Chandler v. Preston

Kuhn, J. (after stating the facts). 1. The relation of trustee and cestui que trust between Mr. Preston and Mr. Chandler began with the execution of the trust deed and agreement. During the preliminary negotiations no such relation existed. The parties were strangers to each other, and were dealing at arm’s length. Mr. Preston was under no obligation whatever to assume the trust, and the only appeal the proposition had for him was from the standpoint of a business venture. It involved some risk on his part. The essential feature of the transaction was his agreement to finance the trust estate for the period of five years, which, under adverse conditions, would require the furnishing of an indefinitely large sum of money. And this was of the utmost importance to Mr. Chandler. What the consequences to him might have been had he been unable to find anyone with both the ability and the willingness to render this assistance, it is impossible to estimate. It is clear, therefore, not only that Mr. Preston had the right in the first instance to demand such compensation as would make it worth while for him to undertake the risks and burden of this unusual trust arrangement, but also that at any time prior to the acceptance of his terms, he had the right to revoke or alter his proposition, and in doing so to increase his demand for compensation, if, upon reflection, he was dissatisfied with his first figure. Had he received an intimation from any outside source that Mr. Chandler was willing to pay a larger compensation than that suggested in Mr. Preston’s proposal, Mr. Preston clearly would have had a legal right to withdraw his offer and to submit a new one naming a larger sum. The fact that his information came [262] through Mr. Chandler’s agent does not alter the situation in point of law. Mr. Preston was still under no obligation to enter into the transaction at all. Mr. Chandler, instead of accepting Mr. Preston’s offer, had made a counter-proposition embodying several new features, among others an agreement on the trustee’s part to pay Mr. Chandler $200 a month during the entire five-year period. Up to the moment of acceptance, therefore, Mr. Preston was free to do as he pleased and to insist upon such terms as he pleased. The provision for the payment of interest on the $25,-000 which Mr. Preston was to receive as compensation was embodied in this counter-proposition of Mr. Chandler’s. There is no merit to plaintiffs’ contention that Mr. Preston’s acceptance of this offer was, under the circumstances, a breach of trust and a fraud upon the beneficiary. 2. After a careful reading of the testimony, we have reached the conclusion that the plaintiffs’ second contention is also unfounded. We agree with the trial judge that Mr. Preston administered the trust with a fair degree of industry and skill, that he sold all the property anyone could have sold, and more than Mr. Chandler wished him to sell, and that he obtained reasonably fair prices for the property sold and the best prices obtainable at the time. Under all the circumstances of the case, we do not think he is open to criticism either for selling at too low prices, as urged in plaintiff’s bill, or for not making greater sacrifice of the trust property in order to reduce the indebtedness and diminish the interest and taxes, as plaintiffs urge so strongly on this appeal. We think it also clearly appears that both Mr. Robertson and Mr. Hinkley were competent managers. 3. The trial judge was in error in holding that the agreement fixing the compensation of the trustee at $25,000 was made under a mutual mistake of fact. [263] The salability of land during a period of five years in the future is not an existing fact. Most purchases and sales are based upon the judgment of the parties as to future value. A mistake in judgment in that regard is no ground for the relief of either party. 1 Black on Rescission and Cancellation, § 146; Parke v. City of Boston, 175 Mass. 464 (56 N. E. 718); DuBois Borough v. Water Works Co., 176 Pa. 430 (35 Atl. 248, 34 L. R. A. 92); Taylor v. Ford, 131 Cal. 440 (63 Pac. 770); Chicago, etc., R. Co. v. Wilcox, 116 Fed. 913, 54 C. C. A. 147. What we have said above as to the value of Mr. Preston’s services to Mr. Chandler is pertinent in this connection also. We think the trustee was entitled to his compensation as agreed. 4. We agree with the contention of plaintiffs.’ counsel as to the construction of the 4th paragraph of the trust agreement, above set forth. It clearly refers to two classes of indebtedness, and by its terms Mr. Preston was to take up indebtedness of fixed maturity when it became due, and indebtedness due upon demand when demand was made. All of the mortgages upon Mr. Chandler’s property matured on fixed dates. They bore interest at 7%, payable semi-annually. The holders of these mortgages, however, were willing to let them run after maturity. Mr. Preston interpreted-the contract to mean that he was not obliged to take up indebtedness of any kind until the creditor insisted upon payment, and accordingly did not take up such of these mortgages as became due. The trustee should, therefore, be charged in the accounting with the further amount of $2,884.67, being the interest in excess of 6% paid on the overdue mortgages after maturity. 5. We are of the opinion that by virtue of section 11, chapter 12, of Act No. 314, Public Acts of 1915 (3 Comp. Laws 1915, § 12362), the defendant Nichols had such an interest in the subject-matter of the litigation as would give him the right to intervene, in [264] accordance with the holding of this court in Weatherby v. Kent Circuit Judge, 194 Mich. 46; McMillan v. School District, 200 Mich. 280; and Detroit, etc., Loan Ass’n v. Oram, 200 Mich. 485. It appears clearly that his interest in the subject-matter is of such a direct and immediate character that he will either gain or lose by the direct legal operation and effect of the decree of this court determining the right of the defendant Preston to recover for his services in accordance with his contract. We are satisfied from this record that Nichols was acting as a go-between. In the first instance he was acting for Chandler, with the understanding that he might get such further compensation as he could from Preston. Preston was apparently willing to accept his services and agreed, as the record conclusively shows, to pay him for obtaining the contract which was finally executed and by which he receives the compensation which he demanded and was agreed upon. So far as Mr. Preston is concerned, it does not make much difference whether his contract was more favorable to him, as he claims, than if he had dealt directly with Chandler. Mr. Chandler did not testify with reference to this phase of the case and makes no complaint about it. We are impressed, on reading the testimony, that as by this opinion the contract entered into between the parties is sustained, in equity and justice likewise the claim of Mr. Nichols should be sustained for the services which he rendered for Mr. Preston and for which Mr. Preston agreed to pay. We think the record is convincing, by reading the testimony of Mr. Nichols, that he dealt fairly with both parties to the transaction, and under the well established rules of law, where the principals have ■knowledge of the fact that the agent is acting in a dual capacity and, with such knowledge, assent to his so doing, he may recover for his services from either [265] party. See 1 Am. & Eng. Enc. Law (2d Ed.), p. 1074; 2 Corpus Juris, p. 713; Adams Mining Co. v. Senter, 26 Mich. 73; Colwell v. Keystone Iron Co., 36 Mich. 51; Aldine Manfg. Co. v. Phillips, 129 Mich. 243. The decree herein should provide that the intervener, Nichols, be paid by the defendant Preston the balance due him for his services, in accordance with the agreement made between the parties, with interest at 5% on sums received by Preston from the date such sums were thus received. The decree of the lower court, as herein modified, will be affirmed, without costs to any of the parties' hereto. Bird, C. J., and Moore, Steers, Brooke, Fellows, and Stone, JJ., concurred. The late Justice Ostrander took no part in this decision.