Bailey v. Frazier

124 P. 643 | Or. | 1912

Mr. Justice Burnett

delivered the opinion of the court.

Without deciding the question of fact involved, we may concede, for the purpose of this case, that the deed from Julia Haller to the defendant was in fact a mortgage designed to secure the payment of money advanced by the defendant on account of plaintiff’s obligations under the mortgage already on the premises. The plaintiff contends that as a consequence of this situation he has an estate in the property which" Frazier holds as trustee, and that the purchase by the latter of the subject of the trust is at least voidable because it is incompatible with that fiduciary relation. In support of his theory that the defendant is a trustee under the circumstances detailed, the plaintiff cites Manaudas v. Mann, 22 Or. 525 (30 Pac. 422). In that case Mann had given to the plaintiff a bond for a deed stipulating to convey the property to the latter upon payment of a certain sum of money within a stipulated period^ Before the bond matured, Manaudas, being in debt to Heilner & Cohn, conveyed to them the property described in the bond together with other land by deed absolute in form but really as mortgage security for his debts. Mann then conveyed the realty mentioned in the bond to Heilner & Cohn ostensibly in performance of its condition on his part, and, at a still later date before the maturity of the plaintiff’s obligations to Heilner & Cohn, they re-conveyed the property to Mann, who had at all times knowledge of all the facts mentioned constituting the transaction. This court held that, possessing such knowledge, Mann took the property impressed with a trust in favor of the plaintiff, permitting him to fulfill the conditions of his bond and take title to the property. The doctrine of that case would be .applicable in the present instance if Miss Haller had held the property in trust for the plaintiff here and the defendant had taken conveyance from her with knowledge of that relation. Under such circumstances the defendant would have succeeded to the trusteeship of Miss Haller and would have been bound by its obligations because of his knowledge of the trust. It is not pretended, however, either in the pleadings or in the testimony, that the defendant had any knowledge of any relationship existing between Miss Haller and the plaintiff at the time of the conveyance from her to the defendant.

1,2. Taking the complaint for all it is worth, the most that can be said of the defendant is that he was a mortgagee in possession. To be a trustee he must have had the title, for a trust, as respects property, implies the holding of the same for the use and benefit of another. It is not apparent how one can be a trustee of property to which he holds no title.

In Kinney v. Smith, 58 Or. 158 (113 Pac. 854), Mr. Chief Justice Eakin reviews the Oregon precedents from Thompson v. Marshall, 21 Or. 171 (27 Pac. 957), down to the present time, and says:

“In this State, a mortgage does not pass the title to the mortgagee. It is only a lien upon the property, the title remaining in the mortgagor, and this is true regardless of the form of the instrument. It applies to an instrument in form a deed, but intended as a mortgage. The title to the property cannot pass to the mortgagee except by foreclosure as provided by the statute, or a relinquishment by the mortgagor.”

It follows that the Haller deed to the defendant created no trust whatever and left the defendant at liberty to deal with the plaintiff respecting the equity of redemption still held by the latter as well as he could before.

3. The plaintiff endeavors to avoid the effect of the quitclaim deed of himself and wife of June 29, 1906, to the defendant, by averring that the same was induced by fraud. It has often been laid down as a rule for pleading fraud in this State that the representations must have been false; that the defendant making them knew they were false; that they were made with the intent to defraud; and that the party seeking to be relieved from the fraud must have relied upon such representations. Rolfes v. Russel, 5 Or. 400; Dimming v. Cresson, 6 Or. 241; Martin v. Eagle Development Co., 41 Or. 448 (69 Pac. 216) ; Anderson v. Adams, 43 Or. 621 (74 Pac. 215) ; Wimer v. Smith, 22 Or. 469 (30 Pac. 416).

4. Reduced to its lowest terms, the substance of the reply in that respect is that, when called upon for a conveyance, the defendant denied that he held the property in trust and said he could prove that he did not so hold it. We have shown, as a matter of law, that he did not hold the property in trust, but at best was only a mortgagee in possession. But giving to the reply the wider signification of charging that the defendant denied any interest of the plaintiff in the property, the allegation falls far short of a sufficient averment of fraud on the part of the defendant to annul the quitclaim deed mentioned. His mere denial of past transactions was not such a representation as would amount to fraud, otherwise fraud could be predicated of any challenge of an adverse claim. His declarations of what the defendant could prove and what the plaintiff could not prove are not representations of fact but mere boasts which do not constitute any basis for fraud.

5. Moreover, the plaintiff does not show that he relied upon those statements or had any right to rely upon them. If it was a fact, he knew at that time as well as the defendant that the deed was a mortgage and that the defendant had agreed to reconvey the property on payment of the debt secured. Knowing all these things as he then did, he cannot be said to have relied upon what the defendant said even if otherwise it amounted to a false and fraudulent expression. This doctrine is well illustrated in the criminal case of State v. Miller, 47 Or. 562 (85 Pac. 81: 6 L. R. A. [N. S.] 365).

6. As between himself and the defendant, the plaintiff, if we take his statement according to its legal effect, then held the equity of redemption in the property. More than five years before that time, to wit: in February, 1901, as appears in evidence on behalf of the plaintiff, the defendant had rendered to him a stated account showing that there was due from the plaintiff to the defendant interest and expenses in a net balance of $2,455.15; amount paid on the principal of the mortgage, $2,500; due one-half of the balance of the principal on the $15,-000 mortgage, $5,000 — amounting in total to $9,955.15. It does not appear that the plaintiff ever made any objection to this statement, so that it became a stated account within the doctrine of Fleischner v. Kubli, 20 Or. 328 (25 Pac. 1086).

It is admitted that the plaintiff never paid anything whatever to the defendant on the purchase price of the premises except the $1,300 derived by the defendant from the mortgages assigned to him by the plaintiff at the time of the purchase. This is more than overbalanced by either of the three charges in the account rendered as above mentioned, even if it did not enter in the calculation there. Moreover, on August 19, 1899, almost a year after the deed from Haller to Frazier which the plaintiff says was a mortgage, he verified his petition in bankruptcy in the United States district court for Oregon, wherein he deposed that he had no real estate and no personal property. Confronted with these circumstances, as he must have known them at the time, it was at least doubtful whether he could have even established his title to the property. It is equally doubtful if he could have effected or even attempted a redemption thereof at that time in view of the large accumulation of unchallenged charges disclosed by the stated account mentioned. He does not pretend that the defendant made any representation as to the amount he had expended on account of the property or any amount that he had received since that statement so as to deceive him in that respect.

7. The conclusion of the whole matter is that the plaintiff and defendant by virtue of the quitclaim deed of June 29, 1906, for which the defendant paid $300 to the plaintiff, made a settlement of the doubtful claim which the courts will always uphold. Smith v. Farra, 21 Or. 395 (28 Pac. 241: 20 L. R. A. 115) ; Sing On v. Brown, 44 Or. 11 (74 Pac. 207) ; Regents v. Hutchinson, 46 Or. 57 (78 Pac. 1028) ; Thayer v. Buchanan, 46 Or. 106 (79 Pac. 343) ; Dickey v. Jackson, 47 Or. 531 (84 Pac. 701) ; Baines v. Coos Bay Nav. Co., 49 Or. 192 (89 Pac. 371).

The decree of the court below is affirmed.

Affirmed.