Vane v. Towle

• Decision Date: 10 November 1897
• Citation: 50 P. 1004,5 Idaho 471
• Parties: VANE v. TOWLE
• Court: Idaho Supreme Court

50 P. 1004

5 Idaho 471

VANE v. TOWLE

Supreme Court of Idaho

November 10, 1897

SUFFICIENT CONSIDERATION TO SUPPORT AN AGREEMENT.-While the compromise of a claim asserted upon the one side, but questioned upon the other, will be deemed a sufficient consideration to support an agreement to pay such claim, it is still essential that the claim so asserted should have some basis upon principles of law or equity. Where one under the influence of threats or persuasion, and for the purpose of avoiding a present or threatened embarrassment, agrees to pay or recognize a claim which has no foundation either in equity or law, such agreement is without consideration and void.

UNDERTAKING ON APPEAL-WHEN SUFFICIENT.-An undertaking on appeal which specifically recites that the appeal is from both the judgment and the order overruling the motion for a new trial and obligates the sureties to pay the penalty in the event of a judgment against the appellants or the dismissal of the appeals is sufficient under the statutes of Idaho.

(Syllabus by the court.)

APPEAL from District Court, Kootenai County.

Reversed and remanded, with instructions.

Charles L. Heitman, for Appellants.

The main contention of appellants is that the contract made on April 19, 1894, by the respondent and R. I. Towle representing appellants, and upon which this action is brought, is wholly without consideration, and that respondent in securing said contract violated his duty as trustee for the Newport Mill Company and took unconscionable advantage of appellants who were, as the first preferred creditors of said Newport Mill Company, beneficiaries of said trust, which it was respondent's duty to execute according to the terms of the agreement of July 28, 1893. Absolute and most scrupulous good faith is the very essence of the trustee's obligation. The first and principal duty arising from this fiduciary relation is to act in all matters of the trust wholly for the benefit of the beneficiary. (2 Pomeroy's Equity Jurisprudence, sec. 1075; 27 Am. & Eng Ency. of Law, 191.) A trustee, in dealing with his cestui que trust, or in the management of the trust estate, must always show uberrima fides. He must never lose sight of the fact that he is acting for another who is the real beneficiary and no thought or hope or purpose of personal advantage can have part in the motive for or in the result of his act. (Perry on Trusts, sec. 427; Bound v. South Carolina R. R. Co., 50 F. 854; note to Read v. Patterson, 6 Am. St. Rep. 885.) It is alleged, admitted and proven without conflict that respondent was trustee of the Newport Mill Company. Neither the promise to do a thing, nor that actual doing of it, will be a good consideration if it is a thing which the party is bound to do by the general law or by a subsisting contract. (Pollock on Contracts, 161.) Nor is the performance of that which the party was under a previous valid legal obligation to do a sufficient consideration for a new contract. (2 Parsons on Contracts, 437.) The performance of an act which the party is under a legal obligation to perform cannot constitute a consideration for a new contract. (Robinson v. Hawes, 56 Mich. 135, 22 N.W. 224; Bartlett v. Wyman, 14 Johns. 260; Crosby v. Wood, 6 N.Y. 369.) Appellants admit that, under ordinary circumstances, and where no relation of trust or confidence exists, the compromise or settlement of a bona fide controversy or disputed claim in order to avoid litigation is a sufficient consideration to support a contract, but appellants contend that none of the elements necessary to constitute a valid and binding agreement are found in the contract upon which this action is based. The alleged claim of respondent against the Newport Mill Company as against appellant's preferred claim was without foundation or merit. (Duck v. Antle, 5 Okla. 152, 47 P. 1057; McKinley v. Watkins, 13 Ill. 140; Long v. Towl, 42 Mo. 545, 97 Am. Dec. 355.) If each appeal be recited or referred to, and the undertaking be of sufficient amount, all the appeals will be rendered effectual. (Hayne on New Trial and Appeal, 645; Granger v. Robinson, 114 Cal. 631, 46 P. 604; Watkins v. Morris, 14 Mont. 354, 36 P. 452.)

R. E. McFarland, for Respondent.

Was there a sufficient consideration for the execution of this contract? It is admitted by both parties that it was executed to avoid litigation. This in law has always been considered sufficient. (McClure v. McClure, 100 Cal. 339, 34 P. 822; Swem v. Green, 9 Colo. 358, 12 P. 202.) It is held in Curry v. Davis, 44 Ala. 281, that where a creditor and his debtor entertain doubts of the validity of a debt, and make an honest compromise of it, a note given by the debtor for the compromise sum agreed upon cannot be contested as lacking consideration. (See, also, Honeyman v. Jarvis, 79 Ill. 322; Hanley v. Noyes, 35 Minn. 174, 28 N.W. 189; Zimmer v. Becker, 66 Wis. 527, 29 N.W. 228, and note; Northern Liberty Market Co. v. Kelley, 113 U.S. 199, 5 S.Ct. 422.)

HUSTON J., QUARLES, J. Quarles, J., Sullivan, C. J., and Huston, J., concurring.

OPINION

HUSTON, J.

On the twenty-eighth day of July, 1893, one J. L. Brace was the owner of a sawmill situated at or near the town of Newport, Idaho. It appears from the record that said Brace had, in the running of said mill, become embarrassed financially, which condition involved certain claims of persons theretofore employees of the said Brace. For the purpose of adjusting existing differences and providing for the further utilization of the product of said mill property, on the 28th of July, 1893, the said L. J. Brace made the following agreement, signed by himself alone, but accepted and acted on by the respondent, William Vane:

"Newport, Idaho July 28th, 1893.

"Know all men by these presents that I appoint William Vane, of Newport, Idaho as receiver for me, to run my mill, and to buy timber for the same, and to sell all the lumber cut by said mill; and I authorize him to pay all bills such as are contracted by him in said receivership, and to pay for provisions and labor, out of said mill and product. Also I agree not to hold said William Vane responsible for any accident of whatsoever nature to said mill while in his charge. And when, at such time all bills for labor and supplies for said mill are paid, the said receivership of William Vane will expire. I also further agree that I have nothing further to do with said mill, which is situate on the townsite of Newport, Idaho nor interfere in any way whatsoever with William Vane, until such time as all bills contracted for provisions and labor are paid; also to pay any bills for goods got from Mr. Towle since the mill came to Newport, and all labor bills now due and contracted since the mill was removed to Newport, Idaho. All bills to be paid out of the sale of lumber. Coupon No. 1 forms a part of this contract. In witness hereof I sign my seal.

"L. J. BRACE.

"Witness: HARRY G. BRACE."

Coupon No. 1, above referred to, is as follows:

"Coupon No. 1.

"This forms a part of the receivership contract between L. J. Brace and William Vane. In any services rendered by William Vane while receiver for mill at Newport for L. J. Brace the said William Vane will be paid for such time that he actually puts in, and the price of such time will be set--or the value of the services will be computed--by three disinterested parties who live in the town of Newport, and their award will be final to all parties concerned."

"L. J. BRACE.

"Witness: HARRY BRACE."

On the same date (July 28, 1893) the respondent made the following contract or agreement with the parties named therein:

"Newport, Idaho July 28th, 1893.

"We, the undersigned, agree with William Vane to work and run the Brace Mill, in Newport, Idaho on the following terms, to wit: That William Vane sells all the product of said mill, and from the proceeds of said product we receive our wages; but we agree that the costs of the provisions, etc., that may be necessary to be purchased to run the boarding-house connected with said mill, and horse feed, and any other feed and provision bills, will be first paid out of the first moneys arising from said sales. Also it is understood that William Vane holds the mill and all the cut from said mill until such time as all the feed and provision and labor bills are paid. And it is further understood that J. L. Brace has no interest in said mill until such time as all the agreements here mentioned are fulfilled. It is understood by all parties herein concerned that the wage or labor bills are only the ones accrued since the mill was removed to Newport, Idaho and contracted there; and the rotation that bills are to be paid are as follows: 1st to be paid is provision bills; 2d, price of lumber for mill; 3d, labor in mill from above date; 4th, old labor bills. It is agreed hereto that Harry Brace look after his father's interest in said mill, and has free access in said premises or mill at any time; and if he sees that anything is mismanaged, he can report to Wm. Vane said mismanagement, and have it adjusted. It is agreed that, if any man leaves, he can have, on demand, his bill in full in lumber. The price of lumber is to be so he can put it on the market at market prices there. Further, that we, each and all of us, have no interest in said mill and product but such as herein mentioned.

F. M. BEARD.

"AUGUST LAARTZ.

"ELI ETHIER.

"JOHN ERSKINE.

"J. BREAKREAGE.

"JOHN W. HORTON.

"HARRY G. BRACE."

The respondent, although he did not sign the last contract or agreement, accepted it, and under it superintended the business for several months, during which time an indebtedness was incurred by the mill company to appellants of some $ 700 or $ 800, for the recovery of...