Gamble v. Folsom

Campbell, J. This is substantially a bill to obtain specific performance of a land contract made by defendant Hoyt with complainant in November, 1876, and claimed to have been so dealt with by Folsom & Arnold, as to give special equities against them. This contract, which was for an aggregate purchase price of $26,000, provided for the sale to Gamble of about 4000 acres of pine lands, a part in town 24 north, of range 3 east, and a part in town 24 north, of range 4 east, in the county of Ogemaw. The payments were to be made .in 4 installments of $2000, each within 90 days, — one of $9000 in one yeai", and one of $9000 in two years, with interest, and taxes. Cutting of logs was to be confined to town 3, until one of the $9000 payments was made. Other conditions, which were numerous and stringent, need not be mentioned, except that no assignment was to be made without consent, and forfeiture was provided for on breach. ■ Substantially contemporaneous with this was a contract whereby complainant agreed to get out and sell to Folsom & Arnold 4 million feet of logs from township 3 at $7 per thousand, and they were to advance the $8000 necessary to meet tips four installments first mentioned, and mate other payments as specified, and were to be at liberty, in case of lack of diligence on complainant’s part, to go on with the work themselves at his expense, and retain a lien for advances. At the same time Gamble assigned the contract to Folsom & Arnold, the assignment to be void on the fulfillment of the lumber contract. On this assignment Mr. Bartow, the agent of Mr. Hoyt, indorsed a consent to assigning so much as related to the land in town 3. Gamble did not completely perform his contract with Folsom & Arnold, and it was extended until 1878. In the mean time he made other contracts with them. They advanced the payments agreed upon and made other payments to and for him. In the latter part of 1877 he proposed to sell them the timber in town 4 and the subject was held under advisement, but declined in 1878. Gamble then made an arrangement with the firm of Gates & Fay to [146] pay up the purchase price of .the lands in town 4 and lumber thereon on joint account. In August, 1878, they saw Mr. Bartow and made preliminary arrangements for securing this end, but it was prevented by the claim of Folsom ■& Arnold that they held an assignment of all instead of, a part of the contract, and Bartow would not assume the risk of litigation. Gates & Fay therefore did not carry out the .proposed plan. In the latter part of August, 1878, just before the repeal of the Bankrupt Law was to take effect, Gamble filed his voluntai’y petition in bankruptcy, under which he compromised with his creditors. He obtained his final discharge in April, 1880. On the 19th of September, 1878, Bartow notified Gamble that the original contract was forfeited. This notice did not state on what particular grounds the forfeiture was declared. On the 11th of October, 1878, Hoyt conveyed to Folsom the lands in town 8 and made a contract for those in town 4 for the precise amount remaining unpaid on the original contract with Gamble. After obtaining his discharge in Dankruptcy complainant, on the refusal of defendants to recognize his rights, filed this bill, and obtained a decree in his favor. Hoyt fook no active part in the controversy, and submitted to such decree as the court might make. Folsom & Arnold appeal. The facts on which the ease must turn are not complicated, although there is considerable testimony on some matters which become material if specific performance is granted. It becomes chiefly important to know how matters stood before the declaration of forfeiture. The assignment to Folsom & Arnold was on its face a mere security. It was confined by its express provisions to the contract of November, 1876, and covered no other transactions. As the accounts are not yet formally closed, we need not consider what unliquidated claims Folsom & Arnold then had against Gamble. It is questionable whether they had not been fully reimbursed, but this we need not now determine. [147] They took the assignment with a distinct understanding 'that it was not available without the consent of Hoyt. As that consent was confined to the lands in town 3, and as itheir contract was also confined to those lands, we think their rights under the assignment were so limited. We are of opinion that — so far as the record shows — ■ Mr. Bartow did not intend to declare a forfeiture of the •contract until Folsom applied to him to purchase the land. When Folsom made this application or inquiry, not only had the contract not been forfeited, but it could not be, under its own terms, without notice to the parties inter•ested, and Bartow knew that Folsom & Arnold were so interested. The immediate connection between the forfeiture and the subsequent dealings with Folsom renders it •quite clear to our minds that whether expressly agreed on •or not, the parties understood that the whole arrangement was for the purpose of enabling Folsom to get the lands, and to get them for the contract price, and that he did so procure them. At this time all the parties knew that nothing but Folsom & Arnold’s unwarranted conduct had prevented Gates .& Fay from securing the land to Gamble’s benefit. It is ;also evident, from the terms that Gates & Fay proposed to make, that the land was regarded as worth considerably more than the unpaid balance.. It is impossible to doubt that Folsom — whether acting alone or for his firm — took advantage of the security in their hands to get the title to this property against right. The only remaining question on the main, issues is whether there has been any loss of right in complainant by laches or acquiescence. So far as Folsom & Arnold are concerned we do not see ;any ground whatever for such a claim. They were bound to use their security for Gamble’s benefit subject only to -their own debt against him, if they had any. That debt was the full measure of their rights. The mortgage to .them did not become forfeited or foreclosed by his default; if he was in default. They could not by the same act [148] destroy his equities and obtain a complete title for themselves, without leaving him a right of redemption. And the fact that Folsom saw fit to take the title in his individual name could not enlarge his rights or destroy his duties.. We must look at the real substance of the transaction,, which cannot be changed by the mere shifting of names. Gamble acted as soon as he was in legal condition to do' so. If an assignee had been appointed there was nothing, so far as we can see, which would have precluded him from disposing of Gamble’s interest, or otherwise obtaining the benefit of it. No new reason existed in September, 1878, for forfeiting" the contract, which did not exist in August, and in that month Bartow’s conduct was inconsistent with any purpose-of forfeiture. As already suggested, we have no doubt that without Folsom’s interference there would have been no forfeiture, and without giving Folsom & Arnold a reasonable notice there could have been none. We see no reasons for disturbing the decree below. And¡ as the court below reserved the equities on the accounting we need not now inquire further. The decree must be affirmed with costs against the appellants, and the cause remanded for further proceedings. The other Justices concurred.