale, and to sell them,
subject to Blair's approval. Shaeffer was to receive a commission
of five percent on the gross amount of sales. Out of the rest of
the proceeds Blair was to be repaid his advances, and after Blair
had been reimbursed, the property was to belong three fifths to
Blair and two fifths to Shaeffer, and to be divided between them
accordingly, either in lands or in money.
Taking into consideration the whole scope of the contract and
the fact that before it was made, Shaeffer had an equitable
interest in the greater part of the lands, which was in fact and
was evidently considered by both parties to be of greater value
than the price which he had agreed to pay for them; that the title
to all the lands was to be taken in Shaeffer's name in the first
instance, and to be conveyed by him to Blair, and especially the
express stipulation that, after Blair should have been fully
reimbursed for his advances out of the proceeds of sales, "then the
remainder of the property shall belong sixty percent to said Blair
and forty percent to said Shaeffer," and should be divided between
them accordingly, the conclusion appears to us to be inevitable
that the conveyance of the legal title by Shaeffer to Blair, like
the deposit of proceeds of sales made by Shaeffer to Blair's
credit, was intended as security only for Blair's advances; that
Shaeffer was to have and retain an equitable title in two fifths of
the land, subject to the claim of Blair for reimbursement, and that
Shaeffer's fraudulent misconduct, while it might properly defeat
any claim of his for commissions, did not divest him of his
equitable title in the lands, as recognized and stipulated for in
the contract.
There may doubtless be a partnership in the purchase and the
resale of lands, as of any other property. But this contract
contains no expression to indicate an intention of the
Page 149 U. S. 258
parties to become partners. It does not authorize either party,
without the consent of the other, to sell any property or to
contract any debts on behalf of both. If the enterprise proves
unsuccessful, the contract does not provide or contemplate that
Shaeffer shall share the loss, and the phrase, "said Shaeffer or
assigns," in the last clause, unless supposed to be inadvertently
inserted, is hardly consistent with the idea of a partnership.
There is great difficulty, therefore, in the way of construing this
contract as creating a partnership between Blair and Shaeffer.
Thompson v.
Bowman, 6 Wall. 316;
Seymour v.
Freer, 8 Wall. 202;
Meehan v. Valentine,
145 U. S. 611,
145 U. S.
623.
But it is unnecessary to express a decisive opinion upon that
point, because, whether Shaeffer was acting as a partner or only as
an agent in performing the duties required of him by the contract,
the fraudulent misconduct proved against him deprived him of the
right to the stipulated commissions.
Denver v. Roane,
99 U. S. 355;
Wadsworth v. Adams, 138 U. S. 380; and
whether he was or was not a partner, that misconduct did not
operate to forfeit his equitable title in the lands.
The result is that Blair is not entitled to the entire property
except as security for the sums advanced by him, and for any
reasonable expenses, including the amount ascertained by the
judgment at law between the parties, so far as they remain unpaid,
with interest computed according to the contract, and that, after
reimbursing him for such advances and expenses, the lands belong,
in equity, three-fifths to Blair and two-fifths to Shaeffer.
The decree of the circuit court adjudging that Shaeffer has no
title or interest in the lands is therefore erroneous, and must be
reversed, and the case is to be remanded to that court with
directions to order that the lands, or so much thereof as may be
necessary to pay and satisfy the sums due to the plaintiff for
advances and expenses, be forthwith sold, and the proceeds applied
to the payment of those sums, and that any lands or proceeds
remaining after so reimbursing the plaintiff between him and
Shaeffer in the proportions aforesaid.
Page 149 U. S. 259
Decree reversed, and case remanded to the circuit court for
further proceedings in accordance with the opinion of this
Court.
MR. JUSTICE BREWER dissented.
MR. JUSTICE FIELD was not present at the argument, and took no
part in the decision.
*
"Whereas, by virtue of a certain contract made by Samuel C.
Shaeffer, of Lancaster, Ohio, with P. Cardenas, of New York city,
for the purchase of thirty-six and 47-100 acres of land in Jackson
County, Missouri, and known as 'lot 7 of the partition of the
estate of Thomas West, deceased, by the Circuit Court of Jackson
County, Missouri, on October 18, 1880,' as per contract dated
November 1, 1883, for which said land the said Shaeffer was to pay
the said Cardenas the sum of $21,882 on or before February 8, 1884,
now it is agreed, as said contract is made by said Shaeffer for
said land, and for prudential purposes, that the same shall be
conveyed by warranty deed to said Shaeffer, and that John I. Blair,
of Blairstown, New Jersey, has paid for the same by giving to said
Shaeffer a check on the National Park Bank of New York city for the
sum of $21,882, signed by the president of the Belvidere National
Bank of New Jersey, to enable him to pay for the said land."
"And whereas, by another agreement made by said Shaeffer with
Marion West, of Jackson County, Missouri, dated July 24, 1882, and
October 21, 1882, whereby said Marion West sold the interests of
Frank West, Thomas West and Joseph C. West, minor heirs of Thomas
West, deceased, and known as 'lots 5, 6, and 8 of the partition of
the estate of said Thomas West, deceased, by the Circuit Court of
Jackson County, Missouri, on October 18, 1880,' for which said
land, by said contract, said Shaeffer was to pay the sum of
$44,559; $10,000 to be paid cash upon the delivery of deed, and the
remainder, $34,559, to-wit, $17,279.50 on or before February 8,
1885, and $17,279.50 on or before February 1, 1886, bearing eight
percent interest from February 1, 1883, and secured by mortgage on
said premises. The said John I. Blair has given to said Shaeffer a
check, signed by the president of the Belvidere National Bank of
New Jersey, on the National Park Bank of New York city, for
$10,000, to enable said Shaeffer to pay that much on account of
said lands, and for prudential reasons to obtain a deed for the
same in his own name. The said Blair is to pay the balance of the
purchase money at maturity, amounting to $34,559, given by said
Shaeffer, and secured by mortgage."
"This makes at this time the cash payments on the above two
contracts, $21,882 and $10,000, making $31,882, which is to bear
eight percent interest until paid out of the sales of the land
aforesaid, the interest to be added to the principal yearly, and
bear eight percent interest until paid."
"Within four months after said Shaeffer shall have obtained the
title to said lands, or sooner if desired by said Blair, said
Shaeffer to make a warranty deed to said Blair for said lands."
"Now it is further agreed that, for the mutual interest of said
Blair and Shaeffer, it may be deemed advisable to obtain certain
releases for pretended claims made by the Anthony heirs to said
property, the sum for said purpose to be mutually agreed upon,
which sum said Blair agrees to furnish to said Shaeffer, upon
telegraphic notice, to aid him in securing said releases, and said
Shaeffer afterwards to deed by release deed said lands to said
Blair. Said money to bear same rate of interest, and governed by
same conditions, as hereinbefore stipulated; the same to be
endorsed on this contract or other written evidences given that
said Blair paid the money."
"It is deemed for the mutual interest of said Blair and Shaeffer
that said Shaeffer purchase the sixty-nine acres of land from John
S. West, adjoining the above-described lands at a price not to
exceed $400 per acre, amounting to $27,600, and to obtain a
warranty deed therefor. Said John I. Blair has given said Shaeffer
the president's check of the Belvidere National Bank of New Jersey
on the National Park Bank of New York city for $14,600 as part
payment for said sixty-nine acres of land. If said property cannot
be purchased for said $27,600, then said $14,600 check to be
returned to said Blair unused. Said Blair agrees to assume and pay
$13,000 mortgage on said property, which said Shaeffer will give to
said West, payable in one or two years, and bearing eight percent
interest, in case said purchase can be made; said Shaeffer, within
four months after obtaining title to said land, to deed same to
said Blair. All the money paid and furnished and assumed to pay for
said land by said Blair to bear eight percent interest and be added
to the principal each year until paid."
"All moneys necessary to stake off lots, grade streets,
advertising, office furniture, fixtures rents, stationery, taxes,
and such other expenses as may become necessary for the
improvements and sale of said property, as may be mutually agreed
upon from time to time by said Blair and Shaeffer, shall be
furnished by said Blair."
"Said Shaeffer is to deduct and receive five percent commission
upon gross sales of all lots sold at the agreed price or over made
by said Blair and Shaeffer, and the remainder to be deposited in
some bank in Kansas City that may be mutually agreed upon, to the
credit of said John I. Blair, until all the money he has paid or
advanced, with interest as aforesaid, shall have been returned to
him. At the end of each month, said Shaeffer is to report the
amount to the credit of said Blair, the same to be subject to said
Blair's draft on account of the money advanced or paid for the
property and otherwise as aforesaid."
"All contracts for the sale of said land or lots to be made in
triplicate, and approved by said John I. Blair or someone appointed
by him, on the back of said contracts the word 'Approved,' or
'Rejected' to be written, and signed by said John I. Blair, as
aforesaid, one copy of said contract to be retained by said
Shaeffer and one by the purchaser. It shall be specified on the
face of said contracts that they shall not be valid unless approved
as specified, and all contracts to be made payable to said John I.
Blair."
"When said Blair shall have been paid in cash for all the money
advanced and furnished by him for the purchase of said lands, and
other moneys, and the interest thereon, as specified, then the
remainder of the property shall belong, sixty percent to said Blair
and forty percent to said Shaeffer, and then said Shaeffer shall
not be required to deposit in the aforesaid bank, as aforesaid
specified, to the credit of said Blair, more than sixty percent of
the net proceeds of sales of said lands or lots."
"If it is at this time desirable to divide said lots or land
between said Blair and Shaeffer, said Blair to take sixty percent
and said Blair to convey the title to forty percent of said
property or lots by warranty deed to Shaeffer, or said Shaeffer to
sell the lots or lands as aforesaid, and divide the net proceeds of
sale, sixty percent to said Blair and forty percent to said
Shaeffer."
"It is understood that said property, or any portion thereof, to
be staked out and prepared for sale within one year by said
Shaeffer or assigns, after the Kansas City Belt Railway shall have
been completed to said property, unless otherwise postponed in
writing by said Blair and Shaeffer."
"In witness whereof the parties hereto have hereunto set their
hands and seals on this the 4th day of February, 1884 at Kansas
City, Missouri."
"Samuel C. Shaeffer [Seal]"
"John I. Blair [Seal]"