Burke Land & Live-Stock Co. v. Wells, Fargo & Co.

• Decision Date: 03 February 1900
• Citation: 7 Idaho 42,60 P. 87
• Parties: BURKE LAND AND LIVESTOCK COMPANY v. WELLS, FARGO & CO
• Court: Idaho Supreme Court

60 P. 87

7 Idaho 42

BURKE LAND AND LIVESTOCK COMPANY v. WELLS, FARGO & CO

Supreme Court of Idaho

February 3, 1900

EXTENSION OF MORTGAGE-ESTOPPEL.-The respondent corporation purchased from appellants all of the property then belonging to the appellant (the B. L. & C. Co.), and agreed to pay therefor $74,048.68, that being the sum then due from the last-named corporation to appellant, Wells, Fargo & Co., and agreed that said purchase price was secured by two certain mortgages executed by appellant, Burke Land and Cattle Company to Wells, Fargo & Company, on said property, and accompanied by possession of such property. Held, that although said mortgages were not originally given to secure all of said purchase price, the respondent is estopped from denying the validity of said mortgages as to any part of said purchase price.

MULTIPLICITY OF SUITS.-The laws of this state prohibit the splitting of causes of action and a multiplicity of suits.

EQUITY-JURISDICTION.-A court of equity having obtained jurisdiction of a cause of action, for any purpose, may retain it for all purposes, and may determine all the matters in issue.

CONSTRUCTION OF CONTRACT.-In the construction of a written contract, if there is room for doubt as to its true meaning, the facts and circumstances out of which such contract arose should be considered, and the contract construed in the light of such circumstances.

STRANGERS.-When a person is largely indebted, and thereafter organizes a corporation, and has all of its capital stock issued to himself, except one share each to four persons, given by him to qualify them as directors, and then transfers all of his property to such corporation, and thereafter such corporation assumes the indebtedness of its creator and owner, one, a stranger, and not a creditor, of such corporation, will not be heard to complain thereof.

PRINCIPAL AND AGENT.-When a contract is entered into by an agent, the principal cannot adopt part of the contract, and repudiate part, and enforce the part adopted.

ULTRA VIRES.-The doctrine of ultra vires should not be applied when it would defeat the ends of justice, or work a legal wrong.

(Syllabus by the court.)

APPEAL from District Court, Bingham County.

Reversed and remanded, with instructions. Costs of this appeal awarded to appellants.

F. S Dietrich and W. H. Dickson, for Appellants.

It is a well-settled rule that the courts, when called upon to construe contracts of parties and to interpret the language which they have employed to express their agreements, will when there is any room for doubt, look to the circumstances which surrounded the parties at the time of entering into the agreement, and will read and construe the language employed by them in the light of these circumstances. (Nash v. Towne, 5 Wall. (U. S.) 689; Canal Co. v. Hill, 15 Wall. (U. S.) 94; Merriam v. United States, 107 U.S. 437, 2 S.Ct. 536; Thompson v. Makay, 41 Cal. 221; Saunders v. Clark, 29 Cal. 229; Walsh v. Hill, 28 Cal. 481.) Parol evidence as to what the real consideration of the transfer of the property was is competent, even though it is inconsistent with the consideration expressed in the instrument of transfer. It is always permissible to show by parol what the true consideration of a deed or contract is. (2 Devlin on Deeds, secs. 823, 828, 830; Frey v. Vanderhoof, 15 Wis. 398; Mobile Bank v. McDonnell, 89 Ala. 434, 18 Am. St. Rep. 137, 8 So. 137: Thompson v. Cheeseman, 15 Utah 43, 48 P. 477; Drury v. Tremont Imp. Co., 13 Allen, 168.) If one purchases land subject to a mortgage and there is a deduction from the purchase price or consideration on account thereof, and he verbally or by his deed agrees not only to take the land subject to the mortgage, but in consideration, in whole or in part, for the transfer, agrees to assume and pay the mortgage, he is not at liberty to deny the existence or validity of the mortgage, or dispute the amount owing thereunder at the time of the transfer. (Hancock v. Fleming, 103 Ind. 535, 3 N.E. 254; 1 Jones on Mortgages, sec. 744; 2 Jones on Mortgages, sec. 1491; Merryman v. Moore, 90 Pa. 78.) A court of equity having obtained jurisdiction of a cause for any purpose, it will retain the cause for all purposes, and proceed to a final determination of all the matters at issue. (1 Pomeroy's Equity Jurisprudence, secs. 181, 231, 232, 242; First Nat. Bank v. Bews, 3 Idaho 486, 31 P. 816.) It is submitted that by the weight of modern authority there is no implied prohibition of, nor is public policy violated by, corporate acts simply ultra vires, and therefore they are not illegal but merely voidable. (Beach on Private Corporations, sec. 421. See, also, excellent discussion, sec. 422; Mining Co. v. Montana etc., 89 F. 529; Smith v. Ferries etc. Ry. Co. (Cal.), 51 P. 710; Fudickar v. East River Irr. Dist., 109 Cal. 29, 41 P. 1024; Roy v. Scott, 1 Wash. 399, 39 P. 679.) The doctrine of ultra vires, when it is invoked for or against a corporation, should not be allowed where it would defeat the ends of justice or work a legal wrong. (Bear River etc. v. Hanley, 15 Utah 506, 50 P. 611; Railroad Co. v. McCarty, 96 U.S. 258; Union Water Co. v. Murphy's Flat Fluming Co., 22 Cal. 621.)

Johnson & Johnson, Arthur Brown and W. T. Reeves, for Respondent, Burke Land and Livestock Company.

It is a cardinal rule in equity pleading that the allegata and probata must agree. (Green v. Covillaud, 10 Cal. 332, 70 Am. Dec. 725; Murdock v. Clarke, 59 Cal. 693.) A party cannot be allowed to claim relief inconsistent with his pleading. (Weil v. Porter, 77 Mo. 287; Gregory v. Nelson, 41 Cal. 278; Cummings v. Cummings, 75 Cal. 434, 17 P. 442; Carpentier v. Brenham, 50 Cal. 549; Burnett v. Stearns, 33 Cal. 468.) A finding is useless and idle, unless the facts found are within the issues; and a judgment based upon such facts cannot be sustained. (Morenhout v. Barron, 42 Cal. 605; Green v. Chandler, 54 Cal. 626; Devoe v. Devoe, 51 Cal. 543.) No decree can be made in favor of a plaintiff on grounds not stated in his complaint, nor relief granted for matters not charged, although they may be apparent from some part of the pleadings and evidence. (Kelsey v. Weston, 2 N.Y. 506; Ferguson v. Ferguson, 2 N.Y. 360; Baily v. Ryder, 10 N.Y. 363; Thomas v. Austin, 4 Barb. 265; New York Pro. Ins. Co. v. National Ins. Co., 20 Barb. 473; Truesdell v. Sarles, 104 N.Y. 167, 10 N.E. 139; Rome Exchange Bank v. Eames, 1 Keyes (N. Y.), 588; Wright v. Delafield, 25 N.Y. 266; Southwick v. First Nat. Bank, 84 N.Y. 420.) In actions brought since the adoption of the code, it is a general rule that the nature of the action is to be determined by the prayer for relief; and that this rule may be safely adopted in cases of doubt, and in any cases where the pleader conceiving himself to be entitled to prosecute either of several actions has so stated his facts as to leave it uncertain which he intends to pursue. (Gillett v. Treganza, 13 Wis. 472, 476; Cobb v. Smith, 23 Wis. 265.) If the mortgagee advance only a part of the sum contemplated in the mortgage, it is a valid security for so much as he does advance, and for so much only. (1 Jones on Mortgages, sec. 378.) There is absolutely no evidence that $ 75,000 was deducted from the purchase price or any proposed purchase price, or of any other fact tending to show that the livestock company owes or has reserved or holds $ 75,000 of the purchase price of the property. (Rapp v. Stoner, 104 Ill. 618; Elliott v. Sackett, 108 U.S. 140, 2 S.Ct. 375; Tanguay v. Felthousen, 45 Wis. 33; Crane v. Hughes, 5 Kan. App. 100, 48 P. 866.) A recital of a mortgage in a deed may estop one claiming under it from denying its existence, or that there is such a mortgage; he further says that a recital in a deed that a mortgage exists does not estop the grantee from relying upon the defense that part of the mortgage has been paid. (2 Herman on Estoppel, sec. 613; Briggs v. Seymour, 17 Wis. 255; Thompson v. Morgan, 6 Minn. 292.) Section 3351 of the Revised Statutes provides that a mortgage can be created, renewed or extended only by writing executed with the formalities required in the case of a grant or conveyance of real property. (London etc. Bank v. Bandmann, 120 Cal. 220, 65 Am. St. Rep. 179, 52 P. 583; Porter v. Muller, 53 Cal. 677; Clark v. Oman, 15 Gray, 522; Bank of Buffalo v. Thompson, 121 N.Y. 280, 24 N.E. 473.) Agents cannot make contracts with themselves so as to bind their principals. The law will not permit one who acts in a fiduciary capacity to deal with himself in his individual capacity. (1 Daniel on Negotiable Instruments, 282; Thompson on Corporations, secs. 4657, 4658, 4630; Claftin v. Bank, 25 N.Y. 293; Bank v. Glifford, 47 Iowa 575; Victor M. Co. v. National Bank, 15 Utah 391, 49 P. 826, 828; Wardell v. Railroad Co., 103 U.S. 651; Mechem on Agency, secs. 455, 456; 1 Morawetz on Private Corporations, sec. 517; McGourkey v. Railway, 146 U.S. 536, 13 S.Ct. 170; Bear River Valley Orchard Co. v. Hanley, 15 Utah 506, 50 P. 614; People v. Township Board, 11 Mich. 222, 225.)

J. W. Eden, for Idaho National Bank, cites no authorities.

SULLIVAN, J. Huston, C. J., and Quarles, J., concur.

OPINION

SULLIVAN, J.

The respondent, the Burke Land and Livestock Company, an Illinois corporation, hereinafter referred to as the "Illinois corporation," brought this action against Wells, Fargo &amp Co., a Colorado corporation doing business in the state of Utah, and the Burke Land and Cattle Company, a Utah corporation, hereinafter referred to as the "Utah corporation," to redeem certain property, real and personal, from the mortgages described in the complaint, alleging that said mortgages had been fully paid and satisfied. The prayer of the complaint is as follows: "Wherefore plaintiff prays and...