Kehoe v. Taylor

31 Mo. App. 588 | Mo. Ct. App. | 1888

Lead Opinion

Philips, P. J.

It is urged against the decree that it does not find the existence of the fraudulent conspiracy alleged in the petition, nor the fraudulent act charged against defendants in appropriating the proceeds of the dividends on the claims in question.

It was not necessary to the validity of the decree that there should have been any special finding of the facts by the court. If this court on review should find the essential facts to exist we would not be bound by the findings of the lower court in a chancery case. And again, if the facts found by the court be sufficient to warrant the decree under the pleadings the judgment would still stand.

It may be conceded to defendants that the evidence in the case may not have been sufficient to justify the court in finding that there was any actual conspiracy between defendants at the inception of this transaction to obtain control of plaintiff’s claims, and to parcel out the dividends among themselves. And if the existence of such facts were essential to maintain the decree it would fail. But it is a well-recognized rule of practice that every averment, even of material matter, need not be proved. If. there be sufficient proof of the remaining substantive allegations constitutive of a cause of action the ends of the law are attained. Wright v. McPike, 70 Mo. 176; Noffsinger v. Bailey, 72 Mo. 216; Gaty v. Sack, 19 Mo. App. 477. So Kerr on Fraud and Mistakes, p. 383, lays down the rule as follows: “If the bill alleges a case of fraud, and the title to relief rests upon the fraud only, tb.e bill will be dismissed, if the fraud as alleged be not proved. It cannot be allowed to be used for any secondary purpose. But if the case does not entirely rest upon the proof of fraud, but rests also upon other matters, which are sufficient to give the court- jurisdiction, and the case of fraud is not proved, but the other matters are proved, relief will be given in respect of so much of the bill as is proved.”

The substantive facts charged in the petition, omitting the word “fraudulently,” are that said allowances were made by Taylor wrongfully, and without any authority whatever from the claimants, and without their knowledge or consent; and that by reason of defendants ’ misconduct in the matter plaintiff will lose her rightful dividend unless equity comes to her relief. Professor Tucker in his notes, after speaking of the impossibility of courts of equity laying down any definite boundary lines within which fraud may be found, as it is so infinite in its ramifications and devices, says: “All surprise, trick, cunning, dissembling, and any unfair way by which another is cheated, is fraud.” So Kerr on Fraud, etc., pp. 42, 43, says : “ Fraud in the contemplation of a court of equity, may be said to include properly all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust, or confidence, justly reposed, and- are injurious to another; or by which an undue or unconscientious advantage is taken of another. * * * Courts of equity do not affect to consider fraud in the light of a crime; it is not their province to punish, nor have they any censorial authority.”

The facts in this case certainly involve a breach of duty in administering a trust fund, injurious to another, and which if permitted to go uncorrected would give the wrong-doer an unconscionable advantage over the party his misconduct wronged.

When the defendant Taylor took upon himself the office of an assignee the law stepped forward and clothed him with an express trust. He then became the minister of justice—to administer the estate coming into his hands precisely as the law directed, and not otherwise. He was the trustee for both the debtor and the creditors, to see that the trust property was so administered as to secure to the creditors, as far as possible, their just claims, and- then to account to the debtor for any surplus.

It, théreíore, becomes at once apparent that his office as such assignee was wholly incompatible with that of an attorney for the assignor or the creditors. In the allowance of claims against the estate he acted in a quasi-judicial capacity. He could not act either for the debtor or claimant. Yet the proof is, that the assignee and his co-defendant were attorneys throughout for the debtor, and their continued partnership extended to a division of the fees for the services rendered as ,attorneys to the debtor, and in the fees coming to the assignee. This dual position concerned him- too much in the interest of the debtor, and the amount of fees that might be got out of him in the event the estate went back to him, after coercing settlements with the creditors, with consequent neglect of the rights and interests of the creditors. Such facts, if brought to the attention' of the circuit court, having jurisdiction over the assignment proceedings, would have justified the immediate removal of the assignee. He sat as • judge in allowing claims against the estate, and permitted his partner to! take judgment of allowance in his own name, without the notes of the claimants being brought into court, nor any legal evidence whatever of any authority to Scott to so have them allowed. And without the knowledge or consent of the owners of the notes, he paid over their dividends, nominally, to Scott. His only claim of authority for this proceeding is that he understood from Suits, the assignor, that he was authorized to so have the same done. Suits denies that he gave him any such authority, or that he had any such direction or permission from the holders of the notes. At his peril the assignee had to be satisfied of two facts, first, that 'Suits had any delegated power whatever from the principals, and second, that Suits was acting within the scope of his imputed agency. As a lawyer he knew that an agency could not be established by the mere declarations or acts of the imputed agent. Anderson v. Volmer, 83 Mo. 406. The burden of proving such agency rested on the defendant. Craven v. Gilliland, 63 Mo. 28.

Without inquiry of the known interested parties, he acted upon the faith of what Suits said, or on what he understood would be the issue of the assignment proceedings, if his partner succeeded on his end of the line in effecting compromises, and Suits should regain control of the goods, and resume business. Having departed from the plain and known path of the law in administering his office of trustee, in reliance upon the integrity of the assignor, by which defendants were to realize large expected compensation, they should look to the man whom they claim to have been acting for and trusting; and not ask that the innocent plaintiff bear the loss of their palpable breach of duty. The danger of loss to which defendants’ misconduct has exposed these unoffending claimants is sufficient to call into activity the powers of a court of equity, as without its interposition the plaintiff is without redress.

Had the assignee proceeded as the obligations of his undertaking required, he would have had ample assets in his hands to pay the claims in question, to the extern of the dividends allowed by him. The money he expended in costs in the attachment suit of Smith he can claim no credit for. As assignee he had nothing to do with the payment of fees against the assignor, their client. That was the individual debt of Suits. And even allowing the assignee a liberal compensation for his services as such assignee there was sufficient assets in his hands to pay the two dividends directed by the decree of the circuit court. If either he or the plaintiff is to suffer loss through his dealing with Suits rather than with the circuit court in administering the estate, it should be he who trusted to Suits, and the success' of the scheme of an outside settlement.

It does not lie with defendants to tread back upon their own tracks by saying the allowance of the' claims in the name of Scott being unauthorized, there is in fact no allowance of plaintiff’s and Carrie Suits’ claims which he can be compelled to pay. He made the allowances, and claimed settlement accordingly with the term court, while the plaintiff and Carrie were living under the impression that their claims were properly allowed ; and equity says no man shall be permitted to take advantage of his own wrong.

The whole trouble with the defendant Taylor, so far as he is concerned in this transaction, is, that he permitted himself to be improperly used by his partner and Suits, no doubt with the honest expectation that all would be fair in the sequel; but the law, in the spirit of equity, demands that he shall not injure the innocent, whereby the least advantage shall accrue to himself.

The judgment of the circuit court must stand affirmed. It is so ordered.

All concur.

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Rehearing

On motion for rehearing.

Per Curiam.

It is insisted in the motion for rehearing that the opinion herein is inconsistent with itself, in that it makes defendant answerable for the loss of plaintiff’s claim for having improperly and without authority, allowed it in the name of Scott; and that this position necessarily rests upon the idea that defendant had no authority whatever from plaintiff in the matter of allowing her claim. Hence, they argue, that plaintiff’s claim was either allowed or it was not allowed; that the same argument which repudiates the act of the assignee in allowing the claim in the name of Scott would also repudiate its allowance at all; and as defendants cannot be held to account for a claim not presented and allowed, the logical result of the court’s opinion must be to acquit defendants of any responsibility.

The premise assumed is false. As the opinion states, there was sufficient evidence to warrant the conclusion that Suits had authority from plaintiff to'have her claim allowed. This was a limited, not a general agency. It carried with it all the power essential to accomplish the purpose desired by the principal, but nothing more. It did not authorize Suits to have the claim allowed in the name of anybody else. She had done nothing to indicate to the assignee that Suits was her general agent. There was no “holding out” by the principal to impress a third party with the belief that Suits was her general agent. The only evidence defendant had, as claimed by himself, was the naked statement of Suits. He was guilty, to say the least, of inexcusable negligence in thus allowing the claim, known to belong to the plaintiff, in the name of a third party, without the production of the note, or any evidence of an assignment, power of attorney, or other written authority from the known principal. Suits did have an agency, as the proof shows, to have the claim allowed. That was sufficient to authorize defendant Taylor to allow it in her name. When he went further and allowed it in the name of his partner, it was without authority, based solely upon what the limited agent said, with nothing in ■ the conduct or acts of the principal to justify him in believing that Suits had a general agency. On the contrary, the fact that Suits asked to have the claim of his principal allowed in the name of a third party, in the absence of the note, should have excited the suspicion of one sitting in judgment. The repudiation of the unwarranted act in allowing the claim in the name of Scott, does not, in equity, carry with it the result of a claim not allowed at all. The claim was presented and allowed, but in the name of a wrong party, under circumstances of culpability. Equity, which looks to substance and not to form, interposes and says, that allowance, as against the wrongdoers, shall enure to the benefit of the rightful party. It shall’ stand, but the apparent beneficiary shall reap nothing from it. The rightful party shall be substituted, and receive the dividend declared in favor of Scott.

Again, when the assignee allowed the note in favor of Scott, which was prima facie due to and owned by plaintiff, the burden of proof rested upon the assignee to show his warrant for this act. The only evidence offered by him was his own testimony, that Suits told him to so allow it. This Suits denied, and testified that he did not tell the assignee to allow the claim in Scott’s name. It is evident from the decree of the trial court that it found this issue against defendant. It is the recognized rule of this court, even in an equity proceeding, to defer to the conclusion of the trial court on a disputed question of fact arising on conflict of testimony.

We are unable to perceive from the record any conduct on the part of the plaintiff calculated to encourage the belief on the part of the assignee that she authorized the allowance of her note in the flame of Scott. If she loses her claim, it will be through the wrongful act of defendants. The defendants can reap no benefit from their own wrong; and a court of equity will place the injured party where defendants’ breach of duty has sought to displace her.

The motion is denied.