213 P. 1041 | Nev. | 1923
Lead Opinion
Kate Moore, a married woman, in her own right as owner, sued Rick De Bernardi to recover possession of a certain parcel of land in Washoe County, situate near the western limits of the city of Reno, which bears the name of “Rick’s Resort” or “Roadhouse,” and demanded in her complaint judgment for $150 per month as rental from the 22d day of July, 1920, until possession be delivered. The defendant answered, and by way of
Upon extended findings of facts following closely the averments of the counterclaim, which are too lengthy to be set out, the trial court concluded as a matter of law that the conveyance of the land by the Washoe County Bank to Kate Moore, on the 22d day of July, 1920, if permitted to stand, would operate as a fraud upon the rights of the defendant; that in virtue of an agreement, set up in the counterclaim, between the bank and the defendant, a constructive trust had arisen in defendant’s favor in the land; and that plaintiff, Kate Moore, purchased the property from the bank with full knowledge of said agreement. Thereupon it was adjudged, ordered, and decreed that said parties convey to the defendant the land in controversy, free and clear from all incumbrances, upon condition that the defendant pay to the Washoe County Bank $6,336.09, or deposit that amount of money into court for its use and benefit, and that the bank, on the payment of said sum, cancel of record a certain mortgage given it by Kate Moore and her husband, M. B. Moore, which bears date on the 22d day of July, 1920. The Washoe County Bank has not appealed, but Kate Moore, the plaintiff, appeals from said judgment and decree, and also from, an order denying and overruling her motion for a new trial.
While numerous errors are assigned upon exceptions taken to rulings in the course of the trial with respect to the admission and rejection of evidence, the material assignments of error, reduced to precise terms, are: First, that the agreement set up in the counterclaim and purported to be established by the findings was, in fact, a mere parol agreement entered into by one of the firm of attorneys for the bank, who had charge of the bank’s action brought against one Constance Parker and Rick De Bernardi to foreclose a mortgage on the land, which had been given the bank by Constance Parker in her own name, in May, 1914, and that said
If there be merit to the last proposition, it is decisive of the appeal, because, if Kate Moore was a purchaser in good faith and without notice, she acquired by her deed a higher right, and took the property relieved of any trust that may have been created by the alleged agreement between her grantor and the defendant. The finding with respect to actual notice, and averred in the counterclaim, is, in substance, that on the 19th day of July, 1920, the defendant notified Kate Moore, by and through her husband, M. B. Moore, who acted as her agent, that the Washoe County Bank purchased the property for the defendant’s use and benefit at a sheriff’s sale thereof, and that the defendant would insist upon his rights under his contract, and at the same time informed said agent of the terms and conditions of the agreement existing between the defendant and the bank, and that prior to July 22, 1920, plaintiff was fully aware of the fact that the bank had purchased the property at a sheriff’s sale for the use and benefit of the defendant.
The evidence in support of the finding is based solely on the testimony of James T. Boyd, an attorney of record in this case, the substance of which was that M. B. Moore visited his residence for the purpose of ascertaining from him what his client, Rick De Bernardi, intended doing about the property in dispute. The evidence opposed to his testimony in this particular is that of the witness M. B. Moore, who testified, in substance, that no such conversation was ever had at the time and place stated by Boyd, or at all. The testimony of these witnesses in all material respects is not only in sharp, but irreconcilable, conflict on the
It has been repeatedly held that, in cases tried by the court without a jury, the same consideration is given the court’s findings as to a verdict, and the same rules apply as to reversing them on appeal, on the ground that they are contrary to the evidence, as apply to a verdict. In such a case the rule is the same as that which governs the court in reviewing a judgment entered upon the verdict of a jury, which is that the jury must be deemed to have found to be true the evidence that is most favorable to the prevailing party. Canda v. Totten, 157 N. Y. 286, 51 N. E. 989. We, therefore, in the absence of anything to show that the court reached a wrong conclusion, decline to disturb the finding that Kate Moore was not a purchaser without notice of the defendant’s claim to the property.
In this connection it is proper to state that we ignore the argument that Kate Moore had constructive notice of the defendant’s right and claim to the property by reason of his long-continued occupancy and possession thereof, for the reason that it is not within the issue, which was that Kate Moore had actual notice of the agreement existing between the defendant and her grantor when she purchased the property and gave a mortgage back to the bank to secure the balance due on its purchase price. The relief granted defendant was upon the ground that a constructive trust was created by the agreement between the defendant and the bank, which the latter was bound to execute, of which agreement creating the trust Kate Moore had actual notice.
It requires no argument to convince us that an attorney’s authority to bind his client extends only to such acts and agreements as are necessary for the due prosecution of the cause or business in connection with which he has been employed; he has no implied power to bind his client by an agreement collateral to and independent of the subject-matter of his employment. A client is not bound by an unauthorized agreement of his attorney to convey land. Thornton on Attorneys at Law, sec. 202. But we do not understand the case or the finding of the trial judge to be that the agreement in question was not authorized and ratified by the bank, but, on the contrary, that it was so authorized. The finding is based solely upon the testimony of the defendant’s attorney, Boyd, who testified, in substance, that, before the agreement was consummated by him with one of the firm of attorneys for the bank, he was first assured by the cashier of the bank, after stating to him his reasons for soliciting the agreement on behalf of his client,'that any agreement entered into by the witness with the bank’s attorneys would be entirely agreeable and satisfactory to the bank. It appears that at the time the proposition was made to the bank, which culminated in the agreement, the bank had comfnenced an action (in January, 1918) in the court below to foreclose a mortgage on the land in controversy, which had been given it in 1914 by one
The cashier of the bank, as a witness in the case, testified, in substance, that he had no knowledge or recollection of having ever authorized the agreement, as testified to by the witness Boyd. There is no doubt that the witness may honestly have been of opinion that, if he had authorized the agreement, he would have recalled the fact, and would never have dealt with Kate Moore. But the cashier’s nonrecollection, or the bank’s repudiation of the agreement by its conveyance of the
The agreement having been established, the inquiry arises: Does the agreement and circumstances of the case create a trust which a court of equity can enforce. In support of the affirmative, counsel for De Bernardi rest their case on the principle, which has become almost a maxim in equity, that the statute of frauds, intended as a protection against fraud, shall not, in equity, be perverted to its consummation. We are in accord' with what is said in Moseley v. Moseley, 86 Ala. 292, 5 South. 732, that this principle, which may now be regarded as a maxim,-has been carried in many cases so far beyond the first intention as to amount to annihilation of the statute of frauds. It is certain that the principle has been overworked by the defendant in this case. The mere refusal to perform a parol agreement, void under the statute of frauds, may be a moral wrong, but it is in no sense a fraud in law or in equity. Wheeler v. Reynolds, 66 N. Y. 234.
In the present case no specific averment of fraud is alleged in the pleadings, but the court concludes fraud in law from its findings, manifestly upon the assumption that to permit the parties to hold the land in face of the agreement and the circumstances would be to support a breach of trust, and a fraud in law. If from this it is to be understood, as argued by the defendant, that the refusal of the bank to carry out its agreement constituted such a fraud as calls for the
The rule is established by a number of authorities that, where one having an interest is induced to confide in the verbal promise of another that he will purchase for the benefit of the former at a sheriff’s sale, and in pursuance of this allows him to become the holder of the legal title, a subsequent denial by the latter of the confidence is such a fraud as will convert the purchaser into a trustee ex maleficio. In the case of Chadwick v. Arnold, 34 Utah, 48, 95 Pac. 527, the writer of the opinion industriously collates the numerous authorities in support of this proposition. In addition, we cite the cases supporting the text, 39 Cyc. 180. As remarked in Cutler v. Babcock, 81 Wis. 195, 51 N.W. 420, 29 Am. St. Rep. 882, the distinction upon which
It is manifest that M. B. Moore, as agent for his wife, before he negotiated with the bank for its purchase, had actual notice of the defendant’s claim of interest in the property, but obviously -was of the opinion that the defendant’s interest had been completely extinguished by the foreclosure of the bank’s mortgage and the sheriff’s deed, and therefore her deed would operate as her protection from the claim of the defendant. But this position, unfortunately for Mrs. Moore, was overcome by the court’s finding that her agent, prior to the date of the deed, had actual notice that her grantor had promised and agreed to convey the legal title to the land to the defendant. She was not, therefore, a purchaser in good faith without notice.
While it is not incumbent upon this court to answer argument, some of the contentions of counsel for Mrs. Moore deserve special mention. It is urged that no confidential relation existed between the bank and the defendant, and in the foreclosure of its mortgage it did nothing more than what it had the right to do; that the bank’s promise, at most, was but a gratuitous undertaking, without consideration, unenforceable, and binding on no one; that the inducement for the promise moved from the defendant to the bank, and not from the bank to the defendant, and no fraud or imposition was practiced upon the defendant.
It is not indispensable that the conventional relation of trustee and cestui que trust, or any express fiduciary relation, should exist between the original wrongdoer and the beneficial owner of the land to create a constructive trust. They arise in invitum for the purpose of working out justice in the most efficient manner. Millard v. Green, 94 Conn. 597, 110 Atl. 177, 9 A. L. R. 1610. It will not do to say, as said in Sandfoss v. Jones, 35 Cal. 487, quoting from Soggins v. Heard, 31 Miss. 428, that the party promising was moved merely by friendly or benevolent considerations, and may therefore, at his option, decline a compliance with his agreement. Such considerations constitute the foundation of almost every trust, and the trustee should be held to account as nearly as possible in the same spirit in which he originally contracted.
For the reasons and upon the authorities hereinabove stated, we are of the opinion that the evidence is sufficient in this case to support the findings, and the court’s conclusions of law are warranted thereby.
The decree appealed from is therefore affirmed.
Rehearing
On Petition for Rehearing
Counsel for appellant ásk for a rehearing upon the following grounds:
“(1) That the evidence is insufficient to support the*50 finding of the court that Cheney, Downer, Price & Hawkins, or Robert F. Price, or either of them, were authorized as agent, or otherwise, to enter into the agreement with James T. Boyd on behalf of the respondent, Rick De Bernardi.
“(2) That the evidence is insufficient to justify the decision of the court in that the respondent, Rick De Bernardi, did not establish at the trial any legal title to the premises in controversy.
“(3) That this court erred in finding or assuming that appellant was the purchaser of the land in question with notice of the equity claimed by the respondent.”
A response to the petition will serve the purpose of correcting what seems to be an erroneous impression of the facts and of strengthening the conclusions reached in our former opinion.
The case was tried in the court below, and presented here upon two issues — one, that the property in controversy was impressed with a constructive trust arising from the fraud of the Washoe County Bank; the other, that Kate Moore, the appellant, was not entitled to the protection of a subsequent purchaser without notice.
It is well settled that a constructive trust cannot be established by a mere preponderance of evidence, but must be established by evidence which is clear, definite, unequivocal, and satisfactory. 39 Cyc. 192; 3 Pom. Eq. Jur. (4th ed.) sec. 1058. Any evidence which tends to prove or disprove the fraud, actual or constructive, necessary to constitute a constructive trust, and which is not objectionable' as to the relevancy, competency, and materiality of the evidence, is admissible. Parol evidence is admissible to prove the facts and circumstances constituting fraud from which a constructive trust may arise. 39 Cyc. 192.
The respondent’s case was decided upon the application of these familiar principles. If there be any doubt as to the correctness of the conclusion of law that the breach by the Washoe County Bank of its promise or agreement to acquire the legal title to the property
It is conceded, or must be conceded, that the respondent’s cause of action is grounded and built upon Boyd’s testimony, but for whose evidence the cause of action might not have existed or have been maintained. Boyd became a witness in the case out of extreme necessity. Whether, under the circumstances, he should have withdrawn from the case and not have put forth all his skill as an advocate t'o maintain a cause of action of his own making is a matter which rests with Boyd and not with this court. Conceding the infirmative considerations attaching to his testimony because of his dual position as witness and attorney, the trial judge believed in the truthfulness of his testimony, acted upon it, and drew from it the conclusion of law that the Washoe County Bank’s failure to keep faith with its promise made to Boyd to acquire the legal title to the property through the foreclosure of its mortgage and convey it to his client operated as such a fraud as to make the bank a trustee ex maleficio. The books are full of such cases. It is true the bank denied in its pleading that the agreement was authorized or ratified by it. This denial cast upon De Bernardi the burden of establishing by clear and convincing evidence the fact that the agreement was not only authorized but ratified by the bank. To maintain this issue Boyd testified to a conversation had
If the cause of action were predicated solely upon the alleged authority conferred on Boyd by the cashier in the conversation as detailed by Boyd, we should be inclined to agree with counsel, but, taking into consideration Boyd’s account of the entire transaction, it appears that R. M. Price did not act upon the alleged authority as given Boyd by the cashier. His testimony tends to show that Price, before entering into the arrangement as proposed by Boyd, visited, as any prudent attorney would before obligating his client to such an agreement, the office of the cashier of the bank, and returned with the assurance that the arrangement as proposed was agreeable and satisfactory to the bank. Boyd’s positive testimony certainly cast upon the bank the burden of answering it.
In our former opinion we endeavored to make it clear that Mr. Taylor’s nonrecollection or failure to remember ever having told Boyd that any arrangement he might make with the bank’s attorneys with reference to its mortgage would be satisfactory to the bank did not raise a conflict of evidence.
“Judges almost invariably hold that, as a matter of course a witness’s positive testimony to an oral declaration, admission, or contract is not overcome by the other party’s testimony only to nonrecollection thereof,*53 oi' his denial that, ‘to his recollection,’ it was made, or his positive denial which dwindles down on cross-examination to mere absence of recollection. * * * ” 2 Moore on Facts, sec. 1169, and authorities cited.
In applying this rule of evidence to the dispute or contradictions between the testimony of the witness Boyd and Mr. Taylor, we took into consideration that ordinarily a cashier of a bank, in the nature of things, by reason of his position and his duties, ought to have known whether he authorized or assented to an agreement affecting a bank’s security, such as a mortgage. We have no doubt that Mr. Taylor was sincerely conscientious in impressing upon the trial court that, if he had at any time authorized the agreement, he would have recalled it. Mr. Taylor was fair enough with his adversary to state in the course of his examination that, if Mr. Price would say that he called upon him at the time and in the course of the transaction, as testified by Boyd, and obtained from him authority or his assent to the arrangement as proposed by Boyd, he would believe Mr. Price, as he considered him a truthful man. Mr. Taylor thus appealed to Price to support his position. If Price was available as a witness, the bank, in justice to Mr. Taylor and its defense, should have called him. The record shows that Price was available as a witness, but was not called. The bank’s failure to call a witness who had full knowledge of the facts essential and material to its case creates an inference that the bank refrained from calling Price because his testimony would not aid its contention that the agreement in question was not authorized, ratified, acquiesced in, or confirmed by the bank. 16 Cyc. 1064.
In the present state of the record we cannot say that the agreement, made the basis of the respondent’s cause of action, was not authorized and ratified by the bank. We therefore adhere to our former opinion upon this branch of the case with this observation upon the argument of counsel for petitioner: That the negligence of respondent in failing to obtain a written stipulation or written contract and to record the instrument
The'second ground urged upon us for a rehearing is not within any of the issues of the case, and we pass, therefore, to the consideration of the third and more serious objection to our former decision, namely, that we failed to protect Kate Moore’s rights as a subsequent bona-fide purchaser against the claim or equity of respondent.
In support of this contention it is pointed out that the respondent did not come into the court of equity with clean hands, but with supplicant hands holding up a clandestine, secret.agreement entered into by his attorney, James T. Boyd, with a mortgagee, for the purpose of securing an advantage over a mortgagor, Constance Parker, with whom the respondent was then in litigation over his claim or equity to the property because of an executory contract of sale, and thus acquire the legal title to circumvent the result of that litigation, should it terminate adversely to him.
The decisions are uniform that the bona-fide purchaser of a legal title is not affected by any latent equity founded either on a trust, incumbrance, or otherwise, of which he has no notice, actual or constructive. Brophy M. Co. v. B. & D. G. & S. M. Co., 15 Nev. 108.
The argument and the very authorities cited in the petition concede that there must be actual payment before any notice, or what in law is tantamount to actual payment, to entitle Kate Moore to protection. That a promise, contract, bond, and mortgage, or other non-negotiable security for the purchase price, will not render the party a bona-fide purchaser, nor entitle him to protection; for upon failure of the consideration he can be relieved from such obligations in equity, even if not at law. 2 Pom. Eq. Jur., sec. 751. Notice after the agreement for the purchase is made, but before any payment, will destroy the character of bona-fide purchaser. 2 Pom. Eq.. Jur., sec. 750; 27 R. C. L., sec. 468, p. 703; 39 Cyc. 1763.
To entitle a party to the character of a bona-fide purchaser, without notice, he must have acquired the legal title, and have actually paid the purchase money before receiving notice of the equity of another party. Moresi v. Swift, 15 Nev. 215.
Was the purchase money paid before notice? The evidence, in our opinion, shows that it was not.
Kate Moore, as a witness in her own behalf, testified that she deposited.with the Washoe County Bank, on or about June 3, 1920, $3,217 for one-half of the purchase price of the property in question. She admitted that her husband, M. B. Moore, acted as her agent in all
“Q. And if I understand you, then, on the 21st or 22d day of July is when the final agreement was finally entered into and consummated, is that correct? A. When the payment was made.
“Q. Well, that is when you finally determined on it, too, wasn’t it? A. No; I think that the final arrangements were made some days preceding that.”
The witness, in the course of his examination, stated that the payment under those terms, as he recollected it, was in the neighborhood of the 22d day of July, 1920.
M. B. Moore, as agent, as shown by the former opinion, received actual notice of the claim or equity of Rick De Bernardi, founded upon the agreement so much discussed, on the 19th day of July, 1920, three days before actual payment was made. Under these circumstances it cannot be claimed that the purchase money was paid before notice. Regardless, then, of the contract to purchase having been made before notice, both on principle and on a just consideration of the authorities, Kate Moore was not a complete purchaser before notice, and therefore not entitled to protection.
The petitioner further contends that she was entitled to protection as a bona-fide purchaser under the registry or recording statute (Rev. Laws, 1038). It is only subsequent purchasers in good faith against
We are urged to grant a rehearing for the further reason that in the present state of the record it affirmatively appears that the equities of the parties are shown to be equal, and that Kate Moore, having subsequently acquired the legal title to the property, thereby secured an advantage which entitled her to priority over the latent equity of Rick De Bernardi. This contention is set at rest by the application of the doctrine that, between an earlier equity and a subsequent legal estate, even when purchased for a valuable consideration, the one who acquires the subsequent estate with notice of the earlier equity in favor of another person will hold his acquisition subject and subordinate to such outstanding interest or right. This subordinating effect is produced from information given to an agent. 2 Pom. Eq. Jur., sec. 730.
No principle is better settled than that if A contract to sell land to B, but before consummating the sale conveys the same land to C, who has a knowledge of the preexisting contract, C is .in equity bound to fulfil that contract. Stonecifer v. Yellow Jacket S. M. Co., 3 Nev. 38.
Rehearing denied.
Concurrence Opinion
concurring:
I concur in the order denying the petition for a rehearing. The grounds relied upon for a rehearing are set forth in the foregoing opinion of my learned associate. As to the first ground, there is absolutely no basis for it. Mr. Boyd gave positive testimony of the agreement relied upon. Mr. Taylor nor any one else could affirm or deny it. All that his evidence amounts to is that he did no.t recollect. This is strictly negative in character, and is entitled to no consideration. 10 R. C. L. p. 1010, sec. 202.
Mr. Taylor was willing to accept the evidence of Mr.
As to the second ground, it may be said that De Bernardi did not rely upon a legal title, nor did this court in its former opinion affirm the judgment upon that theory, but upon the theory that he established a title superior in equity to the title of appellant.
The third and last reason assigned for a rehearing is that this court erred in finding or assuming that appellant was a purchaser with notice of respondent’s equity. To this contention I think it may be said that, in reaching the opinion which we did in the original opinion, we assumed nothing and made no finding, but, on the contrary, relied solely upon the findings of fact made by the trial court. In this connection, I think it sufficient to say that the trial court was fully justified under the evidence in making the findings which it did. As I read the record and the briefs, there are but two questions of fact presented. One I have alluded to, and the other is as to whether or not Mrs. Moore had notice of De Bernardi’s equity prior to the consummation of the deal and the acquisition of title by her. My learned associate has stated the law on this point and invoked a former opinion of this court to buttress his position. As stated in that opinion—
“The purchase must be made in good faith, for a valuable consideration, and the purchase price must be wholly paid, and the conveyance of the legal title received before notice.” Moresi v. Swift, 15 Nev. 215.
It is admitted that the deed passing the legal title to Mrs. Moore was not delivered for several weeks after the 22d of July. The court found that M. B. Moore, the attorney for Mrs. Moore, had actual notice of De Bernardi’s equity on July 19, and that the purchase
