99 Pa. Super. 566 | Pa. Super. Ct. | 1930
Argued April 17, 1930. This bill in equity seeks to have J.C. Flanagan declared a trustee ex maleficio for H.J. McCully as to all the undivided one-half interest in two pieces of real estate described in the bill, hereafter referred to as the Remington property, located on West Liberty Avenue, Nineteenth Ward, Pittsburgh, and the Eberhardt property, located at East and Milroy Streets, Twenty-sixth Ward, Pittsburgh; to compel the conveyance of the one-half interest therein by J.C. Flanagan and Florence Mae Flanagan, his wife, to H.J. McCully; to order an accounting for all moneys received by Flanagan for or on account of said properties; and to pay the plaintiff such sum of money as shall be found to be justly and legally due him.
The lower court ordered that Flanagan pay McCully $1,551.44, being the aggregate of the fraudulent and excessive amounts found to be due by him to McCully, and that Flanagan execute a release for $1,000 claimed by him as a balance due on the purchase price of the Eberhart property. The other prayers of the plaintiff were refused. Appeals were taken by both McCully and Flanagan. *569
The chancellor found that about November 19, 1920, H.J. McCully, one of the plaintiffs, and J.C. Flanagan, one of the defendants, orally agreed to purchase the Remington property, each to contribute one-half of the purchase money. Flanagan represented to McCully that the purchase price was $3,000 and it was agreed that he should contribute $1,500. Negotiations were proceeded with by Flanagan for himself and as representative of McCully. Flanagan, in January, 1921, entered into an agreement, in writing, to purchase in his own name, in consideration of $1,300, the Remington property, which he assigned to Wyndham Sparling, as a dry trustee for himself and McCully. The Remington property was deeded to Sparling, who, with his wife, conveyed it to Flanagan and McCully for the consideration of $1 and other good and valuable consideration. McCully gave his check to the order of Flanagan, in the sum of $1,523.20, in payment of the $1,500, his one-half of the supposed price of $3,000, plus $23.20 as his one-half of the expenses of the transaction. Flanagan had previously paid $100 to bind the bargain, which is the only money of his own that he paid in this transaction, and paid the balance of the purchase price of $1,200 with the McCully money, and received the deed to Sparling and placed thereon United States revenue stamps in the amount of $3, for the purpose of importing a consideration of $3,000. Flanagan appropriated to his own use the $200 paid by McCully over and above the amount necessary to pay the purchase price.
In March, 1925, McCully and Flanagan agreed, orally, to purchase a piece of real estate, known as the Eberhardt property, each to contribute one-half of the purchase money. Flanagan represented to McCully that the purchase price was $10,000, payable by a $6,000 purchase mortgage and $4,000 in cash. It was agreed that each should contribute $2,000 to make up the cash payment. A deed for this property, under *570 an agreement between Flanagan and McCully, was executed and delivered for the consideration of $1 to Oliver N. Lynn, who executed purchase money mortgage of $6,000, which was later recorded. On June 16, 1925, Lynn conveyed the property to Flanagan and McCully for the consideration of $1 and other good and valuable consideration. On that date, Flanagan told McCully that it was not necessary for him to be present at the completion of the purchase as he would attend to it himself. Instead of the purchase price being $10,000, it was $7,500 and the cash payment to be made above the $6,000 mortgage was $1,500, instead of $4,000 as Flanagan had represented. Flanagan submitted to McCully a statement of the purchase of this property showing $10,000 as the purchase price and that $10 had been paid for United States revenue stamps for the deed, to convey the impression that the consideration was $10,000. After deducting the $6,000 mortgage and items of taxes and expenses, there was an apparent balance of $4,093.53, of which each was to pay one-half, or $2,046.76. McCully gave his check to Flanagan for $1,046.76 on account, the remaining $1,000 to be paid later. The $1,500 cash purchase money that was actually paid for the Eberhardt property was made up by the $200 balance of McCully's money that Flanagan had retained from the purchase of the Remington property, $1,000 out of McCully's check of $1,046.76, and $300 out of a commission of $375, which the Flanagans received from the Eberhardts for making the sale.
In both of these purchases, Flanagan acted as the representative of McCully who had implicit faith and confidence in him, and at the same time he was acting in each instance, without McCully's knowledge, as the agent of the vendors of the properties. On July 27, 1925, Flanagan mortgaged the undivided one-half of the Remington property for $8,000 and received $7,600, net proceeds, which amount he retained, and the mortgage *571 remains unsatisfied. On August 20, 1925, at the suggestion of Flanagan, and without any consideration, Flanagan and his wife and McCully and his wife transferred both of these properties to William R. McCommon, as dry trustee, who, with his wife, Frances V. McCommon, by deed, dated and recorded and without consideration, transferred the same property to H.J. McCully and Mary V. McCully, his wife, and J.C. Flanagan and Florence Mae Flanagan, his wife.
The lower court found that although Flanagan was guilty of fraud, it would be too drastic to impose a penalty requiring him to forfeit the corpus of the estate, and that a restitution of ill-gotten profits would be adequate punishment on the theory that he was acting for himself as well as an associate in a common enterprise. We do not agree with that conclusion. A resulting trust was established and Flanagan was a trustee ex maleficio: Strimpfler v. Roberts,
It is true that Flanagan contributed his services but it was not agreed between the parties that he was to receive a greater interest than that for which he paid; each was to be a one-half owner on the same financial basis. Although Flanagan owed the utmost good faith to McCully, he wilfully deceived him in his false statement of the true consideration to be paid for these properties and is not entitled to derive any advantage or profit from the transaction in which he was guilty *572
of a flagrant breach of his duty. He may not now be permitted to retain title which he acquired only through a deception (Cameron v. Townsend,
No consideration was paid for transfer of the legal titles to McCommon and the reconveyance to Flanagan and his wife and to McCully and his wife did not affect the trust estate, as equity will follow the fund through every transmutation and wrest it from the wrongdoer: McLaughlin v. Fulton,
The lower court relied on Yeaney v. Keck,
Flanagan in his appeal contends that the conduct of McCully between September, 1925, when the misrepresentations were made, and the time of instituting this suit, bars him from the redress he seeks. It is true that McCully, without objection, permitted Flanagan to obtain leases for the properties and did not then assert the rights which he now claims. But in order for one to be estopped, he must have full knowledge of his rights: Daley v. Iselin,
As none of Flanagan's money was invested in the Remington property, he is entitled to no interest therein. He contributed $300 out of his commissions, wrongfully collected from the Eberhardt heirs, which would entitle him, as we cannot look to the source of the money he contributed, to a one-fifth interest in that property. Flanagan must account for all moneys received for both properties, except for his share in the Eberhardt property.
In No. 288, wherein H.J. McCully is the appellant, the decree of the lower court is reversed and a decree is to be entered in accordance herewith. In No. 289, wherein J.C. Flanagan is the appellant, the appeal is dismissed. Costs in both appeals are to be paid by J.C. Flanagan.