German American Seminary v. Kiefer

• Decision Date: 11 February 1880
• Citation: 4 N.W. 636,43 Mich. 105
• Court: Michigan Supreme Court
• Parties: THE GERMAN AMERICAN SEMINARY v. KIEFER.

4 N.W. 636

43 Mich. 105

THE GERMAN AMERICAN SEMINARY v. KIEFER.

Supreme Court of Michigan

February 11, 1880

Facts in this case considered, and held that the right of complainant to hold defendant liable as constructive trustee for certain money had and received, was barred by its laches and failure to proceed against him in connection with others standing in a similar position, and against whom a former action had been instituted.In an equitable proceeding to hold a defendant liable as for money had and received, the statute of limitations proper if the action were one of law will be applied.

Appeal from superior court, Detroit.

Otto Kirchner, for defendant.

COOLEY, J.

The bill in this case is filed to compel the defendant to account for moneys which it is claimed are held by him in constructive trust for the complainant.The record is somewhat voluminous, and the evidence conflicting, but it will be sufficient for the purposes of this decision to state the facts as we find them established by the evidence or by the admission of the parties.In January, 1865, complainant was owner of a considerable body of pine lands in the county of Midland, in this state, and was desirous of selling them.The official board of the seminary at that time consisted of Julius Stoll, Bernard Stroh, Edward Eccard, Rudolph Diefenbeck, Karl Busch, Edward Kanter and the defendant.The lands had been thought worth from two to four dollars an acre, but purchasers were not found.

Finally Mr. W.H. Craig offered one dollar an acre, and a committee to whom the board had referred the matter were disposed to close a bargain at that price.Mr. Stroh objected to this, and thought a man should be sent to examine the lands.He finally agreed that if that course should be adopted he would guarantee that the corporation should lose nothing by it, and that if Mr. Craig should withdraw his offer in the meantime Mr. Stroh would himself take the lands at the price offered.This was agreed to, and Mr. Charles Stange was sent to learn what he could about the lands.He went and on his return reported verbally his opinion that the lands were worth from six to ten shillings an acre, the evidence on the report being conflicting, but ranging between these sums.It was then arranged that the lands should be put up at auction and sold to the highest bidder, and February 2, 1865, was fixed upon as the time.The trustees came together at that time, and a few others whom it was thought might be disposed to bid on the lands.The defendant took some pains to invite in parties who were known by him to be able to become purchasers.The quantity of land offered was about 3,700 acres, and bids were made for it, beginning with one of $4,100, by Mr. Stroh, and closing with one of $5,100 by the same person, and the lands were struck off to him.Mr. Craig was a bidder several times, closing with an offer of $5,050.The lands, by request of Mr. Stroh, were deeded to his wife.

It was afterwards known that Mr. Stroh's purchase was made on an understanding with Mr. Stange, Mr. Arnold Kaichen and the defendant, that each of them should take equal interests with him in the lands, and that this understanding was carried out.The reason assigned by the parties for making this arrangement was that they were all interested in the seminary, and anxious to assist it by procuring as much for the lands as possible, but none of them were willing to take the whole risk of buying at the price which was offered; and we are satisfied from all the evidence in the case that the land at that time had no definite market value and that the parties buying could then have counted upon a profit from their purchase only by holding the title for some considerable period.Some public criticism of the sale appeared in the newspapers soon after it took place, but at a meeting of the corporation, held more than a year afterwards a resolution was adopted approving of the sale and of the action of the trustees respecting it.

Within two years after the sale the price of pine lands in the part of the state where these lands were situated began to go up rapidly.This was due in part to the building of a railroad which gave better access to the territory, and in part to an increased demand for pine timber.

In October, 1868, Stroh sold all the pine timber from these lands to Newell Barnard for $24,000, receiving his pay in instalments, the last of which was made in 1872.This sum was divided with Stange, Kaichen and the defendant, each receiving $6,000.In 1874, after there had been an entire change in the trustees of the seminary, if was decided to proceed against Stroh to charge him as constructive trustee of the seminary in holding these lands and selling the timber, and a bill was accordingly filed against him in the Midland circuit, in chancery, which resulted in a decree made November 17, 1876, which set aside the conveyance of the lands to Stroh as fraudulent, and directed that he pay forthwith to complainant the sum of $14,006, and the costs.No appeal was taken from this decree, but meantime Mr. Stroh had become insolvent, and the personal decree uncollectible.The present bill was then filed, the purpose of which is to collect from the defendant the sum which he received on the sale of the timber from these lands.

It is alleged in the bill that complainant did not discover the interest of this defendant in the purchase until some time in the course of the suit against Stroh.This allegation is not sustained by the evidence.It appears beyond dispute that some of the persons who were trustees at the time of the sale knew of defendant's interest soon afterwards, and the evidence is full...