Rounds v. St. Johns Gas Co.

HamiltoN, Judge,

delivered tbe following opinion:

1. Tbe argument took a wider range than seems necessary un-*115the admitted, facts of tbe case. The question whether the second agreement, that of 1910, with the trustees of the debenture holders, bound the St. Johns Gas Company need not be considered for the present. There seems to be difficulty in finding out who are the present directors of the St. Johns Gas Company, and so there might be difficulty decreeing any action on the part of said company; but at least the company is a defendant to this cause and has properly appeared by counsel, and is therefore bound by the proceedings in the cause. It is not disputed that the first agreement, that of 1906, is binding upon the company. It is true that agreements between lawyer and client are construed favorably to the client. Hutchings v. Van Brunt, 38 N. T. 336. But there does not seem to be in the agreement at bar any doubt to be resolved in favor of one party as against the other. If anything, the attorneys in the case seem not to have protected their own interest sufficiently. They made a provision for arbitration, but not for what has happened, that is to say, the failure of the company to act. Even in the later proceeding for sale, they agree to a valuation which it seems is above the market value of the property, and so no fund has been produced by the consent decree.

However, whatever question may be made about either of the two agreements which are in evidence, they are resolved by the decree of this court June 30,1913, which was entered by consent of all parties, and this must be the basis of the decision herein.

2. It is claimed in this case that the principle of equitable conversion applies. This principle has been thus expressed in a leading case: “Nothing was better established than this principle, that money directed to be employed in the purchase of land,, and land directed to be sold and turned into money, are to be con*116sidered as that species of property into wbicb they are directed to be converted; and this, in whatever manner the direction is given, whether by will, by way of contract, marriage articles, settlement, or otherwise, and whether the money is actually deposited, or only covenanted to be paid, whether the land is actually conveyed, or only agreed to be conveyed. The owner of the fund, or the contracting parties, may mahe land money, or money land. . . . The cases established this rule universally.” Fletcher v. Ashburner, 1 Bro. Ch. 497, 28 Eng. Reprint, 1259, per Sir Thomas Sewell, M. R.

No express declaration by the owner is needed that the land shall be treated as money, although not sold; the only essential requisite is an absolute expression of an intention that the land shall be sold and turned into money. 3 Pom. Eq. Tur. § 1159. The true test is the simple one, whether the instrument governing the case absolutely directed that the real estate be turned into personal property. This is purely an equitable doctrine, and is not to be construed as tahing the place of a conveyance of land, which can be only governed by the local law. Equitable conversion, if found in this case, would not give the plaintiffs an undivided fifth interest in the land. That could only result from a deed by or on behalf of the owner. Such a finding, however, would declare that as between the parties to this suit, one fifth of the land is to be treated as its equivalent in money, and that its income would belong to the plaintiffs from the date that the conversion would apply.

In this case there was originally not only no agreement as to the plaintiffs having one fifth interest in the land, but not a definite one that the land should be sold to pay the 20 per cent fee. But this court by its decree of June 30, 1913, by consent, *117found from all tbe facts of the case that the land should be sold in order to pay the 20 per cent fee to the plaintiffs, and in effect decreed a lien upon it for that purpose. This consent decree takes the place of any further agreement, and brings the case within the rules of equitable conversion. It is true that the sale directed was not completed, but that at least was not the fault of the decree itself. The rights of the parties were fully settled by the decree. There being, therefore, an absolute direction to sell, agreed to by the St. Johns Gas Oompany itself, it would seem that equitable conversion may properly be declared to exist in this case in favor of the plaintiffs.

3. If, however, an equitable conversion is declared, it follows that the plaintiffs are entitled to the same proportion, that is, one fifth, of the income of the property. Strictly speaking, if there is a conversion into money, income should be the legal rate of interest, that is, 6 per cent. But the fact that the defendant the St. Johns Gas Oompany is practically defunct, and is only represented by debenture trustees, has not only prevented actual conversion by sale or by conveyance of an undivided interest, but has also prevented arbitration, which should determine the value. There is no principal, therefore, upon which to calculate the 6 per cent income. Consequently, in order to do equity between the parties and prevent the plaintiffs from suffering from these circumstances, over which they have no control, and for which in a sense the St. Johns Gas Oompany is alone responsible, one fifth of the actual net income from the property must be considered as going to the plaintiffs.

There might be a question as to the date from which this income shall be considered as belonging to the plaintiffs. There *118is no question that it would run from tbe date, June 30, 1913, of tbe consent decree wbicb directed a sale, for an agreement of sale is a prerequisite to applying tbe doctrine of conversion. Tbe petition seeks to' carry tbe date back to October 25, 1909, when tbe fee was earned under tbe decree against tbe United States. This, however, cannot be. An agreement of sale is a prerequisite, and there was no such agreement at that time. Tbe only agreement then in force was that of 1906, wbicb provided a percentage fee, but said nothing of sale. Tbe second contract, that of 1910, does provide for a sale, and tbe income should run from that time if tbe contract is to be considered as binding upon tbe gas company, wbicb is contested.

It is true tbe gas company is not a party to this contract, but it seems to have been in 1910 practically defunct, and represented by tbe debenture trustees. Tbe facts of tbe case admit of no other construction, and it would be pushing technicality to an extreme to bold otherwise. Tbe agreement in evidence does not give tbe month and day, and, as it was incumbent upon tbe plaintiffs to show this, it must be construed against them, and considered as dated in tbe fall of 1910, say September 1, as defendants agree. A decree, therefore, should be entered in favor of tbe plaintiffs for one fifth net income of tbe property from tbe date of tbe agreement of 1910, as shown by tbe receiver’s account.

It is so ordered.