Liberty Oil Co v. Condon Nat Bank, 98

• Decision Date: 27 November 1922
• Docket Number: No. 98,98
• Parties: LIBERTY OIL CO. v. CONDON NAT. BANK et al
• Court: U.S. Supreme Court

260 U.S. 235

43 S.Ct. 118

67 L.Ed. 232

LIBERTY OIL CO.

v CONDON NAT. BANK et al.

No. 98.

Argued Nov. 15 and 16, 1922.

Decided Nov. 27, 1922.

[Syllabus from pages 235-236 intentionally omitted] This suit was begun as an action at law in the District Court of Kansas by the Liberty Oil Company, a corporation organized under the laws of Virginia, and a citizen of that state, against the Condon National Bank, a corporation organized under the banking laws of the United States and resident and doing business in Kansas. Plaintiff by its petition averred that it had made a contract with the Atlas Petroleum Company of Oklahoma, C. M. Ball, Isadore Litman, P. G. Keith, and J. H. Keith, residents of Kansas, by which it agreed to purchase and they agreed to sell 160 acres, more or less, of oil lands in Butler county, Kansas, for $1,150,000. By the contract, the purchaser was required to deposit $100,000 with the Condon National Bank simultaneously with a deposit of the contract, and this sum, together with the assignments, transfers, and conveyances under the contract, was to be held by the bank and by it to be delivered in accordance with the conditions of the contract. The main conditions, and the only ones here material, were that the vendors should furnish an abstract of the title to the property contracted to be sold, showing a good and marketable title in them, that the vendee should have seven days in which to examine the abstract, and that, if its examination should show a good and marketable title, the vendee should pay the bank $1,050,000, the remainder of the purchase money, and the bank should deliver the deeds of assignment and transfers to the vendee, and the vendor should deliver possession of the land. If the examination showed a good and marketable title, and the vendee should refuse to pay the money then due from it, the $100,000 was to be delivered to the vendors as liquidated damages, and the contract was to become null and void. In the event that the examination should disclose that the title was not good and marketable, the vendee was to notify the vendors, and they were to have 30 days in which to perfect the title, and should they neglect in that time to do so the $100,000 on deposit was to be returned to the vendee, and the contract was to become null and void.

The petition averred that the money and the contract were deposited in the defendant bank, that the abstract of title was submitted, that an examination of the abstract submitted showed that the title of the vendors was not good and marketable, in that in the chain of title the vendors claimed under the deed of an assignee for the benefit of creditors filed in a Colorado court and taking effect by the laws of that state, but never authorized or confirmed by a court of competent jurisdiction under the laws of Kansas, as required by the law of the latter state, that this defect was not remedied by the vendors within the time required by the contract and on July 11, 1918, the plaintiff duly notified the defendant bank of this and demanded payment of the money deposited, that the defendant refused and appropriated the sum to its own use to the damage of the plaintiff in the sum of $100,000 and interest at 6 per cent. from the date of the demand and refusal.

The defendant bank answered, admitting all the facts averred in the petition, except those as to the character of the title shown by the abstract, and alleged that the vendors in the contract of sale had also demanded that the deposit of $100,000 be paid to them on the ground that the vendee had refused without right to accept a good and marketable title to the land sold, that the defendant bank had no interest in the deposit, and offered to pay the sum into court or to such person as the court should order. The defendant asked that the vendors be made parties and required to set up their claim to the deposit, that the court make proper order as to the disposition of the money, and that the defendant, upon compliance with the order, be discharged from all liability in connection therewith. The court granted the prayer of the answer and 'ordered, adjudged, and decreed' that vendors be made parties, and set up their claim within 20 days. The vendors waived summons and filed an answer and cross-petition, in which they averred that the petition of the plaintiff did not state a cause of action, and denied as much of the petition as averred that there were defects in the abstract of title which prevented it from being good and marketable. By the cross-petition they asked for the payment of the $100,000 deposit and also a judgment for $1,050,000 as the purchase price for the land, title to which they had tendered, and for general relief. This cross-petition the plaintiff answered, making the same issue as that in the petition and answer. A jury was waived in writing. A bill of exceptions was taken, embodying all the evidence, which was signed by the judge, and the same evidence was included in a transcript also certified to by the judge.

The District Court on the evidence found generally for the vendors, and from its opinion it appeared that it found the title good and marketable, and that upon plaintiff's refusal to accept the same the vendors became entitled to the $100,000 as liquidated damages. Accordingly it was 'considered, ordered, and adjudged' that the vendors, interveners, recover $10,750 as interest on the $100,000 from June 30, 1918, that the Condon Bank, defendant, be discharged from further liability, and that the interveners have judgment for the $100,000 then in the registry of the court. There is nothing in the record to show that the defendant bank was dismissed until this final judgment, although, under some authority not made a matter of record, it had turned the money into the registry of the court.

An appeal was taken to the Circuit Court of Appeals and a supersedeas bond given. The Circuit Court of Appeals held that the action was a suit at law, that under section 4 of the Act of September 6, 1916 (39 Stat. 727 [Comp. St. § 1649a]), to amend the Judicial Code, it had the power and it was its duty to consider the appeal taken as a writ of error, and that, as the bill of exceptions showed no special findings of fact in a cause in which a jury had been waived but only a general finding for the interveners, it was not within the power of the court in a law case to consider the sufficiency of the evidence to sustain the finding. It therefore affirmed the judgment of the District Court. A certiorari brings the case here for consideration.

Mr. F. W. Lehmann, of St. Louis, Mo., for petitioner.

Mr. John J. Jones, of Kansas City, Mo., for respondents.

Mr. Chief Justice TAFT, after stating the case, delivered the opinion of the Court.

We differ with the Circuit Court of Appeals in its holding that, as brought in review before it, this cause was an action at law. We think the cause was then equitable, and the proper review was by appeal. The case began as an action at law for money had and received. When the defendant bank claimed to be only a stakeholder of the deposit, disclaimed interest therein, and offered to pay it into court, and asked that the other claimants of the fund be made parties, its answer and cross-petition became an equitable defense and a prayer for affirmative equitable relief in the nature of a bill for interpleader. Section 274b of the Judicial Code, as amended by Act of March 3, 1915, c. 90, 38 Stat. 956 (Comp. St. § 1251b), provides:

'That in all actions at law equitable defenses may be interposed by answer, plea, or replication without the necessity of filing a bill on the equity side of the court. The defendant shall have the same rights in such case as if he had filed a bill embodying the defense of seeking the relief prayed for in such answer or plea. Equitable relief respecting the subject matter of the suit may thus be obtained by answer or plea. In case affirmative relief is prayed in such answer or plea, the plaintiff shall file a replication. Review of the judgment or decree entered in such case shall be regulated by rule of court. Whether such review be sought by writ of error or by appeal the appellate court shall have full power to render such judgment upon the records as law and justice shall require.'

This section applies to the case before us. The proceeding was changed by defendant's answer and cross-petition from one at law to one in equity with all the consequences flowing therefrom. The...