19 Mont. 422 | Mont. | 1897
Upon the trial of the case the respondent, Lewis, gave the following version of the circumstances under which he surrendered the $19,659 note:
“On September 28, 1894, Mr. Lindley stated to me that he had finally made a settlement, or rather a compromise, with
The appellant Joseph M. Lindley gave substantially the following evidence upon the same matter:
“The contract and arrangement I made with Mr. Lewis when this §19,659 note was surrendered in substance was that I was to receive a deed from Mr. Rouse and wife, and surrender his note for §19,659, and that I was to make it satisfactory to him in some way. This was with Mr. Lewis. I don’t know that there was any contract that I was to pay him, or give him a mortgage on this property which secured the §19,659 note. The arrangement was that I was to secure the note in some way or get the money. He wanted the money. * * * I had frequent conversations with the plaintiff about the matters in controversy. We had a good many conversations; among other things, that he had surrendered all the security he had, and that my wife should sign the note. That was the substance of the last • conversation. I know he said, ‘I have surrendered all the security I have, and I want your wife to sign this note. ’ That is the note he held against me. He repeatedly said that he had surrendered all the security he had on the note. The demand he made was that my wife sign the note. ’ ’
On cross-examination appellant testified:
“This demand that she sign the note with me was after I had deeded her the property; not before that. We had frequent conversations as to whether I would be able to pay the money, or have to give a mortgage. I don’t remember of telling him on the 7th of November that I was afraid I would have to give that mortgage. Possibly I told him so. I don’t know that I ever did. Still I emess it is so. He did not want
Now, when we scrutinize the facts as pleaded in the statement of the case given above, and the evidence of Lewis and Lindley, we find these essential facts:
On September 28, 1894, the defendant and appellant Joseph M. Lindley owed this respondent, Lewis, $4,100, abalance due upon a debt which had been owing to Lewis since September, 1888; and from ' that. last-mentioned date to September 28, 1894, the property involved in this controversy had been held by Lewis under a mortgage lien for the security of that debt. The debt was due, and the legal title to the property which had secured the debt was in persons by the name of Rouse, subject to Lewis’ lien upon it. On September 28, 1894, there was a debt in favor of Mrs. Lindley against her husband for money loaned him ten and twelve years before. Prior to September 28, 1894, Mr. Lindley had made an agreement with the legal owners of the property which secured his debt to Lewis which was of advantage to him, but to perfect that contract it became necessary to put the evidence of Lewis’ lien upon the realty into the possession of the Rouses, the holders of the legal title. In order to permit Lindley to take advantage of the benefit to accrue to him by the perfection of this transaction with the Rouses, the plaintiff surrendered to Lindley the evidence of his lien, upon the conditions that, in consideration of Lewis’ surrendering to him (Lindley), for delivery and surrender to the Rouses, the $19,659 note, plaintiff’s lien should be continued, and remain security to plaintiff for his said debt of $4,100, and, immediately upon the. .legal title being secured to said property in Lindley, he
The testimony, therefore, satisfies us that the findings of the court in relation to the surrender, and the conditions attached thereto, of the $19,659 note are amply sustained by the evidence.. In leed, a reference to the statements of appellant Lindley confirms the view taken by the district judge, for Lindley’s statements are not substantially at material variance with the account given by Lewis. He admits that the evidence of the lien of Lewis was to be relinquished to him (Lindley), and in consideration therefor he was to try and raise the money to pay Lewis by a mortgage on the property, and that Lewis was to assist him in effecting such a loan, and that, if the money could not be raised, he was to secure the plaintiff’s debt in some way satisfactory to him; but that the property should be secured in his (Lindley’s) hands, so that he could carry out and make the loan upon it for the purpose of paying the $4,100 due to Lewis.
Furthermore, it is plain from the testimony that Lewis gave up the $19,659 note to Lindley, and Lindley gave it to the Eouses in order to perfect the title in himself of the property embraced in the mortgage, and which was security for the lien held by Lewis; and that it was by reason of the surrender of the $19,659 note that Lindley was enabled to and did procure the legal title to the property. But very soon after this was done, assuming that up to this time Lindley had been acting in good faith, and meant to be honest in his dealings towards Lewis, he conveyed all the' property which had been so transferred to him by the Eouses, and all the other property which he owned, to his wife, to pay to her a stale claim, which was not alone invalid, under the laws of Montana territory at the time it was contracted for, but the payment of which she never had demanded of him before, and which was not secured in any manner whatsoever, and besides was confessedly barred by the statute of limitations.
We think there is the equity, and it can be enforced. We believe it would be a fraud upon Lewis to deny him relief, and the rules of law and equity do not prevent a court from so finding.
The position of the appellant, as we understand it, is that-no fiduciary relation existed between plaintiff and respondent, when respondent, Lewis, under the verbal arrangement, surrendered the $19,659 note to the appellant J. M. Lindley; that no fraud or deceit is charged or proved to have existed .on Lindley’s part in the procurement of the note from Lewis; hence, that no resulting or constructive trust could have arisen, or did arise, under which Lewis could enforce the verbal agreement, without doing violence to the statute of frauds. (Fifth Division Compiled Statutes of 1887, § 217). .
It must be remembered always that Lewis consented to the surrender of the evidence of his lien to enable Lindley to avail himself of the advantageous proposition made to him by the Rouses. He sought and obtained the confidence of Lewis to execute his plan. With faith in Lindley’s honesty, and relying upon his promises to pay the debt due Lewis, or secure it by mortgage, Lewis surrendered the note, but without any intent to change his position as the holder of the first lien upon the property which had been embraced in the mortgage connected with the $19,659 note. Lindley therefore assumed and took upon himself a fiduciary relation towards Lewis, in consideration of the benefits which he might obtain for himself by consummating his negotiations with the Rouses.
There are two familiar principles which should govern a court of equity in exercising its remedial j urisdiction, both of which become applicable in this case. One is, when one,
Within one of the divisions of trusts are the resulting and constructive species. Pomeroy, in his Equity Jurisprudence (section 155), speaks of both kinds as properly described by the generic term ‘ ‘implied trusts, ’ ’ and thus defines them:
“Resulting trusts arise where the legal title is disposed of ór acquired, not fraudulently, or in the violation of any fiduciary duty, but the intent in theory of equity appears or is inferred or assumed from the terms of the disposition, or from the accompanying facts and circumstances, that the beneficial interest is not to go with the legal title. In such a case a trust ‘results’ in favor of the person for whom the equitable interest is thus assumed to have been intended, and whom equity deems to be the real owner. Constructive trusts are raised- by equity for the purpose of working out right and justice, where there was no intention of the party to create such a relation, and often directly contrary to the intention of the one holding the legal title. All instances of constructive trust may be referred to what equity denominates ‘fraud, ’ either actual or constructive, including, acts or omissions in violation of fiduciary obligations. If one party obtains the legal title to property, not only by fraud or by violation of confidence or of fiduciary relations, but in any other unconscientious manner, so that he cannot equitably retain the property, which really belongs to another, equity carries out its theory of a double ownership, equitable and legal, by impressing a constructive trust upon the property in favor of the one who is in good conscience entitled to it, and who is considered in equity as the beneficial owner. ’ ’
Washburn on Real Property (volume 2, p. 530) says that, properly speaking, ‘ ‘constructive trusts are such as are raised by equity in respect to property which has been acquired by
Spence, the learned English writer on Equitable Jurisdiction, on star page 511, expressly includes in his definition of constructive trusts those arising where property has been fairly and properly acquired, but it is contrary to some principle of equity that if should be retained by the party in whom it is vested, — at least for his own benefit; and to exemplify his text he cites the case of Dyer v. Dyer, 2 Cox, Ch. 93, where Lord Chief Baron Eyre stated that, where a purchase is made by a man or by his directions, and with his own' money, the conveyance being in fact taken in the name of another, the trust of the legal estate has been said to ‘ ‘result’ ’ to the man who advances the money. (See, also, Beach, Mod. Eq. Jur. § 226).
When these controlling rules are applied to the facts in the case at bar, and to the premises assumed by the learned counsel for the appellants, all those portions of his argument which proceed upon the hypothesis that Lindley did not acquire towards Lewis a relation of trust and confidence from the time of the agreement and the surrender of the note, fall, and with them go the citations to the cases which eliminate consideration of circumstances like those in this case; while, on the other hand, if we accept — as we do — the clearly established fact that there was a relationship of trust and confidence which Lindley violated, and that fraud is an element of the case, authorities are abundant in support of the view that Lindley held the legal title subject to Lewis’ lien thereon. (Reagan v. Hadley, 57 Ind. 509; Nickerson v. Meacham, 14 Fed. 881).
‘ ‘It is an established rule of equity that, where trust and confidence are reposed by one party in another, and such other accepts the confidence or trust, equity will convert him into a trustee whenever it is necessary to protect the interest of the party so confiding and do justice between them.” (Foote v. Foote, 58 Barb. 262).
Indeed, we do not understand the learned counsel to contend
Here, in our opinion, the effect of plaintiff’s prayer is not to create a trust by parol in real property, under conditions not authorized by the statute, but to have the defendant Lindley declared a trustee ex maleficio, because of his conduct, and, as such trustee, holding the title to the property obtained by the Rouse deed, and conveyed to Mrs. Lindley, subject to the lien of plaintiff, Lewis. (Beach, Mod. Eq. Jur. §§ 227, 233).
Lindley has violated his agreement. He cannot cling to the results, yet deny its legal efficacy. His position was that of a trustee with relation to the property deeded to him by the Rouses, and which he claimed to own when he deeded- to his wife.
Finally, we pass upon the attitude of Mrs. Lindley. It has been decided by this court in Bank v. Gagnon, 19 Mont. 402, 48 Pac. 762, that the transferee of negotiable paper as. collateral for a pre-existing debt may be a hona fide holder under the rules of commercial law. The reason for the rule in such cases palpably lies in the interest of ordinary mercantile transactions; and, while authority is to be found generally in support of a like doctrine as applicable to the purchase of land, still, in such cases, whether an antecedent debt is a valuable consideration within the rule of a hona fide transaction, is not necessary to be considered in this case, and, until called upon to examine the many conflicting views, and to lay down a rule upon that point, we shall reserve our decision thereon.
But passing the contention that she paid a valuable consideration to her husband by giving him his notes, and assuming that she did, we still think that it was incumbent upon her to
Section 232, Fifth Division Compiled Statutes of’ 1887, pertaining to conveyances, provides:
“The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor or of the fraud rendering void the title of such grantor.”
It is urged that, under the foregoing statute, the burden of proof to show such knowledge was upon the respondent plaintiff. We think otherwise.
The allegation of the complaint is that both Mr. and Mrs. Lindley had full knowledge of the $4,100 note held by Lewis, and of the lien held by him as security therefor at the time of the conveyance by Lindley to Osborne and by Osborne to Mrs. Lindley. As part of her affirmative defense, Mrs. Lindley alleged that she took the deed from her husband -in absolute good faith, and for a valuable consideration, and without notice of any claim or equity in plaintiff. Inasmuch as Mrs. Lindley is the person seeking, as against Lewis, whom her husband sought to defraud, the protection of a bona fide purchaser for value, without notice, from such fraudulent grantor, it was incumbent upon her to show good faith and want of notice.
The question of burden of proof in cases like this was presented to the supreme court of Oregon in Weber v. Rothchild, 15 Or. 385, 15 Pac. 650, and it was decided that, the plaintiff having shown the fraudulent intent and purpose of the grantor in a deed, could stop, and that the grantee was then required to prove that he paid value in order to protect his title. There the defendant Rothchild — like the defendant Mrs. Lindley in
The learned judge of the district court must have consid
Finally, upon the whole case, all the equities are manifestly with the respondent, and the judgment of the district court must be affirmed.
Affirmed.