135 Ky. 727 | Ky. Ct. App. | 1909
Opinion of the Court by
-Affirming.
This is an appeal from a judgment of the Payette circuit court enforcing a vendor’s lien asserted by
It appears from the record that appellant’s sister, Maggie Smith, in June, 1897, obtained by purchase certain certificates of membership or stock, with coupons attached, in the Southern Mutual Investment Company, of Lexington, and that, desiring to utilizo this stock in the purchase of a house and lot from appellee, she in October, 1897, entered with him into a written executory contract whereby he sold ánd agreed to convey her by proper deed, upon the full payment by her to him of $1,300 with interest from, date, a house and lot situated on Chestnut street, Lexington, known on the plat of the city as lot 219. In the contract a lien was retained on the lot to secure the payment of the purchase money. The contract recited that the second party, Maggie Smith, had taken out in the Southern Mutual Investment Company six certificates of membership with coupons attached; and the contract provided: “The said certificates shall be and they are hereby assigned to the first party (appellee) to be held by him as collateral to secure the payment of said purchase price, and the said first party alone is authorized to collect and receipt for all the maturing coupons on the said certificates or renewals thereof, until the said purchase price with interest is fully paid to him..”
The contract also provided: “That the said second party (Maggie Smith) will each and every month, beginning on the 15th day of October 1897, pay to the Southern Mutual Investment Company according to its rules, the dues of the said certificates or renewals —that is to say, $2.00 per month on each of said certi
Yet another provision of the contract required Maggie Smith to keep the house on the lot she purchased insured for. appellee’s benefit as long as any of the purchase money remained unpaid. It will be observed that the purchaser had the right to pay the purchase money upon the lot with maturing coupons, and that she was to continue the certificates of membership in the investment company, and to meet all dues that might accrue thereon until the purchase money was fully paid. Pursuant to the contract, she took possession of the lot, procured insurance on the house, paid the dues, and continued the certificates for several years and until she sold, and in writing assigned and conveyed them, together with her interest in the lot and all her rights under the contract to her sister, the appellant Jennie M. Smith, who took the place of Maggie, and in the writing between them assumed all the undertakings and liability of Maggie imposed by the contract of the latter with appellee.
It appears that appellee dotm to the time of the' appointment of the receiver had been paid by appellant and her sister Maggie, through the investment company, from maturing’ coup ms, divers sums amounting in the aggregate to $316.80. In the meantime the house situated on the lot appellee sold had been destroyed by fire and the insurance thereon, amounting to $665.00, was also received by appellee, and for that as well as the $316.80 appellant was entitled to credit upon the amount sued for. By the .■judgment rendered in the lower court appellee recovered $1,300, with 6 per cent, interest from October, 1897, and costs of the action, credited by the various sums making up the $316.80 as of the dates they were, paid, respectively, and by the insurance of $665 as of the date it was received by appellee. Appellant,
The answer as finally amended set up, in substance, the following matters of defense: (1) That, in addition to the credits and insurance admitted by appellee, appellant and her sister paid to the investment company in dues upon the certificates of stock deposited with appellee as collateral $954.21, for which it was alleged she was also entitled to credit. (2) That she was ignorant of the antecedents and character of the Southern Mutual Investment Company and of its system and methods of business, but that appellee ■was informed thereof and of the financial unsoundness of the company, as well as its hazardous and illegal methods of conducting' its business; yet that with such knowledge he, by fraudulently representing to her that the coupons would mature at regular intervals during each year until • the purchase money due him upon the lot would be paid, induced her to continue the payment to the company of dues until its assets 'and business went into the hands of the re-ceiver; but for which representations she would not have done so. (3)' That the manner in which the Southern Mutual Investment Company conducted its business made it in effect a lottery, the operation of which was contrary to law, and that, as the executory contract under which she purchased the 'lot of appellee obligated her to pay him therefor through the investment company and its methods were illegal, the contract became tainted with such illegality and entitled her to its rescission and an accounting by which appellee should be charged with, and appellant allow
As to the claim for additional credits from the payment of dues, it is sufficient to say that the rights of the parties are to be determined by the contract as v ritten, and, as neither fraud nor mistake in its preparation or terms is alleged, we must accept its meaning as expressed. It specifically provides that appellee only had the right to, and should be paid, the maturities. Moreover, he agreed to accept as payment upon the purchase price only the maturities, and these appellant and her assignor agreed he should receive, to be applied, first, in liquidation of the interest on the purchase money, and, secondly, as credits upon the principal. By the terms of the contract, appellant and her assignor had to pay the dues to the investment company, but, as to what application should be made of them after they were paid, that instrument is silent. But appellant would have been compelled to pay the dues so long as she continued the certificates of membership in the investment company even if not indebted to appellee, or after completing the payment of what they owed him. It is not claimed that appellee failed to credit appellant or her assignor by any payment, received from the investment company, or that he was negligent in failing to collect or demand of the company the money upon any matured coupon to which he was entitled. We conclude, therefore, that no credit should have been allowed in the judgment for the dues.
It does not appear from the averment of the answer that appellee knew of the assignment to appellant of her sister’s interest and rights under her contract with him until after it was made, nor was it alleged that she was induced by the alleged fraudulent representations of appellee to accept the assignment or assume in her sister’s stead the obligations it imposed. But, after all, an analysis of the answer and several amendments will show that the alleged fraudulent representations of which appellant complains were simply that appellee assured her the coupons would mature regularly, if she continued the payment of dues thereon. This, at most, was but an expression of opinion on his part; and judging the investment company at the time, in the light of her past ex
The facts averred in the answer as amended do not show particular knowledge of the condition of the affairs of the investment company on the part of appellee, or that he had any peculiar means of knowing it; nor did he sustain any such relation of trust or confidence to appellant or her assignor, or to the investment company, as would make what he said support an action for fraud or deceit, although what he said with reference to the maturity of the coupons may have been exaggerated or untrue. So we think it should be considered that in entering into the contract made by them the parties were upon an equal footing, and that they had equal opportunity of investigating and knowing the subject-matter of the contract in all its details.
We are further of opinion that appellant cannot avoid the contract or ask its rescission on account of the manner in which the Southern Mutual Investment Company conducted its business. However illegal its business methods, it is not alleged in the answer or amendments that appellee had any connection therewith either as an officer, agent, or privy of the-investment company. Nor is it alleged that he in any manner furnished or advanced money, property, or other thing of value to the appellant or her assignor with which to aid the lottery, if it-were a lottery, or that he was in any way to participate in the winnings or profits, if any, which might accrue to the appellant or her assignor from their investment in the company. The contract shows that appellee was only to receive from appellant and her assignor the $1,300, with interest from. October 10, 1897, the agreed price of
The facts alleged in the answer as amended do not afford such information as to the business methods of the Southern Mutual Investment Company as will enable us to say that its business was conducted after the manner of a lottery, and, in the absence of such information, we must presume that the contract between appellant and appellee was in no way made illegal by the manner in which the investment company conducted its business. Martin v. Richardson, 94 Ky. 183, 21 S. W. 1039, 14 Ky. Law Rep. 847, 19 L. R. A. 692, 42 Am. St. Rep. 353; Bibb, etc., v. Miller, etc., 11 Bush, 306. But if it were true that the investment company’s manner of doing business constituted it a lottery, the fact that appellee was to be paid by means of its maturing coupons cannot invalidate the contract with reference to the sale of the lot; it being the duty of appellant to pay the balance cf purchase money due thereon in some other way, if the insolvency of the investment company prevent
It should be borne in mind that the contract in question was not one between appellant, or her assignor, and the investment company; nor is the investment company a party to this action, or in any way seeking to benefit from the contract. The action is simply one on the part of appellee to recover the balance of purchase money due on the lot and to enforce the lien retained therefor. The failure of the investment company, through insolvency, did not relieve appellant of the obligation imposed by the contract to pay the balance of purchase money. It merely destroyed the means by which she had expected to pay it, left it in part unpaid, and compelled her to resort to some other means of raising the money. So in no way can it be said that the failure of the investment company to continue the payment of maturing coupons prevented appellee from compelling by suit payment of the balance of purchase money due him upon the lot. It is clear, therefore, that appellant’s plea that the investment company was a lottery did no£ constitute a valid defense to the action.