Cole v. Merchants Trust Co.

Plaintiff was the owner of 27.64 acres of land which he was desirous of selling for $27,640 net. With this object in view he, on February 1, 1905, executed a written contract with F. W. Armitage wherein he agreed to subdivide the tract into lots as per map attached; grade all of said streets delineated on said map other than Marathon Street, and grade and gravel the sidewalk on all streets graded; execute contracts of sale for all lots sold by Armitage, the price of which should not be less than $250 each and upon terms of sale which required the payment of not less than $25 cash and the balance of the purchase price at the rate of not less than $10 per month, which deferred payments should bear interest, commencing one year from date of sale, at seven per cent per annum; and execute deeds to the purchasers to whom certificates of title should be delivered as each lot was paid for. Armitage on his part agreed to advertise the lots for sale, maintain an office on or near the tract, use due diligence to complete the sale of said lots during the life of the agreement, which gave to the agent the exclusive right for eighteen months for the performance of the contract, pay the cost of subdividing, recording map and procuring certificates of title, sell no lot for less than $250, nor on more advantageous terms to buyers than $25 down and $10 per month, with interest at seven per cent on balance, commencing after one year from sale. It was agreed that the compensation of Armitage should be, first, ten per cent of the amount of each sale, payable out of the first moneys received thereon ; second, all of the purchase money for each lot in excess of $250; .and, third, all moneys received in the aggregate from sale of lots in excess of $27,640, added to the interest on deferred payments, and money expended by first party in improving said land (consisting of the grading of streets and grading and graveling of sidewalks). In addition to which it was provided that when Cole received the amounts specified to be paid to him, all of the lots remaining unsold, together with contracts upon which payments were not fully

Immediately upon the execution of the contract the parties entered upon the performance of their respective covenants, and prior to April 4, 1906, prior to which Cole graded the streets and sidewalks, Armitage sold twenty-three of the lots for $7,945.70, cash, for which Cole executed deeds to the purchasers, and likewise executed contracts to purchasers of seventy-three lots sold on time, and at prices largely in excess of $250 each. Of the money so received up to April 4, 1906, Cole had received $9,362.50 in cash, and held contracts upon which there was unpaid the sum of $25,650. At this time an account stated was had between the parties showing a balance to be paid to Cole of $19,948.30. Thereupon and although several months must elapse before the expiration of the terms of the exclusive agency so granted to Armitage within which he might continue selling lots and procuring contracts from which Cole should be paid the balance of the $27,640, being the agreed price of the land, together with other sums specified to be paid him under the terms of the contract, a declaration of trust was executed under which all of the unsold lots and the seventy-three contracts upon which balances were due from the purchasers of lots, should be and were conveyed and transferred to the Merchants Trust Company, which company was authorized to collect the moneys due upon said contracts as the same became due and payable, and, when entitled thereto, execute deeds to purchasers of lots, and execute contracts of sale to purchasers of unsold lots upon the unqualified order of Armitage, or upon the order of Cole, whose right to sell, however, was subject to a specified price being obtained largely in excess of $250; and pay and distribute the money collected and received by said Trust Company from the contracts assigned to it, as well as from sales and contracts of sale to be executed by it, in the following manner, to wit: To Armitage, any balance of ten per cent due him as commissions on assigned contracts, to

It thus appears that the declaration of trust not only extended for a period of six months the time within which Armitage might sell the lots, ■ but modified the agreement in that no charge should be made against Armitage for further improvements of the property (that is, other than improvements theretofore made pursuant to the terms of the agreement in regard to grading streets and sidewalks), unless the same were, in his opinion, necessary, and for the provision in the agreement under which Armitage, in addition to his ten per cent commission, was given the right to all of the money received on the sale of a lot in excess of $250, there was substituted the provision that other than the ten per cent commission to be paid to Armitage, all of the money derived from the sales of lots, less the ten per cent commission, should by the trustee be applied in liquidation of the amounts due to Cole. During the period between April 4, 1906, and February 1, 1907, the Trust Company sold ten lots upon contracts for the aggregate sum of $5,525, which, together with the aggregate amount due upon the seventy-three contracts so transferred to the Trust Company, and after deducting the ten per cent due Armitage, left a sum largely in excess of that to which Cole was entitled and which, after being paid, also left in the hands of the trustee certain unsold lots.

[1] On the former appeal, as in this, the chief contention of plaintiff was that the provision in the agreement dated February 1, 1905, making time the essence thereof was intended to and did require the payment to plaintiff of the full sum of $27,640 within the eighteen months as extended for a period of six months by the declaration of trust. To quote counsel for appellant: “The bald proposition is: Did

Under the declaration of trust, as we have seen, Cole’s interest in these contracts covered all of the purchase price over and above ten per cent of the sales price specified therein. While it appears that at the expiration of the six months specified in the declaration of trust sales of property had been made for cash and upon contract, the proceeds of which in the aggregate were largely in excess of the sum due Cole under the terms' of the contract and declaration of trust, nevertheless the trust could not be terminated until Cole, as one of the beneficiaries therein, had received the full amount due to him. It is conceded that this sum consisted of $22,461.68, made up of the sum of $19,948.30 specified in the trust agreement, together with $1,776.91, covering all interest paid in upon lot contracts, and $736.47 advanced by Cole in 1911. He was paid $20,355.82, leaving a balance of $2,105.86. It appears, however, that in 1909', long after February 1, 1907, to which the time for performance of the agreement was extended, Cole entered into a contract for the further improvement of the streets, under which contract the Trust Company, upon his order and direction, paid for such work the sum of $4,263.57. The court found that this sum was not an expenditure provided for under the contract of date February 1, 1905, nor under the trust agreement dated April 4, 1906, and was made without the knowledge, approval, or consent of Armitage, and was properly chargeable against the plaintiff, Cornelius Cole. Appellant attacks this finding, claiming that it is contrary to the evidence. We cannot assent to his contention. When the contract of date February 1, 1905, was entered into it provided that Cole should grade certain streets and grade and gravel the sidewalks thereon. It appears that this work was promptly done under a contract with one Crandall. Under

The court further found “that the sum of $2,562.51, paid out by the Merchants Trust Company in 1909 with the knowledge and consent of the plaintiff, Cornelius Cole, to satisfy liens arising under the Vrooman Act, for public street work done in said tract, was made after all interests of the plaintiff in said tract had terminated, and was made without the knowledge of the defendant Armitage or of the intervener, and was not an expenditure properly chargeable against the trust fund held by the defendant Merchants Trust Company.” This finding, in our opinion, is not supported by the evidence. The declaration of trust provided that “should it be necessary to remove any liens, . . . now existing, or hereafter to exist on the said property, . . . the trustee shall use any funds in its possession for this purpose, provided, however, that money so used shall not be deemed a payment to the said Cole.”- It therefore appears that it was the duty of the Trust Company, independently of Cole or any request therefor made by him, to apply the sum of $2,562.51 of the trust funds in satisfaction of the liens created by assessments made upon the lots for street improvement due to action had and taken under the Vrooman Act. (Stats. 1885, p. 147, as amended). In the accounting had the trial court, therefore, erred in finding that this sum should be chargeable to plaintiff Cole.

We attach no importance to appellant’s contention that Armitage was prohibited by the agreement of February 1, 1905, from assigning his interest in the contract. Conceding that he did, prior to the commencement of the action, assign to De Jersey all his right, title, and interest as a beneficiary under the declaration of trust, it was at a time when Armitage and the trustee had fully performed their part of the contract. Moreover, there is nothing in the declaration of trust prohibiting the making of such assignment. Cole had parted with the legal title to the property and his rights and those of Armitage were only such as existed under the trust; hence either might assign his interest therein. (Tyler v. Granger, 48 Cal. 259 .)

The judgment as rendered is affirmed.

Conrey, P. J., and James, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on December 22, 1921, the district court of appeal having, on October 24, 1921, modified its opinion and judgment to read as above.

All the Justices concurred, except Lawlor, J., who was absent.