McCleary v. Chipman

• Decision Date: 15 October 1903
• Citation: 32 Ind.App. 489,68 N.E. 320
• Parties: McCLEARY v. CHIPMAN et al.
• Court: Indiana Appellate Court

32 Ind.App. 489

68 N.E. 320

McCLEARY

v.CHIPMAN et al.^*

Appellate Court of Indiana, Division No. 1.

Oct. 15, 1903.

Appeal from Circuit Court, Kosciusko County; H. S. Biggs, Judge.

Action by Silas W. Chipman and others, trustees, against John C. McCleary, to recover on a contract of subscription. Judgment for plaintiffs, and defendant appealed to the Supreme Court, from which the cause was transferred under Act March 12, 1901. Affirmed.Edgar Haymond and Marshall, McNaguy & Clugston, for appellant. W. D. Frazer, John D. Widaman, J. R. Frazer, and Odell Oldfather, for appellees.

ROBINSON, C. J.

Error is assigned upon the conclusions of law stated upon a finding of facts substantially as follows: In January or February, 1895, appellant and a large number of other persons proposed in writing to one Huffman to purchase from him, at $100 each, lots for which they subscribed, if Huffman would procure title to a certain tract of land, and erect thereon certain factories, and plat the remainder into city lots. Appellees were named as trustees, authorized to collect the money, and distribute the lots “by lots,” in a manner to be determined by them; the subscribers agreeing to accept and pay for such lots as should be set off to them. When 50 per cent. of the price of the lots had been paid, Huffman was to convey the lots to the subscribers by perfect title, in fee simple, free from incumbrances; the subscribers to execute their notes in two payments for the residue. Appellant subscribed for one of the lots. Huffman accepted the proposition, but, before performing his part of the agreement, except making a plat of 350 lots, which plat was not recorded, assigned his interest therein to the firm of Charles & Co., who assumed Huffman's duties, but who did not carry out the agreement. Afterwards, in March, 1895, appellant, with part of the persons who signed the Huffman proposition, with others, signed a second proposition, providing that if the owners of the premises would procure the erection of a factory of certain dimensions and capacity, and would plat into lots the land to have been platted in the Huffman proposition, the subscribers would pay for the lots theretofore subscribed for, the sum so subscribed, to the trustees named in that subscription. The proposition stated that it was made to induce some party to erect the factory on the strength thereof. The subscribers appointed a committee of four to act for them and in their names, and to look after their interests; authorizing them to permit such changes in the details as they might deem necessary, and to divide the lots among the subscribers. thereby ratifying all that they might do. It is further found that among the subscribers to the first and second propositions were ten of the persons designated as the owners of the premises named in the second proposition; that the lands to be platted were in sections 5 and 8; that, when the two propositions were made, the persons named in the second proposition as the owners of the land in section 8 were not such owners, but that 3 of the persons so named had previously conveyed the land to one Oldfather, who did not record his deed until July, 1896. When the propositions were made, the subscribers did not know Oldfather owned the premises, but believed the persons named in the second proposition were such owners. That, contemporaneously with the execution of the deed to him, Oldfather orally agreed that he would hold the land in trust for his grantors, convey the same to persons whom they might designate, and reconvey any portion left, which trust Oldfather has ever since recognized, and now does so. The persons named in the second proposition as the owners of the land to be platted did own that part in section 5, and on October 31, 1895, they quitclaimed the same to Oldfather, who contemporaneously therewith executed to the grantors a written declaration of trust that the conveyance was made to him as trustee, and that he would convey the lots to the parties entitled to such conveyances under the terms of the subscriptions. The second proposition was accepted by the owners, and, relying thereon, they entered into a contract with the firm of Charles & Co. for the erection of a factory; the firm to be paid the proceeds from the subscriptions. The factory was erected substantially in accordance with the requirements of the two propositions, was in complete running order on July 1, 1895, and since that time has been operated in compliance with and to the capacity required in the two propositions. The subscribers' committee entered upon the discharge of their duties, approved the location of the factory, such changes as were made as to the buildings and their locations, the conveyance of the land to the firm of Charles & Co., the platting of the rest of the land into lots, and sent to the subscribers, including appellant, who received the same, notice of a meeting of the subscribers for the purpose of disposing of the lots, which notice contained in detail a plan for distribution, which was substantially adopted at a meeting of the subscribers held afterwards. The parties named as owners of the land in the second proposition conceived the plan of disposing of the land, prepared and circulated the two subscription papers, were the real parties in interest, claiming to be the owners in interest of the land, and were to receive the profits of the sale, except such part as went to the firm of Charles & Co. On April 16, 1896, Oldfather platted the lands, and recorded the same; his plat differing from the Huffman plat, in not including as much land, by about 4 1/2 acres, which was low, wet land, not valuable for building purposes, and of little value for town lots; in changing the factory site to higher ground, of greater value, and enlarging the same, and omitting a strip 66 by 400 feet of the most valuable land. Otherwise the plats were substantially the same. Of the land to be platted in the Huffman proposition, part was low, wet, and swampy land, which had no value for building purposes, and but little value for any purpose. A depression from 5 to 10 feet deep and 15 to 20 feet wide ran through a portion of it. Much of it lay remote from roads or streets. Part was high, lay near roads and streets, and was well adapted to building purposes. Of the lots in the Oldfather plat, part were low and wet, remote from roads and streets, not valuable for building purposes, and no value for any purpose of more than $3 to $15 per lot. That not to exceed 50 of the lots were adapted to building purposes, and had a market value of from $30 to $35 per lot. When the deeds were made to Oldfather, the lands were incumbered with judgment, mortgage, and tax liens of more than $14,000. On December 20, 1900, the State Bank of Warsaw had become the owner of most of these liens, and on that day released the same. None of the liens held by the bank at the date of the release were paid, and still remain unpaid to the amount of more than $7,000. The distribution of the lots was made in the following manner: The numbers 1 to 350, representing the lots, were written on separate cards, which were placed in envelopes and sealed. Each of the names of the 350 subscribers was written upon a separate card. The cards containing the names of the subscribers were placed in one box, and the envelopes containing the lot numbers in another. The boxes were thoroughly shaken, a card containing a name drawn, and simultaneously therewith an envelope containing a lot number. If the subscriber thus drawn had paid $50 on a lot, the envelope was opened, and the number of the lot announced. If the subscriber so drawn had not so paid, the card containing the name and the envelope containing the lot number so drawn were put into a larger envelope and sealed. Appellant was not present, and did not participate in the drawing. Not having paid $50 on a lot, the card containing his name and the envelope containing a lot number drawn with it were sealed in an envelope, which, when afterwards opened, was found to be lot 271, which was part of section 5. The firm of Charles & Co., appellee Chipman, who performed all the active duties of the trust, and the landowners, approved the manner of distribution. Charles & Co. will not recover any of the money collected in this suit, but the same will be used to apply upon the liens held by the bank and a certain estate. Before this suit was brought, Oldfather tendered to appellant a deed to lot 271, conveying to him a merchantable title in fee, free from incumbrances of all kinds. The lots, streets, and alleys in the plat have not been staked out or marked or identified. Appellant has never taken possession of the lot. About 70 subscribers have paid in full and received deeds, and about 100 others have made partial payments. The amount of appellant's subscription is now $105, no part of which has been paid. Appellant has never demanded a conveyance of the lot, or an abstract, or possession, and has never rescinded or offered to rescind his subscription. As conclusions of law, the court stated that appellees are entitled to recover $105 and costs, and that appellant is entitled to the possession of the deed tendered.

It is first argued that the findings show misrepresentations and concealment of material facts on the part of those promoting the enterprise. But the record discloses nothing of this character which would prejudice the rights of appellant, or render the contracts unfair. When the second proposition was signed, the parties representing themselves to be the owners of the land to be platted, of which lot 271 was a part, were in fact the owners; and three of them owned the other tract, and had previously conveyed it to Oldfather in trust for them. It is not shown that there were any secret equities affecting appellant's rights. At no time was the title to the land in a condition that it was impossible for them to...