Warren County NcArchives Court.....Mealor, Vs. Kimble 1811-18 ************************************************ Copyright. All rights reserved. http://www.usgwarchives.net/copyright.htm http://www.usgwarchives.net/nc/ncfiles.htm ************************************************ File contributed for use in USGenWeb Archives by: Deb Haines http://www.genrecords.net/emailregistry/vols/00003.html#0000719 June 12, 2008, 11:40 pm Source: North Carolina Reports Written: 1811-18 June Term 1813. JAMES MEALOR v. BENJAMIN KIMBLE. From Warren. 1. A received from B a tobacco note, which he agreed to sell for the best price that could be got for it, and retain out of the money a debt which C owed to him. A went to market and sold tobacco belonging to himself for the highest market price; but not being able to get the same price for B's tobacco, he declined selling it at that time, and determined to appropriate it to his own use and pay to B the same price for which he (A) sold his own tobacco. B settled with A under the belief that A had sold the tobacco in the market. A afterwards sold the tobacco for 5s. in the cwt. more than he had accounted for to B, and B, having discovered it, brought suit for the money: Held, that B was entitled to recover, although A was guilty of no fraud; for A acted as the agent of B, and in all cases where an agent becomes a purchaser himself the principal has power to put an end to the sale. He may elect to be bound or not to be bound by the purchase of the agent. 2. The rule as to purchasers by a trustee is this, that if he purchase bona fide, he purchases subject to the equity that if the cestui que trust come in a reasonable time after notice of such purchase, he may have the estate resold. This was an action for money had and received to the use of the plaintiff. On the trial the plaintiff produced the following instrument of writing, to wit: March 22, 1808, then received of James Mealor a tobacco note, inspected at Petersburg, weight 1,415 pounds net, which I am to sell at Petersburg or elsewhere, for the best price I can get for it; and the money to be placed to the credit of John Cheeks, executor of James Mealor, obtained 9 January, 1808, and I, the said Benjamin Kimble, am to retain to myself what Thomas Mordy owes me out of this money. Benjamin Kimble. This was proved to be in the handwriting of the defendant. In August, 1808, the defendant sold the tobacco note to Dudley Clanton, of the county of Warren, at the price of $4 per hundredweight and on 25 December afterwards received the money of Clanton, the tobacco being sold upon a short credit. The plaintiff produced upon the trial an account in the handwriting of the defendant and in the following words: 1808. Benjamin Kimble, Dr. to James Mealor. To balance of Hogshead of Tobacco, weighing 1,415 lbs. net, from 19s. to 24s. Some time in the month of May, 1808, after defendant returned from Petersburg, upon being asked whether he had sold Mealor's tobacco, if he had, at what price, he answered that, he had sold it at 19s. per cwt. It was admitted that the defendant had paid to Mealor's use the amount of the tobacco specified in the receipt at 19s. per cwt. On the part of the defendant the deposition of Gideon Johnston, of Petersburg, was read in evidence, which set forth that on 1 April, 1808, Benjamin Kimble, the defendant, came to his store in Petersburg, and was asked by him if he had sold the hogshead of tobacco which his negro had brought down some time before, and which was inspected at Cedar Point Warehouse. Kimble answered, no, but he wished to sell it. Deponent offered him 20s. per cwt. After some minutes he agreed the deponent should have the tobacco at 20s. per cwt., which he paid him. Kimble then offered to sell to him a hogshead of tobacco, which he said belonged to his neighbor. The deponent refused to purchase, because he did not know the quality. Kimble observed that he should be glad to get the same price for his neighbor's tobacco that he had gotten for his own. The deponent answered that he did not wish to purchase the tobacco, as he had not seen it; but advised him to apply to a man in town, who was buying upon the face of the note. Kimble went off, and returned without success. The deponent then proposed to purchase from him another hogshead of tobacco, which he had in town, and which he had seen on that day, and offered Kimble 19s. per cwt. for it. Kimble at first refused, saying that he would hold up that hogshead for a better price; but after some conversation Kimble agreed to sell it and take 19s. per cwt., saying he would keep his neighbor's tobacco for himself, and his would sell for the best price. The price of tobacco was 18s. per cwt., and the deponent did not purchase any other tobacco from Kimble that year. It was further proved that Clanton sold the tobacco note which he purchased from Kimble for 24s. per cwt. Upon the foregoing facts the plaintiff insisted that he was entitled to a verdict for the difference between 19s. and 24s. for 1,415 pounds of tobacco; but the jury under the charge of the court gave their verdict for the defendant. A rule for a new trial was obtained, and sent to this Court. Seawell, J. From this case it is evident that the defendant acted as agent or trustee for the plaintiff; and that it was the understanding of the parties he was to have nothing for his trouble. It is equally clear that the agent accounted for the tobacco at 19s. (under pretense of having sold for that price) and afterwards sold for 24s., by which he gained 5s. in each hundredweight. But it is attempted to be inferred from the statement that the defendant was unable to sell the plaintiff's tobacco for so much as 19s. and, with a view of obliging him, substituted one of his own hogsheads that would command that price. Without inquiring whether there be sufficient evidence of fraud in the conduct of the defendant to overrule the verdict, we are of opinion that if is not in the power of an agent to become a purchaser himself, without leaving it also in the power of his principal to put an end to the sale. 2 Brown Ch., 400, 430; 5 Vesey, Jr., 680. In the present case the plaintiff has elected not to be bound by the exchange of the tobacco which the defendant in his representative character thought fit to make with himself, and calls upon him to account for the full amount, and no more, of the tobacco he was entrusted to sell, and which he has sold; and this he is entitled to by law. The rule for a new trial must therefore be made absolute. Hall, J., contra. It seems that the plaintiff, being indebted, did on 22 March, 1808, deliver to the defendant the tobacco in question, to be by him sold, and the money arising from the sale to be applied towards the discharge of his debts. In the course of a week after that time the defendant attempted to sell the tobacco in the town of Petersburg. The price of tobacco at that time, on the face of the note, as it is called (that is, although it had passed inspection, but the quality unknown to the purchaser), was 18s. Now, had Kimble sold the tobacco for that price no blame could have been attached to him. But his own tobacco having been opened and looked at, commanded a better price. He therefore substituted this in the room of it, and sold it for 19s., and applied the money towards the discharge of the plaintiff's debts, as he had agreed to do. At what time, indeed, does not appear; but there is no complaint on that score. In the month following he stated, when asked, that he had sold Mealor's tobacco at 19s. Now, as he had not sold Mealor's, but his own tobacco, avowedly a substitute for it, and that for a greater price than Mealor's would have brought, and applied the money to Mealor's use, he thereby, I think, made Mealor's tobacco his own, and had it fallen in price afterwards he must have borne the loss. Let it be remembered that there is no allegation or proof of fraud in the defendant. Months after this time, when Mealor's debts were paid off, the tobacco was sold for 24s. on a credit of four or five months, and it is alleged that the plaintiff is entitled to the difference between 19s. and 24s. Had it sold for 4s. only, the defendant must have borne the loss. Besides, it is well known that tobacco generally rises in price from the time it is inspected at least for one year. From this view of the case, rather than the defendant should be compelled to settle with the plaintiff at 24s. per cwt., the plaintiff should return to the defendant 1s. per cwt., rating the tobacco at 18s., the price it bore when he substituted his own in the room of it, and sold it for 19s. But it is said a trustee shall not become a purchaser, and the cases of Fox v. Mockroth, 2 Brown Ch., 400; Forbes v. Ross, ibid., 430; Whichcote v. Lawrence, 3 Vesey, Jr., 740, and Campbell v. Walker, 5 Vesey, Jr., 678, are relied upon. This position cannot be admitted except under certain limitations. I will examine it, but without believing that its solution is indispensable to a decision in the present case, for I can view no other person as the real purchaser, but G. Johnston. In Fox v. Mockroth, supra, the trustee who purchased was decreed still to be a trustee, because he was guilty of a fraud in taking an undue advantage of the confidence reposed in him. That case is founded in reason and justice, and ought to be considered good authority where a similar case shall occur. In Forbes v. Ross, supra, no fraud was alleged against the trustee; but through a misapprehension of his duty he took money to himself at 4 per cent which the testator had directed to be laid out at the most that could be got for it, giving as a reason for so doing that the testator had loaned him money upon those terms during his life. It appeared, also, that the trustee was a man of large property. This is a short and certainly a very plain case, for although there was no fraud alleged in the trustee, yet he became a gainer, and his cestui que trust a loser by his conduct, and it matters not whether such conduct was induced by fraud or happened through ignorance. In Whichcote v. Lawrence, supra, the Chancellor observes, "that it is not true, as a naked position, that a trustee cannot buy of the cestui que trust," and goes on to qualify it by observing, "that it is plain, in point of equity and a principle of clear reasoning, that he who undertakes to act for another in any matter shall not, in the same matter, act for himself. Therefore, a trustee to sell shall not gain any advantage by being himself the person to buy, because he is not acting with that want of interest, that total absence of temptation, that duty imposed upon him that he should gain no profit to himself." In the same case his lordship observes that he does not recollect any case in which the mere abstract rule came to be tried distinctly, abstracted from the consideration of advantage made by the purchasing trustee; for unless advantage be made, the act of purchasing will never be questioned. From these authorities it appears that courts of equity interfere to declare trustees still to be trustees, where a benefit accrues to themselves and a loss to their cestui que trust in consequence of their having become purchasers. If, then, Kimble was the purchaser of the tobacco in question, that purchase is not shaken by the principles on which these cases profess to have been decided; because he gained no profit to himself thereby, and instead of a loss, a benefit accrued to the plaintiff. It remains to be seen what bearing the case of Campbell v. Walker will have on this case. In that case the master of the rolls says: "There never was a rule that no trustee should buy," but adds that "if they do purchase bona fide, they purchase subject to the equity that if the cestui que trust come in a reasonable time they may call to have the estate resold." To examine this case by that rule it must be kept in view that Mealor, the plaintiff, was indebted to Cheek's executors, which debt, as well as the one due to Kimble, was to be discharged by the proceeds of the sale of the tobacco. This sale took place on 1 April, 1808, in consequence of which those debts were promptly discharged. A month afterwards this fact was disclosed by the defendant to the plaintiff, except that he said he had sold Mealor's tobacco, when in fact he had sold his own. This literal deviation from truth seems to give some umbrage; but it should be recollected, by way of extenuation, that two hogsheads of tobacco, made in the same neighborhood, of the same weight (or so nearly so that the circumstance makes no difference), when offered for sale on the face of the note (that is, without the quality of either being known), are as much without earmarks as two bushels of wheat out of the same field; and as far as there was any difference in the present case, the advantage was on the side of the defendant. Be that as it may, Mealor's debts being paid, he remained satisfied two years and seven months; for this suit was not brought until 15 November, 1810. This, to be sure, is not made part of the case now before the Court; but if it be of any importance, and does not appear (and it seems to be so from the case last cited), why may not this Court as well suppose that the plaintiff has been guilty of neglect in not bringing his suit in proper time, as it is more than five years since this transaction took place. Under all the circumstances of the case connected with this lapse of time, and under a knowledge that his debts were discharged by a sale of his tobacco at 19s. per cwt. (a price more than it was really worth), I cannot believe that the master of the rolls, who laid down the rule, would have sustained a bill on behalf of the plaintiff in case it had been brought before him. It appears, then, that a trustee may be a purchaser, and that his purchase will be protected, unless the cestui que trust apply within a reasonable time after the notice to have a resale. And according to this rule, if Kimble became the purchaser of Mealor's tobacco, by selling his own in lieu of it, he ought to be protected in the purchase. It is not pretended that the sale was not honestly made, and for a full price; and it would have been equally so if the plaintiff's tobacco had been sold for 18s. But let it be assumed that Kimble had no right to substitute and sell his own tobacco for Mealor's; it follows that Mealor's tobacco was not sold at all. Then Mealor's debts were paid with Kimble's own money, and had he brought an action against Mealor for the money so advanced, Mealor would have defended himself by proving the terms on which Kimble took the tobacco, and that the price of tobacco was 18s. at the time Kimble ought to have paid it; and so it would have been settled. There would have been the same, result if the present action had been brought before Kimble sold to Clanton, and why that circumstance should make any difference I am at a loss to see. Had not Mealor's debts been paid off, the case would be very different; in that case, if tobacco had risen in price after the time when Kimble ought to have sold, he ought to be answerable for such rise; or in case it had fallen, he ought to be answerable for what it would have brought when he ought to have sold it; or if his own tobacco had been of less value than the plaintiff's, and he had sold it as the plaintiff's, the same consequence ought to follow. The only offense that I can see the defendant has been guilty of is that he allowed the plaintiff a greater price for his tobacco or sold it for a greater price than it was worth. For this he ought to be forgiven; and I think the rule for a new trial should be discharged. Additional Comments: North Caroline Reports, Vol. 6, Cases Argued and Determined in the Supreme Court of North Carolina, Reported by A.D. Murphey, Annotated by Walter Clark. 1811 to 1813, Inclusive and at July Term, 1818. Reprinted by the State. E.M. Uzzell and Company, State printers and binders, 1910. File at: http://files.usgwarchives.net/nc/warren/court/mealor567gwl.txt This file has been created by a form at http://www.genrecords.org/ncfiles/ File size: 16.3 Kb