Flippo v. Lamb

| Va. | Mar 10, 1904

Keith, P.,

delivered the opinion of the court.

On the 28th of Uovember, 1899, John T. Terrell was, upon his own petition, adjudicated a bankrupt in the District Oourt of the United States for the Eastern District of Virginia, and shortly thereafter John A. Lamb was appointed his trustee. On the 23d of October, 1900, the District Oourt entered an order directing the trustee to institute such suit at law or in equity as'to him might seem proper to enforce .a contract alleged to have been entered into between the bankrupt, Terrell, and one Elippo for the purchase of a tract of land, for the collection of any money, or the enforcement of any right which may have accrued to Terrell by virtue of said contract. The trustee filed his bill in the Circuit Court of Hanover county, and with the bill makes the following contract an exhibit:

“Know all raen by these presents, that whereas J. T. Terrell has bought a farm in Caroline county, Va., known as Brooke’s farm, containing 700 acres, more or less, for five thousand dollars cash, for which E. J. Elippo agrees to pay for and take the deed in said Elippo’s name and charge the said Terrell with twenty-five hundred dollars, being one-half of the purchase money for said farm; whereas the said Terrell is at work for the said Elippo by the month, it is agreed that said Elippo shall deduct the interest on the twenty-five hundred dollars every month out of said Terrell’s wages, or on what part thereof that may be unpaid, the said Terrell shall have a right to pay as much of the principal as he can at any time; and whereas the said farm contains a large quantity of timber, whenever the timber is manufactured or disposed of one-half of the proceeds, after paying expenses of manufacturing, shall belong to the said Terrell, and sufficient amount of it shall be paid to said Elippo to satisfy whatever part of the twenty-five hundred that is unpaid. In case of any accident by death or otherwise that the said Terrell could not pay all of the twenty-five hundred, him or his heirs shall have a clear deed to such proportional part of said farm and improvements thereon that said Terrell has paid for.

“Given under our hands and seals this year of our Lord, 1899.

“E. J. ELIPPO. (Seal.)”

The subject of this contract is a tract of land in the county of Caroline, valuable chiefly for its timber, which was owned by the children of R. T. Brooke. Terrell called the attention of Elippo, who was in the lumber business, to this land, and suggested its purchase, but Elippo was of the opinion that it could not be bought for a reasonable figure. Terrell went to see Brooke upon the subject, and entered into negotiations which resulted in its purchase for the sum of $5,000 in cash, as appears by a letter from Brooke to Terrell, and the endorsement thereon, as follows:

“11th October, 1899.

“Mr. J. T. Terrell,

“Peake’s P. O., Hanover Co.

“My Dear Sir:

“I have communicated with my children, and they consent to my selling the place for $5,000.00 (five thousand dollars) cash.

I have been paying taxes on 700 acres, and I will sell it as containing 700 acres, more or less.

“Yours respectfully,

“R. T. BROOKE,

“P. O. Box 102, Richmond, Va.”

“This will be a sale as soon as terms complied with.

“R. T. BROOKE.”

“14th October, 1899.”

Terrell was unable to pay any part of the purchase money, and thereupon the contract above set forth was entered into. There was evidence which tends to show that Elippo was ready to ignore the rights of Terrell, and to deal directly with Brooke for the purchase of this land, but Brooke, having agreed to sell to Terrell, refused to deal with Elippo.

In pursuance of the terms of this contract, Elippo, on the 23d of Kovember, 1899, paid $2,000.00 to R. T. Brooke, by check, and on the 12th of December he borrowed the sum of $3,000.00, and paid the residue of the purchase money.

On Kovember 15, 1899, a deed was made to E. J. Flippo, which was acknowledged Kovember 18, 1899, and was recorded on the 27th of December of the same year. On December 11, 1899, a deed of trust was given to secure the loan, with which Elippo had paid the balance of the purchase money to Brooke, and this deed of trust was also recorded on the 27th of December.

A short time afterwards—on April 16, 1900—Elippo sold the timber upon this land for $7,000.00 in cash, and it is to ascertain the interest of John T. Terrell in this sum and in the land, after the timber had been cut from it, that this suit was instituted.

Elippo, in his answer, states that Terrell was in his employment at a salary of $50.00 per month for the services of himself and his team; that he, the respondent, was endeavoring to purchase the Brooke’s farm when, to his surprise, Terrell showed him a letter from Brooke offering the farm for $5,000 cash, and then the agreement was entered into between Terrell and the respondent, that they would buy it together, each furnishing one-half of the money; that this agreement, which was not in writing, continued until after the deed was ready for delivery some time in December, 1899, when Terrell being unable to furnish his part of the money, the respondent borrowed $3,000, and with $2,000 he had in hand paid for the land, and, with Terrell’s approbation, took a deed in his own name, and then signed the written agreement, which has been heretofore referred to; that after this was done Terrell continued to work with respondent until the 31st of March, 1900, and during that time drew his wages and the hire of his team; that after this state of affairs had continued for some time, respondent told him that he had not complied with his agreement and that he could no longer submit to it, that he would sell the timber on the place, if he could, and give Terrell one-half of the land, to which Terrell consented, and agreed that respondent could have for his trouble what he could get over and above what was necessary to pay what the farm had cost, and in reliance upon this made the sale of the timber, and was then much surprised when Terrell made a demand upon him for one-half of the money.

Depositions having been taken, the Circuit Court was of opinion that the written contract, signed by Flippo and dated 1899, was executed at a period subsequent to the date of Terrell’s being adjudicated a bankrupt, and that, therefore, the interest of Terrell under this contract did not pass by the decree of the bankrupt court to the plaintiff in this cause, but as Terrell, in his answer, conceded the right of plaintiff to recover, there was nothing to prevent his surrendering whatever interest he had under the contract and devoting it to the benefit of his creditors, and upon this theory entered a decree in favor of the trustee in bankruptcy, from which Flippo has appealed to this court.

After a careful consideration of the evidence, we have reached the conclusion that Flippo’s contract with Terrell was made before the adjudication in bankruptcy, and, as a consequence, the trustee in bankruptcy has a right to sue for and recover whatever interest Terrell had in that contract. We think this conclusion is warranted by the evidence, extrinsic and intrinsic, by the testimony of Terrell, his wife and his daughter, incidentally corroborated by Brooke, by Gant, and indeed by Flippo himself; by the letter of Brooke, which shows that the terms of the contract of purchase had been reached and agreed upon as early as October 14, 1899; by the deed of bargain and sale from Brooke to Flippo, which bears date November 15, 1899, and is acknowledged November 18, 1899 ; and by internal evidence to be gathered from the contract itself, which under the hand and seal of Flippo shows that at the time of its execution Terrell had bought a farm in Caroline county for $5,000 cash, for which Flippo agreed to pay, to take the deed in his name and to charge Terrell with one-half of the purchase money. There is a strong probability that this contract was entered into before the execution of the deed of bargain and sale, and, in our judgment, that probability is sustained by a decided preponderance of the testimony.

This conclusion is decisive of the controversy. The case presents no question of implied or resulting trusts. It is a plain and express trust. Terrell, having made the bargain with Brooke for the purchase of this land, and being unable to pay any portion of the purchase money, informed Flippo of the fact. Flippo appears to be an active and energetic man of business, engaged in the purchase, sale, and manufacture of lumber. Seeing a profit in the bargain, he signed the contract, recognizing Terrell as the purchaser, and in consideration, obviously, of being enabled to share in a profitable venture accepted the result of Terrell’s negotiation for the purchase of this land from Brooke as Terrell’s input, and on his own part expressly agreed to furnish the entire purchase money. When that contract was signed, the right of Terrell to share in whatever profits accrued was established.

We have no difficulty, therefore, in affirming the decree of the Circuit Court to this extent.

The appellee claims that there is error in the decree prejudicial to him, which under the rule of the court it becomes our duty to consider.

The land having been purchased for $5,000 and the timber upon it having been sold for $7,000 in cash, the trustee in bankruptcy would be entitled to one-half of the profits, while' the decree appealed from only gave him $700. This result was arrived at by charging Terrell with what it cost Flippo to negotiate the loan of $3,000, with which the balance of the purchase money for the land was paid. Flippo was bound by the terms of his contract to pay the entire purchase money. It was not a matter of grace on his part but of obligation, his contract-bound him to it; and it was error to impose upon Terrell or his trustee 'the cost incurred by Flippo in discharging the obligation of his contract.

It appears from the bill and from a bill of sale dated the 15th of September, 1899, that Terrell transferred certain property, valued at $1,000, to E. J. Flippo, for which Flippo has never accounted, and it is claimed that this sum should go as a credit upon the share of the purchase money due by Terrell, and as a result increase the amount to be recovered by the trustee in bankruptcy.

With respect to this contention we express no opinion, but will reverse the decree of the Circuit Court in favor of the appellee, with respect to the item of $300, enter a decree in favor of the appellee to that effect, and remand the case to the Circuit Court for further inquiry as to appellant’s liability for the property named in the hill of sale dated September 15, 1899, and which appears in the record as “Exhibit J. T. T. Eo. 4” with the deposition of J. T. Terrell.

Reversed.