38 F. 467 | U.S. Circuit Court for the District of Eastern Missouri | 1889
(after stating the ismes as above.) From what has been said concerning the allegations of the bill it is evident that it was framed with a view of establishing a trust, and obtaining an account and administration of the trust property. A certain class of averments tend to show that the trust sought to be enforced is a resulting trust, arising out of a fraudulent conveyance of property by Mary E.,-Albert, and Harry W. Stein to the defendant Thompson. Another class of averments charge, in effect, that the defendant Thompson holds certain property upon an express trust created for complainants’ benefit as sureties of Mrs. Stein, or at least that defendant is estopped to deny the existence of such a trust. I have considered the case in both aspects, and accordingly announce the following conclusions on questions both of law and fact:
First. The Cincinnati real estate alluded to in the bill was conveyed to
Second. The answer denies that the mortgage of July 22, 1881, executed by Harry W. Stein, was ever delivered to or accepted by Thompson, or that it was placed on record with' Stein’s knowledge. The issue so tendered, however, must be found against the defendants. The deed of September 11, 1883, also executed by Harry W. Stein, refers to the mortgage of July 22, 1881, and professes to convey the lands therein described, subject to that conveyance. The execution of that deed by the mortgagor, and the acceptance thereof by the mortgagee, with the recital aforesaid, is a sufficient recognition of the existence of the mortgage as a subsisting incumbrance, and is sufficient proof of the delivery of-the same by Harry W. Stein, and of the acceptance thereof by defendant Thompson. But, conceding such to be the law, it must nevertheless be held that the mortgage will not warrant the court in granting relief under the averments of the bill. The mortgage did not create a trust in any lands in favor of the complainants. The mortgage was given solely to secure Thompson from liability on account of his having given, or being about to give, the complainants an indemnity bond, and also to secure him on account of his having become surety on a release bond in the Cannon Case, pending in the United States district court for the state of Kentucky. The mortgage recites, in effect, that “whereas, William H. Thompson has, or is about to, become surety on a certain bond of indemnity,” conditioned to pay complainants all such sums as they may be compelled to pay as sureties on the release bond, given at New Orleans in the Cotton Valley Case, “now, if Mary Stein shall pay or cause to be paid to Thompson, any and all sums that he shall pay or be required to
Third. The next and most important question in the case is whether the evidence is sufficient to establish an express trust, and involved in this inquiry is the further question whether defendant Thompson is not estopped to deny that he holds certain property in trust to indemnify the complainants. The facts bearing on these issues, as developed by the testimony and found by the court, are as follows: After the collision with the steamer Cannon occurred, and after Thompson as enrolled owner had signed a bond as principal to secure the release of the steamer Morgan from the seizure made in the district of Kentucky on account of that collision, he reconveyed the Morgan to Mrs. Stein, by bill of sale dated May 6, 1880. That conveyance was obviously made by Mr. Thompson to relieve himself from personal liability as ostensible owner, for future damage that might be done by the steamer, and from liabilities that she might incur. At the date of that conveyance proceedings were pending against the Morgan in the districts of Louisiana and Kentucky, and release bonds had been given in each case. It is evident that at that time it was not supposed that either suit was well founded, (particularly the Cannon Suit,') or that either was liable to result in a decree in favor of libelants. On .May 3, 1881, however, a decree was entered in favor of libelants in the Cannon Case, in the sum of about $14,-000, against Mr. Thompson and his sureties on the release bond, and on the 15th of June following a decree was rendered in the United States district court for the district of Louisiana in favor of libelants in the Cotton Valley Case against Mr. and Mrs. Stein and their sureties, these complainants, in the sum of $13,698. From the decree in the latter case an appeal was taken by Mrs. Stein and her husband to the United States circuit court. - On July 15, 1881, following the two decrees last mentioned, Sirs.'Stein reconvoyed the steamer Morgan to defendant Thompson. The bill of sale of the steamer made on that day, recites a consideration of $10,000, but it is conceded that no consideration was paid for that conveyance. The evidence in the case satisfies me that the bill of sale in question, at the time it was executed, was made by way of pledge for the sole purpose of indemnifying Thompson against the decree in the Cannon Case that had been rendered against him on the preceding 3d of May. The evidence does not show, in my opinion, that the defendant, when he accepted the bill of sale of the steamer Morgan, on or about July 15, 1881, either agreed to hold the steamer in trust to indemnify the complainants as sureties on the release bond in the Cotton Valley Case, or in trust to indemnify both himself and the complainants.
“April 7th, 2.
“W. II. Thompson, Esq., St. Louis, Mo. — Dear Sir: At time of acknowledging receipt of bond, a few days since, I had not read it with care. Rut on doing so, and on exhibiting to the gentlemen in interest, they are dissatisfied with it. I drew up a bond in accordance with an understanding which was mutual to the gentlemen and to Captain Stein, and which was represented in the conditions. The bond was intended to cover all the liability of the persons, Wood, Leathers, Martin, and Fagan, who had signed the release bond, and the bond for appeal to the circuit court. Captain Stein explained that you wrould understand this, and that he or Mrs. Stein had placed securities in your hands to protect you in signing such bond. The .bond returned has reference only to the bond of $4,000 yet to he given, to procure an appeal to the sup. court of the U. S., — very different, as you will see, from what was the intention when the bond prepared by me was drawn up. The gentlemen will hesitate to sign a further bond, before they are satisfied. I shall to-day return both bonds to Captain Stein at Cinn. Yery respectfully,
“Chas. S. Hice.”
“St. Louis, April 10th, 1882.
“Chas. S. Rice, Esqr., Hew Orleans, La. — Dear Sir: I am in receipt of your favor of the 7th, and would say in reply that the intention of the bond was to cover all liability that existed by the signing of the ‘ release bond,’ the bond of appeal to the U. S. circuit court, and also to the U. S. supreme court. The bond you sent only covered the two first items, and you stated in yours of March 25th as follows: ‘It explains itself, except that it is proposed to take the case to the ü. S. supreme court on appeal.’ It was this exception*475 that I wanted inserted in the bond, and I cannot see why you should object, or why 1 should sign bond, unless it is inserted. My understanding of the situation is that the parties on the bond objected to any further liability, unless they could have security, which, under the circumstances is only prudent in them, and in order to obtain this security the dispatch was sent to me by Harry Stein. It would hardly be possible for me to understand what you and Captain Stein were agreed about, or the conditions which were or were not to be inserted in the bond. On the receipt of the bond, as I wroto you, I went to see Oapt. Stein, to ascertain the condition of affairs, and he was under the impression that the bond did provide for appeal to U. S. supremo court. Now, in regard to the' securities you mention as being placed in my hands, would say that Oapt. and Mrs. Stein did place in my hands property, real and personal, to secure all parties who had signed bonds on account of the Morgan. This property 1 hold in trust for the benefit of all who signed; not for myself alone. If my signature as trustee only is wanted, then it would hardly be proper for me to make conditions. Rut when I sign for myself it is only fair that I should know the conditions and responsibilities which I assume. Allow me, therefore, to repeat what I stated in mine of the 1st: * The object being to secure all parties, if not satisfactory, will be ready to consent so as to cover all points.’ Now, if you will draw up a bond to cover the liability of the parties for signing ‘ bond of release, bond of appeal to U. ¡3. circuit court,’ and bond of appeal to U. S. supreme court, subject to the decision of the U. S. supreme court, etc., — in other words, I am willing to secure parties in case the suit is finally decided against the Morgan in the courts from all liability that would accrue against them from having signed any or all bonds, and only ask you to put it in such shape that the bond will ‘explain itself,’ without any exceptions. If this is satisfactory, please let me know. Yours respectfully, . W. II. Thompson.”
“New ORLEANS, La., April láth, 1882.
“To IV. If. Thompson, St. L.: The bond I prepared I have again carefully examined. It seems to me to be exact. Stein has it.
“Chas. S. Bice.”
“St. Louis, April 15th, 1882.
“Chas. S. Rice, Esqr., New Orleans — Lear Sir: Your telegram came duly to hand, and would say in reply that I cannot sign the bond you prepared. If the gentlemen only desire to be secured, I cannot see why they should object to provide in the bond for the final adjudication of the case, f cannot add anything to what I wrote you on the 10th, except to say that, if the parties aré not satisfied with my personal bond, if they prefer, I will turn over to any person who may be selected as trustee, any portion of the property conveyed to me by Stein and his wife, and which I hold as trustee to secure all parties who had signed bonds for tlie Morgan. I am perfectly willing that any part of it may be so transferred and held subject to the final decision in the ease. I would "only add that any bond that may be drawn shall have all the conditions plainly stated, and the rights of both parties properly defined. The bond you sent provides for only one, and I cannot think the gentlemen interested would require any such conditions for their protection as is contained therein. Yours, respectfully, W. II. Thompson.”
“May 9th.
“ W. II. Thompson, Esq., St. Louis, Mo. — Dear Sir: I remitted, at request, yesterday a portion, and to-day the balance, of the papers in the Kouns-Morgan matter to Messrs. Lincoln, Stephens & Slattery. I cannot conceive the reason of the last bond prepared not being signed, if it was intended to furnish the indemnity promised. I confess myself unable to understand what*476 are the grounds of your objections. I have urged the gentlemen, through Mr. Ward, to complete bond for appeal to the supreme court without allowing more delay, which I have been powerless to prevent. * * * The decree was rendered March 18th. The law allows sixty days for filing bond,— if the delay to appeal is to operate as a supersedeas. Very respectfully,
“Chas. S. Kioe.”
“St. Louis, May 12th, 1882.
“Chas. 8. Rice, Bsqr., New Orleans — Dr. Sir: I am in receipt of your favor of the ninth, and note contents. Would say that in relation to bond prepared the same objections apply as the first one, and are fully explained in my former letters. The question of whether ‘ it was intended to furnish the indemnity promised,’ would seem to me to be already settled in those same letters, in addition to the bond, which I suppose is in your possession. If there was any doubt about what the bond was intended to cover, it seems to me that my letters, written after signing said bond, would show how I understood it at time. In regard to the delay, would say that when first bond was received I gave it prompt attention, and had bond forwarded promptly, and received your account of the same. Some time afterwards you returned the bonds with your objections. I wrote you at once, covering all points of dispute, and wired you that I would have bond prepared in accordance with conditions stated in my letter. You declined, and insisted on the first bond, which I had already declined to sign. You then wired for bonds to be returned, which was promptly done. Over two weeks elapsed from that time before you prepared the last one, (at least before I heard of it,) and, when I declined to sign the last one, I proposed, if you would wire me, I would have bond furnished. The delay is, I think, not chargeable to me. However, I think it would be better to get matters arranged, and afterwards we can see who was to blame. You can-say to the gentlemen that I am willing to secure them just as I agreed to, and, if the bond they have is not satisfactory, will have one prepared, and forward for their inspection, and, if satisfactory to them, will get Stein and wife to sign, and I will sign and forward as promptly as possible. In this Way, it seems to me, we will reach a settlement sooner, and avoid what might lead to an extended correspondence. I will glad if you will wire me (c. o. d.) on receipt of this, whether appeal is or will- be perfected, so I will know whether to arrange for bond in case the gentlemen decline. Allow me to say further that I regret very much if we misunderstood each other, and can say that in all my objections none were made for the purpose of avoiding the responsibility. I agreed to secure the gentlemen, and propose to do so. 1. think you put conditions in the bonds.that you should not have done if the object was only security. I think a bond with the objectionable clause left out would be just as good, and I do not want the gentlemen to accept anything that does not cover all points. Yours, respectfully,
“W. H. THOMPSON."
The result of the controversy was that an indemnity bond was not executed. Before the time expired, however, for perfecting an appeal, the same was duly taken, and complainants became sureties on the appeal-bond. I think the weight of testimony shows, and I accordingly find, that complainants were induced to sign the appeal-bond mainly by the representations contained in Thompson’s letters, to the effect that the Steins had placed real and personal property in his hands “to secure all parties who had signed bonds on account of the Morgan,” and by his promise to turn over any portion of such property to a trustee to secure the complainants, if they were not satisfied with Ms personal bond. I
On the basis of fact above outlined I proceed now to state the conclusions I have formed. I am of the opinion that the defendant Thompson is estopped from denying that he holds the real estate conveyed to him on September 11, 1883, for the benefit of all who signed bonds for Mr. and Mrs. Stein, including the complainants. I also conclude that from and after the time complainants acted on the representations aforesaid he became bound to treat the steamer Morgan as held in pledge for the protection of the complainants as well as for his own protection. If the complainants had not acted on the representations made to them in the letters above quoted,- — in other words, if it was a simple question of
It is contended by counsel, that the defendant ought not to be held liable ou the ground of estoppel, because the complainants did not incur any additional liability by signing the appeal-bond to the supreme court of the United States, or place themselves in any worse position than they had before occupied; in short, that they were not prejudiced by the representations made, and that one necessary element is wanting to create an estoppel. I have not been able to concur in that view of the case. Complainants certainly incurred an additional liability by signing a new bond, but in addition to that fact I think it highly probable that if they had not signed the appeal-bond, and had suffered the decree of the circuit court to be enforced, the principals in the release bond (Mr. and Mrs. Stein) would at that time have protected them in a large measure, if not entirety, from their liability. When the decree was affirmed three years later, in 1885, the condition of affairs had materially changed. I have no doubt that complainants were prejudiced by acting on the representation that property was held in trust for their benefit, and that they are well entitled to insist on the estoppel.
On the part of the complainants it is insisted that they are exclusively entitled to the proceeds of whatever property, real or personal, originally received from the Steins, the defendant majr be charged with in this proceeding, and that it should be administered accordingly. It is contended that the defendant ought not to participate in the distribution of the proceeds of any property found to be in his hands, notwithstanding the fact that he was compelled to pay $14,855.99, — the amount of
Fourth. A further question concerning the use and final disposition of the steamer Morgan, and defendant’s accountability therefor, at this point demands notice. In April, 1882, a corporation was organized under the laws of Kentucky, styled the “Morgan Transportation Company,” to operate the Morgan. Thompson transferred the steamer to the corpora
At the same time I think the defendant should not be allowed to bring into the account, as against the complainants, the various sums aggregating about §6,605.50, which lie appears to have advanced to Mrs. Stein and Harry W. Stein and others between May 23, 1883, and November 10, 1884, although a large portion of that money may have been spent by the Steins in running the steamer. The view that the court takes of the case does not necessitate a reference of the same to a master. The facts already established by the testimony are sufficient to formulate a decree such as I propose to now outer. The decree will adjudge that all the real estate conveyed to the defendant by the deed of September 11, 1883, which lias not been disposed of, is held in trust by him for the benefit of himself, and these defendants, and it will direct that a sale of the same be ma.de by tlie defendant on such terms, and for such prices, as the defendant and complainants may approve, or, in case of a disagreement between them, as this court may approve, and that the fund be brought into this court for final distribution. Tlic court finds the debt due to the complainants from Mrs. Stein to be $21,j311.28, with interest to be computed thereon at 6 per cent, per annum, from August 15, 1885, to this date. It ascertains the amount due to the defendant Thompson to be §14,855.99, on which interest is to be likewise computed from April 18, 1885, to this date. Both'of these debts will participate ratably in the fund realized for final distribution. It appears that since September 11, 1883, defendant has sold certain of the real estate, and has realized therefor §3,963.64, and that he has expended, in paying mortgages and taxes on the property, the sum of $4,675.71, leaving the property indebted to him in the sum of $712.07, for which expenditure he is entitled to be reimbursed in full out of the proceeds of sale. The costs of this suit up to this date will be Taxed against the defendants. A decree will be entered in accordance with the foregoing directions.