Walsh v. McBride

72 Md. 45 | Md. | 1890

Lead Opinion

McSherry, J.,

delivered the opinion of the Court.

William Walsh and Frederick Minke purchased from Adrian Hedían certain real estate for the sum of fourteen hundred dollars, and agreed between themselves that each should pay one-half of the stipulated consideration. When Hedían delivered the deed which conveyed the property to Walsh and Minke, Minke was not prepared to pay his half of the purchase money, and Mr. Walsh paid the whole amount. The deed was delivered July 3rd, 1884. On September 29th of the same year a note was signed by Minke, and endorsed by Mr. Walsh and Mr. Williams, for $1400, to enable Mr. Walsh to realize the said $1400 paid by him to Hedían. This note Mr. Walsh procured to be discounted, and he received the proceeds. The note was renewed several times, and was finally reduced to $1,322. 50 by payments made out of the rent received from the property. The last renewal is now long overdue and unpaid. The property was formerly owned by F. Haley. Both Walsh and Minke had lost as endorsers of Haley, and they “purchased this property with the hope that they could sell it to some advantage.” In January, 1886, Minke died, and in June following Mr. Walsh filed a bill in the Circuit Court for Alleghany County, against Minke’s heirs-at-law, charging that he, Walsh, and “Minke became tenants in common of said land, and said Minke’s interest therein became subject to a lien in favor of” Walsh “for the purchase money therefor paid by him,” and that Walsh “Avas and is entitled by subrogation to the rights of the vendor of said land, the said Hedían, — to a lien or charge upon said Minke’s undivided interest in said land for the purchase money thereof paid by ” Walsh. ' The defendants answered the bill, and denied the existence of any such lien. After hearing, the Circuit Court dismissed the hill, and from that decree this appeal was taken.

It will he observed that the single theory upon which the bill is founded is that Mr. Walsh is “entitled by subrogation to the rights of the vendor of said land.” In other words, he invokes the familiar doctrine that a surety who pays the purchase money is entitled by subrogation to the lien of the vendor. Winder vs. Diffenderffer, 2 Bland, 166; Ghiselin and Worthington vs. Fergusson, 4 H. & J., 522; Magruder vs. Peter, 11 G. & J., 219; Welch vs. Parran, et al., 2 Gill, 320. But to entitle him to relief on this ground he must have been a surety for Minke, and as such surety-bound for Minke’s share of the purchase money; he must have paid that debt of Minke’s, and the vendor’s lien must not have been waived, abandoned, or extinguished. Had Mr. Walsh, instead of paying the purchase money, become surety on a bond or note of Minke to Hedian for Minke’s share of the purchase money, and had the deed been then delivered by Hedian, and had there been no express preservation of the vendor's lien, there can be no doubt that the lien would have been extinguished. And had Mr. Walsh subsequently paid the bond or note he could have claimed no priority over Minke’s other creditors. This is the specific proposition decided in Carrico vs. The Farmers and Merchants’ Nat. Bk., 33 Md., 235; and that case seems to us to be decisive of this. In the case just cited it appeared that Waters purchased two farms from Williams. By the terms of the contract the purchaser was to pay a part of the purchase money on January 1st, 1860, and the balance in four equal annual instalments, to be secured by bond, with approved security. The cash payment was made, and a bond, with Carrico and others as sureties thereon, was given for the deferred payments, and thereupon Williams conveyed the farms to Waters. Subsequently Waters, being heavily indebted, applied for the benefit of the insolvent laws, and was duly discharged thereunder. Carrico, one of the sureties, paid the purchase money due on the land, and in the distribution of the insolvent’s assets claimed that he was by subrogation entitled to the lien held by the vendor for the unpaid purchase money. Upon the authority of Schwarz vs. Stein, 29 Md., 112, McGonigal vs. Plummer, 30 Md., 422, and in conformity with the great preponderance of opinions of the other American Courts upon this subject, it was held, that when the legal title has been conveyed to the vendee, and he has given his note, with the responsibility of a third person thereon as, security for the unpaid purchase money, the lien will be considered as waived, unless it be made plainly to appear that it was the intention of the parties that it should be retained; and that in such case the onus of showing the intention to preserve the lien rests with the vendee, or those claiming in his stead. The claim set up by Carrico, the surety, was disallowed, because the vendor’s lien had been extinguished. Now, the payment by Mr. Walsh for Minke of the latter’s share of the purchase money in cash, assuming that the payment was made by Walsh as surety for Minke, placed Walsh in no better position than he would have occupied had he become surety on a bond or note of Minke’s; because there was no preservation whatever of the vendor’s lien; and in fact, there was no longer any such lien in existence. By the payment of the whole purchase money in cash, and by the conveyance of the legal title to the real purchasers, the equitable lien of the vendor was completely extinguished. Being thus extinguished, the vendor had no longer any lien or charge upon the property/and Mr. Walsh, was clearly therefore, not entitled, by subrogation or otherwise, to a lien or charge which had actually ceased to exist.

There is nothing in the case of Meluy vs. Cooper cited by Chanceller Bland in a note to Winder vs. Diffenderffer, supra, at all in conflict with the conclusion just announced. The facts in Meluy vs. Cooper were these: One Sherwood, as trustee under a decree, sold certain property to Cooper; Cooper agreed to allow Meluy to become a joint purchaser, each to pay one-half of the purchase money, and Cooper took possession, and then died, without having paid any part of the purchase money, and Meluy afterwards paid the money, but no deed ivas obtained from, the trustee. Meluy claimed a lien on Cooper’s half for the purchase money which he, Meluy, became bound as surety to pay, and had in fact paid. The relief prayed was for a sale of the property to reimburse the surety. The defendants admitted these allegations, and a decree was passed for a sale. There are several features of mai-ked difference between the case last cited and the one at bar. Meluy was not a joint purchaser from the trustee, but was surety for Cooper. Between Cooper and himself there was an independent contract that Meluy should purchase a one-half interest. When Meluy, who was bound as surety, paid the purchase money to the trustee, no deed was given, and the surety was allowed to have the benefit of the equitable lien of the vendor. This was undoubtedly correct, because that lien had not been waived or extinguished, as it certainly was in the case now before us.

We do not deem it necessary to review the decisions of other Courts to which our attention has been called, because we think the cases cited from our own reports are entirely conclusive on this subject.

It has been suggested that the payment by Mr. Walsh of the whole purchase money, under the circumstances stated, created a resulting trust in his favor. In our opinion that position is not tenable.

In all species of resulting trusts, intention is an essential element, although that intention is never expressed by any words of direct creation. 3 Pom. Eq., sec. 2031. As the trust results to the real purchaser by operation of law, which is merely an arbitrary implication in the absence of reasonable proof to the contrary, the nominal purchaser is at liberty to rebut the presumption by the production of parol evidence, showing the intention of conferring the beneficial interest. The trust will not be raised in opposition to the declaration of the person who advances the money, nor in opposition to the, agreement of the parties on which the conveyance is founded, or to the obvious purpose and design of the transaction. 1 Lewin on Trusts, (star page) 170; Rider vs. Kidder, 10 Ves., 360; Garrick vs. Taylor, 29 Beav., 79; Standing vs. Bowring, L. R., 27 Ch. Div., 341; Botsford vs. Burr, 2 John. C., 416; Steere vs. Steere, 5 John. C., 18; White vs. Carpenter, 2 Paige, 265; 2 Story Eq., sec. 1202; Adams Eq., 33; Hill on Trustees, 96 and 97. The evidence to rebut need not, perhaps, be as strong as evidence to create a trust. Nicholson vs. Mulligan, 3 Ir. Rep. Eq., 308. When a clear understanding is had at the time the purchase is made, the money paid, and the deed taken, by which understanding the nominal purchaser was to have both the legal and the beneficial interest, it is incompetent for the person who paid the purchase money to put a different construction upon the transaction at a subsequent time, and claim a resulting trust in the estate contrary to the understanding and intension at the time. 1 Perry on Trusts, (3rd Ed.) sec. 140.

It is perfectly clear from this record, that it was the intention of both Mr. Walsh and Minke that Minke should have a legal and a beneficial interest in the property. It was bought by them to enable them both to reimburse themselves for the losses they had sustained as sureties for Haley. This of itself would rebut the mere legal implication arising from the payment of the purchase money by Mr. Walsh. But in addition to this, the theory of the bill of complaint is utterly at variance with any idea of a resulting trust. The bill claims a lien on Minke’s interest as a tenant in common. Eor such a lien to exist Minke must have had a beneficial interest, and not merely a naked legal title in trust for Walsh. If Minke had a beneficial interest, he was clearly not a trustee for Walsh, and if he was a tenant in common he had a beneficial interest as well as the legal title. Hence, the suggestion that he held as trustee for Walsh is distinctly repudiated by the bill itself. To support a resulting trust, every material averment of the second paragraph of the bill must be not merely disregarded, but actually reversed. The allegation that Walsh and Minke were tenants in common must be treated as though it asserted that Minke had no beneficial interest in the land at all; and the statement that Minke’s interest in the property became subj ect to a lien in favor of Walsh must be read as though it charged that Minke was only a trustee for Walsh, holding the legal title for the benefit of the latter. In fine, the intention of the parties must be overthrown, and a presumption of law substituted therefor, even though that presumption is allowed to prevail only when there are no circumstances shown which indicate the existence of a different purpose. Looking to the face of the bill- of complaint and the agreed statement of facts, the substance of which has already been set forth, it is, we conceive, impossible to escape the conclusion that it was intended Minke should have a beneficial interest in the property. Upon no other hypothesis can a satisfactory explanation be given of the $1400 note transaction. The moment it appears or is conceded that it was originally intended Minke should have a beneficial interest in the property, as well as the legal title, the foundation of a resulting trust is cut away; because the legal implication upon which alone such a trust depends can never, as we have seen, exist in contravention of the agreement of the parties. Hence the money advanced by Mr. Walsh for Minke must be treated as a mere loan upon the personal credit- of the borrower.

(Decided 6th February, 1890.)

Entertaining these views, we must affirm the decree passed by the Circuit Court.

Decree affirmed.

---

Dissenting Opinion

Bryan, J.,

filed the following dissenting opinion:

William Walsh filed a bill in equity for the purpose of obtaining a decree for the sale of certain real estate in Alleghany County. It is shown by an agreed statement of facts that Walsh and Minke contracted with Hedian for the purchase of the property at the price of fourteen hundred dollars in cash; one-half to be paid by Walsh and the other half to be paid by Minke; that Walsh paid the whole purchase money, and thereupon the deed was delivered and recorded. The deed conveys the property in the usual form to William Walsh and Frederick Minke. Minke is now dead and this proceeding is against his widow and heirs-at-law, and the husbands of certain of the female heirs. The bill was dismissed by the Circuit Court.

By force of the Act of 1822, chapter 162, Walsh and Minke were tenants in common of this real estate; and not joint tenants as they would have been at common law, according to the terms of the deed. They held, one undivided half to the one and one undivided half to the other; in the same manner as if there had been separate deeds for these moieties. In this way the legal title to one undivided moiety was conveyed to Minke, while the consideration for this moiety, as well as for the other, was wholly paid by Walsh. The rights which arise from a transaction of this kind are well settled. Where the title to real estate is taken in the name of one person and the purchase money is paid by another, there is a resulting trust in favor of the one who pays the money. The money purchases the property, and the owner of the money is in equity the owner of that which the money purchases. A trust of this kind arises by operation of law and is, by force of the eighth section of the Statute of Fi-auds, expressly preserved as it would have been if the Statute had not been passed; while by the seventh section all other trusts must be manifested and proved by writing. As the argument at the bar proceeded on a different view of this case, it is necessary to examine it with some particularity. The statement of facts is distinct that “Walsh paid the purchase money in full,” at the time of the delivery of the deed. Nearly three months after the deed was delivered and recorded, a note for fourteen hundred dollars was signed by Minke and endorsed by Walsh and Ferdinand Williams, “'to enable,” in the language of the agreement “said Walsh to realize the said fourteen hundred dollars paid by him to said Hedian; and said Walsh on that date received said sum of fourteen hundred dollars.” The note was renewed several times for fourteen hundred dollars, and on June 20th, eighteen hundred and eighty-five was reduced to $1322.50; the difference having been paid by rents received from the property. The note for $1322.50 was renewed and the renewal became due in December, 1885, after the death of Minke. It is still unpaid and is held by the Bank which discounted the original note, and the several renewals. It is seen that, subsequently to the purchase, an attempt was made to re-imburse Walsh for his outlay; but it was unsuccessful, inasmuch as the note was not paid; and Walsh remains liable for the amount of it as first endorser. The maker is dead, and it is stated in the answer that he was greatly involved when he died; and.that a creditors’ bill has been filed for the sale of his real estate.

A few authorities will be cited. There is the celebrated opinion of Chief Baron Comyn in Dyer vs. Dyer, 2 Cox Chancery Cases, 92 and 93. “The clear result of all the cases, without a single exception, is, that the trust of a legal estate, whether freehold, copyhold, or leasehold; whether taken in the names of the purchasers and others jointly, or in the name of others without that of the-purchaser; whether in one name or several; whether jointly or successively, results to the man who advances the purchase money. This is a general proposition supported by all the cases, and there is nothing to contradict it; .and it goes on a strict analogy to the rule of the common law, that where a feoffment is made without consideration, the use results to the feoffor.” Scarcely less in weight is the decision in Botsford vs. Burr, 2 Johnson’s Chancery Reports, 405. Chancellor Kent says: ‘‘The trust must have been coeval with the deeds, or it cannot exist at all. After a party has made a purchase with his own moneys or credit, a subsequent tender, or even re-imbursement, may be evidence of some other contract, or the ground for some other relief, but it cannot, by any retrospective effect, produce the tnist of which we are speaking. There never was an instance of such a trust so created, and there never ought to be, for it would destroy all the certainty and security of conveyances of real estate. The resulting trust, not within the Statute of Frauds, and which may be shown without writing, is when the purchase is made with the proper moneys of the cestui que trust, and the deed not taken in his name. The trust results from the original transaction, at the time it takes place, and at no other time; and it is founded on the actual payment of money, and on no other ground. It cannot be mingled or confounded with any subsequent dealings whatever. ” It is believed that these cases have been universally followed without any qualification or modification whatever. Assuredly the doctrines stated in them have been distinctly declared in this State in Hollida vs. Shoop, 4 Md., 465, and Green vs. Drummond, 31 Md., 81.

If Walsh had loaned the money to Minke, it would have been Minke’s own money which paid for the land. But such is not the fact as stated in the agreement. Subsequently to the purchase an effort was made to repay the money to Walsh 'by means of the note. It was, however, intended to repay him the entire sum of fourteen hundred dollars, and not merely the portion which paid for the moiety of the land embraced in Minke’s legal title. This note was not paid and the purpose of repayment failed. It is probable that there was an agreement that Walsh should convey to Minke the entire interest in the land when the note was paid. But we are not required to make conjectures on this subject. The agreement, whatever it was, if it affected the land or any interest in it, was void unless it was in writing. We are not to be understood as saying that if Minke had actually paid the fourteen hundred dollars, he would have been without remedy, because of the void nature of the agreement. He might have obtained compensation in the mode decreed in Green vs. Drummond. Walsh holding the legal estate in one-half the land, and an equitable estate in the other half, could not validly contract for the sale of either interest except in writing. Bays Judge Story in Smith vs. Burnham, 3 Sumner, 461: “A contract for the sale of an equitable estate in lands, whether it be. under a contract for the conveyance by a third person, or otherwise, is clearly a sale of an interest in the lands within the Statute of Frauds.” And in Bartlett vs. Pickersgill, 1 Eden, 343, where a defendant ha'd purchased land with his own money, and it was attempted to show that he had made a verbal agreement with the plaintiff to buy the land for him, the evidence was rejected. The Lord Keeper said: “The question is, whether this evidence is admissible or not? which depends upon the Statute of Frauds. Óne great end of that Statute was, to prevent persons coming into this Court pretending that they were entitled to trusts of long terms, and sometimes of the freehold, which gave room to fraud and perjury. I think the allowing this evidence would be to overturn the Statute. The Statute says, that there shall be no trust of land, unless by memorandum in writing, except such trusts as arise by operation of law. Where money is actually paid, there the trust arises from the payment of the money, and not from any agreement of the parties. But this is not like the case of money paid by one man, and the conveyance taken in the name of another: in that case the bill charges that the estate was bought with the plaintiff’s money. If the defendant says he borrowed it of the plaintiff, then the proof will be whether the money was lent or not: if it was not lent, the plaintiff bought the land; but as here the trust depends on the agreement, if I establish the one by parol, I establish the other also.” This opinion has received the cordial approval of Kent and Story, and has been made the basis of many well considered judgments. My conclusion is that Walsh became the equitable owner of this land by virtue of the payment of the purchase money, and that he is entitled in equity to the rents and profits.

The learned Judge of the Circuit Court in his opinion made a citation from Sugden on Vendors, which may militate against what we have said. The very great reputation of the author, and the high respect in which all his opinions are deservedly held induce me to quote the passage in full. It is as follows, “It seems that where two or more persons purchase an estate, and one, for instance, pays all the money, and the estate is conveyed to them both, the one who paid the money cannot call upon those who paid no part of it to repay him their shares of the purchase money, or to convey their shares of the estate to him ; for by payment of all the money he gains neither a lien nor a mortgage, because there is no contract for either; nor can it he construed a resulting trust, as such a trust cannot arise at an after period; and, jjerhaps, the only remedy he has, is to file a bill against them for a contribution.” 2 Sugden on Vendors, page 429. Perhaps the meaning of the learned jurist has been misunderstood. He says “nor can it be construed a resulting trust, as such a trust cannot arise at an after periodthese words would seem to imply that he had in view a case where the purchase money, was paid subsequently to the execution of the deed. If this be the meaning, it is in accord with all the authorities. We will, however consider the passage as it was viewed hy the learned Court -below. The text rests on the authority of an unreported case, which is cited in a note with a statement that “the decree does not authorize the observation, but the author conceives it to follow, from what fell from the Master of the Rolls at the hearing.” It is to he noted that in the case mentioned the purchasers were joint tenants, and not tenants in common. The rights of these two descriptions of tenants are very different. But as the trust 'is created by the payment of the purchase money, equity must raise it against the legal - title as in other cases of trust, and the form of the title, will be no greater obstacle in one case than in the other. It was held in Brothers vs. Porter, 6 B. Monroe, 107, that where land is purchased by two persons and a joint deed executed to them, a trust results to each purchaser to the extent of the consideration paid by him. And in Rigden vs. Vallier, 2 Vesey, Senior, 258, Lord Hardwicke used this language: “It has been said indeed, that if two men make a purchase, they may be understood to purchase a kind of chance between themselves, which of them shall survive: but it has been determined, that if two purchase, and one advances more of the purchase money than the other, there shall be no survivorship, though there are not the words equally to be divided, or to hold as tenants in common; which shows how strongly the Court has leaned against survivorship, and created a tenancy in common by construction on the intent of the parties.” This is a distinct declaration that where the legal title is a joint tenancy, the fact that one of the purchasers has paid the greater portion of the purchase money will make the equitable title a tenancy in common; and this, of course, determines that the equitable interest of each purchaser shall be proportionate to the amount of money paid by him. We may also cite Butler vs. Rutledge, 2 Coldwell, 11, where it was held: “It is a well settled principle, that when A and B are the purchasers of land, and it is conveyed to them jointly, and A pays all the purchase money, a resulting trust will thereby be created in favor of A, and B holds whatever interest he acquired by the conveyance in trust for A.”

The complainant in his bill claimed a lien on Minke’s portion of the land for one-half of the purchase money and prayed as specific relief a sale of the land and a distribution of the proceeds of sale; there was also a prayer for general relief. . We do not think that the complainant is entitled to the specific relief mentioned; but it is well settled that under the general prayer the Court may give him such proper relief, as is consistent with the allegations of the bill of complaint. Story’s Equity Pleading, sec. 40. The pleadings and proofs show that he is the equitable owner of Minke’s portion of the land, and he has a right to a conveyance of the legal title. A trustee should be ajjpointed to convey it to him. It has been suggested that the rights of Minke’s creditors are involved in this proceeding. No circumstances appear in the record from which a lien on Walsh’s equitable title could be inferred in favor of anybody. If any such lien exists it may be enforced in another suit, as the decree in this case will conclude only the rights of the parties to this suit.

(Filed 6th February, 1890.)