Episcopal City Mission v. Brown/Opinion of the Court

Whatever be the obligations created by the assumptions contained in the deeds to Mrs. Brown and the bond which was furnished by Brown, it is clear that the mission has only the rights of Meserve, and therefore can assert only such cause of action, legal or equitable, as Meserve may possess. Keller v. Ashford, 133 U.S. 610, 10 Sup. Ct. 494; Willard v. Wood, 135 U.S. 309, 10 Sup. Ct. 831. The corporation being thus limited to the rights which it takes from Meserve, it is clearly subject to all set-offs existing between Meserve and Brown. The proof leaves no doubt that the deed to Mrs. Brown was made without her consent, and that she was in no way a party thereto, either originally or by ratification. Indeed, the court below, in its opinion, states that it was conceded, in that forum, that there was no case against Mrs. Brown, and we do not understand that it is seriously contended here that the record shows any foundation for recovery against her. The only point really at issue is whether Brown is liable for the whole amount of the mortgages resting upon the Boston property, or whether his liability is limited to the amount in his bond. The proof shows that prior to the making of the deeds of the Boston property to Mrs. Brown there was an understanding between Brown and Meserve that the deeds should be made to the former, and that the insertion of the name of Mrs. Brown was subsequently agreed on between the parties.

It is urged that, inasmuch as Brown had no authority to use his wife's name, he is liable for the whole debt, either as a trustee or in consequence of his having acted as agent for his wife without authority. These contentions are not supported by the record. The proof shows that the substitution of Mrs. Brown for her husband, as the purchaser, was made with the full consent and knowledge of Meserve, and that this arrangement was carried out by both parties with full knowledge of all its consequences. By these understandings Meserve on the one hand was to buy from Brown property situated in Chicago and assume the incumbrances thereon, these amounting to about $10,000; and Brown, on the other hand, was to purchase the Boston property from Meserve, and to assume a personal responsibility for a sum equal to the amount which Meserve had assumed in regard to the Chicago property. In other words, the contracts practically amounted to an exchange of the Chicago property for the Boston property, each party relying upon the property itself as the means of discharging the debt except for the sum of $10,000, for which each respectively assumed personal responsibility to the other. The contract having been mae upon this basis and for this purpose, and the use of the name of the wife being the result of an agreement between the parties, the contention of the complainants is reduced to the assertion that the contract must be annulled because the parties agreed to make it, and because its enforcement would bring about the very ends which they intended should follow. The conclusion which we thus reach upon the facts coincides with that of the court below. We have omitted for the sake of brevity quotations from the testimony, but the evidence of Meserve himself is so conclusive in regard to the intention of the parties in making their contracts that we excerpt briefly it at this point:

'Q. Can't you recall to your mind any reasons or circumstances leading to the taking of that bond from Mr. Brown? A. Yes; it was to hold me against a possible loss on those notes.

'Q. Can you recall any of the circumstances or reasons which led to the fixing of the amount of that bond? A. Well, in my own mind it seems probable.

'(Objected to.)

'Q. Will you state what those facts and circumstances were?

'(Objected to.)

'A. To make Mr. Brown's liability equal to my own. I had assumed about $10,000 in Chicago. My feeling was that he had assumed $39,000 there, and there could not possibly be a loss to that extent, if any. I did not feel that there would be any. I recollect it now as a sort of balance between us in our liabilities.

'Mr. Burry: All this is objected to.

'Q. As a matter of fact it was not equal to the difference, was it?

'(Objected to as leading and incompetent.)

'A. I knew my mortgages to be well-secured mercantile property that could not depreciate to any great extent; his was secured by vacant land.

'Q. Why did you take any bond at all, then? A. Because I was deeding to a straw grantee; to somebody that I did not know.

'Q. Well, why didn't you put in the bond the whole amount of the difference, at any rate? A. Because I knew there could be no possible way of making my security worthless by any handling it in three years; there could be no way; the property was insured, and the land was there, which had cost almost the amount of the notes. Had the buildings burned down, the land, with $10,000, would have been security for my note.

'Q. Did you inquire into the solvency of Mr. Brown? A. I did not.

'Q. Did you inquire into the solvency of Mrs. Brown? A. No.

'Q. Did you make any inquiries in relation to her? A. No. Mr. Brown's broker recommended him to be a business man who would be likely to take care of his property, and I regarded him as such.

'Q. Mr. Meserve, did you perform your contract in reference to protecting Mr. Brown against the indebtedness which you assumed?

'Mr. Burry: All this subject is objected to.

'A. No, sir.

'Q. Mr. Meserve, have you any pecuniary interest in the prosecution of this suit? A. Yes.

'Q. What is that interest? A. To furnish an offset of the suits he has against me, helping the matter to a settlement.

'Q. Have you ever paid anything on account of any of these offsets? A. No, sir.

'Q. When did you commence the prosecution of this suit? A. I don't know.

'Q. Did you ever employ any attorney to commence this suit? A. No, sir.

'Q. Have you ever paid anything or are you liable for anything by which you would suffer damage by reason of any failure of Mr. Brown to pay the indebtedness which is alleged to be due to the Episcopal City Mission under those mortgages?

'Mr. Burry: Objected to as calling for a legal conclusion.

'A. I have paid nothing.

'Q. Have you made an arrangement with the Episcopal City Mission by which they have substituted any liability on your part for the supposed liability against Mr. and Mrs. Brown or any arrangement in relation to that matter?

'(Objected to as calling for a legal conclusion.)

'A. I gave the authority to bring this suit with the understanding that it would relieve me of liability.

'Q. On those mortgages? A. Yes.'

This e stimony of Meserve makes it clear that he has paid nothing on account of the mortgage on the Boston property which Brown, to the extent of his bond, undertook to discharge. The record makes it equally clear that Meserve has failed to carry out his assumption, in favor of Brown, of the mortgages on the Chicago property. In order to pay these mortgages assumed by Meserve, Brown has disbursed, as found by the lower court, the sum of $9,122.63, leaving a considerable portion of the debt unpaid, and that some arrangement has been made by Brown with a third party looking to the discharge of this balance. It is insisted here that in discharging a portion of the debt Brown did not pay out in actual money the sum which he claims as an offset, but that part of his payments were made in securities which he has charged at their face value, while they would not bring that amount in the market, and it is urged that only the market value of these securities should be allowed him by way of set-off. It is also asserted that the interest which he has charged on his disbursements is excessive; and, further, that, inasmuch as the arrangement which he made for the payment of the balance of the debt did not involve the expenditure of any money on his part, he cannot set off that balance. All these arguments rest logically upon the proposition that Brown is only entitled to compensate against Meserve his actual disbursements made in the payment of the debt which Meserve assumed. We do not think it necessary to decide whether this position be sound or unsound. If it applies to Brown, it must apply with equal force to Meserve. As we have stated, it was intended by these parties that the obligations of each to the other should be correlative, and hence the contract resulting from the assumption by Meserve is as binding on him as is the assumption evidenced by the bond of Brown.

Now, if Brown be only entitled to set off as against Meserve the sum of money expended by him in paying the mortgages which Meserve assumed, it is clear that Meserve can only recover from Brown the sums actually disbursed by him in paying the mortgages which Brown assumed. This being so, as Meserve has paid nothing he can recover nothing, and there is an end of the case. If, on the other hand, the parties were each entitled to enforce as against the other the sum of their respective obligations, without reference to the amounts disbursed by them in the discharge of those obligations, then, as the obligations assumed by Meserve towards Brown are equal if they do not exceed the amount of the bond given by Brown, the case is also at an end. Judgment affirmed.