Stitt v. Rat Portage Lumber Company
| Decision Date | 29 September 1905 |
| Docket Number | 14,357 - (178) |
| Citation | 104 N.W. 561,96 Minn. 27 |
| Parties | ROBERT M. STITT and Another v. RAT PORTAGE LUMBER COMPANY and Another |
| Court | Minnesota Supreme Court |
Action in the district court for Itasca county to enforce specific performance of an oral contract by which it was agreed certain land and timber purchased by plaintiffs with money advanced by defendant lumber company, the title to which was taken in the name of defendant Patrick A. Smith, was to be conveyed to plaintiffs upon repayment by them of the moneys so advanced. In the alternative plaintiffs demanded judgment for $60,000 damages. The case was tried before McClenahan J., who made findings of fact, and as conclusions of law found that plaintiffs were the owners of the land and timber in question subject to the lien of defendant lumber company for $66,752.40; that upon payment of such amount plaintiffs were entitled to a conveyance of the lands; and in default of defendants' acceptance of such sum that plaintiffs should pay the same into court and that the judgment to be entered pursuant to the findings should stand as a conveyance. From an order denying a motion for a new trial, defendants appealed. Affirmed.
Review of Findings of Fact.
The rule that this court will not disturb the findings of the trial court on matters of fact, where there is evidence reasonably tending to sustain such findings, is here applied to findings of fact to the effect that the contract between plaintiffs and defendant did not make plaintiffs the mere agents of the defendants to buy timber tracts and conduct logging operations for an agreed price, but did result in an equitable or informal mortgage in which the title to lands purchased with money advanced to plaintiffs by defendants was taken in the name of a third person, consenting thereto, as security for the repayment of the consideration price and of other advances and for the performance of a logging contract by plaintiffs.
Mortgage to Secure Advances.
A deed absolute on its face may be shown by parol to be a mortgage to secure future advances and the performance of contractual duties, although the mortgagor did not at the time have title to the land, and although title was put in the name of a third person, under agreement with him, for convenience.
Evidence.
The evidence, to have such an effect, must be clear, positive and convincing, but need not amount to proof beyond a reasonable doubt. It is not necessary, however, that the parties should have used the appropriate technical words. Equity looks at the substance of the transactions, and not at the forms of agreement nor at the mere terms used.
Parol Defeasance.
A deed absolute on its face with a parol defeasance is not avoided by the statute of frauds, nor by the statute abolishing resulting trusts.
Statute of Frauds.
A parol agreement for the conveyance of an interest in land, not to be performed within a year, may be taken out of the operation of the statute of frauds by part performance.
Decree of Court.
In an action upon a breach of an equitable mortgage, a court may determine the amount necessary and proper to be paid by the mortgagor in redemption, and direct that, unless the amount so fixed be received and a conveyance executed by the mortgagee, the decree of court shall operate as a conveyance.
Fraud.
This relief is not to be refused because of want of mutuality in obligations, where the conveyance involves a security for the performance of personal services, nor because of fraud, where one of the motives in putting title to the land in a third person is an existing indebtedness of the mortgagor.
R. R. Briggs and Victor J. Welch, for appellants.
H. B. Fryberger, for respondents.
In this case the plaintiffs and respondents and the defendant and appellant lumber company entered into two contracts. The earlier contract is significant only as it sheds light upon the the true nature of the later one, with which this litigation is concerned. There have been two trials of this action. In the first, the court found for the defendants; in the second, for the plaintiffs. The present appeal is from the latter.
1. The trial court properly resolved the disputed matters of fact for the plaintiffs. The plaintiffs, loggers, without means to carry on logging operations, but with long experience in logging and with an extensive local knowledge of the section in northern Minnesota known as the "Bear River and Deer River Territory," and having options on a large number of timber tracts therein, entered into an agreement with the defendant the Rat Portage Lumber Company, engaged in manufacturing lumber. By the terms of that agreement, the lumber company was to advance moneys for buying lands and stumpage, not to exceed one hundred twenty-five million feet, on part of which plaintiffs held options, for paying taxes thereon, and for defraying the expenses of the logging operations of the plaintiffs. The plaintiffs were to secure the lands and stumpage, procure title deeds thereto to be executed to defendant and appellant Smith, to cut stumpage into logs at the rate of ten million feet per year, to do all work in that behalf, and to deliver the same to the Rat Portage Lumber Company in the Beltrami boom.
One controversy concerned the price to be paid for the logs. Plaintiff's case was that the price agreed upon was a sum "equal to that at which other similar logs cut from the particular and specified territory could be bought for and delivered at said boom, less seventy-five cents per thousand feet." The defendants' case was that such price was to be the market value of similar logs at the place and season of delivery, less seventy-five cents per thousand feet.
A second -- and the most important -- controversy had regard to the title to the land. Plaintiffs contended that moneys, not to exceed in amount the total sum which plaintiffs were to receive for logs delivered, were to be loaned by the defendant company to them; that the title to all lands was to be taken by Smith as security for said loans and for the performance of the terms of the contract by plaintiffs; that the said indebtedness by the plaintiffs to the Rat Portage Lumber Company was to be paid by the delivery of logs at the agreed time and place; and that the interest on said mortgage loan was to be paid by the deductions of seventy-five cents per thousand feet from the agreed price of logs. Plaintiffs further insisted that the reasons for putting the title in the name of Smith were as follows: That the lumber company had been advised by eminent local counsel that it was unable, as an alien corporation, to hold title to the quantity of lands in Minnesota involved in this transaction, and that plaintiffs did not want to take title because of an indebtedness to third persons, on which judgment was subsequently rendered against them. Plaintiffs also claimed that Smith knew and understood that the conveyance was made to him as a security and for the convenience of the parties, consented thereto, and had no interest whatever in the premises. The defendants contended that the plaintiffs were to put into the scheme nothing but work, and to take out nothing but wages, to be determined on the basis of the price agreed to be paid for the logs at the time and place of delivery; that the contract did not create even a power coupled with an interest, but was a mere naked agency for the performance of services for a determinable consideration; and that the deduction of seventy-five cents from the price of logs was an inducement to the lumber company to thus employ the plaintiffs.
A third controversy was whether or not three pieces of land (known as the "Loper & Rumery," "Murray," and "Houlton" tracts) were within the terms of the contract. Plaintiffs' contention was that they commenced to carry out the terms of the contract after it was agreed upon, immediately closed options on timber which they already had, obtained other options on large tracts of timber at very advantageous prices, sent out estimators and explorers to examine the timber, negotiated the purchase of all the timber that was purchased directly, and paid for the same through the Northern Pacific Bank of Brainerd, with the exception of these three tracts; that as to these three tracts plaintiffs had estimated all the timber, had negotiated almost continuously for the purchase of the same for several months, and finally directed the defendant Smith to close the purchases on the terms that they gave him; and that he acted as their agent in closing such purchases. Accordingly the plaintiffs claimed that these tracts were as much within the terms of the contract as any other lands. On the other hand, defendants claimed that these lands were Smith's own property, as they were Smith's own purchase.
The fourth controversy arose as to the breach of the contract. Plaintiffs claim that they procured deeds to timber tracts took possession of and used the lands in logging operations, put in general permanent improvements, and proceeded to and did deliver logs in large quantities; that defendant the Rat Portage Lumber Company advanced moneys to the extent of $205,197.85; that plaintiffs delivered logs of the contract value of $138,445.44; that before this suit was brought defendant was guilty of a breach of contract, without cause, in refusing to advance money in accordance with the contract, and in refusing to allow the plaintiffs to log under the contract, unless they would enter into a different agreement with the Rat Portage Lumber Company; and that to such end defendant company notified the plaintiffs that it would no longer carry out the terms of the original contract. Plaintiffs argue that the real...
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