109 S.E. 56 | N.C. | 1921
This action, in the nature of a suit in equity, was brought by the plaintiff to set up a parol trust in an undivided one-half of the tract of land described in the pleadings, and in order to pass upon the motion of the defendants to nonsuit the plaintiff, it will be advisable to state the issues and the contentions of the parties, which will be done almost in their own language, and, at least, substantially so. There was evidence, we think, to support the respective claims of the parties. The verdict was as follows:
"1. Did the defendant, M. Silver, verbally agree with the plaintiff that they would purchase and hold jointly the premises described in the complaint at the price of $40,000? Answer: `Yes.'
"2. Did the plaintiff Lefkowitz, by any words or act on his part, or failure on his part to comply with the terms of his contract, waive or abandon his rights under the contract, if you find there was such a contract? Answer: `No.'
"3. If so, did the defendant, M. Silver, in violation of that agreement, purchase said premises and take title to himself and to his codefendant? Answer: `Yes.'
"4. Was the plaintiff ready, able, and willing to pay his part of the purchase price? Answer: `Yes.'
"5. Did the plaintiff demand of the defendant, M. (341) Silver, that he convey, or cause to be conveyed to him, *363 the one-half undivided interest in said premises? Answer: `Yes.'
"6. Did the defendant, M. Silver, acquire, and does he now hold title to one-half undivided interest in the premises described in the complaint, as a trustee for plaintiff, as alleged in the complaint? Answer: `Yes.' (the court answered `Yes')."
1. Plaintiff contended that the verdict of the jury establishes that the plaintiff and the defendants verbally agreed that they would purchase and hold jointly the premises described in the complaint at the price of $40,000; that the plaintiff did not waive or abandon his rights under that agreement by any words or acts on his part, or by his failure to comply with the terms of the contract; that the defendant, in violation of the agreement, purchased the premises, took title to himself and to his codefendant; that the plaintiff made demand on the defendant to convey to him, in accordance with the original agreement, a one-half undivided interest in the premises; and that the plaintiff was ready, able, and willing at all times to pay his part of the purchase price. Upon the foregoing findings of fact by the jury, the court, as a matter of law, by answering the sixth issue, adjudged that the defendant acquired and held title to a one-half undivided interest in the premises described in the complaint as a trustee for plaintiff. In support of the allegations of the complaint, and as a basis of the foregoing findings of fact by the jury, the plaintiff offered evidence showing that the defendant, a resident of High Point, came to the plaintiff's place of business in Winston-Salem, seeking a business location in that city. After discussing the matter generally, and in answer to defendant's inquiry as to whether the plaintiff knew of a piece of property in Winston-Salem that could be bought, the plaintiff told the defendant that he thought the property described in the complaint could be bought at $40,000. As a result of this conversation, the defendant proposed that they buy it together — the property belonging to Mr. Harris, of Baltimore. Whereupon, the plaintiff and defendant went to the office of Mr. Fletcher and employed him to negotiate the purchase with Mr. Harris. This visit to Mr. Fletcher's office was on 18 September, and that afternoon Fletcher called in Mr. Hurdle, of the Hurdle Loan Insurance Company, and in the presence of Mr. Hurdle, Mr. Fletcher dictated a letter to Mr. Harris, which will be found in the record, and had Mr. Hurdle to sign it. A reply to this letter was received from Mr. Harris in two or three days, which was shown to Fletcher and by him communicated to Lefkowitz. Another letter was written under similar conditions on 22 September, and Harris' reply to that letter was shown to Fletcher. *364
While these negotiations were going on, the defendant, (342) through his brother, who was in Baltimore, opened up direct negotiations with Harris, and on 22 September, 1919, entered into a contract of purchase for the land in behalf of himself and his mother, which contract of purchase was later followed by a deed from Harris. Claiming that under the circumstances the defendant could not, without a breach of confidence and his agreement with the plaintiff, purchase the property for himself, plaintiff brought this suit, seeking to have the defendant declared a trustee to the extent of a one-half undivided interest and a conveyance from the defendant to the plaintiff for that interest in the land. Silver came to Lefkowitz seeking information as to where he could buy a store in Winston-Salem. Lefkowitz informed him that he knew of such a store, and that he desired to become associated with Silver in his purchase. Upon Silver consenting to this, Lefkowitz disclosed to him the property in question. It was agreed that if the property could be bought for $40,000, or less, that a joint purchase of it should be made. The parties went to Mr. Fletcher and arranged with him to negotiate with the owner for the property upon the terms just stated. While these negotiations were under way, Silver buys the property for himself. Silver secured the information which enabled him to make the purchase by agreeing with Lefkowitz that he should become a joint owner.
2. The defendants' version of the case was, and they so contend, that the defendant Silver was a resident of High Point; he called on the plaintiff Lefkowitz in Winston-Salem the latter part of August, 1919, and asked him if he knew of a store for rent. The plaintiff suggested renting the Winston Clothing Company's building, but the rent the defendant would have had to pay was considered too high. About the first week in September following the defendant returned to Winston-Salem and again saw the plaintiff; he suggested to plaintiff that the best thing to do would be to buy the Winston Clothing Company's place, but that he could not do so alone, and suggested that they buy it together. Defendant asked plaintiff where they could get information about the building, and plaintiff suggested going to see Mr. J. H. Fletcher. They went together to see Mr. Fletcher and secured from him the name of the owner, the size of the lot, and of the building, and such other information as Mr. Fletcher could give. Upon leaving Mr. Fletcher's office, defendant asked plaintiff if he meant business, and if he did, that each would put up $500 to pay cost of negotiating the trade, and they would get some one to go to Baltimore to see if they could buy the property. The plaintiff replied, according to the contention of the defendant, that he was not *365 able to buy the building, and the plaintiff and defendant had no further transactions in regard to the purchase. Two days later the defendant's brother went to a hospital at Baltimore, (343) and the defendant had him to get in touch with the owner. After several interchanges of messages, terms were agreed to, and on 22 September, 1919, the defendant went to Baltimore and bought the building for himself and mother at the price of $40,000. But he concealed the fact from Lefkowitz.
The plaintiff contends, however, that no suggestion was made to him by the defendant to put up any money to negotiate the trade with the owner, and that he did not waive any of his rights to become the purchaser with the plaintiff under the original agreement.
The court charged the jury as follows:
"The first issue submitted for your consideration is this, Did the defendant, M. Silver, verbally agree with the plaintiff that they could purchase and hold jointly the premises described in the complaint at the price of $40,000?
"How do you find that issue to be? The burden of that issue is on the plaintiff to satisfy you, by the greater weight of the evidence or by the preponderance of the evidence, that such an agreement was made by and between the plaintiff and defendant, and if the plaintiff has satisfied you by the greater weight of the evidence that such an agreement was made by and between the plaintiff and defendant, that is, that the plaintiff and defendant agreed between themselves that they would purchase the property in controversy, that they should be joint owners of it, that each one was to pay half of the purchase price, and it was agreed between them that the deed should be made to them as tenants in common, made to both of them — if plaintiff has satisfied you by the greater weight of the evidence that such a contract and agreement was made, though verbally, it would be your duty to answer the first issue `Yes.'"
Judgment for plaintiff, and defendants appealed.
After stating the material part of the case: The substance of the plaintiff's contention is that there was an agreement between him and Silver that they should buy the land together for their joint benefit, each contributing one-half of the purchase money, the deed for the land to be made to them as tenants *366
in common, or each to own an undivided one-half thereof, and that the defendant, Milton Silver, thwarted their plan, and the consummation of their purpose, while Fletcher, as their agent, was negotiating for the purchase, by circumventing Fletcher and the (344) plaintiff and buying the property for himself, taking the deed from Harris to himself and his mother in equal moities. [moieties] Silver did not notify plaintiff of what he intended to do, and afterwards did not, but acted in that respect secretly and clandestinely, with a view of concealing his actions and enabling him thereby to secure the legal title before plaintiff was aware of what he was doing or had done. If the plaintiff can establish these facts, and there are other pertinent ones of which there was evidence, he is entitled to go to the jury upon the allegation of his complaint as to the trust. Whether there was such fraud and circumvention, or evil practice, on the part of Silver as would constitute him a trustee ex maleficio
as to an undivided one-half of the land for the plaintiff, or not, we will discuss later in this opinion, as there is evidence of a parol trust created before the transmutation of the possession, or the conveyance of the legal title to Silver and his mother, which will carry the case to the jury. Sykes v. Boone,
1. By transmission of the legal estate, when a simple declaration will raise the use or trust.
2. By a contract based upon valuable consideration, to stand seized to the use or in trust for another.
3. By covenant to stand seized to the use of or in trust for another upon good consideration.
4. When the court, by its decree, converts a party into a trustee on the ground of fraud. Wood v. Cherry,
With reference to this classification by Chief Justice Pearson, we held in Sykes v. Boone, supra: "The trust in this case comes within the first class, as a declaration of trust was made at the time of the execution of the deed and the conveyance of the legal estate. A trust when so declared is not within the statute of frauds. Nor does it require a consideration to support it. If the declaration is made at or before the legal estate passes, it will be valid even in favor of a mere volunteer," citingBlackburn v. Blackburn,
In the Blackburn case, supra, it was held:
1. The grantor, before the delivery of a deed which he had *367 signed conveying a tract of land to another, made, under seal, this endorsement: "I (the said E. B.) do hereby certify that S. B., a daughter of said E. B., doth hold a lifetime possession in the said deed": Held, to amount to a declaration of a trust in favor of the said S. B., and that the grantee took the title subject thereto.
2. An oral declaration of a trust, made contemporaneously with the transmission of the title, may be established, (345) even without a consideration. No particular form of words is necessary.
Justice Shepherd says substantially, in the opinion and referring toPittman v. Pittman, supra, as deciding the same thing: We think, however (without passing upon the question whether the language used can be construed into a covenant to stand seized to uses), that the judgment of his Honor may be sustained on the ground that the endorsement, made before or at the time of the delivery, amounted to a declaration of trust, to wit, that the grantee should hold the land for the use of the said Sarah for life. Even without consideration, an oral declaration of trust in favor of a third person, made contemporaneously with the transmission of the legal title, will, when established by competent testimony, be recognized and enforced in a court of equity. Pittman v. Pittman,
Justice Shepherd, who also spoke for the Court in Pittman v. Pittman,supra, said in substance in that well-considered case: Trusts *368 and uses were raised in the same manner, and if a feoffment was made without consideration, a use resulted to the feoffer, unless the use or trust was declared at the time of the conveyance. Now, it must be observed, that no consideration was necessary to a feoffment. The conveyance itself raised the use and separated it from the legal estate. The use so raised would, however, as we have said, in the absence of a consideration, result to the feoffer, unless declared at or before the time of the feoffment, and this (346) declaration might be voluntarily made by parol, either in favor of the feoffer or of a third person. But there was a great difference in this respect between a conveyance which operated by transmuting the possession, and the covenant to stand seized, which had no operation but by the creation of a new use; and, as this was raised by equity, and equity never acts without a consideration, one was always necessary to the transfer of the interest by this conveyance; whereas, in the case of the feoffment or fine, the use arises upon the conveyance itself. . . . It seems, therefore, that at common law, only the solemn conveyance by livery or record could raise the use by its own virtue and dispense with the deed declaring it, as well as the consideration for raising it. Roberts on Fraud 92. It appears, then, that at common law no use or trust can be raised in lands without a consideration, except in the single instance of a conveyance operating by transmutation of possession, the character of the conveyance alone being sufficient to raise the use and to dispense with the necessity for a consideration. There are numerous cases approving and affirming those we have cited.
The same justice, in the Pittman case, considers very fully the effect upon parol trusts in this State produced by our failure or refusal to adopt the seventh section of the English Statute of Frauds, and he argues on the assumption that the writings in that case contained no evidence of a declaration of trust contemporaneous with the transmission of the legal title, or of any other antecedent obligation. He then states that we are confronted with the interesting question, whether the legal owner of land can be divested of his property by a simple voluntary parol declaration that he holds it in trust for another (which, of course, means after the legal title has vested in him). The seventh section of the statute of 29 Charles II, requiring that "all declarations or creations of trusts or confidence of any lands, tenements or hereditaments shall be manifested and proved by some writing signed by the party," etc., has been very generally adopted in the United States, and the doctrine of the declaration of express trusts, as laid down by the various text-writers, is based almost entirely upon decisions of the courts *369
since the enactment of the said statute. As the above provision is not embraced in our statute of frauds it, therefore, becomes necessary that we should inquire into the manner in which express voluntary trusts in land could be created at common law. Foy v. Foy,
The cases we have cited (Sykes v. Boon and others), as to parol trusts, have since been specially approved by this Court. Avery v. Stewart,
But whether we should hold this to be a parol trust or a trustex maleficio (that is, one growing out of fraud, misdoing or tort), which perhaps it more strictly is, the rule of evidence and (348) intensity of proof is the same, because in both cases there is parol evidence, or may be. The latter kind of trust, called a trust ex maleficio, or ex delicto, is also known as a constructive trust, and arises entirely by operation of law without reference to any actual or supposed intention of creating a trust, and often directly contrary to such intention. It is entirely in invitum, and is forced upon the conscience of the malefactor, who will be declared a trustee because of his wrong or fraud, for the purpose of working out right and justice, or frustrating the fraud. It is otherwise defined as a trust not created by any words either expressly or impliedly evincing a direct intention to raise a trust, but by the construction of equity in order to satisfy the demands of justice; or a trust raised by construction of law, or arising by operation of law, as distinguished from an express trust; or one that arises when a person clothed with some fiduciary character, by fraud or otherwise, gains some advantage to himself; or is such as is raised by equity in respect to property which has been acquired by fraud, or where, though acquired originally without fraud, it is against equity that it should be retained by him who holds the legal title. 39 Cyc. 27, and notes 86 and 87.
Whether a parol, express, resulting or constructive trust, it is established by the same kind of evidence, not in the deed, but extraneous thereto, or dehors the deed, as we say. But the result is the same. It is not an attempt to set aside the deed. That relief is not prayed, but plaintiff asks that defendant be declared to hold the legal title he has acquired by his fraud "in trust for the use and benefit of the plaintiff, as to one-half interest in the said property, and that he be ordered to convey one-half fee simple interest in the same to him." If he had merely asked that the deed be set aside for fraud practiced upon him, the case ofHarding v. Long,
The plaintiff contends that Silver holds the legal estate in trust upon these grounds, because of his wrong or fraud in betraying the plaintiff's confidence in him:
"1. There was an express agreement that the property should be purchased and held jointly.
"2. Silver obtained the information that enabled him to make the purchase as a result of the confidence Lefkowitz (349) was induced to repose in him because of Silver's promise that the purchase should be joint.
"3. Silver was the agent of Lefkowitz to buy one-half interest," citingAllen v. Gooding,
But we think the judge committed an error as to the intensity of the proof when he charged that a mere preponderance was sufficient to set up a parol trust, as the evidence must be strong, cogent and convincing. This has been thoroughly and finally established by our cases. Cobb v. Edwards,supra, and cases cited in the note to the annotated edition.
Justice Allen said in Taylor v. Wahab,
The error of the court as to the intensity of the proof entitles the defendant to another trial, and it is so ordered.
New trial. *373
Cited: Bank v. Scott,
(351, 352)
