Trustees of Baker University v. Clelland

• Citation: 86 F.2d 14
• Decision Date: 14 October 1936
• Docket Number: No. 10583.,10583.
• Parties: TRUSTEES OF BAKER UNIVERSITY v. CLELLAND et al.
• Court: U.S. Court of Appeals — Eighth Circuit

86 F.2d 14 (1936)

TRUSTEES OF BAKER UNIVERSITY v. CLELLAND et al.

No. 10583.

Circuit Court of Appeals, Eighth Circuit.

October 14, 1936.

Leslie J. Lyons, of Kansas City, Mo., and Frank G. Drenning, of Topeka, Kan. (Donald E. Lyons, of Kansas City, Mo., on the brief), for appellant.

John F. Rhodes, of Kansas City, Mo. (Justin D. Bowersock and Robert B. Fizzell, both of Kansas City, Mo., on the brief), for appellees.

Before GARDNER and SANBORN, Circuit Judges, and NORDBYE, District Judge.

SANBORN, Circuit Judge.

This is an appeal from a decree canceling a trust deed upon lands owned by appellees and the $20,000 note secured thereby.

The appellee Martha Clelland is the widow of William Clelland, who died in 1890. The appellees Mattie A., William R., and Frank W. Clelland are the children of William and Martha Clelland. James Clelland, who died in December, 1929, was the brother of William Clelland, deceased, and the uncle of Mattie A., William R., and Frank W. Clelland. The home of the Clelland family was at New Hampton, Harrison county, Mo. Both James and William Clelland were owners of farm lands and were engaged as partners in farming and stock raising. The lands of William, upon his death, were inherited by his wife and children. William R. Clelland was, at the time of his father's death, eleven years old. Frank W. Clelland was apparently younger, for he did not graduate from college until 1907. Mattie A. Clelland's age does not appear.

James Clelland, who was a bachelor and lived with his brother's family after his brother's death, continued the business in which he and his brother had been engaged. James naturally became, because of his age, experience, and relationship, the head of the family. Both James and William were evidently men of substance and force and leaders in the community where they lived.

Missouri Wesleyan College, of Cameron, Mo., (hereinafter referred to as the college) was an educational institution. Frank W. Clelland was educated at this college, graduating in 1907. From 1910 to 1919 he taught there in the Department of Bible and Philosophy, "Chair of English Bible in memory of William Clelland." He then became a teacher in Boston University, and at the time of the trial of this case lived in Boston, Mass. William R. Clelland became a trustee of Missouri Wesleyan College. He apparently followed in his father's footsteps, becoming a farmer and stock raiser in association with his uncle, James Clelland.

In 1908, the college was in debt and had no adequate endowment fund. At a meeting of the Missouri Annual Conference of the Methodist Episcopal Church at Tarkio, Mo., a Mr. Rankin, of Onarga, Ill., offered to give $25,000 to the college if its friends would pay its debts and would raise an endowment fund which would equal $143,000, including Mr. Rankin's gift. The Rankin offer was limited as to time. Dr. Agnew was president of the college at the time the campaign to meet the terms of the Rankin offer started, but a break in his health caused the campaign to lag, and Dr. De Bra took over the presidency in July, 1909. When Dr. De Bra became president, the time within which the conditions of the Rankin gift must be met would expire the following year. An extension of time was procured from Mr. Rankin, and the campaign was continued with renewed vigor by Dr. De Bra.

In 1910, William R. Clelland and Frank W. Clelland signed a subscription note in favor of the college for $5,000. Up to that time James Clelland had subscribed nothing. Dr. De Bra first solicited James to give $10,000, but finally wrote to him and said that, after canvassing the whole situation, he (Dr. De Bra) thought that James was the one man who could "stand up" with Rankin and give a like amount. The idea seemed to appeal to James, and in the summer of 1911 — the latter part of July or the first of August — he signed a pledge note for $25,000, in order to keep the Rankin offer alive. While this pledge note which James Clelland signed could not be located at the time of the trial, the evidence showed that it was in the following form:

"Missouri Wesleyan College Bond. "Cameron, date.

"In consideration that W. A. Rankin of Onarga, Illinois, has promised to give to Missouri Wesleyan College the sum of twenty-five thousand dollars ($25,000.00) endowment, if the friends of the institution will pay all indebtedness and secure one hundred thousand dollars additional endowment. Therefore, I hereby promise to pay to the said Missouri Wesleyan College of Cameron, Mo., the sum of _______ one-half to be paid within thirty (30) days from the time that it shall be officially announced that the above proposition has been met and the other half within one year from that date; deferred payments to bear interest at the rate of five per cent. per annum.

"Address:"

Both Frank W. and William R. Clelland had urged their uncle to subscribe to the endowment fund. In making his pledge, James told Dr. De Bra: "You cannot make it without we help you. You cannot make it without the $25,000." He also told Dr. De Bra that his nephews had "no business to sign that pledge for $5,000; they cannot afford it; this is my gift. * * * You must tear up that pledge; promise me you will tear up that pledge of $5,000, then I will give this." The nephews' pledge was either destroyed or disregarded.

In making his gift to the college, it was also understood between the college and James Clelland that the income from the gift was to be used to establish and maintain a Chair of English Bible in memory of his brother, William Clelland. The college, after James Clelland's subscription was signed, established, and maintained such a Chair, which was held by Frank W. Clelland until 1919, when another teacher was employed. In 1926, a formal declaration of trust was executed by James to insure the income from his gift being so used. This declaration of trust also provided that, in the event Missouri Wesleyan College should be closed, the income from the trust fund of the "William Clelland Chair of English Bible" should be transferred to the college's legal successor if the successor should be a degree-granting college.

By December 31, 1912, the college had completed the campaign for subscriptions to meet the conditions of the Rankin pledge. In January, 1913, the board of trustees of the college met with Mr. Rankin, and arrangements were made for the collection of the subscriptions. Mr. Rankin gave his note for $25,000 to the college, but insisted upon arrangements being made for reducing all subscriptions to cash or to evidences of indebtedness approved by him. He took a bond from the college and the Cameron Trust Company, its fiscal agent, which recited in part that, "On the first day of January, 1913, the friends of said Missouri Wesleyan College had taken in subscription notes the sum of" $203,897, and had on hand old endowment notes in the sum of $8,784.83; that "W. A. Rankin is satisfied that the face of said subscription and Endowment notes is greater than the amount of the said indebtedness and of the Endowment required under his proposition, but that he is desirous of stimulating and encouraging the officers and agents of said College to speedily materialize the full amount of said debts and Endowment"; that, "It is desired that the said W. A. Rankin now give his note for said Twenty-five Thousand and no/100 Dollars ($25,000.00) with interest to begin thereon from the date that said indebtedness is liquidated, and that he make payments on account thereof in proportion as other subscribers to said Endowment Fund shall pay on account of the same"; and that, "It is further agreed and understood that if the full amount of said debts are not paid, and said Endowment Fund, including said Twenty-five Thousand and no/100 Dollars ($25,000) to be paid by said Rankin, does not equal the sum of One Hundred and Forty-three Thousand and no/100 Dollars ($143,000.00) on or before the Tenth day of June, 1914, which Endowment Fund is to be collected in cash, or by well secured solvent notes, or notes to be approved by said Rankin or his executors or assigns, then the amount of principal and interest paid by said Rankin on his said note of Twenty-five Thousand and no/100 Dollars ($25,000.00) is to be returned to him at once." The Rankin note was placed with the Cameron Trust Company to be collected or returned to Mr. Rankin in accordance with the agreement.

On June 10, 1914, there had been an insufficient amount collected on subscriptions to meet Mr. Rankin's conditions, and he extended the time to September 1, 1915. The latter date was regarded as the "dead line." On September 1, 1915, there was still a deficiency in the amount collected, and fifty friends of the college were called together at Cameron on that day to discuss what might be done. On the morning of that day, James Clelland, who was in Cameron staying with "Professor Frank," went into conference with Mr. Althouse, the president of the Cameron Trust Company, to decide what was to be done about the payment of his (James Clelland's) subscription. The fifty friends of the college agreed to sign two joint notes covering the unpaid subscriptions, which subscriptions were to be put up as collateral to protect the signers of the notes. During the discussion on this proposal, Mr. Althouse and James Clelland came into the meeting. Althouse, after having the proposed plan explained to him, said, "Well you need not include Mr. James Clelland's pledge in these joint notes, for that has been satisfactorily arranged."

The problem with which James Clelland was faced on September 1, 1915, was this: He had lands, but not cash. He did not wish to sell or encumber his real estate, for there existed at that time a rising land market which he no doubt expected to turn to his advantage. He must produce cash or its equivalent to insure the payment of Mr. Rankin's pledge. The problem was solved in this way: James Clelland, on ...