Ellsworth v. Pomeroy

Erazer, J. This was a suit commenced in 1862, by the personal representatives and heirs at law of Henry L. Ellsworth, deceased, against the personal representatives — 159 — of Benjamin Pomeroy, deceased, all of whom, were nonresidents. It appears by the complaint that Mlsworth and Pomeroy had entered into the following written contracts, at the times they respectively bear date: “I, Henry L. Mlsworth, of Lafayette, Tippecanoe county, Indiana, hereby make known, that whereas Benjamin Pomeroy, of Sionington, in New London county, and State of Connecticut, has procured and delivered to me, said Henry, nine land warrants, for one hundred and sixty ames of land each, and three land warrants for eighty acres each, and twelve land warrants for forty acres each, with a power, or letter of attorney attached to or accompanying each warrant, or certificate, by the owners thereof respectively, authorizing and empowering me to locate the same; and whereas said Pomeroy has agreed to procure a deed from each of said owners, (so far as it can be done without too great expense,) conveying to himself the land to be located by virtue of said warrants or certificates, and said power of attorney, as soon after the respective patents are issued as may be; now in consideration of the foregoing, and of the further agreements and stipulations hereinafter mentioned, on said Pomeroy’s part to be performed, I, said Henry, agree to locate said warrants, or certificates, immediately, according to my best judgment and skill, to receive said deeds conveying said lands to said Pomeroy and cause the same to be recorded, to take the care and agency of said lands so conveyed to said Pomeroy, as his attorney, to sell and dispose of said lands, and to make no charge as agent for commissions for locating, care, diligence, skill, or any personal services; but to charge for money paid out for recording deeds, taxes, if any, paid on said lands, and surveying, if any is needed; said Pomeroy having agreed to be at the whole expense of purchase of said lauds, of the patents, and .of procuring deeds of the same; the titlé to remain in him until bona fide sold, and the first proceeds of said lands, or any portion thereof, to be paid over to said Pomeroy until he is reimbursed his capital invested in the purchase of said lands, which is to be — 160 — reckoned at $115 dollars for a full warrant of 160 acres, or seventy-one 87-100. cts. per acre, with interest thereon at the rate of ten per cent, per annum, and to pay to me such sums of money as I shall have paid for recording deeds, taxes and surveying, and the balance or remainder of the proceeds of the sale of said lands, is to be divided equally between said ■Pomeroy and myself. I to be the sole agent for selling for the term of four years, during which period of four years all of said lands are to be sold, unless longer time is mutually agreed upon by said Pomeroy and myself. No money to be expended on said lands unless mutually agreed upon as aforesaid. Now, in consideration of my right to one-half said balance or remainder, and .the foregoing, I, said Henry, guarantee to said Pomeroy, his heirs and assigns, and bind myself, heirs, &e., that said Pomeroy shall receive his. capital in said lands invested, as aforesaid, and ten per cent, thereon within four years from this date; and in case any of said lands remain unsold at the end of four years from this date, I, said Henry, will make no claim to any interest in such unsold lands thereafter, but that the same shall be wholly vested in said Pomeroy, his heirs and assigns, &e. The within and foregoing, on these pages, is a true copy of our agreement. In testimony whereof we have hereunto set our hands and seals this 10th day of January, 1852. The original, executed by Henry L. Ellsworth, is in the hands .of Benjamin Pomeroy. (Signed) “E. Pomeroy, [l. s.] “Henry L. Ellsworth, [l. s.]” “ A memorandum of agreement between Benjamin Pomeroy, of Stonington, Connecticut, and Henry L. Ellsworth, of Lafayette, Indiana, that whereas said Pomeroy owns certain lands in Benton county, Indiana, concerning the agency, sale and division of profits of which, after deducting ten per cent, per annum on the agreed cost to said Pomeroy of said lands, to be said Pomeroy’s wholly, we have a contract bearing date 10th January, 1852; and whereas said Pomeroy owns 800 — 161 — acres of land in White county, Indiana, which it is agreed cost said Pomeroy, $1,000, on the 10th day of January, 1852, now it is agreed that said Mlsworth take the agency of said lands in said White county, in all respects upon the same terms he has those in Benton county; the agency to commence and end at the same time as for said lands in Benton county, the only variation being in the cost of said lands in said White county, which cost one and 25-100 dollars per acre, and those in Benton county cost only seventy-one and 87-100 cents per acre; per centage on costs per annum of profit or interest, and guarantee the same as on said contract, reference thereto being had now in each of our hands. March 16th, 1854. (Signed) “B. Pomeroy, “H. L. Ellsworth.” It also appears that Mlsioorth located the land warrants mentioned in the first contract, and that titles were duly perfected in Pomeroy, as grantee of the waiTantees. It also appears by the complaint, that on the 20th day of September, 1855, Pomeroy died testate, and that his will was, on the 24th of September, 1855, probated in Connecticut, but that it had not been probated or recorded in this State; that Mlsworth died in 1857; that at the death of Pomeroy, the four years within which the said lands were to have been sold had not expired, and that in consequence of his death no sales could be made, Mlsworth having no power except that conferred by the agreements; that prior to and at the time of the death of Pomeroy, negotiations were pending for an extension of time, and that on the 5th of January, 1856, the defendant, Isaac Pomeroy, one of the executors and trustees under the will of said testator, agreed with Mlsworth to extend the time of selling beyond said four years. By Pomeroy’s will, a copy of which is set out in the complaint, the lands in Indiana were devised to two of'his sons, Benjamin Pomeroy, jr., and Isaac Pomeroy, in trust to sell and dispose of the same in their discretion, and to pay legacies, &c., but they had no express power to make any agreement to extend the contract with said decedent, Mlsworth, which the — 162 — complaint avers Isaac did. It was further averred that the lands were of the value of $30,000, and that Ellsworth had expended a small sum of money in recording deeds, &c. The object of the suit was to settle and adjust the rights of the parties in the lands or their proceeds. The defendants demurred to the complaint by Ellsworth’s administrator, and, by a separate demurrer, to the complaint by the heirs at law, alleging for cause the want of sufficient facts to entitle them to any relief. It is conceded that if Ellsworth had no equitable interest in the lands, or in the fund to arise from the sale of them, but only a claim against Pomeroy, in person, for services and expenditures as agent of the latter, then this suit will not lie. The only question presented for consideration, is whether Ellsworth had, in equity, any interest in the land. Did the contracts constitute a partnership between the parties to it, with a joint interest in the property itself, or did they create merely the relation of principal and agent ? After much consideration we have reached the conclusion that the relation of the parties was that of principal and agent. That the agent was to be liable for all losses, to guarantee a certain profit to Pomeroy, and was to be compensated by a certain share of the remaining profits which should be realized by actual sales of the lands, which might be made within a limited time, and that after the expiration of that time the agency should cease. A breach of the contract by Pomeroy, in preventing the agent from executing it, and thereby reaping its advantages, would be properly compensated only in damages, to be recovered by a personal action. It follows that the action of the court below upon the demurrer was correct. It is well settled that a contract to share profits between parties does not, necessarily create a partnership, as between themselves. It is often merely a mode of ascertaining the compensation of an agent for his services. Nor is there'any rule of law or principle of public policy contravened by an agreement of the agent to indemnify his — 163 — •principal against loss by the business, or to guarantee to him. a certain profit in it. In a controversy between the parties or their representatives, as in this case, it is purely a question of intention, to be deduced from the contract itself. In everything but the ownership of the property, the express stipulations of the contract create elements which perhaps might, inter sese, constitute a partnership, and yet tire same stipulations are also consistent with the existence of the relation of principal and agent merely. See Story on Part. § 23. But there are other stipulations which seem to us to evince, quite satisfactorily, a definite intention to create an agency merely. In the first place, the vesting of the legal title to the lands in Pomeroy, exclusively, is a circumstance of much weight. He resided in a distant state, remote from the lands and from the market in which they would bo sold, while Ellsworth lived near them, and he alone was charged with the duty of selling them. If both were sufficiently responsible, so that there would be no risk of loss by putting the title in either, why thus take care to vest it where it would be most inconvenient in obtaining prompt conveyances to purchasers, unless the parties regarded the land as Pomeroy’s own property? Then, also, if a partnership'was intended, why stipulate, in the first contract, that Ellsworth should “be the sole agent for selling,” and “should take the care and agency of said lands as his attorney” ? The language would be inapt. The words of the second contract are still more striking, and furnish a strong indication of what the parties understood by the first. “It is agreed that said Ellsioorth shall take the agency of said lands in said White county, in all respects on the same terms he has those in Ponton county; the agency to commence and end at the same time. ” This is no doubtful .phraseology. Such language, though it might be known to a lawyer, of itself, not absolutely to preclude the idea of a partnership, would not probably have been employed by him. Ron-professional draughtsmen would even be less likely to use such terms in a contract intended to be one of partnership. It is quite — 164 — evident, from a reading of these instruments, that they did not come from a professional pen. If not a partnership, then a community of interest in the property was not created by the contract. Upon the happening of a condition subsequently to be performed by Ellsworth, to-wit: the sale by him of sufficient lands to produce a fund in which he might be entitled to share, it might be that equity would, for his protection, if necessary to relieve him from the consequences of a refusal by Pomeroy to allow him to go on, lay its hand upon the specific fund, or turn the lands remaining unsold into money, and give to him his portion thereof. But the condition never happened, and never can, the time having expired, and of course the right which depended upon its performance never was called into existence. Any breach of it, therefore, by Pomeroy, or those representing him, can only be remedied by giving damages therefor. Obviously, the contracts alone created no community of interest in the lands; nor was it contemplated that there ever should be such community of interest. Ells-worth was to sell the whole, and share a portion of the profits. Mere appreciation in the value of property, without realizing the cash from sales, was not to go to his benefit by any stipulation of the parties. It would be an important matter in ascertaining his damages for a bi’each by Pomeroy of the contract; but there could be no specific thing, a share of which he could claim, until profits were made by sales. It does not even appear by the complaint that he could, within the time limited by the agreement, have sold the lands so as to realize anything for himself, nor even that he intended to make the effort. Mere negotiations pending between the parties at Pomeroy’s death could, of course, effect no change in the previous agreement; nor could an agreement with one of the trustees to whom the lands were devised. Flor do we deem the conclusion which we have reached at all in conflict with anything adjudged in Olcott v. Wing, 4 McL. 15, or Watkinson — 165 — v. Ellsworth, 27 Conn., 209. In the latter case there was no such question involved as determines the one before us. In the former, a partnership was held to exist, but the contract 'was very different from the one in this case. S. A. Huff and JR. Jones, for appellant. H. W. Chase and J. A. Wilstach, for appellees. The judgment is affirmed, with costs. Gregory, C. J., did not sit in this case.