Davidson v. E. F. Brooks Co.

Mr. Justice Van Orsdel delivered the opinion of the Court: It will be unnecessary to consider the more difficult question of the existence of a partnership between appellants and Nolan, since the appeal can be disposed of upon the single ground that appellants were the owners of the property in question. The facts upon which this finding was based are substantially admitted by appellants in the answer to the bill. Appellants aver in their answer that they “were engaged as copartners in the real estate business under the name of Davidson & Davidson, and the title to the real estate belonging to the said copartnership, for the purpose of convenience and to distinguish the said property from property belonging to the individual members of said firm, and for the purpose of facilitating the handling and transfer of the same in the course of their business, has been vested in the defendant Charles H. Davidson, who has been, and is, an employee of the said firm; and that the real estate mentioned and described in these proceedings, as well as other real estate belonging to said copartnership, was vested in the said Charles H. Davidson for the purposes aforesaid.” As to the state of the title during these transactions, appellants admit the conveyance from Davidson to Martin, the execution of the deeds of trust and the trust notes by Martin to [463] Davidson, and the indorsement of the notes by Davidson to appellants, and aver “that after the execution of the deeds of trust mentioned, the defendant Edwin A. .’.Martin conveyed said real estate to said Charles H. Davidson, and aver the fact to be that the said conveyance to the said Charles H. Davidson was made with the understanding that he should hold title to the said real estate as trustee in pursuance of the agreement aforesaid of March 26, 1912, and for no other purpose whatsoever. They admit that the said Charles H. Davidson has .since held title to said real estate as trustee as last above set forth. These defendants further admit that said last-mentioned deed to Charles H. Davidson remained unrecorded for a considerable period of time after its execution, but aver the fact to be that prior to the filing of this suit, the defendants, discovering that said deed had been inadvertently omitted from the record, caused the same to be duly recorded among the land records of the District of Columbia.” The transfer of title from Davidson to Martin, the execution of the notes, deeds of trust, and the reconveyance from Martin to Davidson, and the indorsement of the notes from Davidson to appellants, loft the title just where it started, and merely enabled appellants to hold title and at the same time negotiate the securities. This shifting of title and securities all occurred before the contract was made with appellee company.' During all the time that appellee was engaged in furnishing labor and material for the construction of these houses, the title remained vested in Charles H. Davidson, the admitted agent of appellants for the purpose of holding title to partnership real estate. Hence the property he conveyed to Martin belonged to appellants, and when he took it back it came back as the property of appellants. It will not do now to contend that Charles H. Davidson held this property as trustee under the contract between appellants and Nolan. The contract contemplated no such proceeding. It required appellants to i*aise a certain amount of money by first and second trusts upon their own lots. No shifting of title was necessary to legitimately accomplish this feat. The second trust, which is stated in the contract as representing the value [464] of the lots and commissions, amounted merely to a convenient method of fixing the proportion which Nolan should assume on the lots which he was to receive for carrying out his part of the contract. This construction is fortified by the language of the contract itself. Appellants were “to retain title to lots 51 to 51 inclusive; 61, 62, and 63, assume all trusts and pay proportionately for any excess of cost above loans.” ITow could they retain title to property in the hands of a trustee for all the parties to this agreement? On the other hand, Nolan was “to lake title to lots 55 to 60 inclusive as payment for builders’ commission, assume trusts on said lots, and pay proportionately for any excess of cost above loans.” Why should he gain title in a manner different from appellants if, as contended, each party was to acquire title ultimately from a trustee holding title for the benefit of all the parties to the contract ? It may be further suggested that, if it was the agreement that Davidson should hold the title as trustee for the parties to the contract, why was it not so stated in the conveyance from Martin to Davidson ? If the deed had so stated, and had been promptly recorded, it would have been notice to appellee of the existence of the trust. We think the court below was right in holding that appellee company contracted directly with appellants as owners of the property, and that they are liable as owners. This finding is based upon a conversation which the Brooks’s had with Nolan and, John C. Davidson, in which, after some question as to the reasonableness of the price named by appellee for doing the work, Davidson directed appellee company to proceed and furnish the labor and material upon the terms originally named by it. This conclusion is not- only sustained by the weight of the evidence, but by the circumstances of the case. The proposal of appellee company, while addressed to Nolan, was to perform the work for Martin, assuming at the time, as it had a right to do, that Martin was the owner of the property and the party for whom Nolan was constructing the houses. It is significant that Nolan nowhere pretends that any other acceptance of this proposition was ever made, except in the conversation in which we have found that John C. Davidson directed appellee to per [465] form the work on .tbe terms stated in its proposal, it having been discovered by appellee between the date of making the proposal and the date of the conversation with Nolan and Davidson that the Davidsons, and not Martin, were the real owners. Considerable is sought to be made by appellants of the manner-in which appellee company kept its book account of this transaction. We regard it as of little importance, other than evidential, whether the account was entered against Nolan or the Davidsons. The contract being with the Davidsons as to this part of the work, Nolan became their agent, and the mere form of entering the account in appellee’s book would furnish no relief to appellants. The court, finding that the property had been sold to satisfy the trusts, properly held that for any deficiency appellants, as owners of the property, are liable. D. C. Code, sec. 1258. [31 Stat. at L. 1388, chap. 854.] The decree is affirmed with costs. Affirmed. Mr. Jnstice Hitz, of the Supreme Court of the District of Columbia, sat with the Court in the hearing and determination of this appeal, in place of Mr. Chief Justice Shepard.