Manning v. Ayers

¶11, Contract to Improve and Sell Lands — Participation in Profits — Criterion of Value — Execution Sale.

¶2The firm of S., W. & Co., owning several tracts of unimproved land in Illinois, made a contract with one M., by which it was agreed that M. should go to reside on the lands, cultivate and improve them under the direction of S., W. & Co. (who would advance money for the purpose), and effect sales thereof, for which he should receive a sum equal to half the net income and half the net profits of the sales of the lands. It was *691provided that, at the termination of (he agreement, the lands and the property thereon should be sold, at auction or private sale, as agreed on by the parties, and the price realized should determine the profits. It was also expressly provided that M. was not constituted a partner, in any sense, with 8., W. & Co. Afterwards, a supplemental agreement was made, providing, among other things, that 8., W. & Co. should give M. an option to buy the property at cost, and that, if he did not avail himself of it, a price should be agreed on at which either party might buy or sell to the other, which, being accepted, would discharge all liability under the contracts. Before any of these provisions were acted on, 8., W. & Co. failed, and made an assignment in New York, where they did business. Certain creditors attached the lands in Illinois, obtained judgments, and sold the lands under execution; one C., a creditor, buying them in, and also obtaining a conveyance of them from the assignee by the rele.ase of a part of his claim. In a suit brought; by the assignee to determine conflicting claims to the lands, M. sought to establish an interest in the lands, and a right to purchase them from C., by virtue of the said agreements, of which he averred that C. had notice, and of which he sought specific performance. Held that, if there were any such right, the price paid by C. for the lands, at the execution sales, would not be a fair criterion of the value of the lands, or of the price at which M. should have the right to purchase under his contract.

¶32. Same, — Specific Performance,.

¶477M, further, that the contract was not one which could he specifically enforced, since no price was fixed by such contract for the land, nor any terms of payment adjusted, and none could be fixed by the court.

¶53. Samis — Personal Contract.

¶6Held, further, that M. acquired no interest in the lands, by virtue of the contract, which a court' of equity would recognize, but that; the contract of 8.. W. & Co. to pay a compensation measured by the profit on the sale of the lands was merely personal.

¶7í. Same — Ascertainment of Profits.

¶8Held, further, that M. had no right to a decree for the sale of the lands, to ascertain the amount of the profits in which he would be entitled to share, both because the lands were always subject to sale by 8., W. & Co., or at suit, of their creditors, without remaining subject to any such right of 11., and because the contract provided for ascertaining the "profits by a sale, privately or at auction, as agreed by the parties, and not by a decree of ihe court.

¶9Appeal from the Circuit Court of the United States for the Southern District of Illinois.

¶10The original bill was filed by Marshall Ayers, assignee of Sawyer, Wallace & Co., and by his assignors, ¿gainst Michael W. Manning, Cliarles Carroll, and others, to determine conflicting claims and interests in certain lands. The appellant, Manning, filed a cross bill, to which all parties to the suit were made respondents, asserting and seeking to enforce an interest in the lands by virtue of contracts with Sawyer, Wallace & Co., to whom the lands had belonged. The demurrers thereto of Carroll and of the complainants in the-original bill were sustained, and the cross bill dismissed.

¶11The essential facts are these: The firm of Sawyer, Wallace & Co., being the owner of the lands in question, on the 1st day of November, 1883, entered into the agreement with Maiming as follows:

¶12“Articles of agreement, made, aiul concluded this the first day of November, A. I). 1883, between Sawyer, Wallace & Co., of the city of New York, party of the first part, and Michael W. Manning, of the city of Chicago, party of the second part, viz.: That the said party of the first part, being now the owners of certain lands in Williamson county, state of Illinois, popularly known as the ‘John Fully Place,’ containing about 300 acres; the ‘Bob Fully Place,’ containing about 240 acres; the ‘Holland Place,’ containing about 220 acres; the ‘Joe Hillard Placo,’ containing about 330 acres; the ‘Herrin Place,’ containing about SO acres; also several parcels, bought of the Illinois Central *692Railroad Co., containing about 105 acres: also a parcel bought of the TT. S. Gov., 40 acres; also a parcel lately bought hy Thomas Miller of the Illinois 'Central Railroad Co., 500 acres, — and being desirous to improve the above-described lands, so as to obtain a greater xn'ice therefor than is obtainable in their present condition, the said party of the first part lias:

¶13“(1) Employed the said party of the second xiart to reside on said lands, give all his time thereto, lake charge of, manage, and soil the same under the direction of the said party of the first xiart.

¶14“(2) In' compensation for the aforesaid services, to he rendered as above stated, the party of the first part agrees to pay to the party of the second X3art a sum of money equal to one-half of such net increase, in the aggregate value of said lands, as may he shown hy the sale thereof, after deducting all taxes, insurances, assessments, and all other expenses incurred thereon, over and above their present aggregate value.

¶15“(3) That the present value of said lands, for the purpose of this agreement, is hereby determined and agreed uxion as follows, to wit;

¶16The John Pully x>lace, 300 acres at $12.50 x>er acre. . $3,750.00

¶17Bob Pully “ 240 15.00 . 3,600.00

¶18Holland . “ 220 8.00 . 1,700,00

¶19Joe Dillard “ 330 12.50 . 4,125.00

¶20Herrin “ 80 12.50 . 1,000.00

¶21Illinois Central II. R. parcel, 105

¶22TJ. S. Gov. parcel, 40 7.50 . 1,537.50

¶23Thomas Miller place, 500 3.00 . 1,500.00

¶24The present aggregate value, being. .$17,272.50

¶25“(4) In addition to the compensation hereinbefore stipulated (to wit, iii clause 2), the party of the first part agrees to pay to the party of the second part a further sum of money equal to one-lialf the rents derived from the said lands, and one-half the net xjroceeds of the stock and produce bought, raised, and grown on said lands, as may ax>pear hy the sales thereof, after deducting the money expended in buying and keeping said stock, paying hand hire, purchase of implements, tools, seeds, etc., and all other exxienses incurred by stock raising and farming on said lands. The amount so expended up to this time, and also to he deducted, is hereby agreed vq>on and fixed at the sum of $3,130.14, this being the amount expended hy Tilomas Miller through the party of the second x>art, for live stock, fanning implements, etc., as shown hy an accounting made between said x^arties on the 25th October, 1883, and now paid said Miller hy x)arty of the first part.

¶26“(5) The said party of the first part further agrees to furnish such sums of money from time to time to improve said lands, buy stock, implements, tools, etc., as may hereafter be decided upon, and reference is hereby 'made to a certain memorandum, signed by the parties of this agreement, which described certain improvements and expenditures which it is now thought desirable to make.

¶27“(6) The party of the first part also agrees to exchange, if it can be effected on satisfactory terms, the John Pully place for the Bill Cliitty place (so-called) in Herrin’s Prairie and sixty acres additional thereto; also, to buy the John Dillard place in Herrin’s Prairie, containing 525 acres, if it can he had for $5,250.00, and hy paying therefor the proceeds of the Holland place (the sale of which is hereby contemplated) and giving notes for the balance of the purchase money, — in which event the said xfiaces so purchased and acquired by exchange shall be substituted for the Holland and John Pully places in this agreement.

¶28“(7) It is further agreed and understood, that any money furnished by the party of the first part, for any of the irarposes of this agreement, in excess of §15,000.00, which" sum includes the—

¶29Present value of said lands, as hereinbefore fixed, at.......... $17,272.50

¶30And the cost of stock, implements, tools, etc., already bought, and hereinbefore fixed, at....................................... 3,130.14

¶31$20,402.64

¶32*693“Shall bear Interest at the rate of six per cent, per annum, compounded, and the amount of such interest shall ho charged to and borne as part of the expense of carrying on the. farming operations contemplated by this agreement, and shall be deducted from the profits thereof, to determine the not amount of I ho same, in like manner as other expenses, as hereinbefore provided.

¶33“(8) The parly of tlio second part, in consideration of the compensation hereinbefore stipulated, agrees and binds himself to give his direct personal services and all his lime to the management and care of the aforesaid lauds, and to the farming of the same, to the extent of his ability and the moans at his command, and to reside on the Joe Dillard farm with his family; also, to furnish to the party of the first part strictly accurate statements and vouchers for all expenditures, promptly, as made; to keep a strict and accurate account of all produce, stock, or other property sold; and to report the same and remit the proceeds thereof, promptly, to the said party of the first part, so that they shall be always thoroughly well informed of all transactions made by the said party of the second part, and of the true condition of the interests intrusted to his care. The said party of the second part especially agrees to use his best efforts to effect sales of said lauds under the direction of the said party of the first part, as soon as the improved condition of the same will warrant such action.

¶34“(0) This agreement is to continue in force far the term of three years from the first day of January, 1881, unless terminated sooner by the consent, of the parties thereto, and at the end of the said term of three years, all the said lands, slock, produce, implements, tools, etc., which may have been acquired under this agreement, and not before disposed of, shall be sold at auction or private sale, as may be agreed upon by the parties thereto, and in this manner shall bo determined the net increase in the value of the said lands, the net profits of stock raising and farming, and the amount of compensation due to the party of the second part under this agreement.

¶35“(10) It is further agreed that, in the event of the death of the said party of the second pan, the party of the first part shall have the right thereupon to terminate this agreement, sell all the property of every kind, and determine 1ho amount due to the estafo of the said party of the second part, in the manner provided hereinbefore, viz. in clause 8, or to continue the same under such management as they may deem best, until the full expiration of the said term of three years.

¶36“(11) It is expressly agreed and understood that the party of the second pari, is not, nor is meant to be, constituted a partner, in any sense, with the party of the first part under this agreement.

¶37“(12) The party of the second part has the right, under this agreement, to use free of charge, such wheat, corn, fresh meat, and pork grown on said hinds, to the extent required for actual diet consumption by his own family, but shall keep and render an account, of the same to the party of the first part. He shall also have the right to grow and use, without charge, such garden vegetables as may be required for his own family use.

¶38“Sawyer, Wallace & Co.

¶39“Michael W. Manning.”

¶40The memorandum referred to is omitted, being immaterial.

¶41Upon the making of (he agreement, Manning, with his family, went upon the lands, and in compliance with that agreement, and a supplemental agreement executed April 21, 1888, he managed, cultivated, improved, and developed the lands, until deprived of possession by the receiver appointed in this canse, having “devoted more than seven years of his time, and of the time of several members of his family, to the management, improvement, and development of said lands,” whereby, it is alleged, they have become greatly enhanced in value. The supplemental agreement is of the following tenor:

¶42“Memorandum of agreement: to be formally entered into and executed by and between the undersigned concerning the future management and disposition of tlioir joint interest in lands in Williamson county, Illinois, to wit: S., W. & Co. to have all the income from the crops, and pay the necessary expenses for producing same, and pay, also, to Manning, at tlio rate of $1,000 per annum beginning May 1st next, and ending December 31st, next, in con*694sideratioñ of which Manning to give his time and efforts to sell the property, meanwhile maintaining- the property in as good condition as the revenue therefrom will admit. No expenditure exceeding revenue to be made without the consent of both parties in writing. Manning to make no charge for selling the property, but necessary expenses actually incurred (as may be agreed upon from time to time) to be advanced by S., W. & Co. but charged to the property, as provided in contract now existing, and to which reference is now made, and to be deducted before any profits are declared. S., W. & Co. to advance such sums as may be required for the necessary expenses of carrying on the farm work until crops grown and sold. S., W. & Co. to furnish the exact cost of the property up to May 1st next (as provided in contract referred to), and to give Manning the option of buying it at such cost with interest until Dec’r 31st next. Should Manning not avail himself of the said option, a price is to be agreed upon at which either party may offer to buy or sell the other, which, being accepted, discharges all obligations under the contract referred to. Should Manning elect to take the property at cost, then, and in that case only, interest shall continue to run against his interest therein. Privilege as to garden produce for family use is same as in existing contracts. The terms of payment for the property in ease Manning should elect to buy it, to be considered and settled subsequently.

¶43“Sawyer, Wallace & Co.

¶44“M. W. Manning.

¶45“New York, April 21, 1888.”

¶46The firm of Sawyer, Wallace & Co. and its individual members became insolvent, and on September 4, 1890, executed to Marshall Ayers a deed of assignment, in conformity with the laws of New York, where the business of the partnership had been conducted, of all partnership and individual property held by them for the payment of all debts without preferences. Thereafter, with full knowledge of the assignment, certain creditors of the firm sued out of the local courts writs of attachment, and, having obtained judgments, caused the lands, excepting 560 acres in Franklin county, to be sold; Charles Carroll becoming the purchaser of those in Williamson county at the price of $13,000, of which he paid to other attaching creditors about $1,200, and credited the remainder upon his own judgment; and of the 330 acres in Franklin county, sold for $550, he is the holder and owner of the certificate of sale. He also claims a lien upon the unsold lands in Franklin county by virtue of the unsatisfied judgment which he recovered in his attachment suit in Williamson county. The cross bill further charges “that said assignment, so made by said firm of Sawyer, Wallace & Co., was administered by and under the direction of the judicial court of the city and county of New York, in the state of New York, known as the ‘Court of Common Pleas,’ which court; by the laws of the state of New York, had and has full power and jurisdiction over said assignment, and over the disposition of the property, of said insolvent firm and the individual members thereof; that, in the year 1891, and since the filing' of said original bill in this cause, said Charles Carroll caused said Ayers, as assignee of said insolvent firm, to file a petition in said court of common pleas, praying that court for leave to sell and convey to said Charles Carroll all of said lands, so subject to said agreement and supplemental agreement, located in said counties of Williamson and Franklin, in consideration of said Carroll deducting from his claim against said insolvent firm of Sawyer, Wallace & Co. (which claim, amounting to over one hundred and seventy-five Thousand dollars, said Carroll had before the filing of said petition proven and had allowed against the estate of said insolvent firm in the hands of said assignee) the sum of twenty thousand dollars, and relinquishing any claim to a dividend out of the estate of said insolvent firm upon the last-mentioned sum of money; that said petition, so filed by said assignee at the instigation and request of said Carroll, stated that all of said lauds were not worth twenty thousand dollars, and was supported by an affidavit, filed with said petition in said court of common pleas, of one George W. Smith, the solicitor for said assignee in this cause, to the effect that said lands so subject to said agreement and supplemental agreement were not worth to exceed the sum of $17,-090 or $18,000, which affidavit said Carroll procured and caused to be filed *695with said petition; that said petition and affidavit were, in the month of October, 1891, by the procurement of said Carroll, presented to said court of common pleas; and, acting thereupon, that court,, in the mouth last mentioned, granted the prayer of said petition, and ordered said assignee to convey to said Carroll all of said lands so subject to said agreement, and supplemental agreement, upon said Carroll deducting from his said claim so proven in said insolvent proceedings the stun of twenty thousand dollars, and relinquishing all right to any dividend from said insolvent estate upon ihe sum of money last mentioned; and thereupon, in the mouth of October or November, 1891, said assignee made and delivered to said Carroll a deed purporting to convoy to said Carroll all the interest and estate of said firm of Sawyer, Wallace! & Co., and of ihe individual members thereof, in and to all of the lands last mentioned, and said Carroll still has the interest therein so conveyed to him. Your oraior further showotli that the assets of said insolvent firm and the members thereof at no time have been sufficient to pay more than ten cents upon the dollar of the indebtedness of said firm and the members thereof, and that the claim of twenty thousand dollars so withdrawn by said Carroll from his claim against said insolvents was not worth over the sum of two thousand dollars; that your orator was not a parly to said petition so filed by said assignee, and had no notice thereof, and was not a party to, nor notified of, said proceeding in said court of common pleas, which resulted in said deed so made to said Carroll; that all of said judgment creditors, including said Carroll, had notice of the rights and interests of jour orator in said lauds, and of said agreement and supplemental agreement, at and before the times of suing out, each and every one of said attachment writs, and at all times since, and said Carroll had such notice long prior to and at the time of the making of said conveyances to him by said assignee, and said Carroll, at the time of suing out said attachments and each of them, and at all times since, and at the time of the delivery of said deed to him by said assignee, knew that your orator had the right and preference of right to purchase all of said lands at a price to be fixed by said firm of Sawyer, Wallace & Co., or by any authority or tribunal which has acquired the power of disposing of said lands in the stead of said firm of Sawyer, Wallace & Co. And your orator avers that the saiii assignee acquired no greater right or power respecting said lands than was possessed bjr said insolvoni firm at the time of making said assignment, and took said lands subject to the right of your orator to purchase the same in preference to anybody else, all of which was well known to said Carroll long before and at the time of file filing of said petition, and the making of said deed to him, and als o at the time of the suing out of each one of said attachment writs, and at all times since: that by said proceedings in said court of common pleas the selling price of said lands was fixed and determined by the court last mentioned, and by an authority having power to hind said insolvent firm and said members thereof, and also said assignee and said Carroll, and said Oarroli took and acquired the title to said lands bjr said deed from said assignee, with notice of the rights of your orator, and as the trustee of and for your orator, and now holds the same as trustee for your orator, and ought to he compelled to convey the same to your orator upon the payment by your orator to said Carroll of whatever amount or value said Carroll paid therefor or allowed therefor to said assignee, which payment your orator hereby offers to make to said Carroll; and said Carroll, having acquired the title to said lands as the trustee of your orator, cannot make a profit out, of his trust, and is, in equity, hound lo convey the same to your oraior, upon being reimbursed for the actual amount of the consideration paid by him for said lands; and, if said consideration includes the amount paid by him therefor at said attachment sale, your orator also offers to repay the same to him, upon receiving from said Carroll a conveyance of said lands. And your orator avers that neither said Sawyer, Wallace & Co. nor your orator took any steps to carry out the provision of said supplemental agreement, for the sale or purchase of said lands, up to the time of making said assignment, for the reason that the members of the firm last mentioned and your orator agreed and were of the opinion, during all the time prior to said assignment,'that the conditions were not such as to make a present sale advisable, and by the consent of all parties concerned the time for making a sale of said lands by either -party to the other was post*696poned until said, assignment was made. Your orator sliows that he is able and willing, and hereby offers, to pay to said Carroll the value of all the consideration paid by him to said assignee for said lands with interest thereon, and all moneys paid by him therefor at said attachment sale or sales, with interest Thereon, or any other sum which this court may, on a hearing hereof, decree as the proper and just compensation to be paid therefor. Your orator further shows that, in any event, he is entitled to have an accounting in this court of ail transactions had between your orator and said insolvent firm under said agreement and supplemental agreement, and, in case said sale by said assignee to said Carroll cannot be held to have fixed the selling value of said lands, to have the same sold under the decree of this court, in order to bring about a full adjustment of said transactions; and your orator avers that said complainants in said original bill have abandoned their prayer for an accounting therein contained.”

¶47Samuel P. Wheeler, for appellant.

¶48Carl Roedel, for appellee.

¶49Before WOODS, JENKINS, and SHOWALTER, Circuit Judges.