Swift v. McPherson, 232 U.S. 51 (1914)

Swift v. McPherson

Argued November 14, 1913
Decided January 5, 1914
232 U.S. 51

ERROR TO THE SUPREME COURT

OF THE STATE OF SOUTH DAKOTA

Syllabus

While there may be a presumption that a dismissal in equity without qualifying words is a final decision on the merits, that presumption of finality disappears when the record shows that the court did not pass upon the merits, but dismissed the bill on any ground not going to the merits.

The scope of a decree dismissing a bill in equity must in all cases be measured not only by the allegations of the bill, but by the ground of demurrer or motion on which the dismissal is based. Vicksburg v. Henson, 231 U.S. 259.

A decree of the Circuit Court of the United States dismissing a bill in equity on motion of the parties and not for want of merit held, in this case, not to be a bar to a subsequent suit in the state court on the same cause of action, and the refusal of the state court to treat the decree as conclusive on points left open did not deprive the defendant of any federal right.

27 S.D. 296 affirmed.

McPherson, as assignee of Miller, brought suit against Swift in a circuit court of South Dakota, seeking to establish his rights to an undivided one-half interest in certain land then in the possession of Swift. The defendant denied that McPherson had any interest in the property. He further claimed that McPherson had once before brought a similar suit which, after being removed to the circuit court of the United States, had been dismissed, and that this dismissal finally adjudicated the matters at issue in favor of Swift and against McPherson. The record in the former suit was set out in the answer, and as the pleadings in the two cases both deal with the same matters, it will conduce to brevity to state the facts in narrative form.

Swift, on May 8, 1888, purchased a tract of land in Deadwood, South Dakota, paying therefor $18,500 and taking the deed in his own name. Miller, who was a resident of Deadwood, had been active in securing the land, and, on May 14, 1888, Swift and he made a contract which recited that Miller "had purchased the land for Swift and for joint account." For his services in collecting the rents and looking after the property, Miller was to receive one-half of the net profits, first deducting 8 percent interest on the purchase price of $18,500.

In consideration of Miller’s agreement to pay Swift one-half of any ultimate loss that might accrue on said purchase, Swift agreed that Miller should receive one-half of the profits ultimately accruing from the sale of the property over and above the purchase price, --

$18,500.

Miller died January 12, 1891, and his administrator obtained an order for the sale of Miller’s interest in the land described in the agreement with Swift. After advertisement, this interest was sold to McPherson for $5,005. Thereupon, on May 18, 1893, McPherson filed in the state court a bill against Swift, which was removed to the United States circuit court. In it, McPherson set out his purchase of Miller’s interest and alleged that, at all times since Miller’s death, the land could have been sold for a sum largely in excess of $18,500, but that Swift had neglected to sell or to account for the rents and profits. McPherson, in the bill, tendered Swift $9,250, one-half of the original purchase price, and demanded a conveyance and an accounting. Swift’s demurrer having been overruled, he answered, alleging, among other things, that the original contract had been fraudulently procured by Miller, but claiming that, if originally valid, it was a mere contract of employment which had been revoked by the death of Miller, and which therefore could not pass to McPherson under the administrator’s sale.

A replication was filed. Several terms passed without any testimony’s having been taken, and Swift finally notified McPherson that he would accept the tender of $9,250, and recognized him as a partner and joint owner on the terms stated in the bill. McPherson made no reply to this offer, and thereupon Swift filed a petition in the cause reciting McPherson’s refusal to pay the $9,250 tendered in the bill, renewed his offer to accept the tender, and asked leave to withdraw from his answer those paragraphs which set up an affirmative defense, and "to submit to a decree in plaintiff’s favor on such terms as might by the court be found equitable and just."

A copy of this petition was served on McPherson, who was required to show cause why it should not be granted.

At the February term (1896), McPherson appeared in person and, by his solicitors, filed a response under oath in which he moved the court to dismiss his bill of complaint, stating that his tender had been made at a time when the value of the property was such that it could have been sold at a price to net a profit; that Swift had declined to accept the tender, and the property was now much depreciated in value, and that the tender had been withdrawn before the procurement of the order to show cause. McPherson’s response concluded by the statement that

the contract does not require this affiant to pay any part of the purchase money for the property, but the same is to be paid at affiant’s option out of the proceeds of the sale, and while he was willing to have paid the $9,250 at the time the tender was made, the defendant’s refusal for an unreasonable time, and the depreciation of the value was so great that affiant is not willing now to exceed the strict letter of the contract in reference to the mode and manner of reimbursing the defendant for the original purchase price, wherefore he prays the court to discharge the order to show cause, and to dismiss the complaint herein as prayed for in this motion.

After argument by counsel, the court made an order reciting that,

the cause coming on to be heard on the application of Swift for leave to withdraw pars. 13 and 14 of his answer, and to submit to a decree in plaintiff’s favor on such terms as might be equitable . . . and the resisting affidavit of the plaintiff, who at the same time, by his solicitors, moved to dismiss the bill . . . , and the court having heard the matter upon the affidavit, bill of complaint, verified answer, and replication, it is ordered that Swift’s application be denied, and it is further adjudged and decreed that this suit and bill of complaint . . . be, and the same is hereby, dismissed, and that defendant have and recover of plaintiff, McPherson, the costs of this suit.

The defendant excepted, but there is no record of any appeal’s having been taken by Swift.

In June, 1901, five years later, McPherson brought the present suit in the state court, alleging that Swift had collected large sums by way of rent on the land and the sale of lots, which sums were more than sufficient to reimburse Swift for the purchase price of $18,500, interest and expenses, and that, upon an accounting, McPherson would be entitled to one-half of these net profits and to an undivided one-half of the lots remaining unsold. McPherson prayed for such relief and for partition.

The defendant answered, attacking the validity of the contract. He also set out the proceedings in the former suit, and pleaded that decree of dismissal by the United States circuit court as a bar to the present suit.

The trial resulted in Swift’s favor, but the decree was reversed by the supreme court of the state. 22 S.D. 179. On the second trial the court found that there had been no fraud on Miller’s part; that the contract was not one of employment, but created an interest in the property which was assignable; that McPherson was the owner thereof by virtue of the administrator’s sale; that Swift had received $103,436 from rental and sale of land, and that, after proper deductions, there was a net profit of $22,374. A decree was thereupon entered in favor of McPherson for $11,187 and also for an undivided one-half of over 100 city lots remaining unsold. On appeal, the decree was affirmed (27 S.D. 296), and the case was then brought here by writ of error.