Plews v. Burrage

• Decision Date: 02 May 1927
• Docket Number: No. 999.,999.
• Parties: PLEWS v. BURRAGE.
• Court: U.S. District Court — District of Massachusetts

19 F.2d 412 (1927)

PLEWS v. BURRAGE.

No. 999.

District Court, D. Massachusetts.

May 2, 1927.

Whipple, Sears & Ogden, Sherman L. Whipple, and Alexander Lincoln, all of Boston, Mass., for plaintiff.

Henry W. Beal and John H. Powers, both of Boston, Mass., for Hayden, Stone & Co.

Boyd B. Jones, of Boston, Mass., for trustees.

MORTON, District Judge.

The subject-matter of this litigation has been twice before the Circuit Court of Appeals. On the first occasion it was decided that Burrage had no standing to maintain a bill in equity to enjoin the present action at law by Plews. Plews v. Burrage, 266 F. 347, 348. Thereafter elaborate pleadings were filed in this case. The plaintiff's declaration and replication and the defendant's answer, taken together, present substantially the same questions as were raised by the bill in equity. Burrage demurred to the replication upon the ground that, on the facts therein stated and admitted, the plaintiff was not entitled to recover. The questions raised by this demurrer went to the Circuit Court of Appeals, and it was held on the facts so presented (1) that the action must go forward and be tried at law; (2) that Burrage occupied a fiduciary relation towards Plews, which entitled Plews to full and frank disclosure from Burrage with respect to the matters in question; (3) that the replication stated a good case of oral and written misrepresentations and concealments practiced upon Plews by Burrage; (4) that the proceedings in the state court (Ross v. Burrage, 237 Mass. 545, 130 N. E. 80) did not bar Plews from maintaining the action; and (5), that Plews was not guilty of laches. Plews v. Burrage, 274 F. 881.

The view of the law on which the first point in the second case rested — and certain expressions in the previous opinion — has been overruled by Liberty Oil Co. v. Condon Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232. Both parties now agree that the issues of fraud raised by the replication are to be determined on the equity side of the court, in connection with the report of Mr. Proctor as special master, not as auditor. The other points in the second decision were not affected and constitute the law of this case. It must be borne in mind, however, that the Circuit Court of Appeals heard it on a demurrer which admitted the plaintiff's allegations of fact. While on many points the master's findings have sustained the allegations of the replication, on certain very important ones he has found against the plaintiff; so that the facts now before the court are substantially different from those before the Circuit Court of Appeals.

The present questions arise on exceptions taken by both parties to the master's report. They have been carefully considered, with the aid of unusually thorough briefs.

As to the plaintiff's exceptions: The first five, the ninth, and the tenth, raise a question of fact as to alleged misrepresentations and concealments by the defendant at the interviews between him and the plaintiff in London and Paris in July, 1911. Only the two parties participated in the conversations, and each testified about them before the master. He has found that the defendant made no fraudulent concealments or representations on either occasion. The plaintiff contends that this finding is very clearly wrong, and that Plews' account of the conversation should have been accepted. There was no significant contemporaneous evidence supporting either witness. Plews' subsequent statements, which are urged by the plaintiff, are too highly self-serving to carry much weight. The master had to choose between the conflicting stories told by the opposing parties. After hearing each testify at great length, he was not persuaded that Plews' version was correct. It is a situation in which the master's findings are almost conclusive, for the simple reason that an able and fair-minded man — and the master in this case was both — is, under such circumstances, far more likely to reach a correct conclusion than anybody reading a transcript of what was said. I am by no means convinced that the master was clearly wrong. These exceptions must be overruled.

Of the defendant's exceptions, the fourth, seventh, eighth, ninth, and tenth relate to alleged misrepresentations and concealments by him, through which, after having obtained the option on the commission note, he procured the plaintiff's assignment of it in accordance with the option. They may conveniently be discussed together. In order to do so, reference to certain facts is necessary.

During the summer of 1911, Ross suggested to Burrage that he (Ross) undertake to buy out Plews, and that he could probably do so for a small sum. Burrage told him to let Plews alone; that Burrage would deal with that matter in his own way and time. Ross, however, went ahead on his own account, "without the instrumentality, knowledge, or consent" of Burrage (as the master finds), and got from Plews a written option to buy the commission note for £500. Ross paid Plews from his own funds £50 on account of the purchase price. The option was dated September 29, 1911, and ran four months. In November or December, Ross told Burrage what he had done. Burrage was much displeased, intimated that Ross had no right to get the option behind his (Burrage's) back, and dragooned Ross into turning it over to him, repaying Ross the £50 which the latter had advanced. In February, 1912, Burrage exercised the option, paid the balance of the option price to Plews, and took from him an assignment of the commission note and a discharge of Plews' rights under it. Before doing this Burrage had written, in January, 1912, two very deceiving letters to Plews about the adventure. The master has found (a) that Plews relied on these letters in accepting the balance of payment under the option and in making the assignment under it; and (b) that they constituted fraud on the part of Burrage in getting the commission note. These findings are challenged by the exceptions under discussion on the grounds that the first finding is not warranted on any reasonable view of the evidence, and as to the second finding that misrepresentations made after the option was given were as a matter of law immaterial.

As to (a): It is a question of fact, relating to Plews' state of mind, as to what influenced him in making the assignment in accordance with the option. He has stated his point of view in unmistakable terms. In July, 1914, he wrote to his counsel:

"When Burrage wrote that letter, I looked very seriously into my contract with Ross, to find out if it were binding on me, with the result that I was satisfied that, as I had accepted £50 on account, I was obliged to complete, and could not interfere in any way with Ross' contract, but I had the conviction that I had been sold, and, if I could then have legally withdrawn, I should have done so." Plaintiff's Brief, p. 8.

Again in 1916 he wrote to them:

"When Ross wrote and told me that he had handed over the benefit of his contract with me to Burrage, I felt at once that I was in the soup, whether by the collusion of Ross and Burrage, of course, I could not determine; but I was very suspicious, and I would have repudiated the bargain, if I had felt satisfied that I could do so legally." Plaintiff's Brief, p. 8.

In January, 1912, while the option was outstanding, Plews wrote to Ross:

"In view of what I have heard recently I would prefer to cancel the arrangement and to send you back your £50.

In his testimony Plews puts his attitude in much the same way:

"Q. Having parted with the note to Ross, you believed that your right to the note itself was terminated? A. Well, I believed this, that I was obliged to carry out any arrangements that Ross should make, either with a third party or it may be even with Burrage." Plaintiff's Brief, p. 9.

Many other similar statements by the plaintiff might be referred to; his testimony on the point, taken as a whole, is clearly in accord with the foregoing quotations. It seems certain, in spite of the master's finding to the contrary, that Plews did not make his assignment of the commission note for any other reason than because he supposed that he had to do so under the option which he had given. I do not see how the English language can put such a state of mind more clearly than Plews himself has done in his evidence taken as a whole. Apparently this is felt by the plaintiff's counsel, for in his brief it is suggested that Plews completed the transaction because he did not realize "that the defendant's concealments and misrepresentations had...