Baldwin v. Reynolds

¶11. Bills and Notes (§ 310*) — Contract for Sale of Notes — Construction and Validity.

¶2Complainant became the owner through the death of her husband of certain notes for $19,000, secured by a purchase-money lien on timber land. After her husband’s death his brother, who was a lawyer, acted as complainant’s agent and managed her affairs as he thought for her best interest. The maker of the notes having become insolvent and the sufficiency of the security being doubtful, he made a written proposal to the maker, which the latter accepted on behalf of a lumber company of which he was president, to sell the notes at a discount of $6,000, part cash and part in payments, complainant to retain the notes and lien as security. Under such contract the lumber company made payments^ from time to time until but about $4,000 of the agreed price for the notes remained unpaid, several of such payments being made after the time fixed for completing payment had expired. Complainant knew of the contract, that it was made with the maker of the notes, and provided that he might transfer his rights thereunder, and was also chargeable with knowledge that the payments were made by the corporation. Held, that it was an executed contract for the sale of the notes under which the title to the same passed at once to the purchaser; that as it contained no provision making it void on default in the payments complainant was estopped by accepting and retaining payments made afterward from insisting that it was executory, that time was of its essence and title to the notes did not pass, and that the payments should merely be applied thereon.

¶3[Ed. Note. — For other cases, see Bills and Notes, Cent. Dig. §§ 742, 743; Dec. Dig. § 310.*]

¶42. Principal and Agent (§ 171*) — Contract Made by Agent — Estoppel of Principal to Deny Authority.

¶5Complainant’s brother-in-law having died she appointed as her agent another lawyer who was somewhat familiar with her affairs, and several of the payments by the lumber company were made to him both before and after the company was in default. Later a further payment was made and a contract entered into between the agent and a representative of the company providing that complainant should bring a suit to foreclose the lien for the entire $19,000, making certain other lien claimants parties to cut off their rights, and should bid for the property the full ■ amount of the judgment obtained, and if she acquired the land should convey it to the company on its payment to her of the amount remaining due on the contract, while if it was purchased by others she should first receive such amount, the company should be paid the amount of its last payments, and the remaining purchase money should be divided between them. The suit was brought, but complainant subsequently denied the authority of her agent to make such agreement, and the right of the company to such share of the recovery. Held that, by the course of dealing between her and the agent, he had at least apparent authority to make the contract, and that in any event having received and retained the payments made by the company at the time she was estopped to deny his authority and was entitled in equity to no more of the recovery than the amount due her under the contract for the sale of the notes, with interest.

¶6[Ed. Note. — For other cases, see Principal and Agent, Dec. Dig. § 171.*]

¶7*853Appeal from the Circuit Court of the United States for the Eastern District of Kentucky.

¶8Suit in equity by Isabella C. Baldwin against Mary A. Reynolds and others. Complainant appeals.

¶9Affirmed.

¶10A large tract of timber land in Rowan county, Ky., was sold by William II. Baldwin, l'is wife, Isabella, joining in the deed, on June 26, 1895, to Thomas J. Reynolds for $30,000, $5,000 of which was paid in cash and the balance was evidenced by eight promissory notes as follows:

¶11

¶12All of the notes were dated -July 1, 3895, with interest at 6 per cent, payable January 1st, and July 1st, of each year, to the order of William II. Baldwin at the Commercial Bank of Rochester, N. Y.

¶13In the deed a lien was expressly retained upon all the property conveyed, “as surety for the unpaid purchase money therefor,” the notos being described in detail.

¶14The deed contained the following reservation: “The parties of the first part, however, except and reserve for themselves, their heirs and assigns, all gas, oil and minerals found in or on the lands hereby conveyed, with the right to go upon said lands to develop the same at any time.” Also a provision that: “The grantee, his heirs, or assigns may at any time prior to January, 1S96, pay off the whole of said lien so reserved and represented by said notes, or any portion thereof, and, if he shall so elect, he shall receive a discount on the amount of said debt so paid at the time such payment is so made.”

¶15On the same day Baldwin and his wife entered into an agreement with one Rodbourn covering the mineral rights so reserved. The agreement recites the sale t'o Reynolds and the retention of the mineral rights and also the lien to secure the $25,000 balance of purchase money, the notes evidencing the balance being set out in the agreement at length. The agreement further provides: “Now, therefore, the said party of the first part rthe Baldwins] in consideration of one dollar to each of them paid and other valuable consideration, the receipt whereof is hereby acknowledged, do hereby agree to deed or lease unto the said party of the second part, his heirs or assigns, or to whomsoever he or they may direct, the said oil, gas and mineral as reserved in said deed to Thomas J. Reynolds, aforesaid, with the right to develop the same upon the payment of twenty-five thousand dollars with interest, as in aforesaid lien reserved as part purchase money of said lands; and in said parties of the first part on receiving payment of such liens of twenty-five thousand dollars and interest above mentioned, shall at their own proper cost and expense execute and deliver to the said party of the second part, or to whomsoever he may direct, a good and sufficient deed or release of said oil, gas and mineral rigid s, as reserved in said deed to Thomas J. Reynolds.”

¶16Baldwin was a lawyer jn Cincinnati, having an office with his brother, J.. F. Baldwin, also a lawyer. Baldwin died June 8, 1898, at which time the first two of the Reynolds notes due January 3, 3897, and January 1, 3898, had been paid. A few days after bis death his will was probated in Hamilton county, and his wife, Isabella C. Baldwin, the appellant, qualified, as executrix, she being the sole devisee and legatee under his will.

¶17J. F. Baldwin, after his brother’s death, had complete charge of the *854widow’s business affairs and acted for her until his own death in 'December, 1899. She had full confidence in him.

¶18The semiannual interest due July 1, 1898. is admitted to have been paid, and on January 1, 1899, there remaind unpaid of the purchase money $19,000 and six months’ interest. The third note and such interest, amounting to $570, were due January 1, 1899.

¶19Reynolds was in the lumber business, and lumbered this land or a part of it. It is probable that he paid the first two notes out of the proceeds of lumber taken from the land. Reynolds had been concerned with the I-Iixon Rodbourn Dumber Company which became bankrupt, and in April, 1897, Reynolds then himself insolvent, organized the Standard Dumber Company, appellee, between which and Mrs. B.aldwin the present controversy exists.

¶20The assets of the Hixon-Rodbourn Company were turned over to the Standard Dumber Company. The .capital stock of the new company was $10,000 divided into 100. shares of $100 each. Reynolds subscribed for 94 shares, E. A. Marsh, his attorney,. of Rochester, N. X., for 3 shares, the consideration of which, was legal services connected with the organization of the company, and John De Witt,. the manager of the company, subscribed for 3 shares, the consideration of which does not appear. The company did considerable business in lumber, a part, at least, of which came from this tract of land. It discontinued business in 1903 or 1904, the exact time not appearing. There was apparently no meeting of its hoard of directors from the time of its incorporation until shortly after the death of Reynolds, October, 1902, at which time a meeting was held, Mary A. Reynolds, appellee, appearing and voting as the owner of 94 shares of the stock, and Marsh as the owner of 3 shares, and Reynolds’ son as the owner of the 3 De Witt shares. How Mrs. Reynolds and her son obtained title to these shares does not appear, nor does it appear that any administration was had upon the estate of Reynolds. At that meeting the affairs of the company were put in charge of B. A. Marsh. On the death of J. P. Baldwin the management of Mrs. Baldwin’s affairs were intrusted to Edward A. Hafner, who had been for many years a young lawyer in the office of the Baldwins, and undoubtedly had their confidence. He managed her affairs in the same manner as her brother-in-law J. P. Baldwin had managed them, and there was no reason to suppose that she had less confidence in him than she had had in her brother-in-law. >She intrusted her business to each of them successively, to do with it as they thought best. Before Mrs. Baldwin's affairs came into Hafner’s bands, he was familiar with much of the details of them. Her business affairs involved other matters besides the sale of this land, but they were not many, and this transaction involved apparently the most important item. Mrs. Baldwin lived in Cincinnati until about a year after her brother-in-law’s death and while her affairs were in Hafner’s charge for about a year, during which time she occasionally came to his office. She then moved to New York and remained' there until 190G, when she took her affairs out of Hafner’s hands and put’ them in charge of Charles H. Stephens of Cincinnati, her present counsel.

¶21When Hafner was discharged he turned over to Mr. Stephens all of Mrs. Baldwin’s papers, including a copy of the contract of June 22, 1899, to which reference will be made.

¶22The first two Reynolds notes were found by Marsh among the papers of the Standard Dumber Company. They were indorsed by William H. Baldwin without recourse. The other notes disappeared. Hafner was unable to find them, nor could Marsh find among Reynolds’ and the Standard Dumber Company’s papers the third note, which, under the facts, might be expected t'o be among tbe papers of the Standard Dumber Company.

¶23There is a suggestion in the evidence that all.of the notes had at some time been turned over to some bank by William H. Baldwin as collateral security or for collection. It' is probable, though no direct finding of fact can be made on the subject, that all of the notes were indorsed by William .-H. Baldwin in his lifetime, though none of them were indorsed by his executrix sua manu, and it is not, shown that' J. P. Baldwin indorsed them, but Hafner did not.

¶24*855Reynolds was undoubtedly the moving and managing force as well as the almost exclusive owner of the Standard Lumber Company, though it was a separate, distinct identity from him and carried on business after his death, a part of which, at least, was lumbering this tract. When the lumber company ceased business in 1903 or 1904, its debts were at least as large as its assets. Reynolds, a few days before his death, October, 1902, conveyed the real estate to his wife, Mary 13. Reynolds, by deed. On January 1, 1899, there remained unpaid $19,000 and six months’ interest. The third note of $8,000 and the entire interest amounting to $570 were due January 1, 1899. On January 5, 1.899, the following receipt found by Mr. Marsh was given the Standard Lumber Company:

¶25“Cincinnati, January 5, 1899.

¶26“Received from the Standard -Lumber Company, of Rodbourn, Kentucky, three thousand and five hundred and seventy dollars, on account, of purchase of notes, made by T. J. Reynolds. Esq., to the order of W. IT. Baldwin amounting in the aggregate with interest January 1, 1899, to $19,570.00, and if said company should fail to complete the purchase of said notes by July 1, 1899, the undersigned hereby agrees to deliver one of said, notes due January 1, 1899, for $8,000.00 as paid in full so far as the remaining notes are concerned. Also she agrees to indorse $480.00 of the above sum, as paying all interest on the residue of said notes up to January 1, 1899, and leaving the balance due on said purchase $11,000.00 and interest from January 1. 1899.

¶27“Isabella O. Baldwin, Ext.,

¶28“By J. IF. Baldwin.”

¶29The receipt is evidence that on that day the Standard Lumber Company paid Mrs. Baldwin for the third Reynolds note and the interest on all the notes to January 1, 1899, and it was agreed that, even if the purchase wore not completed, yet that note was paid as to Mrs. Baldwin, and was fo he kept alive as against Reynolds in the interest of the Standard Lumber Company. By this agreement the Standard Lumber Company would hold the third note against Reynolds and would buy the balance, $16,000, for $11,000, with interest from January 1, 1899, and as against Reynolds would, have all the rights Mrs. Baldwin had to recover the entire $19,000, making a saving of $5,000. The company made no further payment, and this agreeinent was permitted to lapse or was abandoned, but under it the company became entitled to the third note for $8,000 for which it. had paid. However, before July 1, 1899, the following agreement was entered into:

¶30“Whereas, there is now due from T. .T. Reynolds, Esq., for one-half year’s interest up-to Julyl, 1899, on purchase money for property sold to said Reynolds bv the late General W. II. Baldwin, of Cincinnati, Ohio, the sum of $330.00.

¶31“And will become due January 1, 1900, the sum of $8,000.00.

¶32“And will become due January 1, 1901, the sum of $3,000.00.

¶33“And will become due January 1, 1902, the sum of $3,000.00.

¶34“And will become due January 1, 1908, the sum of $3,000.00.

¶35“And will become due January .1, 1904, the sum of $4,000.00.

¶36“And interest on all -of said sums, pa>able semiannuallv from and after July 1, 1899.

¶37“And whereas Isabella C. Baldwin, widow and executrix of said General W. H. Baldwin and sole owner of all of said sums of purchase money and of the purchase money lien reserved in the deed conveying said lands to said Reynolds, desires to settle said entire transaction and to collect as soon as possible all moneys coming to the estate of said W. II. Baldwin.

¶38“Now, therefore, for the purpose aforesaid, said Isabella C. Baldwin hereby proposes to sell and convey to such person or persons or corporations, as said Reynolds shall name all of said purchase-money notes, and purchase money, and the lien reserved in said deed to secure the payment of said notes for the sum of $10,380.00, payable as follows:

¶39“$3,130.00 payable in cash.

¶40“$3,130.00 payable January 1, 1900, with 6 per cent, interest, from July 1, 1899, and $4,100.00, payable July 1, 1900.

¶41*856"The above-mentioned notes and purchase-money liens to secure the sámete be retained by said Isabella C. Baldwin until said last three named payments shall be made. Isabella C. Baldwin,

¶42“By J. F. Baldwin, Her Attorney.

¶43“Dated June 22, 1899. In duplicate.

¶44“I hereby accept the above proposition. Dated, June 22, 1899.

¶45“T. J. Reynolds.”

¶46And on that day the following receipt was issued by J. F. Baldwin:

¶47“Cincinnati, June 22, 1899.

¶48“Received from T. J. Reynolds, Esq., check of the Standard Dumber Co., by T. J. Reynolds, No. 2,198, for the sum of $3.180.00 which when paid is- in full of the first payment on the within 'written contract, $3,130.00.

¶49“Isabella O. Baldwin,

¶50“By J. F. Baldwin, Her Attorney.”

¶51Mrs. Baldwin was in Cincinnati at the time this agreement was made and afterwards knew of it, made no objection t'o it, and does not dispute the propriety of J. F. Baldwin making the contract in her behalf, and has accepted all payments made on account of the same, whether to J. F. Baldwin or to Hafner.

¶52This cash payment of $3,130 was the only money paid during J. F. Baldwin’s lifetime. The receipt of the $3,130 is indorsed on the contract in the handwriting of J. F. Baldwin as follows'

¶53“Cincinnati, June 22, 1899.

¶54“Received from T. J. Reynolds, Esq., check of the Standard Dumber Co., by T. J. Reynolds, No. 2,189, for the sum of $3,130.00 which when paid, is in full of the first payment on the within written contract.

¶55“Isabella C. Baldwin,

¶56“By J. F. Baldwin, Her Attorney.

¶57“Check drawn on the First National Bank of Huntington, W. Ya.

¶58“J. F. Baldwin.”

¶59Shortly after Hafner took charge there was paid to him on the agreement $693 by check of the Standard Dumber Company as follows:

¶60“Standard Dumber Co., Wholesale Dumber.

¶61“Huntington, W. Va., Feb. 19, 1900.

¶62“No. 2946. Pay to the order of E. A. Hafner, atty, for Isabella C. Baldwin $693.00 six hundred and ninety-three dollars.

¶63“To First National Bank, Huntington, W. Va.

¶64“Standard Dumber Co.

¶65“By T. J. Reynolds, Pt.”

¶66And on the contract is the following indorsement:

¶67“Cincinnati, Jan. 1, 1900.

¶68“Received of T. J. Reynolds check of the Standard Dumber Co. by T.. J. Reynolds for the sum of $693.00, which when paid is to be credited on the within contract' on acct! of the amount due Jan. 1, 1900.

¶69“Isabella O. Baldwin,

¶70“Per E. A. Hafner, Her Atty.”

¶71This receipt so indorsed is, without doubt, a memorandum of the payment by the check of February 19, 1900.

¶72The next payment is evidenced by the following receipt in Hafner’s handwriting:

¶73“Cincinnati, O., July 24th, 1900.

¶74“Received from Standard Dumber Co., of Huntington, W. Va., one thousand and eighty-five 45-100 dollars to apply on contract for sale of T. J. Reynolds notes to W. H. Baldwin. Isabella C. Baldwin,

¶75“Per Edw. A. Hafner, Atty.”

¶76These payments were made when Mrs. Baldwin was living in Cincinnati and making occasional visits to Hafner’s office.

¶77The next payment, March 23, 1901, is by check of the Standard Dumber *857Company to Hafner, attorney, for $693, and payment indorsed by him on the copy of the agreement.

¶78The contract of June 22, 3899, was in duplicate, each party taking one. Mrs. Baldwin’s copy was in Mr. Hafner's hands and was lost, probably with the notes, lmt in 3906 he turned a copy, with the indorsements on it, over to her counsel, Mr. Stephens. It does not appear thai she actually knew of the nature of the indorsements upon the copy, or that there were any indorsements until that time. The $693 paid February 39, 1900, paid $93 interest to January 1, 1900, on the note for $3,100 due that day, and $600 on the principal reducing that, note to $2,500 with interest from January 1, 1900.

¶79The next payment was by check as follows:

¶80“Standard Lumber Co., Wholesale Lumber.

¶81“Huntington, W. Va., March 22, 3901.

¶82“No. 4455. Fay to the order of Edward A. Hafner, atty. $693.00 six hundred and ninety-three dollars, for

¶83“To First National Bank, Huntington, W. Va.

¶84“Standard Lumber Co.,

¶85“By T. J. Reynolds, Pt'.”

¶86There is no indorsement of this sum on the original agreement, hut on the copy turned over by Hafner to Stephens there is an indorsement March 22, 1901, paid on within $693. Why this exact sum of $693 was paid at that time does not appear, for analysis does not disclose any particular application io interest or principal.

¶87The $1,085.45 paid the interest on the note due January 1, 3900, theretofore reduced to $2,500 from January 1, 1900, to July 24, 1900, and $1,000 on the principal which was thus reduced to $1,500 with 6 per cent, running from July 24, 3.900.

¶88The next payment was as follows:

¶89“Standard Lumber Co., Wholesale Lumber.

¶90“Huntington, W. Va., March 30th, 1903.

¶91“No. 7236. Pay to the order of Edward A. Hafner, Atty. $1,164.00, eleven hundred and sixty-four dollars. For: Upon purchase Baldwin notes vs. Rowan lands.

¶92“To First National Bank, Huntington, W. Va.

¶93“Standard Lumber Co.

¶94“By E. A. Marsh, V. Pt.”

¶95This is indorsed on the original agreement:

¶96“Received of the Standard Lumber Company the sum of $1,164.00 by check to applv on within.

¶97"March 30th, 1903. Edw. A. Hafner.”

¶98When this payment was made, Reynolds had been dead all of live months. Hafner knew of Reynolds’ insolvency and death. Whether Mrs. Baldwin actually knew these facts does not appear. At that time the Standard Lumber Company was probably carrying on business, and certainly was making payments on the contract of June 22d. Hafner knew the payments were made by it on the contract. The last payment to be made under the agreement was $4,100 payable July 1. 1900. so that the payments of July 24. 1900, March 22, 3901. of March 30, 1903, and of May 13, 1903, noted immediately below, were received by Hafner on account of this contract and turned over to Mrs. Baldwin by him after the time fixed for the last payment.

¶99On May 13, 1903, Hafner received a check as follows:

¶100“Standard Lumber Co., Wholesale Lumber.

¶101“Huntington, W. Va., May 13th, 1903.

¶102“No. 7342. Pay to the order of Ed. A. Hafner, Atty. for Isabella C. Baldwin $600.00, six hundred dollars. For: On account of purchase money lien on the Rodboum Land.

¶103“To First National Bank, Huntington, W. Va.

¶104“Standard Lumber Co.

¶105“By E. A. Marsh, V. Pt."

¶106*858The foregoing check is indorsed as follows:

¶107“Bay to Isabella C. Baldwin or order

¶108“Ed. A. Hafner, Atty. for Isabella C. Baldwin.

¶109“Isabella C. Baldwin.”

¶110The Rodbourn lapd is another name for the timber land in. question, so Mrs. Baldwin knew that at least $600 of the moneys that were paid on that' contract were paid by the check of the Standard Lumber Company without the intervention of T. J. Reynolds in any capacity. It is highly probable that she actually knew of Reynolds’ insolvency and death. The payment of the $600 is not indorsed on the original nor on the copy. The sum of these various payments, including the amount paid on the contract of January 5, 1899, was $10,935.45, and they were paid by the moneys of the Standard Lumber Company.

¶111Judge Cochran in his closely reasoned and painstaking opinion showed that the amount due Mrs. Baldwin under the. contract on May 13, 3903, was $4,315.03, the correctness of which,- as a calculation, iá admitted by appellant, who concedes that if that contract is binding on Mrs. Baldwin that amount and interest is the sum to which she is entitled.

¶112On or about March 30, 1903, Marsh, knowing that Hafner had charge of Mrs. Baldwin’s affairs, came' to Cincinnati, had a conference with him, figured on the amount due Mrs. Baldwin on the contract of June 22, 1899, which was fixed at $5,000. This was a mistake, as the calculation of figures shows'. It should have been $4,315.03 as the parties undoubtedly figured the $693 paid February 19, 1900, as a different payment from that evidenced on the copy of the contract of the same amount as of January 1, 1900. March 30, 3903. Marsh paid Hafner $1,164 by check on that day, and came to Cincinnati again on or about May 13th, at about the time the check for $600 was sent, and at’that time the following agreement was entered into between Marsh and Hafner:

¶113“Whereas on or about the 26th day of June. 1895, W. II. Baldwin of Cincinnati, Ohio, deceased, sold to Thomas J. Reynolds, late of Huntington, W. Va., deceased, a tract of land situated in Rowan county, Kentucky, reserving in the deed to said Thomas J. Reynolds rights to all the oil, gas and mineral located on said land and the right to develop the same, and also reserving in said deed a lien on said lands securing the deferred payments of purchase money.

¶114“And whereas, on or about the same day the said W. I-I. Baldwin, deceased,, and Isabella C. Baldwin, his wife, executed and delivered, to one James II. Rodbourn, of Erin, Chemung county, Xew York, a certain contract in which he agrees to deed or lease unto the -said James H. Rodbourn, or as he may direct, all of the gas, oil and mineral found in or on said lands with the right to develop same, provided all of said deferred payments of purchase money should be paid to the said W. H. Baldwin by said Thomas J. Reynolds, and

¶115“Whereas the Standard Lumber Co., a corporation, organized under the laws of the state of Kentucky, have advanced certain moneys, to wit, the sum of $10,242.45 toward the purchase of said purchase-money lien on said lands, and

¶116• “Whereas, the said Thomas J. Reynolds has failed to pay said purchase money, and there is still due and owing on said purchase money lien to Isabella -C. Baldwin, the widow and sole heir and devisee of said W. II. Baldwin. and to the said Standard Lumber Company the sum of $--, and

¶117“Whereas it is considered and agreed by and between the parties hereto that the said contract made by the said W. I-I. Baldwin to said James IT. Rodbourn is of no force and effect as against the rights of the said Standard Lumber Company and Isabella C. Baldwin.

¶118“Now, therefore, in consideration of the mutual covenants herein contained-it is hereby mutually agreed that the said Isabella C. Baldwin shall bring a suit in foreclosure and foreclose the lien of the parties hereto for the unpaid portion of said purchase money of said lands, including. all notes^heretofore purchased by said Standard Lumber Company, which notes held by both parties amount, in the aggregate, to $39,000.00, and interest from January 1, 1899, *859and ilia said Standard Lumber Company in consideration of tlie agreements herein contained hereby assigns, transfers and sets over to said Isabella C. Baldwin all of said notes and indebtedness heretofore purchased by it. It is further agreed that the said James IT. Iiodbourn and bis assigns shall be made a party to the suit of foreclosure and proper allegations made to cut off and determine the rights of said James H. Iiodbourn and Ms assigns under and by virtue of the contract, made between him and the said W. H. Baldwin and Isabella C. Baldwin.

¶119“It is further agreed that tlie costs necessary to maintaining said action shall be shared equally by tlie Standard Lumber Company and said Isabella C. Baldwin: and it is agreed that in tlie event, of Isabella C. Baldwin recovering a judgment against the parties to said suit and procuring an order of sale of said property free and clear of any x’ights or equities which the heirs or assigns of said Thomas J. Reynolds or the said James II. Rodbourn or his assigns may have or claim, then and in that event said Isabella C. Baldwin shall bid on said lands up to tlie full amount of the judgment obtained in said suit, and if the same is sold to her she shall convey to the said Standard Lumber Company or their successors or assigns all of the said lands sold to her at such sale, reserving to herself only the undivided one-half of all the oil, gas and mineral rights, covering iron, coal, fire clay and whatsoever other mineral and mineral clay may be found in or on said lands with the right to develop the same, and the right to ingress and egress over said lands, upon tlie pay ment-to her of the sum of $5,000.00, and Interest from April j, 1903, which said sum the Standard Lumber Company hereby agrees to pay. In case of the purchase of said lands by any person other than tlie parties to this contract at said foreclosure sale, it is hereby agreed that $5,000.00 of the amount so collected and interest from April 1, 1903, shall be paid to the said Isabella G. Baldwin, and the balance thereof shall lie divided between tlie said Isabella C. Baldwin and the Standard Lumber Company after repaying to the Standard Lumber Company the sum of SI .764.00. paid by it at the time of making this contract, provided, however, that should the said Isabella O. Baldwin in sa;d suit not succeed in recovering judgment for at least $19,000.00, or should not, succeed in recovering the judgment cutting off the rights of the said James II. Rodbourn and his assigns, then the said Standard Lumber Company shall be entitled to an assignment of all the rights; title and interest: of the said Isabella C. Baldwin in said notes and lien on payment to her of the said sum of $5,000.00 and interest from April 1, 1903, and costs of said foreclosure ac-1 ion.

¶120‘•Witnesses the hands and seals of the parties this day of May, 1903.

¶121“Standard Lumber Co.

¶122“By M. A. Marsh, V. L>t.

¶123“Isabella O. Baldwin,

¶124“By Kdw. A. Ilafner, Atty.”

¶125The particular significance of the reference to tlie contract with Rodbourn for the gas, oil, and minerals in the tract of land lies in the fact that the contract was on record, and was a cloud on the mineral rights, and on the title of the land. Ilafner wanted to get rid of those claiming under Iiodbourn, as the mineral rights might be of some value. Mrs. Baldwin was pressing Ilafner for money. He told Marsh he must have some money, and that he thought he ought to foreclose Mrs. Baldwin's lien. The question was debated whether the contract of June 22, 1899, was still in force; the payments not, having been made on time. Marsh called attention to the payments actually made long after the date the last payment was to be made under the contract, and showed Ilafner that the Standard Lumber Company had substantial rights which should be protected, growing out of the payment of the money. The agreement was the result of their conference. Ilafner at that time evidently did not doubt Ills iiower to make the agreement with Marsh.

¶126By mesne conveyances one Gillmor became the owner of such rights as Rodbourn had under his agreement with Baldwin. In pursuance of the agreement., á bill was filed in the Rowan, Ky., circuit court, entitled Isabella C. Baldwin, Widow and Heir at Law of William II. .Baldwin, Deceased, Plaintiff, vs. Mary A. Reynolds, J. II. Iiodbourn, Grace Rodbourn, Edwin Ripley, Ada C. Ripley, *860George Gillmor, and Christian Glatzau, Defendants, in which the plaintiff claiming there was still $19,000.00 with interest from January 1, 1899, unpaid on the Reynolds’ purchase-money notes, prayed for a judgment against Mary A. Reynolds for that sum and interest, and, in default of payment, for an enforcement of the lien reserved in the deed to Reynolds and a sale of the premises to pay the amount due.

¶127On October 2, 1900, Reynolds, being indebted to Buell in the sum of $6,000, executed, his wife joining therein, a mortgage to Buell to secure that sum. October 27, 1903, the cause upon petition of Rodbourn and his wife, Ripley and his wife, Gillmor and Blatzau, was removed to the Circuit Court of the United States for the Eastern District of Kentucky.

¶128Mrs. Reynolds answered, denying any sum of money was due from her to the plaintiff, and prayed that so much of the plaintiff’s petition as sought a personal judgment against' her be dismissed. On November 14, 1904, the parties at whose instance the cause was removed demurred to the bill for that it showed no cause of action against them, which demurrer was sustained November 17, 1904. The cause then stood between Mrs. Baldwin as complainant and Mrs. Reynolds as respondent.

¶129On April 24, 1906, Gillmor filed a cross-bill by leave of court. He showed the deed to Reynolds, the deed by Reynolds to his wife, the reservation to Baldwin, his heirs and assigns of all gas, oil, and mineral rights, and the agreement of Baldwin and his wife with Rodbourn. He also showed the mesne conveyances through which he became the assignee of Rodbourn’s contract and rights. He claimed that the $19,000 balance of purchase money had been paid to Baldwin, that there was no lien upon the premises, and that Mrs. Baldwin and Mrs. Reynolds were conspiring to the end that they might assert large and unjust claims upon the property, and thus defeat his rights. He prayed for an accounting between Mrs. Baldwin and Mrs. Reynolds and for a deed from Mrs. Baldwin to him, and that, if any balance of purchase money were found still due Mrs. Baldwin, the property be sold to pay the same, and that a deed of the oil, gas, and minerals be made to him!

¶130On April 24, 1906, complainant took an order to file an amendment to her bill or a supplemental bill, setting up the amount paid by her since the suit was brought for taxes, penalties, and interest assessed upon the mineral, oil, and gas rights in the land. Neither of these pleadings were filed, nor did she ever amend her bill in any particular. On the same day the cause was referred to J. O. Einnell as special master to ascertain and 'report the amoxint due complainant on the lien reserved in the deed, and on May 10, 1906, Mrs. Baldwin afid Mrs Reynolds were made parties respondent to Gillmor’s cross-bill.

¶131On June 4, 1906, Mrs. Reynolds answered the cross-bill, denying Gillmor’s claim of interest in the premises, and denying the charge of conspiracy with Mrs. Baldwin, denied in substance all of the allegations in the cross-bill, and prayed to be dismissed.

¶132July 2, 1906, Mrs. Baldwin filed a plea to the cross-bill of Gillmor. In the meantime, January 17, 1907, Buell filed an intervening petition setting up his-mortgage. July 18, 1907, Mrs. Baldwin’s plea was overruled. Various proceedings were taken, not necessary for consideration here.

¶133December 16, 1907, Mrs. Baldwin answered Gillmor’s cross-bill. She denied its allegations and that Gillmor has any interest in the mineral rights until the $25,000 balance of purchase money from Reynolds was paid, and averred “that it is true that in her original bill filed herein she alleged that there was yet unpaid on the purchase price of the lands, sold as aforesaid to Reynolds and secured by a lien on said lands, the sum of $19,000, with interest from the 1st day of January, 1899; that at that time this defendant was informed by her attorneys that said sum was due her and she believed such to be the fact; that she has since learned the fact to be that $6,000 was paid on account of the -purchase price of said lands and in discharge of said lien by Thomas J. Reynolds; that subsequent to that time further payments were made by the Standard Lumber Company, a corporation; that said corporation claims that the payments made by it were a part of the purchase of her lien on said lands, and not a payment in discharge of said lien; that giving credit. *861for the total amount received by this defendant from all sources on account of said lands sold to Reynolds there remained due to this defendant on the 1st day of January, 1907, approximately the sum of $13,000; that, in addition to'said sum still due on the purchase price of the said lands, the plaintiff has been obliged to pay large amounts for taxes both upon the surface rights and mineral rights in said lands, and penalties for delinquent taxes, amounting to more than $2,500, and has incurred large expenditures in attempting to realize upon her security.”

¶134And she prayed that the equities of the case as presented upon the cross-bill and her answer be found to be with her. On the same day she answered the intervening petition of Buell, and avers that, if he has any lien, it is inferior to her purchase-money lien. In this answer she averred her want of knowledge as to the relation of the Standard Lumber Company to Reynolds as to whether or not payments made by the Standard Lumber Company were in part payment and discharge of the purchase-money lien, or were part of the purchase of the same as claimed by the Standard Lumber Company.

¶135December 24, 1908, Finnell, special master, filed his report. He found the various payments made by Reynolds and the Lumber Company and made findings based upon two views — one, that the contract of June 22, 1899, was binding on Mrs. Baldwin and that her claim to the purchase-money notes, and interest must be based on it; and the other, upon the theory of her counsel that the contract was void, and that she was entitled to recover as if the contract had not been entered into. He found the amount due her on that theory as calculated by an expert bookkeeper to be July 1, 1908, $15,300.91. This amount was reached by applying the payments first to the payment of interest due upon all the notes, and then to the notes in order of priority,.

¶136Marsh, upon learning of this report, filed by leave, March 31, 1909, the intervening petition of the Standard Lumber Company which alleges that prior to the 1st of January, 1903, the petitioner paid the complainant in part purchase of the purchase-money lien set forth in her original complaint, $10,242.45, upon the agreement between her and t'he petitioner that the same was paid upon the purchase of the purchase-money Hen in which the petitioner had thereby acquired an interest in that amount. The intervening petition also averred that the petitioner, the Standard Lumber Company, on or about March 22, 1903, paid the complainant $1,104 and again on May 13, 1903, paid the complainant the sum of $000 upon the agreement that said sum should apply upon the purchase of the complainant’s purchase-money lien, and that said sums were received by her upon that understanding, and thereby the petitioner acquired further interest in the purchase-money Hen in the sum of $1,704 and interest from the dates of the respective payments amounting in all to an interest in the Hen to tiie extent of $12,000.15 and interest from the dates of respective payments. The petition averred the priority of this sum to any interest; the other defendants might hare, and averred that said sum and in-1 erest were part of the $19,000 and interest claimed by the complainant, Mrs. Baldwin, in her petition, which prior to the commencement of her suit she liad agreed with the petitioner to account for out of the proceeds of the sale, and averred that Mrs. Baldwin made proof of the amount due her without reference to the interest of the Standard Lumber Company in the purchase-money Hen. The petition also tendered an issue on the claim of Gillmor that Reynolds through the Standard Lumber Company paid off the purchase money due Mrs. Baldwin, and that the Standard Lumber Company ceased to do business at the death of Reynolds, or that the estate of Reynolds became the beneficiary of the assets of the corporation, but averred that no part of the money paid to Mrs. Baldwin was paid by Reynolds through the Standard Lumber Company, and that the estate of Reynolds had no interest in the corporation, and prayed that the amount adjudged to be due upon the purchase-money lien set forth in complainant’s bill be decreed to include the amount paid by petitioner and interest' in addition to the sum due Mrs. Baldwin in her own right, and that the amount paid by the petitioner be paid out of the proceeds of the sale of the land.

¶137Gillmor answered, denying the averments in t'he intervening petition of the Standard Lumber Company, and asks that the intervening petition be dis*862mifesed. April 22, 1909, Buéll answered the intervening petition, put- 'in issue its averments, and asked that it be dismissed. September 27, 1909, Mrs.; Baldwin knswered the intervening petition of the Standard Lumber Company. She admitted the payment to her prior to January 1, 1903, of $10,242.45, alleges that she does not know whether it was paid by the Standard Lumber Company or by Reynolds. She denies any agreement between herself and -the Standard Lumber Company, and that the amounts so paid were upon the purchase of the Reynolds notes and the purchase-money lien; denies that the Standard Lumber Company acquired a proportionate interest with her in the purchase-money lien to the amount of $10,242.45. She avers “that her affairs after the-death of her husband, and during said period” (when the various amounts were paid), “were managed first by her brother-in-law, J. F. Baldwin, and later by Edward A. Hafner, her attorney, and that she never personally made any such agreement as alleged or Bad any knowledge thereof.” She further admits the receipt of the $1,164 and the $600, and denies :any agreement was made upon the receipt thereof. She denies ever having made ahy such agreement, or that she authorized her attorney to make the same, and says she does not know whether the payments should be considered as having been made in part payment of the notes and lien which she held, or in part purchase of the notes and lien of .the Standard Lumber Company, .and denies that that company had any right to further pro rata with her the amount due on the Reynolds notes. She admits that the sums alleged to have been paid by the Standard Lumber Company are a part of the $19,000 alleged in her original complaint to be due her, but denies that she agreed to -account to-it out of.the proceeds of her suit thereafter, and alleges that, if any such agreement was made on her behalf, it was without her authority or knowledge, and that she never consented to the same. And thus the issues were made up.

¶138' Upon exhaustive consideration, the court' below was of opinion that by the contract of January 5, 1899, the third note passed to the Standard Lumber Company, but subordinate in right of payment out' of the land to the other purchase-money notes; that the contract of June 22, 1899, was an executed agreement; that the title of the Reynolds notes passed to the Standard Lumber Company upon its acceptance of the proposition of sale contained in the agreement; that Hafner had authority to act for Mrs. Baldwin in the agreement of May, 1903, though not to the extent of relinquishing her right to one-half or any part of the mineral rights in the land; that Buell’s mortgage claim was valid, but subordinate to.the payment of the purchase-money lien; that Gillmor had no interest until the entire $25,000 balance of- purchase money was paid; that this might never happen, and therefore Gillmor had no present interest: that there was a lien on the land for the sum of $19,000 and interest, out of which the complainant was entitled to be first paid $4,315.03, with interest from May 13, 1903, the balance to go to the Standard Lumber Company.

¶139The intervening petition of the Standard Lumber Cbmpany not setting up exactly its claim as the court found it should be, leave was granted to amend its petition to conform to the findings of the court, the amendment to be filed before the decree was entered. Thereupon such amended intervening petition was filed, alleging among other things that the first two notes for $3,000 each were paid by Reynolds; that Isabella C. Baldwin in consideration of $11,628.45 paid to her in cash at different times by the Standard Lumber Company, sold all of the notes, except the first two which had been paid by Reynolds, five of which were for $3,000 and one for $4,000 she reserving a lien on the same for a portion of the purchase money, estimated by mistake as $5,000 as of May 13, 1903, but which upon correct calculation turned out to be $4,315.03 of that date. The petition averred that the agreement of May 13, 1903, between Marsh and Hafner was for the purpose of enabling Mrs. Baldwin in her own name and for the benefit of the Standard Lumber Company and herself to enforce the lien for the entire amount due to herself and the Lumber Company, namely, $19,000 and interest from January 1, 1S99, the proceeds of the sale of the lands to be applied first to the payment of the ¿mount due the complainant, the $4,315.03 as of May 13, 1903, and the remainder of the $19,000- to be paid the Standard Lumber Company; that the suit *863was brought by Mrs. Baldwin in hor own name to carry out the terms of the agreement. Thereupon a decree was entered April 7, 1910, embodying the findings of the court theretofore made, and finding specifically, among other things, that Mrs. Baldwin and the Standard Lumber Company have a valid vendor’s lien upon the land to secure the payment of $31,476.66, being $19,000 with interest from January 1, 1899, at the rate of 6 per cent, to December 11, 1909, and costs, of which sum $6,018.10 being $4,315.13 with interest from May 13, 1903. and December 11, 1909, was ordered to be first paid to Mrs. Baldwin and the remainder of the $31,476.66 and interest to be paid the Standard Lumber Company. The decree awarded a lien to Buell of $5,500, with interest amounting to $8,534.16, to December 11, 1909, to hear interest from that date, but subordinate to "the purchase-money lien, and directed the sale of the property if the money was not paid wUhin a certain time.

¶140From this decree Mrs. Baldwin alone appeals. Her contention is that the amount found due her is $6,000 too small. This amount is the difference between the face value of the Reynolds notes and the figure at which Reynolds agreed to buy them under the contract of June 22, 1899.

¶141Decree affirmed.

¶142Charles H. Stephens and Charles II. Stephens, Jr., for appellant.

¶143Frank Chinn and Ednor A. Marsh, for appellee Standard Lumber •Co.

¶144Before SEVERENS and KNAPPEN, Circuit Judges, and PIOLLISTER, District Judge.