Kramer v. Dinsmore

Opinion by Mr. Justice Heydrick, The undisputed facts reported by the master entitle the plaintiff to the relief which she demands. It is not now a question whether Judge White had authority to make the contract out of which this controversy has grown. He undertook to make it “for and in behalf of the Mahoning Bank.” It stipulated for certain advantages to the banking association which he as — 272 — sumed, if he was not authorized, to represent. These advantages, whatever they may have been worth, have all been reaped by the bank. The rules to show cause why its judgments against George Kramer should not be opened were withdrawn; the pending litigation was terminated; executions, until then stayed by the rules to show cause, were permitted to go out forthwith, and not only was the farm in controversy sold as stipulated, but other real estate of Kramer was seized, sold and purchased by the banking firm as lien creditors entitled to the proceeds of the sale, and it now has, so far as appears, undisputed title thereto if it has not disposed of the same. By accepting these fruits of the contract the bank affirmed it: Evans v. Mengel, 6 Watts, 72; Garrett v. Gonter, 42 Pa. 143; and that affirmation related back to its inception and to the authority of the agent to make it. Omnis ratihabitio retro trahitur et mandato priori aequiparatur. It was not a ratification of so much, only, of the contract as was beneficial, but when the firm accepted the benefits it took them cum onere: Hovil v. Pack, 7 East, 164; and is consequently bound to perform the undertaking in its behalf which was the consideration of the benefits received. Hart v. Withers, 1 P. & W. 285, relied upon by the master as maintaining a different doctrine, does not sustain his position. That was an action of covenant against a copartnership upon an instrument sealed by a single member in the firm’s name, but in the body purporting to be the deed of him who signed it, and no more seems to have been decided than that under the law merchant one partner has not the power to bind his fellows by deed, for although the question of ratification by subsequent enjoyment of the fruits of the contract was in the cause it was disposed of by the Chief Justice by saying: “ Undoubtedly the partnership had the benefit of the plaintiff’s wood (the subject in part of the contract), but he thought fit to furnish it on separate account.” But if the immediate context be thought to indicate that the court intended to decide that a deed sealed in the name of a firm by one of its members without precedent special authority could not be adopted by the firm by its subsequent conduct, it must be regarded as having been overruled in this respect by Bond v. Aitkin, 6 W. & S. 165, in which, after referring to the discussion of the subject — 273 — in Gram v. Teton, 1 Hall, 262, and Cady v. Shepherd, 11 Pick. 400, it is said: “ The principle is settled that a partner may bind his copartner by a contract under seal, in the name and for the use of the firm, in the course of the partnership business, provided the copartner assents to the contract previously to its execution, or afterwards ratifies and adopts it; and this assent or adoption may be by parol. And we are satisfied that the rule is founded upon principles of justice and policy and supported by the general tenor of the adjudged cases in this country and in England.” It is, however, contended that the firm had no knowledge of the existence of the contract until after the sheriff’s sale, and that, therefore, their acts in apparent affirmance of it cannot he treated as a ratification or adoption. There is nothing in the articles of association of this firm to take it out of the general law of partnership even as between the members, save only the stipulation “ that neither of said parties (the partners) shall during this copartnership .... give any note or accept or endorse any bill of exchange in the partnership name for himself or partners .... without the express written order or consent of the board of directors first had and obtained.” But how this stipulation differentiates this association from an ordinary partnership in respect to the effect of notice to one of its members has not been pointed out. Leaving out of view, however, the fact that Judge White was, as he says, “ acting as a director and one of the principal stockholders ” in making the settlement with Kramer, and had much to do with the management of the business of the bank, there is abundance else to affect the copartnership with notice of what had been done by him. ' The firm must he presumed to have had knowledge of its own lawsuit during the pendency of the litigation, and of the proceedings therein, and it would not seem creditable to the members as business men to doubt that they had actual knowledge of the terms of the settlement made, except upon the assumption that they had committed the business to somebody with delegation of plenary powers in the premises, content to abide without question by whatever their agents should do. Mr. Dinsmore, a member of the firm and its cashier and active agent as well as its trustee in respect to the judgments, apparently clothed with ample power to settle the controversy, — 274 — was present when Judge White and Mr. Kramer were negotiating the settlement and knew that they had that business in hand, and knew immediately afterwards that a settlement had been accomplished in some way. And when their attorney issued the execution provided in the contract to be issued he learned from the record that a settlement had been made, and his knowledge was the knowledge of his clients. Now if neither Mr. Dinsmore nor the other members of the firm chose to inform themselves of the terms of the settlement which they knew had been made, and upon which they proceeded in issuing the execution, they are in no better position than one who signs a contract without reading or asking to have it read. The construction put by the master upon the contract, that it is a covenant'made by “ White for himself and his copartners to convey by deed land belonging to the partnership,” is not warranted by the language employed either aided or unaided by the facts found by him. When the contract was made the partnership had no title legal or equitable to the land; it was then Kramer’s land; and when the sheriff subsequently conveyed to Dinsmore, ostensibly in trust for the firm, an absolute estate did not pass. The withdrawal of the rule to show cause why the judgment on which the sale was made, the contract and the sheriff’s sale and deed were successive steps in the general scheme of settlement. They were in pari materia, and are to be construed together as one transaction: Thompson v. McClenachan, 17 S. & R. 110; Greenfield’s Estate, 14 Pa. 501; Cummings v. Antes, 19 Pa. 287. As was said in the latter case: “We cannot separate what the parties have joined and look for their understanding and intentions in one instrument when they have employed three to express them.” Not only was the sheriff’s sale and deed by which the legal title was vested in Dinsmore provided for in the contract, but, except for the withdrawal of the rule to show cause which must be taken as part of the contract, the sale could not have taken place and the legal title would not have passed. The legal import of the transaction was that, in consideration of the settlement and withdrawal of the rules to show cause, Dinsmore took the title in trust to convey the land to Mrs. Kramer upon payment of the amount of his bid, with interest thereon within two years. While the purpose for which the sheriff’s deed was obtained as — 275 — well as the manner of obtaining it was perfectly fair, to now use it, or claim it, for another different and unfair purpose would be as much a fraud as to have obtained it by fraudulent means: Parke v. Chadwick, 8 W. & S. 98. No other title than that which was intended did or could pass by the sheriff’s sale and deed. It follows that the firm not only had no title to the land at the time of the execution of the contract, but now has no estate in it, legal or equitable. Mr. Dinsmore is the conduit merely through which the title was to be passed from Kramer to his wife, having, however, the right to retain the legal title as security for the money which he or his firm has advanced. A contract to assume the position of such conduit is a very different thing from a contract to sell and convey land. ' It is, however, argued, and the master and learned court below held, that it would be inequitable to decree a conveyance under the circumstances of this case. Upon #the face of the contract it is fair and conscionable. If the bank’s judgments against Kramer had been unassailed and the contract had not stood in its way it would have been perfectly legal for it to have acquired title to the farm for the one hundred dollars which its cashier bid, though it was worth several thousand dollars. The gentlemen who conducted the sale, made the bid, received the deed and now seek to hold the land evidently never thought there was anything unconscionable in acquiring the land at such a price, otherwise they would undoubtedly have bidden more, though there was no competition. And after acknowledgment of the sheriff’s deed the sale could not have been avoided for mere inadequacy of price, and because the defendant had been careless of his rights. The purchasers would have been held entitled to stand upon their advantage. Why, then, may not Mrs. Kramer stand, upon her advantage if she has gained any ? The master replies: “ It seems reasonably certain that the understanding between the parties when the contract was made was that said property was to be bid up at the sheriff’s sale to about its full value,” and that this was prevented by the neglect of Kramer’s attorney to furnish Judge White, or the attorney who issued the writ, a copy of the contract. There was no allegation that the understanding referred to was part of the agreement between the parties, and should have been incorporated with the contract, — 276 — but had been omitted by fraud, accident or mistake, or that it was a contemporaneous agreement without which the written contract would not have been signed. It is clear that no such allegation could be successfully made, for the bidding was to be' done by the bank or its representative, and the right to bid much or little without accountability to Kramer or his wife for the exercise of judgment or caprice in the matter of bidding was carefully reserved. Nor was the bank prevented from bidding by the conduct of Kramer or his wife or their attorney. The master finds that the contract was left in the keeping of Kramer’s attorney, and that he agreed to send a copy of it to Judge White and did not do so. But that was not a concealment of its contents or a misleading by which bidding was or could be prevented. Nor is it entirely clear that Mrs. Kramer has gained any advantage inconsequence of the neglect of the bank to bid the land up to its full value. It was stipulated as part of the settlement' that if the bank should within two years sell certain land in Clearfield county, formerly belonging to Kramer, and purchased by it at a sheriff’s sale, for sufficient to cover his indebtedness, Mrs. Kramer should receive a conveyance of the land in controversy without payment of any farther sum. The only evidence in regard to the Clearfield county land is the contract of sale made by M. J. Dinsmore to the successors of the Mahoning Bank, December 18, 1886, and the schedule thereto annexed, in which a valuation of forty thousand dollars is placed upon it. Whether that was the price actually paid for it does not clearly appear, but whether this evidence was not sufficient to cast the burden upon the defendants of showing what was actually received by them is a question not entirely free from doubt. It is not, however, vital; the pinch of the case being in tbe contract to convey, and Mrs. Kramer’s performance of her part. As to the application to the court to set aside the sheriff’s sale, it is enough to say that it is not now the subject of review. It must be presumed that the court refused it for good and sufficient reasons. The only ground made apparent in this case upon which Mrs. Kramer could have had any standing to resist the .application is that she had a vested right under that sale. If that was the ground of the resistance the court’s refusal to — 277 — set the sale aside was in the nature of an adjudication in her favor upon the question in litigation in this case. And now, January 2, 1893, it is ordered, adjudged and decreed that the decree of the court below be reversed and the plaintiff’s bill reinstated. And it is further ordered, adjudged and decreed that the defendant, M. J. Dinsmore, upon the payment or tender to him of the sum of one hundred dollars with interest thereon, from the 14th day of September, 1886, convey by good and sufficient deed to Sarah Kramer, the plaintiff, the land and premises described in the deed of Henry Chamberlain, sheriff of Jefferson county, to him, the said M. J. Dinsmore, dated 14th of September, 1886, and recorded in sheriff’s deed book No. 1, of said county, at page 439, and pay the costs of this suit; and the record is remitted for enforcement of this decree by the court below.