Gayle v. Pennington

Citation185 Ala. 53,64 So. 572
PartiesGAYLE et al. v. PENNINGTON.
Decision Date03 February 1914
CourtSupreme Court of Alabama

Appeal from Chancery Court, Montgomery County; L.D. Gardner Chancellor.

Bill by Cincinnatus Pennington against W.A. Gayle and others, for a discovery and an accounting. From a decree overruling demurrers to the amended bill, respondents appeal. Reversed and remanded.

The first paragraph of the bill sets up a contract of partnership between orator and William A. Gayle, and the members of the firm of Troy, Tompkins & London, to engage in the business of buying and selling real estate in and around the city of Wetumpka; orator contributing his services in this business buying and selling on the approval of Gayle, the other parties to furnish the money, the profits realized to be divided into five equal parts, each party to the contract share and share alike.

The second paragraph averred the purpose and the investigation of various pieces of property, which different pieces are set out and described, together with a piece of timberland consisting of about 1,840 acres situated about seven or eight miles east of Wetumpka, known as the Neil-Smith place. It is then averred on information and belief that all except Gayle and orator withdrew from the agreement and it was agreed between him and Gayle that Gayle was to furnish the money his interest being increased to a four-fifths, and orator's remaining as it was, and that Gayle assumed to pay the entire purchase money for the property already bought, and such other property as orator might buy; that the notes were duly met by Gayle at maturity, but the title was taken in orator's name, but that, in purchasing the Neil tract, Neil did not care for any of the purchase money, and so orator gave him his notes secured by mortgage, together with interest notes; that, while it was not a part of the agreement, orator, with the consent of Gayle, looked after the renting of the property and in putting the same in favorable repair, and that he paid for repairs out of the rent collected, also some of the interest that had matured on notes executed for the purchase of the Neil place, and also paid out sums from time to time for city, state, and county taxes, and remitted the balance to Gayle, and that his services covering a period of 12 years, were worth $40 per month, which he is entitled to have paid, with interest; that orator himself sold some of the property so purchased including two storehouses in Wetumpka, realizing on one $1,250, and the other $250, besides leaving a store and residence and lot as net profit, the same being worth between $1,500 and $1,600. Orator requested Gayle to allow him to retain a part of the profits on the sale, and Gayle replied by saying that, although the property sold had yielded a profit, the remainder might entail a loss, and it could not be known, until all the property was sold, whether there would be a profit or not, but assured orator that a full settlement would be made when the property was disposed of. It is then averred that Gayle paid all the notes except as to the Neil-Smith purchase, and that that had grown vastly more valuable; that at Gayle's request, and as Gayle had paid all the purchase money, and orator's interest was only in the profits, he conveyed to Gayle, in 1892, all the property remaining unsold, but continued to collect the rents and make repairs and pay the taxes; that, when the Neil-Smith mortgage matured, Gayle without informing orator, and without paying the mortgage as he should have paid it, conceived the design of depriving orator of any interest in the resale of said land by having the mortgage thereon foreclosed, and, Smith having died in the meantime, the administrator advertised the place for sale under the power contained in the mortgage, and the same was bid off and sold through Mary W. Gayle, wife of said W.A. Gayle. It is then averred that, at the time of the foreclosure, Gayle was a man of means, and of fine standing and credit in the city of Montgomery, and had the means to pay off the mortgage, but that, even if he had no means, he could have easily raised upon the security of the property the amount necessary to pay off the mortgage. It is then averred that Gayle represented his wife in all these transactions, and that Mrs. Gayle had notice of orator's equities. It is then averred that Mary Gayle retained the property until the 30th of September, 1910, when she and her husband joined in a deed of the property to one E.G. Ensign, and that, while the express consideration was $1 and other valuable consideration, orator is informed and believed that the real amount of said purchase money was the sum of $70,000. It is then averred that orator was without knowledge or notice of these transactions. It is then averred that in November, 1901, Gayle executed to Lancaster a deed to all the other property purchased by orator in or near the city of Wetumpka, which had not previously been sold in exchange for a 1280-acre plantation in Marengo county, and that Gayle continued to own said plantation until November, 1910, when he sold and conveyed same to the Dallas Investment Company, on a recited consideration of $5 and other good and valuable consideration. But on information and belief orator charges that a large profit was realized by Gayle on said property over and above the cost of the property which he conveyed to said Lancaster for the same, but orator does not know the amount, and has not been able to discover it. Then follows a statement of a conversation had with Gayle, the substance of which was that Gayle declined to make a settlement or statement, and that, at the request of orator's solicitors, Gayle had declined and refused to state an account which had been declined by Gayle. Then follow a number of questions propounded to Gayle for the purpose of ascertaining just what was received by him in the various dealings with the property purchased by orator for him.

Demurrers being sustained, complainant amended his bill by adding thereto that orator had made diligent effort to ascertain what said Gayle obtained for the Marengo county plantation, and the Neil-Smith place, but has been unable to ascertain through Gayle or from any other source, and that orator has no means of ascertaining, and no way of discovery or proving, the fact, without an answer from said W.A. Gayle, and that a discovery was necessary to ascertain the true facts relative thereto, except by answer of W.A. Gayle by striking out what was alleged in paragraph 2 relative to Gayle paying the purchase money; and orator being interested only in the profits, and believing in the absolute good faith of Gayle, made him a deed to all the property in 1892, and by substituting in its place the following: "Orator avers that, while he was jointly interested with said Gayle in the profits that might be derived from the purchase and sale of said land, he had the utmost confidence in the absolute good faith of said Gayle, and complied with his said request, and made him a deed to all of the said property in 1892, but that said conveyance was not intended to be regarded by either party as in any manner affecting the rights or interests of orator under said contract. Orator further avers that there was no agreement between himself and Gayle that orator should be simply an employé, or that his interest in the profits should be only a means of ascertaining his compensation; but, on the contrary, it was understood and agreed that said Gayle and himself should own jointly the profits that might be derived from a resale of said property, and that the same should be divided between them. Orator avers upon advice of counsel that, upon receipt of proceeds of the Marengo county plantation and of the other property sold as aforesaid, Gayle became and was the trustee for the benefit of your orator to the extent of his interest in said fund, and held the same in trust for orator. That it was expressly agreed that said Gayle should make sale of said property, and divide the proceeds between himself and orator pursuant to the terms of the contract. And orator avers that Mary W. Gayle became a trustee in invitum for the benefit of your orator of the proceeds derived from the sale of the Neil-Smith place to the extent of the interest of orator therein, and was and is liable to account to orator for the same as such trustee to the extent of his interest therein."

Marks & Sayre, of Montgomery, for appellants.

J.M. Chilton and Ball & Samford, all of Montgomery, and Foster, Samford & Carroll, of Troy, for appellee.

MAYFIELD J.

Appellee filed this bill against appellants, for discovery and an accounting. The defendants demurred to the original bill, and the demurrers were sustained, whereupon the complainant amended his bill. To the amended bill the demurrers were reinterposed, but were overruled. From this last decree this appeal is prosecuted.

The reporter will set out the material facts averred in the original bill and in the amended bill; that is to say, such material facts as will tend to elucidate the opinion. The chancellor wrote a valuable opinion upon sustaining the demurrer to the original bill, and another, when he overruled the demurrer to the amended bill.

After a careful study of the record and of the able and extended briefs of the appellants and the appellees, we are of the opinion that the chancellor was correct in his first decree and opinion, but wrong in his second. We do not think that the amendment cured the bill of its defects pointed out by the demurrer, and must hold that the chancellor erred in overruling the demurrer to the amended bill.

We are unable to find any equity in this bill in so far as it concerns Mrs. Gayle. Her only connection with the...

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