McEwen v. Gotthelf

¶1This action was begun in October, 1911, for an accounting between tenants in common upon the sale of their land and for the recovery by plaintiff of his alleged share of the additional consideration received 'by defendant over and above the amount ^reported- by defendant to plaintiff. The action was tried by the court without a jury. The court found that the defendant knowingly and fraudulently withheld from plaintiff the facts in regard to such additional consideration for the purpose of'cheating and defrauding plaintiff. Judgment was entered in favor of plaintiff and against the defendant for the sum of $5,000 and- interest. The claim of the plaintiff rests upon alleged fraud and deceit on the part of defendant, in the transaction while defendant relies upon a contract. On July 11, 19x1, the plaintiff and defendant and defendant’s -brother, M. J. Gotthelf, were, and had been for some years prior thereto, the owners of a large tract of pine land in the counties of Custer and Pennington, in this state, each owning an undivided one-third thereof. On .that date plaintiff delivered to defendant a contract in writing, whereby he agreed at any time on or before July 11, 1912, upon payment -to him of the sum of $10,962.83, and the cancellation of any and all indebtedness owing from him to defendant to convey to defendant his undivided one third of said property. Said contract further -pro vided: *185“This is strictly an optional contract, which 'if the said Ed. J. Gotthelf fails to make said payment, I cancel said obligations and indebtedness on this contract and same shall be void.” On August 5; 19x1, defen dent went to Freeman, S. D., and had a talk with John Schamber about selling him the whole property. On August 7th defendant invited plaintiff to his home and the contract was altered by striking out the consideration as underscored above, and interlining the following as the consideration: “$11,999 'm ca's'h or good security, such as the said Ed. J. Gotthelf and M. J. Gotthelf is willing to take for their interest” in the .property. Defendant’s evidence tends to show that this change was made with plaintiff’s consent. Plaintiff’s evidence tends to show that the change was made without his consent. On August 12, 1911, defendant closed the deal with Schamber for the entire property, taking notes for the sum of $36,750, secured by collateral notes, together with a building and lot and stock of goods at Alpena, S. D., which were put in at the trading price of $27,250 making the total nominal consideration $64,000. Defendant took possession of the store building and stock of merchandise at Alpena on August 14, 1911, .but the deeds were not delivered to Schamber until on or about August 29, 1911. He conducted the store business until November, 1911, when he traded the lot and building and remainder'of the merchandise for land. Defendant caused the title of this land to' be placed in the name of defendant’s wife. The only consideration received by plaintiff -for his interest in the property was notes to the amount of $12,250. Plaintiff did not learn the truth of the transaction until September 13, 1911.

¶2The court found the Alpena property and merchandise to be worth not less than $20,000 at the time defendant took possession, but limited plaintiff’s recovery to $5,000, instead of fixing at at one-third of $20,000.

¶3[1] That the trial court was right in determining that plaintiff was entitled to recovery in some amount appears to be fully established from the testimony of the defendant without recourse to the testimony of the" plaintiff, because it clearly appears that defendant was therein acting as plaintiff’s agent. Following are portions of the transcript of defendant’s testimony: “Q. What did you tell him (plaintiff) on the 7th day of August, 1911? A. I told him —I says: ‘Mack, I want to know just exactly where I am at on *186this proposition. . .1 want-to know, just -what I can do-. I have been oyer to Freeman and had a talk.with Schamber, and I want to know what you will take .for your one-third interest in this- timber, before I. start, because I have had several deals .on, and when I came to close them, I found hitches, and I want to know this time exactly where I am at. What will you take for your interest?’ We talked back and forth, and he says: T will take $12,500 in securities the same as your brother and you are willing to take for your share, less the actual expenses you have been to in selling this timber.’ After .we had talked this over we made that contract as changed. Q. And you stated all you said to him at that time about the Schamber matter? A. Well, he wanted to know of me what I was getting for it, and I told him I though I could get $37,5°° in notes; that is, secured by collateral notes, and stock of merchandise and store building in Alpena. Q. Did you say anything about the value of those? A. No, sir. Q. You did not say whether the value of those was $500 or $50,000. A. No. I told him at the time and in that same conversation I says: ‘Mack, I have been to a whole lot of trouble in selling this timber. I sold it four times and whatever I get over and above $37,500 I will keep for my commission in making this deal.’ Fie says: ‘ That will be perfecttly satisfactory to me.’ Q. Did .he ask you how much this stock of merchandise and real estate in Alpe'na was worth? A. Fie asked me if I knew how much it was worth; that is, how much that stock would invoice. I told him that I did not know; that I had not invoiced it or got that far along; that I had not got that tar along with the deal, but that I thought I could close the deal. … Q. On the 7th you told McEwen that Schamber would give you $37,500 in notes ? A. I told hiin I could get it, I thought. O. Why did you think you could get $37,500 in notes if you and Schamber did not have five minutes talk? A. Simply because we talked along and I drew enough ,out of him to infer I could make that kind of a deal, but I was not certain. Q. You did that in five minutes. A. Yes, sir. Not to exceed ten minutes at least. Q. Also, you drew out of him on the 5th .of August in five minutes talk that he would give you a stock of merchandise, store and lots in Alpena? A. He says: ‘Ed., if you would take in my store at Alpena, I might trade with you.’ I asked him- what his store was, and he told me. Q. What did he tell you ? A. He says then : T have got *187a general stock and building. There is a mortgage on the building ■of $1)000/ I sáys: ‘How about the balance Mr. Schamber?’ ‘Well, he says, ‘I suppose I can give you my notes and put up some collateral notes.’ Q. .Schamber did not say anything about how much of a stock he had there? A. Yes, sir. Q. What did he say? A. tie said -the 1st of January, if he remembered right, it had invoiced somewhere'$19,000. Q. But you did not -tell your partner here that did you, Mr. McEwen? A. No, sir. Q. Did you say it invoiced $19,000. A. No, sir. Q. You kept that-for yourself? A. I had made a deal with him what he was to have -for his interest. Q. When you changed this contract and got a new one, you did not tell him there was $19,000 stock of goods ? A-. I told him there was a stock of merchandise. Q. You did not tell him how'much? A. No, sir; absolutely no.” Plaintiff testified -to the following conversation had between him and defendant on August 20, 1911: “I asked him how the deal was coming on. He said that he had got an offer from Schamber of $37,500 in notes, and that -lie had also a stock of hardware at Dane, S. D. I asked him what the stock of hardware was worth. ' He said he thought perhaps he could get $1,500 for it. He says: ‘I have done a good deal of work on -this thing. I think I ought to have it for my commission/ I asked him where in the town of Lane, and he described it. I had been there. I said I thought he earned that much commission, and, if that was all there was of it, he could have it.” It is undisputed that at the date of this conversation defendant had been for six days ■ in possession of the store at Alpena.

¶4There was no evidence tending to show that the defendant did not act in good faith in securing the contract in its original form on July 11, 1911. It is clear, therefore, that at any time within the year plaintiff would have been bound to convey his interest in the property to defendant upon the payment by defendant to plaintiff of the sum mentioned in the contract.

¶5Whether defendant was bound to act in good faith with plain•tiff in securing a modification of the optional contract, or whether defendant was legally authorized to ■ treat plaintiff as a stranger for the purpose of securing the modification of such contract, it is not necessary for us to decide, because no sale was rhade under the contract.

¶6In the case of tenants in common acquiring title by descent the *188courts have almost uniformly held that a fiduciary relation exists 'between them. In cases where the tenants in common acquire their interests from different owners, ’the decisions of the courts are not uniform. Some courts hold that, in matters strictly between themselves there is no fiduciary'relation; while other courts hold the trust relation to exist as in the case of tenants in common by descent.

¶7- But the rule is firmly established that, when one tenant in com-_ mon acts as agent for the sale of the whole property to a stranger, then the fiduciary relation arises. It is therefore not necessary for us to decide whether sections 1201, 1202, 1292 and 1293 of the Civil Code apply to the relations of the parties to this action so far as concerns the obtaining of the alteration of -the contract between them on August 7, 1911, even if it, be assumed that the contract was altered by consent. The evidence shows without contradiction -that the parties did not act under that contract either in its original form of as amended. The evidence clearly shows that in the making of the sale of the interest of the three owners of the property to Schamber the defendant was-acting as agent for his co-tenants. The trial court was therefore right in finding that the contract was irrelevant to any of the issues of the case. In the case of Calkins v. Worth, 215 Ill. 78, 74 N. E. 81, the court said: “It is contended by appellant that the parties were mere tenants in common, and that a fiduciary relation does not arise in law from such ownership. With the proposition of law we do not take issue. … The owners as related to their separate interests could undoubtedly deal with each other as strangers. One could sell to the other at such price as he deemed fit, and thus far the rule contended for by appellant is sound-and could be applied, and within that rule each could sell to a stranger on terms that suited him and-the other could not complain. But when eithef attempted to sell or .began negotiations for the sale of the whole property, not only his -own, but the share of the other, to a stranger, then the law raised a relation of trust between them that required honesty and fair dealing.” In the same case in the Appellate Division the court said: ‘ Tn making this sale, Calkins was plainly the agent of his co-owner, as such agent he owed to his partner the duty of acting in the transaction with common honesty and straightforward fairness. This law is so elementary that even the layman understands it.” *189117 Ill. App. 478; 38 Cyc. 15; Garr v. Boswell (Ky.) 38 S. W. 513; Lewis v. Jacobs, 153 Mich. 664, 117 N. W. 325; Purslow v. Jackson, 93 Iowa, 694, 62 N. W. 12; Walker v. Evans, 98 Mo. App. 301, 71 S. W. 1086; 2 Pomeroy, Eq. Jur. § 959; Hoyt v. Lightbody, 98 Minn. 189, 108 N. W. 843, 116 Am. St. Rep. 358, 8 Ann. Cas. 984. See, also, Gamble v. Loffler, 28 S. D. 239, 133 N. W. 288.

¶8[2] Appellant’s sixth assignment of error relates to the exclusion of testimony offered by defendant to show the value of the pine lands owned by the cotaiants. Even if, as is claimed by defendant’s counsel, the lands were not worth to exceed $37,500, we fail to see what bearing such evidence would have upon the issues in this case. There was no error in such ruling.

¶9[3] In-the appellant’s nineteenth assignment, -the claim is set forth that this action should have been tried by jury. No record of any such demand by the defendant appears in the proceedings had at or before the trial of the case. The claim was first made in the specification of errors in the bill of exceptions. It appears that both parties by their notes of issue set the cause for trial by the court. Even if this had been a case properly triable by jury, the right thereto was waived by defendant. Chrystal v. Gerlach, 25 S. D. 128, 125 N. W. 633; De Laney v. Western Stock Co., 19 N. D. 630, 125 N. W. 499.

¶10There were in all 4Í assignments of error set forth by appellant. A large number of these are disposed of by the decision herein in regard to the fiduciary relation between the parties. The remaining assignments relate to alleged errors in admitting or excluding testimony., W'e have carefully examined all of them, and the portions of the transcript referred to, and we are clear that there was no prejudicial error in any of the rulings of the court upon which the same were based.

¶11The judgment and order denying new trial are affirmed.