Hill v. Gratigny Plateau Development Corporation

• Decision Date: 09 October 1931
• Docket Number: No. 5692.,5692.
• Citation: 52 F.2d 142
• Parties: HILL et al. v. GRATIGNY PLATEAU DEVELOPMENT CORPORATION et al.
• Court: U.S. Court of Appeals — Sixth Circuit

52 F.2d 142 (1931)

HILL et al. v. GRATIGNY PLATEAU DEVELOPMENT CORPORATION et al.

No. 5692.

Circuit Court of Appeals, Sixth Circuit.

July 3, 1931.

Rehearing Denied October 9, 1931.

John M. Cole, of Springfield, Ohio, and A. S. Iddings, of Dayton, Ohio (Cole, Bowman & Hodge, of Springfield, Ohio, and D. W. & A. S. Iddings, of Dayton, Ohio, on the brief), for appellants.

William Keifer and Frank W. Geiger, both of Springfield, Ohio (Keifer & Keifer, of Springfield, Ohio, on the brief), for appellees.

Before DENISON, MOORMAN, and HICKS, Circuit Judges.

MOORMAN, Circuit Judge.

On September 27, 1925, the Gratigny Plateau Development Corporation, as vendor, and "Frank J. Braun, Trustee," as vendee, entered into a "binder" agreement, at Miami, Fla., for the sale of Florida real estate. The purchase price was $152,500, payable $36,500 down and the balance in six semiannual installments beginning January 15, 1926. On the following day, September 28, an "agreement for deed" was executed by the same parties, in the same manner, and sealed. This agreement contained the same terms as the prior one, and in addition contained restrictive covenants as to streets and taxes, with an acceleration clause as to deferred payments. Simultaneously with the execution of the agreement for deed, "Frank J. Braun, Trustee," executed, under seal, notes payable to the order of the Gratigny Company corresponding in amount, maturity, and interest with the deferred payments referred to in the agreement. The notes did not mention the agreement, and contained no acceleration clause, nor anything to show they were in series. The down payment was made, and the note due January 15, 1926, was paid on its due date. Some of the other notes not being paid when due, the Gratigny Company filed this suit at law on March 2, 1928, to recover the balance of the purchase price. Judgment was asked against Braun and also against Cugley, Hill, Cartmell, and Essex, upon the theory that Braun acted as their agent and/or partner in making the purchase. Upon the trial, there was a directed verdict for plaintiffs, and judgment was entered thereon. The defendants other than Braun appeal.

After the execution of the notes and before the filing of suit, two of the notes were sold. Under a ruling of the trial court, the plaintiff was required to make the purchasers of these notes, O'Donnell and Lowry, parties plaintiff, and, by supplemental petition alleging the transfer of the Lowry note to Harry and Sarah Orner, the latter were substituted for the former as parties plaintiff. These coplaintiffs adopted the allegations of the petition as amended, and joined in the prayer thereof for a recovery of the unpaid purchase money, three-fifths to the Gratigny Company, one-fifth to O'Donnell, and one-fifth to Harry and Sarah Orner.

The petition as amended set up the execution of the binder agreement, the agreement for deed, and the several notes for the purchase price. Appellee contends that the action is based on the binder agreement. We cannot accept that view. The binder agreement was, in fact, a receipt for a sum paid by Braun to bind the contract, and, while it recited the terms of payment, it did not set forth all the terms of the contract, but was superseded by the agreement for deed containing terms and covenants not included in the binder. It appears, therefore, that the parol agreement, unenforceable because not in writing, did not become a binding contract in all of its terms until the execution of the agreement for deed. Furthermore, the only right that the Gratigny Company has to maintain an action on one of the notes sued upon rests upon the acceleration clause in that contract, not contained in the binder or the notes. It may be that there is ground for contending that, as to O'Donnell and the Orners, the action is based on the notes which they hold, but, if that be true, they are in no better position than their co-plaintiff, for the notes also were executed under seal, and the right of action thereon is not only affected by that circumstance, but is subject to such further limitations as may be imposed by the Negotiable Instrument Act. Moreover, the petition alleges that, at the time of making the "last mentioned agreement," that is, the agreement for deed, the notes were executed and delivered "as evidence of the amounts to be paid thereunder but not in payment thereof." Whether this averment be true or not, it shows that plaintiffs did not seek a recovery on the notes, as such, but upon the contract, and, as we have said, the only written contract which sets forth all the terms and conditions of the agreement is the "agreement for deed." We think the action is founded on that agreement.

Appellants entered into an agreement among themselves to speculate in Florida lands and employed Braun, an experienced real estate man, to buy and sell the lands, upon the understanding that his expenses would be paid, and that he would participate in the division of any profits that were made. It does not appear that he was to share in any losses that were sustained, and there is nothing in the evidence to show that "Frank J. Braun, Trustee," was ever adopted or used by appellants as a partnership name, or that Braun purported to act or did act in the capacity of partner. The true relation between the parties is set out in Braun's letter to Cugley, of September 5, 1925, saying: "I shall, as your agent and representative undertake to invest and reinvest in Florida real estate such sums of money as you shall put to my disposal." In the same letter, he stated that it was the understanding that the titles, options and rights "taken in my name * * * shall in reality be held in trust for you." It is thus clear that Braun was not a partner of appellants, but was merely their agent with authority to purchase land.

Under the law of Florida, a contract for the sale of real estate may be executed as a simple contract, without seal. Lente v. Clarke, 22 Fla. 515, 1 So. 149. The general rule is that when a simple contract other than a bill or note is executed by an agent in his own name, whether he describes himself as agent or not, or whether the principal be known or unknown, the principal may be made liable thereunder, and will be entitled to sue thereon.¹ It is also the settled law that an action can be maintained upon a sealed instrument only against those whose names are signed thereto or appear therein, and accordingly that a contract properly executed under seal is not enforceable against an undisclosed principal. Willard v. Wood, 135 U. S. 309, 10 S. Ct. 831, 34 L. Ed. 210; Badger Silver Min. Co. v. Drake (C. C. A.) 88 F. 48; Western Sugar R. Co. v. Helvetia Swiss Fire Ins. Co. (C. C.) 163 F. 644; Seretto v. Schell, 247 Mass. 173, 141 N. E. 871. As heretofore stated, we think this action both as to the Gratigny Company and as to the holders of the assigned notes is founded on the agreement for deed. Considering it from that point of view, the question is whether a contract not required to be under seal, though sealed, is to be treated as a specialty or sealed instrument.

Upon the question just stated, there is a conflict of ruling among the decisions.² These cases varyingly rest on common-law rules and statutory enactments. They are pertinent here in so far only as they do not conflict with the Florida statutes as construed by the highest court of that state. Section 5705 (3827) of the Compiled General Laws of Florida 1927 provides that all written instruments made with a scrawl or scroll, printed or written, affixed as a seal, shall be sealed instruments, and shall be construed and received in evidence as such in all the courts of the state. Construing this statute in Langley v. Owens, 52 Fla. 302, 42 So. 457, 11 Ann. Cas. 247, the Supreme Court of Florida held that the placing of the characters or device "L. S." upon a promissory note in the usual place for a seal imported an intention to make the note a sealed instrument, and hence the five-year s...