Weaver v. Richards

Grant, J.

(after stating the facts). 1. Plaintiff agreed to effect a sale of defendant’s lands which should net the defendant $6,000. The sale was not effected, and it is urged that the 'reason for the failure is a defect in title, for which the defendant alone is responsible, and that the plaintiff had performed his contract by finding a, purchaser. No bad faith is charged against the defendant. He acted in entire good faith. He believed he had a good title. He was willing to defend it by warranty deed. How the plaintiff obtained knowledge that the defendant owned these lands does not appear. If he obtained knowledge by an examination of the records in the office of the register of deeds, he is chargeable with knowledge of the defendant’s title, and would be held to have contracted with reference to it. He does not testify that he did not know what was the defendant’s source of title, or that he did not see and examine the abstract which the defendant had. Three attorneys of standing had advised defendant that his title was good. The power of attorney and the deed thereunder had been held valid by the circuit court for the county of Schoolcraft. See Chicago Lumbering Co. v. Powell, 120 Mich. 51 . That case was appealed to this court and affirmed, although the validity of the power of attorney was not discussed, and the *403 case was determined on other points. Under these circumstances there is no justice or equity in the plaintiff’s claim, and, if it can be sustained, it must be by reason of an inexorable rule of law. Plaintiff made no binding contract with the proposed purchaser, the Sailing, Hanson & Co. It was under no legal or moral obligation to purchase the land. It could decline with or without reason. It declined because its attorney advised it that there was a defect in the title. The opinion of the attorney is not evidence of a defect. Brackenridge v. Claridge, 91 Tex. 527 (43 L. R. A. 593). If the defendant had title by adverse possession, clearly the proposed purchaser would •not be under any obligation to accept such a title. Would plaintiff in that event have earned his commission ? The cases upon such contracts are very numerous. The briefs are very meager upon this important question. Inasmuch as it is unnecessary, we decline to pass upon' it, as the case can be disposed of upon the other point. Upon this point, however, see Blankenship's Adm’r v. Ryerson, 50 Ala. 426 ; Garcelon v. Tibbetts, 84 Me. 148 ; Gilchrist v. Clarke, 86 Tenn. 583 ; Barnard v. Monnot, 34 Barb. (N. Y.) 90; Park v. Hogle, 124 Iowa, 98 ; Knapp v. Wallace, 41 N. Y. 477 ; Tombs v. Alexander, 101 Mass. 255 ; Stewart v. Fowler, 37 Kan. 677 . A full discussion of the question and citation of authorities will be found in Fitch on Real Estate Agency, pp. 107-115, and Rapalje on Real Estate Brokers, chap. 13.

2. It is insisted that the above agreement, containing the power of attorney, necessarily incident to the performance of the agreement, conferred only rights and powers revocable by the death of any of the parties thereto; or, in other words, that the power to sell and convey conferred upon Frank and John is a mere naked power, not coupled with any right or interest which they did not possess before the execution of the instrument. Contracts are always to be construed so as to carry out the clear intefit of the parties thereto, unless such intent is unlawful, or opposed to some sound and well-defined policy of the law. *404 Counsel concede that they find no case the parallel of this in its facts. They cite other cases involving the construction of powers of attorney and reason by analogy from, them. Owners of estates, both real and personal, may incumber them, provide for their sale and disposition while they are living, and also after their death, in any manner not inconsistent with the laws prohibiting the entailment of property.

The situation of the parties and the purpose to be attained are of importance in determining the character of the instrument. Here were five tenants in common of a large estate, consisting of both real and personal property, situated in various jurisdictions in Canada and in the United States. The necessity, as well as the wisdom, of placing this estate in the hands of one or more of their number to dispose of and divide the proceeds, is apparent. Under the law each party could apply for partition to the courts in each jurisdiction where the land was located. Such proceedings would be expensive and difficult, and probably would not result in the most beneficial sales. The credits could not be collected, and other personal property sold without the joint action of all. The parties, therefore, wisely came together and executed the above agreement. By it Frank and John agreed to take the possession, control, and management of the entire property for five years, at a compensation of $4,000 each per year. The other tenants in common agreed to this. The power to sell and convey was a necessary part of such a contract. All the expenses of Frank and John and their compensation were to be paid out of the body of the property. They therefore had a lien upon the property -for such expenses and compensation. Each surrendered his legal right for five years to proceed under the law for a partition of the estate. They did not retain the right to sell and transfer any of the property in their own name, nor was it to be transferred necessarily in their names by Frank and John as attorneys in fact. The instrument provided the name or names by-which the property could *405 be transferred. All had a joint- interest in the possession nse, and control of the property. They all agreed for a valuable consideration to surrender these rights to, and place the property.and its control and possession in the hands of, two of their number. A trust deed would not have given them more complete power. The intention of the parties is commendable and legal. The purpose to be attained is not only not contrary to any policy of the law, but one which the law should specially favor. •

The scriyener of this instrument evidently understood the law governing powers of attorney, for he expressly provided in accord with the intent and wishes of the parties that no party thereto should be able to revoke or renounce the agreement or any part thereof during the term covered thereby, and made it binding upon their heirs in case of death. None of the cases cited by plaintiff contain the like provision. A revocation by the act ■of the party or by death would destroy the unity of the agreement and render it of no avail. It was the clear and ■express purpose of the parties by this instrument to prevent such a result, and to provide for an economical and speedy collection, sale, and division of lihe estate. The power of attorney, necessarily incident to the execution of this agreement, cannot, in my judgment, be separated from the rest of the agreement, and be held to be a mere naked power of attorney.

Counsel for defendant do not appear ‡0 claim that either party could revoke this instrument by his own act. In case of a mere naked power the owner may sell the property, the subject of the power, and collect the purchase price, in which case the only remedy of his attorney is to sue him for his compensation. Such was the case of Baker v. Baird, 79 Mich. 255. In this case either party might convey all his interest in the estate, but it would be subject to this contract under which upon the division he would receive only what his vendor would have received.

A mere naked power of attorney is revocable at the will of the principal, for the reason, as stated by the author *406 ities, that “the derivative authority cannot generally exist longer than the original authority. ” Story on Agency, § 481. Or, as stated by the same author, “upon the general principle that he who alone has an interest in the execution of an act is also entitled to control it.” Section 476. The same section of the learned author clearly intimates that if the agent has an interest in the execution of the power, and there is a valid consideration for it, the power is not revocable. To the general rule above stated there are exceptions, viz., where the power is coupled with an interest, or where a consideration is paid for it. Courts have found some difficulty in determining when the power -is coupled with an interest. It is generally held that the interest must be in the thing itself, and not in the, execution of the power, and that the same instrument must confer the power and convey the interest. Where an executor is vested with "the rents and profits for the sale or use .of another, the power survives as an authority coupled with an interest. Peter v. Beverly, 10 Pet. (U. S.) 532. Where the language detached from other parts of the instrument conferred a naked power, but other provisions of the instrument evinced a design that at all events the lands, are to be sold, the power was held to survive. Franklin v. Osgood, 14 Johns. (N. Y.) 553. One authority states the general rule as follows:

“ Where an authority or power is given for a valuable-consideration, or is coupled with an interest, or is part of a security for the payment of money, or the performance of some other lawful act, it is irrevocable, whether so expressed upon its face or not.” Frink v. Roe, 70 Cal. 296 .

It is also said:

“ One of the exceptions to the general rule is where the-agency is for a definite time. Where the contract of agency is entered into for a certain specified time, it cannot be rightfully revoked before the expiration of that time, except for sufficient cause.” 1 Clark & Skyles on Law of Agency, § 160.

Two circuit courts, after careful consideration, have> *407 held this power of attorney irrevocable. Chicago Lumbering Co. v. Powell, supra, and the trial court in this case.

It is declared by one authority that, if the act authorized must be performed in the name of the principal, the agency is revocable; but, if such act can be performed by the agent in his own name, then it is not revocable. 1 Parsons on Contracts, p. 72. Tested by this rule the power was not revoked; for, by the very terms of the contract, the various acts contemplated need not be done in the name of the principals.

Where certain parties were partners, and they made an arrangement by which certain property was to be disposed of by one of their number, and the property was actually placed in his custody for that purpose, it was said:

“ The power vested in the plaintiff was not a naked power, but a power coupled with an interest. The death of the other parties would not have revoked it, and neither will their subsequent transfer of their interest. It would be unjust to allow an arrangement of this kind, entered into to prevent the necessity of legal proceedings and to secure to parties their legal rights and no more, to be made and unmade, at the pleasure of one of the parties.” Beecher v. Bennett, 11 Barb. (N. Y.) 374, 380.

Reinhard, in his work on Agency (section 183), cites .as an instance of an irrevocable power “where the power conferred is that the agent may reimburse himself for advances made in the course of the agency,” citing Posten v. Rassette, 5 Cal. 467 . That case holds that the power conferred was something more than a mere naked power, but does not state the facts upon which the holding was based. The opinion states that “it was received by Parker as a security for the indebtedness of his principal to him,” and held that he had a vested right founded upon a good consideration. It may be that the indebtedness arose by way of advances made in the course of the agency. If so, it would be an authority for the statement of the author. It is said in Peter v. Beverly, supra:

*408 “It is the possession of the legal estate, or a right in the subject over which the power is to be exercised, that makes the interest in question.”

Chancellor Kent said in Bergen v. Bennett, 1 Caine’s Cas. (N. Y.) 1, 15:

“A power simply collateral and without interest, or a naked power, is, when, to a mere stranger, authority is given of disposing of an interest, in which he had not before, nor hath, by the instrument creating the power, any estate whatsoever. But when power is given to a person who derives, under the instrument creating the power, or otherwise a present or future interest in the land, it is then a power relating to the land.”

See, also, Knapp v. Alvord, 10 Paige (N. Y.), 205; Merry v. Lynch, 68 Me. 94 ; Kelly v. Bowerman, 113 Mich. 446 ; Baker v. Baird, 79 Mich. 255 .

Counsel for plaintiff rely greatly upon Hunt v. Rousmanier, 8 Wheat. (U. S.) 174. To secure a proper application of that case, it is necessary to consider what was there involved and what was decided. The question arose upon a demurrer to a bill in chancery, which was sustained by the court below and reversed by the Supreme Court. The original bill stated:

“That Lewis Rousmanier, the intestate of the defendants, applied to the plaintiff, in January, 1820, for the loan of $1,450, offering to give, in addition to his notes, a bill of sale, or a mortgage of his interest in the brig Nereus, then at sea, as collateral security for the repayment of the money. The sum requested was lent; and on the 11th of January the said Rousmanier executed two notes for the amount, and on the 15th of the same month he executed a power of attorney, authorizing the plaintiff to make and execute a bill of sale of three-fourths of the said vessel to himself or to any other person, and in the event of said vessel, or her freight, being lost, to collect the money which should become due on a policy by which the vessel and freight were insured. This instrument contained, also, a proviso, reciting that the power was given for collateral security for the payment of the notes already mentioned, and was to be void on their payment, on the failure to do which, the plaintiff ..was to pay the *409 amount thereof, and all expenses, out of the proceeds of the said property, and to return the residue to the said Rousmanier.”

The bill, further set forth another loan and a similar agreement upon the schooner Industry. The demurrer to this bill was sustained, and leave given to amend the bill. The amended bill stated an agreement that Rousmanier should give specific security on these vessels, his ■offer to execute a mortgage, the consultation of counsel, and his advice that the power of attorney which was executed should be taken in preference to a mortgage, “because it was equally valid and effectual as a security, and would prevent the necessity of changing the papers of the vessels,” etc. The prayer of the bill was for a sale of the vessels, and the payment out of the proceeds of the debt due the complainant. Counsel for the complainant in the Supreme Court did not argue the question of the construction to be placed upon the power of attorney standing alone, but insisted that the power was not the contract, and was not intended to embrace the whole contract, and sought to show by parol the entire agreement. Counsel for the defendant insisted that the instruments were mere naked powers of attorney, and became extinct by the ■death of Rousmanier, and that only a mistake of law was involved against which courts were powerless to afford relief. ■ In stating the claims of the appellant the court said: . '

“1. That this power of attorney does, by its own operation, entitle the plaintiff, for the satisfaction of his debt, to the interest of Rousmanier in the Nereus and the Industry.

“ 2. Or, if this be not so, that a court of chancery will, the conveyance being defective, lend its aid to carry the contract into execution, according to the intention of the parties.”

The court held that, if the written instrument was to be considered ' alone, it was a naked power of attorney and was revocable by the death of Rousmanier. It then held that parol evidence was admissible to show the contract *410 in connection with the power of attorney, reversed the decree, and remanded it for answer. In discussing the question of the power of attorney the learned Chief Justice said:

“As the power of one man to act for another depends on the will and license of that other, the power ceases when the will, or this permission, is withdrawn. The general rule, therefore, is that a letter of attorney may at any time be revoked by the party who makes it, and is revoked by his death. But this general rule, which results from the nature of the act, has sustained some modification. Where a letter of attorney forms a part of a. contract, and is a security for money, or for the performance of any act which is deemed valuable, it is generally made irrevocable in terms, or, if not so, is deemed irrevocable in law. Although a letter of attorney depends, from its nature, on the will of the person making it, and may, in general, be recalled at his will, yet, if he binds himself’ for a consideration, in terms, or by the nature of his contract, not to change his will, the law will not permit him to change it. Rousmanier, therefore, could not, during his life, by any act of his own, have revoked this letter of attorney. But does it retain its efficacy after his death ?' We think it does not. We think it well settled that a power of attorney, though irrevocable during the life of the party, becomes extinct by his death. ”

The opinion means that, if the power of attorney had contained the entire contract showing a lien, it would have been a power of attorney coupled with an interest, and the power would have been merely incidental to the. contract, and intended as a means to carry it into effect. The name given to an instrument is not controlling. Its contents control its character. What difference can it make whether the instrument creating and conveying a lien or other interests, and containing within it the necessary power for execution, be called a power of attorney, or a contract, or a mortgage ? We must look to the four-corners of the instrument to determine what the contract, is, and when that is ascertained it should be enforced. In this case the instrument contains the entire agreement, recites the consideration, transfers the possession of the. *411 property to the trustees or attorneys, conveys the unlimited control of the property for a definite period, and minutely describes how the agreement shall be enforced, and in unequivocal terms makes the agreement binding upon themselves and their heirs. In my opinion the decision of Hunt v. Rousmanier, supra, is not opposed to the validity of this agreement. On the contrary, it is there held that parties may make a contract not to change their will. If they may do this, why may they not make such an express contract binding upon their heirs, so long as the law against the entailment of estates is not violated ? The contract in this case evinces a design that at all events the lands were to be sold. Franklin v. Osgood, supra. It was given for a valuable consideration. Frink v. Roe, supra. It was entered into for a specified time. 1 Clark & Skyles on Law of Agency, § 160. It is similar to partnership property actually placed in the custody of one of its number for disposal. Beecher v. Bennett, supra.

We do not deem it necessary to discuss the effect of the will afterwards discovered, and which established an absolute title in the defendant, although it was not at the time known either to the defendant, the plaintiff, or the proposed purchaser.

The judgment should be affirmed.

Blair, J., concurred with Grant, J. Hooker, J.

A judgment for the plaintiff would have been warranted only upon the theory that the defendant was in duty bound to convey to the purchaser found by the plaintiff a merchantable title, i. e., one which on the face of the record, as well as in fact, was an unassailable title. That the defendant’s title was in fact such an one is shown in view of the will of James Gibb Ross, as it is thereby made to appear that neither of the deceased persons inherited an interest in the land, and that Frank, his sole legatee, was in a situation to convey, and through his attorney did convey a complete title to the entire premises. At that time, however, the existence of the will was not *412 known, and all of the parties executing the power of attorney supposed that each was an heir and had inherited an interest in the lands; they having been adjudicated to be such by the probate court of Marquette county. The abstract showed these facts, and we understand that they are not disputed. When it appeared that the conveyance made by the supposed heirs by the attorney of record was open to the claim of invalidity as to two interests, owing to the fact that the two heirs who inherited such interests were dead when the attorney made his deed, the persons who expected to purchase the property declined to accept the deed tendered by defendant, for the reason that defendant’s title did not include those interests. As we have said, this was not true, but no one at that time suggested any reason for saying that defendant had full title, except the claim that the power of attorney was not revoked by the deaths. Unless defendant was right in such assertion, the person contemplating a purchase could not be compelled to accept a deed. It would not only be not merchantable, but he might justly claim that defendant had no title to convey, and, had he been bound by an ordinary contract in writing, he would have been justified in refusing to perform it until a valid title should be shown. There was testimony justifying the submission to the jury of plaintiff’s claim, that a contract for the sale of the premises by him upon commission was made, and that under that contract he had a right to understand that defendant would exhibit or prove that he had a valid title to the premises. 2 Page on Contracts, § 664; Carr v. Leavitt, 54 Mich. 540 ; Hannan v. Prentis, 124 Mich. 417 ; Stange v. Gosse, 110 Mich. 155 . See, also, Brackenridge v. Claridge, 43 L. R. A. note, 609, 612 ( 91 Tex. 527 ). See Roche v. Smith, 51 L. R. A. 510 ( 176 Mass. 595 ); Livermore v. Crane, 57 L. R. A. 402 ( 26 Wash. 529 ); Mattes v. Engel, 15 S. Dak. 337; Corder v. O’Neill, 176 Mo. 438 ; and other cases cited in 4 L. R. A. Cases as Authorities, 913.

This leaves the defense to stand upon the claim that *413 the power of attorney was not revoked by the death of the two heirs. The power of attorney was included in a contract between the heirs, whereby they agreed to and did appoint one Conolly, attorney, to sell all of the property of the estate of James Gibb Ross belonging to them, and to receive and distribute the proceeds. It contained an express provision that the power should be irrevocable and should survive if any of the principals should die. It is also contended that it survived because coupled with an interest in the land. The reason usually given for the rule that death revokes a power is that, as the act authorized by the power is to be done for and in the name of the principal, it cannot survive the power of the principal to act, which is terminated by his death. Upon this rule is ingrafted an exception, viz., that where the instrument creating the power conveys to the attorney the legal title to the interest covered by the power, it (the power) survives. - But this must be an interest in the thing itself, and must be created by the instrument creating the power, and if it be an interest only in that which is to be produced by the exercise of the power it is not within the exception.

Both of these questions are fully discussed and covered by the decision in the case of Hunt v. Rousmanier, 8 Wheat. (U. S.) 174, the leading casein this country. In that case, while he recognized the irrevocability during the life of the person making the instrument of a power which is the subject of contract, Chief Justice Marshall says that even in such a case it does not retain its efficacy after his death, and he clearly shows.that a contrary rule would involve an absurdity.

“This general rule that a power ceases with the life of the person giving it admits of one exception. If a power be coupled with an ‘interest,’it survives the person giving it, and may be executed after his death.

“ As this proposition is laid down too positively in the books to be controverted, it becomes necessary to inquire what is meant by the expression, ‘ a power coupled with an interest ? ’ Is it an interest in the subject on which the *414 power is to be exercised, or is it an interest in that which is produced by the exercise of the power ? We hold it to be clear that the interest which can protect a power after the death of 'a person who creates it must be an interest in the thing itself. In other words, the power must be engrafted on an estate in the thing.

‘ ‘ The words themselves would seem to import this meaning. ‘ A power coupled with an interest ’ is a power which accompanies, or is connected with, an interest. The power and the interest are united in the same person. But, if we are to understand by the word ‘ interest ’ an interest in that which is to be produced by the exercise of the power, then they are never united. The power to produce the interest, must be exercised, and by its exercise is extinguished. The power ceases when the interest commences, and therefore cannot in accurate law language, be said to be ‘ coupled ’ with it.

“But the substantial basis of the opinion of the court on this point is found in the legal reason of the principle. The interest or title in the thing, being vested in the person who gives the power, remains in him, unless it be conveyed with the power, and can pass out of him only by a regular act in his own name. The act of the substitute, therefore, which, in such a case, is the act of the principal, to be legally effectual, must be in his name, must be such an act as the principal himself would be capable of performing, and which would be valid if performed by him. Such a power necessarily ceases with the life of the person making it. But, if the interest or estate passes with the power, and vests in the person by whom the power is to be exercised, such person acts in his own name. The estate!, being in him, passes from him by a conveyance in his own name. He is no longer a substitute, acting in the place and name of another, but is a principal acting in his own name, in pursuance of powers which limit his estate. The legal reason which limits a power to the life of the person giving it exists no longer, and the rule ceases with the reason on which it is founded. The intention of the instrument may be effected without violating any legal principle.

“This idea may be in some degree illustrated by examples of cases in which the law is clear, and which are incompatible with any other exposition of the term ‘ power coupled with an interest.’ If the word ‘interest’ thus used, indicated a title to the proceeds of the sale,' and not *415 a title to the thing to be sold, then a power to A. to sell for his own benefit would be 'a power coupled with an interest; but a power to A. to sell for the benefit of B. would be a naked power, which could be executed only in the life of the person who gave it. Yet, for this distinction, no legal reason can be assigned. Nor is there any reason for it in justice; for a power to A. to sell for the benefit of B. may be as much a part of the contract on which B. advances his money, as if the power had been made to himself. If this were the true exposition of the term, then a power to A. to sell for the use of B. inserted in a conveyance to A. of the thing to foe sold would not be a power coupled with an interest, and consequently could not be exercised after the death of the person making it; while a power to A. to sell and pay a debt to himself, though not accompanied with any conveyance which might vest the title in him, would enable him to make the conveyance, and to pass a title not in him, even after the vivifying principle of the power had become extinct. But ■ every day’s experience teaches us that the law is not as the first case put would suppose. "We know that a power to A. to sell for the benefit of B. engrafted on an estate conveyed to A. may be exercised at any time, and is not affected by the death of the person .who created it. It is, then, a power coupled with an interest, although the person to whom it is given has no. interest in its exercise. His power is coupled with an interest in the thing which enables him to execute it in his own name, and is, therefore, hot dependent on the life of the person who created it.”

This case has been cited with approval many times. See Frink v. Roe, 70 Cal. 310 . The fact that the attorney is given the right to compensation from the proceeds of the sale does not make the power one coupled with an interest. See Simpson v. Carson, 11 Or. 361 ; Farmers’ Loan & Trust Co. v. Wilson, 139 N. Y. 284 ; Cassiday v. McKenzie, 39 Am. Dec. 82 , and note (4 Watts & S. [Pa.] 282); Peter v. Beverly, 10 Pet. (U. S.) 532.

The judgment should be reversed, and a new trial ordered.

Carpenter, C. J., and McAlvay, Montgomery, and Ostrander, JJ., concurred with Hooker, J.