Dexter v. McClellan

• Decision Date: 29 June 1897
• Parties: DEXTER ET AL. v. MCCLELLAN ET AL.
• Court: Alabama Supreme Court

22 So. 461

116 Ala. 37

DEXTER ET AL. v. MCCLELLAN ET AL.

Supreme Court of Alabama

June 29, 1897

Appeal from chancery court, Montgomery county; Jere N. Williams Chancellor.

The bill in this case was filed by R. P. Dexter and Phares Coleman to enforce the specific performance of an alleged contract between the defendants R. H. McClellan and Charles Scheerer and the complainants, and to establish a trust in certain bonds of a corporation, and for the foreclosure of a deed of trust securing said bonds. Demurrer to bill sustained, and complainants appeal. Reversed.

The facts averred in the bill were substantially as follows Charles Scheerer and R. H. McClellan were the owners of a four-fifths interest in certain lands near the city of Montgomery, Ala., and one A. W. Le Bron and W. C. Agee the owners of the remaining one-fifth. Said Le Bron formed a plan of organizing a corporation to build a street railway through certain streets of the city of Montgomery out to the said lands, and for the corporation to build the road and purchase the lands. This plan was concurred in by said McClellan and Scheerer and Agee and Le Bron, and all agreed to sell said lands, including the entire ownership, for $60,000 cash. Thereupon Le Bron, with the assistance of complainants Coleman and Dexter, whom he engaged to assist therein organized a corporation known as the Montgomery & Cloverdale Street-Railway Company, and obtained franchises from the city of Montgomery; and thereupon complainants and Le Bron organized another corporation, known as the Cloverdale Land &amp Development Company, and the said Montgomery & Cloverdale Street-Railway Company, by proper instruments, conveyed to said Cloverdale Land & Development Company said franchises and right of way, and said McClellan and Scheerer and Le Bron and Agee agreed that said lands should be sold to said Cloverdale Land & Development Company on their being paid $60,000. To enable Le Bron to accomplish this purpose, said McClellan and Scheerer jointly, and said Agee separately executed deeds to said Le Bron to said lands, the said McClellan and Scheerer depositing their deed in escrow on or about the 2d of February, 1892, to be delivered to said Le Bron upon his payment of $48,000, the consideration therein mentioned. It was understood that Le Bron directly or mediately would convey the lands to the corporation at a price in excess of $60,000, namely, $85,000, the excess, $25,000, being the profits which should belong to Le Bron and complainants for their services in effecting said sale, for Le Bron had agreed with complainants that each of them should have $5,000 of said profits in consideration of their services in effecting said sale. The above agreement was not carried out. In September, 1892, Le Bron executed a deed conveying his and said Agee's interest in said land to said Scheerer, and vesting the entire ownership in the land in McClellan and Scheerer; and in November, 1892, McClellan and Scheerer withdrew their deed from escrow, and refused to carry out the arrangement originally agreed upon. They, however, agreed to sell the lands to the Cloverdale Land & Development Company for $85,000, provided their share of the proceeds, as vendors of the entire legal title, which they held, was increased to $70,000, and the profits which complainants and Le Bron were to receive reduced to $15,000. Said Le Bron and complainants agreed to increase the amount which McClellan and Scheerer would receive to $70,000, and to reduce the amount which would go as profits to $15,000. This new agreement is thus stated in paragraph 5 of the bill: "Said McClellan and Scheerer, in consideration of the increase of the amount which was to be paid them as vendors from $60,000 to $70,000, agreed to sell said lands to the Cloverdale Land & Development Company for $85,000, with 105 of said bonds as collateral, as hereinafter stated, and further agreed that the interests of complainants in the proceeds of sale, namely, $5,000 each, should be protected by said collateral, the said interests of complainants in said note and collateral being placed on the same footing with the residue of said note. It was expressly understood and agreed between said McClellan and Scheerer, Le Bron, and each of complainants that said note for $85,000 was given for and included the purchase money, to wit, $70,000, and the $15,000 which it was agreed Le Bron and complainants were to receive for effecting said sale of the land, and for securing the construction of said railway, and for enhancing and developing the value of the same." Dexter, one of the complainants, was a director of the Cloverdale Land & Development Company, to whom the land was sold by appellees. He was also treasurer of the corporation, and Le Bron was its president. Upon the said arrangement being made, it is averred McClellan and Scheerer delivered a conveyance of said lands to one Pickering, for the benefit of the Cloverdale Company, in consideration of the note and obligation of said company for $85,000, a copy of which is attached as Exhibit A to said bill, the same being secured by 105 of said bonds of $1,000, deposited as collateral to said indebtedness, as set forth in said obligation. The said deed, when executed by said McClellan and Scheerer, was not delivered by them to Pickering, but was deposited by them with the Bank of Montgomery, to be delivered to the said Cloverdale Land & Development Company on the bank's receiving the 105 bonds mentioned in said note or obligation of which Exhibit A is a copy. The bill avers that it was expressly agreed and understood that, when said bonds were delivered by the Cloverdale Land & Development Company, the proportion thereof which constituted the collateral to so much of said indebtedness, to wit, $10,000, as was due complainants, should be delivered to complainants by the agent of said McClellan and Scheerer in this city. Complainants applied twice for said bonds, but were refused. The said corporation has failed to pay any part of said purchase money for said land. Said corporation was also indebted to appellees Townsend & Brown in the sum of $138,000, for building and equipping its railroad, secured by 224 of said mortgage bonds. The corporation failed also to pay said Townsend & Brown, whereupon they reduced their claim to judgment, and filed a bill in equity to enforce their lien. It appears from the bill that Townsend & Brown and McClellan and Scheerer were the holders of 329 of the entire issue of 350 bonds, and that 20 of the remainder were in the treasury of the company, and the remaining 1 had been obtained from the company by Pickering, and deposited as collateral for his own indebtedness; that Townsend & Brown, who had not been paid for their railroad, and McClellan and Scheerer, who had not been paid for their land, agreed that the property of said corporation, consisting only of said railroad and land, should be sold in said suit brought by Townsend & Brown, and bought in by them, and that, when purchased, said Townsend & Brown should retain their said railroad and part of appellees' (McClellan's and Scheerer's) land, and convey the remainder of the said land to them, and that, being then together the owners of the property, and of the indebtedness constituting a lien thereon, they should deliver up the evidences of said indebtedness (the bonds) to the trustee and have the same canceled. The bill further shows that said property was purchased by said Townsend & Brown under decree in said suit as proposed, and divided between them and McClellan and Scheerer, as above stated; that said Townsend & Brown and McClellan and Scheerer each sold their said collateral, and purchased same at such sales, and purposed to surrender said bonds to said trustee, and procure the cancellation of the same, and the satisfaction of the said mortgage by which the same were secured, thus leaving the title obtained by said...