Hutton v. Dewing
| Decision Date | 09 December 1896 |
| Citation | 26 S.E. 197,42 W.Va. 691 |
| Parties | HUTTON v. DEWING et al. |
| Court | West Virginia Supreme Court |
Submitted September 9, 1896
Syllabus by the Court.
If one with knowledge of a fraud which would relieve him from a contract, goes on to execute it, he thereby confirms it, and cannot get relief against it. He has but one election to confirm or repudiate the contract, and, if he elects to confirm it, he is finally bound by it.
Appeal from circuit court, Randolph county.
Action by Elihu Hutton against Dewing & Sons. Decree for defendants and plaintiff appeals. Affirmed.
John W Mason, L. D. Strader, and Butcher & Harding, for appellant.
W. T Ice and E. D. Talbott, for appellees.
This is a chancery suit by Elihu Hutton against Dewing & Sons in the circuit court of Randolph county. The claim of Hutton is that A. H. Winchester and himself, in August, 1885, formed a partnership by verbal agreement for the purpose of purchasing timber lands on Gauley river and its tributaries, and selling them at a profit; that Hutton, who lived not far from that section, and was well acquainted with its people and land, was to examine the lands, find the owners, and enter into contracts or options for their purchase, while Winchester was to look up purchasers for the lands, and sell them at not less than two dollars per acre, but more, if possible; that Hutton was to furnish what cash should be required in purchasing through Winchester out of Hutton's earnings or profits in another enterprise in which they had before been engaged in buying land on Cheat river; that they were to share profits equally; that later B. L. Butcher, a lawyer, was taken into the partnership, so that the enterprise might have his services in examining and securing good titles, and the three were to share profits by thirds; that in pursuance of this enterprise some fifty-odd thousand acres of land were contracted for by executory contracts or options, under which 10 per cent. was to be paid cash, the balance of purchase money deferred, at an average price of one dollar per acre; that in February, 1887, Winchester made a contract by which Butcher disposed of his interest in the lands to Winchester and Hutton upon indefinite terms, fixing no price, and Butcher had never received what was due him; that about the same time Winchester informed Hutton that he had sold, or was about to sell, all said lands to Dewing & Sons at two dollars per acre, and that Hutton protested against such sale, but Winchester claimed the right, under the terms of the agreement of co-partnership, to do so, and virtually compelled Hutton to acquiesce in the sale; that all the while, at the date of this sale, and up to May, 1889, Hutton rested under the confident belief that Winchester was his partner, whereas, in truth and fact, he was all this while the paid agent of Dewing & Sons, appointed and under duty to look up and purchase lands for them at lowest terms for their advantage and again, and, instead of subserving the true interests of the partnership in zealously seeking purchasers for said lands at fair, profiting prices, he had used the power of sale given him by the agreement of partnership to enforce a sale to Dewing & Sons of these valuable lands at a price greatly below their true market value, to the injury and loss of Hutton. The bill asked that the sale to Dewing & Sons be canceled, the land sold for the benefit of the firm, and the firm accounts settled. Butcher was made a defendant, and he filed an answer, giving the same version as Hutton's bill, and as affirmative relief prayed the same relief as Hutton, and that he be given a share in the proceeds of the lands. A decree denied all relief to Hutton and Butcher, and Hutton appealed.
It is claimed that, as Dewing & Sons were aware of the arrangement between Winchester, their agent to buy lands, and Hutton and Butcher, and assented to it, Dewing & Sons, not Winchester, were partners with Hutton and Butcher, and that equity will so treat them. I suppose the basis of relief on this theory would be that the partners in this sale dealt on unequal terms, Hutton and Butcher not knowing Dewing & Sons were their partners, but supposing Winchester was selling to a stranger under authority to sell, with or without their assent, given him by the terms of partnership; whereas, if they had known the truth, they need not and would not have consented to the sale; and that thus it is the case of a purchase by one partner of the interest of another in the social assets at undervalue in ignorance of a material fact, which he had a right to know, but which was hidden either by the partner purchasing, or by his agent to accomplish the purchase, or by both, and that equity would cancel the sale and hold the property for the benefit of all the partners. But, if the theory of partnership be not tenable, then another theory would be that at any rate Winchester was agent of Dewing & Sons to buy lands, and with their knowledge and assent entered into the arrangement with Hutton and Butcher under which the lands were acquired, and then sold to Dewing & Sons at undervalue, claiming to act under rightful power of sale given him by the terms of partnership, which he might use, if he thought best, for his own sole interest, if he wished; and claiming that such sale was well meant by him, as the best he could do for the common interest, whereas he was not in fact acting, as his duty as a partner demanded, for the firm's interest, and selling to a stranger for the market value, but was acting under a duty to Dewing & Sons as their agent, demanding of him to get the land for a low price, though it did injure Hutton and Butcher, they ignorant of the important fact that throughout, and even in the sale, he was acting as agent for Dewing & Sons, and ignorant, by reason of the suppression of that fact; and that, whether it was suppressed and hidden from them with or without the knowledge of Dewing & Sons, suppressed it was by their agent, and they would be chargeable with it under the law of agency. Gregory's Adm'r v. Railroad Co., 37 W.Va. 606, 614, 16 S.E. 819. It is useless to discuss these two theories of the accountability of Dewing & Sons, as, if tenable, in fact or law, they conduct to one result: the cancellation of the conveyance of the land to Dewing & Sons, and holding it for the common benefit of Dewing & Sons, Hutton, and Butcher.
Assuming such accountability of Dewing & Sons, yet, if Hutton and Butcher were advised of the fact that Winchester was but the agent of Dewing & Sons, then plainly they cannot get relief, for it is the suppression of that fact which they say led them to do what, had they known of it, they would not have done; that is, sell to Dewing & Sons. Then, did they know of this fact at the date of the sale or its consummation? We must look at a good many circumstances to reach what we cannot say is an absolute certainty, but a fair and reasonable probability, which in many instances is all that can be done. This is a signal instance, along with its brother enterprise on Cheat river, of a large business, involving several hundred thousand dollars, carried on in a loose, irregular, uncertain manner, without writings, left largely to frail memory, and involved in multitudinous complications, constituting it an Egyptian labyrinth, the correspondence between Winchester and Dewing, especially letters of the former, being past finding out in certain meaning. Let us look at some circumstances bearing on the question whether Hutton knew that Winchester was Dewing & Sons' agent.
1. In the spring of 1885, Hutton and Winchester made an agreement by which Hutton was to procure lands on Cheat river to be conveyed to Winchester, "or any person he may designate"; the contract itself suggesting some one else interested. A large area was acquired under this. Hutton knew that Winchester had no means of consequence, and that the money paid to those from whom he bought the lands and to himself, and paid in the work of sawing lumber on the Cheat lands, and to buy goods in a supply store run by Hutton and Winchester, paid in various calls and sums, only came through Winchester from some source abroad in copious quantity, if he did not know it was from Dewing & Sons. In the latter part of the summer of 1885, W. S. Dewing, the active member of the firm, visited Winchester at Cheat river bridge, and on his way there met Hutton at Huttonsville, and they went on to Winchester's together, and Hutton remained there in his company several days. This man very plainly was the source of the money supply. And Hutton then, if not before, knew that Winchester was the agent of Dewing & Sons in the Cheat river purchases, "and such other business as was connected with that purchase," to use his language, as he himself states. It was Hutton who, in the Cheat river enterprise, by the terms of the contract with Winchester, was to look up and get the lands, just as in the Gauley river enterprise; and in August, 1885, if not before, he knew Winchester was the agent of the Dewings, and that the lands were to be theirs; and was it not the most ready and reasonable conclusion that so, too as to the Gauley lands, Winchester was getting them for the Dewings? Was not that conclusion almost inevitable? The enterprises were so closely kindred, the same object in both,--that this wealthy firm of Michigan lumber men should buy up vast areas of the fine timber lands on Cheat and Gauley rivers. Could a man of Hutton's business capacity and experience in such matters, thrown in personal contract with the active member of that firm, who had been, through Winchester, employed to buy the Cheat lands for that firm,--could he help concluding that when he in the same way...
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