Flagg v. Walker

• Decision Date: 02 March 1885
• Citation: 28 L.Ed. 1072,5 S.Ct. 697,113 U.S. 659
• Parties: FLAGG and another v. WALKER
• Court: U.S. Supreme Court

113 U.S. 659

5 S.Ct. 697

28 L.Ed. 1072

FLAGG and another v. WALKER.

March 2, 1885.

William F. Flagg, one of the appellants, was the owner, in February, 1875, of real estate in and near the city of Bloomington, Illinois, which may be generally described as follows: (1) A large manufacturing establishment, known as the Empire Machine Works, and about three acres of land upon which it stood. (2) A tract of land containing about 69 acres, known as 'the pasture,' situate in the northeastern part of the city. (3) Block No. 1, in Flagg's third addition to the city of Bloomington, containing about five acres, on which stood his residence. This property is designated in the record as the 'homestead.' (4) A large number of lots in the city, most of them vacant, but on about 10 of which were tenement houses. (5) A tract in Fayette county, Illinois, and lands in Pettis county, Missouri. He also owned a large amount of personal property, consisting mainly of the machinery and tools in the Empire Machine Works. At the date mentioned he was embarrassed in business and owed over $50,000. The larger part of this indebtedness bore interest at the rate of 10 per cent. per annum. Much of the real estate was covered by mortgages; his tenement houses were out of repair; he was largely in arrears for taxes and for interest on his indebtedness, and was in broken health. In this condition of his affairs he sent for the appellee, Samuel Walker, who resided in Massachusetts, and who was the brother of his first wife, and made a statement to him of his financial condition and embarrassments.

On February 22, 1875, after a conference between Flagg, Maggie R. Flagg, his wife, Walker, and J. H. Rowell, who, up to that time, had been the counsel of Flagg, but who, on that occasion, with the knowledge of Flagg, acted as attorney for Walker, Flagg agreed to convey all his real estate to Walker by deed, his personal property by bill of sale, and his choses in action by assignment. Although there is some conflict in the testimony on this point, it plainly appears that these transfers were to be made to enable Walker to eontrol and dispose of the property as he saw fit. Its management and disposition of the proceeds were left entirely to his judgment and discretion, both Mr. and Mrs. Flagg having full confidence in his business ability and integrity; but their understanding was that the proceeds of the property were to be applied to the payment of Flagg's debts, and Walker was to advance money temporarily for that purpose. The effect of the proposed transfer was explained to Mr. and Mrs. Flagg by Rowell. On the next day, February 23d, Flagg and wife executed to Walker deeds of conveyance, absolute on their face, of all the real estate above mentioned, and Flagg gave him a bill of sale of all his personal property, and an assignment of his choses in action. Walker at once took possession of all the property, except the 'homestead,' which by agreement was to be left in the occupancy of Mr. and Mrs. Flagg.

In the following April, Walker stated to Mrs. Flagg that he would allow her $1,500 per year for four years; that, at the end of that time, he thought he would be able to dispose of the property, and would give a bond that whatever was left, after paying all the indebtedness and the expenses of disposing of the property, he would divide equally between himself and Mr. and Mrs. Flagg. This proposition was accpted. Afterwards Walker executed and delivered to Mrs. Flagg (Mr. Flagg being absent from home) a writing, which opened with the following recital 'This agreement, made this twelfth day of April, 1875, between Samuel alker, of the first part, and William F. Flagg, of the second part, witnesseth, that the said Flagg and wife have heretofore conveyed to the said Walker all the real and personal property of the said Flagg.' The writing then declared that in consideration of such conveyance Walker agreed, in addition to the moneys already advanced by him for Flagg, to pay him $1,500 per year for four years, and pay off all the ascertained indebtedness of Flagg which had at that time been made known to him, and that Flagg should occupy his residence for one year free from any interference by sale of the same, or otherwise. But Walker, by the same instrument, limited his liability to pay the sum of $25,000 due to Hiram Sibley, secured by trust deed to Corydon Weed, 'to the amount realized out of the lands mortgaged to secure the same.' He further agreed that, after 'a disposition' of the property conveyed to him by Flagg, if anything should remain of the proceeds after reimbursing Walker for payments for Flagg, and paying the expenses of the management and sale of the trust property, he would pay to Flagg, or his legal representatives, the one-half of such excess. The writing then stated, and was signed and witnessed, as follows:

'It being the express understanding that the conveyance heretofore made to said Walker is absolute for all purposes; that said property; that he will free and unobstructed ownership purposes; that said Walker is to have the dispose of such property at pleasure, and according to his best judgment; and in all things be the sole judge of time and manner of using and disposing of said property, both real and personal; and this agreement is to include the property known as the Empire Machine Works, as well as the other property of said Flagg. The said Flagg, by his acceptance of this contract, agrees to its terms, and consents to all its parts. Witness our hands the day and year first above written.

SAM'L WALKER.

'Witness: J. H. ROWELL and JOHN M. HAMILTON.'

There is no doubt that the agreement of Walker embodied in this paper was accepted by Mr. and Mrs. Flagg, and was for a time acted on by both them and Walker.

Walker, upon the transfer above mentioned by Flagg of the property of the latter, paid off all, or nearly all, of the unsecured debts of Flagg, and furnished Mrs. Flagg with money to pay the taxes which were due and interest due and unpaid on the residue of Flagg's debts, and supplied Flagg with money to take a journey for the improvement of his health. The money so advanced amounted on August 27, 1875, to over $11,000.

Among the other indebtedness of Flagg there was due from him to one Soper about $5,000 in notes and on open account. Walker, acting upon the advice of Flagg, sold to Soper the tools and machinery in the Empire Machine Works, and as part consideration therefor, Soper acknowledged payment of the debt due to him from Flagg, and gave his notes for the residue. Walker also leased to Soper, by the advice and with the consent of Flagg, one-half of the Empire Machine Works buildings for $1,500 per year. Walker began repairing the tenement houses so as to put them in good condition for renting. Having appointed one Du Bois as his agent to look after the property, superintend the repairs which he had begun, and collect the rents, he returned to his home in Massachusetts. When the transfer of his property was made by Flagg to Walker in February, 1875, there was a deed of trust of the 69-acre tract, known as 'the pasture,' to Corydon Weed, trustee, to secure $25,000 due to Hiram Sibley, bearing interest at the rate of 10 per cent. per annum, payable semi-annually, and there was a mortgage on the 'homestead' for $9,000, bearing like interest. In November, 1876, the interest on the debt due to Sibley being in arrear, Weed, the trustee, by virtue of a power contained in the deed of trust, advertised 'the pasture' for sale, and on the day mentioned in the notice sold it at public sale to Hiram Sibley for $10,500. The mortgage for $9,000 on the h mestead was purchased by Walker on July 1, 1876, the amount paid, principal and interest, being $9,976.77.

After these events, on September 25, 1878, the original bill in this case was filed by Mrs. Flagg against Walker, Sibley, Weed, the trustee, and her husband, William F. Flagg. It alleged that since the conveyances made by her husband to Walker, in February, 1875, the former had by mesne conveyances transferred and conveyed to her 'all his interest, right, and title in and to said real estate above mentioned,' referring to the real estate conveyed by Flagg to Walker, 'and all personal property appertaining thereto, or that went into the hands of Samuel Walker.' The bill set out the transfer to Walker by Flagg and his wife of the real and personal estate of Flagg, and in reference thereto made the following averments: 'That the said deeds were intended by said William F. Flagg and oratrix to secure the said Samuel Walker for his advances to be made by him, as above set forth, and as a further security for a reasonable compensation to be paid to him for the rendition of such services, and that he might out of the sale of a portion of said property be reimbursed for such advances and compensation. It was also agreed * * * that when the purpose for which such conveyance had been made was fully completed, the said Samuel Walker was to reconvey to William F. Flagg, or to oratrix, as they might elect, at least one-half of the property remaining unsold and undisposed of, and should keep for himself and for his compensation a portion of said lands, not exceeding one-half of the residue, after payment of all debts.' The bill also averred 'that shortly after receiving the said deeds of conveyance the said Samuel Walker executed a statement in writing, in which he set forth and stated to your oratrix the use and purpose, both set forth, upon which the said Samuel Walker had received the said property in trust.' The bill charged 'that said deeds of conveyance made to Samuel Walker, while, in fact, warranty deeds,' were, 'in equity, no more or less than mortgages, made to secure said Samuel Walker for his advances to be made by him, and said advances were to be sufficient in amount to pay all indebtedness of said William F. Flagg to other persons than said Samuel Walker;...