Opinion
No. 6134.
July 6, 1931. Rehearing Denied August 7, 1931.
Appeal from the District Court of the United States for the Southern District of Florida; Alexander Akerman, Judge.
Suit by the Taylor-Moore Syndicate, Incorporated, and others, against the Central Florida Lumber Company. Judgment for plaintiffs, and defendant appeals.
Reversed and remanded with direction.
By a contract dated June 1, 1925, the Central Florida Lumber Company, owner of a tract of approximately 104,000 acres of land in Florida, granted to several individuals, styling themselves the J. Warren Leach Syndicate, an option to purchase the land at the price of $22.50 per acre, payable in five equal annual installments. The contract acknowledged receipt from the Leach Syndicate of $25,000, for which the option was granted for thirty days. The option was assignable, and was assigned by the Leach Syndicate to the Taylor-Moore Syndicate, with which the Gillett-Fowler Syndicate afterward became associated. The assignee syndicates paid an additional $25,000 for an extension of the option for another thirty-day period, at the end of which they paid $50,000 more and thereby acquired the right to purchase the land by the 1st of October following, when, upon the payment of the first annual installment, less the $100,000 already paid, it was agreed that the lumber company would give a deed and take back a mortgage to secure the deferred payments. The contract further provided: "In the event the Purchaser fails or refuses to exercise this option within the time specified, or fails to make payments herein provided for, all rights of the Purchaser hereunder shall cease and be determined, and all moneys paid by Purchaser to Vendor shall be forfeited to and retained by the Vendor as the price or consideration for tying up said lands under this option." The deed of the lumber company, it was expressly stated in the contract, was to be made subject to an existing lease which granted the right to cut the timber, both pine and cypress, off of all the land. That lease did not expire until 1934, and the lessee had the option to extend it for an additional period of five years. The lessee was required to pay half the taxes on land which it continued to hold under the lease, but had the right to release those portions from which it had removed the timber. The lumber company had no right to demand the release of any land during the term of the lease. The balance due on the first annual installment of the purchase price was not paid, and so the contract of purchase was never completed. On October 1, 1925, when that balance became due, the lessee had cut and removed from the land from 65 to 70 per cent. of the pine timber; but none of the cypress timber had been cut. On or about that date the three syndicates made demand on the lumber company for the return of the $100,000 it had received, on the grounds: First, that it had falsely represented that from 65 to 70 per cent. of all timber, both pine and cypress, had been removed from the land; and, secondly, that it had the right to compel its lessee to release the land in 40-acre tracts as the timber was removed. After that demand had been refused by the lumber company, the three syndicates joined in a bill in equity praying for the cancellation of the contract because of the alleged false representations as set forth in such demand, and for the payment by the lumber company to them jointly of the $100,000 which had been paid on the contract. The bill contained allegations to the effect that the alleged false representations had been made by the lumber company to the Leach Syndicate with the intent and understanding that they should be repeated to syndicates that might later become interested in the land by assignment of the contract; and that the Leach Syndicate in good faith repeated those representations to the assignee syndicates. The usual averment was made that the representations were relied on as being true.
The lumber company filed a motion to dismiss the bill on the grounds, among others, that no joint cause of action was shown in favor of the Leach Syndicate on the one hand, and the two assignee syndicates on the other; that the Leach Syndicate had a full, complete, and adequate remedy at law; and that as there was no privity of contract between the lumber company and the assignee syndicates the latter could not rely on representations made only to the Leach Syndicate. That motion was denied, and the lumber company made no motion to transfer the case to the law side of the docket. In its answer the lumber company denied that it had made the representations claimed by the syndicates, and alleged that the representations which it did make were in accordance with the admitted facts, that is to say, that 65 to 70 per cent. of the pine timber had been removed from the land; that none of the cypress timber had been cut; and that not it, but its lessee, had the right to release the land from which timber had been cut. The evidence on these disputed issues was in sharp conflict.
The district judge after hearing the witnesses found that the averments of the bill were true, and thereupon ordered the contract canceled and entered a common-law judgment that the syndicates jointly have and recover from the lumber company the $100,000 sued for, and an additional $10,000 as attorney's fee for examining abstracts of title, together with interest and costs. The lumber company appeals, and assigns as error the order denying its motion to dismiss.
W.H. Baker, Geo. L. Rutherford, and Martin Sack, all of Jacksonville, Fla. (Baker, Baker Rutherford, of Jacksonville, Fla., on the brief), for appellant.
N.B.K. Pettingill and Cody Fowler, both of Tampa, Fla. (Macfarlane, Pettingill, Macfarlane Fowler, of Tampa, Fla., on the brief), for appellees.
Before BRYAN, FOSTER, and SIBLEY, Circuit Judges.
There was a misjoinder of parties. The Leach Syndicate was interested only in the recovery of $25,000 which it paid for the original option for thirty days. The assignee syndicates claimed $75,000 upon the subsequent payments, and an additional sum as attorney's fee. The three syndicates did not have a claim in common to the amount sued for. But it may be assumed that the misjoinder would not be fatal if the suit had been of such nature as to confer jurisdiction in equity. United States v. American Bell Telephone Co., 128 U.S. 315, 352, 9 S. Ct. 90, 32 L. Ed. 450. A bill of complaint which states a cause of action either at law or in equity is no longer subject to be dismissed on motion under Equity Rule 29 (28 USCA § 723); if it fail to state a cause of action in equity, but does state one at law, it should be transferred to the law side of the docket under Equity Rule 22 (28 USCA § 723), and 28 USCA § 397. Twist v. Prairie Oil Co., 274 U.S. 684, 47 S. Ct. 755, 71 L. Ed. 1297; Pierce v. National Bank of Commerce (C.C.A.) 268 F. 487. The averments of the bill, to the effect that appellant intended its representations to be relied on by the Leach Syndicate and its assignees, stated a cause of action at law. 12 R.C.L. 326. And so the motion to dismiss was properly denied.
Appellees contend that appellant, by failing to move to transfer the case to the law side of the docket, waived any right it may have had to insist upon a common-law trial. It is doubtless true that appellant, after its motion to dismiss was denied, should have moved that such transfer be made; nevertheless the court was not taken unawares, but must have understood that the right to proceed in equity was being challenged. Although a defendant may waive his right to have a case tried at law by failing to move to transfer it, yet if there be no jurisdiction in equity it is the duty of the trial court to order the transfer of its own motion. Brown, Bonnell Co. v. Lake Superior Iron Co., 134 U.S. 530, 536, 10 S. Ct. 604, 33 L. Ed. 1021; Southern Pacific R.R. Co. v. United States (No. 1), 200 U.S. 341, 26 S. Ct. 296, 50 L. Ed. 507; Pusey Jones Co. v. Hanssen, 261 U.S. 491, 43 S. Ct. 454, 67 L. Ed. 763.
We are of opinion that the bill failed to state a case over which an equity court could have exercised even concurrent jurisdiction. It has long been provided that suits in equity shall not be sustained where a plain, adequate and complete remedy may be had at law. 28 USCA § 384. In Whitehead v. Shattuck, 138 U.S. 146, 11 S. Ct. 276, 277, 34 L. Ed. 873, it is said that, "where an action is simply for the recovery * * * of a money judgment, the action is one at law." There was no need to cancel the contract between the parties, as it could not possibly stand in the way of the recovery of a money judgment. There were no rights under that contract which appellant threatened or had the power to assert. Upon the failure of appellees to pay the first installment of the purchase price, the only right which appellant had left was to retain the money which it had received "as the price or consideration for tying up said lands under this option." Appellant had no right, and had not threatened or attempted, to compel specific performance or to sue for damages. A common-law action of deceit, or for money had and received, would have afforded a remedy as complete as was or could have been obtained in this equity suit. A charge of fraud or false representation will not give a court of equity jurisdiction where complete relief on that ground can be obtained in a court of law. See Adams v. Jones (C.C.A.) 11 F.2d 759, and authorities there cited, including the leading case of Buzard v. Houston, 119 U.S. 347, 7 S. Ct. 249, 30 L. Ed. 451.
The decree is reversed, and the cause remanded with direction to transfer it to the law side of the docket.