Moore v. Petty

¶11. Executors—Actions in Foreign Court—Authority to Maintain.

¶2An executor or administrator, in his representative capacity, cannot maintain an action in the courts of any sovereignty other than that under whose laws he was appointed and qualified, without obtaining an ancillary grant of letters in the state where the action is brought, unless the right so to do is conferred upon him by the law of the forum.

¶3[Ed. Note.—For cases in point, see vol. 22, Cent Dig. Executors and Administrators, §§ 2330-2333.]

¶42. Same.

¶5But whenever the cause of action declared upon by the foreign executor or administrator is one which involves an assertion of his own right, rather than one of the deceased, or which has accrued directly to him through his contract or transaction, and was not originally an asset of the estate in his charge, he may maintain an action in another state for the enforcement thereof, although express authority go to do may not be found in a statute of the forum. 1

¶6[Ed. Note.—For cases in point, see vol. 22, Cent. Dig. Executors and Administrators, §§ 2330-2333.]

¶78. Same—Accrual op Action.

¶8A cause of action to recover from agents employed by executors the proceeds of a sale of real estate belonging to the decedent’s estate accrues directly to the executors, and they may sue thereon in a state other than that of their appointment, without procuring new letters in that state.

¶94. Pleadings—Amendment—Discretion op Court.

¶10It was within the discretion of the trial court to allow the amendment at the trial of a petition alleging that a sale made by defendants as plaintiff’s agents was in fact a sham concocted for the purpose of deceiving plaintiffs, and that, after accomplishing the same, defendants sold the land to others at a substantial advance, so as to allege that defendants, as agents, sold the land for the increased price, and received and retained such price.

¶115. Principal and Agent—Misconduct op Agent—Action in Selp-Interest —Remedies op Principal.

¶12Where agents, during the continuance of their agency, purchased for themselves land of their principals, using the name of another to give color to the transaction, and resold the same at a higher price, the benefit of the resale inured to the principals, and they could sue at law for the profit received and retained by the agents.

¶136. Trial—Verdict—Direction—Formality.

¶14Where the court directs a verdict, the usual and better practice is for the jury to return a formal verdict in writing, but the absence of such a verdict is not fatal to the validity of the judgment.

¶157. Principal and Agent—Sales by Agent—Rights op Principal.

¶16' Defendants were plaintiffs’ agents for the sale of land, and expressly agreed that, for the compensation which they were to receive, they would look after plaintiffs’ interests until the sale was concluded and *669the money fully paid. They entered into a contract of sale which unauthorizedly bound plaintiffs to execute a warranty deed, and .the purchaser, in the contract, did not so obligate himself that plaintiffs could have held him to the purchase. Before the question of the character of the deed was settled, and before the purchaser signed any obligatory writing, the latter transferred his interest in the property to defendants, without having made any payment. This fact defendants concealed from plaintiffs, and immediately thereafter sold the property themselves at a greater price than the first purchaser was to pay. In subsequent negotiations with plaintiffs, they still spoke of the first purchaser as making the purchase. Reid, that the sale finally made by defendants was made by them as plaintiffs’ agents, and plaintiffs were entitled to the profits thereof.

¶17In Error to the Circuit Court of the United States for the Northern District of Iowa.

¶18This was an action brought by Robert B. Petty and Henry H. Negley, executors of the last will of Catharine R. Negley, deceased, against Charles E. Moore and William B. Chick, copartners as Moore & Chick, to recover certain moneys in the hands of defendants, received from the sale of a tract of land. The executors claimed that the land, when sold, belonged to the estate in their charge, and that the sale was made by defendants while acting ar their agents. The defendants claimed that, while they once sold the land as agents of the executors, they duly accounted for the proceeds; that they thereafter bought the same from the purchaser, and resold it at a profit; and that the profit sought by the executors was their own. The petition, as first filed, proceeded upon the theory that the first sale by the defendants war. a sham, and was really to themselves, though made colorably to another foi the purpose of deceiving the executors and defrauding the estate; that, after accomplishing the deception, they sold the land to other parties at a substantial advance; and that consequently the estate was damaged in that amount. After the issues were joined, and when the cause came on for trial, the executors, with permission of the court, but against the objection of the defendants, amended their petition by alleging that the defendants, while acting a? their agents, sold the land for the increased price, and received and still retained the same. „ No continuance or delay was requested by the defendants on account of the amendment. The cause was tried to a jury.

¶19The record discloses the following facts;

¶20Catharine R. Negley was a resident of Pittsburgh, Pa. Her will was duly probated ir. the orphans’ court of Allegheny county, in that state. The plaintiffs, having been nominated therein as executors, qualified as such; and, in due course, letters testamentary were issued to them. The executors were invested by the will with full power to sell and convey the real property of the testatrix at public or private sale, and at such times and upon such terms as they might deem best, and to invest the proceeds. Included in the estate, which was considerable, was a tract of land in Cherokee county, Iowa. The defendants lived at Cherokee, Iowa; the executors, in Pennsylvania.

¶21Por several years prior to the transactions which resulted in the controversy the defendants had acted as agents of the executors in renting the Iowa land and paying the taxes. In August, 1901, ithe defendants wrote the executors that conditions were very unfavorable for the renting of the land in the future, and suggested the fixing of a selling price if the latter desired to sell. Then followed a course of correspondence covering a period of several months. The executors being willing to sell at a satisfactory figure, it was agreed that, if a sale was effected through defendants’ efforts, they should,“as agents, receive a commission of 2 per cent, of the selling price; the same “to include all ordinary transactions in relation to the future care of the matter such as collecting and forwarding the money.” In this same connection the defendants had previously written the executors; “We would feel it incumbent upon us, if desirable to you, to still have charge of your Interests in the premises until such time as the payments were all made.” *670The defendants wrote on November 14, 1901, that they had a customer who would pay $17,000 for the property. The executors did not accept the proposition, but suggested the propriety of advertising in a local paper that the land was for sale. The defendants answered that the suggestion might be good if it was proposed to divide the land and peddle it in parcels, but they questioned the advisability of doing that. The executors rejected the offer of $17,000, and named a higher figure, which they said they ought to obtain. To this the defendants replied that their customer, “after a careful examination of the land,” declined to raise his first offer, and that they concurred in his views. They offered arguments in favor of their position, and said that the price desired by the executors was “out of the question” and “beyond the limit” It is worthy of note at this point that the customer who was said to have carefully examined the land is the man to whom the defendants claim to have made the sale two weeks later. He testified at the trial that he had never seen the land before purchasing, but had relied on ' defendants’ statements concerning it On December 12, 1901, the executors wrote that another party had written them, inquiring the price of the laud. To this the defendants replied that they probably knew him, and that he was the man who in the preceding fall had offered them several thousand dollars less than the executors wanted. On December lGth the executors wrote that they had a definite offer from the other party; that they fixed the selling price at $18,081, the purchaser to pay a certain tax; that they regretted that defendants did not advertise the property for sale, for, had they done so, a still better price could probably have been secured; that they had expected that the defendants would use all proper means to obtain the highest possible price, and at least obtain bids from the other parties whom defendants said they knew. They also said that, if they did not hear from defendants by wire on the 19th of December, the price mentioned would be withdrawn. On the 18th the defendants wired and wrote that they had sold the land at the price mentioned. At no time prior to the 21st of December did the defendants advise the executors of the name of the person with whom they were negotiating, and to whom they claimed to have sold. The tenor of their letters is marked by unfavorable comments on the value of the land. They knew or believed that a party residing in the same town, who had once offered them $15,000 for the land, was then endeavoring to purchase from the executors, but they refrained from communicating with him. On the 18th of December a written contract of sale and purchase was prepared and signed by the defendants, as the agents of the executors, and by one Gray, as purchaser. The contract contained a requirement that the executors give the purchaser a good and sufficient warranty deed, except as to the tax already mentioned; that Gray pay $100 upon the execution of the contract, the receipt of which was acknowledged; that $2,900 be paid March 1, 1902: and that the remaining $15,081 be represented by notes and mortgage. The contract and a draft for the $100 were sent to the executors about a week afterwards. They returned the draft, and made various objections to the terms of the contract, among which was one to the requirement of a warranty deed. The sole evidence of the authority of defendants was in the correspondence, and it contained no warrant for a sale with covenants of warranty. The executors prepared and sent to the defendants a contract to be executed, but it was never executed by Gray, nor did he at any time bind himself in any enforceable way to accept such a conveyance as they were willing to give. The provisions of an Iowa statute affecting the sale of real property under foreign wills postponed the consummation of the transaction to about March 1, 1902. On February 21st, Gray executed two notes aggregating $15,000, and a mortgage to secure the same. On the 26th the defendants wrote the executors, inclosing a draft for the cash payment, less their commission, also the notes, and the mortgage, which had been recorded, and said that they “had Mr. Gray pay an amount to make the mortgage an even $15,000.” They were retained by the executors.

¶22On April 22, 1902, the defendants sent the executors a prepared deed “to be executed to Mr. É. H. Gray, the purchaser of this land”; and on the 26th of the same month the executors, having stricken out the clause of warranty, executed the same, and returned it to the defendants. In June, 1902, *671the executors discovered that Gray had previously conveyed the land to the defendants, and that the latter had resold the same at an advance of more than $5,000. The $100 sent to the executors in December, 1901, by the defendants, and represented as being earnest money received from Gray to confirm the sale, was in fact furnished by the defendants themselves. Gray was a banker who lived at another town in Cherokee county, Iowa. He carried a balance in a bank in the town in which the defendants lived, and which was but a short distance from their office, where the contract of sale was said to have been prepared and signed. He did not draw a check upon his balance in that bank for the earnest money, but, on the contrary, the defendants, who had had previous dealings with him, advanced the money themselves, and charged Gray with the same upon their books. After the draft for the earnest money was returned by the executors, the defendants credited Gray therewith. When the cash payment of $3,081, less commission, was remitted to the executors, on February 26, 1902, Gray had no interest whatever in the land. The money was wholly supplied by the defendants, although, as has been observed, they wrote that they “had Mr. Gray pay an amount to make the mortgage an even $15,000.” Gray executed the notes and mortgage for the deferred payments on February 21st.

¶23The defendants say that some time between, the 22d and the 26th, the date of the remittance, Gray came to them, and expressed regret that he had made the purchase, because of other financial engagements which he was required to meet. He said that he was willing to withdraw from the transaction without making any profit whatever. Consequently, according to the defendants, they took the purchase oft of his hands, but they did not advise the executors thereof. About two months afterwards they prepared and forwarded to the executors a deed of conveyance to Gray, as the purchaser. It was conceded that, aside from the notes and mortgage which he executed, Gray never had a dollar invested in the transaction; that he made nothing and lost nothing.

¶24It also appeared that, shortly before the commencement of the action in the court below, the executors wrote the defendants, charging them with bad faith, and with purchasing the land for themselves in the name of Gray. In reply, the defendants denied the charge that Gray was not the real purchaser, and referred the executors to certain court records for proof that Gray had contested the amount of the tax, which, as purchaser, he assumed, had succeeded in reducing It, and had finally paid the reduced amount. The truth was, however, that Gray did not pay the tax. It was paid months after the time the defendants claimed to have purchased the land from him, and after Gray himself ceased to claim any interest in it. At the same time the court records in the tax proceedings would doubtless have afforded some proof of their assertion, in that Gray was recognized therein as the owner of the land; but the testimony conclusively showed that from February to May, 1902, the defendants had no writing evidencing their alleged purchase from Gray, and from May to August, 1902, a deed from Gray to them was, according to the testimony of defendant Moore, kept from the records in order to avoid making new parties to the court proceedings. The letter of defendants regarding proof by the court records that Gray had paid the tax was therefore obviously misleading. One of the executors had seen the land several years before the transactions which have been related. The other had never seen it Both of them relied largely upon the representations of the defendants concerning it.

¶25About the first of the year 1902, in order to prepare the records for a proper conveyance of the title, an attested copy of the will of the testatrix and a transcript of the probate proceedings in the orphans’ court of Allegheny county, Pa., were filed in the probate court of Cherokee county, Iowa, and the will was admitted to probate and record in the latter county as a foreign will. The order of the Iowa court contained a confirmation of the foreign appointment of the executors, and also a clause appointing them as such in that court. There was no bond given or formal, qualification by them in Iowa. One of the defenses In the answer was that the court below was without jurisdiction to hear, try, or determine the cause, but the accompanying allegations showed that defendants evidently intended to chai*672lenge the capacity of the plaintiffs to maintain the action in Iowa. At the conclusion of the trial the plaintiffs interposed a motion for a verdict. The journal of the court recites that the motion was sustained, and that the jury returned a verdict in favor of the plaintiffs for $5,207. The record does not disclose that any writing in the form of a verdict was signed by any one acting as foreman of the jury. Judgment having been entered for the amount of the verdict, the defendants prosecuted this proceeding in error.

¶26E. H. Hubbard and A. R. Molyneux, for plaintiffs in error.

¶27J. D. F. Smith and C. H. Lewis, for defendants in error.

¶28Before VAN DEVANTER and HOOK, Circuit Judges, and AMIDON, District Judge.