WARD V. SHERMAN, 192 U. S. 168 (1904)

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U.S. Supreme Court

Ward v. Sherman, 192 U.S. 168 (1904)

Ward v. Sherman

No. 25

Argued October 15-16, 1903

Decided January 11, 1904

192 U.S. 168


Where the holder of a defaulted mortgage on a cattle range and cattle accepts the property in payment of the debt in pursuance of a written contract and enters into possession, treating the property as his own for all purposes, the former owner cannot, in the absence of fraud or mistake, after three and a half years, obtain a rescission of the contract and treat the vendee as merely a mortgagee in possession. The doctrine of laches applies.

The fact that the vendor failed to deliver part of the property and the vendee commenced an action for the value thereof, alleging such value as the unpaid balance of the original debt, does not amount to a repudiation on his part of the contract of sale, the affidavit accompanying the complaint stating that the debt sued for was not secured by mortgage or otherwise.

Where an action is not brought in proper form, but the plaintiff's intention is manifest, equity will not destroy rights on account of a mere technical mistake of counsel.

The facts in this case are few and beyond dispute, most of them being shown by the averments in the answer of the defendant Sherman. On August 23, 1889, Ward, the plaintiff and appellant, sold to the defendants the Sunflower range, together with the cattle thereon and other personal property. A conveyance was, by agreement, made to the defendant Hardenberg, who, to secure a part of the purchase price, to-wit, $25,000, evidenced by two notes of $12,500 each, made by Hardenberg and guaranteed by Sherman, executed a mortgage of the cattle and some other property. Thereafter the defendants incorporated themselves under the laws of the Territory of Arizona as the Sherman-Hardenberg Cattle Company, and transferred to it all of the property above mentioned,

Page 192 U. S. 169

subject to the payment of the two notes held by the plaintiff. On September 12, 1894, an agreement was entered into between the company and the plaintiff which, after reciting the indebtedness, reads as follows:

"Whereas the said party of the second part is unable to pay to said party of the first part the said sum of $14,500, due on October 1, 1894, and has notified said party of the first part that it will be unable to pay said sum at said time, and"

"Whereas said party of the second part desires to deliver up and turn over to said party of the first part all of the property heretofore purchased by one David Hardenberg of the party of the first part, and for which said notes were given as a part of the purchase money,"

"Now therefore in consideration of the promises and agreements of said party of the first part, the said party of the second part hereby agrees to and with said party of the first part to transfer and convey by proper deeds of conveyance and bills of sale all of the real and personal property heretofore purchased by the said David Hardenberg of the said party of the first part; also, all personal and real property owned by the said party of the second part in the Territory of Arizona, in whomsoever's name the same may now stand, to said party of the first part, and more particularly described as follows, to-wit: the Sunflower Cattle Range in Maricopa County, Arizona Territory; all cattle, horses, mules, or burros branded with either of the following brands: Diamond brand, thus: ; H.B. brand, thus: HB; also all wagons, mowing machines, farming implements, and camp outfit, and everything pertaining to or used by said Sherman-Hardenberg Cattle Company, excepting only from the provision of said conveyance such cattle as shall have been sold and delivered by said Sherman-Hardenberg Cattle Company prior or to September 1, 1894, it being understood that all stock cattle which may have been sold subsequent to September 1, 1894, shall be accounted for by the party of the second part to said party of the first part."

"That, in consideration of the said party of the second part

Page 192 U. S. 170

conveying to said party of the first part of all of the property hereinbefore described within thirty days from the date thereof, and delivering possession of the same to said party of the first part or his authorized agent, in said County of Maricopa aforesaid, the said party of the first part hereby covenants and agrees to deliver to said David Hardenberg and one M. H. Sherman two promissory notes, each for $12,500, one of which matures on October 1, 1894, and one of which matures on October 1, 1897, heretofore executed by the said Hardenberg and Sherman to the party of the first part; also to release the said Hardenberg and Sherman from the payment of all interest due thereon, and to cancel and discharge a certain chattel mortgage executed by the said David Hardenberg to the said party of the first part, for the purpose of securing the payment of said notes, which said mortgage is now on file and of record in the office of the County Recorder of Maricopa County, in the Territory of Arizona."

"In witness whereof, the said party of the second part, The Sherman-Hardenberg Cattle Company, has executed these presents in its corporate name, by its president, and the said party of the first part has executed these presents the day and year first above written."

The following instrument was also executed:

"Phoenix, Arizona, Sept. 29, 1894"

"To J. M. Ward, Esq.:"

"The Sherman-Hardenberg Cattle Company hereby authorizes you to enter upon and take possession of all the property belonging to the Sherman-Hardenberg Cattle Company, in accordance with and as described in that certain contract entered into by and between the Sherman-Hardenberg Cattle Company and yourself, bearing date on the 12th day of September. A.D. 1894."

"That, on receipt of said property, you are to turn over to the Sherman-Hardenberg Cattle Company at the office of C. F. Ainsworth in Phoenix, Arizona, the notes described in the

Page 192 U. S. 171

contract, and also to cancel the chattel mortgage held by you on the property therein referred to."

"The Sherman-Hardenberg Cattle Co."

"By C. F. Ainsworth, Its Secretary"

"I hereby authorize H. C. Ward as my agent to rec. the above described property for me."

"J. M. Ward"

All the property mentioned in this agreement was turned over to Ward except, as he claimed, 104 head of cattle. Ward retained possession of the property, and managed it as his own, but did not cancel the mortgage or surrender the notes, insisting that he was entitled to receive the 104 head of cattle or else their value.

On June 12, 1895, he commenced an action in the District Court for the County of Maricopa in which he set forth a copy of the first of the notes, and alleged that there was due thereon the sum of $1,500. At the same time, he filed an affidavit for an attachment in which he averred that the payment of the note was not secured by mortgage or lien upon any real or personal property, or any pledge of personal property, and that the amount due was $1,500. No property was attached and no service of process made until May 6, 1899, and then only on the defendant Sherman, who thereupon filed an answer and counterclaim, which was in the nature of a cross-bill in equity, in which he set up the purchase from Ward, the organization of the company, the transfer to the company of the property purchased and the agreement for the delivery of the property to Ward and the return of the notes and cancellation of the mortgage, and alleged that though the property had been delivered, the notes had not been returned nor the mortgage cancelled. He also alleged a transfer by the company to himself of all its rights and claims.

The trial court found the facts as above stated in respect to the original transactions between Ward and defendants, the organization of the company, the transfer to it and by

Page 192 U. S. 172

it to Sherman, and, further, in reference to the transaction between the company and Ward in 1894, it found as follows:

"5. That during the month of September, 1894, and before the maturity of the first note, the Sherman-Hardenberg Cattle Company attempted to make a settlement with the plaintiff by agreeing to turn over to him the Sunflower range, all the cattle then on the range, also the desert wells, and other property which it had, which was not included in the mortgage, on condition that said plaintiff turn over and deliver up the two notes aforesaid, with the interest thereon, and cancel and satisfy the mortgage securing the same."

"6. That this contract was never carried out on the part of the plaintiff, but that, acting under it, he took possession of all the property of the Sherman-Hardenberg Cattle Company, as aforesaid, on or about October 1, 1894, but never turned over, delivered, or cancelled said notes, or either of them, or satisfied or discharged the chattel mortgage securing the same. And that, on the contrary, he brought suit on one of said notes for the collection of a portion that he claimed to be due thereon. At the time he brought this suit on the note maturing October 1, 1894, the other note had not matured."

It thereupon adjudged that Ward was a mortgagee in possession, and, after finding the disposition which he had made of the property, entered a judgment in favor of the defendant Sherman for $17,173.50, and decreed the cancellation of the notes and mortgage.

By section 1 of an act of the territorial assembly, Laws Arizona, 1897, p. 127, it is provided that, in a case appealed to the supreme court of the territory, the appellant may have the testimony taken in the trial transcribed and certified by the court reporter and filed with the papers in the case, and that thereupon it shall "become and be a part of the record in said cause," and be transmitted to the supreme court of the territory with the other papers in the case. That was done in this case, and part of the record taken to the supreme court

Page 192 U. S. 173

of the territory and brought here is the duly certified transcript of the testimony taken on the trial.

Section 2 of that act also provides that is shall not be necessary "to file with the supreme court any transcript, assignment of errors, or other papers except as herein provided." Section 3 requires the plaintiff in error or appellant to make an abstract of the record for the benefit of the opposite party and the supreme court. Sections 4 and 5 are as follows:

"SEC. 4. Each party shall prepare and print or typewrite an argument of the points and authorities relied on. The briefs of both sides shall begin with a succinct statement of so much of the record as is essential to the questions discussed in them, referring to the printed abstract by folios and sufficient to dispense with the reading of the printed abstract on the argument. The brief of the plaintiff in error or appellant shall also next contain a distinct enumeration in the form of propositions of the several errors relied on, and all errors not assigned in the printed brief shall be deemed to have been waived. It shall not be necessary to assign or file any assignment of errors in the court below or supreme court except those assigned in the brief of the plaintiff in error or appellant."

"SEC. 5. All rulings made by the court below in opposition to the plaintiff in error or appellant shall be taken as excepted to by the party appealing or suing out the writ of error, and, when assigned as error in the brief, shall be reviewed by the supreme court without any bill of exceptions or other assignment of errors except as herein provided."

The record discloses that, in the supreme court, the appellee moved to strike from the files appellant's abstract of record. No action appears to have been taken upon this motion. The record also discloses that leave was given to the appellant to file a supplemental brief. Neither the original nor the supplemental brief, if one was filed, is before us.

Page 192 U. S. 174

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