Burget v. Cranston

• Court: U.S. Court of Appeals — Sixth Circuit
• Citation: Burget v. Cranston, 297 F. 32 (6th Cir. 1924)
• Decision Date: 14 March 1924
• Docket Number: 3701.
• Parties: BURGET v. CRANSTON et al.

297 F. 32

BURGET v. CRANSTON et al.

No. 3701.

United States Court of Appeals, Sixth Circuit.

March 14, 1924

Mrs. E L. Burget, of Akron, Ohio, in pro. per.

Ben. B Wickham, of Cleveland, Ohio (Boyd, Cannon, Brooks & Wickham of Cleveland, Ohio, on the brief), for appellees.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

PER CURIAM.

Appellant brought suit against the three appellees and the Co-Operative League of America (hereinafter called the 'League') for an accounting of profits and special damages resulting from an investment of $1,000 made by her in November, 1919 under an agreement with appellees Taylor and C. M. Cranston for the purchase of certain 'land and home purchasing contracts' which had been issued by the League. The purchased contracts were assigned to appellee E. B. Cranston. The League was not an indispensable party, was not served with process, and did not appear. On hearing upon testimony in open court upon the issues joined by the petition and the answers of appellees Cranston (Taylor had dropped out and did not defend), the trial court found that the relation between the four parties constituted a joint adventure, those concerned being entitled to share in the profits thereof according to their respective financial contributions to the enterprise. Decree was rendered for appellant against the appellees Cranston for profits in the ratio which her contribution bore to the total contributions, the claim of special damage being denied.

Under the League contracts (which were assignable upon payment of a transfer fee) the holder, after making a certain number of monthly installment payments (the contract thus being 'matured'), was entitled, in order of priority among subscribers to the series, to exercise a so-called 'loan privilege,' viz. to obtain at 3 per cent. interest a real estate loan for certain specified purposes in amount not exceeding the 'face value' of his contract, and to receive a credit upon the loan equal to the aggregate payments actually made on the contract; the League itself, however, agreeing, on demand of the contract holder, to sell such privilege, and from the proceeds to pay the holder a sum equal to the payments already made on the contract, plus any 'premium' received on the sale, less 10 per cent. of the premium, as compensation for making the sale. The contracts were subject to forfeiture for nonpayment of monthly installments.

The total net profits from the transactions in question, as found by the District Court aggregated $3,060, of which amount $2,430 was realized by appellees Cranston through selling premiums (at the rate of $180 net per $1,000) on $13,500 face value of matured contracts, the remaining $630 representing the selling premium of the $3,500 of contracts, of which appellant was given the benefit, in connection with a loan in the latter amount obtained by her from the League. The court found the aggregate capital contributions of the parties (including appellant's $1,000) to be $4,250; credited appellant with her $1,000 contribution and with $719.10 as a percentage of the total profits (about 23 1/2 per cent.) in the ratio which her contributed capital bore to the total contributed capital; ^[1] charged her with the selling premium of $630 above mentioned and with $350 (returned to her in the making of the loans) of payments which had been made from contributed capital on the $3,500 of contracts awarded her; and entered decree in appellant's favor for the resulting balance of $739.10, with interest from August 12, 1920, that being the date when the last of the purchased certificates were sold, and at which the appellees were held obligated to account.

Appellant contends that there was no joint adventure, but that in effect appellees C. M. Cranston and Taylor (the latter of whom wrote contracts for the League) were to buy for her such an amount of contracts as her $1,000 would buy.

On the basis that payments amounting to 10 per cent. of contract face were requisite to 'loan privilege,' $1,000 would provide for $10,000 face value of contracts. Appellant insists that under the evidence she was entitled to all the profits from that amount of first maturities, instead of from only the $3,500 of contracts awarded her. She also alleges that, in reliance upon her eligibility to procure loan privileges on $5,000 of contracts maturing on or about March 1, 1920, she made down payments upon the purchase price of certain properties in Wilmington, Del., bought in January and February, 1920, agreeing to complete payments in April, 1920, but that she failed to do so on account of defendants' refusal to perform the agreement, and so lost her down payments amounting to $750. The contention that more profits were made than were accounted for will be later referred to.

Considering the case as originally presented in the District Court, and which resulted in the decree appealed from: The testimony was taken before the trial judge in open court, each of the four parties testifying. The court's conclusions upon the facts must be accepted by us, unless the evidence decidedly preponderates to the contrary. City of Cleveland v. Chisholm (C.C.A. 6) 90 F. 431, 434, 33 C.C.A. 157; Oehring v. Fox Co. (C.C.A. 6) 272 F. 833, 836. ^[2] The trial court's conclusion of existence of joint adventure, whose profits were to be divided in proportion to the respective contributions, is supported by competent testimony. ^[3]

Appellant testified that appellees C. M. Cranston and Taylor told her that 'with their money and my money they wanted to buy these contracts,' and that $3,000 was all that was required to buy them, and produced a writing of date May 1, 1920, said to have been issued by appellee E. B. Cranston to the League, authorizing it to use $3,500 of the matured contracts, of which verbal notice had been given, as a first mortgage loan on appellant's property in Canton. The League's verbal notice referred to $12,000 of matured contracts. It turned out that there were but $8,000. Taylor testified that appellant said she would go in with the others if she could have the first loan for her Canton property, and that the conversation 'closed by her saying that she would come in with us. ' There was testimony on the part of both Taylor and C. M. Cranston that appellant then desired loan privileges only to the extent of $3,500 which she wished to borrow on her Canton property.

We think there was no error in admitting the testimony of appellees regarding the actual arrangement with appellant, notwithstanding the language of the receipt given by C. M. Cranston and Taylor at the time appellant paid her $1,000. ^[4] The testimony as to whether the words 'and others' were in the receipt when it was signed is conflicting. But, regardless of this, we agree with the trial judge that if the exhibit was merely a receipt it was open to explanation, and, if a contract, it is evidently so incomplete as to admit evidence of surrounding and explanatory circumstances. The receipt specifies no number of contracts, nor does it appear therefrom what specific contracts were in mind, nor when they would mature

Appellant also produced an undated memorandum signed by Taylor, reading:

'Co-Operative League contracts. They will mature in 30 or 60 days. You get loans at 3 per cent., according to the amount paid in, also get money back.'

Appellant says this was given to her before she paid in her money. In respect of several important features there is a sharp conflict between the testimony of appellant and that of appellees. To discuss those conflicts in detail would serve no useful purpose. Recognizing, as we must, that questions of credibility of witnesses were peculiarly within the trial court's province, we think the evidence does not clearly preponderate against the court's conclusions that there was a 'joint adventure,' ^[5] that the profits were to be divided in proportion to respective capital contributions, and that appellant was to have the benefit of the 'first maturities' only to the extent of desirable and obtainable loan on her Canton property, which, we understand, turned out to be but $3,500. Nor are we prepared to say that these conclusions are against the weight of the evidence. The possibly inaccurate statement of the trial judge that 'the parties are agreed that the division was to be in proportion to the capital contributions made by each' does not seem very important, followed as it was immediately by the statement, 'In addition thereto plaintiff contends that she was entitled to loan privileges first maturing,' and in view of the finding that appellant did not prove 'her right to claim the first maturities to the full extent of her participation. ' In reaching this conclusion we attach no special importance to any presumption of proportional equality of profits between the parties to the adventure. ^[6] It follows that, unless appellant is entitled to further trial upon the facts, it is our duty to affirm the decree of the District Court

Before the appeal was argued, appellant presented a motion for leave to take newly discovered evidence, and lodged with the clerk of this court a petition for leave to file bill of review. After the appeal was argued, appellant was given leave to present to the District Court either or both of those applications, as...