Opinion
12-13-1906
SMITH v. UMSTEAD et al.
G. Dore Cogswell, for complainant John F. Earned, for defendant Hallinger.
Bill by Frank Harlan Smith against Charles H. Umstead and another for specific performance. Decree for defendant H. G. Hallinger.
G. Dore Cogswell, for complainant John F. Earned, for defendant Hallinger.
LEAMING, V. C. (orally). I am prepared to decide this case without hearing from Mr. Harned. This is a bill filed by the vendee to compel specific performance by the vendor of an agreement for the conveyance of properties on Penn street in the city of Camden. The vendor, Charles H. Umstead, has filed no answer, and a decree pro confesso has been taken against him. The bill, however, makes as a defendant H. G. Hallinger, who has a deed of conveyance for this property to himself from Mr. Umstead from whom the complainant procured his agreement, and the claim in the bill is that Mr. Hallinger is not an innocent purchaser for value without notice of the rights of the complainant, but that, on the contrary, Mr. Hallinger purchased this property after an agreement was made by the complainant with the owner and with knowledge of the existence of the rights of the complainant.
It is unquestionably true that, if the defendant Hallinger purchased this property with a knowledge of the existence of the agreement held by the complainant, his purchase would be subject to the rights of the complainant, and specific performance could be decreed, not only against the original owner, but also against Mr. Hallinger, for the theory of the law is that where there is an agreement for the sale of real estate, the equitable title at once passes to the vendee, and any person who buys with a knowledge of the prior agreement holds the property as trustee for the owner of the equitable title, and the owner of the equitable title can enforce specific performance against him as well as against the original owner. The question, therefore, for determination in this case, and the only question, is one of fact whether or not Mr. Hallinger purchased this property with a knowledge of the rights of complainants, or with a knowledge of such facts as would reasonably charge him with notice of the rights of the complainant, for, if Mr. Hallinger had knowledge of matters which should have put him upon inquiry touching the rights of the complainant, he would be chargeable with a knowledge as broad as a reasonable and prudent research, stimulated from the more limited knowledge he might have received, would have brought to him. So the whole question is whether Mr. Hallinger knew, or had reason to know, of the existence of the complainant Smith's rights at the time he purchased this property.
The evidence offered upon the part of the complainant to establish that fact consistsfirst of the testimony of the complainant, who, I have no doubt, testified with the utmost truth as he recollects the facts. I would not hesitate for a moment in reaching the conclusion that the testimony of the complainant was given with the utmost sincerity and fidelity, whether he is mistaken in his recollection as to the exact facts or not. The testimony of the complainant is that, one week before his contract of purchase was executed, he called upon Mr. Hallinger touching the purchase of the property, having observed that Mr. Hallinger had it for sale, or had some properties for sale which he ascertained later to be this property, through a notice in a Philadelphia paper. Mr. Hallinger asked a price of something over $3,600 and Mr. Smith offered $3,500. Finally, Mr. Hallinger asked him to make it $3,600, and Mr. Smith declined to pay that amount, and Mr. Hallinger then stated that he would consult the owner in the matter. If Mr. Smith's recollection of that conversation is strictly accurate, it goes far toward establishing the fact that at that time, which was one week before the date of complainant's contract—complainant's contract is dated February 6th—Mr. Hallinger was not the owner of that property, either by agreement of purchase or otherwise, but was handling it for some one else. Mr. Smith also testifies that three days after the date of his contract of purchase he was called on by Mr. Van Blanck, who is the agent of Mr. Hallinger touching these properties, and that at that time he informed Mr. Van Blanck that he had already purchased the properties through Mr. Barr, and it is admitted that Mr. Van Blanck reported that fact to Mr. Hallinger about that time, perhaps a day or so later.
The other evidence upon the part of the complainant to establish the fact that Mr. Hallinger knew of the existing rights of the complainant, and was not in fact what he professes to be, a bona fide purchaser of these properties, but that the professions he makes in that respect are mere shams, is a witness by the name of Mary A. Yomer, who testified that in May, 1906, while she was a tenant of one of the properties, and when she was making complaint by reason of the bad repair of the property she occupied and asking for further repairs, that Mr. Hallinger stated to her, "I can't do anything, for I don't own the property."
Another witness offered by the complainant was Margaret A. Denight, another tenant of one of the properties, who testified that, under somewhat similar conditions in May or June, 1906, Mr. Van Blanck, the agent of Mr. Hallinger, used this language to her: "We can't fix it up; we don't own the property."
Under this testimony the complainant's contention is not only that Mr. Hallinger had notice of the existence of rights upon the part of the complainant sufficient to put him upon inquiry, but also the claim that Mr. Hallinger's purchase is a sham and not a verity.
Upon the part of the defense Mr. Hallinger testifies with positiveness, and in a manner to carry conviction, that this property was purchased by him in good faith from Mr. Yeager, the agent of the defendant Umstead, on January 20, 1906, and that a written agreement to that effect was signed by the agent at that time; that at the time that agreement was made Mr. Hallinger, fearing that the agent might not have absolute authority in the matter, requested that a new agreement be substituted for the one then executed, and the new agreement signed by the principal, Mr. Umstead, in person, and that on the first day of February, 1906, or at the latest the day after that, Mr. Umstead signed a new contract which was substituted for the old one, which contract is marked "Exhibit D 2," and was received in evidence. The testimony is that later on the date of the deed, which was March 1, 1906, a final settlement was made in accordance with the agreement of February 1st—which agreement is claimed to be practically a duplicate of the prior agreement of January 20th—and the balance of the purchase money was paid.
Mr. Hallinger explains the testimony of the tenant Yomer by the statement that he has no recollection of any conversation whatever with her, but that he may have used language, not as stated by the witness, but of somewhat similar import, by reason of the fact that he had an agent, Van Blanck, employed to take sole charge of a large number of properties owned by him and rented by him, and that he himself took no personal charge and gave no personal attention to the matter of rents or repairs; and that all persons who inquired of him touching rents were turned off with a remark of that kind, and that Mr. Van Blanck was the person to whom they were always referred and who took up such matters and gave them the necessary attention. Mr. Hallinger explains the testimony of Mr. Smith touching the conversations to which Mr. Smith has testified, by the statement that Mr. Smith is mistaken, that he did not and could not have used language attributed to him by Mr. Smith because the properties had at that time been purchased by him under the agreements which have been referred to.
I make this review of the testimony for the purpose of showing that the whole case resolves itself upon the determination of the single question of fact: has Mr. Hallinger told the truth; has Mr. Hallinger purchased these properties in good faith as he testifies he has? For, if he has, it is perfectly plain, as a matter of law, that when this agreement of the 1st day of February, 1906, was executed as a substitute for a prior agreement of January 20, 1906, executed by the agent, Mr. Hallinger's rights were absolute, and no matter what claims were made against theproperties or what notices were brought to his attention touching the properties after that, it was his privilege, if he chose to take the risk, to live up to that agreement, and this court would be bound to protect his rights. Therefore, the sole question is that single question of fact, has Mr. Hallinger told the truth, has he in good faith entered into these agreements and carried them out?
It is incumbent upon the complainant to satisfy this court with such a fair preponderance of evidence as will justify this court in making a finding of fact against the verity of Mr. Hallinger's testimony before this court can be justified in giving affirmative relief in behalf of the complainant and against Mr. Hallinger. The proofs made by the complainant fall short of that convincing force which will enable this court to determine as a fact that Mr. Hallinger's testimony has been a system of fabrication from beginning to end, as it would necessarily have to be to warrant a decree against him. On the contrary, the testimony as a whole leads me to the conclusion that Mr. Hallinger has told the truth and that, in so far as the testimony cannot be fully reconciled, there has been honest misunderstanding.
I am obliged, therefore, to find as a fact that Mr. Hallinger is the purchaser of the properties in good faith and without notice of the rights of complainant. It follows that a decree of specific performance cannot be made against him. I will so advise.
Mr. Cogswell: I ask that no costs be taxed in this case.
The Court: I cannot say that Mr. Hallinger should be denied his right to costs. If you have a remedy against Mr. Umstead, and there does not seem to be any question but that you have, you should look to him, if you can get jurisdiction over him. Mr. Hallinger was obliged to defend this case, and I think, on the general principle upon which costs are awarded, the court should award costs to him.