Opinion
11-22-1823
Morris and Others v. Terrell
Leigh, for the appellant. Wickham, for the appellee.
[Syllabus Material] [Syllabus Material] [Syllabus Material]
This suit was originally brought in the County Court of Campbell, and afterwards removed by certiorari to the Lynchburg Chancery Court.
The bill was exhibited by Micajah Terrell against Charles L. Terrell, Robert Morris and John Lynch, setting forth the following case:
That Micajah Terrell, the complainant, had purchased of John Lynch a lot of ground in Lynchburg, and executed his bond for the purchase money, in discharge of which the complainant made sundry payments and remained indebted only in the sum of ___: that he deferred calling on Lynch for a deed, until the aforesaid balance should be paid: that some time afterwards, the complainant (then living in the western country,) wrote a letter to Charles L. Terrell, requesting him to sell a tract of land belonging to the complainant, lying in the county of Campbell; but, according to his best recollection, he never gave Charles authority to sell the Lynchburg lot; or, if such power were given, it was a special power to sell only for cash: that notwithstanding, the said Charles sold the said lot to one Robert Morris, to whom he was indebted, and the sale was made by Charles in discharge of the debt from him to Morris: that Morris induced Lynch (in whom the legal title resided) to make him a conveyance of the said lot, by representing that Charles Terrell had been compelled to pay a large sum of money as surety for the complainant, whereas the truth is, that Charles was largely indebted to the complainant: He therefore prayed that Charles L. Terrell might be required to produce the aforesaid letter, if it was in his possession; that he might say whether it authorized him to sell the said lot; and if it did, whether it did not expressly restrict him to a sale for cash: that he might say whether he shewed the said letter to Morris: whether he was not, at the time of the sale, indebted to the complainant, and whether the lot was not sold in discharge of a debt due from the said Charles to Morris. The complainant prayed that the deed might be delivered up to be cancelled, and that Lynch might be compelled to make a deed to him, upon payment of the balance of the purchase money due for the said lot, & c.
The answer of Morris states, that Charles L. Terrell applied to him to purchase the lot in question, alledging that he had a letter from his brother Micajah, authorizing him to sell the said lot: that Charles farther represented to the respondent, that he was anxious to sell the lot to discharge an execution against himself, amounting to 128 pounds 12s. which had been originally the debt of the said Micajah, but to which he had made himself liable: that confiding in these statements, and believing that Charles had full power to sell the lot in question, he became the purchaser at the price of $ 500, which was at that time thought to be a high price: that he paid in cash for the same 125 pounds 12s. and to John Lynch, the original proprietor, by the directions of the said Charles, the farther sum of ___ pounds, that being the balance due from Micajah Terrell, for the purchase of the lot; in addition to which, the respondent held the complainant's bond for the sum of ___ pounds, which Charles Terrell agreed to receive, and pay the overplus beyond the $ 500 to the respondent, when he got his crop of wheat to market: that many circumstances combined to induce him to believe that Charles had authority to sell the lot: that Lynch made the conveyance to the respondent, upon his paying the balance of the purchase money due upon the lot: that he has not the letter authorizing the said Charles to sell the lot, in his possession, and never had: that he merely represented to the said Lynch what had been stated to him, which he believes to be true; and that he considers the sale as a cash sale.
The answer of Lynch states, that the lot was sold at public auction, and the complainant became purchaser, as he understood: that the other defendant, Morris, represented to him, that he had purchased the lot of Charles L. Terrell, under an authority from Micajah Terrell: that he hesitated for some time, but upon being informed by his son, Christopher Lynch, that he had seen such a letter, and from other circumstances inducing a belief that Charles's power to sell was unquestionable, he executed the deed to Morris: that if the authority should be found deficient, he prays that Morris may be compelled to convey the lot to Micajah Terrell, and that he may be dismissed with costs, & c.
Charles L. Terrell having died, his executors answered, disclaiming any knowledge of the transaction, and exhibited an answer, prepared and sworn to by Charles L. Terrell, before his death, as their own.
In this answer, Charles L. Terrell affirms that he received a letter from his brother Micajah, authorizing him to sell the lot in question; which letter is lost or mislaid, and the respondent has never been able since to find it: that the part of the letter relating to this subject, is, as nearly as he can recollect, as follows: " As to the lot in Lynchburg, I do not know so well about it, unless it was sold for cash, and that laid out in young negroes:" That it is not true that the lot was sold to Morris in discharge of a debt due from the respondent to Morris; but, in discharge of a debt of the complainant's, for which the respondent had made himself liable: that it is true, that the respondent was at that time, and still is indebted to the complainant, in consequence of long transactions between them; but, that as the respondent was not in the habit of keeping accounts, he did not know how the account stood: that, since the sale of the lot, a settlement has taken place between them, and the respondent found that he was indebted to the complainant upwards of $___: that he does not believe, that he ever shewed the letter to the defendant Morris.
Christopher Lynch deposed, that previous to the sale to Morris, he was in conversation with Charles L. Terrell, about Micajah Terrell's lot in Lynchburg, when Charles drew out a letter which he had received from Micajah some time before, containing, as well as he recollected, these words: " it would be as well," or " perhaps it would be as well, to sell the lot in Lynchburg, and lay out the proceeds in young negroes," and the witness adds, " giving the said Charles perfect discretion about the same:" that the witness was informed by the said Charles, that there was an execution hanging over him, and that he intended to sell the said lot to discharge it, or was compelled to do so, or raise the money somehow: that the witness mentioned the said Robert Morris as being the most likely person to buy it; which he afterwards mentioned to the said Morris: that soon after, on the same day, the sale was made by Charles to Morris, and the witness was requested by both, to apply to his father for a deed: that his father hesitated at first, because Micajah had not paid for the lot; but, upon seeing Morris, the deed was made: that the witness told his father, that he had seen the letter from Micajah to Charles, authorizing the latter to sell: that he knew the letter to be in the hand-writing of Micajah; and, in a conversation with him some time afterwards, concerning it, he did not deny having written it, but differed a little with the witness as to the construction of it; but, even according to his construction, it would still have given Charles a discretion to sell: that he considered the price, at that time, a fair one: that Micajah complained that Charles was in his debt, and had not treated him well in selling the lot: that, in saying that the letter gave Charles a perfect discretion to sell, the witness only means to give his conclusion from the words quoted above as contained in the letter.
John Lynch confirms most of the statements in the foregoing deposition, and says, in addition, that he has understood, both from Micajah and Charles Terrell, that the latter was indebted to the former; and that after the payment of a debt to McCleland, there was still a balance due from Charles to Micajah: that Micajah uniformly refused to ratify what Charles had done.
McCleland gives a history of his claim against Charles L. Terrell, and says that the said debt was paid by Morris, and he understood, both from Charles Terrell and Morris, that the latter advanced this money in part payment of a lot sold by Charles for Micajah Terrell to the said Morris.
Another witness states, that the lot in question is greatly improved in value by the improvement of the main street in that part of the town; which improvement was jointly made by Morris and others.
The Chancellor, being of opinion that Charles L. Terrell had no authority to sell the lot in question to Morris, decreed, that the said Morris should execute to the plaintiff a deed with special warranty, conveying the legal title, and surrender possession of the said lot; and that John Lynch, senior, upon receiving from the plaintiff the balance of the purchase money due him, should execute to the plaintiff a deed of confirmation for the same, with general warranty; and that the executors of Charles L. Terrell should pay the costs out of the estate of their testator, if any, and if not, then out of their own estates.
From this decree, the defendant, Morris, appealed.
Leigh, for the appellant.
Wickham, for the appellee.
Judge Green. Judge Coalter. Judge Brooke, concurred with Judge Green.
OPINION
GREEN, JUDGE
The appellee living in Tennessee, and having an equitable title to a lot in Lynchburg, the legal title of which was in Lynch, and a tract of land in the neighbour-hood, wrote to his brother, Charles Terrell, authorizing him to sell the tract of land; and it is alledged, that in the same letter, he also authorized him to sell the lot. The best, and indeed the only account, entitled to any weight, which we have of the nature and extent of this authority, is from the testimony of a witness who saw the letter, (which is lost,) and who states, that there was in it, this expression: " it would be as well," or, " perhaps it would be as well, to sell the lot in Lynchburg, and lay out the proceeds in young negroes." The witness states, that the letter gave to Charles a perfect discretion about the same. This perfect discretion was inferred by the witness from the terms of the letter, as before stated, and was not otherwise expressed, as is stated explicitly by the witness himself. Charles Terrell was then indebted to the appellee in upwards of $ 800, and still continues to be indebted; but had voluntarily and without the request of the appellee, given his bond for a debt of the appellee, amounting to 125 pounds 12s., upon which bond the creditor had sued and obtained judgment. Charles Terrell sold the lot to the appellant for $ 500, professedly and with the knowledge of the purchaser, for the purpose of discharging this last mentioned debt; and Morris paid the 125 pounds 12s. directly to the creditor. The appellant seems never to have seen the letter, and to have acted under the impression that Charles Terrell had an unlimited authority to sell and dispose of the proceeds of sale; which impression was derived from the declarations of C. Terrell himself, and of the witness, who had seen the letter. Morris obtained from Lynch the legal title.
This sale and appropriation of the proceeds thereof, was a breach of trust on the part of Charles Terrell, and a fraud upon the appellee. The former could not, in justice, use his voluntary engagement to pay the debt of 125 pounds 12s., otherwise than by off-setting it against his larger debt to the latter, or frustrate, under pretence that the debt ought to be paid by Micajah Terrell, the appropriation of the proceeds of the sale of the lot, which the owner might have thought, and which probably would have been, very beneficial to him. The sale, as well as the appropriation of the proceeds of sale, was fraudulent and a breach of trust. The circumstances under which it was made, were calculated to prejudice the sale in respect to price. It was made by a person urged by a pressing necessity to sell, in order to relieve himself from an execution, and to a person who was apprised of this necessity. A vendor, under such circumstances, cannot expect as much for any property, as if it were known that he was under no necessity, nor even anxious to sell. It appears, by Micajah Terrell's letter, that he was entirely indifferent whether he sold or not, and Charles Terrell's necessities alone urged him to sell. The witnesses are of opinion, that the property was sold at a fair price. But, that is of no consequence. The principal had a right to the benefit of the sound discretion and unbiassed judgment of his agent, in respect to the most proper time for selling the property. And, it appears, that shortly after this sale, an inferior lot, near to that in question, was sold for $ 600; and probably it was notorious, that property of that description was rising in value. The appellee has lost the benefit of this judgment and discretion, (if this sale bound him,) by the unjustifiable purpose of his agent, to appropriate the property to his own use, to serve an immediate and urgent occasion. The statement of one of the witnesses, that according to the declarations of the appellee, after the sale, Charles Terrell had a discretion to sell, means no more than that he had a discretion to sell or not, and not that he had a discretion as to the terms of the sale and appropriation of the proceeds.
Is the purchaser, under the circumstances of this case, to be affected by the fraud and breach of trust on the part of the agent? I think he is. He who deals with an agent is bound to look to his authority. The failure of Morris to call for a sight of the letter which gave C. Terrell authority to sell, was a gross negligence, and no prudent man would, in such a case, be content with the assurances of an agent or a stranger, as to the extent of the authority, when it was so easy to have ascertained the real terms of the authority, by inspecting the letter. Such negligence is equivalent to actual notice. A man who purchases an estate subject to an equity, which the title papers disclose, is bound in the same way as if he had actual notice, although he may never have seen the title papers, and may have been assured by the vendor, and believed, that the estate was free from incumbrance. It is his folly or wilful neglect, not to have resorted to the means palpably in his power, of ascertaining the true state of the title to the property for which he had treated. If Morris had seen the letter. (and he stands in the same situation as if he had,) he would have known that C. L. Terrell was selling the property for the purpose of applying the proceeds, contrary to the instructions of his principal, and would not only have been privy, but would have been contributing, to the fraud and breach of trust on the part of the agent. I think, therefore, that the appellant cannot be protected in his purchase.
As to the claim of the appellant to be compensated for improvements, now for the first time, and in this Court, as far as it appears, asserted, I should have thought that if the appellee had asserted a claim for rents and profits, and an account thereof had been ordered, then any permanent improvements made by the appellant, although not claimed in his answer, ought to have been allowed as a set-off against the rents and profits, and to no other purpose; provided, such improvements had been made before notice of the disaffirmance of the contract by the appellee. The existence of the improvements is not alluded to in the pleadings, nor is the time at which they were made, stated in the evidence; and if they were, I should not have thought the appellant entitled to claim compensation for them, under the circumstances of this case, except to the extent aforesaid. In many cases, a party in possession may claim a compensation for improvements against the owner, as if the latter is guilty of a fraud in permitting such improvements, with a knowledge of his claim, and without giving notice thereof to the possessor, or is guilty of gross laches in asserting his claim, after he is apprized of it. In this case the appellant was not faultless. The appellee disaffirmed the contract, as soon as he was informed of it, and promptly prosecuted his suit for the recovery of the property. The sale was in September, 1809, and the answer of Morris was sworn to in July, 1810. The time of instituting the suit does not appear, but it must have been shortly after the sale.
The appellant having lost the benefit of his purchase, is entitled to have the money paid by him, refunded. In point of law his claim is against Charles L. Terrell only, who virtually received the money from him, upon a consideration which has failed. If C. L. Terrell had applied the money to the use of Micajah Terrell, although not according to his directions, the former would have had a claim against the latter to that extent, and a Court of Equity, if nothing further appeared, might substitute Morris to the rights of C. L. Terrell. But, as the latter admits that he was indebted to Micajah, and as it appears by the evidence that he was so indebted in a much larger sum than he undertook to pay for him, he has no claim against Micajah Terrell on that account, further than to set-off the payment against his debt. This right of the appellant against C. L. Terrell being ascertained and established by the pleadings and proofs between the plaintiffs and all the defendants, a decree ought to have been rendered in favor of the appellant, against the representatives of Charles L. Terrell, for the amount paid by him to said Terrell on account of the purchase. The case of Chamley v. Lord Dunsanny and othersSch. & Lefr. 690, cited at the bar, fully supports the proposition, that in such a case a decree may be made between co-defendants. And this does not conflict with the decision in the case of Taliaferro v. Minor, in this Court. The Court did not in that case declare, that no decree could be pronounced in any case between co-defendants; but that it was improper in that case.
With this variation, I think the decree should be affirmed, and the appellant should pay to the appellee his costs.
JUDGE COALTER. I am by no means satisfied, that under the circumstances of this case, this sale ought to be set aside, either for the want of power in Charles Terrell to make it, or by reason of any fraudulent or improper conduct between the appellant and him, in relation to the purchase money, which ought to vacate it.
The bill denies that any power at all was given, but insists that if any was given, it was a limited power, inasmuch as it directed a sale for cash. There is no allegation, as a ground for vacating the sale, that there was inadequacy of price, or any particular destination or appropriation of the purchase money, which the agent and purchaser combined to defeat; but, that instead of a sale for cash, as directed, it was made to pay a debt due from Charles Terrell the agent, to the appellant, when he, Charles, was in his debt.
It is proved by Christopher Lynch, who saw the letter, that it did contain a power to sell for cash, and lay the money out in young negroes, and he thinks also, a perfect discretion on the subject: that when the appellee returned to this State, he admitted he had written such a letter, and did not materially differ from the witness, as to its import and construction; but by his construction, it would still have given Charles a discretion to sell.
The deponent was apprised by Charles of the appropriation he intended to make of the greater part of the purchase money, as hereafter mentioned, and says that from his knowledge of the brothers, together with the letter, he would have no hesitation in making the purchase. He also proves that the lot was sold for a fair price; but says, the appellee complained, that Charles was in his debt, and had not treated him well by selling the lot.
The denial of any authority, then, was contrary to the appellee's own knowledge of the fact; and, in candor and truth, he ought to have rested his case solely on the charge, that it was not a sale for cash. But this charge is denied, and as to the greater part of the purchase money, is disproved; and on an account being ordered, I presume, could have been altogether disproved. How was it?
The appellee, before he went to Tennessee, sold a bill on Philadelphia, and received the cash. The drawee could not be found, nor could it be discovered that any such person had ever resided there; it of course came back protested. Upon this, Charles Terrell, to save the honor and credit of his brother, took in the bill, and gave his own bond, on which, at the time of the sale, a judgment had been obtained, and execution sued out. Now, though it since appears that Charles Terrell was at that time in debt to his brother, even after a credit for this sum; yet, he says, that accounts for many years, had existed between them, the state of which he knew not, and did not know he was in debt. He was not bound, therefore, to take this step for his brother; but having done so, and being now pressed by execution, instead of buying slaves for his brother, and suffering his own property to be sold, he made a sale of the lot for $ 500, and applied $ 418.67, to the discharge of this debt; and this, it is true, with the knowledge of the appellant at the time of the sale, of this destination of so much of the proceeds, who actually paid that debt. Suppose it had turned out that Charles had not been in debt to his brother; would not this have been a payment in cash, even to the appellee himself?
But in either way, it was, in reality, his debt. It is true, if Charles had known the state of the accounts, and had told the appellant that notwithstanding that, he intended to screen his own property, there would have been some appearance of combination between them, even if the appellant had paid over the money to him, and had alledged that it was not incumbent on him, to see to the appropriation of it. But no such case is made out; and when we add to this, that the appellant never saw the letter, but took it for granted, from the representations of Christopher Lynch and Charles Terrell, that the latter had a power to sell for cash, no intentional fraud can be attributed to him, any more than if he had paid the cash to Charles, instead of the creditor, leaving it to him to use the money as he thought proper. Some interest or unworthy motive, of which I cannot see a semblance, ought to be shewn, to inculpate him, if that is necessary; as, under all the circumstances of this case, I think it is, in order to defeat the legal title in him, which has been thus honestly acquired and paid for. The after-disputes and settlement between the brothers, however the accounts may now stand, is not enough. Indeed, Charles cannot be accused of intentional wrong. I come to this conclusion, not only from the bona fides, in reality, of the transaction, but because I think the appellee is not altogether clear of blame. He was guilty of negligence in giving a power to his brother, in whom it was natural to suppose, from their previous confidence in each other, the world would confide, if he was unworthy of that confidence; and has thus contributed to any deception, if any has been practised by that brother, either on himself or others. This power, to say the least of it, was contained in a letter calculated to produce, and did produce, a belief that it justified this very sale, in the mind of the witness, and which, of course, was calculated to produce the same opinion in the mind of the appellant. Micajah Terrell had left the State without a previous settlement with his brother, leaving his own honor in jeopardy as to the bill sold, and also his brother's in some respect, who had told the purchaser that he might rely on its payment. I cannot help thinking, therefore, that if this letter had not been lost or mislaid, or if Lynchburg lots had been falling, instead of rising, in price, on his return, we never should have heard of the defect of this power.
But this was not a sale, as is alledged in the bill, to pay a debt due from Charles to the appellant Morris. It was a sale for cash, and $ 418.67, was paid in cash, as above stated. As to the residue, there was a part of the original purchase money due to Lynch; concerning which, there is, and can be no dispute; and the small balance remaining, was to go as a credit on a bond for a larger amount, in which the appellee went off indebted to the appellant. Perhaps Charles was security in that, or was desirous to save his brother's honor there also; for, he promised to pay the balance, as soon as he got his crop to market, as is alledged in the answer, and all this would, doubtless, have been proved on taking the accounts. It was, therefore, a sale for cash, and cash payments, and consequently, the only complaint in the bill is done away. This case presents another hardship, which induces me to think that less injustice will be done in affirming the sale, than in setting it aside.
About the time of the suit, whether before or after does not appear, the appellant sold a part of this lot, and a brick house has been built and other monies laid out, which have enhanced its value. The appellant, or some one else, perhaps equally innocent, must lose this, unless the appellee can be made to account for it. This I think would be too great a premium on his transactions in this case. I have not particularly investigated this point, nor is it necessary, the other Judges being of opinion, that no account of these improvements can be taken. Indeed, I am inclined to think, from the manner in which this point is presented by the record, that no account can be taken.
I therefore think we ought to reverse the decree and dismiss the bill. The other Judges, however, are of a different opinion, and the only question remaining is, whether there can be a decree between the appellant and the representatives of Charles Terrell, for the money paid in discharge of the debt aforesaid, there being no dispute as to any other sum? The amount thus paid, as stated in the answer of the appellant, was £ 128 12s. The witness McCleland says, as near as he recollects, it was £ 125 12s. It seems to me that a decree may be made between those parties. But, as those representatives have no counsel here, and as there is no one authorized to assent to a decree for any specific sum, all that we can do is, to send the cause back for an account between those parties, settling the principle that it is competent for the Court to decree between them.
The appellee has recovered his costs in the Court below against the appellant, by the decree, and must have his costs here on the affirmance.
As to the future costs in taking the accounts, & c., they will of course be charged, either to the appellant or to the representatives of Charles Terrell, as either shall require the services producing such costs. But, on the final decree between them, I think the estate of Charles Terrell ought to be made responsible, not only for the interest of the money paid, but all costs incurred by the appellant, as well here as in the Court below, in the same manner as if he had brought a suit to have his purchase money and costs reimbursed.
As to the bond of the appellee, if that was delivered up to Charles Terrell, it ought to be returned or accounted for.
CONCUR
BROOKE, JUDGE concurred with GREEN; JUDGE and this was, in substance, the decree entered up: That although the decree of the Chancellor is right so far as it goes, it is erroneous in not proceeding to decree that the defendants, the personal representatives of Charles Terrell, should, out of the assets of their testator, if so much thereof they have, pay to the appellant what the said Charles Terrell received from him, in consideration of the sale of the lot in the proceedings mentioned, with interest from the time of the receipt thereof, and all the costs expended by the appellant in defending this suit; and to that end, proper accounts should have been directed. In taking such accounts, the said representatives should be also charged with all costs and loss, incurred by the appellant in the prosecution of this appeal; and that the costs of the further prosecution of the said suit, which would otherwise be chargeable to the appellee, should be borne in the first instance by the appellant. Therefore it is decreed and ordered, that the decree aforesaid, so far as the same conflicts with the foregoing opinion, be reversed and annulled, that the residue thereof be affirmed; and also, that the appellant do pay to the appellee, as the party substantially prevailing, his costs by him about his defence in this behalf expended. But, this decree is to be without prejudice to any suit which the appellant may be advised to bring against the said Charles L. Terrell's representatives, claiming compensation for improvements on the said lot, or to any defence of the said Terrell's representatives, against such suit or claim.