45 So. 168 | Ala. | 1907
— This appeal is prosecuted from a decree of the city court of Talladega overruling a' motion to dismiss a bill for want of equity and overruling a demurrer to the bill. The bill has been carefully read and considered, and without stating its contents in detail we will proceed to a discussion of the theories upon which the complainants (appellees) seek to support it.
One purpose of the bill is to have a conveyance absolute on its face declared a mortgage and that the complainants be let in to redeem from the mortgage. In respect to this theory of the bill, the conveyance (Exhibit A) is one of lands, executed by the complainant M. L. Smith, and his wife, to E. J. Smith. It is absolute on its face, with nothing in its terms to indicate that a mortgage was intended, or that it should be taken otherwise than as an absolute conveyance. Nevertheless such an instrument may, in equity, by means of extrinsic and parol evidence, be shown to be in reality a mortgage. “The principle which underlies this doctrine * * * is that it would be a virtual fraud for the grantee to insist upon the deed as an absolute conveyance of the title, which had been intentionally given to him and which he had knowingly accepted merely as a security, and therefore in reality as a mortgage.” — 3 Pom. Eq. Jur. § 1196. The essential fact to characterize such conveyance as a mortgage, and which must be distinctly averred in the bill, is that the conveyance was given as security for a debt — that the relation of debtor and creditor existed between the parties. “If there is no indebtedness, the Conveyance cannot be a mortgage.” — Earling v. Charleston, 51 Ala. 166; Martin v. Martin, 123 Ala. 191, 26
It -is not averred in, nor can it be fairly inferred from, the allegations of the bill, that E. J. Smith was to loo]; to the complainants, or to either of them, for the payment of any money, or that E. J. Smith held any debt against the complainants or either of them. M. L. Smith, the complainant with whom all the transactions which led up to the execution of the conveyance were had, was thought to be insolvent, and it was agreed that he should go (and he did go) into bankruptcy, and a composition of .his unsecured indebtedness was accomplished at 40 cents on the dollar. This of itself is incompatible with the idea that his prior contractual obligations should continue, against his voluntary consent, after his discharge. While the bill avers that prior to the filing of the petition in bankruptcy by M. L. Smith there was a statement made by E. J. Smith to M. L. Smith that he would procure and advance to him the money necessary to enable him to pay off secured debts, and the amount necessary to pay the proposed composition of his unsecured debts, yet it was stated in the same connection, as shown by the bill, “that the money so advanced Gould be paid out of M. L. Smith’s assets.” Furthermore, it plainly appears that up to that time there was not any agreement sufficiently certain to make a binding legal contract between them. E. J. Smith had agreed to nothing definite. It is manifest that he had merely held out the hope that something might be done Avhereby M. L. Smith might escape Avith something from his insolvent condition. This is made clear, and it may be said to be admitted, by the complainants in the last sentence of the sixth section of the bill, wherein, referring to the time after M. L. Smith Avas adjudged a bankrupt, it is averred: “At this time nothing had been said
It is obvious that from the contents of the conveyance of the lands and the written agreement executed contemporaneously with it nothing is to be gathered which in the remotest degree tends to show that the relation of debtor and creditor existed between the grantors and grantee, that M. L. Smith owed E. J. Smith anything, or that there was any contingent liability from M. L. Smith to E. J. Smith. On the contrary, the wording and the substance of the conveyance of the lands and of the written agreement plainly exclude the theory that a debt existed or that a mortgage was intended. The two papers, having been executed at one and the same time, and the written agreement referring to the conveyance of the land, will be construed together. The agreement (Exhibit B) sets out in detail the existing conditions, explains the transaction and its meaning, and leaves nothing to be inferred or implied. After reciting that the consideration paid is the full value of the property, it recites, further, that the conveyance of the lands (Exhibit A) and the property embraced in the transaction is, without any reservation, to be held in fee simple to E. J. Smith, forever, absolutely as his own, and states that the grantors “will make, execute, and deliver to the said E. J. Smith any and all further or additional conveyances, transfers, and assignments of any or all of
Furthermore, to shoAv that a conveyance should operate as a mortgage, it is indispensable that the bill should aver the concurring intention of both parties, at the time of the execution of the instrument, that it should so operate. — Douglass v. Moody, 80 Ala. 61; Mitchell v. Wellman, 80 Ala. 17; Martin v. Martin, 123 Ala. 191, 26 South. 525; Reeves v. Abercrombie, 108 Ala. 535, 19 South. 41. In the fifteenth paragraph of the bill it is averred “that the making and signing of said íavo conveyances, Exhibits A and B, Avas merely intended, should they be approved by Brown & McElderry, as security for said moneys so to be procured and advanced by the said E. J. Smith to and for the said M. L. Smith as aforesaid.” According to the Avell-established rule that pleadings must be construed most strongly against
Appellees, in their brief upon this point or theory, have cited several Alabama cases to support their argument that a mortgage was intended. We have examined all the authorities cited, and in every case in which the bill was held good against demurrer, or in which relief was granted on final hearing, it plainly appeared by the averments of the bill and the proof that the relation of debtor and creditor existed between the grantor and grantee. Especially is this true of the case of Shreve v. McGowin, 148 Ala. 665, 42 South. 94, the opinion in which case is set out fully in the brief of two of appellees’ counsel.
In conclusion on this point, it is clear to our minds . that the allegations of the bill are not sufficient in respect to the mortgage theory — that they do not show that the conveyances were intended to operate as equitable mortgages; and in this respect the bill is without equity.
We come next to consider whether the bill contains equity as one to declare a trust, on the theory that fhe grantee is a trustee of the legal title ex maleficio. la his incomparable Avork on Equity Jurisprudence, Mr. Pomeroy, after a discussion of trusts ex maleficio, clas
The rule, then, established by the authorities, and the one by which the case in judgment must be worked out, is that “a trust will never be raised by the breach of a mere verbal promise to purchase lands and convey them on request; or, as stated by the learned author: ‘The fraud-Avhich suffices to lay a foundation for such a trust is not simply that fraud Avhich is involved in every deliberate breach of contract. * * * There must have been an original misrepresentation, by means of which the legal title was obtained, and an original intention to circumvent, and get a better bargain, by the confidence reposed.’ * * * But in no case will the grantee be deemed a trustee, if he used no fraud or deceit in getting his title, although he verbally promised to hold the land for the grantor.” — Brook v. Brock, supra; Manning v. Pippen, 95 Ala. 537, 11 South. 56; Id., 86 Ala. 357, 5 South. 572, 11 Am. St. Rep. 46. In the case cited from 86 Ala., 5 South. ,11 Am. St. Rep., the principle declared in Patton v. Beecher was applied to the case of a grantee in a deed Avho procured his title by a fraudulent promise to execute a will. It Avas there said: “If there was a fraudulent intent in obtaining the deed AAdthout the intention to make the Avill, and pursuant to it the will Avas not made, the question of the statute of frauds becomes immaterial.” In such a case the court Avould hold the grantee to be a trustee ex maleficio.
On the foregoing considerations and authorities it is made clear that no parol trust can be ingrafted on the legal title, which the instrument of conveyance makes absolute on its face, unless its execution is procured by fraud. Fraud necessary to create the trust must be averred Avith precision and proved by clear and convincing proof. In other Avords, Avhere a right depends upon
In this respect the appellees contend that the bill shows that confidential relations existed between the grantor and the grantee in the conveyances. If this be conceded, yet the bill also shows that, at the time the conveyances were presented to the grantor by the grantee for signature, the grantor does not claim to have been ignorant of the contents of them, nor that the grantee made any false statement as to their contents. On the contrary, the inference to be drawn from the bill is that the grantor knew their contents, and the bill specifically avers that the deeds were signed on the condition that they should be submitted by the grantee to the attorneys of the grantor, and that, if they did not approve them, they were to be of no effect, and were not to be placed on record, but destroyed. Thus it appears that the grantor, if deceived, was not deceived by any state
But the appellants insist that this cannot avail the complainants anything, because the grantors were not ignorant of the contents of the conveyances and there was no misrepresentation as to their contents. We recognize the principle which underlies this contention, that where a party signs an instrument in writing without reading it, or without any knowledge of its contents, .he is bound by the signature, unless his failure to read it or his lack of knowledge of its contents ivas the result of fraud practiced upon him by the party procuring the signature. But, as has been elsewhere stated, the complainants make no claim of right because of a lack of knowledge of the contents of the conveyances. Their case rests upon actual fraud on the part of the grantee in procuring the signtnres to the conveyances.
It is also insisted that, as a deed may not be delivered as an escrow to the grantee, the conveyances must be operative according to their tenor. It is obvious that this contention is without merit if the execution of the conveyances was procured through fraud. We are of the opinion that the averments of the condition upon which the conveyances were sighed, coupled with the averment that at the time the grantee fraudulently intended not to comply with the condition, and his failure to comply, and the offer to do equity, impart equity to the bill, and for this reason the motion to dismiss the bill for want of equity was properly overruled.
In respect to the demurrer to the bill, while many grounds of demurrer are assigned, only one ground (that of multifariousness) is insisted upon in the argument of appellants’ counsel. This ground of demurrer
While the chancellor’s opinion found in the record shows that he overruled the motion to dismiss the bill for want of equity on the wrong theory, nevertheless the decree on the motion and the demurrer will be affirmed. The respondents will be allowed 30 days in which to answer the bill, to be extended at the discretion of the chancellor for good cause shown.
Affirmed.