Raymond v. Flavel

Opinion by

Mr. Justice Wolverton.

1. The important questions involved in this case have been presented upon both sides with great force and rare ability, and received our careful attention. It is stoutly contended by appellant that the refusal of the court below to award an issue, and direct a jury to be formed to try certain questions of fact, was reversible error. The basis for the contention is that the evidence is conflicting and doubtful, and, while it is admitted that the awarding of an issue lies in the discretion of the court, yet it is claimed that it is a judicial discretion, and subject to review by this court. It is further claimed that this is a right guaranteed by the state constitution, and prescribed by statute. Article I, section 17, constitution of Oregon, provides that “In all civil cases the right of trial by jury' shall remain inviolate.” This section simply secures to suitors the right of trial by jury in all cases where it was demandable at common law. It is not an enlargement, but a guarantee, of the right as it existed before the adoption of the ■ constitution.^* It applies to equitable suits to the extent only that in whatever instances a jury was demandable as of right at common law, it is demand-able now under the constitution, but the class of cases formerly determined by the court alone is not affected by it: Tribou v. Strowbridge, 7 Or. 156; Davis v. Dyer, 62 N. H. 235, 237; Le Guen v. Gouverneur, 1 Johns. Cas. 500 (1 Am. Dec. 121).

2. By section 396, Hill’s Code, it is provided that in suits in equity “Both issues of law and of fact shall be tried by the court, unless referred. Whenever it becomes necessary or proj>er to inquire of any fact by the verdict of a jury, the court may direct a statement thereof, and that a jury be formed to inquire of the same. The statement shall be tried as an issue of fact in an action, and the verdict may be read as evidence on the trial of the suit.” This section is declaratory of the common-law equitable procedure in the manner of trial, and of the necessity and propriety of calling a jury for the determination of certain issuable facts; and hence we must look to the law as it stood before the constitution and the statute to ascertain in what instances, under what circumstances, and for the determination of what issues, a commission will issue for the interposition of a jury. It was the privilege of an heir at law, and of a rector or vicar, in suits to establish a will or modus, to demand a hearing before a jury, and this was granted as a matter of right. Aside from these exceptions, the granting of an issue at common law was discretionary with the court; it was not demandable¡ as of right: Adams on Equity, *377; 2 Daniel on Chancery Practice, § 1080; Barton v. Barbour, 104 U. S. 133; Pacific Railway Company v. Wade, 91 Cal. 456 (25 Am. St. Rep. 201, 13 L. R. A. 754, 27 Pac. 768); Koons v. Blanton, 129 Ind. 393 (27 N. E. 334); Brown v. Buck, 75 Mich. 274 (5 L. R. A. 226, 42 N. W. 827, 13 Am. St. Rep. 438). Formerly an issue was directed only in cases where there was a want of evidence, or wherein the testimony was contradictory, or so nearly balanced that it was necessary to have an open and rigid cross-examination of the witnesses where they could be seen and heard by the jury, who were to decide the questions of fact submitted to them. The awarding of an issue was merely a matter of discretion resting with the chancellor, and its purpose was to inform his conscience: Clark v. First Congregational Society, 45 N. H. 336; Townsend v. Graves, 3 Paige on Chancery, 456; 2 Daniel on Chancery Practice, *1078; State v. Churchill, 48 Ark. 436 (3 S. W. 352, 800). But in all eases where there was sufficient evidence to satisfy the conscience of the chancellor, or where the evidence, though somewhat conflicting and contradictory, unless it created a doubt in his mind, by reason whereof he was unable to come to a satisfactory conclusion of his own, an issue was not directed: Reed v. Cline’s Heirs, 9 Gratt. 136; Le Guen v. Gouverneur, 1 Johns. Cas. 500 (1 Am. Dec. 121); Newark and New York Railroad Company v. Mayor of Newark, 23 N. J. Eq. 515; Harding v. Handy, 24 U. S. (11 Wheat.), 125; 2 Daniel on Chan cery Practice, *1072-3; Beaumont v. Bramley, 1 Turn, and R. 55. The propriety of granting or refusing an issue for a jury is always spoken of in the books as being a matter resting within the sound discretion of the court. Its exercise is judicial in its nature, and was at common law subject to appeal. Beasley, C. J., in Newark and New York Railroad Company v. Mayor of Newark, 23 N. J. Eq. 515, says: “The course of this practice has been uniform, and its propriety has never been, so far as I can learn, judicially criticised or questioned.” The doctrine is recognized and stated by Mr. Daniel, (2 Daniel on Chancery Practice, *1075,) as follows: “Except in cases of an heir-at-law, or of a rector or vicar, who were entitled to issues as a matter of right, the granting of an issue by a court of equity was entirely a- matter of discretion in the court, which it would not, however, exercise without due deliberation, and a mistake in the exercise of which was a just ground of appeal; and, therefore, if the court refused an issue, and the court of appeals thought the contrary decision would have been a sounder exercise of discretion, it would rectify the order of the court below accordingly; and so, when the house of lords thought that the court below had directed issues improperly, it reversed the order directing the issues, and remitted the cause with directions to the judge to decide upon the matter himself.”

Lord Chancellor Eldon, in Hampson v. Hampson, 3 Ves. and B. Ch. 42, says: “Courts of equity have an original jurisdiction, which, I agree, must be exercised according to a sound discretion, to try questions of fact without the intervention of a jury; and which aid is sought, according to the common expression, for the purpose of informing the conscience of the court. I agree that a mistake in refusing to send the case to a jury is a just ground of appeal, if the court of appeal should think that the contrary decision would have been a sounder exercise of discretion; but it is a competent exercise of the authority and duty of the court, in every case, and throughout every case, and in every stage, to determine, according to its discretion, whether it does or not want that assistance. ” This doctrine has been recognized and the practice followed in this country. Rad cliff, J., in Le Guen v. Gouverneur, 1 Johns. Cas. 500, (1 Am. Dec. 121,) says: “The chancellor is, constitutionally, the judge both of law and fact. Whether the institution of such a court be expedient or wise is not now the subject of inquiry. Its power is established, and the trial by jury is there unknown. However excellent that mode of trial may be, it is not the right of any party seeking his remedy in that court to demand it. It ought regularly to proceed from the chancellor himself, to inform his own conscience, where the evidence is insufficient for that purpose; and even with respect to him, it is not a power to be exercised at pleasure, and depending on arbitrary discretion.” See also Chase v. Winans, 59 Md. 479. So that at common law, in cases of equitable cognizance, where the evidence was so conflicting and contradictory as to render the true state of affairs doubtful and uncertain, a jury was not demand-able by either party as of right. It was a matter residing within the sound discretion of the court whether an issue for a jury should be awarded. This was a legal discretion, not to be arbitrarily exercised, and was the subject of review by the appellate courts. And under our statute cited above, (section 396, Hill’s Code,) this doctrine must govern as to suits in equity in this state. It is the abuse of discretion that is reviewable, that it may not be arbitrarily exercised. The language of the statute is that “whenever it becomes necessary or proper to inquire of a fact by the verdict of a jury the court may direct a statement,” etc. It is in many instances proper to call a jury when it is not necessary or legally essential to do so. It is legally essential only when the law requires it. Such being the state of the law, it remains for us to determine whether there was an abuse of discretion by the court below in not directing a statement for a jury upon the two questions, one of notice, and the other of the statute of limitations. It may be doubted whether plaintiff’s motion for a statement was made at the proper time (see Chase v. Winans, 59 Md. 479), but our views as to other aspects of the case render this question unimportant. We have very carefully read and considered all the voluminous testimony brought here, and have given especial attention to the portions thereof bearing upon the question of notice and the 'statute of limitations; and, while there is some conflict in the statements of the witnesses, we are left in no appreciable doubt as to the correctness of the findings of the court below. Without restating or discussing the evidence here, let it suffice to say we are fully satisfied that the presiding judge, exercising his functions as a chancellor in a case of purely equitable cognizance like this, did not arbitrarily refuse the plaintiff’s request for a jury, and hence there was no abuse of discretion in such refusal.

3. But even if it were otherwise, this case would not be sent back for the purpose of having it go to a jury, for the very cogent reason that we have elsewhere determined that plaintiff is pursuing a stale demand, which is a question of law, and not of fact for a jury, and it could make no kind of difference how a jury should find upon the question sought to be submitted to their consideration: Newark and New York Railroad Company v. Mayor of Newark, 23 N. J. Eq. 515.

4. It is doubtless true that, as a general proposition, express or continuing trusts, clearly established, do not come within the statute of limitations, for the reason, as stated by Lord Redesdale (Hovendon v. Annesley, 2 Sch. and Lef. 607): “If a trustee is in possession, and does not execute his trust, and if the only circumstance is that he does not perform his trust, his possession operates nothing as a bar, because his possession is according to his title”; or, as put by Strahan, O. J., in Manaudas v. Mann, 22 Or. 525 (30 Pac. 422): “The trustee holds in right of the eestui que trust, and * * * as long as he holds in that right his possession cannot be hostile or adverse. ” Mr. Wood in his work on Limitations (Yol. II, § 200), says: “This doctrine rests upon the case of Cholmondeley v. Clinton, 2 Jac. and W. 171, * * * and has been universally adopted in the courts of this country, as well as in England, ever since.” See also Perry on Trusts, § 863; Decouche v. Savotier, 3 Johns. Ch. 214 (8 Am. Dec. 478); Seymour v. Freer, 75 U. S. (8 Wall.), 202. “But,” says Mr. Justice Gray, in Speidel v. Henrici, 120 U. S. 386, (7 Sup. Ct. 610,) “this rule is, in accordance with the reason on which it is founded, and as has been clearly pointed out by Chancellor Kent and Mr. Justice Story, subject to this qualification, that time begins to run against a trust as soon as it is openly disavowed by the trustee insisting upon an adverse right and interest which is clearly and unequivocally made known to the eestui que trust; as when, for instance, such transactions take place between the trustee and the eestui que trust as would in case of tenants in common amount to an ouster of one of them by the other.” See also Perry on Trusts, § 864; Bacon v. Rives, 106 U. S. 99, 107 (1 Sup. Gt. 3); Phillippi v. Phillippi, 115 U. S. 151 (5 Sup. Ct. 1181); Otto v. Schlapkahl, 57 Iowa, 226 (10 N. W. 651); Janes v. Throchmorton, 57 Cal. 388; Hastie v. Aiken, 67 Ala. 316; Hubbell v. Medbury, 53 N. Y. 98; Ward v. Harvey, 111 Ind. 471 (12 N. E. 399); Decouche v. Savotier 3 Johns. Ch. 214 (8 Am. Dec. 478). It thus appears that where the trustee disavows his trust, and assumes compíete ownership of the trust property, and treats it in such a manner and under circumstances as to give the eestui que trust actual or constructive notice that he has repudiated all trust relations, the statute attaches, and begins to run as against the eestui que trust from, that time, unless he is then under some statutory disability, or under influences superinduced by the trustee. Such a denial of the trust relations, and the assertion of an adverse or hostile claim by the trustee, is an abandonment of the fiduciary character in which he theretofore stood as to the property, and from the time that it is made to appear clearly that the eestui que trust had knowledge, either directly or indirectly by necessary implication, of the repudiation or adverse and hostile claim of the trustee, the statute begins to run, and if it continues for the statutory period the eestui que trust is barred: 2 Wood on Limitations, § 212.

Ward v. Harvey, 111 Ind. 471, (12 N. E. 399,) was a case where it was sought to charge the administrator with funds which he had received from the sale of lands of which his intestate held the title. It was contended by appellants that they had furnished part of the purchase money, and that a trust resulted in their favor. The court there say: “Conceding that when the land was acquired and title taken, as it was, by John Ward, in eighteen hundred and fifty, and that it was taken in trust, there can be no recovery, because the evidence shows that more than twenty years prior to the time that this action was brought there was an open disavowal of the trust. The evidence, indeed, shows more than a disavowal of the trust, for it shows that the appellants acquiesced in the intestate’s assertion of title. There is evidence very clearly showing that the intestate treated the land as his own, and that the appellants dealt with him as the owner. Under this evidence there can be no recovery; for it is well settled that where there is a disavowal of the trust, and it is brought to the notice of the beneficiary, the statute will run.” Hubbell v. Medbury, 53 N. Y. 98, is a case where the trustee bought in, at a foreclosure sale, lands held in trust by him, and it was held that the statute began to run as soon as the trustee took possession in pursuance of the foreclosure sale, and “began openly and notoriously to occupy them as his own, asserting an individual right thereto.” Philippi v. Philippe, 115 U. S. 151, (5 Sup. Ct. 1181,) is much in point. The question came up on demurrer to a bill showing that Antonio Philippe claimed as his own since eighteen hundred and fifty-six the property alleged to have been bought with partnership or trust funds, the knowledge of which was brought home to. Angelo M. Philippi, the ancestor of plaintiff, but that from the year eighteen hundred and fifty-six down to the death of Angelo in eighteen hundred and seventy-four, eighteen years, and down to the commencement of the suit in eighteen hundred and seventy-nine, a period of twenty-three years, defendant had maintained his possession, and used and enjoyed as his own the property and its issues and profits. During all the period up to his death Angelo lived in the same town with defendant, in poverty, and some of the time in distress for want of means, but that defendant never paid to Angelo any part of the proceeds of the large property which the bill avers he was holding in trust. The court Say: “There could be no clearer line of conduct on the part of Antonio Philippe to show his repudiation of the alleged trust, and his claim of title to the alleged trust property; and all was of necessity known by Angelo. ” The statute of limitations in Alabama, where the cause of suit arose, was twenty years, and it was held that the plaintiff’s suit was barred. In this state, by section 382, Hill’s Code, a suit for the determination of any right or claim to or interest in real property shall be deemed within the limitations provided for actions for the recovery of the possession of real property. Under this statute it has been held that the same period which will bar an action for the recovery of real property will bar a suit touching a claim or interest therein, which is ten years: Springer v. Young, 14 Or. 285 (12 Pac. 400). So that a clear disavowal by the trustee of the trust relation, and an adverse or hostile holding of real property, for a period of ten years, the eestui que trust having had notice and knowledge thereof during the entire time, will bar a right of recovery by the eestui que trust under our statute.

5. It is further urged as an objection to plaintiff’s recovery in this suit that his claim is stale, and that, aside from the statute of limitations, a court of equity should not lend its aid at this time by granting the relief demanded. In order to call into activity a court of equity there must be an exercise of good conscience, good faith, and a reasonable diligence; and where time and long acquiescence have obscured the nature and character of the trust, or the acts of the parties, or other circumstances, give rise to presumptions unfavorable to its continuance, the court is passive and does nothing, because of its inability to do complete justice: 2 Wood on Limitations, §214; Taylor v. Blair, 14 Mo. *437; Williams v. First Presbyterian Society, 1 Ohio St. 494, and Badger v. Badger, 69 U. S. (2 Wall.), 94. Both or either of these objections based upon the lapse of time are fatal to plaintiff’s cause of suit. On December seventh, eighteen hundred and fifty-nine, Gen. John Adair loaned to W. W. Raymond, the father of plaintiff, two hundred dollars, to secure the payment of which Raymond executed and delivered to Adair a deed to the premises in question. So it is found by the court below, and is probably correct, although the evidence upon which it is based is somewhat obscure and unsatisfactory. On November twentieth, eighteen hundred and seventy-three, nearly fourteen years thereafter, Adair executed and delivered a deed to the premises to Martha A. Loomis, the daughter of "W. W. Raymond, for the consideration of six hundred dollars. Mrs. Loomis, with her husband, John Loomis, while living on a tract of land adjoining, took possession, and in about a year thereafter inclosed the same by a substantial inclosure. They continued in possession, making such use of the premises as it was capable of, until February second, eighteen hundred and eighty-six, more than thirteen years, when they sold and conveyed them by deed to the defendant, who took immediate possession, and occupied the same up to the date of the commencement of this suit, (July fifteenth, eighteen hundred and ninety-two,) so that more than thirty-two and a half years have elapsed since the transactions transpired by reason of which it is claimed the trust relations had their inception. Conceding that the deed to Adair was intended as a mortgage, he became by reason thereof a trustee of the legal title by express understanding between the parties. It is claimed that Mrs. Loomis took from Adair with the express understanding that she should assume the trust obligations of Adair, but this is not proven, although it is apparent that she had knowledge of such obligations. Mrs: Loomis, then, took with notice of the trust, and became a trustee ex mala fide, or by implication or construction of law, and it has often been held that the statute of limitations will run against a resulting trust. This, however, we do not now decide. Mrs. Loomis’ holding began to be adverse and hostile to that of W. W. Raymond from the time she took possession, and so continued to the date of her transfer to defendant, who continued in the adverse possession to the date of the commencement of this suit. There was a repudiation and disavowal by Mrs. Loomis .of all trust relations, and a claim of absolute title and ownership by her, of which Raymond clearly had knowledge. “Where the trustee makes a conveyance of the trust property in breach of the trust, and his grantee continues to hold adversely, the statute applies”: 2 Perry on Trusts, § 864. These facts make the statutory bar effectual.

Beyond this it appears that during all the thirty-two and a half years intervening from the time of the execution of the deed to Adair, W. W. Raymond lived in the immediate neighborhood, and part of the time with Mrs. Loomis, yet he never at any time asserted his alleged rights as a cestui que trust. Much of this time he lived in poverty, and upon the county and the charity of his neighbors. He himself testified that he did not broach the subject of settlement to his daughter or son-in-law for fear of disturbing the family relations of amity and friendship, and he certainly never did inform the defendant of his alleged claim. Nor is there a scintilla of- testimony in the whole case to the effect that any of the grantees, from General Adair down, have practiced any fraud or deception upon him to prevent the enforcement of his demand, or to lull him into silence and repose. The relations of the parties have greatly changed; witnesses have died, the defendant has made valuable improvements upon the land, and the land itself has greatly enhanced in value, so that equity cannot now do complete justice as between the parties. Very similar were the facts attending the Philippi case, and were held to constitute unwarranted laches. And so in this case Raymond has been guilty of laches by reason of which his claim has become stale. A court of equity will not at this late date lend its aid to grant him or the plaintiff, who is his grantee, the relief demanded.

6. The question of notice, both actual and constructive, is involved in this inquiry. We have decided in a late case, Bowman v. Metzger, 27 Or. 23, (39 Pac. 3,) wherein it was sought to charge a purchaser of a promissory note before due with notice of infirmities in the title, that the question for the determination of the jury was whether Bowman purchased in good or bad faith; and that it was error for the court to instruct the jury that notice of facts and circumstances that a prudent man would take notice of and inquire about, and which, if followed up, would disclose the truth, was equivalent to notice. The principle is applicable here. Circumstances which one man might look upon with suspicion, and which might cause him to make careful inquiry, might escape the notice of another person of equal prudence and caution; so that the incidental question of common prudence is not a safe criterion by which to determine a question of notice. It might be and often is a circumstance tending to show bad faith, as fraud or guilty knowledge may be imputed either by direct proof, or evidence of a circumstantial nature, the same as any other fact, but the real and ultimate question for determination is the mala fides of the transaction. If a person has actual notice of latent equities, and purchases notwithstanding, the presumption of mala fides is irresistible, or rather he takes the estate laden with the equities, and stands in no better position than his grantor. The attempt to claim as an innocent purchaser is the fraud of which the owner of the equitable title may complain.

7. The deed from John Adair to Mrs. Martha A. Loomis, the defendant’s immediate grantor, is a bargain and sale deed with special covenants of warranty against the grantor’s own acts. It is claimed that the effect of this deed, it appearing in defendant’s chain of title, is to impute actual notice of outstanding equities. The doctrine contended for is that “the absence of the usual covenants of warranty of title in the conveyance to his immediate grantor is a warning of an outstanding equity to the purchaser, who has actual notice of such defect; and the burden of proof is on such purchaser to show consequent careful inquiry in good faith, and the receipt of a satisfactory explanation for such a defect. Otherwise he will be held to have actual notice of the equity. ” Many authorities hold to the doctrine that one taking and holding directly under a quitclaim deed cannot be considered a Iona fide purchaser without notice of prior equities. Some hold that the legal effect of a quitclaim deed found in the chain of title is such as to impute notice to the purchaser. Such is the purport of the opinion of Mr. Justice Thayer, in which the other justices did not occur, in Baker v. Woodward, 12 Or. 3 (6 Pac. 173). The doctrine has since been restated in American Mortgage Company v. Hutchinson, 19 Or. 334, (24 Pac. 515,) and alluded to in Low v. Schaffer, 24 Or. 239 (33 Pac. 678). Other authorities sustain the position that one who purchases from another holding under a quitclaim deed cannot, by reason of that fact, claim to be a purchaser without notice, as limited and qualified by McIver, J., in Aultman v. Utsey, 34 S. C. 572 (13 S. E. 848). He says: “ While we are not prepared at present to go to the full extent to which the doctrine has been carried by some of the cases, yet we are satisfied that the fact that the immediate grantor of the purchaser holds under a quitclaim' deed is a circumstance well calculated to excite inquiry, which, if not pursued properly, will affect the purchaser with notice of every fact which such inquiry, pursued with due diligence, will disclose.” From this case, and the case of Merrill v. Hutchinson, 45 Kan. 62, (25 Pac. 215,) comes the doctrine of “warning,” which the counsel for appellant so strenuously insists is applicable here. The latter case is one wherein the purchaser, Hutchinson, took under a quitclaim. The court say: ‘ ‘ The form of the deed alone did not conclude Hutch inson, nor prevent him from becoming a purchaser in good faith; it simply operated as a -warning to him, and put him upon inquiry. It was his duty then to look further, and ascertain why the deed was made without covenants of warranty; and he took it loaded with such outstanding equities or interests as he might have discovered by the exercise of reasonable diligence.” But in whatsoever of these several phases this doctrine may have been announced, limited, and qualified, it is severely criticised and very much shaken by the strong and forcible reasoning and logic of Justices Field and Brewer in the cases of Moelle v. Sherwood, and United States v. California Land Company, 148 U. S., at pages 21 and 31 (13 Sup. Ct. 426, 458). The doctrine of those cases is that “the receipt of a quitclaim does not of itself prevent a party from becoming a Iona fide holder, and the doctrine expressed in many cases that the grantee in such a deed cannot be treated as a bona fide purchaser, does not rest upon any sound principle.” But we are not called upon here to declare the bona fides of a purchaser, whether holding under a quitclaim, or taking from one so holding, or taking upon finding a quitclaim in the chain of his title. The defendant took under a deed with full covenants of warranty, and his immediate grantor under a deed of bargain and sale with special covenants of warranty against the acts of the grantor. The latter deed, as well as the former, binds and passes every estate or interest which' the grantor may subsequently acquire: Taggart v. Risely, 4 Or. 235; United States v. California Land Company, 148 U. S. 31 (13 Sup. Ct. 458). A deed of this nature purports to pass the whole estate, and the fact that it contains a limited warranty, or if it contains no warranty at all, cannot of itself impute notice of prior or latent equities, nor will it operate as a warning to put the purchaser upon inquiry at his peril. No presumption oí the want of Iona fides in the purchaser is thus cast upon him, as the warranty forms no part of the conveyance, and a perfect title passes without it: Taylor v. Harrison, 47 Texas, 460 (26 Am. Rep. 304); Richardson v. Levi, 67 Texas, 363 (3 S. W. 444); Garrett v. Christopher, 74 Texas, 453 (15 Am. St. Rep. 850, 12 S. W. 67); Snowden v. Tyler, 21 Neb. 215 (31 N. W. 661); Meikel v. Borders, 129 Ind. 533 (29 N. E. 29); Chapman v. Sims, 53 Miss. 163, and Moelle v. Sherwood, 148 U. S. 31 (13 Sup. Ct. 458). We have been cited to no authority holding that the doctrine contended for by the counsel for appellant is applicable to a deed of bargain and sale, such as we find in this record, and we believe none can be found.

8. It is next contended that defendant had at the time of his purchase actual notice of the equities of plaintiffs grantor. This is a question of fact to be determined from the evidence. The testimony which it is claimed shows that Flavel had actual notice of W. W. Raymond’s outstanding equity at the time of his purchase is as follows, as collated in the brief of counsel for appellant: John B. Morris testifies: “In January, eighteen hundred and eighty-six, Captain Flavel and McGuire came there (to Tanzy Point) * * * Captain asked me, ‘Jack, do you know what my errand is?’ and says, ‘I am bargaining with Loomis about this place, but he says he would have nothing to do with it till we had fixed up things, because he heard I had a claim on the place.’ * * * ‘But,’ says I, ‘ Captain Flavel, if you purchase his place, I am very much afraid you will have trouble with the Raymond folks some time or another,’ and he didn’t seem to take any heed of it at all. I told him that after I got outside, under a little willow tree near a cabin.” G. W. Raymond testifies: “Late in eighteen hundred and eighty-five I heard that Loomis was offering to sell the Raymond donation land claim to George Flavel. A short time before the deed I went to see Flavel. * * * I told Captain Flavel that Loomis had no rights there. It was down here on the street by the Occidental Hotel. ” Again he says: “I told him (McGuire) not to have anything to do with it; that Loomis had no rights there; that he had bought mother’s half and never paid for it, and was trying to steal the old man’s altogether. ” Let it be assumed that McGuire was the agent of Flavel, — the evidence shows, however, that he was not, — and let it be further assumed that this conversation took place shortly prior to the execution and delivery of the deed by Loomis to Flavel. Is there enough in all this to charge Flavel with notice or to superinduce inquiry, without which he could not complete the purchase with a conscience void of offense? The purchaser must have received information of facts tangible in their nature, and such as are capable of being verified by reasonable inquiry; vague rumors and covert insinuations will not suffice. The reason is that such rumors and statements do not furnish any positive information, any tangible clew, by the aid of which he may commence and successfully pursue an inquiry, and thus discover the real truth. Such rumors and insinuations therefore do not bind the conscience: 2 Pomeroy’s Equity, §§ 597, 602; Wilson v. McCullough, 28 Pa. St. 440 (62 Am. Dec. 347).

Morris testifies that he said to Flavel, “If you purchase this place I am very much afraid you will have trouble with the Raymond folks some time or another.” And George Raymond states at one time “I told Captain Flavel that Loomis had no rights there,” and McGuire at another, “not to have anything to do with it, that Loomis had no rights there, but he had bought mother’s half and never paid for it, and was trying to steal the old man’s altogether.” Now, at the time of the purchase by defendant it is claimed that Mrs. Loomis was a trustee in regard to the title, and W. W. Raymond the cestui que trust, and that the deed under which Mrs. Loomis held the title was in reality a mortgage to secure a loan of long standing, the defeasance resting in parol. What is there in either of these assertions to afford Flavel a clew to this secret trust? That he might have trouble with the Raymond folk was possible, or might have been even probable, but it was not made apparent what fact would induce the trouble. And the assertion that Loomis had no rights there was surely not suggestive of a secret trust abiding in Mrs. Loomis for the benefit of Raymond. Nor was the assertion “that Loomis had no rights there,” coupled with the one “that he (Loomis) had bought mother’s half and never paid for it, and was trying to steal the old man’s altogether,” any more explicit as the statement of a fact which could be laid hold of, and which, when followed up, would lead directly to the discovery of this secret trust. The language is strong to assert that one person is trying to steal another’s land, and one would infer that an attempt was being made to commit a grievous fraud. But from such an expression, how is one going to find out of what the fraud consists ? It would be fruitless to go to Loomis and inquire of him if he was trying to steal the land, and it might well have been assumed that George Raymond told him all he knew about it. So that, taking the testimony in its strongest light, we find no suggestion of any fact of a tangible nature which bears any indication whatever of the existence of a secret trust connected with the deed, which was in effect but a mortgage encumbering the land which Flavel was about to buy.

A court of equity acts upon the conscience, and it is upon the ground of malafides that a purchaser for value is affected with notice of a prior claim. The notice must be more than would excite the suspicion of a cautious and wary person; it must be so clear and undoubted, with respect to the existence of a prior right, as to make it fraudulent in him afterwards to take and hold the property: Hall v. Livingston, 3 Del. Ch. 348. This case cites several others with facts very similar to the case at bar. It may be remarked, however, in passing, that the facts of these alleged warnings being given by the witnesses Morris and George Raymond to Flavel and McGuire is disputed by the latter, or at least to the extent of materially modifying and explaining their meaning and bearing. On the other hand it has been proved beyond question that Flavel paid nine thousand dollars in cash for the land and some forty head of cattle,- — all that the land and cattle were worth; that before completing the purchase he took the precaution of having the record searched as to the land, and to procure the advice of an attorney skilled in such matters. He was also careful to see that a claim of John B. Morris against Loomis, which it was thought might encumber the land, was provided for before he would consummate the purchase. Flavel found Loomis in full possession of the land, acting as owner thereof, and he himself took possession directly from Loomis. In all this we are unable to discover that Flavel acted in bad faith in any particular, and the evidence fully warrants the position that he was a purchaser in good faith, for value, and without notice of the secret equities of W. W. Raymond.

9. Two other questions remain to be noticed: (1) as to the “burden of proof”; and (2) as to “common reputation.” It is asserted that “upon proof of the equitable title of plaintiff, a defendant who relies upon the defense of being an innocent purchaser in good faith must set up the union of the legal title with a superior equity arising from the payment of the money and receiving the conveyance without notice, and with a clear conscience. ” This doctrine seems to be based upon good authority. See Rhodes v. McGarry, 19 Or. 222 (23 Pac. 971), and Boone v. Chiles, 35 U. S. (10 Pet.), 211. But the defendant has done by his answer precisely what the rule requires, and the evidence offered supports it.

10. It is further claimed that the court below was in error in excluding evidence as to common reputation of ownership of this land at and during the time that General Adair held the deed thereto. The object of offering this proof was to charge Flavel with notice. The statute provides (section 776, subdivision 12, Hill’s Code): “That a person is (presumed to be) the owner of property from exercising acts of ownership over it, or from common reputation of his ownership.” This statement is an innovation upon the common law. Prior thereto it was incompetent to prove ownership by common reputation: Wilson v. Maddock, 5 Or. 480. It was also held in that case that “by this provision common reputation is placed on an equal footing with possession, as furnishing a presumption of ownership.” Now, it is contended for this that, as possession is notice of ownership, common reputation of ownership serves the same purpose as to such notice. Whether this is so or not, reputation of ownership could hardly have the effect of giving notice to persons residing without the community in which the land was situated. It was shown that Captain Flavel lived at Astoria, then quite a village, some five or six miles from the land, and by reason of this fact he was not likely to have become cognizant of such reputation, even if it was common in the community in which the land is situated. There was no error in excluding the testimony. The decree of the court below will be affirmed.

Affirmed.

Notes

* This was the holding in Fleischner v. Citizens’ Investment Company, 25 Or. 119, following the Tribou case. — Reporter.

Case Details

Case Name: Raymond v. Flavel

Court Name: Oregon Supreme Court

Date Published: Apr 29, 1895

Citation: 40 P. 158

Court Abbreviation: Or.