Minor v. Willoughby & Powers

| Minn. | Jul 15, 1859

By the Court

— Atwater, J.

In March, 1850, one David Olmsted executed and delivered to the Respondents a bond for a deed of the lot in question, signed by himself as one of the obligors and by "William G. Ewing by said Olmsted as his attorney in fact, as the other obligor. The bond was conditioned for the execution of a deed to the Respondents by the said Ewing, (who held the legal title to the lot,) upon the payment by the Respondents to said Ewing of the sum of three hundred dollars, on or before the 1st day of September, 1850, that being the price agreed upon for the lot. The complaint alleges that the Respondents, immediately after the execution and delivery of this bond, went into possession of the premises described in the bond, and commenced the erection of buildings thereon for business purposes, and have ever since occupied the premises for such purposes, and have expended some three thousand dollars thereon. The three hundred dollars was paid before it fell due, and the obligees thereupon demanded a deed of the lot described in the bond. Ewing refused to execute a deed, claiming that Olmsted had no authority to execute the bond for him, nor to sell the property. The first question presented, therefore, is whether any valid title or interest in the lot passed to Willoughby & Powers by virtue of the bond executed by Olmsted.

It appears from the testimony that Olmsted never had a properly executed power of attorney from Ewing for the conveyance of land. The only authority (as he stated in his' testimony) which he had for the execution of the bond, was a letter of which the following is a copy:

„ “ St. Paul, Aug. 9,1849.

“David Olmsted, Esq.—

“ Dear Sir:

“You are hereby constituted my agent to lease and collect rents on my property in St. Paul, and on lands in its vicinity. You are also constituted agent for the sale of the same.

“ Yours, Resp’y, ■

“William G. Ewing,

“ By Richard Chute.”

At the time Mr. Chute wrote this letter, he was a partner of "W. G-. and G-. W. Ewing, (the name of the firm being Ewing, Chute & Co.,) and was also the general agent of W. Gr. and GL W. Ewing, having charge of their business in the Northwest. It also appeared that the lot in question was the property of "W. Gr. & Gr. W. Ewing, in fact, the deed having been taken at the time of purchase in the name of ~W. Gr. Ewing for convenience in selling. Mr. Chute testified that he had charge of the business of the Ewings in Minnesota, and bought and sold lands for them here; and that he received a letter from Gr. ~W. Ewing, directing him to sell all their property in Minnesota, and that it was in pursuance of those instructions, that he wrote the letter above quoted to Olmsted, constituting him the agent of Ewing to lease and sell real estate. It does not appear that Chute had anj properly executed power of attorney to convey real estate in Minnesota, although he had held such authority to convey real estate for the Ewings in other places.

The bond executed by Olmsted was an executory contract for the conveyance of land. Such a contract, to be valid, is required by the Statute of Frauds to be in writing, but is not required to be under seal. (Stat. of Min., p. 457, Sec. 8.) And it is held, that if the contract may be made without deed, the seal shall not prevent its enuring as a simple contract, though the authority be by parol, or merely implied from the relation between principal and agent, as if they be partners. (Lawrence vs. Taylor, 5 Hill, 113.) And in Paley on Agency, note on page 158-160, it is said that “ upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them, or upon any agreement not to be performed within a year, although the several agreements recited must be in writing, signed by the party or his agent thereunto lawfully authorized, the authority is not required to be in writing. And therefore the authority to contract for a lease or other interest in land, need not be in writing, though the authority to sign the lease or instrument by which the interest passes must be so.”

An agreement by Ewing to ■ sell the lot in question, would liave been valid and binding on him by an instrument in writing not under seal. Such an instrument, executed by an agent properly authorized, would be equally binding on the owner, and an authority to give such instrument need not be under seal. Was such authority given to Chute ? We think it was. Mr. Chute states in his testimony, that by letter of Gf. W. Ewing, he was instructed to sell all the real estate of the firm in Minnesota, and that it was in pursuance of those instructions that he appointed Olmsted agent for the sale of these lands. It may be urged that the letter of Ewing to Chute, if it gave any authority, gave authority to sell the lands, and not to contract for the sale, and having failed to give the legal power actually to convey the lands, from lack of the necessary formality, it failed of its purpose wholly. Such does not seem to be a necessary consequence. The power to sell and convey includes the power to make an executory contract for the sale and conveyance, but the power to do the latter does not necessarily include that to do the former. The testimony stands undisputed, that Ewing had requested Chute as the agent of the firm to dispose of their real estate in Minnesota, and that Chute acted in accordance with these instructions in contracting (through Olmsted) to sell this lot to the Plaintiffs. The testimony also shows that the lot was purchased by the Plaintiffs in good faith, for a fair and adequate consideration, and that they immediately proceeded to make valuable improvements on the property. The equities are all in their favor, and the objection of the Defendant wholly technical. It is based on the 'ground that the owner of the lot had not given the requisite legal authoi’ity to execute an instrument of conveyance of the premises, under seal, not that he had given no authority at all to sell, or contract to sell. If force can be given to the authority which Ewing did give, it would manifestly be in furtherance of justice to do so. This is evidently the doctrine in the case of Laurence m. Ta/ylor, above cited, in which, while it is held that a speciality, executed by an attorney, cannot operate as such in any case unless his power be under seal, yet even in such case it does not follow that it shall not operate at all. And in that case it was held, that it might enure as a simple- contract, the Court also citing, in support of this doctrine, Story on Part. 197; Anderson vs. Tompkins, 1 Brook C. C. R. 462, per Marshall, C. J.; See also 2 Kent, p. 614, 6th Ed.; Newton vs. Bronson, 3 Kernan, 587.

If, however, there be any doubt as to the extent of the original authority given by G. W. Ewing to Chute and through him to Olmsted for the sale of the premises in question, we have none as to the subsequent ratification of the contract by Ewing, after the same was made known to him. It is true that he demurred to executing the contract by making a deed for the lot, not on the ground, however, that ho disputed the authority of Chute to make the executory contract, but on tlio ground principally of inadequacy of consideration. The testimony shows that Ewing was in St. Paul subsequent to the making of the contract, and that he then expressed dissatisfaction with the sale of the lot, and that he endeavored to persuade Willoughby & Powers to accept a lease of the premises, but not succeeding, stated to Olmsted, (as appears from the testimony of that witness,) “ that he would give a deed — that the consideration was too small, and he wanted to get the land back again from Willoughby, but if he could not get it back he would give a deed.” Of course he could not get it “ back ” unless he had parted with it, and it is clear that he recognized at least some authority in Olmsted in contracting for the sale of the lot. lie (Olmsted) further states that “ he (Ewing) never found any fault with my sale — on the contrary, from his general conversation he expressed approval,” Mr. Chute, who war a partner of, and the agent of the 'Ewings in Minnesota, testifies to conversations with W. G. Ewing in the summer of 1850, about the lot in question, the substance of which was, that Ewing seemed vexed at the sale, and was anxious to have Willoughby & Powers accept a lease, but it does not appear that he denied that he had given Chute instructions to sell the real estate of the firm in Minnesota. He (Chute) also states that he received the money for the lot, (through L. A. Babcock, Esq., the agent of Ewing to whom it had been paid,) and charged himself with the amount in the books of the firm of W. G. & G. W. Ewing.

A. Willoughby, one of the Plaintiffs, also testifies, that he had several conversations with Ewing in the summer of 1850 about the lot, that Ewing wanted to buy the lot back and wanted witness to give it up, and offered him $800 for the lot, and a lease of the same'for ten years, which was refused.

Mr. Babcock testifies that he saw W. G. Ewing in the month of June, 1850, and was employed by him as the attorney in fact of Ewing for the transaction of certain business. “That as attorney in fact he had instructions to present a lease to Willoughby & Powers and have them execute it if they would, and if they executed it, to retain the note until further orders j if they did not execute the lease, I was to receive the money on the note if they paid it.” He also states that he notified the Ewings by letter of the payment of the note, and that the receipt of the letter was acknowledged by one of the firm, and that he was instructed by them to fill up a deed of this lot to Willoughby & Powers, and send to them, which he did.

This testimony, with considerable more of the same tenor, stands substantially uncontradicted, and leaves no doubt that Ewing not only recognized the authority of Chute (and through him of Olmsted) to dispose of the property, but is a ratification of the contract made by Olmsted, even if he had no authority originally to contract for the sale of the lot. It is seldom that a clearer case of the ratification of the acts of an agent is presented, and under the authorities there can be no question but that the principal must be bound by it. Johnson vs. Jones, 4 Bar. 369; Dunlap's Paley Ag. 172, and note ; 12 Johns. 300; 2 Kent, p. 616, mid cases cited; Story on Agency, 239 et seq.

The property in question was sold to the Defendant Minor, by W. G. Ewing by deed bearing date September 27th, 1850, and there remains the farther' question, whether Minor is a bona fide purchaser for a valuable consideration without notice. The bond adven by Olmsted to Willoughby & Powers was not acknowledged, and had only one subscribing witness, and was not therefore entitled to record. And though actually recorded, it could not operate as notice actual or constructive of the contract_of sale to the Plaintiffs below. No actual notice to the Defendant Minor, is shown of this contract of sale previous to the date of his purchase from Ewing, though there may be strong reasons for supposing from the relations existing between the Defendant and the Ewings, that he must have had some knowledge of what had transpired in relation to the premises in question. The Defendant, however, denies that he had any notice of this contract previous to his purchase. But it is alleged in the complaint that “ in the month of April, 1850,the Plaintiffs commenced the erection of expensive and permanent structures upon the premises, which have been continually used and occupied for business purposes by the Plaintiff's ever since their erection,” etc. Of this fact we must presume the Defendant had notice before his purchase from Ewing, for the denial of the answer is by no means sufficiently definite and specific to rebut such presumption. The statement in the answer is, “ that the Defendant admits it to be true that the Plaintiffs have been in possession of the premises described in the complant, and that they have erected a building and improvements thereon, and that they use and occupy the same for business purposes. But the Defendant says he has not any knowledge or information thereof sufficient to form a belief as to when or at what time the Plaintiff went into possession or occupation of the premises aforesaid, or when they commenced making or made improvements thereon, or what amount they have expended,” &c.

This allegation of the answer can scarcely be regarded as less than equivalent to an admission on the part of the Defendant, of actual notice of this possession by the Plaintiffs. Eor whenever a purchaser claims an equity, as against another party, from want of notice of the rights or equities of such party, his allegations must be positive and precise, and negative the possibility of his having knowledge of such rights and equities before purchase. “ lie must not only deny any, knowledge of the title of the adverse party; but he must also deny any knowledge of circumstances charged, from which notice may be reasonably inferred. This defence never rests on proofs alone. It must always be made as an allegation ; and the denial of notice, must be full, positive, and precise. The rule is necessarily strict; but it imposes no hardship on a purchaser ; who is always able to state what he knows, and his ignorance of that which he knows not. (HopkinsCh. R. Galatin vs. Erwin 48; Mitf. 215, 216, 1 John. Ch. 202, 575, 2 John. Ch. 157, 3 John. 345.)

Tested by the principles above laid down, the answer is clearly defective and evasive, in denying notice of the Plaintiff’s possession of the premises, and of the erection by them of valuable improvements, previous to Defendant’s purchase. It simply states that the Defendant is ignorant as to the tvme when the possession of the Plaintiffs commenced, and their improvements were made. The Defendant in his answer does not deny that he had full knowledge of this possession, and these improvements before he gywrchased of Ewing. It is true, that the complaint does not allege that the Defendant had notice of the possession and improvements of the Plaintiffs before such purchase, but in all cases in which a party sets up his title to relief in equity, as a bona fide purchaser, without notice, for a valuable consideration, he must deny notice though it be not charged. (1 John. Oh. 302, above cited)

The general rule is, that possession of land is notice to a purchaser of the possessor’s title. (4 Kent 179, Grimstone vs. Carter, 3 Paige 437, Tuttle vs. Jackson, 6 Wen. 226; Chesteriman, vs. Gardner, 5 John. Ch. Rep. 33, 16 Ves. 254, 2 J. J. Marsh. 180.) Willoughby and Powers claim the prior equity in the premises in dispute, and were in possession, and notice of that fact by the Defendant was sufficient to "put him on enquiry as to the actual rights of the occupants, and he must be presumed to have purchased with full knowledge of their rights and equities.

But there is another fact in the case which precludes the idea that the Defendant can be treated as a bona fide purchaser for a valuable consideration without notice. The proof shows that the Defendant at the time he made the purchase, gave notes for the purchase money, payable in two and three years. The Defendant was notified by Chute in the spring of 1854, of the existence of the Plaintiffs’ claim. The notes were not paid until the fall of 1854, and- vere then paid by charging the amount of the notes to the Defendant on the books of W. G-. & G-. W. Ewing, and that after the amount so charged, the Ewings were still owing Defendant about six hundred dollars. No part of the purchase money was therefore paid by the Defendant, until after this knowledge in regard to the Plaintiff’s claim was obtained from Chute, and no money was ever actually paid by Defendant, credit having been given to the Ewings to the amount of the notes, on their indebtedness to the Defendant. To constitute a Iona fide purchaser for a valuable consideration without notice, he must not only be without notice of other rights and equities at the time of his purchase, but also at the time of the actual payment of the money. (Jewett vs. Palmer, 7 John. Ch. 67, and cases cited; 10 Paige Rep 180; Story’s Eq. Jur. § 396, § 1502, and cases cited.) The cancellation of a prior indebtedness is not considered in law as a valuable consideration, in the sense in which the term is used in the books. To constitute this, money must be actually paid, or the party have parted with its equivalent, which he had in possession. In no view which can be taken therefore, can the Defendant be regarded as a lona jide purchaser for a valuable consideration, of the premises in question.

The objection is made by the Appellant, that the judgment is irregular because the Court below did not state facts found, and conclusions of law separately, as required by the Statute. To bring this question properly before this Court, it should be upon the denial of a motion to set aside the judgment on this ground, or upon a bill of exceptions, a course which was not pursued in the case at bar. (2d Selden 356, 3 Kernan 344.) The objection at best, is rather to the form than the substance of the proceedings, and where it is manifest that the judgment must be the same upon the facts and the law, there is no occasion to remand it, to correct the irregularity complained of. (Stat. Minn. p. 564, Sec. 55.) The judgment of the Court below is affirmed.