Zetterlund v. Texas Land & Cattle Co.

Ryan, 0. On September 5, 1892, the Texas Land & Cattle Company, a corporation, as party of the first part, entered into a written agreement with Victor Rylander and August Jernberg, as partners composing the firm of Jem-berg & Rylander, parties of the second part.- By the terms of the contract the parties of second part undertook for the first party to sell a large amount of real property known as the K. O. Ranch, situate in the state of Texas, on certain fixed terms and for agreed rates of compensation. In this agreement there was the following provision: “It is also understood and agreed that this contract is not assignable or transferable by the parties of the second part, and any one accepting such, assignment or transfer shall receive no rights or equities under the contract by reason of such transfer and assignment, and said party of the first part shall, at its option, be relieved of its obligations hereunder.” On February 20, 1893, the above named August Jernberg and Victor Ry-lander, as a partnership firm and as party of the first part, entered into a written contract with Ernest Bihl, Olof Zette-rlund, Jonas Adling, and Adolph Osterholm, representing the Southern Land Company, a partnership firm, as parties of the second part, by the terms of which the second - parties assumed all outstanding obligations to agents- connected with the K. 0. Ranch, and all expenses incurred or to be incurred in the handling of the K. O. [357] Ranch, and agreed to meet all requirements of the contract between the Texas Land & Cattle Company and Jernberg & Rylander, and, in consideration of the above assumption of said firm’s liabilities and of the receipt of one dollar, said firm, gave to the parties of the second part the exclusive handling and charge of all the lands in said K. O. Ranch and all said firm’s right, title, and interest in and to the same. Under this arrangement the Southern Land Company transacted the business above undertaken by them until June 15, 1893, -when the Texas Land .& Cattle Company, as it claimed pursuant to its right reserved so to do, notified Jern-berg & Rylander and the individual members of the Southern Land Company that the contract originally entered into for the sale of the K. O. Ranch was canceled. Until June 10, 1893, or thereabouts', it was not known to the Texas Land & Cattle Company that there had been an attempted assignment of the contract to which it was a party for the sale of the lands composing the K. O. Ranch. On December 7,1894, the individuals composing ■ the firm known as the Southern Land Company began their action in the district court of Douglas county to obtain an accounting with the Texas Land & Cattle Company of the amounts due said plaintiffs by reason of their services rendered in the sale of lands composing part of the K. O. Ranch. In this action there were joined as defendants with the Texas Land & Cattle Company certain judgment creditors of August Jernberg and Victor Rylander, in favor of whom there were in existence orders in garnishment requiring the Texas Land & Cattle Company to pay into court certain amounts due and to become due as commissions for the sale of lands of the K. O. Ranch under the terms of the contract entered into by the Texas Land & Cattle Company. One Carl E. Elving, by his petition of intervention, alleged similar facts and asked for like relief to that prayed by the members of the Southern Land Company; No separate review of this branch of the case [358] need therefore be undertaken.. The services- for which compensation was sought to be obtained were partly rendered as agents of Jernberg & Rylander before the assignment by the firm of its interest in the contract with the Texas Land & Cattle Company, and partly afterward. It is unnecessary to consider those rendered before said assignment, further than to say that the claimants were employed as agents of Jernberg & Rylander and as such earned whatever compensation they were entitled to receive. By the contract for the sale of the lands constituting the K. O. Ranch, Jernberg & Rylander agreed to bear all the expenses necessary to make the required sales, and to that firm alone are these parties entitled to look, for the assignment did not purport to assign amounts already earned by Jernberg & Rylander, and there was no equitable principle by virtue of which these amounts might be reached. (Union P. R. Co. v. Douglas County Bank, 42 Neb. 479.) The district court found specially as follows: “15. That by the terms of said assignment it is sought to assign the contract; that in so far as such assignment attempts thus to assign the contract it is void. “16. That upon sufficient consideration said assignment transfers to the plaintiffs, as members of the Southern Land Company, the moneys arising as commissions earned by Jernberg & Rylander under their contract with the Texas Land & Cattle Company, and that in so far as said assignment seeks to assign said moneys it should be upheld to the interest of the plaintiff therein.” On the theory that the prohibited assignment wa? a valid transfer of moneys already earned by Jernberg & Rylander the district court required the Texas Land & Cattle Company to account to the Southern Land Company’s individual members for such amounts as had already, or afterwards should, become due to Jernberg & Rylander as commissions on deferred payments upon sales of land already made by that firm, and required that the amounts of these commissions as they fell due [359] should be paid to the members of the said Southern Land Company. It ‘will prevent misapprehension, though it may produce some confusion, to note at this point that not the whole of such amounts of commissions was required to be paid to plaintiffs and the intervener, for thirty-two per cent of the interest of the Southern Land Company was found, on the trial, to be held by Ernest Bihl in secret trust for Jernberg & Rylander. By this decree of the district court the orders in garnishment entered in other independent cases in favor, respectively, of the Dime Savings Bank of Chicago and of Basil M. Webster were modified so as to permit of present payments to said judgment creditors of but the above mentioned thirty-two per cent of commissions as they should be paid in. The other sixty:eight per cent of commissions was appropriated to the payment of plaintiffs, the members of the Southern Land Company, and to Carl E. Elving, the intervener, before the judgment creditors were entitled to anything. This was, in effect, the creation of an equitable subrogation of said plaintiffs and said intervener to the rights of Jernberg & Rylander by virtue of the assignment, by said firm of its. interest in the contract, in which there was an inhibition of such an assignment, coupled with a provision that any one receiving such forbidden assignment thereby should obtain no rights or equities thereunder. We are of the opinion that the district court was right in its fifteenth finding, that the transfer of the' contract was void, for it was an attempt, to substitute for Jernberg & Rylander other parties in the performance of services which the parties had a right to stipulate, and in fact did stipulate, should be performed by said Jernberg & Rylander. While such an assignment might render Jernberg & Rylander liable to their assignees it would not affect the Texas Land & Cattle Company without its assent thereto. (Burck v. Taylor, 152 U. S. 634; Delaware County Commissioners v. Diehold Safe & Lock Co., 133 U. S. 473; Arkansas Talley Smelting Co. v. Belden Mining Co., 127 U. S. [360] 379; Grigg v. Landis, 19 N. J. Eq. 350; Sloan v. Williams, 138 Ill. 43; Fartunato v. Patten, 25 N. Y. Supp. 333; City of Omaha v. Standard Oil Co., 55 Neb. 337.) It is, however, insisted by appellees that the services rendered by them, were rendered with the knowledge of the Texas Land & Cattle Company, and notwithstanding its ignorance of the assigmnent that company equitably should be required to account as it was required by the district court. To this we quote as quite apposite the language of Cobb, C. J., in Gould v. Kendall, ■ 15 Neb. 549: “It may be claimed that the defendants having done business in the name of the plaintiffs, are estopped to deny the interest of the plaintiffs in that business. That would probably be so could the plaintiffs’ case ever reach the point at which the defendants are required to develop their defence, but the difficulty is in the inherent weakness of the plaintiffs’ case. They cannot reach the enemies’ works except through the contract, which, by reason of its illegality, is ‘no thoroughfare’ for them.” The judgment of the district court is reversed and this action is dismissed. Beversed and dismissed.