Northwest Eckington Improvement Co. v. Campbell

Mr. Chief Justice ShbpaRd

delivered the opinion of the •Court:

Daniel testified in support of the allegations of the bill, and was positively contradicted by Campbell, as indicated in his .•answer.

The burden being upon complainants to show that the deed did not express the intention of the parties at the time, the ■court below considered the question of fact as evenly balanced upon the bill and answer; and, being of the opinion that there were not sufficient circumstances established by the evidence to corroborate the evidence of Daniel, refused the relief prayed .as to the deed, in accordance with the general rule in such eases laid down in Vigel v. Hopp, 104 U. S. 441, 26 L. ed. 765.

From that point of view the conclusion of the learned justice is a correct one, but we are constrained to differ from his view of tlie weight of the circumstances surrounding the transaction.

At the time' of the agreement of March 13, 1902, it is apparent that the complainants were apprehensive of the foreclosure of the mortgage on the land, concerning which they were in default; hence the liberal agreement with Campbell respecting the organization of a corporation for its purchase; Campbell, himself, entering into no binding obligation to accomplish the scheme.

Notwithstanding the failure of the scheme, the conditions of the property greatly improved during the year on account of the railroad development. The parties were agreed as to the reasonable prospect of building houses thereon and securing income therefrom. It was apparent that the cash value of the land had advanced considerably beyond the amount of the Franz mortgage, and apprehension of its loss by foreclosure was greatly, if not entirely, relieved. Complainants had no cash, and but little credit, for the improvement of the property, and believed that Campbell was not only a skilful builder, but also one who could render financial assistance.

Campbell submitted his estimates of the probable cost of the erection of as many as forty houses, and the probable income therefrom as indicating successful development in that way. The parties then entered into the contract of October 23, 1902.

The legal effect of this contract was to make the complainants partners with Campbell in the development of the land by building houses; they furnishing the land and Campbell undertaking the erection of the houses. All were to join in using their credit in obtaining money to erect houses, and pay off the $32,000 encumbrance; and the sums advanced by the i*espective parties were to be accounted for. Five houses were to be erected at. once, to be followed by others if results were approved. The last paragraph of the agreement was that “in return for said undertaking on said Campbell’s part he is to become possessed of an undivided one-third interest in said property.” Clearly this did not contemplate that Campbell should at once become the absolute owner of this one third of the land. It was necessarily conditioned upon the terms of his undertaking, before recited in the contract. He had no immediate right to demand a conveyance thereunder, and none when the deed was actually executed and delivered to him on January 16, 1903. Complainants contended that this deed was made, at Camp-bells request, to secure him in his rights under the contract. There is a conflict in the evidence relating to another matter in this connection. Complainants say that Campbell submitted to them in July, 1903, another contract, which he requested them to sign, and upon Daniel’s refusal carried it away. When asked to produce this paper, on Daniel’s examination as a witness, counsel for Campbell stated that [he] “being of the opinion that a paper not executed by the parties to this litigation is not competent evidence for any purpose, declines to produce it.” Daniel then testified as to its contents, saying that it was a verbatim copy of the contract of October 23, 1902, with the exception that it contained certain other paragraphs reciting that Campbell, having complied with his agreement, is entitled to a one-third interest in the property. His reason for not signing the paper was that if signed it would relieve Campbell from all future responsibility in the whole transaction, and give a title before his undertaking had been carried out. Campbell, when called there after as a witness on his own behalf, denied this statement, and produced an unsigned contract which he said that he had demanded the execution of December 10, 1902. He said that he then told Daniel that he had advanced too much money already without corresponding amounts having been advanced by him and Kedman, and that he would decline to go ahead any further unless this contract or the deed itself was signed for his own one-third interest; in other words that he demanded this or the deed; but one or the other -must be executed. He then produced the alleged paper. This first reeites the contract of October 23, 1902, and then adds two additional paragraphs as follows:

“9. The said corporation party hereto agrees to execute at once a conveyance of said undivided one-third interest to said Charles 3d. Campbell in fee simple.

“10. The said corporation party hereto agrees to indemnify the said Charles Id. Campbell against all liability or loss of every nature, including counsel fees and expenses of litigation, •which he may in any manner suffer, or incur for the benefit of said corporation under this agreement.

“The said T. Cushing Daniel and Samuel 0. Redman hereby release the said Northwest Eckington Improvement Company and said Charles M. Campbell from all rights, interest, or claim which they claim or could claim under any former agreement.”.

Accepting Campbell’s version of this transaction, and the paper as the true one, his statement is not calculated to impress us with the fairness of his purpose. This proposed contract went much farther than the deed which he demanded the ■execution of as an alternative. It not only contained a special indemnity clause for which there was no apparent reason, but ■also a clause releasing the Northwest Eckington Improvement Company and Campbell from all rights, interest, or claim which Daniel and Redman claim or coidd claim under any former agreement.

Under clause 9 he would have had the right to demand an immediate execution of the deed, and would thereby become invested with the absolute title ■ to one third of the land under the legal title of the improvement company, and the equitable titles of Daniel and Redman discharged, possibly, from the obligation of the former contract, notwithstanding its re-recital, by the concluding paragraph before mentioned. If such a ■contract was in fact presented to Daniel and Redman, they were not only within their legal rights, but wise also, in refusing to sign it.

When the deed was executed, on January 16, 1903, it is not pretended that there was any new consideration for its execution. It was founded wholly upon the provisions of the contract of October 23, 1902, no matter what may have been the private opinion of the respective parties as to Campbell’s rights thereunder; and its meaning, purpose, and effect are determined thereby.

The difficulty attending the correction of a deed or instrument carrying into effect a previous parol agreement is obviated when it appears to have been prepared and executed in pursuance of a written agreement. When it appears that the instrument intended to give effect to a written agreement is inconsistent with its terms there is a manifest equity to correct the error. Adams, Eq. 169; Elliott v. Sackett, 108 U. S. 132, 141, 27 L. ed. 678, 681, 2 Sup. Ct. Rep. 375.

As before stated, there is nothing which tends to show that Campbell was to become the absolute owner of one third of the complainants’ land without regard to the performance of the joint undertaking contemplated in the contract of October 23, 1902. It is true that contract is inartificial and somewhat vague, but no such meaning can be imputed to it.

In the light of the circumstances pointed out, we can come to no other conclusion than that complainants’ statement of the purposes of this deed is the correct one. They represent it as given to secure Campbell in their performance of the contract. It was not a security, or an additional security, in the ordinary sense, but it did make Campbell secure, in the case of his endeavor to carry out that contract, by giving him at once the conveyance that he might thereafter become entitled to, and enabling him, by its registration, to give notice of his rights under the contract, to all persons who might thereafter acquire any interest from the complainants.

The decree, in so far as this conveyance is concerned, is interlocutory in its nature, and for the guidance of the auditor in stating the account between the parties, and, instead of virtually establishing it as an absolute deed, should have declared it to be merely a conditional one dependent upon the performance of the agreement in accordance' with which it was made. The question whether it shall be canceled is a final one that can only be properly determined upon the coming in of the auditor’s report with the account that has been ordered to be taken by him.

There is a mass of disconnected testimony relating to the money advanced by the parties, to which, as well as to that relating to the sale to Malnati, we have given no consideration,, because it all relates to the subject-matter of the reference to the auditor. For the same reason we have not undertaken to determine whether there has been an actual breach of the agreement of October 23, 1902, by either party, or what are the rights of the parties respectively in the matter of the distribution of the proceeds of the sale to Malnati. It is sufficient for present purposes to say that complainants had no right to sell any part of the land without Campbell’s consent, or to appropriate the entire proceeds to their own use, if at that time the joint contract for improving the lands was in full force, and had not been violated by Campbell, or abandoned by him without justification.

All these matters can be inquired into, and settled in the final hearing with the auditor’s report.

Our conclusion is that so much of the decree as has been appealed from must be reversed, with costs, and vacated, and the cause remanded, with direction to enter a decree declaring the true intent and purpose of the deed of January 16, 1903, as indicated in this opinion. Reversed.