Fetzer v. South Side Lumber Co.

KOHLSAAT, Circuit Judge (after stating the facts as above). By the letter of January 9, 1907, defendant bound himself to assign to plaintiff, on tender of the $6,000 due him, the interest of George and Erañk J. Pankratz in the Vans Plarbor Band & Lumber Company, as security for any loss the plaintiff might incur by reason of its con tract with the George Pankratz Lumber Company. This latter con tract contemplated the completion of its terms during the years 1906 and 1907. As a matter of fact, through no fault of the plaintiff, completion was not had until October 27, Í908, when a loss of over $18,-000 was ascertained. In the meantime, after repeated notices and demands that plaintiff elect, and after notice that steps would be taken to reduce its said $6,000 lien to cash, defendant foreclosed the same in a proceeding to which plaintiff was made a party, and brought in by publication, 'but to which proceeding it made no defense. The decree of foreclosure provided that the defendants in said suit and all persons claiming under them should be forever barred and foreclosed from all right, title, interest, and equity of redemption in the mortgaged or pledged property, except the right of redemption before sale. Thereafter the property was sold pursuant to law to defendant for the amount of his demand, fixed at $6,939.16, This was the situation at the time of the tender by plaintiff. Was defendant required under his agreement with plaintiff to> hold said interest in the Vans Harbor Land & Lumber Company subject to the right of plaintiff to elect whether to take it or not, after the year 1907 and until the final settlement of the affairs growing out of the Pan-kratz Lumber Company contract? And, if so, was the amount of loss definitely ascertained prior to about the time of the tender to de fendant of the $6,000? [1] .The agreement. between defendant and plaintiff was in per-sonam. Such an undertaking could not be affected in a foreclosure proceeding. Plaintiff had only defendant’s agreement to assign his said pledge contract in case of its election to take. No interest in the deféndant’s pledge contract or in the subject-matter thereof passed to plaintiff under the contract granting it the option; therefore there was no right in rem' of plaintiff to be foreclosed in defendant’s foreclosure suit. As was said by the District Judge in his conclusions of law: . . '‘The foreclosure cut off this (that of the Pankratz brothers) equity of redemption, but left the same kind and quality i of title in defendant as hq previously had.” So far as concerns plaintiff; this is unquestionably correct. Whether by proper proceedings defendant could have' barred plaintiff from asserting any rights under his said undertaking of January 9, 1907, we need not here consider. At the time demand was made, all rights [882] of the Pankratzes, if any, had expired, and defendant was fully empowered to carry out its contract. [2] Error is assigned upon the finding of the court that plaintiff’s loss under the George Pankratz Company contract amounted to more than $4,000. As a matter of fact, plaintiff claims that it exceeded $18,000. A number of objections to the method followed in arriving at this sum were raised by defendant, especially to the interest items thereof. As will be seen from the statement of facts hereof, the Dis • trict Court had before it evidence to support its finding, and this oourc will not attempt to' weigh the evidence and unsettle that judgment. The same is true of the court’s finding that the value of the interest in the Vans Plarbor Company held by Eetzer and by him tendered to plaintiff in his letter of January 9, 1907, was $10,000. The District Court might lawfully make that finding upon the evidence before it, and we may not, under the facts of this case, go back of its judgment. The amount received by defendant on his subsequent sale of said one-fifth interest to Lowe cannot be taken as fixing the value of said interest. [3] It was held by the District Court that the amount of plaintiff’s damages in the case should be the difference between the $6,000 secured as above to defendant and the value of that security, i. e., $10,000. This difference of $4,000, it gave judgment for, together with interest thereon from the date of the tender by plaintiff and costs. As we look at the matter, plaintiff was entitled to have the security contract turned over to himself on demand and tender of the $6,000. That being so, and defendant, having wrongfully refused to make the $6,000 and assign the contract as he should have done under his agreement, was liable to- plaintiff for its damages thereby sustained, viz., the sum of $4,000, and no reason is apparent why he should not be charged with interest from the date of tender and demand, viz., January 15, 1909. [4] It must be borne in mind that defendant’s security' contract did not call for stock, but for a one-fifth interest in the Vans Harbor Land & Lumber Company. Manifestly, its market value could be arrived at only by ascertaining what property it represented. We think that the method pursued by the District Court in arriving at its value was the correct method under the circumstances. Murray v. Stanton, 99 Mass. 348; Ruppel v. Adrian Furniture Co., 96 Mich. 455, 456, 55 N. W. 995; Feige v. Burt, 124 Mich. 565-568, 83 N. W. 367. Numerous errors are assigned to the method pursued in regard to the taking of testimony. On the whole record, we think that sufficient evidence was properly admitted to justify the District Court in rendering its judgment, and that substantial justice has been done. We find no reversible error in the judgment of the District Court, and it is therefore affirmed.