154 A. 487 | Pa. | 1931
The only question involved in this appeal is whether appellant's bill contains sufficient averments to sustain equity jurisdiction.
Custis, appellant, and Serrill, one of the appellees, entered into an agreement to erect a cold storage plant convenient to the Dock Street Market, Philadelphia, the plant to be later leased to a company which they would organize. The plan included an agreement with some railroad as a necessary incident to its success. Serrill and Custis were each to have a fifty per cent interest in the enterprise. Custis failed to induce the Pennsylvania Railroad Company to enter into the arrangement and the parties then determined to try the Baltimore Ohio Railroad, the site for the plant to be selected by that company.
Custis opened negotiations with this company. Conferences were held with officials of the road at which Serrill admitted he and Custis were jointly interested in the matter. Later it was determined the negotiations should be conducted by Serrill, who was better informed in cold storage matters, and Custis notified the railroad officials at a conference with them that the lease and terminal agreements were to be taken in the name of Serrill. The project was finally approved by the parties, and a lease and agreement was executed by the railroad company to Serrill.
The bill then avers that Serrill fraudulently and surreptitiously appropriated the lease and contract to his own use and assigned it to the other defendant appellee, the Quaker City Cold Storage Company, a Pennsylvania corporation controlled by Serrill, who was an officer and majority stockholder. The lease was said to have had a value of $500,000. *270
When Custis became aware of the transfer, he endeavored to have his rights protected; but defendants refused to acknowledge his claim or recognize his interest. This bill was brought to compel the cold storage company to acknowledge this interest, to make a full accounting of the transaction between it and Serrill regarding the lease, to disclose the price paid for the lease and the profits under the lease. Serrill was asked to account for the profits made on the lease and to convey or procure the conveyance of appellant's one-half interest in the lease. The court below dismissed the bill against the cold storage company because there was no allegation, first, that it was a party to the fraud, second, that it was not a bona fide purchaser for value of the lease, and, third, that there was any contractual relation between the company and Custis. The action against Serrill was certified to the law side of the court.
If we assume appellant's statement of the facts to be correct, Custis had such an interest in the lease that would entitle him to ask for the conveyance of a one-half interest in possession of the cold storage company, if the latter had notice and there were no intervening equities. "It is a universal rule, that if a man purchases property of a trustee, with notice of the trust, he should be charged with the same trust . . . . . ., as the trustee from whom he purchased": Perry on Trusts, volume 1, section 217, and cases there cited; Cameron v. Peoples' Bank of Maytown,
Appellant demands an accounting of the profits from the lease so that his one-half interest may be properly protected. Among the instances where an accounting in equity is proper are "where the accounts are all on one side, but there are circumstances of great complication or difficulties in the way of adequate relief at law"; and "where a fiduciary relation exists between the parties, and a duty rests upon the defendant to render an account": Williams v. Finlaw, Mueller Co.,
The bill avers fraud and asks for discovery and these are sufficient for equitable jurisdiction even if we are mistaken as to the other matters which may be considered doubtful. Whether or not the remedy in equity is more efficacious, adequate, or convenient than an action of law, it is certain chancery always assumes jurisdiction in relief of fraud.
All the reasons urged by appellee's counsel against sustaining the bill will no doubt have great weight in the ultimate determination of the case. They include the rights of other shareholders and creditors, those of intervening parties, and the question of notice. The question of laches and whether or not Custis put it into the power of Serrill to do just what was done, is likewise important. The bill, while not as full and clear as it might be, contains sufficient averments to go to a hearing. The complaints are not so separate and distinct as to be objectionable. We do not agree that, from the pleadings, the legal relation between Custis and Serrill is that of a deal between purchaser and real estate broker, or that of agency. The case, on the pleadings, may be likened to one at law. Where a motion to dismiss a bill for insufficient pleadings is made and it is not clear whether they are objectionable on that account, but, because of the nature of the action, a broad inquiry into the facts should be made, the court should refuse to dismiss the bill in such doubtful cases and proceed to a full hearing. See Griffith v. Sitgreaves,
The decree of the court below is reversed, the bill is reinstated, and the cause is remanded for further hearing. Costs to abide the determination of the case.