40 W. Va. 521 | W. Va. | 1895
Appeal of Elihu Hutton and others from a final decree rendered by the Circuit Court of Randolph county in a certain chancery cause therein pending at the suit of W. S.. Dewing & Sons.
The circumstances which gave rise to this litigation areas follows, to wit': The plaintiffs, citizens of Kalamazoo,.
Winchester on the 26th day of May, 1885, entered into a written contract with defendant Hutton — a man of wide experience and influence, and already in the business — to make purchases for him according to the stipulations and conditions contained in such contract. This was certainly within the scope of Winchester’s agency, and inured to the benefit of the plaintiffs, who, by their many acts of acceptance, ete., fully ratified what Winchester had done in this regard. This contract embraced lands within a certain boundary on the head Avaters of Cheat river, in the counties of Randolph and Pocahontas. A large territory- was thus purchased, and passed into the possession and control of the plaintiffs, who, through their agent, began to cut and market the timber thereon.
In the meantime Winchester and Hutton entered into a partnership to buy lands on (3-auley river and its tributaries; Hutton to do the buying, and Winchester to do the selling, at a minimum price of two dollars per acre; expenses to be deducted, and the profits to be equally divided between them. Afterwards B. L. Butcher was taken into the partnership, to assist in doing the work, in a legal capacity, and to hare a share in the profits. Winchester wrote to the plaintiffs, telling them of this partnership arrangement, and proposing to them that they should take the lands at two dollars per acre — they to take his share of the profits, and pay for the land, including expenses and the profits that would be coming to the other members of the partnership; that this arrangement was to be kept a matter of secrecy between themselves. The plaintiffs at first declined to enter into the arrangement, but finally consented, with the understanding that Butcher was to be bought out, which was done and he was retired from the partnership. After-
In the meantime Winchester and Hutton had entered largely into the store and farming business at Huttons-ville, in Randolph county, which was principally managed by Winchester, through his agent, John 0. Arbogast, in whose name such business was run, and by him conducted as manager. The fact that Winchester and Hutton were tacitly understood to be behind him gave him standing and credit, and a large amount of property was accumulated in his name. Winchester used the money of the plaintiffs in this business, pretending to them that it was going into the land purchases, but with the understanding with Hutton that if his earnings and interest in the land sales were sufficient to cover the Arbogast investments, in a final wind-up, Hutton was to have all the Arbogast property. Being speculative and visionary, no other result was ever contemplated by them, especially Winchester, but how he was to derive any benefit from the arrangement is not made to appear. W. S. Dewing, becoming aware of the extravagant notions and transactions of Winchester, and the wild chase he was leading Hutton, and fearing that his firm was about to lose some money, owing to the fact that they advanced, as he believed, a much larger sum than they had or would receive a return for, induced Hutton, without the knowledge or consent of Winchester or Arbogast, to execute a deed of trust on all his property, including the Arbo-gast property, for the purpose of securing the “payment of the account of Dewing & Sons against said Elihu Hutton, which approximately aggregates the sum of twenty five thousand dollars, which sum is made up of cash advances to said Hutton by said Dewing & Sons, through their agent, A. H. Winchester, in the purchase of real estate in West Virginia, subject, however, to settlement and adjustment hereafter by the parties in interest, as to credits.” This
On the 2Gth day of November, 1888, Hutton and Arbogast, understanding that it was with Dewing’s consent, so expressed in the deed, executed another deed of trust, conveying the Arbogast property, in trust, to secure the claim of Dewing & Sons against Hutton, and the Arbogast creditors, on an equal footing. This deed was objected to, and never recorded. Finally, on the 3d day of December, 1888, a third deed of trust was executed by John C. Arbogast and Arthur H. Winchester, trustee, conveying to Joseph F. Harding, trustee, all the Arbogast property, to secure the Arbogast creditors, pro rata, and was admitted to record the 5th day of December, 1888. The trustee under the last deed took possession of all said property, and was proceeding to administer the same, and pay the debts thereby secured, when the plaintiffs filed their bill, obtained an injunction, and had said property taken charge of by a receiver of the court, and sought to have their trust debt declared a first lien thereon. Defendant answered said bill, claiming that he owed plaintiffs nothing, but on a fair settlement they would be justly indebted to ■him, and prayed for such a settlement, and a decree for any amount that might be due him against plaintiffs. John C. Arbogast and his creditors answered, claiming that their debts should be first paid out of the trust funds, in accordance with the last deed. Other answers were filed, and general replications thereto, and special replications to affirmative matters. Plaintiffs
The following is the assignment of errors: “First. The court erred in allowing the said injunction, or, if not error in allowing the same, it was error not to dissolve the same upon the hearing of the cause. Second. It was error to attempt, under the pleadings in the cause, to make a general statement and settlement of the accounts between the plaintiffs and the petitioner, as the proceeding had for its object, as the plaintiffs allege, the execution of the trust, and the correction of an alleged misapplication of the funds of the personal estate conveyed in trust. Tlm-d. It was error to attempt a settlement of the partnership account between the plaintiffs and the petitioner, as was done by Commissioner Ward, who finds that there was a partnership between petitioner and A. H. Winchester, agént for the plaintiffs, as to the ‘G-auley purchases.’ This partnership could be settled only upon proper proceedings had for the purpose, to which B. L. Butcher would be a necessary party; and for that purpose a proper suit is now pending in the said Circuit Court wherein the petitioner is plaintiff, and the plaintiffs herein, B. L. Butcher and others, are defendants. Fourth. It was error to decree in said cause, in favor of the plaintiffs, more than twenty five thousand dollars, with interest from November 16, 1888, as a lien under the deed of trust of that date, because the said trust deed only secured that sum of money ‘subject to settlement as to credits.’ Fifth. It- was error to decree the proceeds of sale of the merchandise, live stock, and other property of the business at Huttonsville carried on in the name of J. 0. Arbo-gast, to the plaintiffs, to the exclusion of the creditors of said business, because the social assets of said business
The following are the exceptions to the commissioner’s report: “The defendant Elihu Hutton excepts to the report
The exceptions of the Arbogast creditors and others are
It is a matter of impossibility, in any reasonable space of time, to take up these prolix and extremely lengthy assignments of error and exceptions to the commissioner’s report, and dispose of them in rotation. The attention of the learned counsel in this and other similar cases is respectfully called to the rules of this Court, to be found in volume 23 of the West Virginia Reports. If the counsel would acquaint themselves with, and endeavor to observe these rules, it would be a concession for which the Court would be truly grateful.
The two questions of main importance presented for consideration by this record are; First. Are the Arbogast creditors entitled to priority of payment out of the proceeds of the Arbogast property? Second. Has the commissioner made a proper statement and settlement of the accounts between the plaintiffs and the defendant Hutton?
Dor some reason, best known to themselves, neither plaintiffs nor defendants took the testimony of Arthur H. Winchester, and it is quite conspicious by reason of its absence. Sometimes it was needed, and its siippression must operate-against the plaintiffs, and at other times against the defendant Hutton, as Winchester appears to have been the mutual friend and dual agent — seeking, with truly altruistic-disinterestedness, to advance the interests of both without injury or detriment to the other. He wanted the plaintiffs to become rich off of their purchases through the defendant Hutton, and he wanted Hutton to thrive magnificently off of his income from the plaintiffs, while for himself he had no thought, except to rejoice in the success of his friends,, brought about by his labors. In his zeal to serve two friends whose interests were at times adverse, he overreached himself, and managed to get their business affairs in such a tangle as to lose the confidence of both, and involve them in a legal conflict, for the solution of which his evidence ought to have great weight and bearing, yet it is rejected by both alike.
From the pleadings and the evidence, and the lack of
An agent can not be deprived of his lien, without his consent, by an act of the principal. Arbogast had possession of the property in controversy, with every mdicia of ownership, acting as the agent of Winchester. The plaintiffs and defendant Hutton deny any interest in the property, except such as the plaintiffs may have by virtue of Hutton’s trust deed. If these separare pretensions be accepted, the property must be regarded as belonging to Winchester, and Hutton’s deed passed no title to the trustee. And the deed of Arbogast and Hutton, having been made without Winchester’s consent or knowledge, is invalid in so far as it secures any debts other than those belonging strictly to the agency. And, in any event of ownership, to such extent the last mentioned deed was invalid, for the reason that Ar-bogast, in executing it for such purpose without, the consent of Winchester, as owner or trustee, exceeded his authority.
But the trust deed of the 3d of December, 1888, executed by Arbogast to secure the agency creditors, was rendered valid beyond controversy, by Winchester consenting thereto and uniting therein.
On the other hand? treating the property as conditionally Hutton’s under the management and control of Winchester, as trustee, through Arbogast, as his agent and the ostensible owner, both Arbogast and Winchester have a lien on said property for all liabilities contracted in the management thereof, with the right to retain possession, and,being clothed with the power, the right to sell a sufficiency thereof to pay such liabilities, superior to the rights of Hutton, or plaintiffs, claiming through him. And, with the consent of all interested parties, they had the right to execute the trust for the continued security of the liabilities incurred, and thus merge their lien and possesion in the trustee, Harding, for their use and benefit. To this disposition of the property the evidence, by a decisive and convincing preponderance, shows that both plaintiffs and defendants consented. And this disposition was in accordance with the law.
The sole question for us to decide is whether the agency lien of Winchester and Arbogast is entitled to priority, as to this property, over the lien acquired by plaintiffs by virtue of the deed of trust from Hutton. To this there can be but one answer, and that is that the Arbogast creditors, under the circumstances of this case, must be first paid out of the Arbogast property, and that the plaintiffs’ trust lien, when rightly ascertained, must be postponed and made second in priority as against such property.
As a case of partnership in some respects analogous, see Darby v. Gilligan, 33 W. Va. 246 (10 S. E. Rep. 400); also Baer v. Wilkinson, 35 W. Va. 422 (14 S. E. Rep. 1)—which cases would be pointedly applicable if there was a partnership between Hutton and Winchester. The only interest, then, that plaintiffs have in the Arbogast property by virtue of the deed of the 16th of November, 1888, is'the right to the residuum after the payment of the agency creditors. They therefore had such an interest in the property as justified the filing of their bill, and if losses are sustained by reason of the injunction, the removal of the trustee, and the appointment of a receiver, it will probably fall most heavily upon themselves. .As the amount secured by the trust was indefinite, and subject to settlement, it could not be properly ascertained and fixed without a complete adjustment of all the transactions between the plaintiffs and defendant Hutton.
B. L. Butcher is not a necessary party to this suit, for the evidence shows that he long since parted with his interest in the G-auley partnership to his co-partners. This partnership was first formed between Winchester and Hutton. It was for a specific purpose. Lands were to be bought as low as possible, and Winchester was to sell the same for not less than two dollars per acre, and the net proceeds were to be divided between them. Winchester induced the plaintiffs to purchase the lands at the price named by agreeing th'at they should have his share of the profits, and thereby ostensibly led them to take his place in the partnership.
There are a great many disputed items controverted by both plaintiffs and defendant Hutton in each other’s accounts, and yet the commissioner without making an itemized statement, charges defendant Hutton with a total sum of one hundred and thirty two thousand six hundred and sixty dollars and twenty eight cents and credits him with a total sum of one hundred thousand seven hundred and forty eight dollars and ninety three cents, finding a uet balance of thirty nine thousand nine hundred and ten dollars and forty one cents, including interest. The defendant excepted to the report for this reason, as he was unable to tell what items entered into these aggregate amounts, and therefore he could not intelligently except to the allowance or disallowance of any special item. This exception should have been sustained, and. the report recommitted, with direction to the commissioner to make an itemized statement, showing item by item the credits, debits and all sums disallowed. In no other wTay can the court examine and pass upon such report, unless it accepts as a finality the action of its commissioner. Buch, 'however, is not the law. A commissioner is intended to aid the court. This Court has-no such officer, and, when this duty has not been properly performed, there is no alternative but to reverse the case, and send it back to be recommitted. To pursue any other course would be to try the whole controversy de novo, impose on this Court the' duties of a commissioner, and the determination of the litigation as in a court of original, instead of appellate, jurisdiction.
There is one other exception to the commissioner’s report
For the foregoing errors the decree complained of is reversed . set aside and annulled, and this case is remanded to the Circuit Court, to be recommitted to the commissioner, with direction, without regard to his former reports, to make a complete itemized statement of all transactions between the defendant Hutton and the plaintiffs, by themselves or through their agent, Winchester, giving and showing all proper credits and debits, and each item disallowed; and to be further proceeded in according to the foregoing opinion and rules of equity.