Brinton v. Lewis-Littlefield Co.

• Decision Date: 25 November 1911
• Citation: 118 P. 917,66 Wash. 40
• Court: Washington Supreme Court
• Parties: BRINTON v. LEWIS-LITTLEFIELD CO. et al.

118 P. 917

66 Wash. 40

BRINTON v. LEWIS-LITTLEFIELD CO. et al.

Supreme Court of Washington

November 25, 1911

Department 2. Appeal from Superior Court, King County; Boyd J. Tallman Judge.

Action by Joseph Brinton against the Lewis-Littlefield Company and others. Judgment for defendants, and plaintiff appeals. Affirmed.

E. W. Howell, for appellant.

Leander T. Turner and Sandford C. Rose, for respondents.

MORRIS J.

It is sought in this action to follow trust funds into the hands of a third party, and to obtain a decree holding such third party to be a trustee for the benefit of plaintiff. The court below dismissed the cause, and this appeal follows.

The facts are these: The Lewis-Littlefield Company was, at the time of the involved transaction, engaged in the real estate business at Seattle. On February 13, 1907 the company received from appellant $650 to invest in real estate for the use and benefit of appellant, and gave him its acknowledgment as follows: 'Received of Joseph Brinton $650 for investment in real estate. It is understood that the money is to be invested as soon as possible, and that as soon as so invested, a complete statement and declaration of trust is to be furnished. It is also understood that as soon as the property is sold, the whole or any part of this money together with the profits, may be withdrawn by the subscribers. Lewis-Littlefield Co., By Geo. B. Littlefield, Manager.'

On February 16th Lewis-Littlefield Company purchased from respondents Black lot 7, block 9, Rainier Boulevard Fourth addition to Seattle, for the sum of $4,000, taking the title in its own name. Of this amount $1,350 was paid in cash, and the balance was represented by a promissory note payable in one and two years and secured by a mortgage on the lot. On February 27th Lewis-Littlefield Company, in pursuance of its agreement expressed in its receipt of February 13th executed and delivered to appellant the following declaration of trust: 'This is to certify that Lewis-Littlefield Co., a corporation of Seattle, Washington (hereinafter called the company), has received from Joseph Brinton of Seattle (hereinafter called the subscriber), for investment in property for sale by said company as brokers or owners, the sum of six hundred and fifty and no/100 dollars ($650.00), and that the same has been expended, together with other similar sums, in the purchase of lot 7, block 9, Rainier Boulevard Fourth addition to the city of Seattle, at the price of four thousand dollars ($4,000.00) and upon the following terms: One thousand three hundred and fifty and no/100 dollars ($1,350.00) cash, balance, one and two years at 7 per cent. per annum. There has been subscribed for the purchase of this property the sum of one thousand three hundred and fifty and no/100 dollars ($1,350.00), which has been or is to be expended as follows: Cash payment, $1,350.00. Property to be sold before one year. This property is held by the company in trust for the subscriber and for other subscribers to the fund upon the following terms: The property is to be held and managed by the company for the benefit of the subscribers, the said company retaining the exclusive right to sell such property at such time, at such price and on such terms as to said company shall seem best for the interest of the subscribers. If, at any time, it shall seem necessary to make any further payments for the protection of the interests of the subscribers, the company shall have the right at their option to make such payments and to receive repayment of same with interest at the rate of 8 per cent. per annum, from the first proceeds of the sale of the property. When the property is sold, the proceeds shall be applied as follows: (1) To the payment of the expenses of the sale, including a commission of 5 per cent. to Lewis-Littlefield Co.; (2) to the repayment of such sum or sums, in excess of the original subscriptions as may have been applied to the payment of taxes, special assessments or other expenses necessarily incurred in protecting the interest of the subscribers, with interest at the rate of 8 per cent. per annum from the date of such payment or payments to the date of the sale of the property; (3) the surplus remaining after payment of the foregoing sums shall be distributed pro rata to the subscribers, the amount due the holder of this certificate being 650/1350 of the entire net proceeds. In witness whereof the company has caused this certificate to be signed and its corporate seal to be affixed by its manager, thereunto authorized, this 21st day of February, 1907. Lewis-Littlefield Co., By Geo. B. Littlefield, Manager. [Corporate Seal.]'

The cash payment of $1,350 is conceded to be made of the $650 paid in by appellant and $700 paid in by other parties, under the same arrangement. On March 28, 1908, appellant paid to Lewis-Littlefield Company the further sum of $65, which, with other sums paid in by other subscribers, was used in making a partial payment of interest then due on the note and mortgage. At the time of the purchase of the lot from Black the real estate market was active, especially in the neighborhood of this lot, where, on account of certain regrades of streets connecting with the downtown portion of the city, it was assumed property in this vicinity would be brought into closer touch with the business district of the city and its value greatly increased. It is apparent that this was in the minds of the subscribers to this trust fund at the time, and that they expected to make a resale of the lot, before any additional payments were required, at such an increase over its cost as to give them a handsome profit on their investment. Unfortunately, like other 'bestlaid plans,' this expectation was never realized. The year 1907 saw many business reverses. Times became hard, money scarce, and investments of every nature made on the expectation of 'quick sales and ready profits' returned only disappointment and withered hopes. This is shown to be especially true of real estate values in the vicinity of this lot. Lewis-Littlefield Company made strenuous efforts to sell, but was unable to do so. Street...