Connelly v. Peck

The transfer of a bond for title to land upon a promise by the assignee to pay a eertain debt of the assignor, binds the assignee to perform the trust, and the obligation to pay the debt is not affected by any misrepresentations made by the assignor to the assignee, because the rights of the creditor under the transfer had already vested. jNor is the obligation of the assignee affected by the fact that the land was partnership property of the assignor and assignee, where it was not so held out to the world, and where the partnership was unknown to the creditor. And where the assignee was a commercial firm, and the assignment was made to an agent acting as the trustee of the firm, and the agent obtained from the obligor in the bond a deed for the land to the members of the firm, and subsequently the firm sold the land to their successors in business, constituting a new firm, of which some of the old firm were members, Held that the purchasers are chargeable with notice of the trust.

Appeal from the District Court of the Fifth Judicial District, County of San Joaquin. This cause was before the Supreme Court in 1853, when the decree entered in the Court below was reversed, and it was ordered that the plaintiff be allowed to amend his bill, or file a supplemental bill, on the ground that he was entitled to relief upon his proofs, although they did not sustain the allegations of the bill. The case is fully reported in 3 Cal., 75. The plaintiff thereupon filed a supplemental bill in the Court below, averring that the defendants, Sylvester F. Peck and A. B. Reading, were partners in business in Vicksburg, Miss,, under the firm name of Reading & Peck; and that the defendants Robert McDowell and John A. Peck, were partners in New Orleans, under the firm name of McDowell & Peck; that the two firms engaged in a joint adventure of shipping houses and lumber to California, and that S. P. Peck came to California in 1850 and took charge of the houses and lumber so shipped as the ostensible owner; that in August, 1850, he obtained in his own name from C. M. Weber a bond for a deed for a lot of land in Stockton, under which he went into possession, and proceeded to erect a building thereon, under the superintendence of the defendant John McNish, out of some of the lumber so shipped. That the plaintiff recovered a judgment, as alleged in the original complaint, against S. F. Peck for money loaned by plaintiff on account of the said joint adventure, which ostensibly belonged to S. F. Peck alone, the interest of John A. Peck, of Reading, and of R. McDowell being unknown to plaintiff until after the filing of the original complaint in this action ; that neither McDowell & Peck, nor McDowell, Mills & Co., (the successors of McDowell & Peck,) paid any new consideration for or on account of the conveyance to them of the legal title to the land—the sole pretended consideration being an alleged balance due by S. F. Peck to McDowell & Peck, on account of the joint adventure, and the succession of McDowell, Mills & Co. to the firm of McDowell & Peck. [This conveyance, as alleged in the original complaint, was made by Weber, after payment of the whole purchase money, to McDowell & Peck, and by them transferred to McDowell, Mills & Co.] That on December 11th, 1850, S. F. Peck assigned the bond of Weber to the defendant John McNish, as trustee of McDowell & Peck, in trust, to pay out of the property assigned, first, the mechanics’ liens, and second, the plaintiff the amount due for money loaned, the residue to be paid to McDowell & Peck; which McNish promised to do; that at the time of the execution of the deed from Weber to McDowell & Peck, and of their deed to McDowell, Mills & Co., there had been no dissolution of the special partnership as to said adventure, nor any settlement of accounts between them. [The deed from Weber to McDowell & Peck, was made after the assignment of S. F. Peck to McNish, and was procured by McNish, as charged in the original bill, and as appears from the evidence.] The supplemental bill prays that the property may be decreed to be subject to the trust, and be sold, and the proceeds applied to the payment of plaintiff’s claim. The original bill avers that the plaintiff had obtained a 'judgment against S. F. Peck for the amount due him, under which the lot had been sold in execution and bought by the plaintiff, the levy being prior to the recording the deeds of Weber to McDowell & Peck, and of McDowell & Peck to McDowell, Mills & Co. The defendants demurred to the amended bill. The demurrer was overruled; whereupon it was stipulated between the parties that the original answers of the defendants stand as the answers to the supplemental bill, and the case be submitted on the evidence offered at the former trial. The defence is in substance, that the land was bought with, the partnership funds of McDowell & Peck, and was partnership property, and that McDowell & Peck paid the whole amount thereof, through MeNish, directly to Weber, and obtained the deed of the lot in their own name; that McDowell & Peck conveyed the same through MeNish, their agent, to McDowell, Mills & Co., for a valuable consideration; and that Reading & Peck are largely indebted to McDowell, Mills & Co. on account .of the joint adventure, and that the lot is insufficient to pay the same. The evidence offered, which will be found fully set forth in the former report of this case, shows that MeNish took the assignment •from S. F. Peck in 1850, at which time, as S. F. Peck deposes, the instalments of the purchase money then due, had been paid by S. F. Peck; that MeNish promised S. F. Peek to pay, first, the mechanics for building on the lot, and secondly, to pay the plaintiff for money borrowed of him for the use of the company and other purposes specified, the balance to go to McDowell & Peck. MeNish testifies •that the promise was obtained from him under a misreprepresentation made by S. F. Peck, by which MeNish was induced to believe that the plaintiff had a judgment against each of the parties in the concern. MeNish also deposes that he paid the whole amount of the purchase money to Weber from the funds of McDowell & Peck in his hands. It was also proved that the deed of Weber to McDowell & Peck, and their deed to McDowell, Mills & Co., were both executed before, but not delivered till after, the levy on the lot under plaintiff’s judgment, under which plaintiff bought. The cause was tried before the Court—a jury being waived. The finding of the Court is that the promise of MeNish was obtained by misrepresentations of S. F. Peck. That the transfer from S. F. Peck to MeNish, as well as the deeds from Weber to McDowell & Peck, and from them to McDowell, Mills & Co.,' were made prior to the levy under plaintiff’s judgment, under which plaintiff bought the lot; and that McDowell, Mills & Co. are the successors of McDowell & Peck; and the conclusion of the Court upon the finding is, that S. F. Peck had no interest, legal or equitable, in the lot at the time of the levy of the plaintiff’s judgment, and that the other defendants, McDowell, Mills & Co., prior to the levy, and prior to any lien of the plaintiff under his judgment, had acquired the whole legal and equitable title to the land, and that the plaintiff acquired no right or title thereto under the sheriff’s deed, whereupon the Court entered a decree for the defendants. Plaintiff appealed.