Barry v. Bernays

• Decision Date: 05 December 1911
• Citation: 141 S.W. 933,162 Mo.App. 27
• Parties: CARTER M. BARRY, Appellant, v. C. L. BERNAYS et al., Administrators, Respondents
• Court: Missouri Court of Appeals

141 S.W. 933

162 Mo.App. 27

CARTER M. BARRY, Appellant, v. C. L. BERNAYS et al., Administrators, Respondents

Court of Appeals of Missouri, St. Louis

December 5, 1911

Appeal from St. Louis City Circuit Court.--Hon. Hugo Muench, Judge.

REVERSED AND REMANDED (with directions).

Judgment reversed and cause remanded.

T. J Rowe, Thos. J. Rowe, Jr., and Henry Rowe for appellant.

Chas F. Krone for respondents.

NORTONI J. Reynolds, P. J., and Caulfield, J., concur.

OPINION

NORTONI, J.--

This is a suit in equity for an accounting. The finding and decree were for plaintiff in the amount of $ 357, and from this judgment he prosecutes the appeal, on the theory that he is entitled to recover a much larger amount.

The suit was originally instituted against Dr. A. C. Bernays. Before the trial Dr. Bernays departed this life and the cause was subsequently revived in the name of his administrators who appeared and defended it.

It is shown that during his lifetime Dr. Bernays and plaintiff entered into an agreement whereby plaintiff should assist Dr. Bernays about selecting and purchasing certain real property in the city of St. Louis, to be thereafter sold at a profit. For the purchase and improvement of the property, Dr. Bernays agreed to furnish the money and plaintiff his efforts and experience. It was agreed that upon the sale of the property at a profit, plaintiff should have one-third of whatever profits were made in the venture. In accordance with this agreement, plaintiff selected as a good investment fourteen lots on Grier avenue, St. Louis, in city block 5198. On September 24, 1904, Dr. Bernays purchased lots 16 to 25, inclusive, in that block from Mr. T. J. Rowe and paid $ 5,185 therefor. On June 3 thereafter, in 1905, he purchased through the negotiations of plaintiff lots 26 to 30, inclusive, in the same city block from Cornet & Zeibig and paid therefor $ 1,600. As before stated, the two purchases included fourteen lots which at the time were unimproved, and all were purchased through the negotiations of and under the arrangement with plaintiff above stated. Dr. Bernays expended $ 1,788.66 in improvements thereon, such as sidewalks, streets, etc., but it does not appear when these improvements were paid for. All of these lots were unoccupied and unproductive. On December 8, 1905, Dr. Bernays exchanged the entire property, consisting of fourteen lots, to another person for an equity in a building known as No. 18 South Broadway, St. Louis. This building was incumbered at the time by deeds of trust thereon in the amount of $ 25,000. Dr. Bernays' lots were unincumbered when this exchange was made, except as to the current taxes then due for 1905, which the purchaser assumed. The consideration of the deed executed by Dr. Bernays by which he conveyed the fourteen lots on December 8, 1905 is recited to be $ 15,000 and the consideration of the deed which he received conveying the Broadway property is recited to be $ 40,000. The current taxes for 1904 on the several lots which Dr. Bernays owned at the time are shown by the testimony of plaintiff to have been a charge thereon of not less than $ 90. The evidence is quite conclusive that, notwithstanding the recital in the deeds exchanged on December 8, 1905, the real consideration which Dr. Bernays received for the fourteen lots was an equity of redemption in the Broadway property valued at $ 10,000. This property was incumbered by mortgages to the extent of $ 25,000 and a number of real estate experts place its value at that time at $ 35,000. Plaintiff himself valued it at $ 40,000 and a witness who owned it immediately before placed the value at $ 30,000. The evidence is overwhelming to the effect that this equity which Dr. Bernays received for the fourteen lots was of the value of $ 10,000 and no more.

The court found such to be the value of this equity and charged it in the account at that amount. In stating the account, the court credited Dr. Bernays with an investment of $ 6,785 on September 24, 1904, as though all the lots were purchased by him on that date, and computed interest on this amount at six per cent from September 24, 1904 to December 8, 1905, that is, until he exchanged the property for that on Broadway. There are two complaints leveled against this credit, as follows: First, it is said the court should not have allowed interest at all on any part of the purchase money; and, second, that it erred in computing interest on $ 1,600 from September 24, 1904, for the reason that this amount was not invested by Dr. Bernays until June 3, 1905 when he made the second purchase of lots. There can be no doubt that the latter objection is a sound one, for Dr. Bernays invested on September 24, 1904 only $ 5,185 for the lots which he purchased from Mr. Rowe and the investment of $ 1,600 calculated by the court as of the same date was not made until June 3, 1905, or at the time of the second purchase of lots from Cornet & Zeibig. We do not accept the view, however, that the court should not have allowed interest at all on these investments, for the agreement of the parties is that they should divide the profits accrued upon finally selling the property. Plaintiff contributed his labor and experience in the venture as against the cash of Dr. Bernays, but there can be no doubt that before profits may accrue there must first be deducted the purchase price together with interest thereon, for the property was wholly unoccupied and unproductive. Profits, or net profits, which are said to be synonymous, are the excess of returns over advancements or the excess of what is obtained over the cost of obtaining the property. Interest on...