Shaeffer v. Blair/Opinion of the Court

The decision of this case turns upon the construction of the contract of February 4, 1884, by which the parties agreed to buy certain lands, and to sell them again for the joint benefit of both.

The provisions of that contract were, in substance, that those lands, in the greater part of which Shaeffer already had an equitable title under agreements of third persons to sell and convey them to him, should be purchased for the mutual interest of the parties; that the legal title in all the lands should be taken in Shaeffer's name, and be conveyed by him to Blair; that Blair should advance the sums required to enable Shaeffer to pay the purchase money of the lands, as well as the necessary expenses of preparing them for sale and selling them, and should be repaid his advances, with interest, out of the net proceeds of sales; that Shaeffer should stake out the lands for sale, make the necessary improvements, sell them, retain a commission of 5 per cent. upon the gross amount of sales, and, until Blair should should have been reimbursed for his advances, deposit the rest of the proceeds in a bank to Blair's credit; that the expenses of improving and selling the lands, the time within which they must be prepared for sale, the price at which they might be sold, and the bank in which the proceeds should deposited by Shaeffer, should be mutually agreed upon between him and Blair, and all contracts of sale by Shaeffer should be approved by Blair; and that, when Blair should have been reimbursed for all his advances, 'then the remainder of the property shall belong 60 per cent. to said Blair and 40 per cent. to said Shaeffer,' and be divided between them accordingly, either by Blair's conveying the title in two fifths of the lands to Shaeffer, or by Shaeffer's selling the lands and paying 60 per cent. of the proceeds to Blair.

The contract evidently contemplated that, while the sales to be made by Shaeffer should be subject to Blair's approval, no sales should be made by Blair without Shaeffer's consent. This clearly appears from several provisions of the contract. It is by Shaeffer, or, as said in the last clause of the contract, 'by said Shaeffer or assigns,' that the lands are to be staked out into lots and prepared for sale. 'Said Shaeffer is to deduct and receive five per cent. commission upon gross sales of all lots sold at the agreed price of over made by said Blair and Shaeffer;' that is to say, 'of all lots sold' by Shaeffer 'at the agreed price or over,' the price (not the sales) being 'made by said Blair and Shaeffer.' The provision that all contracts of sale shall be made in triplicate, and approved in writing by Blair, and one copy retained by Shaeffer, clearly implies that all contracts of sale shall be initiated by Shaeffer; and after Blair shall have been reimbursed his advances, then, if the lands are not themselves divided between them, it is Shaeffer who is to sell them and divide the proceeds.

In short, Shaeffer was to contribute to the venture his equitable title in the greater part of the lands to be purchased, as well as his own services. Blair was to contribute all the money required to carry out the enterprise. The legal title was to be taken in Shaeffer's name, and conveyed by him to Blair. Shaeffer was to sttend to preparing the lands for sale, and to sell them, subject to Blair's approval. Shaeffer was to receive a commission of 5 per cent. on the gross amount of sales. Out of the rest of the proceeds Blair was to be repaid his advances, and, after Blair had been reimbursed, the property was to belong three fifths to Blair and two fifths to Shaeffer, and to be divided between them accordingly, either in lands or in money.

Taking into consideration the whole scope of the contract, and the fact that before it was made Shaeffer had an equitable interest in the greater part of the lands, which was in fact, and was evidenly considered by both parties to be, of greater value than the price which he had agreed to pay for them; that the title to all the lands was to be taken in Shaeffer's name in the first instance, and to be conveyed by him to Blair; and especially the express stipulation that, after Blair should have been fully reimbursed for his advances out of the proceeds of sales, 'then the remainder of the property shall belong sixty per cent. to said Blair and forty per cent. to said Shaeffer,' and should be divided between them accordingly,-the conclusion appears to us to be inevitable that the conveyance of the legal title by Shaeffer to Blair, like the deposit of proceeds of sales made by Shaeffer to Blair's credit, was intended as security only for Blair's advances; that Shaeffer was to have and retain an equitable title in two fifths of the land, subject to the claim of Blair for reimbursement; and that Shaeffer's fraudulent misconduct, while it might properly defeat any claim of his for commissions, did not divest him of his equitable title in the lands, as recognized and stipulated for in the coutract.

There may doubtless be a partnership in the purchase and the resale of lands, as of any other property. But this contract contains no expression to indicate an intention of the parties to become partners. It dose not authorize either party, without the consent of the other, to sell any property or to contract any debts on behalf of both. If the enterprise proves nusuccessful, the contract does not provide or contemplate that Shaeffer shall share the loss; and the phrase, 'said Shaeffer or assigns,' in the last clause, (unless supposed to be inadvertently inserted,) is hardly consistent with the idea of a partnership. There is great difficulty, therefore, in the way of construing this contract as creating a partnership botween Blair and Shaeffer. Thompson v. Bowman, 6 Wall. 316; Seymour v. Freer, 8 Wall. 202; Meehan v. Valentine, 145 U.S. 611, 623, 12 Sup. Ct. Rep. 972.

But it is unnecessary to express a decisive opinion upon that point, because, whether Shaeffer was acting as a partner or only as an agent in performing the duties required of him by the contract, the fraudulent misconduct proved against him deprived him of the right to the stipulated commissions (Denver v. Roane, 99 U.S. 355; Wadsworth v. Adams, 138 U.S. 380, 11 Sup. Ct. Rep. 303;) and whether he was or was not a partner, that misconduct did not operate to forfeit his equitable title in the lands.

The result is that Blair is not entitled to the entire property, except as security for the sums advanced by him, and for any reasonable expenses, including the amount ascertained by the judgment at law between the parties, (so far as they remain unpaid,) with interest computed according to the contract; and that, after reimbursing him for such advances and expenses, tha lands belong, in equity, three fifths to Blair and two fifths to Shaeffer.

The decree of the circuit court adjudging that Shaeffer has no title or interest in the lands is therefore erroneous, and must be reversed; and the case is to be remanded to that court, with directions to order that the lands, or so much thereof as may be necessary to pay and satisfy the sums due to the plaintiff for advances and expenses, be forthwith sold, and the proceeds applied to the payment of those sums; and that any lands or proceeds remaining after so reimbursing the plaintiff between him and Shaeffer in the proportions aforesaid.

Decree reversed, and case remanded to the circuit court for further proceedings in accordance with the opinion of this court.

Mr. Justice BREWER dissented.

Mr. Justice FIELD was not present at the argument, and took no part in the decision.