CARTER v. LOVE et al.

(Supreme Court of Illinois.

VENDOR AND

ANCE

Dec. 16, 1903.)

PURCHASER-OPTION-ACCEPT

AGENCY-COMPENSATION-
CONTRACTS-RESCISSION.

1. Where a contract for an option to purchase land also provided that, if the purchaser should be the cause of any person purchasing the property, he should be entitled to all obtained over a certain price per acre, and a provision for commission, which was contained in the blank form of contract used, was stricken out, the purchaser, if regarded as agent of the seller, was entitled, as compensation, to all he obtained over the agreed price per acre, and his duty to his principal did not require him to turn over to the latter the excess which he received for the land over the agreed price.

2. The fact that one party to a contract does not fully understand its legal effect does not justify a court in setting it aside.

3. A contract giving an option to purchase land, though unilateral and without consideration as to the vendee, becomes binding and capable of being specifically enforced upon its acceptance by the purchaser before being withdrawn.

4. Plaintiff gave defendant an option to buy certain real estate, agreeing to convey on payment of $1,000 in cash; balance to be paid in one year. Later, and before the expiration of the option, defendant sold the land to another person, who deposited $1,000 in a bank, which notified defendant of the deposit; and the latter informed plaintiff that he would take the land, and told him of the deposit, and some time later, after the execution by plaintiff of the deed, sent him a draft for the $1,000. Held to constitute an acceptance of the option by defendant.

5. Where a contract giving an option to buy land allowed the purchaser until a certain date to perform his part of the contract, the vendor could not, after acceptance by the purchaser, and before the date set for performance, prevent him from making an effectual tender of performance by filing a bill to rescind the con

tract.

Appeal from Circuit Court, Whiteside County; Frank D. Ramely, Judge.

Action by George R. Carter against Martin G. Love and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Samuel J. Howe, for appellant. C. L. & C. E. Sheldon, for appellees.

CARTWRIGHT, J. About January 10, 1942, appellant, George R. Carter, a resident of Chicago, received a letter from appellee Martin G. Love asking whether his farm of 120 acres, near Tampico, in Whiteside county, was for sale. On January 14th Carter replied that the farm was not on the market, but if be could get $77 per acre, net, he would sell, and did not want all cash. Love went from his home at Tampico to Chicago, and on January 20th met Carter. After some negotiations they agreed upon the terms of a contract, and Love asked Carter if he had any one he wanted to go to to have the contract drawn. Carter suggested that Love draw the contract, and he took a printed form, in which he made some changes; striking out a

2 See Contracts, vol. 11, Cent. Dig. §§ 418, 1158.

provision for a commission of $1 per acre to be allowed him for the sale of the farm, and making the contract correspond with the agreement of the parties. Carter read it over, and, being satisfied with it, signed it. It was as follows:

"This indenture, made and entered into this 20th day of January, A. D. 1902:

"Witnesseth, That I, G. R. Carter, of Chicago, county of Cook, State of Illinois, in consideration of one dollar to me in hand paid by M. G. Love, of Tampico, county of Whiteside and State of Illinois, do grant to him, M. G. Love, the sole option to purchase the following described piece, parcel or lots of land of which I am the owner thereof, namely, one hundred and twenty acres of land one mile southwest of Tampico, Ill., now occupied by John Nelson, $1,000 to be paid March 15, 1902, $8,240 to be paid March 15, 1903, if purchased by M. G. Love or sold by M. G. Love to another party. Now, if the said M. G. Love shall at any time before the expiration of this option so desire, I agree, in consideration of the sum of $9,240, to convey to said M. G. Love, or as he shall direct, the above-described premises by clear warranty deed and good abstract of title. The above described property is not encumbered. For the faithful performance of the above agreement I bind myself in the penal sum of $500, to be paid said M. G. Love if I fail to fulfill this agreement. I agree that if said M. G. Love be the cause of any person or persons purchasing the said abovedescribed property, that he shall be and is entitled to a commission of all over $77 per acre on farm. I also agree that if, before the expiration of this option, I fail to notify said M. G. Love to the contrary, this option shall be considered renewed on same terms per purchase for one year, hereby binding myself, my heirs, my administrators or assigns for the fulfillment of this agreement at any time during the period of fifty-three days after date first above written.

"I have hereunto set my hand. G. R. Carter. [Seal.]"

Carter told Love that after writing him he had received a letter from Mahlon Fell, at Tampico, asking if the farm was for sale, but had not answered the letter. He wrote to Fell, stating that the farm was not for sale. On his return to Tampico, Love entered into negotiations with Fell for the sale of the farm to him when he should obtain title from Carter, and entered into a contract to sell Fell the land at $85.50 per acre, out of which he was to rebate $400 for delay in delivering possession until the expiration of a lease of the farm to John Nelson. Fell deposited in the Tampico Bank $1,000 to apply on the contract, and the bank addressed a letter to Love stating that the $1,000 had been deposited. On January 30th Love went to Chicago, taking this letter with him, and told Carter that he would take the farm at Carter's terms, or that he had sold it, and would

take it as agreed; and, in response to an inquiry from Carter, he said that Fell would eventually get the farm. Carter criticised the character of the letter from the Tampico Bank, stating that it should have been addressed to him instead of Love, but he made no objection to carrying out the trade; and, with his wife, he made and acknowledged a warranty deed of the farm to Love. He also gave Love the following writing:

"Chicago, Ill., Jan. 30, 1902. I hereby agree with Martin G. Love to leave $6,000 of a loan secured by mortgage on the premises in Tampico township, Whiteside county, Illinois, conveyed by me to him, and that this sum of $6,000 in loan so left will be accepted as a part of the purchase price to me to be paid by him. Interest at five per cent. per annum, dating from March 1, 1902. George R. Carter."

The deed and writing were, by agreement of Carter and Love, inclosed in an envelope, and mailed to the Bank of Tampico, to be held until the mortgage should be executed and the rest of the purchase money paid. On February 3d Carter wrote Love that he had sent to Morrison for the abstract, and, as soon as received, he would send it and the lease. On February 4th Carter received a letter from Love inclosing a draft for $1,000 to apply on the purchase of the farm, and requesting Carter to mail the abstract and the lease assigned to him to the Tampico Bank, and then he would assign the lease to Fell. On February 6th Carter acknowledged the receipt of the draft, and said he would send the abstract as soon as it was returned from Morrison. On February 7th Love wrote to Carter, acknowledging the receipt of his letter on the 6th, and asking him to forward the abstract as soon as possible, saying it must reach him before March 1st, and stating that he had papers made from Fell and wife direct to Carter for $6,000, due in five years, with interest at 5 per cent., and had written Fell $700 insurance for five years, loss payable to Carter. Carter had not cashed the draft, and on February 13th he went to the Tampico Bank, and was shown the note and mortgage from Fell and wife to him. He said he was not satisfied with the form of the papers. He thought his deed should run direct to Fell, or else the mortgage should have been made by Love, as there was no deed from Love to Fell. agreement the papers were then sent by the Tampico Bank to the First National Bank of Chicago for inspection. On February 17th, 13 days after receiving the draft from Love, Carter wrote the Tampico Bank that after examination of the papers he could not approve them, and he returned the draft. He also wrote Love, requesting him to come to Chicago. Love declined to do so, and on February 22d Carter telegraphed him to meet him at the Tampico Bank the following Tuesday. Carter went to Tampico and saw Love on February 25th, and then served no

By

tice on the bank not to deliver the deed deposited for Love. On the next day, February 26th, Carter filed his bill in the circuit court of Whiteside county against Love, Fell, and the banker, Glassburn, asking for an injunction against placing anything on record to cloud his title, and praying that his contract of January 20th, and the memorandum relating to the $6,000, should be canceled as having been procured by fraud; that Fell should be decreed to elect whether he would take the land from Carter at the price he was to pay Love; and that, if he elected not to do so, he should be barred from claiming any title to the lands. On the next day, February 27th, Love, with his wife, executed a note and mortgage for $6,000, payable to Carter, in accordance with the memorandum, and deposited it in the Tampico Bank for Carter. On March 1st Love deposited the cash payment of $3,240, and notified Carter that he had complied with the conditions of the contract. The defendants answered the bill, and Love and Fell filed cross-bills. Love's cross-bill set up the contract, and sought a specific performance of it; praying that the bank should be decreed to deliver the deed from Carter to him, and deliver the money and notes to Carter. Fell's cross-bill asked that his contract with Love should be carried out. Carter answered the cross-bills, and the issues were referred to the master in chancery, who took the evidence, and reported the same, with his conclusions, to the effect that Love was not the agent of Carter in the transaction, but that he had an option to purchase the lands at $77 per acre; that there was no fraud or misrepresentation, and the transaction was fair; that Love was entitled to the deeds, and Carter to the notes and money in the bank; and that the optional contract was for a good and valuable consideration, and was not revoked by Carter. He recommended a decree in accordance with the prayer of Love's cross-bill, and also that Fell should pay the purchase price to Love, and Love should convey subject to the $6,000 mortgage. The court overruled exceptions to the report, except so far as it related to a conveyance by Love to Fell, and entered a decree dismissing Carter's bill and Fell's cross-bill, and granting relief to Love on his cross-bill. The decree ordered the bank to deliver the deed of Carter to Love, and to deliver the money, note, and mortgage to Carter.

The first proposition stated for appellant is that Love was Carter's agent, and therefore could not take advantage of his agency to make a profit for himself over and above his compensation. If it should be admitted that Love was Carter's agent, it must also be conIceded that he did not make a profit for himself over the agreed compensation. It is true that one who acts as agent for another in the sale of land has no right to speculate upon the subject of the agency at the expense of his principal. He will not be allowed to put

In

himself in a position antagonistic to his prineipal, to whom he owes a duty; and, if he sells for a higher price than that limited by his principal, he is bound to account for the excess over and above his own charges and commissions. Merryman v. David, 31 Ill. 404; Kerfoot v. Hyman, 52 Ill. 512. But where there is no fraud the compensation may be agreed upon in any manner or to any amount by the parties. It is not uncommon to agree that an agent shall have as his compensation all that he can obtain over a certain fixed price, and in the absence of fraud such an agreement is conclusive upon the parties. this case the proposition of Carter in his letter was that he should receive $77, net, per acre, by which he would not be liable to any commissions; and, when the contract was entered into, the provision for a commission was stricken out of the blank form. The contract explicitly provided that, in case Love should be the cause of any person purchasing the property, he should be entitled to all obtained over $77 per acre. Carter testified that Love told him he thought he was asking a pretty good price, and thought he ought to make it low enough so that he could make at least 50 cents an acre, and that this made him think that Love was going to act as his agent. If that is so, we do not see what effect it could have upon the agreement that Love should have all that he could realize above $77 an acre. If he was acting as agent, he certainly owed nothing to Carter in regard to any enhanced price, but in negotiating a sale was working in his own interest, to get as much as he could as commission. There are other agreements, however, in the contract, having no relation to agency. The contract gave Love an option for 53 days to purchase the land at the stipulated price, and Carter agreed, in consideration of the purchase price, to convey to Love, or as Love might direct. It is clear that the contract represented the understanding of the parties.

Counsel for appellant says that Carter did not understand that he was dealing with Love as a principal. But that is merely saying that he did not fully understand the legal effect of his contract, which would not justify a court in setting it aside. His testimony, however, shows that he did understand the contract, and it corresponded substantially with his letter to Love that he would sell the farm for $77, net. He was a business man, and read over the contract before he signed it, and it cannot be supposed that he did not know that Love had an option to buy the land himself. He testified that he knew Love was engaged in the insurance business and selling farms, but that fact is entirely consistent with the contract by which Love was allowed to sell the farm to some one else, or to buy it himself. If Love sold the land to Fell as an agent, he was entitled to all that he received above $77 per acre; and, if he dealt with Carter as a purchaser, he was to have the land at that price. The evidence shows that he

availed himself of the option and became a purchaser.

The next proposition of counsel is that a contract, to be specifically enforced in equity, must be supported by a good and valuable consideration, and must be reasonably fair and just, and that the contract of Carter was unilateral and without consideration. If the contract was of that character, it would become mutual and capable of enforcement at the instance of either party, upon acceptance of its terms by Love within the time limited, and before the option was withdrawn. Crandall v. Willig, 166 Ill. 233, 46 N. E. 755; Guyer v. Warren, 175 Ill. 328, 51 N. E. 580. There was such an acceptance by Love at least on February 4th, when he wrote the letter to Carter, sending him the draft for $1,000. He had previously, on January 30th. told Carter he would take the land on his terms; and Carter made the deed and memorandum, which were mailed to the Tampico Bank for the purpose of completing the sale. In the attempt to so complete it, a mortgage was made by Fell to Carter, which Carter would not accept; but his objections were to the party named as a receiver, and because there had been no conveyance from Love to Fell, and he feared trouble in foreclosing the mortgage. He then knew all about the sale to Fell, and made no objection whatever to complying with his contract. There was no fraud, deceit, or misrepresentation of any character in obtaining the contract; and Carter's conduct, up to the time he repudiated it, shows that he fully understood its terms.

It is also urged that Carter had a right to rescind the contract before acceptance, that the filing of the bill was a rescission, and that Love could not thereafter legally perform the contract on his part. As we have already said, there was an acceptance on the part of Love before the bill was filed; and, the contract having become legally binding upon the parties, Love had until the 1st day of March to tender performance. Appellant could not prevent such tender of performance by filing the bill and attempting to rescind the contract. The mortgage was made by Love and wife on February 27th, and the cash payment was made on March 1st. This was a full compliance with the contract, and he thereupon became entitled to the deed in the possession of the bank.

The decree is affirmed. Decree affirmed.

MALICKI v. BULKLEY et al. (Supreme Court of Illinois. Dec. 16, 1903.) INSOLVENT CORPORATION-CREDITOR-RIGHT

TO PREFERENCE-DILIGENCE.

1. M., having obtained judgment against an insurance company, the company deposited with a trust company a fund to secure a fidelity company from loss as surety on its appeal bond in case M.'s judgment was affirmed. The judgment was, however, reversed, and on a retrial M. again obtained judgment. Meanwhile the insurance company had become insolvent. Held,

that M. was not entitled to a preference over other creditors of the insurance company in the fund deposited with the trust company, as the condition on which the deposit would have become available to the fidelity company had not occurred.

2. The fact that receivers of an insolvent corporation know of and report the existence of assets, from which report a creditor obtains his knowledge thereof, shows that the creditor is not entitled to a preference on the ground of diligence.

Appeal from Appellate Court, First District.

Suit by the insurance commissioner of the state of Illinois against the Chicago Guaranty Life Society and others, in which Almon W. Bulkley and others were appointed receivers, and in which Teofila Malicki sought to intervene as a preferred creditor. From a judgment of the Appellate Court (107 Ill. App. 595) affirming a judgment denying the intervener's petition, she appeals. Affirmed.

John M. Duffy and Warwick A. Shaw, for appellant. Anson E. Meanor, for appellees.

BOGGS, J. The appellant instituted an action in the circuit court of Wayne county, in the state of Michigan, against the Chicago Guaranty Life Society, an Illinois corporation, to recover on a policy of insurance. Judgment was entered in appellant's favor, and the society appealed to the Supreme Court of the state of Michigan. In January, 1898, the Fidelity & Deposit Company of Maryland became surety on the appeal bond given by the society, and the society, to secure the Fidelity & Deposit Company as such surety, and also to secure it as surety on another undertaking which it had entered into, being a forthcoming bond in a garnishment proceeding pending in one of the courts in the state of Georgia against the society by one A. M. MacMurphy, deposited with the Royal Trust Company of Chicago the sum of $2,800. The appeal was prosecuted with success, and the judgment was reversed, and the cause remanded. The case was redocketed, and on a subsequent hearing in the circuit court judgment was on the 15th day of January, 1901, awarded the appellant in the sum of $3,600. In October, 1900, prior to the rendition of this judgment, a judgment creditor of the Chicago Guaranty Life Society procured a decree to be entered in the superior court of Cook county, Ill., ordering the society to be placed in the hands of the said Royal Trust Company, as receiver. On the 24th day of October, 1900, the insurance commissioner of the state of Illinois filed a bill in the superior court of Cook county to oust the Royal Trust Company as receiver and to secure the appointment of other receivers. On the 19th day of December, 1900, a decree was entered awarding the relief asked by the bill filed by the insurance commissioner, and the appellees were appointed receivers. The receivers, in a report to the court filed on May 11, 1901, advised the court that the Royal

Trust Company held the said sum of $2,800, and stated fully the reason why said money had been so deposited, and that the proceeding instituted by MacMurphy in the court of Georgia was still pending, and for that reason the receivers were not entitled to the possession of the money. On the 1st day of June, 1901, the appellant filed an intervening petition in the proceeding, based on the bill filed by the insurance commissioner, which was pending in the said superior court of Cook county, praying that an equitable attachment or lien superior to that of other creditors of the society be adjudged in her favor against the money so remaining in the hands of the Royal Trust Company, and praying also that the Royal Trust Company be made defendant to said petition, and be brought into court and required to answer. On a hearing the prayer of the intervening petition was denied. The Appellate Court affirmed the action of the superior court, and the matter is here on a further appeal.

The money was deposited with the Royal Trust Company in part to secure the Fidelity & Deposit Company from loss on the appeal bond in the event the judgment which the appellant had obtained in the trial court in the state of Michigan should be affirmed by the Supreme Court of that state. But that judgment was reversed, and the cause was remanded. Without deciding whether the appellant could have obtained any right or interest in the fund by way of subrogation or other equitable doctrine had her judgment been affirmed by the Supreme Court of Michigan, it is clear that, as her judgment was reversed, no such right or interest accrued to her.

The reversal entitled the Chicago Guaranty Life Society to have the fund returned whenever the other liability which the Fidelity & Deposit Company had assumed for the society should be adjusted. The appellant subsequently obtained a judgment against the society in the circuit court in Michigan, but not until after the society had been decreed by the superior court of Cook county, in this state, to be insolvent, and its property placed in the hands of receivers. The appellant had no preferential interest whatever in the fund or the disposition to be made of it. Nor was she entitled to the preference under some circumstances given a diligent creditor who has discovered assets, for the reason, if no other, that the receivers knew of the existence of the fund, and had reported all of the facts relative to the same to the court before the appellant filed her petition. It was from this report of the receiver the appellant became advised of the fact that the money was on deposit with the Royal Trust Company. No reason, legal or otherwise, appeared for giving the appellant any preference over other creditors of the society in the distribution of the fund in question.

The judgment of the Appellate Court is af firmed. Judgment affirmed.