France v. Coleman ( 1907 )

Mr. Chief Justice Shepard

delivered the opinion of the Court:

Without passing upon the question that has been argued at length, whether extraordinary weight shall be given to the report of the auditor, by reason of the fact that the whole testimony was referred to him for consideration, by consent, with direction to report his findings of fact and conclusions therefrom, we shall treat it as the report of a master or auditor made in the ordinary course of proceedings in equity.

It is well settled that the conclusions of such a referee, depending upon the weighing of conflicting evidence, have every reasonable presumption in their favor, and are not to be set aside unless mistake or error therein is made clearly to appear. Tilghman v. Proctor, 125 U. S. 136, 149, 31 L. ed. 664, 668, 8 Sup. Ct. Rep. 894. “The findings of a master or an auditor, concurred in by the court below, are to be taken as presumptively correct, and will be permitted to stand, unless some obvious error has intervened in the application of the law or the principles of the decree under which he acts, or some important mistake has been made in the evidence, and which has been clearly pointed out and made manifest.” Richardson v. Van Auken, 5 App. D. C. 209, 213; Grafton v. Paine, 7 App. D. C. 256, 266; Smith v. American Bonding & T. Co. 12 App. D. C. 192, 198; Hutchins v. Munn, Present Term [28 App. D. C. 271]. The critical review of the evidence and the able argument founded thereon, on behalf of the appellant, have failed to convince us of the existence of any such error or mistake in the auditor’s report, which received the unqualified approval of the learned justice who presided on the hearing. On the other hand, a careful examination of all of the evidence, a further review of which we regard as unnecessary, has satisfied us of the correctness of each of his findings of fact. The conclusions from these findings of fact, carried into the decree requiring the appellant to pay to the complainants the balance due on her loan to Eedfern, are in strict accord with the rule laid down in Anglo-American Sav. & L. Asso. v. Campbell, 13 App. D. C. 581, 603, 43 L.R.A. 622. There can be no doubt that the appellant, in lending her money to Eedfern, looked to the buildings to be constructed on the lots in question as the chief security for its repayment; and she was careful to arrange for the delivery of it in instalments as the work thereon progressed. It is equally clear that the complainants relied on appellant’s advances to Eedfern, under the loan contract, for the instalments due by the building contract, under like terms and conditions. The testimony on this point is put beyond doubt by the circumstance» of the entire transaction. Eedfern had neither sufficient property nor credit, beyond the proceeds of the loan, to warrant any expectation of payment by the complainants from any other source; and the loan was effected for that purpose. The deed in trust by Eedfern to secure the loan of appellant, which amounted to a sum so near the value of the lots with the completed buildings thereon, made the mechanics’ lien, which the law gave to the complainants, practically valueless, because subordinate to that of the appellant: It is true that the appellant was under no direct promise to pay complainants the money loaned to Eedfern, or to see that he applied the sum to the payment of the complainants. Her obligation was discharged by making payment to Eedfern when due. But, having induced or contributed to induce complainants to contract with Redfern, and with their labor and materials to furnish the chief security for her loan to him, it would be unjust and inequitable to permit her to withhold money actually payable to Redfern upon which they relied for their payment. As to such money, a constructive trust, or lien, through the application of the doctrine of equitable estoppel, arose in favor of the complainants, which will be enforced. Anglo-American Sav. & L. Asso. v. Campbell, supra; Angle v. Chicago, St. P. M. & O. R. Co. 151 U. S. 1, 26, 38 L. ed. 55, 67, 14 Sup. Ct. Rep. 240. As found by the auditor, the buildings were completed about January 1, 1903, in accordance with the contract for their construction. At that time, by the terms of the contract with Redfern, the last sum of the loan was payable by her to him. Redfern’s obligation to her, by the terms of the notes and the deed in trust, had not then matured, and would not mature until March 17, 1903. She had no excuse, therefore, for withholding the said payment, and the court did not err in impressing it with a trust in favor of complainants, and ordering her to pay it to them.

It remains to consider whether the appellant was entitled to retain from the last payment of $5,400 due to Redfern, the interest that had become due under her contract with him. This interest was payable semiannually, and seven notes for $135 each were held by her for the first instalments thereof, and seven of like amount for the second. As regards the first series, due six months after March 17, 1902, we are of the opinion that the appellant had this right, though she seems not to have claimed it when they matured. Under the authority of the case before cited, all that complainants could claim as impressed with a trust in their favor was the sum actually due and payable to Redfern upon the completion of their contract with him. The exceptions to the report made claim to the entire interest for the year, making no distinction between the two instalments, one of which was duo on the other notes. The attention of the auditor seems not to have been specially directed to the claim of the first instalment of interest, as no mention of the same is made in his report. Be that as it may, while right as regards the second instalment of interest, we are of the opinion that he should have allowed a credit for the first. The appellant had the right to deduct the latter in paying Redfern, in the absence of any stipulation of the contract to the contrary; the former she had not. .

An appeal to the Supreme Court of the United States was prayed by the appellant, and allowed April 4, 1907.

The balance of $5,400, due Redfern, would have been reduced to $4,455 by allowing a credit thereon of the first seven notes, amounting to $945; and the decree should have been entered for that amount. The decree will therefore be modified so as to direct the payment by the appellant of the said sum of $4,455, with interest from February 1, 1903, instead of said sum of $5,400; and as so modified is affirmed. One half of the costs of this appeal will be paid by the appellant, and one half by the appellees. It is so ordered. Modified and affirmed.

Mr. Justice McComas dissenting.