McDonald v. Fithian , 6 Ill. 269 ( 1844 )

The Opinion of the Court was delivered by

Scates, J.

This case comes upon appeal from the Vermillion Circuit Court, dissolving an injunction, and dismissing complainant’s bill. The record is too voluminous to give any more than will present the points raised; and advert to such portions of the testimony as, in our opinion, establish material facts.

The history of the transaction appears to be as follows: Some time in the year 1835, Fithian purchased a lot in Milwaukee, Wisconsin Territory, for the sum of $500, of the defendant, Juneau. Juneau executed a title bond, in which he acknowledged the receipt of $10,000, conditioned to convey, under a penalty of $20,000. The same year, he sold another lot to J. H. Murphy, and gave him a similar bond. In the spring of 18&6, Juneau found that he was unable to convey a title to either of them, of which fact Fithian was apprised; but it does not appear that Murphy knew that fact; Juneau, at least, believed he did not.

In March, 1836, Fithian and Hezekiah Cunningham, for themselves, and Isaac R. Moores, as the agent of complainant, and James P. Murphy, as the agent of John H. Murphy, went in company from Danville, Illinois, to Milwaukie, for the purpose of speculating in land, or town lots; the two former, separately and individually for themselves, the two latter, separately and individually for their respective principals. A conversation occurring at Milwaukie relative to their common object to speculate, it was suggested by Fithian to the company, or by some of the company, that, as he had dealt some with Juneau in town property, possibly he could make better terms with him than any of the rest, and by all purchasing together, a better bargain could be had than by each one buying separately. All being of that opinion, it was agreed that Fithian should contract for four acres of Juneau, and that each one should take his separate acre. Accordingly, Fithian treated with Juneau about the purchase, and Juneau proposed that $3000 per acre was the least he would take. This was made known by Juneau and Fithian to the others, and after consultation together, apart from Juneau, they each agreed to take an acre at that price, one fourth in hand, and the remainder in three equal payments at six, twelve and eighteen months. Juneau insisted to Fithian, as he communicated to the others, that he should give his individual notes for the remainder, and take the notes of the others to himself. To this, all agreed. The money was paid by each, except a small sum advanced by Fithian for complainant and John H. Murphy, which they afterwards reimbursed. Fithian executed his notes to Juneau for $6000, and took a bond for title to himself. Three thousand were left unadjusted by note until Juneau should adjust the bond for title, which he gave Fithian in 1835. But this fact was not made known to the others, Juneau requesting Fithian to be as silent as possible about the fact that he was unable to make those titles, until he could get some compromise with Murphy on his bond, believing that Murphy was not aware of his inability to make the title, and of the advantage he possessed.

Upon the return of the parties to Danville, and Moores, complainant’s agent making known to him what had been done, he executed his notes to Fithian for the residue of his acre at six, twelve and eighteen months, taking a bond from Fithian for a title, but which Fithian has since taken up, upon Juneau’s conveying the acre directly to complainant. Complainant has since paid one of the notes to Fithian, and upon the other two judgment has been rendered against him, which judgment he seeks, by this bill, perpetually to enjoin. He charges in his bill that Fithian, at his own suggestion of its advantages, and at his own proposition and solicitation, was appointed by the parties their agent to negotiate the purchase, and that he undertook to do the best he could, and make such terms with Juneau as would comport with the mutual, equal and best interests of each and all; and that after the agreement upon the price, each one should have, and take his separate acre.

The bill further charges that Fithian and Juneau combined and confederated to cheat and defraud the complainant and the others; that, in consideration that Juneau would let him have one acre for the title bond of 1835, he agreed that the others should give $3000 per acre, or that Fithian overreached Juneau in consequence of holding said bond. And the bill avers that Fithian afterwards, in pursuance of such agreement, paid the remaining $9000 with the said title bond of 1835. The bill prays that Fithian refund to complainant all that he has paid, or, at least, that he be perpetually enjoined from the collection of any more on the judgment.

Fithian and Juneau answer separately, admitting all the facts in relation to the purchase, &c. &c., but deny all fraud, combination, and overreaching; and also all the material facts charged and stated in the bill, tending to show or prove fraud. They state that the land was worth, then, the price paid, and purchased at the lowest sum that Juneau would take; and that Fithian paid $3000 down in cash, and for the remainder, he gave the title bond of 1835, and a deed to Juneau for lot eight (8), in block six (6), in Milwaukie.

There are eight errors assigned which, in substance, question the decree dissolving the injunction, and dismissing the bill upon the proof in the case.

The depositions are too voluminous to attempt to set them forth in detail. I will, therefore, only advert to the prominent facts tending to impeach, and sustain this transaction, on the grounds of bad faith, and fraud. The answer admits that Fithian acted, in negotiating for the land, under a verbal agency, and although denied, it is proved that he made the first proposition to that effect. It is contended, that being the agent, he could not deal for his own advantage with the thing purchased for his principals, or become the seller, or buyer, to or of them, on account of his confidential relation, and being bound to disclose to them every fact, circumstance and advantage, in relation to the purchase, which may come to his knowledge. These general principles, I recognise as correct. It is contended, on the other side, that a verbal agency in relation to land, is not binding; that Fithian could not have bound his principals; that he was not the agent of the parties to make a purchase; but, as a mere friend, an instrument, or go-between, to make and receive propositions for a purchase and upon which the others had to act, and did act, before any contract was concluded.

I admit that, under this agency, he could not have bound his principals,.and that where one acts gratuitously, in a relation of mere friendship, or instrumentality, he is not to be clothed with the character and all the responsibilities of an agent. But while I would thus protect him, I would, by no means, permit him to avail himself of any information he might thus acquire, or of this confidence, to commit a fraud upon the friend he consents to serve. Fraud is odious, and will not be tolerated under the guise of friendship, or gratuitous service. If he consent to act in the relation of mere friendship, so far as he acts he must do so in good faith. He shall not commit a fraud, and ask it to be sanctioned because that, from the manner of his appointment, he could not have bound his principal. Nor will it avail, in this case, any thing, that the principals consented to, and concluded the contract themselves, if they did éo upon false and fraudulent information, materially affecting their rights and in ignorance of the truth. For the question is not one of validity of a contract, depending upon the legality of an agency, nor of gross negligence in the execution of a voluntary service; but it is one of positive fraud, and I am of opinion, that if proven, all the consequences should follow, whether as agent, or friend, and with or without compensation for the trouble.

Having disposed of this branch of the subject, I come now to consider and examine the evidence of fraud. The ground of the fraud is supposed to be, that Fithian did not agree to give three thousand dollars per acre, and to be paid in money, as he represented to complainant and the others; but that the contract was for a less sum, and in whole or in part, to be paid in the title bond of 1835; or that he was to have his acre for less, in consideration that he, Fithian, would procure the others to pay that sum. The evidence is circumstantial, consisting of facts and detached portions of conversations with, and admissions of Fithian. At the time the contract was concluded, and about to be executed, James P. Murphy and Fithian were in Juneau’s house with him. While Murphy was writing a bond for a title from Juneau to Fithian, the notes for the remainder of the purchase money were drawn in the same room; that there were two sets of them prepared, one for 49000 according to what Fithian had represented was the price, and another set for six thousand; and that the smaller set were executed, and witnessed by Murphy, as well as the bond, and for what reason, was not then explained to Murphy, for he heard no conversation at the time between Fithian and Juneau on the subject. That Fithian looked confused when the larger notes were presented through mistake. On Murphy’s afterwards alluding to the fact, and asking the reason why the notes were' for less, Fithian said he had paid more down. In 1838, Fithian was a candidate, and was charged with fraud in the matter by John H. Murphy, and in a handbill, when Fithian said he would not explain the two sets of notes, if his election depended on it. In a private conversation, he said it was on account of the title bond given t Murphy by Juneau, that he would not explain. He admitted that he felt bad about it, and would explain some time ox other.

After Fithian and Juneau had conversed apart, they came together into the presence of the other three, and divers others, when Fithian asked Juneau what was the least he would take per acre, and Juneau replied, not one cent less than $3000 per acre. This was all the others heard pass between them on the subject.

Fithian afterwards admitted to complainant, Cunningham and Moores, that he did not give three thousand for his acre, in consequence of the title bond of 1835, which he held on Juneau. This is stated by Moores in his deposition, and further, by him, Fithian said he would make it all right. Fithian was known to take about $3000 when he went to Milwaukie, and return with about $2500. Fithian was heard to say, that he had made about $16,000, speculating in 1836.

A day or two before the acres were purchased, Fithian had been offered by Juneau, and refused $10,000 in Milwaukie lots for the title bond of 1835. Afterwards, in August 1836, when he finally settled with Juneau, for the four acres, this bond was rated, as Fithian states, at $6000, and Juneau states at $7000, in payment of the remaining $9000, and a deed to lot eight, (8,) block six, (6,) at $2000 or $3000.

The defendant took Juneau’s deposition, and from it, it appears, that a few days before the deposition was to be taken, Fithian went into the neighborhood of Milwaukie, and sent for Juneau, read to him the interrogatories that were to be put, and requested him to think over it.

These are the principal facts and circumstances relied upon as establishing the fraud.

The explanation of these circumstances given in the answers of Juneau and Fithian, and the deposition of Juneau, is this: About the time Fithian was going to sign the notes, he insisted that Juneau should let him have his acre for less, as he had been a good customer; or at least, that the price of it should be left open, and no note taken until the title bond of 1835 was adjusted, to which Juneau agreed. , Accordingly another set of notes was drawn for a smaller amount; and that Fithian and Juneau both believed that Juneau was liable for $10,000 on the bond of 1835; and so, upon settling in 1836, they compromised the bond at $6000 or $7000; and for the balance, Fithian made Juneau a deed for the lot eight, (8,) in block six, (6,) which was counted and believed to be good for the remainder of the $12,000.

The reason why he would not explain the two sets of notes, and state how much, and in what he paid the remainder, was, because Juneau desired him to say nothing about the bond, and his inability to make a title, as he was liable to Murphy on a similar bond, for the same amount; and Juneau wished to get a compromise with Murphy before he found out his want of title. He could not, therefore, explain his own transaction, without apprising Murphy of his advantage. It is further shown in evidence, that the lot for which that bond was given, was then rated at from $8000 to $10,000; that the land sold to complainants and others was then rated at and thought to be worth $3000 per acre; that complainant was offered $500 for his bargain by Moores, his agent; and that Fithian afterwards sold his acre for $6000; and the other-acres were thought to be worth more than was paid for them. There was then a great rage for Milwaukie lots, and holders hardly knew what price to set upon them, for fear they would not ask enough.

The agency of Fithian in this transaction, it seems to me, extended only to the negotiation and settlement of terms with Juneau for this purchase; and as to the price, kind and time of payment, if, in the business of his trust, he committed a fraud, I have said he should account for it. These terms were fully and fairly made known to the others, and they consented. This is positively asserted in .the answer, and not contradicted in the proofs. The proposition to execute the bond for title to Fithian, and take his notes, was also submitted to them, and agreed to. The answers both positively deny that any change was thereupon made, in the time, amount, or kind of payment, and only that a note should not be given for $3000 of the purchase money. Now is this true,. and if not, does it affect the rights or interests of the complainant, or the others, in relation to any matter confided to Fithian? Fithian and Juneau alluded to the adjustment of the bond of 1835, when Fithian should come to settle the remainder of the purchase money; and this seems to be the basis of the fraud, showing, as is contended, that he did not agree to give so much as $12,000; or that he did not pay $3000 down; that he was to have his own acre for nothing, and had changed the terms of the contract, without apprising his principals.

The complainant seems to proceed upon the idea, that he would have had a right to see to the adjustment of the amount Fithian was entitled to receive on the title bond of 1835; that, because Fithian gave only $500 for the lot, he would not be entitled to receive of Juneau so much as $10,000; and if, in law, Juneau would not be liable to pay so much, he would have no right to pay it, nor Fithian to receive it. These would, indeed, seem to be the positions assumed. Else, what change would it effect in the contract, if Juneau should first settle that debt, by paying Fithian $10,000, and then receive b.ack $9000 in discharge of this debt? If, indeed, the adjustment of that debt was a consideration for giving more for these acres, it would, no doubt, be fraudulent. But to draw this conclusion from the simple fact, seems to me to be begging the question, by assuming the conclusion, as the means of proving it. It does not appear that Juneau was insolvent, or in doubtful circumstances; or that the debt was insecure. It does not appear that $10,000 was more than was legally recoverable upon the bond. The true recovery would have been the value of the lot, at the time stipulated in the bond to convey it. When it was to have been conveyed, does not appear; but it is in proof that the lot was rated at, and considered to be worth from 8 to $10,000, in April, 1836. There is nothing in the record showing that Fithian and Juneau estimated the debt due on this bond larger than its true legal amount. If, then, this debt was really due, and Juneau was able to pay it, of what advantage was it to Fithian to pay with it, debts that would become due in six,. twelve, and eighteen months? It amounted only to the adjustment of a claim upon one man, by taking claims upon three others, and all equally good and solvent, for any thing appearing.

Again, because he did actually settle the purchase money with this bond, it seems to be regarded as evidence that it was a part of the contract, in the first place, that it should be so settled. Suppose it was the contract, would a knowledge of that fact have bettered the condition of the complainant? It was still cash. He would have no right to say to Fithian, that his bond for the title was not cash. It had, at least, become a cash demand. He might as well have denied Juneau the right to settle any other cash demands upon him with the proceeds of this .sale, as to deny this one due Fithian.

But there is another circumstance, that seems to weigh much with the complainant. Fithian gave contradictory accounts of there being two sets of notes, and refused to explain. This, to me, is fully and satisfactorily explained. Juneau had requested silence in relation to the bond, because Murphy held a similar one; the amount acknowledged in it to have been received, was $10,000, the 'penalty $20,000, although the actual purchase money was but $500. Juneau sought to settle it on the best terms he could. To explain, would be to apprise Murphy, and a breach of confidence with Juneau. Neither the adjustment, nor any transaction arising out of, of concerning this bond of Murphy, was committed to Fithian; nor does it appear that the discovery of Juneau’s inability to make a title was any way connected with his agency in this new negotiation. I can see no want of good faith in letting alone a business not confided to his management. Murphy had his agent there, no doubt with full instructions. If there were any advantage to his principal in giving his own note to Juneau for the purchase money, he should have refused his assent to the change, permitting Fithian to become paymaster. It does not appear that Murphy’s claim on Juneau on the bond has been endangered, or become less secure; and as to the amount he would be entitled to receive, it was not Fithian’s business to adjust. Whether he should befriend Juneau by keeping his secret, or Murphy by divulging it, was for himself to decide between friends. These circumstances explain fully to me the motives of his silence, and refusal to explain the two sets of notes. In all these circumstances, I can see no evidence of fraud, or bad faith, affecting the interest of the parties to this contract, in any matter confided to Fithian. Whatever of contradiction there may have been in his account of the transaction, seem to me to have arisen from his anxiety to satisfy those who inquired without divulging this other fact. A refusal to give an explanation which, when given, does not at all vary, or affect the rights of the parties; will surely not be a fraud. It seems to me to be unfortunate for him, that he assumed an obligation of secrecy, that prevented him from answering the legitimate inquiries of those concerned; and it should be an admonition, from its consequences, of that truth, that open confession is good for the soul.

Decree affirmed with costs.^*

Decree affirmed.

* Justices Treat, Shields, and Thomas dissented from the foregoing Opinion. J. J. Brown, for the appellant, presented a petition for a re-hearing, which was denied.