Kramer v. Arthurs

• Decision Date: 25 November 1847
• Citation: 7 Pa. 165
• Parties: KRAMER <I>v.</I> ARTHURS and NICHOLSON.
• Court: Pennsylvania Supreme Court

7 Pa. 165

KRAMER v. ARTHURS and NICHOLSON.

Supreme Court of Pennsylvania.

November 1, 1847.

November 25, 1847.

Nov. 1.

IN error from the District Court of Allegheny.

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Williams and Dunlop, for plaintiff in error, argued that the ratification by Luckey could not affect any intervening rights, nor could they be let in on the estate thereby confirmed: McKinney v. Rhoads, 5 Watts, 345. There being no contract binding upon the vendor under the statute of frauds until the ratification, the judgment was not let in. The possession of Wetmore and Havens was not such as sufficed to take the case out of the statute; 1 Fonb Eq. 185; Anderson v. Maltby, 2 Ves. jun. 244; Whitbread v. Brockhurst, 1 B. C. C. R. 404. There was, therefore, no estate in Wetmore or Havens, which is essential to give a lien: Rickert v. Madeira, 1 Rawle, 329; but a sort of equitable right which never passed into estate until the conveyance to Patterson by Luckey. That there may exist such an equity, in Pennsylvania at least, is shown by Fisher v. Taylor, 2 Rawle, 33, and Vaux v. Parke, 7 Watts & Serg. 19. But what interest had Wetmore and Havens, supposing a title was vested in them? It was but a trust of an equitable title. Their title as trustee could not be sold, Frazer v. Hallowell, 1 Binn. 126; and the rights of their cestuis que trust were protected by the outstanding legal estate which they were entitled to manage; and, as to their right to a part of the profits, or their lien for advances, that cannot, in Pennsylvania, be said to be an estate, when we hold that the devisee of the proceeds of land has no such interest as can be sold under a judgment.

Metcalf and Loomis, contrà, argued that the ratification of the contract by Luckey had a retroactive effect to vest a title under the agreement: Story on Agency, ss. 244, 250, and 252. Under that agreement, a clear equitable estate was vested in the purchasers. This title, though equitable, was bound by judgment, which could not be defeated by any secret agreements of the holders; and, supposing it was subject to the articles, and converted into partnership stock, yet, as Havens was the creditor of the firm, he was entitled to the assets, and the plaintiffs succeeded to his rights, and could retain possession until his claims were paid.

Nov. 25. GIBSON, C. J.

In order to develope the principles of this case, it is necessary to state succinctly the facts to which they are to be applied. By the style of the Pittsburgh Land Company, the firm of Wetmore and Havens, and nineteen other shareholders, executed articles to constitute themselves a joint-stock company to deal in real estate in that city and its vicinity, which was limited, in its duration, to a period of three years; at the end of which, the investment was to be withdrawn and the profits divided. The capital stock was limited to $100,000, in shares of $5000 — one of which was subscribed by Havens and Baldwin, who was one of the nineteen partners, and H. Wetmore and Havens were to be the active agents of the company and the ostensible owners of its property, having power to deal to thrice the extent of its capital, and to take conveyances in their own names as the only persons concerned, but being bound, at the same time, to execute declarations of trust for the security of the company, and put them on record when required to do so. Besides Havens's proportion, as part owner of a share, Wetmore and Havens were to receive a third of the profits at the winding up of the concern; but, in every thing else, they were to be a mere conduit-pipe of the title from their vendors to their vendees. They purchased the ground in contest by a written agreement from Lee, holding himself out to be the agent of Luckey, the owner of it, who subsequently ratified the bargain in a written correspondence with Havens. Shortly afterwards, Wetmore retired from the company, transferring his interest to his partner Havens, who, with its assent, thenceforth became its exclusive instrument. Thus constituted, and having paid the purchase-money, he sold the premises to Stewart, by whose direction the title was made to Patterson — not, however, through Havens, but directly from Luckey. It will be seen that this avoidance of circuity is the master-key of the case. In the mean time — that is, between the bargain with Lee, and the execution of it by the conveyance from Luckey to Patterson — the Dry Dock Company of New York had obtained a judgment against Wetmore and Havens for a debt separately due by their firm, on which the premises were sold to the plaintiffs below; and we are first to inquire into the relation which they thenceforward bore to the defendant, or those from whom he derives title.

Had the legal title and consequent indices of ownership been in Wetmore and Havens at the time of the...