Dunlop v. Baker

• Decision Date: 09 November 1916
• Docket Number: 1424.
• Citation: 239 F. 193
• Parties: DUNLOP v. BAKER et al.
• Court: U.S. Court of Appeals — Fourth Circuit

239 F. 193

DUNLOP v. BAKER et al.

No. 1424.

United States Court of Appeals, Fourth Circuit.

November 9, 1916

L. L Lewis, of Richmond, Va., and Charles E. Plummer, of Petersburg, Va., for appellant.

Richard H. Mann and Bernard C. Syme, both of Petersburg, Va., and Edwin P. Cox, of Richmond, Va. (Mann, Syme, Wilson & Mann, of Petersburg, Va., on the brief), for appellees.

Before KNAPP and WOODS, Circuit Judges, and JOHNSON, District Judge.

WOODS Circuit Judge.

The ultimate practical question in this appeal is whether the bankrupt, Robert E. Baker, may escape from an option agreement made by him to sell a tract of land to the petitioner, J. J. Dunlop, which turned out to be disadvantageous. The option executed by Baker and his wife Lillie M. Baker, under seal, was in these words:

'For and in consideration of one dollar, to me in hand paid, the receipt of which is hereby acknowledged, and other good and sufficient considerations, I hereby agree to give J. J Dunlop, or assigns, the exclusive right to purchase the 418 acres of land owned by Robt. E. Baker, situated in Prince George county, state of Virginia, with the appurtenances thereunto belonging, for the sum of $12,000 from the 9th day of April, 1915, to the 9th day of July, 1915, upon the following terms, $200 on signing of contract, and trust for balance of equity, on the delivery of good and sufficient warranty deed, and the balance as follows: Purchaser to assume existing trust on property.'

The date on the paper was April 9, 1915, but the real day of execution was Sunday, April 11, 1915. On the following day, April 12th, Baker filed his petition in bankruptcy, and the adjudication immediately followed. Among the assets set down in his schedule by the bankrupt was the tract of land described in the option at a valuation of $12,000. On May 1st, Dunlop filed a petition in the bankruptcy proceedings, setting up the option, and asking that he be allowed to pay into court the purchase money, $12,000, and that, upon the payment, the trustees be directed to convey the land to him free of liens. On May 8th the bankrupt, answering the petition, admitted its allegations and joined in its prayer. On May 20th Dunlop filed an amended petition, alleging that when he filed the original petition he was advised that the bankrupt's assets would be more than sufficient to pay his debts, but that it had developed at the hearing before the referee that the liabilities might exceed the assets; that the rights of the petitioner under his option were inferior to the lien given to the trustees for the benefit of creditors under section 47 of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 557 (Comp. St. 1913, Sec. 9631)); that in order to protect his rights he offered to pay into court such amount, in addition to the purchase price of $12,000, as may be necessary to pay all the debts of the bankrupt and costs of the proceedings; that in exercising his rights to discharge the lien of the trustees he was--

'entitled to be subrogated to all rights against the bankrupt and his creditors, and therefore to the right to contest all claims which may be filed against said bankrupt, and the further right to require the marshaling of the assets of said bankrupt, and such application of said assets as will protect your petitioner's right in the premises.'

The petitioner asked on these allegations that the title be made to him on his making a deposit in bank awaiting the determination of the questions that might arise, and to be applied as the court might determine. The bankrupt, by his answer filed on May 28th, completely reversing his position, denied the rights of the petitioner to have the relief sought, even under the facts stated in the petition, and set up the following affirmative defenses: (1) Want of any consideration for the option; (2) such indefiniteness and uncertainty in the option as to make it incapable of enforcement; (3) invalidity of the contract because executed on Sunday. The answer of Lillie M. Baker, wife of the bankrupt, set up substantially the same defenses.

It is needless to recite the steps through which the controversy finally reached the District Court and was decided. The court dismissed the petition and ordered the land to be sold at public auction; but the order provided 'that all valid liens upon and claims to the said property be, and they are hereby, transferred and shall attach to the proceeds of sale. ' At the sale the land brought $31,000. The aggregate of the debts of the bankrupt and costs and expenses of the proceedings is $18,853.43.

The facts agreed on before the District Court may be thus summarized: (1) Execution of the option on Sunday, and the procurement by Dunlop of other options on other lands in the vicinity during the months of April and May, 1915; (2) the sale of other lands near by just before the trial at $125 per acre; (3) the knowledge by Dunlop, immediately after he had procured the option, that Baker, before giving it, had signed his petition and schedule in bankruptcy, and had placed them in the hands of his attorney for filing; (4) the existence of liens on the land at the time the option was given, in the form of deeds of trust, aggregating $8,000 and interest.

For the sake of clearness we consider, first, whether there was ever any contract to sell the land binding on the bankrupt. The defense of want of consideration cannot be sustained; for the option was under seal and expressed the consideration of 'one dollar and other good and sufficient consideration, ' and no evidence is offered that the paper spoke falsely in this respect. The point was elaborately discussed by Judge Cardwell in Watkins v. Robertson, 105 Va. 269, 54 S.E. 33, 5 L.R.A.(N.S.) 1194, 115 Am.St.Rep. 880, the court holding that an option under seal for the sale of certain shares of stock, expressing the consideration of $1 and the condition that it be accepted within a stated time, should be treated as an irrevocable covenant, of which equity would enforce specific performance upon due acceptance by the optionee. The court said that the case of Graybill v. Brugh, 89 Va. 895, 17 S.E. 558, 21 L.R.A. 133, 37 Am.St.Rep. 894, which expressed a contrary view, was to be considered practically overruled by Central L. Co. v. Johnston, 95 Va. 223, 28 S.E. 175. The Supreme Court of the United States thus states the familiar rule:

'The covenant in the lease giving the right or option to purchase the premises was in the nature of a continuing offer to sell. It was a proposition extending through the period of ten years, and being under seal must be regarded as made upon a sufficient consideration, and therefore one from which the defendant was not at liberty to recede. When accepted by the complainant by his notice to the defendant, a contract of sale between the parties was completed. * * * When a contract is of this character, it is the usual practice of courts of equity to enforce its specific execution upon the application of the party who has complied with its stipulations on his part, or has seasonably and in good faith offered, and continues ready, to comply with them. ' Willard v. Tayloe, 75 U.S. (8 Wall.) 557, 19 L.Ed. 501, 21 L.R.A. 129, note.

The defense of indefiniteness and uncertainty is equally unfounded. The option clearly meant that upon its acceptance and the execution of the contract of sale the purchaser was to pay $200 in cash, assume the payment of the debts secured by the trust deeds covering the property, and execute for the benefit of the seller a trust deed as security for the difference between the purchase price, $12,000, and the aggregate of the cash payment and the liens assumed by the purchaser. This construction of the contract was assented to as correct by the bankrupt in his answer to the original petition. The only item not definitely fixed was the time for the payment of the balance going to the seller. But it is settled by authority from which there is no dissent that expression of the time of payment is not essential to the validity of a contract of sale. If no time be mentioned, it is to be inferred that either immediate payment or payment in a reasonable time according to the circumstances is intended. 36 Cyc. 597, and authorities cited.

This brings us to the question whether an option executed for valuable consideration is invalid because executed on Sunday. The Virginia statute provides:

'If a person on the Sabbath day be found laboring at any trade or calling, or employ his apprentices or servants in labor or other business, except household or other work of necessity or charity, he shall be deemed guilty of a misdemeanor,' etc. Code 1904, Sec. 3799.

In the absence of any construction of this statute by the Virginia court, we must depend upon reason and the construction of similar statutes by other courts. The state statutes on the subject may be divided into two classes. In a large number of the states the prohibition is against the doing of any business or labor on Sunday. In these states it has been generally held in cases too numerous for citation that the giving of a note, or bond, or mortgage, or conveyance is doing business, and therefore is within the statute.

In other states, however, the statutes do not make every isolated business transaction criminal. These express a different purpose, namely, the stopping and breaking of the continuity of the trades and callings-- the regular everyday occupations-- of the people, to the end that the individual and the public at large may have the benefits expected from the general observance of the Sabbath. Their language seems carefully chosen to exclude the idea that the citizen may be harassed by prosecution for every incidental or isolated transaction he...