Kelly v. Ruble

By the Court,

Waldo, J.:

The complaint alleges that on the first day of July, 1878, the respondent bound himself by an agreement in writing to convey to I. N. Muncy, for $30,000, to be paid in installments of $10,000 in two weeks, two months and four months, seven mining claims in Jackson county, Oregon.

The respondent owned but one of these claims, but contracts to convey to him are alleged to have existed between him and the owners. Some of these contracts are shown to have been verbal, and in the others the writings have not been produced. They must, therefore, all be held to stand on the same footing of verbal contracts, void under the statute of frauds. The complaint, as stated in respondent’s brief, goes on to allege that Nuble in conjunction, with Muncy and severally for himself—what that may mean no one has tried to explain—assumed said contract and undertook to carry it out, and to take said property from respondent. Now there was no contract on Muncy’s part to be assumed. The contract was unilateral. (Hawralty v. Warren, 17 N. J. Eq., 124.) Muncy had an option to purchase and if he turned that option over to Nuble, Nuble would have an option and nothing more. If Nuble became bound he became so wholly by subsequent transactions. Then, after Nuble had assumed, as is alleged, the so-called Muncy contract, it is next alleged that the contract was afterward modified so as to exclude the Marshal claim and reduce the purchase price to $27,000. This modification was oral and, therefore, void. (Dana v. Hancock, 30 Vt., 616; Abell v. Munson, 18 Mich., 306.)

The next allegation is that Muncy and Nuble undertook to raise the $27,000, for which the contract called, and we are introduced to the subscription paper, by which it appears that Muncy—not Muncy and Nuble—undertook to figure in the character of vendor of these claims and to sell them to third parties for $100,000. The method adopted was to endeavor to form a company and issue stock, out of the proceeds of the sale of which Muncy was to be paid $100,000, and to make over the property to the company. In furtherance of this project, it is alleged that on the 27th day of August, 1878, Nuble, Muncy, Stump and Murphy incorporated the Coyote Gold and Silver Mining Company; and Nuble is alleged then and there, although the articles of incorporation had not yet been filed and were not filed in J ackson county until the 6th of September, to have purchased of Muncy, acting as agent for the company, 50,000 shares of stock, and to have agreed to pay Muncy therefor the sum of $25,000; $7,000 in hand and the balance in installments. What authority Muncy had to act as agent for the corporation and sell its stock to Nuble is one of the mysteries of this remarkable complaint. At this time there was neither stock nor company in existence. (See Mokelumne Hill M. & C. Co. v. Woodbury, 14 Cal., 424.) So far as the complaint affirmatively shows, Nuble rests under the burden of this debt to this day. There is not a word more about the indebtedness to Muncy.

The corporation which is alleged to have'been organized for the purpose of taking and holding the property for the benefit of the subscribers to the Muncy subscription paper, seems to have forgotten the purpose of its creation. But it is alleged that the incorporators agreed among themselves that Nuble should “proceed to Coyote creek, in Jackson county, and make payments on account of said Muncy and Nuble contract with the plaintiff for the purchase of said mining claims and take the title for the same in the name of the company or in his own name, but it was agreed between said parties as aforesaid that if taken in his own name the said title should be held by said Nuble in trust for the use and benefit of the company.” The transaction thus alleged has much the appearance of having been a transaction between third parties—res inter alios aeta.

It is then alleged that Nuble went to Jackson county in pursuance of said agreement, and for the purpose of purchasing said mines for said company, and represented to respondent that he was the agent for said company and authorized to make payments for said company to respondent and to take title in his own name for the use and benefit of said company, and that respondent, relying on said representations, did, on the 2d day of September, 1878, cause the Davis & Nathburn claim to be conveyed to Nuble, followed, on the 4th of September, by conveyances of the O’Shea and Rathburn claims.

How does the case, as thus far stated, stand? The claim is, that Ruble acted as agent and purchased these claims for the Coyote Gold and Silver Mining Company, and holds them in trust for that corporation. This cannot possibly be true as matter of law. The respondent was bound to take notice that the articles of incorporation had not been filed. "When Ruble purchased, the corporation had no legal existence. Ruble could not have been an agent, for there was no principal. He could not have been a trustee, for there was no cestue que trust. If the promise was made to Muncy, Stump and Murphy for the benefit of the corporation, it was void, not only under the statute of frauds, but for •want of consideration. As a contract, it would have been one to which the respondent was a stranger. But suppose the corporation to have been in existence and that the promise was made directly to the corporation, Ruble paid his own money and his promise to buy and hold in trust for the corporation would have been directly in the teeth of the statute of frauds. (2 Sugden on Vendors, 8 Am. Ed., 438.) Hence, even if Ruble had been actually the agent of the corporation and had undertaken to purchase the property for the corporation, no title would have vested in the corporation on account of the pm-chases made on the 2d and 4th of September. Some other ground must be found, then, on which to assert a title to this property in the corporation. This ground is supposed to be found in the representations Ruble is alleged to have made to the respondent, that he was purchasing for the corporation. In other words, Ruble is estopped by those alleged representations to deny the title of the corporation. But the corporation was a stranger to the alleged representations, and can neither take advantage of, nor be bound by them. (Averill v. Wilson, 4 Barb., 180; Wood v. Bennell, 51 Me., 52; 32 Pa. St., 49.) No trust can arise in favor of the corporation because of those alleged representations to the respondent. (Blyholder v. Gilson, 18 Pa. St., 135.)

Nuble is not charged to have purchased for himself. There is an insurmountable difficulty in so charging him, because the contract is alleged to have been entire and Nuble purchased only a part. An end, then, would seem to have been reached in the attempt to establish a vendor’s lien on the property held by Nuble. But this apparently irremediable defect at the threshold of the respondent’s case, has been supplied in the following extraordinary manner: Nuble and the corporation are both defendants in the suit and between them they own the whole of the property. They can not be charged severally, because the contract was entire. There was but one vendee and one sale. This sale was made to the corporation and a portion of the property conveyed to Nuble as trustee. But, unfortunately, the corporation can assert no title to the property held by Nuble. The equitable as well as legal title is wholly in Nuble. How, then, is the trust to be established? The respondent solves the difficulty as follows: Nuble, as he alleges, represented to the respondent that he was purchasing the property for the corporation, and the respondent believed those representations and sold to Nuble believing that he was selling to the corporation. It must be admitted that those alleged representations gave the company no title to the property so purchased. But the respondent is entitled to consider that those representations were true, and that while Nuble is not estopped to deny, as against the corporation, that the property he holds is equitably its property, he is, nevertheless, estopped to deny this as against the respondent. That while the property does not belong to the corporation, within any legal definition of the word property, the respondent has such peculiar relations to it that he may levy on and sell it at execution sale to satisfy a debt against the corporation. The result is most extraordinary. Ruble and the corporation are consolidated into a centaur-like figure—half man—half corporation. Ruble’s existence as a natural person is so far destroyed by merger in the corporation that a sale to him instantly vests the title in the corporation. There is, according to the respondent’s views, no distinction, in legal effect, between Ruble and the Coyote Gold and Silver Mining Company. They are the same. But Ruble claims to be a private person entitled to the benefit of the laws of private property. The property of one person cannot by the laws of this country be taken to pay the debt of another. Yet this is precisely what the respondent is attempting to do. The corporation, which is sued directly as the purchaser of the property and debtor to the respondent for the purchase money, has not a shadow of title to the property held by Ruble. Hence, had the corporation made defense, the debt which the suit is brought to enforce would have been shown to have no existence, and, consequently, the respondent’s suit would have failed. But the corporation makes default. This, however, cannot affect Ruble. Ruble can attack- the respondent’s case as the corporation could have attacked it, and show that the corporation has no title to the property, and, consequently, that he cannot .be a trustee. In any other view, the cticum stance of making default or making defense on the part of the corporation would determine the question of Ruble’s liability. But Ruble claims adversely and his rights cannot depend on any such principle. The alleged representations to respondent had no effect on the title of the corporation, and there' is no other title in controversy. The respondent asserts rights against Knble not independently of, but through the corporation, and his case fails when he fails to make out title in the corporation.

Next, when we come to the transfer of the Ash & McWilliams claim, we find facts impossible to reconcile witli the transaction of an entire sale set up by the respondent. The Davis & Kathburn claim was conveyed on the 2d of September, anÜ, since the contract was entire, the contract for the sale of. the whole of the property should have been made by that time. Now, it cannot be denied that the respondent’s contract with Ash & McWilliams was void under the statute of frauds. Hence, the respondent had not, equitably, sold that claim on the 2d of September when the Davis & Kathburn claim was conveyed. Ash & McWilliams were the absolute owners after that time and could have sold to any one with full notice of the void contract and conveyed a perfect title. There were neither legal nor equitable rights in respondent of which to take notice. On what ground, then, can the respondent claim to have been the vendor of that claim on an entire contract? Suppose that Kuble, after his purchase of the Davis & Kathburn claim on the 2d of September, had conveyed that claim to one with full notice of the void oral agreement. Would not the purchaser have acquired a good title to the claim? This shows that when the Davis & Kathburn claim was conveyed, no sale of the Ash & McWilliams claim had taken place. In what condition was the alleged vendor’s lien on the Davis & Kathburn claim prior to the subsequent conveyances? If the other claims were sold under the same contract with the Davis & Kathburn claim, they must have been sold by the 2d of September. If they were sold after that time, it severs the entirety of the contract and is fatal to the respondent’s case.

But how can. the respondent avoid the statute of frauds which stares him in the face in every one of these transactions. There cannot be a case in the books entitled to a moment’s consideration that will sanction such an inroad on the statute of frauds as is attempted in this case. There is not a single act or circumstance in connection with the alleged part performance to stand as a safeguard against perjury. The oral agreement was as invalid in equity as at law. Earl, J., Wheeler v. Reynolds, 66 N. Y., 236. Where the agreement has been partly performed,c equity interferes to prevent fraud. Id., 236; Playmale v. Comstock, 9 Or., 321. The act of part performance must be clearly proved, and to do this it is essential that the act itself must be such that it cannot be consistently explained except on the supposition of an agreement. Brewer v. Wilson, 17 N. Y. Eq., 180; Bunton v. Smith, 40 N. H., 353; Charpiat v. Sigeron, 25 Mo., 63; Knoll v. Harvey, 19 Wis., 99; Wheeler v. Reynolds, 66 N. Y., 231; Peckham v. Barker, 8 R. I., 22; Purcell v. Minor, 4 Wall., 513.

What presumption can be raised from the fact that Ash & McWilliams deeded their claim to Nuble, that there was an agreement for its sale between respondent and Nuble; it appears on its face to have been a sale made by Ash & McWilliams to Nuble, and when it is shown that Nuble paid the purchase price to them out of his own money, and, as he swears, for his own beneñt, parol testimony cannot be heard to the contrary. The act which is set up to establish part performance must itself furnish some evidence of the alleged agreement without the aid of parol testimony. Such testimony alone cannot establish part performance. Samms v. Worthington, 38 Md., 326-7, cited in Waterman on Specific Performance, § 261; Harris v. Knickerbocker, 5 Wen., 645; Armstrong v. Katterhorn, 11 Ohio, 264; Danforth v. Lancy, 28 Ala., 274; Wilson v. Wilson, 6 Mich., 9; German v. Mackin, 6 Pa., 293; Ham v. Goodrich, 33 N. H., 32; Jones v. Peterman, 3 S. & R., 543; S. C. 8 Am. Dec., 672. If the proposition advanced by the respondent was true, no sale of real estate could take place against which a vendor’s lien could not be established wholly by parol testimony by collusion between the grantor and alleged vendor.

It follows that, admit the facts to be as alleged, and they fail as matter of law to show that the respondent was the vendor of these claims. They show, on the contrary, that he was not.

As the respondent has failed to make out a sale, it becomes unnecessary to consider the case further. We have thus far impliedly admitted the existence of the equitable lien of a vendor of real estate for the unpaid purchase price. But we doubt the actual existence of the lien in this state. Ahrend v. Odiorne, 118 Mass., 261; Kauffert v. Bower, 7 S. & R., 64, 76. It is not believed the existence of such lien was decided in Pease v. Kelly, 3 Or.

Judgment reversed and restitution of the property ordered.