16 F. Cas. 645 | U.S. Circuit Court for the District of Oregon | 1879
Upon the evidence, including the answer of the defendant, the following facts are satisfactorily established: That on September 18,1874, the register and receiver of the proper land-office issued a certificate, under section 7 of the act of September 27, 1850, aforesaid, from which it appears that the premises in controversy are the wife’s half of the donation of Bethuel and Rachel Dove, granted to them by section 4 of the act aforesaid, on account of the husband’s settlement and occupation thereon, commencing on December 1, 1868; that some time prior to 1858, and up to 1865, the defendant was the general attorney and trusted adviser of Bethuel Dove and his wife; that in 1858, one William Griswold, after serious litigation, obtained a judgment against Beth-uel Dove for over eight thousand dollars, in which litigation the defendant acted as the attorney of said Dove, and as such, procured one J. B. V. Butler, also a friend and client
The evidence is conflicting concerning some of these conclusions of fact but the truth is generally apparent, notwithstanding. I do not propose to discuss it in detail, but there are one or two points that justify some special attention. As to the circumstances concerning the preparation and execution of the mortgage there is a direct conflict between the testimony of the Doves and that of the defendant and his witness, Reason B. Booth-by. The contradiction can hardly be explained upon the theory of a failure of memory or an unintentional mistake, and therefore it almost necessarily involves willful falsehood.
At the date of the transaction the defendant was living on his donation claim a few miles north of the Doves while Boothby lived at Eola, about half way between them. The Doves swear unqualifiedly that Hayden came to their house and prepared the mortgage there, using Ford’s notes of the claim survey which they had, in describing the premises, and left it with them, saying he would send Boothby — a justice of the peace — down to take their acknowledgment; that Boothby came down the next day or two, when they executed and acknowledged the instrument.
On the contrary Hayden swears both in his answer and testimony that he never wrote a line of the mortgage and don’t know who did — that he never advised it or knew anything about it until some time after the execution. Boothby testifies that he wrote the mortgage including the names of the mortgagors thereto — Bethuel and Rachel Dove — in short, that he wrote every word of the instrument, except the names of the attesting witnesses — George Bolter and Theodore Ingalls.
The Doves, although not parties in interest,, are not disinterested witnesses by any means,, while the defendant is deeply interested in-the result in both property and character. Boothby does not appear to be a person of any particular character or standing. During the past twenty years he appears to have-lived from place to place in Oregon and Washington, for the most part east of the-Cascades, and is a painter by trade.
A very satisfactory solution of this problem is furnished by an inspection and comparison of the writings on the mortgage with one another and with that on the receipt of July 20, 1864; and also the signatures of the defendant and said Boothby to their evidence given before the examiner in this cause.
The mortgage bears upon its face indubitable evidence that Boothby’s story is untrue-—that he never wrote a word of the mortgage except the certificate of acknowledgment and his signature thereto, as an attesting witness. In the first place, Boothby’s. story and that of the defendant do not agree, for while the latter says he knew nothing about the making of the mortgage, the former said he went to Dove’s to attend to his business at the request of the defendant who then furnished him with a blank form upon which to write the mortgage and a prepared description of the premises.
The mortgage is upon a printed form of a-deed of bargain and sale. The body of it contains twenty-two lines, which are written- or mostly in writing, and the certificate six such lines, beside the signature of Boothby. The handwriting of the body of the instrument and the certificate are both unskillful, but quite uniform and marked in character and radically different. It is safe to say, they were never written by the same person. The difference in the capital Rs, Bs, Ds, Ps- and figure 9s is very noticeable. But this is not all. In the body of the instrument the name Rachel is incorrectly spelled with an “ae” in the last syllable, while in the certificate it is spelled in such syllable with an ‘‘a” only. Bethuel is spelled correctly in the body of the instrument, but in the certificate it is spelled without an “e” in the first syllable. It is also apparent that this name was first written in the certificate as “B-huel” and then before completion corrected into “B-thuel,” by making the loop of an “h” upon the m stroke or lower part of the first “h,”‘ and thus converting the latter into a “t”' But the loop of the second “h” did not comedown directly upon the m stroke of the first one, but at an angle, on the outside, thus-leaving the process of emendation quite apparent.
The signatures of Bethuel and Rachel Dove to the mortgage were evidently written by the subscribing witness, George Bolter, who wrote a plain, bold, round hand, as unlike that in the body of the instrument or the-certificate as light and darkness.
Again, the words in the condition of the-
The second and third of these insertions merely supply manifest omissions, while the first only formally expresses what would otherwise be implied from what was already expressed. Before this interlineation, the condition read: “This conveyance is intended as a mortgage to secure the payment of the sum of fifteen hundred and fift// dollars,” all but the words in italics being printed, and continued thus: “The note executed by Beth-uel Dove,” etc., putting “the note” in apposition with “the sum of fifteen hundred and fifty dollars,’’ which is represented. The interlineation “according to the tenor,” etc, was placed between the words “dollars” and “note” aforesaid, and the pen drawn through the “The” before the word “note.”
As it does not appear that Mr. Heath was present when the mortgage was executed, it is probable that these interlineations were made by him at the county seat, Dallas, when the instrument was taken there by Dove, or other person, to obtain the money from the county treasurer, and was delivered to him for record.
Attention is called to these interlineations and insertions after the execution of the instrument, not to suggest that any wrong was committed or intended thereby, but to show the incorrectness of Boothby’s testimony. who deliberately and repeatedly swore that he wrote every written word in the instrument except the signatures of Bolter and Ingalls, the subscribing witnesses.
Neither is this all. Boothby swears in effect that he took a clean blank with him to Dove’s on March, 1S59, upon which he then and there wrote this mortgage, and it is very certain that this is not so. The mortgage reads: “This indenture, made this second day of March. A. D. 1859,” the words “second” and “March,” and the figure “9” being in -writing. But upon examination it plainly appears that in place of these words there was first written “twenty-sixth” and “February,” the latter words being partially erased, and the former written over and in place of them. Neither were the words “second” and “March” written by Boothby. but probably by Bolter, who appears to have been the best penman that made a mark upon the paper, unless it was Heath, while the -words “twenty-sixth” and “February” appear to have been written bj' the person who wrote the body of the instrument. The coincidences are most convincing, but one is almost demonstrative. The letter “x” in “twenty-sixth” is formed by two perpendicular curved lines with their convex sides approaching and connected by a hyphen or horizontal line, thus )•(. According to my observation it is a very singular formation of the letter, and an almost certain mark of identification. The only other written “x” in the instrument is found in the body of it, in the word “executed,” and that is made in precisely the same way.
But the fact of the alteration of the date is a very significant one. It not only tends to prove that Boothby did not write the instrument as alleged, but also that it was drafted, as the Doves testify, by some one other than Boothby before the day of its execution, only the time was four days instead of one or two as they remember it.
The instrument having been drafted on February 2G. when the parties came to execute and acknowledge it before Boothby, on March 2, it would naturally occur to some one that the date ought to be corrected, and so the words “twenty-sixth” and “February” were changed to “second” and “March.” but not so as to prevent the paper from revealing to the microscope, and even the naked eye, the truth of the transaction.
From these facts, and the striking similarity between the writing in the body of the mortgage and that in the receipt of July 2G, which is admitted to be the defendant’s, as well as his signature to the examination, it is morally certain that the defendant wrote the mortgage as the Doves testify. The receipt is more than five years later in time than the mortgage; but making some allowance for the careless way in which the former is written, as compared with the latter — it being necessary to write somewhat closely and small to get the matter in the spaces left in the blank — and for some freedom of hand acquired in the meantime, as well as the difference in pen, ink and paper, the writings are very like. All the peculiarities of style — and they are many and marked —observable in the one are apparent in the other. The capital Rs, Bs, Ps and Ds are very notable • instances. The terminal ds are uniformly made with an upward and outward curl from the o, instead of a stem, while the middle ones are just as constantly made with a stem, which is well detached from the body of the o — the latter being open. The figure 8 in the two writings is very singular, and “they are like as two black-eyed peas.” The s, the ps. the words “Dove,” “hundred,” “land,” “claim” — in short, the whole face and expression of the one is exhibited in the other.
In this connection it may be also mentioned that at the taking of the evidence before the examiner, this receipt was mislaid and supposed to be lost, and counsel for the plaintiff put in a paper which he testified was a
Next, as to the agreement or. understanding between the defendant and the Doves concerning the purchase and redemption of the premises. All the circumstances, and particularly the payment of the two hundred dollars, and the receipt therefor, tend strongly to show that the defendant bid in the property at the sheriff’s sale, as the attorney and friend, and for the benefit of the Doves, and that they were to remiin in possession and have the benefit of the use and occupation of the place to enable them to repay him the purchase-money with interest; and also that the defendant after a time conceived the design — lucri causa — to ignore his relation and understanding with the Doves, and claim the property as his own. The apparent excuse for this breach of faith was, that these poor, old, unfortunate people would never be able to repay him, and to make sure of this, he did what he could to prevent them from so doing, by depriving them in the meantime of the use and possession of the property.
The defendant pretends that the agreement to redeem .was made at the date of the receipt, and not before; and that he did not believe, at the time, that the Doves would be able to perform it, and therefore he made the further conditions that if the redemption was not completed within a year from the date, that is, by March 5 next following, the agreement should be at an end, and the two hundred dollars then paid on it be retained by him as rent of the premises for such year. But with this statement the known and undisputed facts of the case are at variance. The receipt itself is directly opposed to it. If such was the agreement, why does it not appear in this writing? and especially, why does it not contain some reference to the alleged conditions, that the redemption was to be made within eight months from that date, and if not, that the two hundred dollars then paid should be retained by the defendant as rent? The defendant is an attorney, and a person of shrewdness and experience. These provisions are altogether in his favor, and it was his interest to preserve the evidence of them. While he was writing the memorandum, a few words, moi’e or less, would have expressed them. The Doves, according to his statement, had no rights in the premises as against him, and so far as terms are concerned, were at his mercy. But the language actually used in the writing is also contradictory of the defendant’s statement. The receipt is not simply for two hundred dollars received by the defendant on account of land then sold the Doves, or then purchased back by them from him. On the contrary, it is in terms and effect for two hundred dollars, to be applied on purchase of Mrs. Dove’s land theretofore purchased by the defendant at sheriff’s sale. To be applied on what purchase? Why, manifestly, the purchase made at the sheriff’s sale, thus suggesting distinctly what the Doves assert, that the land, though pm-chased at such sale by the defendant in his own name, was, in fact, purchased for them, and was in equity and good conscience, their purchase. Upon no other theory of the facts can effect be given to this word “purchase” in the receipt, or its use therein satisfactorily accounted for. Indeed, some such view of the matter must have suggested itself to the mind of the defendant, for he could not remember, when it was thought the receipt was lost, that it stated that the money was to be applied on the purchase of Mrs. Dove’s land-claim, and swore to the best of his recollection that these words were not in the receipt; and by way of giving emphasis and weight to his testimony in this respect, swore that he had seen the receipt, and scrutinized it closely, since this matter was placed in the hands of counsel.
As to the value of currency at the date of the sheriff’s sale, I have consulted the contemporaneous quotations of the price of gold and find that legal tenders were then worth, in Portland, sixty-five cents on the dollar, which makes the amount advanced by the defendant, in gold, seven hundred and ninety-six dollars and twenty-five cents. The only Testimony upon this point was that of the defendant and Dove, the former stating that they were worth about seventy-five cents and tne latter fifty cents; but he also states, what he was more likely to remember, that the amount to be repaid the defendant was about seven hundred dollars in coin.
As to the value of the property in 1864, the testimony is very conflicting, the opinions varying from seven hundred dollars to four thousand dollars in coin. Much of it is unsatisfactory, and some of it utterly incredible; as for instance, that it was not worth more than two dollars per acre. In a country where land is the foundation of society, and agriculture the chief occupation of the people, a certain amount of knowledge upon this subject is common to most persons, and in considering this question it cannot be overlooked that this property is the half of a donation claim selected in 1848, and therefore probably choice land and favorably situated; that it lies very near the Willamette river, within a few miles of the capital of the state; that with any kind of cultivation, much of it will produce at least twenty bushels of wheat and forty bushels of oats to an acre, one year with another, and that probably it has not, since 1851, been held at a less value than ten dollars per acre, and under favorable cir-
It has been suggested that the price paid, one thousand two hundred and twenty-five dollars, in currency, was credited on the decree against the Doves at par, and therefore the defendant ought to be considered as having advanced that much for them in coin or its equivalent.
So far as Rachel Dove is concerned, a sufficient answer to this suggestion is found in the fact that the decree against her, so far as it was in personam and for money, was void. She was not indebted to the county. She did not join with her husband in the note for the loan; and if she had, being a married woman, the act would have been a nullity. Norton v. Meader [Case No. 10,351]; Dick v. Hamilton [Id. 3,890]. By the mortgage she pledged her property for her husband’s debt, and by its sale on the decree it was discharged from the lien.
The parties seem to have acted upon the theory that the husband had no interest in the wife’s land. But this was a mistake. Bethuel Dove was seised of an estate for his life in the donation of his wife by virtue of the marriage. Starr v. Hamilton [Id. 13,-314]; Wythe v. Smith [Id. 18,122]. But even as to the husband, if the defendant acted for him in making the purchase, the advantage, if any, accrued to the former and not the latter. Between them, the question is, not what effect did the payment of the currency have upon the decree, but what did it cost the defendant? What did he advance? McDowell v. Milroy, 69 Ill. 500.
Upon this state of facts, and leaving out of view, for the present, that the defendant was also the attorney of the Doves at the date of this transaction, the law implies a trust between the defendant and them. His conduct being inequitable and unjust, and involving a gross breach of the special trust and confidence reposed in him by the Doves to their serious injury and his corresponding advantage, equity will treat him as a trustee of the property thus wrongfully acquired, and hold him liable accordingly. 1 Perry, Trusts, §§ 160, 168; 2 Story, Eq. Jur. §§ 1254, 1261, 1265; 3 White & T. Lead. Cas. Eq. 139; Gaines v. Chew, 2 How. [43 U. S.] 649. This is a ease of constructive trust, a trust arising out of the misconduct of the defendant, and does not depend upon the existence of a writing. It is without the statute of frauds, and the facts constituting it may be shown by parol. 1 Perry, Trusts, § 85; 2 Story, Eq. Jur. § 1531; 1 Greenl. Ev. § 266; Jenkins v. Eldridge [Case No. 7,266]. This being so, there is no doubt but that the Doves had an interest in the premises at the date of their conveyance to the plaintiff. In addition to the authority cited on the hearing of the demurrer upon this point, reference is made to Perry on Trusts (section 227) where it is said: “The right of a party who has been defrauded of the title to his land, is not a mere right of action to set the deed aside, but it is an equitable estate in the land itself, which may be sold, assigned, conveyed and devised. In the view of a court of equity, he is still the owner of the estate, subject to repay whatever money or other property he may have received from the fraudulent grantee.”
But it is contended for the defendant, that this suit is barred by the lapse of time. That the plaintiff or those under whom he claims have been guilty of laches — have slept upon their rights.
In the consideration of purely equitable rights and titles, courts of equity act in analogy to the statute of limitations, but are not bound by it. As was said in this court in Hall v. Russell [Case No. 5,943]: “When an action upon a legal title to land would be barred by the statute, courts of equity will apply a like limitation to suits founded upon equitable rights to the same property. So, in cases of implied or constructive trusts, when it is sought for the purpose of maintaining the remedy, to force upon the defendant the character of a trustee, courts will apply the same limitation as provided for actions at law.” Citing Elmendorf v. Taylor, 10 Wheat. [23 U. S.] 176; Miller v. McIntyre, 6 Pet. [31 U. S.] 66; Beaubien v. Beaubien, 23 How. [64 U. S.] 207: to which may be added Wisner v. Ogden [Case No. 17,914]; Kane v. Bloodgood, 7 Johns. Ch. 110; and Michoud v. Girod, 4 How. [45 U. S.] 560. Apply this rule to this case, and this suit may be maintained at any time within twenty years from the fall of 1865, the time when the defendant finally repudiated the arrangement with the Doves and wrongfully took possession of the premises, that being the period limited by statute for the commencement of an action at law therefor.
But where the trust is constructive and also arises out of the fraud of the defendant, there does not appear to be any fixed rule upon the subject. The matter is left to the equitable discretion of the court to be decided in each case according to its nature and circumstances, subject to the qualification that diligence must be used to establish a trust by implication, and that equity will not aid a party to enforce such a trust when the demand is stale or where there has-
Periods ranging from fifty to seventeen years have been field to be a bar, and under other circumstances a delay of from eleven to eighteen years has been field to be no bar. Perry, Trusts, § 229. In Michoud v. Girod, 4 How. [45 U. S.] 561, where the matter was thoroughly examined, Mr. Justice AVayne says: “Within what time a constructive trust will be barred, must depend upon the circumstances of the case. Boone v. Chiles, 10 Pet. [35 U. S.] 178. There is no rule in equity which excludes the consideration of circumstances, and, in a case of actual fraud, we believe no case can be found in the boohs in which a court of equity has refused-to give relief within the life-time of either of the parties upon whom the fraud is proven, or within thirty years after it has been discovered or becomes known to the party whose rights are affected by it.”
This suit was commenced within eleven years, and the one in Polk county within nine years from the time the defendant took possession of the premises and disavowed the understanding and obligation under which he acquired the legal title, so that in any view of the matter there is no ground on which to rest a claim that this suit is barred by lapse of time, or that the demand is stale, or the wrong long acquiesced in. Indeed, considering the circumstances of the case, and the unequal condition of the parties, the court would not be justified in refusing relief upon the case made, if twenty years had elapsed from the commission of the wrong.
But the decision of this case can be put upon higher and safer ground than the contracts and understandings of the parties, which are liable to both misrepresentation and misapprehension.
If the defendant was the attorney of the Doves at the time he bid in this property, he must be considered as acting for them, and he is liable to them therefor as their trustee,' unless he can show satisfactorily that he has purchased for himself with his clients’ consent, and that the transaction was in every respect fair, and not to their •disadvantage. The presumption is against him, and the burden of proof is upon him; and if his interest as a purchaser may conflict with his duty as an attorney, the sale will be held void, or the attorney charged as .-a trustee, at the option of the client. This rule is- alike necessary to preserve the dignity and integrity of the legal profession, and to protect the interests of a dependent and confiding clientage; and in the enforcement of it courts will not hesitate, because the injury to the client does not fully appear, or a positive intention on the part of the attorney to gain an advantage is not shown. This statement of the law will be found fully supported by the following authorities, some of which go even beyond it, and hold that a purchase by an attorney of the subject of litigation cannot be maintained against the client under any circumstances. 1 Perry, Trusts, § 166; Case v. Carroll, 35 N. Y. 388; Harper v. Perry, 28 Iowa, 60; 1 Story, Eq. Jur. §§ 312, 313; Berrien v. McLane, 1 Hoff. Ch. 428; Cutts v. Salmon, 5 Eng. Law & Eq. 95, 12 Eng. Law & Eq. 317; Ward v. Carttar, L. R. 1 Eq. 29; De Rose v. Fay, 3 Edw. Ch. 389, 4 Edw. Ch. 44; Trotter v. Smith, 59 Ill. 244; Howell v. Baker, 4 Johns. Ch. 120; Hess v. Voss, 52 Ill. 481; Wade v. Pettibone, 11 Ohio, 60; Nesbit v. Lockman, 34 N. Y. 169; McDowell v. Milroy, 69 Ill. 500; Hawley v. Cramer, 4 Cow. 730; 1 White & T. Lead. Cas. Eq. 203; Evans v. Ellis, 5 Denio, 643; Weeks, Attys. at Law, §§ 273 et seq.
The already great length of this opinion precludes any citation from these authorities, but the following paragraph from Case v. Carroll, supra, is so exactly in point and so sound in doctrine and clear in expression that it may be cited notwithstanding:
“It is a settled principle of equity, that no person, who is placed in the situation of trust or confidence in reference to the subject of the sale, can be a purchaser of the property on his own account. And this principle is not confined to a particular class of persons, such as guardians, trustees or solicitors, but it is a rule of universal application to all persons coming within its principle, which is, that no party can be permitted to purchase an interest when he has a duty to perform inconsistent with the character of a purchaser.”
But it is contended that the defendant was not the attorney of the Doves at the time of the purchase. It is admitted, -however, that he was the general attorney of the husband, and it is not seriously contended that he was not such attorney for the wife also, through the agency of the husband, so far as she needed one. It is also admitted that he was the husband’s attorney in the foreclosure suit; and finally upon the hearing the quibble that he was not the wife’s attorney also in such suit, was frankly abandoned. And this accords with the record, which states unequivocally that he appeared for both, though the demurrer filed by him, or the transcript of it, states that “the above-named defendant” — -in the singular — comes by B. Hayden, etc. But who is “the above-named defendant?” The reference is to the title of the cause in the beginning of the demurrer, and that reads, “J. Emmens, Treas. of Polk County v. Bethuel and Rachel Dove, Defts.,” so that if there is any ground for-saying that this demurrer was made by the defendant, for either of them rather than both, it is the wife who is expressly named in full, and who was the principal party in interest. But the omission of the s from the word defendant, in the body of the demurrer, is undoubt
But it is claimed that the defendant ceased to be the attorney of the Doves from and after the date of the decree of sale in the foreclosure suit, or at most at the expiration of sixty days thereafter — the time then allowed for an appeal to the supreme court.
This sale, being made in a suit in equity, was a judicial one, and so in effect are all sales made upon execution in this state — that is, it was not made absolutely, but subject to the approval of the court which might upon the objection of the defendant set it aside, if it apeared that there were “substantial irregularities in the proceedings” concerning the same, to his probable loss or injury. Civ. Code Or. §§ 293, 413. If, then, the relation between the defendant and the Doves, of attorney and client, had not ceased before this sale, the defendant could not become a purchaser thereat on his own account, without raising a conflict between his duty and his interest. It was his duty to examine the circumstances of this sale and if he found good cause, to object to its confirmation. The property was sold for not more than one third its value. There is satisfactory testimony in the case that a neighbor intended to make the property bring at least the amount of the decree and costs, but learning that the defendant was going to bid for Mrs. Dove, and having sympathy for her, he generously forebore. But this was an irregularity which ought to have avoided the sale. The loss was a direct injury to Dove, who was left personally liable for so much of the decree as the sale of property ought to have satisfied, but did not. But the defendant, as he was situated, could not' or would .not bring this matter before the court, because, if he purchased for Dove, as was the understanding, his clients were satisfied, while if he purchased for himself, as he now claims, his interest would prevent it.
How or why the defendant ceased to be the attorney of the Doves before this sale is not shown, nor can it be. It is not claimed that there was any change of attorney or any agreement or understanding that his services were to stop short of the final determination of the matter, which was not the mere entry of the order of sale, but the final confirmation.
By the law of this state an attorney has authority to bind his client in any of “the' proceedings in a suit by an agreement. Civ. Code, § 1007. And he may be changed before the final determination thereof by consent, of record, or the order of the court. Id. § 1010.
As has been shown, the final determination of the proceeding in question was the order confirming the sale. It is not pretended that there was any change of attorney between the order and confirmation of sale, as provided by statute or anywise.
Still it is insisted that in some undefined and occult way the defendant dropped out of the case before the sale, and was thereafter a stranger to the proceediug. Suppose the defendant had not purchased and had signed a stipulation consenting to a re-sale, or had appeared in court and objected to the sale, would it have been necessary to enter his appearance anew as upon a first retainer, or would the court or opposing counsel have presumed or thought of asking for his authority to appear in the proceeding for his confirmation of the sale, in the suit in which he had appeared and acted as the defendant’s attorney, in the preparation and hearing of the cause?
It seems to me that the matter is too plain for argument. The defendant was the attorney .of the Doves when he made the purchase, and in so doing, if he purchased for himself, as he now claims, he put his duty to them in conflict with his interest as such purchaser, to the manifest injury of his clients, and therefore they have a right to treat the sale as void, or to hold him to account, as their trustee. If, on the other hand, he purchased it for them, as I find from the evidence he did, then of course he is their agent and trustee and bound to account to them as such.
The conclusions here stated, have not been lightly or hastily reached. But they are the result of a thorough examination of the case, and a full and careful consideration of the questions involved in it, after able and instructive arguments by the learned counsel, who appeared for the parties, particularly for the defendant. I now announce them with reasonable confidence in their conformity to the law and justice of the case, and with the comfortable assurance that if they are otherwise the defendant can appeal to so exalted a tribunal as the supreme court of the United States for their correction.
The decree of the court will be, that the defendant, within sixty days, convey the premises to the plaintiff by a good and sufficient deed, with proper covenants against his own acts, to be prepared and settled before the master of this court, and at the same time deliver possession of the premises, and that defendant within the same time pay the plaintiff his costs in this suit expended, and that in default thereof, execution issue therefor.