Shannon v. Mastin , 135 Mo. App. 50 ( 1908 )

ELLISON, J.

This is an action on a covenant in an assignment of a lease. Tbe judgment in the trial court was for the plaintiff.

Edward Coultier was the owner of a tract of land thought to have gas and oil beneath the surface. He and his wife executed under seal a paper which is called a “permit” to the Belton Oil and Mining Company, permitting that company to drill for gas or oil or numeral, for one dollar and certain royalties. Afterwards the defendants Mastin, Goodbar and Jerard were appointed trustees of the Oil Company by the circuit court in a proceeding for that purpose instituted to dissolve the corporation. [R. S. 1899, secs. 976-980.] This permit was found by the trustees among the company’s assets. Thereafter they executed an assignment of it to this plaintiff.

Afterwards Coultier, considering that he had grounds to forfeit the lease or permit, brought an action for its forfeiture against these defendants and this' plaintiff. All of them were served with process but this plaintiff did not appear. The defendants appeared and filed an answer setting up that they had assigned the lease to this plaintiff (their codefendant in that case) and that they had no further interest in it. They were discharged with their costs. Judgment was rendered forfeiting the lease.

After the beginning of that action by Coultier, but before judgment, the plaintiff began this action for breach of the covenant, alleging the price he paid as his damages. The original petition was against these defendants as trustees only; the amended petition made them also defendants in their individual capacity. At the trial the record and judgment in the case annulling the lease, occurring since the original petition was filed, \vas introduced in evidence; and after the close of the case the amended petition was amended so as to plead that judgment- of forfeiture.

1. It is clear to us that plaintiff, in basing his action on the covenant, has misconceived its meaning. The words employed to express this part- of the contract of assignment are that “they covenant with the said party of the second part, that they have a good right and lawful authority to sell and' assign the same in manner aforesaid.” Plaintiff construes this to be the technical covenant in conveyancing of “right to convey,” and that, as such covenant, it is of the same import as a covenant of seizin or of title. He then goes one step further and says that it being the covenant of trustees without affirmatively limiting its binding force to them as such trustees only, they are individually liable. He cites in support of the individual liability when the contract with trustees fails to limit their liability, the cases of Koken Iron Works v. Kinealy, 86 Mo. App. 199; Taylor v. Mayo, 110 U. S. 335.

In construing the contract it is proper to consider the capacity in which it was made as well as for whom it was made. These defendants are not private trustees. They are mere instruments of the court in which the affairs of the corporation were being administered and if we call them either ministerial or fiduciary trustees, they are not owners of the property and they made no pretense of conveying or assigning anything of their own. It is quite true that, generally, an ordinary trustee, although describing himself as such and who signs as trustee, will - nevertheless be bound personally unless he limit the contract so as to exclude himself personally, the official designation being held to be mere words of description. [Koken Iron Works v. Kinealy, supra; Taylor v. Davis, supra.] But this is not so with that large class of trustees who are but the arm of a court in the exercise of a power in which they have no personal interest. In such cases the rule is the reverse of that just stated, and to be bound personally the contract must so express it, — the laAv being that a covenant arising from the use of certain words will not be implied against him, though the same words used between individuals would be regarded as a covenant by implication. Thus the words “grant and demise” in a lease by an officer or agent of the law do not raise against such character of trustee a covenant by implication, though they d.o with individuals. [Webster v. Conley, 46 Ill. 13.] Nor do the words “grant, bargain and sell” impose a personal covenant on an administrator. [Shontz v. Brown, 27 Pa. St. 123, 134; Dow v. Lewis, 4 Gray 468.] The rule in such case is caveat em-ptor and the burden is cast ■ upon the purchaser. [Maupin on Marketable Titles (top page) 132, 153, 157.]

It is not meant to say that such character of trustee cannot enter into a personal covenant in dealing with the trust property, for that he may do (Barnard v. Duncan, 38 Mo. 170, 183), but the contract must show an intention to do so and dependence should not be placed on implications.

By keeping in view the foregoing considerations we are better prepared to ascertain the true intent and meaning of the covenant upon which plaintiff bases his claim against defendants. First, we will assume, for the moment, that the words of the covenant are the same as if the technical words “good right to convey” had been used. The latter expression in covenants in a deed is generally the same as a covenant of seizin, though sometimes of even wider significance. Yet, considering the official character of these defendants, and for whom they were acting, it is clear, in the light of the foregoing authorities, that a personal covenant cannot be made out.

2. But, in reality, the words of the covenant are not susceptible of meaning “good right to convey.” The covenant appears to be no more than an assurance of their official character, of their due appointment and authority. They covenant that they have lawful authority to sell the lease “in the manner aforesaid,” that is, as stated in.the preceding part of the assignment. And so besides having, at the outset, described themselves as trustees of the corporation dissolved by order of the court of Cass county, they sign as “Trustees of the stockholders of the Belton Oil and Mining Company, by order of the court of Cass county, Mo.” It is manifest that there was no other intention than this. And while a covenant or agreement that they were trustees, as they represented themselves to be, might have been implied without being so stated, yet they have chosen to give express assurance to that effect. That and nothing more was intended.

3. Having concluded that there is no individual liability on the part of the defendants, it remains to be seen whether there is a case against them as trustees, or, in other Avords, whether the corporation, thus dissolved, is liable in a case of this kind. We have concluded that it is not. It was a sale or assignment of the lease without warranty and the purchaser or as-signee purchased at his peril. Such assignment may well be likened to a sale by an administrator. A dissolved corporation which is being administered in court may be likened to a deceased individual whose estate is being so administered. In the latter, a purchaser of assets is understood to buy only what the estate has to sell. [Throckmorton v. Pence, 121 Mo. 50, 57; Estes v. Alexander, 90 Mo. 453.] Sheriff’s sales, sales in bankruptcy, etc., do not carry with them a warranty of title, and the rule of caveat emptor applies. [Cashion v. Faina, 47 Mo. 133; Stephens v. Ells, 65 Mo. 456.]

4. Another and distinct view determines this branch of the case against the plaintiff. The assignment was made by a lessee to an assignée. The law is that while in a lease by an original lessor covenants may be implied as against such lessor, from the use of certain words in conveyancing-; yet when the lessee himself becomes an assignor of the lease to a third person, no covenants by implication can arise. [Blair v. Rankin, 11 Mo. 440; Waldo v. Hall, 14 Mass. 486.]

There Avas, therefore, no covenant made by these defendants as trastees. And having already shown that there was no covenants made by them as individuals, it follows that plaintiff is without a right to maintain this action against defendants as trustees or as individuals, and the judgment must be reversed.

All concur.