Kanawha Banking & Trust Co. v. Gilbert ( 1947 )

I am unable to concur in the opinion of the majority in this case. In my opinion, the decree of the circuit court of Wyoming County should be modified in certain particulars to be hereinafter noted, and, as modified, affirmed.

At the outset, it should be borne in mind that there is no attempt on the part of anyone to vary or contradict the terms of a written agreement, and the single question involved in this litigation is whether the written agreement of December 15, 1896, hereinafter referred to as "agreement", should be construed as remaining in effect until the real estate mentioned therein has been fully disposed of; or as terminating on the death of the last surviving member of the firm of Couch, Flournoy and Price, which merely calls for a construction of the agreement as written, and on that single point. There is no ambiguity in the contract in respect to any other question which might arise therefrom. In the almost fifty-year period from the date of the agreement to the death of Harrison B. Smith in the year 1942, every provision thereof had been complied with by all the parties thereto.

I am in full agreement, in principle, with the four points of the syllabus prefixed to the majority opinion. The first three of those points are based upon the assumption that the contract of December 15, 1896, is unambiguous; in other words, that its meaning is so clear that extrinsic evidence attempting to explain its meaning cannot be accepted under what is known as the parol evidence rule. The fourth point of the syllabus merely states the general rule that a contract for personal service terminates upon the death of the person, or the member of a firm, whose services are contracted for. No one can take issue with these general statements of law, but I think the case at bar is not one to which they are applicable. If the agreement under consideration is ambiguous, then, under all decisions with which I am acquainted, parol evidence is admissible to bring to light the conditions under which it was entered into, and the interpretation which the parties thereafter gave to the terms thereof, as shown by the manner in which they acted thereunder.

These principles are well settled, and I do not understand that they are questioned by anyone interested in this litigation. Along with other numerous authorities cited in the majority opinion on this question, reference may be had toCentral Trust Co. v. Virginia Trust Co., 120 W. Va. 23,197 S.E. 12, in which this Court held: "In the absence of a showing of illegality, fraud, duress, mistake or insufficiency of consideration, the terms of an unambiguous written agreement may not be varied or contradicted by parol evidence of statements of any of the parties thereto made contemporaneously with or prior to the execution of such agreement."; and "An unambiguous written agreement entered into as the result of verbal or written negotiations will, in the absence of a showing of fraud or mistake, be conclusively presumed to represent the final agreement of the parties thereto, and may not be varied or contradicted by evidence of conversations or statements had or made at the time of or prior to its execution." I cite that case because it happens that the opinion therein was prepared by me for the Court. I have not changed the views then expressed.

In my opinion, the meaning of the agreement is not clear, and it is, therefore, ambiguous. Ambiguity is defined as "Doubtfulness; doubleness of meaning; indistinctness or uncertainty of meaning of an expression used in a written instrument." Black's Law Dictionary, Third Edition, 102. The majority opinion, being based upon the theory that there is no ambiguity in the agreement, and having agreed that on such theory the opinion of the majority is correct, it devolves upon me to state the reasons supporting the position that the agreement is ambiguous to such an extent as justifies the introduction of parol evidence to show the circumstances under which it was prepared and executed, and the manner in which it was afterwards interpreted and acted upon by the interested parties. This I shall attempt to do.

The agreement is one between Charles S. Whelan, George F. Lasher and John Wagner, trustees, on the one part, and Couch, Flournoy and Price, attorneys-at-law, on the other part. No other party is involved under the provisions thereof requiring the performance of service, or in that provision which refers to payment for services theretofore performed. The parties of the second part, hereinafter referred to as "law firm", agreed with the parties of the first part, hereinafter referred to as "trustees" to continue to represent as their attorneys the trustees, their successors, and beneficiaries of the trust under which they were acting, in all suits and matters pertaining to the lands of the trustees located in McDowell and Wyoming counties, and to so represent them so long as said lands, or any part thereof, should be owned by them or by their beneficiaries. It then goes on to provide for their compensation of ten per cent of all moneys which might be "hereafter received" by the trustees from sales of land, leases, etc., after deducting from the amount so received all expenses and costs, and all taxes, and also any sums paid in settlement of other claims to said land, or any part of them. The last mentioned provision has some significance in connection with the interest in the land, if any, acquired by the law firm, because the effect thereof was to require the law firm to pay its share of any sums of money that might be necessary to be expended in perfecting the title to the said land. Under the agreement the law firm accepted the sum of twelve hundred dollars "in full of services in all matters up to this time", and as payment in full for such services. It then goes on to provide for their employment, and while it does not use the word "future" that meaning may fairly be implied, and in another part of the agreement the words "future legal services" are used. The trustees who executed the agreement acted under a trust created November 21, 1882, under which the trustees were not permitted to dispose of any interest in the lands entrusted to them, without the consent of a majority of the beneficiaries thereunder, and, to authorize the agreement, written authority to the trustees to enter into the same was signed by a majority of the beneficiaries, and made a part of the agreement of December 15, 1896, and it is in that authorization that the words "future legal services" are used, and in which the beneficiaries of the 1882 trust consent to the arrangement then being made by the trustees for "future legal services," and that "a sum equal to ten per cent of all moneys to be received by said trustees or their successors from the sale of the lands and lumber, from damages, leases, etc., shall be paid to Mess. Couch, Fllurnoy and Price of Charleston, West Virginia, and J. R. Sypher, of Philadelphia, in the proportion of 7-1/2% to Couch, Flournoy and Price, and 2-1/2% to J. R. Sypher."

When we study the agreement we find that there is no limitation therein as to the period during which the law firm should receive such share of receipts. In the majority opinion, much stress is laid upon the failure of the agreement specifically to provide for the situation which might arise in the event of the death of the members of the law firm before the sale of the land to which the agreement related; but it would have been just as easy to have limited the agreement to the lifetimes of the members of the law firm, had that been intended, and these two suggestions pretty much offset each other. The provisions of the agreement which impose on the trustees and their successors and the beneficiaries under the trust, the obligation to pay to the law firm ten per cent of the net proceeds derived from the land "hereafter received" or "received hereafter" are just as clearly and concisely stated as any statement relied on in the majority opinion. These statements are conflicting and inconsistent with each other. Different meanings may be argued therefrom, and this creates the exact situation in which a resort to explanatory parol evidence is warranted. Why favor one clear statement over another of like character? Why not resort to extrinsic evidence to determine, if possible, what the parties to the agreement meant. No doubt all of the parties to the agreement had in mind that the lands would be disposed of during the lifetimes of the parties who executed the same, especially the members of the law firm, because by the terms of the agreement itself, the successors of the trustees were bound thereby.

As stated above, the members of the law firm were the only people required to perform any services, and they were the only people to whom the contract assured payment of compensation for services. There is nothing in the agreement which binds J. R. Sypher to perform any services, and nothing in the agreement proper that guarantees him any sum of money from the ten per cent provided to be paid; but the authorization to the trustees, aforesaid, made a part of the agreement, does specifically provide that of the ten per cent to be paid for "future legal services", three fourths should be paid to Couch, Flournoy and Price, and one-fourth to J. R. Sypher. Why was this provision put into the agreement? If we accept the theory of the majority opinion, the provision of the agreement under which Sypher was to receive a part of the ten per cent, provided to be paid, was a mere gratuity to him, because he was not required thereafter to perform any kind of service, and was no longer employed as an attorney for the trustees. This provision in the contract, together with the provision that "the intention being that the said parties of the second part shall receive ten per cent of all amounts received hereafter by the parties of the first part, their successors or by said beneficiaries * * * from said lands by way of damages, leases and sales, after deducting from said sums all taxes, charges, costs and expenses which shall hereafter be paid by said parties of the first part, or their successors to said beneficiaries", without any limitation as to the period during which such payments should be made, certainly calls for some explanation of what the parties really had in mind to do, and this can only come from a resort to extrinsic evidence.

I think it fair to argue that the purpose of the first clause of the agreement, in which the law firm agreed to accept twelve hundred dollars as payment in full for services theretofore performed, was intended to relieve the trustees from further cash payments on fees, and that it meant nothing more. A like settlement was made with Sypher, as appears from the record. The settlement between the trustees on the one hand, and the law firm and Sypher on the other, involved a cash payment of five thousand dollars on a claimed fee of fifteen thousand dollars for services rendered to the date of the agreement. It must not be forgotten that, under the majority opinion, all of the evidence touching the steps leading up to the execution of the contract is deemed admissible, as bearing upon the allegation of fraud contained in the answer and cross-bill of defendants. Of course, the majority would limit the use of this evidence to the question of fraud, but the evidence being in the case, on whatever pretext, is, in my opinion, there for all purposes, and should be considered on any question arising therein.

Assuming that this evidence is before the Court, even on the question of fraud; and further assuming that the Court has the right to look to it on other questions properly arising in the case; we find that the meaning of the agreement was not clear in the minds of one of the trustees who executed it, nor to their successors. It appears that the agreement was prepared by S. L. Flournoy, a member of the law firm; and that he died in 1904; and that thereafter matters pertaining to the agreement were handled by George E. Price. In January, 1911, Price wrote to Lasher, one of the trustees, suggesting the formation of a corporation, to which the 36,750 acres of land then owned by the trustees and here involved, should be conveyed, and stock issued to the beneficiaries for their respective interests in the properties included in the 1882 trust, and under this suggested plan the law firm would have received one-tenth of the stock, and although this suggestion, with immaterial variations, was made at subsequent dates, nothing ever came of it, but, so far as the record discloses, it was never disputed that the law firm was entitled to such stock interest, in case the property should be conveyed to a corporation, and the trust closed in that manner. In 1913, Lasher, one of the trustees who signed the agreement, requested of Price his interpretation of the agreement, especially with reference to its termination. The position of the law firm on this point was promptly stated, that position being the same as that now asserted by the plaintiffs herein. Later, in April, 1917, John Gilbert, who had in the meantime become a trustee, made the same inquiry, to which the same answer was given; and in April, 1918, another letter was written by Price to Gilbert, giving advice on the proposed sale of the land to a corporation, in which he again made the same claim. Still later, in October, 1918, Price offered to reduce the law firm's supposed interest in the proceeds of sale to eight and one-half per cent of any stock issue, but still maintaining his original position that the firm was entitled to its ten per cent. Nothing ever came of this offer, or of the proposed organization of a corporation, and the offer was later withdrawn. Again in December, 1921, inquiry was made by the trustees at to what the law firm would be willing to accept for its interest in the agreement, to which Price replied and again insisted on the right of the law firm to ten per cent of the net proceeds of sale, and this position was also maintained in letters which followed in March and April, 1922. In 1923 and 1924, sales of some fifteen thousand acres, of the original 36,750-acre tract, were made to Fordson Coal Company and H. C. Booz, in separate transactions. To consummate these sales, it was necessary that there be a judicial determination on whether the proposed sales were approved by a majority of the beneficiaries, as required under the trust deed of 1882, under which the trustees were acting. In both of these proceedings, adjudicated in the Circuit Court of McDowell County, the law firm was made a party, appeared and answered, and was paid under the agreement. In 1938 the trustees, being still uncertain as to how the agreement should be interpreted, procured the advice of counsel in Philadelphia, who gave it as his opinion that the contract would terminate on the death of the last surviving member of the law firm, the same position now taken by defendants, the appellants herein. So it is, that, from as early as 1913 to the date of the institution of this suit, there has been uncertainty, at least on the part of defendants, as to the meaning of the agreement. I think this strongly supports the theory that if the parties to the agreement were, themselves, in doubt as to the meaning thereof, there can be no impropriety in the introduction of parol evidence to explain the situation in which it was executed.

For these reasons, I am of the firm opinion that a reading of the agreement in its entirety creates grave doubt as to what the parties thereto really meant on the single issue presented on this appeal. The words "hereafter received" and "received hereafter" are in no wise limited. The provision in favor of Sypher is not explained by any language of the agreement, and we are left in doubt on this point. On the whole, I think the consideration by the trial court of the parol evidence introduced was proper. Fortunately for all concerned, that evidence is of a character which cannot be questioned. It consists, almost entirely, of correspondence between the parties, and court proceedings. The only testimony given by witnesses was on points affecting the identification of letters, and none of the parties questions either the identity or materiality of the evidence, although, of course, defendants have maintained throughout that the contract is clear and unambiguous, and that the evidence so taken cannot be read.

On the theory that the parol evidence appearing in the record should be considered, what do we find? It is unnecessary to stress the importance of the services performed by the law firm, in settling the title to a large portion of the 36,750 acres of land held by the trustees. That litigation began in 1890 and was not ended until 1896. It was first decided in the Circuit Court of the United States for the District of West Virginia, and later by the Circuit Court of Appeals for the Fourth Circuit. In effect, it cleared and settled the title to approximately twenty-three thousand acres of land, although the title to about one-third of that acreage had been settled by compromise with one McCreery, after the suit was instituted. Up to that time, so far as appears from the record, the property was not income producing, and taxes and other expenses connected with the land were paid from assessments on the beneficiaries of the trust, under which the trustees held the land. When the litigation ended the law firm, and J. R. Sypher, claimed a fee of fifteen thousand dollars. I do not think that the record shows that there was any dispute over the amount of the fee, but the trustees were apparently unable to raise the money necessary to liquidate the fee in cash. It appears that previous to the date the fee was presented to the trustees for payment, there had been paid to the law firm approximately thirteen hundred dollars; and to Sypher about nine hundred sixty dollars. It appears that the trustees had funds available sufficient to pay to the law firm, and to Sypher, a sum of money, which, with what they had theretofore received, would amount to five thousand dollars. Some time during the negotiations over fees, which continued intermittently from May, 1896, until the date of the agreement, the suggestion was advanced that these cash payments were all that the trustees could make at that time, and the further suggestion was then made that the lawyers should look for payment of the balance of their fees through an agreement which would give them a percentage of the moneys thereafter received by the trustees, their successors, and their beneficiaries from sales of the lands, leases, etc. It was at first suggested by the law firm, and Sypher, that each receive ten per cent, or a total of twenty per cent, of any sums thereafter received from the land; but this was later reduced, and an agreement reached that payments be made in cash, which, with the payments theretofore made, would amount to five thousand dollars, and that the attorneys be assured of payment of the balance of their fees by a written agreement which would entitle them to ten per cent of all sums thereafter received from the land. In the meantime, Sypher had accepted a sum of money in full payment for services to date, of the same general tenor as the agreement on that point between the trustees and the law firm. Therefore, the provision in the agreement under which Sypher was to have one-fourth of the ten per cent agreed to be paid, was either a pure gratuity to him, or was intended to compensate him for what the trustees felt they owed him on account of the balance of the fifteen thousand dollar fee, which had not been paid in cash. To me, it seems entirely clear that the authorization, aforesaid, which included the requirement that Sypher be paid a part of the ten per cent, was made to provide a bar against any claim by the law firm or Sypher to a further cash payment for services rendered prior to December 15, 1896, and was executed in consideration of the waiver on their part to any further cash claims, and the acceptance in lieu thereof of an interest in the proceeds that might thereafter be derived from sales of land or from other income therefrom.

If this be true, then the agreement of December 15, 1896, was not a simple contract for personal services. The law firm and Sypher surrendered ten thousand dollars which, it may be assumed, they could have collected in cash at that time, and, in lieu thereof, accepted the agreement out of which this litigation arises. Had the property been sold within a few years thereafter, it is unlikely that there ever would have arisen any question as to the interpretation of the agreement, and it would not have been considered an unreasonable one. It is the long lapse of time, the increase in values, brought about by the development of the country in which this large tract of land is situated, and the large sums of money which the law firm has received over a period of nearly fifty years, which seem to cause concern. In this connection, however, it appears that defendants, in order to sustain a theory, not now advanced on this appeal, vouch for evidence on the value of the services rendered to the trustees by the law firm, after the date of the agreement, which tend to show that the value of said services was approximately eighty thousand dollars; and it does not require anything more than a simple calculation to determine that the sum of ten thousand dollars, if paid in 1896, and invested in real estate, or even allowed to accumulate at normal rates of interest, would, in the course of nearly fifty years, amount to a very large sum of money. Then to the extent that the increase in values has benefited the law firm, it has, to nine times greater extent, benefited the beneficiaries.

I am not concerned as to what we shall call the interest which I think the law firm obtained under this agreement. The plaintiffs' suit is based on the theory that under the agreement they became entitled to a vested equitable estate in fee simple, in an undivided one-tenth interest in the tract of 36,750 acres of land here involved, and that such interest vested at the date of the agreement. If that construction be given to the agreement, its benefits would pass to the heirs of the individual members of the law firm, as an interest in real estate. Whatever we may call the interest, it seems to me that, under the circumstances of the case, as disclosed by the record, and including the parol evidence produced, the agreement should be construed to give to the law firm, and the heirs, devisees, distributees or legatees of the individual members thereof, the right to the stipulated percentage until all of the said land had been disposed of, and whether it was disposed of in the lifetimes of the members of the firm, or after their deaths.

In my opinion, all parties to the agreement of December 15, 1896, contemplated that the land would be sold in the lifetimes of the members of the law firm. This probably accounts for the failure to be more specific, both as to the date of the expiration of the agreement, or as to any limitation on the time within which the payment of ten per cent would be required. Even if the parties did not have an express understanding on this point, the law assumes that as to any agreement which requires the performance of an act on the part of a party thereto, it is contemplated that the agreement and act will be performed within a reasonable time. The land here involved was held by the trustees under a trust which, by its terms, contemplated that they dispose of the land when reasonable opportunity therefor presented itself; and when the agreement here involved was entered into, it was certainly contemplated that the land would be disposed of within a reasonable time, and within the lifetimes of the members of the law firm, most of whom were at that time men of middle life or younger.

It is not meant to be suggested or even intimated that the trustees have delayed sales of the land, in order to avoid paying to the law firm its interest in the sales provided to be paid under the agreement; but, clearly, giving to the agreement the meaning contended for in the majority opinion, the trustees could have delayed sale of the land, or any part thereof, and avoided payment of any sum of money to the law firm. They did not do that, as to a considerable part of the land, and there is nothing in the record to indicate that they have withheld sales with that purpose in later years. But the agreement should be construed as of its date, as preventing any such result to one of the parties thereto. The services performed by the law firm and Sypher were of such character, and of such an important nature, involving as they did, the very title to the greater part of the large tract of land held by the trustees, that they became, as a matter of equity, entitled to a substantial fee, gauged by the prevailing standard of fees at the time the agreement was executed. Their compensation for their services depended to a very great extent, on the good faith of the trustees in disposing of the land. They should not be deprived of that compensation through the failure of the trustees, whatever their motive, to dispose of the land within a reasonable time, and, therefore, equity will hold the trustees to the same responsibility to which they would have been held, had they sold the land within a reasonable time, and within the lifetimes of the members of the law firm. It is upon this theory of the case, coupled with the general equities of the case as they appear from the entire record, that I think the decree of the trial court should be affirmed. As stated above, I do not contend that a mere contract for personal services can be continued after the death of the person who contracts to render that service. That is a general and well established rule; but, like all general rules, it has its exceptions, and I think this is one of them.

The agreement provided that the law firm should render legal services connected with the handling of sales or other disposals of this large boundary of land. That provision of the agreement cannot now be carried out, inasmuch as all of the members of the law firm are dead. The trustees still retain more than one-half of the original tract of land, and will, no doubt, require the services of counsel in connection with the future disposition thereof, as well as current requirements involved in the holding and protection of real estate. The trustees not being chargeable with any intent to delay the sale or other disposition of the land involved, and thus, according to their construction of the agreement, deprive the members of the law firm of their interest in the land under the agreement, it seems fair that the cost of legal services required subsequent to the date of the death of the last surviving member of the law firm, and which the members of the law firm, had they continued in life, would have been required to render, should be charged against the interest of the plaintiffs in the land, or in the proceeds therefrom.

I would therefore modify the decree of the Circuit Court of Wyoming County, and provide that the reasonable expenses for legal services, necessary to the protection and disposition of the remaining portion of said real estate, required subsequent to the date of the death of the last surviving member of the law firm, be charged against the interest of plaintiffs, in any future distribution of the ten per cent stipulated to be paid under the agreement, and, as modified, I would affirm the decree appealed from.