sion on terms already arranged on all busi- A few days later Thomas arrived in New ness placed with them by British government." York, and plaintiff called upon him, and later wrote Johnson advising him of his interPlaintiff showed this cablegram to John-view with Thomas and that he had informed son, who, according to plaintiff's testimony, the latter that his (plaintiff's) interest in the said that, if his company came in contact matter waswith the British representative through the

efforts of plaintiff and his associate, and ne- "to receive a reasonable commission from the gotiations resulted in a contract, a "suitable manufacturer to compensate Mr. Mottelay and commission would be paid" them for "serv-me for our services so far rendered and to be ices so far rendered and to be rendered." rendered in the future, provided contracts result from negotiations."

Plaintiff also testified that Johnson informed him their counsel had advised the company it could not legally enter into contracts for making war munitions directly, and suggested taking the matter up with a Mr. Wiggin, of New York, who was interested in the formation of a separate company for taking over such contracts. Plaintiff interviewed Wiggin with the result, as he stated in his letter to Johnson of, June 30, 1915, that

"Nothing definite was arranged along the lines as suggested in the cablegram which I received from Mr. Mottelay and which I show ed to Mr. Wiggin. If the future develops that Mr. Mottelay and I are entitled to a commission, I will deem it a favor if you will be good enough to bespeak for us a good word with Mr. Wiggin at the opportune moment."

In the meantime Mottelay and his associate secured the sending of a cablegram to D. A. Thomas, now Baron Rhondda, a representative of the English government who was on his way to America, requesting him on his arrival at New York to meet plaintiff regarding negotiations for the purchase of the entire output of munitions manufactured by several large American plants during the period of the war. Mottelay thereupon cabled plaintiff as follows:

"At our request government have officially cabled Thomas to receive Mitchell as representing important group manufacturers including the three companies whose names have been officially placed before government. We have thus secured highest official credentials you must arrange meeting on arrival of Thomas."

A copy of this cable was submitted to Johnson in a letter from plaintiff under date of July 1, 1915, in which letter it is stated: "The real object of this letter is to ask you to be good enough, when definite negotiations are opened, to consult with me in connection with having such price as you may name to the British government include a suitable commission to be agreed upon to be paid to me for my services as well as those of Mr. Mottelay."

With this letter he inclosed a copy of one addressed to Thomas and requested to be advised if such letter correctly stated plaintiff's relation in the matter. In the Thomas letter, after referring to the facilities of defendant company, plaintiff states:

"If you think it advisable to negotiate for the engagement of these facilities, I shall be very glad to report the same to Mr. Johnson and arrange that you will be brought into contact with the proper party for a conference, unless their negotiations with Messrs. Morgan & Co. should make it undesirable for the company to do so. Mr. Johnson has naturally made no definite agreement with me, but should business be consummated it is expected that a reasonable commission will be paid to compensate Mr. Mottelay and me for our services."

To this Johnson replied that

"The letter expresses correctly the negotiations which have passed between us relative to the supply of shells. In view of the condition which not be expedient for us to proceed with a parthe other negotiation has now reached, it would allel negotiation until that is disposed of. For this reason I think it would be better not to make an engagement to meet Mr. Thomas."

In answer to the letter to Thomas the lat

ter's secretary, under date of July 15, 1915, replied that Thomas—

"has been in direct communication with the J. G. Brill Company and the Baldwin Locomotive Works and has been assured by responsible officers of both these firms that you are not in any way authorized to represent them. Mr. Thomas asks me to repeat to you that he has made it his practice to deal only with responsible heads of manufacturing firms, or with their duly accredited agents, and to say that in these circumstances, he does not see his way clear to correspond with you further in regard to the supply of munitions of war."

Nothing further was done until November 23, 1915, at which time plaintiff wrote Johnson demanding commissions on munitions manufactured under contracts procured

Replying to this letter the following day, through plaintiff's efforts, to which Johnson Johnson said:

"As stated in our interviews, under advice of counsel these works are not legally authorized to undertake contracts for projectiles or other war materials outside of the purposes designated in its charter. For this reason, we are unable to quote you or any other party, for such ma

replied, disavowing the alleged agency of plaintiff, and denying that any contract for war materials was entered into pursuant to negotiations by plaintiff, or through his instrumentality.

In the meantime defendant company, previous to the original interview between plain

(108 A.)

the British government a number of shell [1] We find no evidence that plaintiff had cases under contracts, which were loaded by any direct connection with the making of other firms. Following the execution of these contracts, other than such as may be those contracts the British government ap- inferred from the interviews and letters herepointed J. P. Morgan & Co. its American tofore referred to between him and Johnson. agents, and at various times during April, A careful consideration of the evidence in a 1915, specifications for shell cases were sub- light most favorable to plaintiff fails to esmitted by that firm to defendant, one being tablish the slightest right on his part to refor 100,000 cases, for which a contract was cover commissions from defendant company. made April 26, 1915. From that time, cover- The letters indicate quite clearly that the ing a period of about 18 months, similar con- claim to commissions was dependent upon tracts were made from time to time for vari- completion of negotiations through efforts of ous war supplies, the total amount aggregat- plaintiff and his associates. The only bid ing over $33,000,000. In April, 1915, Samuel for work submitted through plaintiff concedM. Vauclain, vice president of the Baldwin edly produced no results, and it is even Locomotive Works, during a visit to Russia, arranged for an order for rifles to be filled by the Remington Iron Company of Connecticut. Upon his return he was invited to join with others in the organization of a company for the manufacture of rifles for the British government, to which he consented on condition that a factory be erected at Philadelphia so as to be convenient for him to handle the business in connection with his duties with defendant company. Subsequently the Baldwin Locomotive Works agreed to construct necessary buildings on land belonging to it at Eddystone and lease the property to the new company, the structures to be erected in such manner as to be subsequently available for the manufacture of locomotives. Later a company known as the Remington Arms Company of Delaware was formed, and a formal lease executed April 30, 1915, between that company and the Baldwin Locomotive Works. There is no evidence to show that plaintiff had any connection whatever with this contract and lease.

doubtful from the evidence if that order was a bona fide one. Plaintiff was aware that other negotiations were pending at the time through Morgan & Co. as agents of the British government, was definitely told that his right to commissions was subject to the earlier completion of the pending negotiations, and finally was informed that, owing to the condition of such negotiations at the time, nothing further could be done toward meeting Thomas, and plaintiff was requested to proceed no further in the matter. Up to this time clearly no contract entitling him to commissions existed according to plaintiff's admission in his various letters. As late as his letter of June 30, 1915, after having been informed of defendant's inability to bid on the work, owing to its charter restrictions, and being referred to Wiggin as one possibly interested in the formation of a company to handle such contracts, plaintiff asked Johnson to "bespeak for us a good word at the opportune moment" if the future should develop he and his associates were enWhile in Russia Vauclain was also request- titled to a commission. Nothing was done by ed by the Russian government to take up the plaintiff subsequent to that time to entitle manufacture in the United States of loaded him to receive compensation. It is argued, shells. Upon his return and during the early however, he was prevented from earning his part of April, 1915, this matter was again commissions by the act of defendant in prosuggested by Morgan & Co. on behalf of the ceeding to complete negotiations in its own British government, and was considered by behalf. The answer to this is that the conthe board of directors of defendant com- cluding of such negotiations was not, so far pany; but, on advice of counsel, the com- as the proof goes, the result of plaintiff's efpany decided its charter did not permit the forts, or through the agency of any persons manufacture of loaded ammunition. A sug- whom plaintiff had introduced to defendant, gestion followed that a company be formed but was solely the result of the consummafor the purpose of making shells, and that tion of previous pending negotiations origithe Baldwin Locomotive Works erect build-nated through a different source, of the exings on its vacant land to be leased to the company in the same manner as it had leased [2] We recognize the general rule that, other property to the Remington Arms Com- where a broker produces a purchaser who pany. Accordingly the Eddystone Munition buys the property in question, or is able and Corporation was formed, of which Vauclain willing to do so upon terms acceptable to the was managing director and a stockholder, in principal, he has earned his commission, and which, however, the Baldwin Locomotive in such case the principal may not, pending Works, as a company, was not interested. the negotiations, escape liability for compenThe munitions corporation, under date of July 23, 1915, entered into a contract with the British government, through J. P. Morgan & Co., for the manufacture of shells pursuant to previous negotiations extending over a period of practically two months.

istence of which plaintiff had notice.

sation by taking the matter into his own hands and completing the transaction personally. In the present case, however, defendant had been submitting proposals on work for the British and other foreign governments before plaintiff first suggested such

contracts to Johnson, of which plaintiff had knowledge, and it was fully understood, as appears from plaintiff's own evidence, that defendant reserved the right to proceed with such negotiations and effect the contracts, if possible, through others who were conceded to be official representatives of the British government. While it is true contracts were finally made with the very party with whom plaintiff was attempting to deal, yet such contracts were not negotiated through him, but through another. The very condition upon which plaintiff was to be entitled to commissions, to wit, that a contract was actually entered into through his efforts, was never fulfilled. Nor is plaintiff in a position to contend he earned his commissions because of the fact that contracts with the British government, with whose representative he had been attempting to deal, were actually consummated at a later date, inasmuch as such contracts were the result of negotiations pending at the time with knowledge of plaintiff, and which, if consummated, would bar any claim on his part for commissions. Groskin v. Moore, 249 Pa. 242, 94 Atl. 1057.

The judgment is reversed, and judgment is directed to be entered for defendant non obstante veredicto.

(265 Pa. 170)

MacDOUGALL et al. v. CITIZENS' NAT.
BANK OF LEHIGHTON et al.

(Supreme Court of Pennsylvania. June 21,

1919.)

the trustee to bid for their mutual protection did not prejudice other creditors, where the transaction was free from fraud or any attempt to prevent free and open competitive bidding.

3. TRUSTS 231(3)—EVIDENCE INSUFFICIENT TO SHOW FRAUD IN PURCHASE OF PROPERTY BY TRUSTEE AT SALE TO PAY DEBTS.

Where a company which had obtained loans and against which judgments had been obtained executed a judgment note in the aggregate amount of its indebtedness to secure claims against it, the mere fact that its realty sold on execution' on judgment entered thereon was purchased at a price less than its actual value was not sufficient evidence on which to found an inference of fraud by the trustee and other creditors who had agreed to bid in the property for their mutual protection. 4. APPEAL AND ERROR 1009(2) FINDING

OF CHANCELLOR CONCLUSIVE WHEN BASED ON

SUFFICIENT EVIDENCE.

The findings of a chancellor based upon sufficient evidence will not be reversed in the absence of clear error.

Appeal from Court of Common Pleas, Carbon County.

Bill in equity for an accounting by Alexander MacDougall and others against the Citizens' National Bank of Lehighton, Pa., and the First National Bank of Lehighton, Pa. From a decree dismissing bill, plaintiffs appeal. Affirmed, and appeal dismissed.

Argued before BROWN, C. J., and MOSCHZISKER, FRAZER, WALLING, and SIMPSON, JJ.

William Wilhelm, of Pottsville, and C. A.

1. TRUSTS 231(3)—PURCHASE OF PROPERTY Hauk, of Lehighton, for appellants.

BY TRUSTEE AT SALE TO PAY CREDITORS
VALID.

George E. Gray and Heydt, Balliet & Sei

Where a company obtained loans from two dle, all of Lehighton, for appellees.

banks, and judgments had been recovered against it by other creditors, and then executed to one of such banks a judgment note in the aggregate amount of its indebtedness "to equally secure the claims" against it, and upon execution on judgment entered thereon its realty was advertised for sale, the trustee, if having no control over the sale and not instrumental in bringing it about, may bid and purchase the property free from any trust in favor of parties mentioned in the obligation, though it would be otherwise if the trustee brought about or controlled the sale.

FRAZER, J. Defendants, the First National Bank of Lehighton, and the Citizens' National Bank of Lehighton, loaned to the Kester Slate Company various sums of money represented by notes, amounting to $7,717.58 due the former and $5,070 due the latter. The notes were not paid at maturity, and the First National Bank brought suit to recover the amount of the indebtedness due it. The Kester Slate Company had various other creditors, several of whom had brought suit

2. TRUSTS 231(3) LIEN CREDITORS CAN and obtained judgments, and, for the purpose

PURCHASE AT SALE OF REALTY.

Where a company which had obtained loans and against which judgments had been obtained executed judgment note covering all its indebtedness to equally secure the claims against it, lien creditors were not prevented from bidding at a public sale on execution on a judgment thereon issued at instance of another creditor nor from purchasing the property free from obligation to other creditors, so that an agreement between two or more lien creditors and

of protecting all creditors, the company, acting on advice of counsel, executed to the Citizens' National Bank a judgment note in the sum of $20,760, that being the aggregate amount of its indebtedness, "to equally secure the claims against the said Kester Slate Company"; a list of the creditors with the sums due them respectively being set out in full and made part of the note. Subsequently, at the instance of an attorney representing one

(108 A.)

of the creditors named in the note, not, how- [action is free from fraud or attempt in any ever, either of the banks, execution was is- manner to prevent free and open competitive sued upon the judgment entered thereon and bidding. Smull v. Jones, 1 Watts & S. 128; levy made upon the real estate of the com- Woodruff v. Warner, 175 Pa. 302, 34 Atl. 667, pany, which was advertised for sale by the 52 Am. St. Rep. 845; Braden v. O'Neil, 183 sheriff on January 31, 1914, subsequently ad- Pa. 462, 38 Atl. 1023, 63 Am. St. Rep. 761. journed to February 7, 1914, at which time The mere fact that the property was purthe property levied upon was sold. Previous chased by defendants at a price considerably to the sale the two banks agreed to co-operate less than its actual value is not sufficient evifor the purpose of protecting their interests, dence upon which to found an inference of the First National Bank to bid at the sale, fraud. Mead v. Conroe, 113 Pa. 220, 224, 8 and, if necessary, purchase the property on Atl. 374. their joint account, any loss sustained or [4] To support their theory of a trust as to profit realized to be shared pro rata between the realty after the purchase at sheriff's sale, the two. The First National Bank became plaintiffs rely upon a conversation had shortthe purchaser for the sum of $3,000, this be- ly before the sale, between the attorney reping the highest bid. A few months later the resenting one of the judgment creditors and bank resold the property for the sum of the cestuis que trust and the attorney repre$25,000. Thereupon the creditors named in senting defendants. The former testified, "I the trust note, other than defendants, filed was about to bid on the property and he [dethe bill in this case asking that defendants fendant's attorney] said, 'Don't bid; it will be ordered to pay to them their proportionate only run up the costs.'" This, the witness share of the net proceeds derived from the stated, was the only conversation in regard to resale, basing their proceeding on the theory the matter. Defendants' attorney denied usthat the circumstances created a resulting ing the language attributed to him, and testrust for the benefit of all parties men- tified, "Mr. Hauk asked me if I wanted any tioned in the obligation. The court below dis- bidder and I said it is immaterial to us," missed the bill, and plaintiffs have appealed. and that nothing further was said in regard [1-3] No question is raised as to either the to the matter. This testimony is inferentially regularity or validity of the sale nor as to corroborated by that of the president of the the propriety of the distribution of the pro- First National Bank to the effect that the ceeds realized; the sole contention of plain- president of the slate company asked an optiffs being that a trust resulted as to the tion on the property if bought in by the bank. realty and the proceeds of the resale thereof This, however, was refused with the remark by reason of the purchase of the premises at that he was there to protect the interest of the sale by the trustee in conjunction with the bank only, and that the president of the one of the cestuis que trust. The sale, how- slate company or any other person had the ever, was not brought about or controlled by privilege of bidding at the sale. The court beeither defendant. The general rule is that, low found this testimony was not contradictif a trustee becomes the purchaser of prop-ed or impeached, and that the alleged request erty at public sale brought about or in any manner controlled by him, he will be presumed to buy and hold for the benefit of the trust. But this rule does not apply where the trustee is without control over the sale and is not instrumental in bringing it about. In the latter case he may bid and become the purchaser of the property free from any trust on his part. Calvert v. Woods, 246 Pa. 325, 328, 92 Atl. 301, and cases cited. Neither are lien creditors equally with third persons, prevented from bidding at a sale fairly conducted and purchasing the property free from obligation to other creditors; consequently an agreement between two or more lien creditors or between lien creditors and the trustee to bid for their mutual protection does not alter the situation so long as the trans108 A.-39

not to bid at the sale was not, in fact, made, and further that the evidence failed to show a combination by defendants for any purpose other than their own protection from loss in the resale of the property, and that the sale was fair and open to all bidders, and not controlled or brought about by defendants or either of them. The evidence fully sustains the conclusion of the court below, and, under the recognized rule that the findings of a chancellor based upon sufficient evidence will not be reversed in absence of clear error, the judgment should be affirmed. Hull v. Delaware & Hudson Co., 255 Pa. 233, 99 Atl. 740; Scranton v. Coal Co., 256 Pa. 322, 100 Atl. 813.

The judgment of the court below is affirmed, and the appeal dismissed at the cost of appellants.

5. APPEAL AND ERROR 173(9) — DEFENSE money so expended and never requested pay

6. EQUITY 427(1)-RELIEF MUST CONFORM tion, for value received.

Appeal from Court of Common Pleas, Huntingdon County.

Bill in equity for the cancellation of a deed by H. C. Isett against Ellen C. Maclay. From