50 Iowa 376 | Iowa | 1879
Lead Opinion
The answer admitted the receipt of the money, but denied ¡any indebtedness therefor, and it is averred “that the Iowa Railroad Contracting Company has credit for each of said •sums for the full amount thereof; and by way of cross-claim .against the said plaintiff this defendant claims the sum of ■ one hundred and eighty-nine thousand one hundred and forty dollars, which he alleges to be due him from said plaintiff, .and for cause of such claim states that the Iowa Railroad Contracting Company and the plaintiff are two corporations, largely if not entirely composed of the same persons, and interested in the same property; that the Iowa Railroad Contracting Company built a portion of the Cedar Rapids & Missouri River Road from Cedar Rapids to the Missouri River; that John I. Blair was the president of said contracting company; that said Blair, as such president, for and on behalf of said contracting company, entered into a verbal contract ■with this defendant whereby this defendant was to purchase and procure donations of lands (the said Blair to furnish the money to pay for all purchases so made) along the line of ¡said railroad — this defendant to take the title to all of said
It is further averred “that at the time said Blair conveyed and transferred said lands to said plaintiff, as aforesaid, the
■ It is averred, as a further cause of such cross-claim, that the contract for the purchase of the lands was made with John I. Blair, as we understand, in his individual capacity. The terms and conditions of the contract are the same as above stated, and the defendant makes the same claim thereunder as aforesaid.
The defendant prays relief as follows: “Wherefore, defendant says that by reason of the premises aforesaid he is entitled to an accounting from said plaintiff 'for the town lots sold since the 24th day of July, 1871, and that defendant is entitled upon said accounting to one-half the profits arising from the sale of such lands and lots, after deducting the costs, interest and taxes,” and judgment is asked against the plaintiff for one hundred and eighty-nine thousand one hundred and forty dollars.
In a further pleading, and “by way of further, more specific and other cross-claim against plaintiff,” the defendant states that he entered into a contract with John I. Blair for himself only, and that said Blair, for himself and defendant, made the contract which is set out, and the same is substantially, in other respects, like that above stated, so far as the question now under consideration is concerned.
The plaintiff replied to the pleadings filed by defendant, and denied the several matters therein stated, or alleged other things in avoidance thereof. Such being the issue, did the court err in referring the cause ? •
If, under the pleadings and issues joined, the cause or causes of action, either under the petition or answer and cross-
Section 2816 of the Code in substance is identical with Revision, § 3090, with reference to which it was said by Cole, J., in McMartin v. Bingham, 27 Iowa, 234, that “our Code has specified the precise matter which was formerly of equitable cognizance, and as to which, of course, in that court, there was no right of trial by jury. * * * Where a case falls within the rules of equitable cognizance, as correctly specified by the Code, there should be no hesitation in the exercise of the power of compulsory reference.”
The defendant asks that an accounting of the matters aforesaid be had. Such is unknown to a purely legal action, but it is freely granted in an equitable proceeding. Such a remedy it is the peculiar province of courts of equity to administer. This has been' so since the action of account was abolished or abandoned at law, the accounting in equity having taken its place. The jurisdiction of equity, in this respect, has never been accurately defined. It is, indeed, doubtful whether it can be done. In Story’s Equity Jurisprudence, § 454, it is said: “One of the most difficult questions arising under this head is to ascertain whether there are any, and, if any, what are the true boundaries of equity jurisdiction in such matters of account as are cognizable at law.”
It is true no discovery is called for by the defendant, and it is equally true that his demands az’e not for goods sold, money had and received, or for services rendered; and unless
The account or transaction out of which the profits, on the defendant’s theory, have accrued, is exceedingly complicated. Conceding the contract to be established before the profits of the venture can be ascertained a series of calculations must be made. The lands were purchased at different times; the amount paid for each parcel was not the same; the taxes paid on each tract may or may not be the same; and interest must be calculated not only on each purchase, but also, we think, on each payment of taxes.
When the contract is established, and the amount of money paid out thereunder is ascertained, there remains a series of calculations to be made before the profits can be determined. Surely such calculations, and all matters connected therewith, can be much better made and ascertained by a competent referee than by a jury of twelve persons not versed therein.
In section 457, Story’s Equity Jurisprudence, it is said: “Another and more general ground has been asserted for the jurisdiction, and that is, not that there is no remedy at law, but that the remedy is more complete and adequate in equity; and, besides that, it prevents a multiplicity of suits.”
An examination of the accounts introduced in evidence by the defendant satisfies us that to try this case before a jury would be a mockery. The time required to try the case before a jury, and the fact that it can be more expeditiously done before a referee, and a correct result more nearly attained, satisfies us, under all the circumstances of the case, that the court did not err in making the reference, because the remedy is “more complete and adequate, ” and for that reason, if no other, equity has jurisdiction.
Blair was president and the defendant assistant treasurer
When money was paid out for lands a voucher was made out in the name of the company therefor, and a receipt taken in its name for the money so paid. These vouchers were kept with others, which, it is conceded, contained legitimate charges against and payments by the company. The defendant’s time, as an employe of the company, was required to perform duties he was compelled to perform under the alleged contract. Not only so, but other employes of the company performed services under the direction of the defendant in selecting and attending to said landed interests.
For the services so rendered said employes were paid by the company. We have looked in vain for any testimony showing that any difference whatever was made between said lands, the money contributed for the purpose of purchasing the same, and any other matter which legitimately belonged to the company, until long after the lands were purchased, when, according to the testimony of the defendant, Blair directed him to change the accounts, or eliminate from the ¡same in the company’s books the items in relation to the 'lands.
At the time the alleged contract was made, and during the .time the lands were being purchased, Blair and defendant were directors in the company; and members of the executive
We are satisfied that the other stockholders believed, and had reason to believe, the lands were purchased for the use- and benefit of the company. Some of them so testify, and that Blair assured them such was the fact.
After a time disputes arose between them and Blair in-relation to matters connected with the construction of the-road, including the ownership of the lands and moneys received from the sale of portions thereof.
The conclusion is forced on us, from the matters above-stated, that the defendant must have understood, during the-time the lands were being purchased, that the same were purchased for the use and benefit of the company. His acts and conduct at the time, and for some time afterward, irresistibly lead to this conclusion. His explanation of the manner of' keeping the accounts is that the books were regarded as temporary, and that he did not desire that certain stockholders should know he had such a contract. This is far from satisfactory, and to our minds clearly insufficient.
If wrong in this, we are unable to believe Blair and the-defendant could legitimately use their position as officers and directors of the company for their'personal aggrandizement, as contemplated by the contract. Without saying the same-was done, they had opportunity to locate stations, if the contract were legitimate, in furtherance of their own interest, at the expense of the company. The lands were purchased in the vicinity of the road, and their value enhanced by its construction. That Blair and the defendant might properly purchase lands the same as other individuals, and advantageously use' and have the benefit of their positions, and knowledge derived therefrom, as aids in making selections,.
So far from the company or the other stockholders giving their consent to Blair making the purchases for. himself individually, they had just the contrary belief and expectation. Neither Blair nor the defendant could derive any advantage or benefit from purchases so made, and the contract alleged to have been made as against the company was void.
'III. It is insisted that the claim or account sued on never has been assigned to the plaintiff; but we think otherwise. The testimony of Blair, certain writings executed by him, and the action of the contracting company in the passage of certain resolutions, satisfies us that the claim sued on has been assigned to, and is the property of, the plaintiff. The length of this opinion forbids a discussion of the evidence further than has been done, and no possible benefit could be derived therefrom.
Affirmed.
Dissenting Opinion
dissenting. — I think the court erred in sending the case to a referee. This point I will briefly examine. The statute upon the subject of reference demanding consideration in this ease is found in the following provisions of the Code:
“Section 2815. All or any of the issues in an action, whether of facts or of law, or both, may be referred upon the consent of the parties, either written or oral, in court, entered upon the record.
“Section 2816. When the parties do not consent the court' may, upon motion of either, or upon its own motion, direct a reference in either of the following cases:
“1. When- the trial of an issue of fact shall require the examination of mutual accounts, or when, the account being on one side only, it shall be made to appear to the court that ■it is necessary that the party on the other side should be examined as a witness to prove the account, in which case the
“2. When the taking of an account shall be necessary for the information of the court before judgment, or for carrying a judgment or order into effect; or—
“3. When a question of fact shall arise in any action by equitable proceedings, in which case the court, in the order of reference, shall prescribe the manner in which the testimony shall be taken on the trial. ”
It will be observed that, without the consent of the parties, references may only be had in cases cognizable in equity. The settlement of mutual accounts, and the taking of accounts contemplated in the first and second paragraphs of section 2816, are matters, it is presumed, of which a court of chancery has jurisdiction. It is not intimated, however, that when issues arise in actions at law involving matters of this character, they may not be referred without consent of the parties.
It is claimed by plaintiff that the issues of fact in the case required the examination of mutual accounts, and that the defendant’s answer, setting up his cross-claim, presents an equitable cause of action. Upon this ground the ruling of the court ordering the reference seems to have been made. It, therefore, demands consideration.
Let me state briefly the issue in the case. The petition claims to recover for money received by defendant. The receipt of the money is admitted in defendant’s answer. TTis liability therefor is denied on the ground that it was applied toward the payment of a sum due from plaintiff under the ■contract. It is plain that the issues arising upon the petition do not require such settlement or examination of mutual .accounts as to bring the case within the statute above quoted. We do not understand this is claimed by plaintiff’s counsel. The issues upon the petition; therefore, require no further ■consideration.
The cross-petition of defendant sets up a contract with
The defeiidant’s claim against plaintiff rests upon an alleged contract for service-3. While defendant may be said, in common language, to hold an “account” against plaintiff, we think his claim is not a matter of “account” of which equity takes cognizance. Under all contracts for services “accounts” of like character may exist. The “account” in this case may be unusually prolix, and require a long time to adjust it, but these are not grounds of equitable cognizance. The mere fact that a case involves'the examination of an account, using the word in its common acceptation, will not give chancery jurisdiction thereof.
In order to understand this subject clearly, attention must be given to the doctrines and rules of equity applicable to this subject. They are familiar to the profession, and cannot be the subject of controversy. They are summarized by Justice Story in the following language:
“So that, on the whole, it may be laid down as a general doctrine that in matters of account growing out of privity of contract courts of equity have a general jurisdiction where there are mutual accounts; and a fortiori where these accounts are complicated, and also where the accounts are on one side, but a discovery is sought and is material to the relief. And, on the other hand, where the -accounts are all on one side, and no discovery is sought or required; and, also, where there
It is not claimed that there are mutual accounts in the case, nor is a discovery claimed. '
The trial may involve the examination of many items which constitute the claim of defendant. This does not give equity jurisdiction. It may involve the examination into the state of the accounts of the two contracting companies, of Blair and of plaintiff, relating to the purchase and sale of lands and-lots; but defendant does not base his right to recovery upon these accounts, and plaintiff cannot claim that they are accounts against defendant. They are examined for the purpose of determining the amount of compensation defendant ought to recover under the terms of the contract. Facts disclosed therein constitute the basis of compensation in such investigation.
I reach the conclusion that the District Court erred in ordering the'reference without the consent of the parties, and that the judgment of the District Court ought to be
Reversed.