Allen v. Withrow

• Decision Date: 14 January 1884
• Parties: ALLEN and others v. WITHROW and others
• Court: U.S. Supreme Court

110 U.S. 119

3 S.Ct. 517

28 L.Ed. 90

ALLEN and others v. WITHROW and others.

January 14, 1884.

C. C. Cole and G. W. Kretzinger, for appellants.

Thos. F. Withrow and Geo. G. Wright, for appellees.

FIELD, J.

In November, 1875, one John F. Tracey, now deceased, executed to the defendant Thomas F. Withrow a deed of a large amount of property, real and personal, of great value, situated in Iowa. It is alleged that this deed, though absolute in form, was made in trust for one Thusie M. Allen, also now deceased, and the present suit is brought by her heirs at law to charge Withrow, as trustee, and compel him to account to them for the property. Withrow denies the alleged trust, and claims that he owns, in his own right, an undivided half interest in the property, and that the other undivided half belongs to his co-defendant, William L. Scott, as assignee of Tracey. Scott has filed a cross-bill, setting up his title and praying that it may be established. The court below sustained the claims of both defendants, and dismissed the bill, and the case is brought here on appeal from its decree.

The facts which led to the execution of the deed in question, and upon which a trust is sought to be established, collected, so far as practicable, from a mass of conflicting testimony, contained in a record of over 850 closely printed pages, are substantially as follows In the year 1868, when the Chicago, Rock Island & Pacific Railroad Company—a corporation created by the state of Illinois—was about to extend its road from Des Moines to Council Bluffs, in Iowa, a company was formed, consisting of B. F. Allen, of Des Moines, Ebenezer Cook and John P. Cook, of Davenport, in that state, to purchase land necessary for the stations and use of the railroad company between De Sota and Council Bluffs, and also other lands adjoining or near the several stations located by the engineer of the company. The agreement between the parties was at the time a verbal one, but in April, 1870, a memorandum was signed by them, giving its terms, and reciting also the purchases which in the interval had been made. Among other things, it provided that Allen should furnish the money to make the purchases, and provide for the taxes and expenses; that the title to the property should be taken in his name as trustee for the joint account of the parties; and that the net proceeds should be divided between them, as follows: One undivided half to Ebenezer Cook, one-fourth to Allen, and the remaining fourth to John P. Cook. The agreement also provided that Allen should keep an account of the amounts paid out by him, and of the sales, receipts, and expenses, so that from his books a statement might at any time be made, showing the condition of the property, the amount sold, and the prices received; that the sales should be made by John P. Cook and Allen, on the best terms they could obtain, and by their joint action when practicable; that from the proceeds of the sales Allen should retain the interest on his advances, the taxes on the property, and the expenses incurred, and then pay the advances made for the purchase of the property; and that the money and property remaining in his possession, including notes and contracts, after such payments, should be regarded as net profits, and be divided in kind, or converted into money and then distributed, and in either event according to the respective interests of the parties as mentioned above.

During this time Tracey was president of the railroad company, and, though he is not named in the agreement, it is conceded that he was entitled to one-half of the interest represented by Ebenezer Cook, and had a right to control and dispose of it. It appears that he had, previously to the formation of the land company, suggested to different parties that in case a litigation then pending, affecting the company, should terminate favorably, a good opportunity would be afforded to make a successful venture in the purchase and sale of land along the line of the road west of Des Moines; and that upon this suggestion the land company was formed. It appears, also, that in a conversation with Withrow, one of his counsel in the litigation referred to, upon the subject f a venture of this kind, Tracey had expressed a desire that his friends should be benefited by the venture; and that he, Withrow, should participate in it, advising him to bear this in mind in making out his bill for legal services. After the land company was formed, and the agreement made had been acted upon, Tracey was reminded by Withrow of this conversation, and of the understanding he had from it that he was to have an interest in the venture. Tracey not only admitted a similar understanding on his part, but declared that Withrow had an interest in it, and in March, 1871, obtained from Ebenezer Cook a statement in writing to that effect. This statement, after referring to the agreement of the land company, and the provision that one-half of the profits arising from the purchase and sale of real estate under it were to be his property; and reciting that it was understood that Withrow and one Johnson should have an interest in the profits of the venture, the amounts of which had not been specified, but were to be thereafter fixed by Tracey and himself, and that the remainder of said profits (if any) should be equally divided between Tracey and himself,—declares that he, Cook, holds the interest specified in the agreement, and all amounts to be received thereon, in trust for the uses and purposes mentioned; that is to say, to pay from such receipts to Withrow and Johnson such amounts, respectively, as should be agreed upon as aforesaid, and to hold the one-half of the remainder in trust for Tracey, his heirs and assigns.

Subsequently, in October, 1872, Withrow, for the nominal consideration of one dollar, executed to Tracey a transfer of his interest in this contract and declaration of trust. In December following, Johnson executed to Tracey a similar transfer upon a like consideration. Withrow testifies that this transfer was made by him, not for the purpose of conveying the ownership of his interest to Tracey absolutely, but to facilitate a settlement with Allen of the affairs of the land company, which were embarrassed by improvident expenditures, and with an understanding that if Tracey realized anything out of the venture he should give Withrow his share. This testimony is corroborated by the statement contained in the deed subsequently executed by Tracey to Scott, that the transfer by Withrow was made upon an agreement that his interest should be protected for his benefit.

In November, 1875, Tracey executed to Withrow a deed of all the interest which he then had, or which might thereafter accrue to him, in the lands, notes, and bills receivable arising from the contracts, declaration of trust, and assignments mentioned. This deed recites the original agreement between Allen and the two Cooks, the subsequent declaration by Ebenezer Cook of the interest of Withrow, Johnson, and Tracey in the proceeds of the venture, and the transfers executed in 1872 by Withrow and Johnson to Tracey, and, in addition to conveying the property, authorizes the grantee, in his own name, to enforce a proper partition of it, and to collect for his own use any sums of money which might accrue to the grantor under the contracts, declaration of trust, and assignments mentioned. Previously to the execution of this deed to Withrow, Allen had become bankrupt, and in due course of proceedings his property had been transferred to Hoyt Sherman, as assignee in bankruptcy. Subsequently a suit was commenced in the circuit court of the United States involving the title to the whole of the property of Allen in the land company. In that suit the Charter Oak Life Insurance Company and others were complainants, and Allen, and Sherman his assignee in bankruptcy, were defendants. Withrow intervened and filed a cross-bill, claiming partition of the interest of...