Rowan v. Sharps' Rifle Manufacturing Co. , 31 Conn. 1 ( 1862 )

Hinman, C. J.

The original bill seeks to foreclose the re7 spondents’ interest in certain mortgaged premises, but the parties have conflicting claims to the property, and the result in the superior court was a decree in favor of the respondents upon their cross-bill and answer, by which the petitioner’s interest therein was foreclosed, unless he paid to the respondents a large sum of money claimed as damages against the British Government, represented in this cause by the petitioner,Rowan.

The premises are the two outer sections of a tract of about twenty-five acres, upon the central section of which the respondents’ rifle factory is situated. The whole tract was purchased by Robbins & Lawrence for the purpose of erecting the factory thereon, (and which was soon after the purchase elected,) under a contract between them and the respondents, dated January 9th, 1852, by which they bound themselves, with the aid of $>40,000 advanced by the respondents on their giving satisfactory security therefor, to purchase the necessary land, and erect thereon and equip a manufactory for the making of rifles, and to manufacture for the respondents twenty thousand Sharps’ rifles, to be paid for on delivery, and the whole to be made and delivered by the 1st day of January, 1855. It was further provided by the contract that the land should be conveyed to the respondents, who were to hold it until the contract was performed, and then to reconvey it to Robbins & Lawrence; with a right, however, at their election to become the absolute owners of it by purchase, upon giving six months’ written notice of their election so to purchase; the price to be fixed by an appraisal, to be made by three disinterested appraisers, one to be named by each party and the third by the two thus appointed. The title to the twenty-five acres was, in accordance with the terms of the contract, conveyed to the respondents, and they have ever since held the central portion, on which the factory was built, having in 1857 become the absolute owners of it by an election to purchase it, and by proceedings taken for the purpose under the contract. On the 11th of December, 1855, they released their interest in the two outer sections to Robbins & Lawrence, to enable them to mortgage the same to Fox, Henderson & Go.; and Robbins & Lawrence having accordingly executed the mortgage, and it being now held by assignment by the present petitioner, he seeks by this bill a foreclosure upon it. After the contract of January 9th, 1862 was executed, the respondents made further advances to Robbins & Lawrence, besides the $>40,000 provided for therein, to secure which Robbins & Lawrence, on the 23d of September, 1853, made a mortgage of the same estate, with the factory thereon and the machinery contained in it, the factory having been then built and equipped, to the respondents, to secure them for the original $40,000, and for such subsequent advancements.

The respondents’ rights in the property then, previous to their release of the 11th of December, 1855, were based upon the contract of the 9th of January, 1852, with the legal title which they held under that contract, and upon the mortgage of September 23d, 1853. The contract of January 9th, 1852, so far as it provides for a conveyance of the legal title to the land to the respondents, and a reconveyance by them to Robbins & Lawrence when the twenty thousand rifles were manufactured and delivered, in connection with the fact that the legal title to the land was by deed conveyed to the respondents pursuant to the contract, shows clearly that the land was held by them as a security for the performance of that contract for the manufacture of rifles. If this part of the contract had been embodied in the deed it would have been but an ordinary defeasance in a mortgage, and it can surely make no difference that two instruments instead of one were executed, or that they were executed on different days. If they were to form but parts of one contract, courts should give effect to them according to the intention of the parties. As a security for the performance of the contract to manufacture and deliver twenty thousand rifles, the land can only be held for such damages as the respondents have suffered by the failure of Robbins & Lawrence to perform that contract, and Robbins & Lawrence would be equitably entitled to demand a reconveyance to them on their performing the contract or paying the damages caused by their non-performance. The provision for the purchase by the respondents at their election is all that gives the contract any peculiarity. But this is an independent provision in the contract, the performance of which on the part of Robbins & Lawrence was secured, if the respondents should elect to purchase, by their taking the legal title in the first instance, instead of relying upon the voluntary act of Robbins & Lawrence, or upon the power of a court of equity to enforce such performance. But it did not operate to restrict the power of Robbins & Lawrence to convey their equitable interest in the land. Such a conveyance would operate to pass the title to the land in case the respondents elected not to purchase, and would amount to an assignment of their claim upon the respondents for the price of the land if they elected to purchase it. And this was the view taken of this contract in the late case between the same parties. 29 Conn., 282. If this was the position of the respondents on the 11th of December, 1855, when they released to Robbins & Lawrence their title to the portion of the land now in controversy, to enable them to mortgage it to Eox, Henderson & Co., upon which mortgage now held by the petitioner this bill was brought, it is obvious that the only effect of holding that release to have been executed under such circumstances that the interest released stands like a surety for tlie debt of another, and is discharged in this case by the transactions between Robbins & Lawrence and the mortgagees, is to postpone the petitioner’s mortgage to the prior incumbrance created by the contract of January 9th, 1852, and the conveyance to the respondents of the legal title pursuant to that contract, and also to their mortgage of September 23d, 1853. Without, therefore, determining the legal effect of the circumstances which are claimed to operate to avoid that release, let us see if the decree of the superior court can be sustained upon the assumption that there had been no such release executed. The consequence of holding the release to be inoperative would be, that the respondents would be re-instated in the same position which they occupied before the release was executed; in which case they would be entitled to hold the property as security for the balance of their account against Robbins & Lawrence, and for any damages they had sustained by the non-fulfillment of the contract to make the twenty thousand rifles, and would be enabled to take the property at an appraisal. Subject to these rights of the respondents the petitioner is most obviously entitled to his mortgage to secure the $130,000.

Before coming, however, to the questions arising upon the decree in favor of the respondents on their cross-bill, it is proper to notice the very broad claim which they make, that notwithstanding the release deed executed by them through their president on the 11th of December, 1855, and the vote of the corporation under which that deed was executed and delivered, their right to take the land under an appraisal, as against the mortgagees of Robbins & Lawrence and the present petitioner, was still retained by them, irrespective of the question whether the deed and vote were made and passed under such circumstances as to impress upon the property the character of suretyship for the debt for which it was mortgaged, with the rights of a surety as to a discharge by the subsequent acts of the mortgagees. The release deed is in the most general terms, and is comprehensive enough to include every interest that the respondents had in the land at the time it was executed. But it is said that the terms of the vote, which was the only authority that the president of the company had for the execution of the deed, preserved to the respondents their right to take the land at an appraisal as against the mortgagees of Robbins & Lawrence. We think this claim can not be sustained. Before that vote was passed, Fox, Henderson & Co., who seem to have been contractors with the British government for the furnishing of arms to that government, had contracted with a Yermont corporation, called The Robbins & Lawrence Company, for the manufacture by the latter of twenty-five thousand Minie rifles, and had advanced to that company the sum of $100,000, to be repaid by a deduction of $1 from the stipulated price of each rifle, upon paying for the same as delivered. Robbins & Lawrence were the principal stockholders in this corporation, and had taken upon themselves the manufacture at Hartford of certain parts of the rifles for the corporation. The company found themselves in need of further advances, which Fox, Henderson & Co. were willing to make on receiving satisfactory security. To accomplish this purpose, Robbins & Lawrence, and the corporation of which they were the principal stockholders, Fox, Henderson & Co., and the British government, applied to the respondents to release a portion of the tract of land held by them, to Robbins and Lawrence, to enable them to make security upon unincumbered property for such past and contemplated advances, and upon this application the directors of the company passed the following vote:

“ Voted, That the president be authorized to execute a release of the company title and interest in and to the land and buildings lying east of a line drawn parallel to the eastern wall of the boiler house annexed to the main factory building, and distant therefrom in an easterly direction three feet, extending from the Little River on the north to the Babcock farm on the south, except the strip of land lying north of the street and between the brook and the enclosed land, on which strip of land the cartridge shop and magazine of the company are situated; also, all the land and buildings thereon lying west of a line drawn from Little River to the Babcock farm, parallel with the west side of the factory building and distant therefrom one hundred and fifty feet; to Robbins and Lawrence, to enable them to secure the sum of one hundred and thirty thousand dollars, advanced to them by Pox & Henderson, toward a contract for twenty-five thousand Minie Rifles ; and on the fulfillment of said contract, said land and buildings, with all the machinery, tools, engines and fixtures, to be reconveyed to said Sharps’ Rifle Manufacturing Company; and upon condition that the said Robbins and Lawrence éxecute a mortgage of said premises, buildings, machinery, stock, fixtures and tools so mortgaged to said Eox & Henderson, or to other parties for their use and benefit, to said Sharps’ Rifle Manufacturing Company, independent of any other lien ; and also to secure to the company the right to take the entire property, as contemplated by the contract of 9th of January, A. D. 1852, at such time as may be acceptable to the executive committee.”

We think, notwithstanding the ingenious argument of the respondents’ counsel, that it was the clear intention of the parties by this vote to release the right of purchase provided for by the contract of January 9th, 1852, as well as every right and interest which they had in the two outer sections of land described in it. Such to our minds is the plain import of the vote itself, and taken in connection with the deed, and with an agreement made by the respondents with Robbins & Lawrence alone for the extension of the right to purchase, when the contemplated mortgage to Fox, Henderson & Company was satisfied, we can not doubt that such was the intention at the time. It is obvious, however, that this question would be unimportant if the claim of the respondents is correct, that the interest which Fox, Henderson & Company took by their mortgage was subject to be postponed, and became in fact postponed, to the claims of the respondents upon the land, by the subsequent transactions between Robbins & Lawrence and the holders of this $130,000 mortgage. And this question we are disposed not to determine or discuss in this case, since a majority of us are of opinion that the decree of the superior court must on other grounds be reversed.

By the terms of the contract, if the respondents elected to take the property they were to take it at an appraisal, made by appraisers to be specially selected and appointed for that purpose. We think that the finding of the value by the committee can not be substituted for this formal appraisal thus specifically provided for. The petitioner has a right to insist upon the terms upon which alone Robbins & Lawrence agreed to sell the land. They had provided for three appraisers, and the precise mode in which they were to be selected was stated in the contract. The judgment of the committee may be as sound as that of any other man or body of men, but it is not the judgment of the men upon whose opinion alone the land was agreed to be sold. The committee was appointed, not for his particular skill as an appraiser of real estate, but to find the facts in the case, and he doubtless acted upon the question of the value of the property, as he did upon all the other facts of the case, upon such evidence as was before Mm; whereas the mode contemplated by the contract looked principally, if not entirely, to the judgment of the appraisers themselves, upon a personal inspection of the property. It is obvious that the results of these two modes might be very different. Besides this there is no allegation of value in the cross-bill, for the purpose of laying the foundation for the respondents’ claim to take the land; nor is it alleged that the land has in fact .been taken, but the contrary is expressly admitted. It is difficult to see therefore what the evidence of its value had to do with the case, unless it was introduced and received for the purpose of enabling the court to fix the time of redemption if a decree should be made in favor of the petitioner. But an inquiry for such a purpose would be made with less care, since it would be regarded as of far less importance than if the value found was to stand for the price upon an absolute sale and transfer of the title. We can not, therefore, sustain the conclusion of the superior court in treating the title to the property as transferred to the respondents upon the valuation fixed by the committee, and for this reason we think there is manifest error in the decree.

But while this difficulty is fatal to any decree in favor of the respondents upon the claims set up in the cross-bill, it does not settle the right of the petitioner to a decree of foreclosure in his favor upon the whole case, since it may well be, that although the decree sought can not be rendered in favor of the respondents, either because facts enough are not alleged in the cross ' bill, or are not found by the committee, on which to base such a decree, still enough may be found to show that the petitioner has no equity which will entitle him to a decree in his favor, either for the whole or for any part of his claim. Hence, if it be true that the respondents have a large claim against the British government, the payment of which they have no means of enforcing except by an application of it to the claim which that government is endeavoring to enforce against them through this petition, they have a right, undoubtedly, to offset so much of it as they may be enabled to establish, against the claim which that government is attempting to enforce by an appropriation of this land by the foreclosure, the respondents having very valuable legal and equitable rights in the land. But we have great difficulty in finding from the report of the committee that any considerable amount of damage has been sustained by the respondents through the improper acts of the agents of the British government, and we do not see that this damage has been found as a fact by the committee in such a manner that we can act upon it. It is found that by reason of the requirement that the Maynard primer lock should be attached to certain carbines and that other alterations in the construction of the arms should be made, and by reason of certain conduct of the viewers and inspectors of the British government, the respondents were prevented from delivering the carbines at an earlier time than they were delivered, on which account damage to the amount of $25,950 was sustained. But this conduct is found to have been between the 17th of March, 1855, and the day of the delivery of the last of these carbines. Now we think there is nothing shown which can avoid the contract of March 26th, 1856; and that contract expressly provides for Maynard’s primer; and what part, if any, of the misconduct was after the execution of that contract, we can not, of course, determine^; and as it is no where found in the report, it is impossible to consider any portion of this, much the largest item of damages, as legally or equitably due from the British government, or any damage of which the respondents can complain. Again, if any interest in this land is claimed by the respondents in consequence of the failure of Robbins and Lawrence to perform the contract of January 9th, 1852, for the manufacture of the riñes, by reason of their neglect to manufacture and deliver them within the time specified, the damages which have accrued in consequence of this neglect are not found. It is found that the indebtedness of Robbins & Lawrence to the respondents has all been satisfied and extinguished by the taking of the central portion of the whole tract of land with the factory, &c., except the small balance of $141.38. If this is the extent of their claim on Robbins & Lawrence, then on the payment of it, with the interest, the case will be relieved of some embarrassments resulting from the very great complication of facts which it presents.

We make these suggestions not so much uith reference to the simple question of whether there is error in the decree foreclosing the petitioner’s interest in the premises, upon the facts alleged in the respondents’ cross bill and found by the committee, as with the view of aiding the parties in presenting to the court the whole case upon any future hearing that may be had in it. We are satisfied that the decree in favor of the respondents upon their cross-bill is erroneous ; first, because the respondents have no where alleged that they have taken or elected to take the land which the petitioner seeks to foreclose, under the contract of January 9, 1852; secondly, because if they had made such an allegation, it is conclusively disproved by the report of the committee; and thirdly, because they have no right to take the land in any other mode than that provided for in the original contract of 1852. This is sufficient to show that there is manifest error in the decree in favor of the respondents; and we purposely abstain from advising the superior court as to whether the petitioner is entitled to a decree in his favor, and from making any observations upon several important points in the case ; desiring that, in the determination of those points, if it shall hereafter become necessary to consider them, we may have the benefit of a full court, which we have not had in the present consideration of the case.

In this opinion Dutton, J., concurred; Butler, J., dissented; Sanford, J., did not sit.