Martin v. Powell

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The appellant was the plaintiff and the appellee the defendant in the court below to recover $6,424. In consequence of adverse rulings to the plaintiff on his demurrers to pleas numbered 4, 7, 8, and 9, and on demurrers to replications 2 and 3 to the seventh plea considered hereinafter, the plaintiff took a nonsuit. These pleas and replications will be reproduced in the report of the appeal as well as the demurrers to them. At least a good part of the differences between counsel may, we think, be eliminated through a correct interpretation of count 2 and some of the units of subsequent pleading to which reference has been made.

The subject-matter of the contract averred in count 2 was the Swedish steamer Alida. On the 16th day of December, 1914, the charter of the vessel stood in the name of the Gulf Oil Cake Company. On that date the plaintiff, Martin, entered into a contract with the charterer (and one B. T. Barrett, whose relation is not otherwise alluded to in the count) by the terms of which the charterer transferred and assigned the charter to the defendant, Powell. The averred consideration for the transfer of the charter was:

The "promise on the part of the defendant to pay to the City Bank Trust Company, as trustee, the sum of $12,948, one-half of which was to be paid to the City Bank Trust Company, for the use and benefit of the Gulf Oil Cake Company, and one-half of which was to be paid to the City Bank Trust Company, for the use and benefit of the plaintiff."

It is further averred in the count that the charterer made the transfer of the charter in accordance with the contract, but that the defendant failed and refused to pay to the City Bank Trust Company the said $12,848; that the defendant made an agreement with the Gulf Oil Cake Company, the assignor of the charter, by which that company relinquished its right to its one-half of the said sum of $12,848; whereupon, it is alleged, that company divested itself of any interest in this suit. It is then further averred:

"That the interest of the City Bank Trust Company in said matter has ceased, for the reason that said money was to be paid to it in trust for the plaintiff in order that the said City Bank Trust Company might pay to itself therefrom all orders which it might hold for the Gulf Oil Cake Company and the Gulf Export Company, and the City Bank Trust Company holds no such orders and has gone out of business, wherefore the plaintiff says that, the said trust having ceased and determined the said sum of $6,424 is payable to the plaintiff."

On this appeal the sufficiency of count 2 is not in any manner brought under review; and, other than to construe count 2 with a view to a determination of the questions presented touching the sufficiency of the mentioned pleas and replications, no consideration can be or is given the count. It appears that the promise declared on is an absolute promise of the defendant to pay to the Trust Company as trustee a certain sum, one-half of which was for the use and benefit of the plaintiff. The promise is not to the plaintiff. His asserted right is as the beneficiary of the promise to another, and is, hence, derivative only. The count then proceeds with averments calculated to exclude, and we assume for the occasion only accomplishing the exclusion of, the trustee as a party in interest to the promise averred. To otherwise state the effect of the count: It rests on an absolute promise made by the defendant, to pay a certain sum of money to a trustee for the use and benefit of the plaintiff; but the trust prospectively provided for and contemplated when the promise was made was limited in purpose, which limitation has so determined as to eliminate the object of the trust's provision in consequence of which the trustee had become divested of any interest in or concern for the keeping or enforcement of the promise thus made to the trustee alone. By the fourth plea the defendant asserted, in substance, that before this action was commenced the plaintiff had by assignment divested himself of "all interest in any funds accruing in or to the said trust." The demurrer, in one aspect, criticizes the plea on the ground that it only purports to assert the assignment by plaintiff of all interest in a trust fund; whereas the averred failure of the defendant actually to pay the fund that would in fact have consummated a trust would have afforded the indispensable corpus of a trust estate, defeated the creation of a trust which, until such payment was made, was executory only, and hence the plea's allegation of previous assignment by the plaintiff of all his interest in the trust fund was an averment that assumed to conclude against the plaintiff's right to sue for a trust fund that the complaint affirmatively disclosed never became such. This criticism of the plea is based upon the consideration that there is a distinction between an executory agreement or contract to create a trust and the actual creation of a trust: the existence of a trust res or subject-matter as the sine qua non to the actual creation of a trust. 39 Cyc. pp. 34, 35; 1 Perry on Trusts, § 100.

The principle on which this objection to plea 4 is rested cannot have application in this instance, because the right on which plaintiff declares in his second count is not a promise to him; is alone derived from, is alone traceable through, the defendant's promise to the trustee. If the trust remained executory, because of the defendant's failure to afford the trust res, the defendant's promise to afford the trust res was none the less a promise to the trustee; and whatever effect the defendant's default may have had to defeat the actual creation of a trust, it could not alter the only promise he made, viz. to pay the trustee.

Under the averments of count 2 the plaintiff assumed the affirmative obligation to show a promise to the trustee; and the plea's allegation that plaintiff had previous to the action parted with all "interest in any funds accruing in or to the said trust" was an averment that, if true, went to deny plaintiff's interest in the money defendant had promised to pay the trustee for plaintiff's benefit. This plea (4) is not a plea in abatement, but is a plea in bar of the plaintiff's right to recover, under the averments of count 2, as the beneficiary of a promise made to a trustee for his benefit. The plea (4) was not subject to the demurrer.

The court overruled appellant's demurrer to plea 7. There is no occasion to repeat in detail the construction already given count 2, to which reference must be had in determining the subjection of the plea to the demurrer interposed. The plea contradicts the count in the very important particular in which the count averred an absolute promise by defendant to pay the stated sum to the trustee. It appears from the plea that the sum to be paid to the trustee by defendant was the difference between the freight rate provided in the charter and the higher rate stipulated in the agreement for transfer of the charter by the Gulf Oil Cake Company to defendant, and that this sum was due "on the safe arrival of the said steamship Alida at Galveston, New Orleans, or Mobile as ordered, * * * and to be payable before sailing either in cash at Mobile or New York exchange to the City Bank Trust Company, as trustee." Subsequently the defendant retransferred the charter to the New Orleans Export Company, Limited, at a further increase of freight rate. The charter provided that, if the vessel was not ready to load on or before noon of March 25, 1915, the charterer had the option to cancel the charter party. It seems to be accepted by counsel on both sides that this option, when its conditions existed, was available to any assignee of the charter. The plea avers that the steamer did not arrive at any of the ports stipulated by the date specified. The condition to the creation of the option having come to pass, the option to cancel the charter party was subject to exercise, and, if exercised, would result in the defeat of the happening of the contingency upon which the defendant's promise to pay the stated sum to the trustee was rested. The plea proceeds with affirmative averments to the effect that by agreement made after the date the vessel should have been ready to load, between the owners of the vessel and the trustee, the New Orleans Export Company, and the Gulf Oil Cake Company, the charter was canceled, the owners paying for the cancellation the sum of $15,000, which, it was agreed, was to be apportioned in the amounts specified in the plea, $4,500 being the sum paid to the trustee. The plea concludes to the further effect that the "plaintiff, with full knowledge of said arrangement, and of all of the facts hereinabove alleged, accepted and took one half of said $4,500. * * *" Apart from the question made by the concluding allegations that seek to avail of rules of law applicable in cases where a party consciously, intentionally accepts benefits under a previous unauthorized agreement touching his interest or contract, the plea had antecedently set up matters of contract and fact that went to show that the absolute promise declared on in the second count was not made, but that, on the contrary, the promise to pay was contingent, and that that contingency did not happen because of the failure of the vessel to arrive as stipulated, and, in turn, that the obligation to bring it to the place designated was abrogated by an agreement to which the assignee of the charter (the New Orleans Export Company) was a party, and in which company resided the right to exercise the option to abrogate the charter.

If, as is averred in the plea (7), the arrival of the vessel did not occur by the date stipulated, and if, as is averred in the plea, the holder of the charter then had the option to cancel the charter, and if the repository of the option exercised the power to cancel, the contingent promise to pay the trustee never became available to the plaintiff, or to the trustee for that matter, as the source or measure of an obligation against the defendant, for the reason that the very terms of the contract the plea asserts the obligation to pay was contingent on was an event that did not take place. It would seem to be quite clear that the proof of these allegations in plea 7 would be a complete defense to the absolute promise declared on in count 2; for, "when a day is appointed for the payment of money, and this is to happen after the performance of that which is the consideration of it, no action can be maintained before the performance." 2 Elliott on Contr. § 1577. This effect of the plea's averment (apart from its concluding allegations of the acceptance of the money by the plaintiff) was not made the subject of criticism in any ground of demurrer interposed to plea 7. It does not now appear on what ground demurrer to it could be put, unless some basis for an objection exists in the proposition with which the following statement in the brief for appellant concluded:

"The next allegation to be found in the plea is that the defendant retransferred the charter to the New Orleans Export Company at a still further increase in the freight rate. The only effect of this allegation is to show that the defendant thereby put it in the power of the New Orleans Export Company to defeat the happening of the condition precedent by enabling the New Orleans Export Company to cancel the charter party without his consent. The defendant also thereby voluntarily vested the option to cancel the charter party in the New Orleans Export Company, and, having thus put it in the power of a third person to defeat the condition precedent, the obligation to make the payment became absolute; for no man who has contracted to pay upon the arrival of a vessel can defeat his obligation by himself canceling the charter party by agreement with the owners for a consideration; indeed, such a performance as this would amount to a fraud."

The doing of that which one validly provides in his contract may be done cannot be pronounced a fraud upon his right. Harton v. Amason, 195 Ala. 594, 71 So. 180, 183. The fraud suggested in the quoted extract from the brief is necessarily predicated of a wrong, a breach of duty against the plaintiff; otherwise he could not be heard to complain. According to the averments of the plea, the contract out of which the promise declared on arose was contingent upon the happening of an event, and the happening of that event, after a stipulated date, was made to depend upon the express right of the holder of the charter to exercise the option to cancel it, which right was as much an element of the contract as any other feature of it. In consequence the obligations and rights of the parties were as defined in the subject-matter of the transfer, viz. the charter, and in the agreement in which the averred contingent promise to pay was made; a contingency that was contemplated and provided for in the charter. The effect of the engagement might, of course, have been avoided, as between the assignors or assignees, by appropriate stipulation against the right of the holder of the charter to exercise the option according to the holder's own ungoverned will; but it does not appear from the plea's allegations that any such restriction was put upon the contractual right passing to the assignee of the charter. Such instruments are held to be the subject of assignment unless some restriction is stipulated. 36 Cyc. p. 60.

Since demurrer will not lie to a part of a plea in an action of this character (Corpening v. Worthington, 99 Ala. 541,12 So. 426; L. N. R. R. Co. v. McCool, 167 Ala. 644, 646-647,52 So. 656), and since in the aspect stated plea 7 on its face presented a bar to a recovery under count 2 the court cannot be put in error for overruling the demurrer to it.

The court sustained demurrers to special replications 2 and 3 to plea 7. These replications only purport to reply to that feature of the plea wherein it is averred that the plaintiff, with knowledge of the facts, accepted from the trustee the amount stated therein. The grounds of the demurrers to the replications manifest, unmistakably, the defendant's acquiescence in, if not acceptance of, the plaintiff's interpretation of plea 7; an interpretation that confined its effect to the assertion of the defense predicated of the plaintiff's receipt, with knowledge of the facts, of the stated sum from the trustee.

No ground of the demurrers to the replications pointed their inefficiency as presenting matter in avoidance of the defense otherwise set up in the plea. Their sufficiency must be determined in accordance with the only theory of their insufficiency presented through the demurrer. Both of these replications sought to avoid the effect of the ratification asserted in the concluding part of the seventh plea through the therein averred acceptance by plaintiff of the named sum, with knowledge of the facts, by alleging that the sum so paid and received was not accepted in full discharge of the obligation sued on; that it was only accepted on account of the obligation sued on. It appears that the sum accepted by plaintiff was paid to him by the trustee; and it also appears from count 2 and from the plea (7) that the payment to the plaintiff contemplated was to be made by the trustee. The issue of law raised by the conjoint effect of the demurrers to the special replications, of the averments of the special replications, and of the plea now under consideration, comes, as we understand the agreement to this: The defendant asserts that the acceptance by the plaintiff of the sum, with knowledge of the facts, absolutely concludes him to implead the defendant as upon a liability existing up to the time of such receipt of the money; while, on the other hand, the plaintiff asserts that, since the trustee was the source or medium of a payment of the money to plaintiff under the contract, and since the sum referred to in the plea was paid to the plaintiff by the same trustee, the implication of ratification from the act of accepting, with full knowledge of the facts, the money, is not exclusively conclusive, as the defendant (appellee) contends, but that, since the plaintiff was entitled under the contract to be paid by the trustee a sum even greater than that he accepted from the trustee, and since ratification is a matter of intention, the act of receiving the sum alleged was, at best, so equivocal in its effect with respect to ratification as that the plaintiff's real intent might be disclosed by his declarations or reservations made at the time the money was accepted, or, to attempt a more concise statement, that ratification through confirmation of an act of one previously unauthorized to represent the party against whom the ratification is alleged or to whom ratification is sought to be imputed cannot be conclusively implied where the effect of the act upon which the claimed ratification is rested may be referred to a status of intent inconsistent with a purpose to confirm that which had been done by another without previous authorization. This doctrine, for the present application of which the appellant contends, has been often recognized. 31 Cyc. pp. 1267-1269, and notes, and authorities noted on the brief for appellant. Applying the doctrine indicated, it is said in brief for appellant:

"* * * The plaintiff, being entitled to receive the money which he in fact received from the City Bank in part payment of the debt owing to him by the defendant without assenting to the unauthorized act of his agent, cannot be held to have ratified that unauthorized act by doing what he had a perfect right to do."

Our opinion is that the doctrine urged is not applicable to the presently pertinent state of fact set forth in plea 7. The averments in that connection are that the plaintiff had "full knowledge of said arrangement, and of all the facts hereinabove alleged," which included, necessarily, the affirmation that when he accepted the sum stated the plaintiff knew that the source of the fund thus delivered to him by the trustee was not the defendant, but was the owner who paid a gross sum, of which this money so received by the plaintiff was a part, in consequence of the adjustment effected between the owners and the parties designated in the plea. If the money accepted by the plaintiff had been paid to the trustee by the defendant, whose promise to pay is the basis of the cause declared on in the second count, the application of the doctrine for the plaintiff might be invoked.

It necessarily results from the averments of the plea that the acceptance of the money by the plaintiff, with the knowledge averred, was a ratification of previously unauthorized acts and agreement of adjustment producing the fund thus paid to the plaintiff, just as if the plaintiff had himself effected the arrangement and accepted its fruits. 2 C. J. pp. 467, 468, 504. Since the plaintiff's averred act in accepting, with full knowledge of the facts, the fruits of the arrangement, could not possibly evince, or be referable to, any other intent than to confirm that which he had not previously authorized, he could not be heard to assert or avow another inconsistent purpose, or the absence of an intent that would contradict the only possible purpose he could have entertained when, fully advised of the facts as he is alleged to have been, he accepted the fruits of the arrangement which fully terminated the contract out of which the defendant's promise arose. The court did not err in sustaining the demurrer to replications 2 and 3 to the seventh plea.

Plea 8 avers the composition, the settlement in fall of defendant's obligation, viz. that sued on, and the plaintiff's acceptance, before suit brought of the fruits of the settlement "with knowledge of the settlement." It is not necessary to repeat the construction, already stated, of count 2; the ascertainment of the particular promise on which it declares. The visitation of the conclusions of law before set down leads to the result that there was no merit in grounds numbered 3, 6, 7, and 9. If Code, § 3974, has application to the matter asserted in plea 8, it is met by the averment in the plea that the settlement of the plaintiff's claim (sued on) by the City Bank Trust Company was "accepted in writing" by the company; thus, we think, rendering ineffectual the grounds of demurrer asserting the criticism that the plea did not show any consideration for the composition. The phrase "accepted in writing" undoubtedly refers to the company, not to the plaintiff; and this is so clear that no occasion is afforded by the plea to construe its averments in this regard with disfavor to the pleader. It appears from the plea that plaintiff accepted the fruits of the settlement of his claim against the defendant "with knowledge of said settlement." The manifest, necessary effect of the allegations of the plea is that the company, as trustee, assumed to act for plaintiff in settling the claim sued on, and that, having acted (without authority), the plaintiff accepted the fruits of the settlement with knowledge that the previously unauthorized actor had assumed to make and had made a composition of plaintiff's claim against the defendant, viz. that subsequently sued on; thereby confirming the previously unauthorized act of the company. It is not conceivable, we think, that the plaintiff was otherwise than adequately informed in order to effect a ratification by him of the previously unauthorized act of the company in respect of his claim against the defendant if, as the plea avers, the plaintiff had knowledge of the settlement of defendant's obligation to the plaintiff. Knowledge of such a settlement — a "full settlement" is the necessary effect of the reference accomplished by the use of the word "said" in the allegation — undoubtedly comprehended all that was requisite to the creation of a status of information that could serve to afford the basis for an advised confirmation, a ratification of the previously unauthorized act wrought by an acceptance of the fruits thereof. The court properly overruled the demurrer to the eighth plea.

Plea 9 was not subject to the demurrer. In the particulars that it avers the bases of and facts for a ratification of the previously unauthorized acts of the trustee by the acceptance of the fruits thereof, we need add nothing to what has already been said on that subject.

The additional averments therein, set in to show a consideration for the unwritten composition effected, are sufficient under the doctrine of Hand Lumber Co. v. Hall,147 Ala. 561, 41 So. 78. The facts and circumstances averred as disclosing the disputed character of the claim — the uncertainty of its availability as an obligation against defendant — served to bring that feature of the plea within the rule that:

"Where the claims are in dispute, the compromise and part payment thereof are sufficient consideration to support the discharge." Hand Lumber Co. v. Hall, supra.

No error being shown, the judgment is affirmed.

Affirmed.

ANDERSON, C. J., and SAYRE and GARDNER, JJ., concur.