Greenwood's Appeal

Mr. Justice Paxson delivered the opinion of the court, January 5th 1880. There are twenty-seven assignments of error in this case. Most of them relate to questions of fact, and may be at once dismissed, as the evidence is not before us. There are enough left, however, to enable us to review to some extent the principles upon which the case was decided by the master and the court below. The liability of John T. Perdue to account to Mrs. Long was settled in Long v. Perdue, 2 Norris 214. It was there held that the denial of Mrs. Long’s right by Mr. Perdue made him a trustee ex maleficio, not from the time of the denial, but from the date of the original agreement; and that he must account to her for the proceeds of the well. An account was accordingly decreed by the court below, and a master appointed for that purpose. The defendant appeared before the master, and furnished an account of the actual sales of the oil, and claimed credit for certain items of costs and expenses. The master rejected the defendant’s account of sales so far as prices are concerned, and adopted an arbitrary rule for fixing the value of the oil. This will appear from the following extract from his report: “After careful consideration of the testimony and proofs, and much study, the master has concluded that a just and proper measure of damages in this case will be adopted by charging the defendant with the highest market value of each run of oil on the day of its run, and interest from such date.” The case was disposed of by the master, and the court below, upon the theory that the defendant being a trustee ex maleficio, was liable to account, not for what he received for the oil, but for what he might have received for it. No authority was cited for this proposition, except those referred to by the plaintiff’s counsel before the master, and which do not apply. They were cases of technical trusts, or of the conversion of stocks deliverable upon a particular day. The distinction between such cases and the one in hand is manifest. The defendant was lawfully operating a well in which he had a joint interest with the plaintiff. It was his duty, as settled by the former decree of this court, to account to plaintiff for the proceeds of half the oil. Under such circumstances there is no rule of law or equity which would make him responsible for [185] the highest market price of the oil upon, the days on which it was turned into the pipe lines. In the absence of fraud or bad faith in the sales, neither of which is pretended, the true measure of damages would be the actual sales. The oil market, as is well known, is fluctuating, and at times experiences violent changes. Upon the day when the plaintiff turned the oil into the pipe lines, he may have been unable to sell, or he may have had reasons to anticipate a rising market. Nor do we attach importance to the fact, found by the master, that defendant owned other wells and produced other oil, which was also run into the tanks and pipe lines, and igade other sales upon other days and at different prices. Such facts, if conceded, have no bearing upon the sales of this particular oil. We are of opinion that the rule laid down for the measure of damages was erroneous. As there was no bad faith shown, the defendant should have been charged only with what he received for the oil. In this view of the case the matter referred to in the third specification becomes unimportant. In any event we have no evidence before us, and cannot say whether it justified the admission of the “ Oil City Derrick” as authority upon the state of the market. Besides, the master states that he took these quotations by the agreement of the parties. It was also alleged (27th assignment) that the court erred in continuing to exercise jurisdiction after the said John T. Perdue had been declared a bankrupt. The record shows a certificate, under the seal of the District Court of the United States, for the Northern District of Ohio, that the said Perdue had been adjudged a bankrupt on December 8th 1877. The assignee was permitted to come in and defend in the court below, and this appeal was taken by him. I see no reason why the parties may not go on in the state court and get their judgment. No attempt to restrain them through the United States courts has been made. The claim here being clearly provable in bankruptcy, the defendant’s discharge would render a decree of little avail, however. Yet it may be used to secure a dividend against his estate. The decree is reversed at the cost of the appellees, and the report is ordered to be sent back to the master to restate the account in accordance with the principles indicated in this opinion.