40 App. D.C. 520 | D.C. Cir. | 1913
of the Supreme Court of the District ■of Columbia, who sat with the court, in the place of Mr. Justice Van Orsdel, delivered, the opinion of the Court:
This is a bill to set aside certain conveyances on the ground ■of fraud, to reinstate the complainants, Bladen Forrest and Henrietta Forrest, in their original rights, or, if that cannot be •done, to recover the value of such rights. We shall relate the facts as they are disclosed by the evidence, and then consider what equity requires.
Bladen Forrest, a man of some sixty years of age, who was formerly for many years a ticket agent on the elevated railroad in New York, had come to Washington a few years ago and invested what property he had in real estate in this city, and in most instances in equities of redemption. For the most part he had made these investments through the real estate corporation, Moore & Hill, who had also acted as his agents in the >care of the two largest pieces of the property and the collection -of rents therefrom. The representative of this corporation, with whom most of his business had been transacted, was the •'defendant Bignald W. Beall, vice president of the corporation. At the time when the story of this case begins, Forrest’s prop■erty was in five pieces of real estate:
(1) The Vernon apartment house on H street, which he had ■obtained through Moore & Hill by exchanging other property ■therefor at the valuation of $30,000, but upon this property there was a trust which, at the time now in question, amounted to $16,500, leaving, on the basis of said valuation, an equity an Forrest of $13,500.
(2) The Harvard apartment house on Harvard street, obtained through Moore & Hill by the exchange of other property at the valuation of $30,000. Upon this property there was .a trust which, at the time now in question, amounted to $11,-'000, thus leaving in Forrest an equity of $19,000.
(3) The property known as 903 S street, obtained through Moore & Hill by exchange at a valuation of $6,000. Upon this
(4) The property known as 2116 G street, which had not been obtained through Moore & Hill, but through another office .at $3,625 cash.
(5) A vácant lot, being No. 12 in square 1096, which Forrest had bought at public auction for $709.56.
This was the situation of his affairs in September, 1909. One day at about that time he went to Moore & Hill’s office to see about some property of his which was in their care and, after finishing that business, as he was going out, he saw Beall at his desk and asked him to make a deal by which he could trade his properties for others that would produce a larger income. Beall said he thought he could do it, and made an engagement to come to Forrest’s house and show him some property. Two days later he came in an automobile to Forrest’s house and took Forrest to see the Wellington and the Birmingham, two apartment houses, telling him that the Wellington was built by Harry Wardman, whose price therefor was $180,-000. The house was not quite finished at that time, but was substantially completed and nearly all of the apartments were occupied. Beall told Forrest that Wardman would take the five properties above referred to if Forrest would assume the first mortgage on the Wellington, amounting to $100,000, and give a second mortgage thereon for forty or fifty thousand dollars. They also had some talk about the Birmingham, which was another of Wardman’s houses. When this talk occurred, Forrest had not given Beall a list of his properties, but a little later, on the same day or the day after, Beall was to come to Forrest’s house and get such a list. He had already told Forrest that the rents of the Wellington were $1,508 a month, that the Wellington was worth $180,000, and that Wardman could get that for it. The same or the next night Beall came again to Forrest’s house and took a list of Forrest’s properties, with the amount of mortgage thereon. The values he fixed himself and wrote them down. The list aforesaid was set down on the fourth page of a circular purporting to be issued by the ex
“Interest on $100,000 at 6% .................. 6,000
Expenses of carrying a Taxes.................. 2,750
Interest on 2d trust, $40,000 ................. 2,400
$800 month on principal...........■........... 3,600
$14,750
Harvard at 30,000 trust 11,000 ................ 19,000
Vernon “ 30,000 “ 16,500 13,500
902 S 6,000 “ 2,500 3,500
(2116 G 5)* 3,000 2,000
Lot 12 sq. 1096 ..........'................... 1,000”
Beall made a copy of what he had written on said fourth page, and toot it away with him, and probably submitted it to Wardman, leaving the original with Forrest, who has had it ever since.
On September 13th a writing was presented to Forrest by Beall, and signed by Forrest, bearing that date, an unsigned copy' of which is in the case as plaintiff’s exhibit 4. It declares that in consideration of $1 paid by Wardman to Forrest, Forrest agrees to convey to Wardman or anyone he may designate the Harvard apartment, subject to a trust of $11,000, the Vernon apartment, subject to a trust of $16,500, No. 2116 G st., N. W., subject to a trust of $3,000, No. 903 S st., N. W., subject to a trust of $2,500, and lot 12 in square 1,096, and to give a second deed of trust for $35,000 upon the Wellington, subject to the existing trust of 100,000, and to pay $1,000 in cash without any charge by Moore & Hill or anyone for commission or other compensation in said exchange, Wardman to have the option of accepting the contract aforesaid within ten days from its date, the contract itself to be closed within thirty
We shall now turn to Wardman’s connection with the transaction. He occupied an office just above that of Moore & Hill, and communication between the offices was easy and frequent, a stairway at the hack of the hall at the rear of Moore & Hill’s office communicating with the rear of Wardman’s office, so thak the occupants of the two offices were able to and did speak with each other without actually going from one office to the other. Moore & Hill had acted for Wardman in a great many instances as sellers of his property, and were accustomed to get out printed matter like the circular already referred to, describing
Wardman was called as a witness by the complainant, and testified with respect to his talk with Beall pending the negotiation as follows:
“The proposition came to me that ‘we can make you this deal for this property, and we think we can handle this property, giving you about $10,000 in cash or you can take the property and handle it youself; make the trade straight to-you.’ I said, ‘Well, I don’t know just what I would clo then. Mr. Beall, but you get it signed up and I will let you know which one I will take.’ At that time I was also needing money and I took the money. ... I think I got in the neighborhood of—I think about $8,000 after taking out expenses.”
When asked what commission he paid Moore & Hill, he said' at first, “I don’t think I paid them any commission,” but, when pressed, added, “Oh, I don’t know—probably that was—there-is a possible chance that I did pay some commission oat of that $2,000. I got $8,000 out of the ten. Now I don’t just remember whether I paid any commission or not, but probably-
Again and again he was asked as to whether he paid a commission and finally said: “Well, I think I did,” but protested that he could not remember how much. Then he was asked if he did not get from them a statement. He admitted that he did, and that he had it, and that his books would show it. Asked to produce his books and the original statement from Moore & Hill to him, his counsel objected on the ground that the same was not material, and the books were never produced, but later the statement was produced and is printed in the record. It is headed, “Mr. Harry Wardman and Thomas P. Bones, case No. 714, in account with Moore & Hill, real estate, loans, and insurance.” The statement is dated November 2, 1909, in the sale of the Wellington, settled to October 25, 1909. It credits Wardman & Bones by price of property, $149,000, which is evidently made up of the $100,000 first trust, the $39,000 second trust, and the $10,000 which Moore & Hill had agreed that Wardman should realize from Forrest’s properties. There is also a credit of $396.67 for insurance. Then Wardman & Bones are charged with the first deed of trust, $100,000, and the accrued interest thereon, with the second deed of trust, $39,000, with certain rents to October 31st, with taxes and with a small amount paid the janitor, with $8,000 paid to him in cash, leaving an unpaid balance of $1,209.66.
Upon this state of the facts we cannot fail to find that Ward-man not only allowed Moore & Hill to take Forrest’s properties off his hands at $10,000, but also allowed them to keep the aforesaid balance as further compensation for their services to him in putting through this deal. Nor can there be any ■doubt that Wardman perfectly understood that Moore & Hill were coming to him from Forrest and acting as Forrest’s agent. What he did was to buy the services of the other party’s agent upon the terms above stated. That is to say, the services of the trusted and confidential agent of the other party to the -exchange. The same day that he received the deeds from
Soon after the deal was closed by the transfer of the properties, to wit, on October 21, 1909, Beall came to Forrest and procured from him an appointment of Moore & Hill as his exclusive agents to sell the Wellington on a 3 per cent commission, with an option upon the same for thirty days at the price of $200,000, subject to trusts of $139,000. Forrest went into possession of the Wellington and remained there for. some twenty months. He became satisfied that he had been misinformed with respect to the value of the Wellington, hut he never knew or suspected that his properties had been transferred to Moore & Hill until just before he brought this suit, nor did he know or suspect that the agent whom he had trusted had been acting in the employ of the other party to the contract. Indeed, full knowledge of the facts was not acquired until the testimony brought them to light, for even the answers did not disclose the real truth. Hence the complainant cannot justly be charged with laches touching the ground upon which his claim is now based. He became satisfied that he could not afford to pay for the Wellington even the amount of the two encumbrances ; the property was sold under the trusts and bid in by Wardman, and the actual net result has been that Forrest has lost the properties he conveyed and the money he paid in exchange for the Wellington, and has received nothing in return except the net income from the Wellington during the twenty months of his occupancy.
The story of the Wellington itself is an interesting disclosure in real estate transactions. Wardman bought the land on which the Wellington was built for $29,500. He borrowed of
This brings us to the second question. Since right must be done the complainant by the payment of money, what ought, to be the measure of the complainant’s recovery?
The law is clear and well-established that when properties are exchanged at agreed values, and one party to the exchange-has so conducted himself in the transaction as to give the other-party a right to have the contract set aside, and at the same time has put it out of his own power to place the aggrieved party m statu quo, he may be compelled to respond in damages; and where equity has taken jurisdiction of the cause upon proper grounds, the damages will be ascertained and awarded in equity to avoid circuity of action. The measure of damages is the same as in an action at law, based upon a rescission. If the property that was received by the complainant has been disposed of by him before he was aware of the facts that gave him a right to rescind, and the property with which he parted has-been disposed of by the defendant, the measure of damages will be the difference between the values of the two properties. If the property that was received by the complainant has been restored to the defendant while the property that the defendant received from the complainant has been disposed of by the defendant, then the measure of damages will be the value of the property with which the complainant parted when the exchange
In the present case the property that was received by the •complainant has gone back into the hands of the defendant, the defendant having bid it in at the mortgage sale at a price that released the complainant from the second trust. The situation is thus practically the same as if it had been restored to and accepted by the defendant. It follows that the plaintiff is entitled to recover his cash payment of $1,000 and the actual value of his interest in the properties conveyed by him to Ward-man & Bones, with interest upon the whole from the 25th day ■of October, 1909, diminished by the net income received by him from the Wellington while the same was in his possession. The decree below, which was in favor of the defendants, must be reversed, and the cause remanded for further proceedings in
The decree is reversed with costs and the cause remanded.
Words and figures inclosed in parentheses erased in copy.