Hurlburt v. Morris

Oct 14, 1913
Reporters:
, ,
Before:
Bean
Mr. Justice Bean

delivered the opinion of the court.

1. The testimony upon the pivotal point in this suit, that is, as to the ownership of the 1,000 shares of stock represented by certificate No. 41, comes to us as follows: Plaintiff testifies that, pursuant to an understanding had with F. S. Morris, as representative of the different partnerships referred to, certificate No. 41 for the 1,000 shares of stock in dispute was issued to him on November 7, 1904, as compensation for the services which he had rendered in building up the Oregon “Water Power & Railway Company, and also for other services performed in behalf of defendants. It also appears that on November 7, 1904, there was issued to plaintiff certificate No. 35 for 1,000 shares of the stock of the Oregon Water Power & Railway Company, and to Geo. I. Brown, chief engineer of the company, certificate No. 37 for 1,000 shares. These certificates, with others, were canceled, and in lieu of No. 35, certificate No. 41 for 1,000 shares was issued to the plaintiff, and in place of No. 37, certificate No. 42 for the same number of shares was issued to Geo. I. Brown. Mr. Pratt, the bookkeeper of the concern, wrote the certificates, and the words “Authority F. S. Morris” appear on the stubs of ‍​​​​​​​​​​‌‌​​‌​‌‌​‌​‌‌‌‌​‌‌‌‌​​‌‌​​‌​‌​‌​‌​​‌‌‌​‌​​‌​​‌​​‌‌​‌‌​​​‌‌‌‌‌‌‌​‌​​‌‌‌​‌​‌​​​‌‌‌​​​‌‌‌‍these certificates in the handwriting of F. B. Pratt. It also appears that they were written by the bookkeeper from a written memorandum furnished him by F. S. Morris. These *267certificates, with others held by defendants and some of their associates, remained in the stock hook until they were indorsed by the plaintiff and Mr. Brown the next October. Wm. T. Mnir, an eminent attorney of this court, testified that, when a suit pertaining to the settlement of the partnership affairs of Morris Bros. & Christensen was on trial in Philadelphia in 1908, while he was attending as a witness in that case, the question arose about the ownership of the Oregon Water Power & Railway Company .stock, and that both F. S. Morris and James H. Morris told him that at the time of the settlement of the partnership affairs of Morris Bros. & Christensen it was arranged that 1,000 shares of the capital stock of the Oregon Water Power & Railway Company should go to Muir, and that Hurlburt should have 1,000 shares, and Mr. Brown 1,000 or 2,000 shares; that their partnership settlement was made with that understanding, Christensen contributing his share of the contribution. He stated that this was the first he knew of his being entitled to 1,000 shares of the stock, or to any of the proceeds thereof. The plaintiff is also corroborated to a certain extent by the evidence of Mr. Christensen, who stated that at the time of the dissolution it was understood that he should take care of his friends, and that Morris Brothers should take care of their friends, and that 1,000 shares of this stock should go to Mr. Brown, the engineer, and 1,000 shares to Wm. T. Muir, the attorney for the company; and that he thought that Mr. Hurlburt was included among their other lieutenants who were to receive a portion. It appears that the proceeds, $65,000, of the 1,000 shares issued to Geo. I. Brown, were paid to him. On the other hand, the defendants deny that there was any understanding or agreement that any of the stock in this corporation or in any other should be issued to the plaintiff as compensation for his services. Mr. F. S. *268Morris, the moving spirit in the affairs of Morris Brothers in the west, stated that he had no recollection of the issuance of certificates Nos. 41 and 42 to the plaintiff and Mr. Brown, respectively, and the indorsement thereof to himself. Morris stated that there was no reason on earth why he should give those certificates to either Mr. Hurlburt or to Mr. Brown. ‍​​​​​​​​​​‌‌​​‌​‌‌​‌​‌‌‌‌​‌‌‌‌​​‌‌​​‌​‌​‌​‌​​‌‌‌​‌​​‌​​‌​​‌‌​‌‌​​​‌‌‌‌‌‌‌​‌​​‌‌‌​‌​‌​​​‌‌‌​​​‌‌‌‍He also testified thus: “Toward the last of my ownership I said that if I sold out I would try and do something for him (Hurlburt) take care of him, pay him for what he was grumbling about, hard work, etc.” It appears from Mr. Morris ’ evidence that while they managed to meet all their obligations for a time before the sale of the Oregon Water Power & Bailway Company stock the financial clouds were quite threatening. It seems that a great deal depended upon the successful determination of the Oregon Water Power & Bailway Company. Mr. Morris further stated that he paid Mr. Hurlburt for his services in full; that he never authorized the issuance of the stock to him or to Brown, but that when Morris Bros. & Christensen dissolved he stated that he would like to do something for Mr. Brown, Mr. Hurlburt, and Mr. Muir; that “Mr. Brown was the whole thing. ’ ’

The voluminous record discloses that Hurlburt was president of a number of active, growing, western corporations, if they were all like the samples mentioned. That he greatly aided in making the success of the enormous venture of defendants is not successfully controverted. While Mr. Morris gives testimony indicating what he now considers the plaintiff is entitled to, it appears that there has been a change in his opinion during the time that has elapsed since the arrangement was made, as shown by a preponderance of the evidence. It is not strange or improbable that plaintiff’s employers, more properly speaking, his associates, should agree to reward him with a portion of *269what he helped earn. Careful consideration of the evidence convinces us that they did make such bestowal. It is not enough for the defendant F. S. Morris to controvert the testimony in this case upon material points by stating that he does not remember. It is claimed by the defendants that the plaintiff’s conduct is inconsistent with an unsettled claim of the proceeds of this stock. It should be remembered that close, personal relations existed between the plaintiff and the defendants. Hurlburt states, “I never had a piece of paper with Mr. Morris in my life.” It appears that each placed implicit confidence in the other. No convincing evidence of a settlement in regard to the stock formerly represented by certificate No. 41 is found in the record. Plaintiff did not keep strict account of his affairs with the defendants. In fact the latter at times looked after plaintiff’s personal expenses. He appears to have devoted all his energies and made the effort of his life ‍​​​​​​​​​​‌‌​​‌​‌‌​‌​‌‌‌‌​‌‌‌‌​​‌‌​​‌​‌​‌​‌​​‌‌‌​‌​​‌​​‌​​‌‌​‌‌​​​‌‌‌‌‌‌‌​‌​​‌‌‌​‌​‌​​​‌‌‌​​​‌‌‌‍to carry on the defendants ’ business, particularly the railway portion, in which he had had a large experience. “When all the circumstances are taken into consideration, the fact that there was a misunderstanding and dispute in relation to the matter pertaining to the second and third causes of suit does not materially weaken the plaintiff’s claim to the 1,000 shares of stock in question.

2. The jurisdiction of a court of equity to determine the controversy is challenged by counsel for defendants. It is earnestly contended that plaintiff has a full and complete remedy at law, if any, as shown by the evidence in the case, and that the suit should be dismissed. On the other hand, it is contended by counsel for the plaintiff that, where a person is intrusted with the property of another to sell, the latter becomes the trustee of the former, and may be required to account in equity, when upon such accounting the burden is upon him to show that his duties as such *270trustee have been fully performed: Marvin v. Brooks, 94 N. Y. 71. In the case just cited it was held that an agent who had been intrusted with his principal’s money to be expended for a specific purpose might be required to account in equity, and that upon such an accounting the burden was upon him to show that his trust duties had been performed and the manner of their performance. The jurisdiction was placed upon the ground of a fiduciary or trust relation, and it was held that a court of equity had jurisdiction over trusts and those fiduciary relations which partake of that character; but it was held that the existence of a bare agency was not sufficient, that it must be an agency coupled with some distinct duty on the part of the agent in relation to funds or some specific property.

In 1 Pomeroy’s Equity Jurisprudence (third edition), Section 186, in the discussion of concurrent jurisdiction of equity, we find the following: “Among the most common instances in which this remedy is employed by courts of equity are the ascertaining and settlement of claims and liabilities between principals and agents, and between all other persons standing in fiduciary relations to each other. * * ” In 2 Story’s Equity Jurisprudence (twelfth edition), it is stated, at Section 975, that in general a trustee is suable in equity in regard to any matters touching the trust. When Hurlburt indorsed the certificate of stock No. 41 to defendant F. S. Morris for the firm which he represented, and Morris assured him that ‍​​​​​​​​​​‌‌​​‌​‌‌​‌​‌‌‌‌​‌‌‌‌​​‌‌​​‌​‌​‌​‌​​‌‌‌​‌​​‌​​‌​​‌‌​‌‌​​​‌‌‌‌‌‌‌​‌​​‌‌‌​‌​‌​​​‌‌‌​​​‌‌‌‍he would take care of his interests, Morris became the agent of Hurlburt for that purpose, and thereafter a fiduciary relation existed between the plaintiff and the defendants. Where the relation of principal and agent is such that a confidence is reposed by the principal in his agent, and the matters for which an accounting is sought are peculiarly within the knowledge of the latter, equity will assume jurisdiction: 2 Pomeroy’s Equitable Rem*271edies, §§ 931, 932; Irvine v. Dunham, 111 U. S. 327, 334 (28 L. Ed. 444, 4 Sup. Ct. Rep. 501); Kilbourn v. Sunderland, 130 U. S. 505, 514 (32 L. Ed. 1005, 9 Sup. Ct. Rep. 594); Clews v. Jamieson, 182 U. S. 461, 478, 481 (45 L. Ed. 1183, 21 Sup. Ct. Rep. 845). In many cases it appears that the equitable jurisdiction over matters of account is exercised not primarily upon the ground of account alone, but because there is involved some recognized head of equitable jurisdiction: 1 Cyc. 417. The learned counsel do not disagree as to the law, but in the application thereof. Moreover, the defendants in their answer asked for affirmative relief, and stipulated with plaintiff to try the law action together, with the suit in equity.

3. If it be that the plaintiff would have a remedy at law, in view of the fact that the legal title to the certificate of stock in question was held by defendants after its indorsement by the plaintiff, and it being necessary for, plaintiff to establish his legal title thereto, we think that his remedy at law would be inadequate, and that a court of equity should determine the cause.

4. It is also contended by the defendants that the demand for accounting by plaintiff was insufficient, and that the same is necessary in order to permit plaintiff to recover in this suit. Assuming without deciding that a demand by plaintiff for an accounting was essential, we note that plaintiff testifies that he endeavored to obtain a settlement with the defendants. In his letter of August 23, 1910, to Fred S. Morris, after stating that it was unnecessary to go into detail as to the time which had elapsed since the sale of the Oregon Water Power & Railway Company, and that be felt that the assurances he had received were misapplied, he said: “I am now at a period in life where I feel, in justice to myself, that I should put my house in order and have matters adjusted with a record *272which would not be misunderstood in the event of anything happening to me. * * Also, I would like to know if it is your intention to ‍​​​​​​​​​​‌‌​​‌​‌‌​‌​‌‌‌‌​‌‌‌‌​​‌‌​​‌​‌​‌​‌​​‌‌‌​‌​​‌​​‌​​‌‌​‌‌​​​‌‌‌‌‌‌‌​‌​​‌‌‌​‌​‌​​​‌‌‌​​​‌‌‌‍further consider me when the control of the Jersey Central Traction is disposed of, and to what extent. My affairs have been left largely in your hands in an unsettled condition, as I have confidence in your integrity for doing what was equitable and fair, and assume you will.be glad to advise what consideration I am to be allowed so I can get. my affairs into business shape.” This letter may be construed as a demand, or it may be termed a declaration of war, when we consider that a close, business, and friendly relation existed between the parties. It indicates Hurlburt’s desire for a settlement, and for his property to be put in his own name. Mr. Morris answered this letter on September 19, 1910, and stated that upon his return he would like to have the plaintiff come into the office and adjust his affairs. The amounts that had been advanced by the defendants to the plaintiff the trial court allowed as payment. Those items are not called in question. •

5. The trial judge heard the witnesses testify, and his findings of fact should be given great weight.

We think the decree of the lower court was right, and it is affirmed. Affirmed.

Mr. Chief Justice McBride, Mr. Justice Eaicin and Mr. Justice McNary concur.