Gee v. McMillan

Strahan, J.

The object of this suit is to enforce a grantor’s lien upon certain real property situate in Multnomah County. The material parts of the complaint are as follows: That the defendant Sarah McMillan is the wife of the defendant R. II. McMillan, and the defendant Mary Ilaugg is the wife of the defendant N. TIaugg; that on.the 18th day of December, 1885, the plaintiff was the owner of an undivided interest in and to the said property described in the complaint, and was also the owner of an undivided interest in and to certain personal property in the complaint described, and that the legal title to said land and personal property was in B. F. Mays, who held the interest owned by plaintiff for her ; that plaintiff is the wife of D. B. Gee, and that said property was her sole, separate, equitable estate ; that on or about December 19, 1885, the defendants R. II. McMillan and N. Ilaugg, and the said D. B. Gee and B. F. Mays, entered into a contract to sell all of said property to 17. H. McMillan and N. Ilaugg ; and that the defendants last named then and there agreed to and with the said D. L. Gee and B. F. Mays to purchase said property, and to pay therefor as follows: To pay .to D. L. Gee and B. F. Mays $1,000, including the payment of a certain chattel mortgage, which was a lien upon a part of said personal property, in the sum of $150.00, arid to turn over to said D. L. Gee a butcher shop and business estimated at §250.00, and to make, execute and deliver to the plaintiff a good, negotiable, bankable promissory note for the sum of $1,250, to be signed by persons of sufficient responsibility so as to enable plaintiff to cash the same, and that they would take said land subject to a certain mortgage thereon for $2,-200; that pursuant to said agreement, and at the request of said defendants 17. H. McMillan and N. Haugg, said Mays executed a deed to said real property to the defendants Sarah McMillan and Mary Haugg, who now hold the title to said property ; that said defendants last named have paid nothing whatever for said property; and that 17. H. McMillan and N. Ilaugg caused and procured the conveyance of all of said property to their said wives, Sarah McMillan and Mary Ilaugg, for the purpose and with the intent to defraud and cheat the plaintiff out of all his interest in said property ; that the defendants R. II. McMillan and N. Haugg failed to execute to plaintiff such bankable note as they had agreed to do, but fraudulently and falsely, and with the intent to cheat and defraud the plaintiff out of the said $1,250, made and executed a certain promissory note themselves, wherein they promised to pay to the order of Lizzie Gee, this plaintiff, the sum of §1,250 ; that said note was sent to the plaintiff through the mail, and was not received by her in payment of anything ; that said R. II. McMillan and N. Haugg are now, and were at the time said note was made, wholly insolvent; and that said note is wholly worthless, and was made, executed and sent to the plaintiff with the intent to defraud and cheat her out of said property ; that at the time the defendants Sarah McMillan and Mary Haugg received said deed, they knew all the foregoing facts; that no part of said note has been paid, and that the same is overdue.

The defendants answered together, and denied the material allegations of the complaint, except that it is admitted that said property was conveyed to the defendants Sarah McMillan and Mary ITaugg. The cause was referred for the purpose of taking the evidence, and the same was taken in writing and accompanies the transcript. The trial in the court below resulted in a decree in favor of the plaintiff, enforcing a grantor’s lien against the real property described in the complaint; from which decree the defendants Sarah McMillan and Mary Haugg have appealed to this court. There are, therefore, but two questions presented for our examination, namely: (1) Does the evidence prove to the satisfaction of the court the material allegations made by the plaintiff ? and (2) Are those allegations, if true, sufficient in law to entitle the plaintiff to the relief which she prays?

I will now examine these questions in their order : and first, as to the question of fact. Lizzie Gee, D. L. Gee, B. F. Mays and Robert Gee were examined as witnesses on the part of the plaintiff, and it is sufficient, to say that their evidence satisfies me of the truth of all the material allegations in the complaint. The facts disclosed leave no doubt in my mind as to the intent on the part of R. H. McMillan and N. Haugg to overreach and defraud the plaintiff, and to obtain her interest in said real property without paying the $1,250 represented by said note. No extended discussion of the facts is necessary. They do not seem to be seriously controverted by the defendants, who offered no evidence or explanation whatever touching their conduct in this transaction. Under these circumstances we are justified in drawing the strongest and most favorable inferences from the evidence given on the part of the plaintiff that the facts will authorize. The defendants had the opportunity of contradicting this evidence, so damaging in its character; and having failed to do so, we must give it effect according to its fullest scope and meaning. We, therefore, adopt the findings of feet made by the learned circuit judge as the findings of this court.

The questions of law are more difficult. The complaint appears to have been drawn to meet one of two alternative views of the law; that is, either to enforce a grantor’s lien on the real property described, or, if that cannot be done, then to annul such transaction for fraud. At least, both views were insisted upon on this argument. But the complaint does not contain facts sufficient to authorize a rescission of the contract. The fraud is perhaps sufficiently alleged and proven, but that is not enough. If the transaction is to be rescinded, all parties must be restored to the same situation they were in, substantially, at the time the deed was executed. This would require that the plaintiff should tender back to the defendants all that they parted with on the faith of the agreement; or, at least, offer in her complaint to make restitution. It is manifest that this transaction cannot be rescinded under the facts alleged. Mr. Mays received a part of the consideration from the defendants, and he is not even a party to this suit, and it does not appear whether he desires a rescission or not.

But the other question is the one mainly relied upon, and, it must be admitted, presents the greatest difficulty. The contention of the plaintiff is that the, note of §1,250 described in the complaint is for the residue of the purchase money for the real property which she conveyed to the two defendants Sarah McMillan and Mary Haugg, and that as against them she has a lien in equity for said purchase money. In this case the property was conveyed to the grantees, and, therefore, according to some of the authorities, the lien, if it exists, is called a grantor’s lien. (3 Pomeroy Eq. Jur., Sec. 1249.) While other authorities equally as respectable seem to ignore this distinction, and to treat the lien as a vendor’s lien, where the property has been conveyed; or else it is entirely disregarded. (1 Lead. Cas. Eq., part 1, 481; 2 Story Eq. Jur., Secs. 1217, 1218.) Whether the lien be treated ás a vendor’s lien or as a grantor’s lien can make no difference in this case, as the result would be the same. The principle contended for by the respondent is, that where one sells real property to another and conveys the same by deed, a lien arises in equity in favor of the grantor for the purchase money, or for such part thereof as remains unpaid. I think this proposition rests on principles of equity too strong to be shaken or overthrown without legislative sanction. It is not important whether it will be accounted for as a trust, or as an equitable mortgage, or as arising from natural equity, or as having originated from any of the other causes or reasons stated by the writers on that subject: the result must be the same. In either event, it is a principle eminently promotive of justice between man and man, and in my opinion has the sanction of the ablest writers on jurisprudence, as well as the weight of judicij opinion, in its favor. (3 Pomeroy Eq. Jur., Secs. 1249, 1250 ; 1 Lead. Cas. Eq. 481 and notes; 2 Story Eq. Jur., supra ; and see 2 Sugden’s Vendors, 671 and notes.)

Mr. Pomeroy’s excellent treatise shows that the grantor’s lien exists in the following states and territories : Alabama, Arkansas, California, Colorado, Dakota, District of Columbia, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New York, Ohio, Oregon, Tennessee, Texas and Wisconsin. (Sec. 1249, supra.) The states of Connecticut, Delaware, Georgia, Kansas, Maine, Massachusetts, Nebraska, New Hampshire, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and West Virginia do not recognize the doctrine. The Supreme Court of the United States recognizes and enforces the lien. Said the court: “ When one person has got the estate of another, he ought not in conscience to be allowed to keep it without paying the consideration. It is on this principle that the courts of equity proceed as between vendor and vendee. The purchase money is treated as a lien on the land sold, where the vendor has taken no separate security.” (Chilton v. Braiden, Adm'r, 2 Black. 458; Peters v. Bowman, 98 U. S. 56; Thredgill v. Pintard, 12 How. 24.)

The earliest case in this court where a vendor’s lien is recognised is Pease v. Kelly, 3 Or. 417. The opinion is brief, and was delivered by Boise, J. Speaking of the lien for the unpaid purchase money, he said: “ A mortgage is a more certain and definite security than a vendor’s lien. The lien exists if there is no higher security.” In the brief of counsel for the appellant in that case, the very grounds upon which this lien appears to have been doubted in this state, in a case presently to be mentioned, were referred to, and must have been considered by the court. It is clear that the reasons there suggested did not prevail, and that the court would have enforced the lien if it had not been waived by the taking of a mortgage. It is difficult to understand how the vendor’s lien could be waived by the taking of a mortgage if such lien never had any existence.

The case which seems to throw some doubt upon Pease v. Kelly, supra, is Kelly v. Ruble et al., 11 Oregon, 75. There it is said: “ As the respondent has failed to make out a sale, it becomes unnecessary to consider the case further. We have thus far impliedly admitted the existence of the equitable lien of the vendor of real estate for the unpaid purchase price. But we doubt the actual existence of the lien in this state. (Ahrend v. Odiorne, 118 Mass. 261; Kauffelt v. Bower, 7 S. & R. 64—76.) It is not believed the existence of such a lien was decided in Pease v. Kelly, 3 Or. 417; having reached the conclusion that no sale had been shown in the case before the court, no question could arise as to a lien for the purchase money.” While this intimation by this court is entitled to very great respect and consideration, I do not think, under the facts of the case, it oughttobe adopted as controlling authority. In Coos Bay Wagon Road Co. v. Crocker, 6 Saw. 574, the IT. S. circuit court, district of Oregon, recognized and enforced a vendor’s lien. And this court at the present term has recognized and applied the same principle. (Burkhart v. Howard, ante, p. 39.

It was suggested upon the argument that a grantor’s lien did not exist in this case, for the reason that the note mentioned in the complaint was partly for the price of the land and partly for the price of the personal property. But we do not find that any part of the consideration for the personal property entered into said note. The court below found that this note was given as a part of the purchase price for land, not personal property, and I think the finding was justified by the evidence. No stronger case could be {presented, requiring the application of the equitable doctrine of grantor’s lien for purchase money, than this. Here a most flagrant fraud appears to have been practised upon some confiding and unsuspicious people, manifestly requiring relief of some kind; and yet, unless it be administered through the application of the law of equitable lien for purchase money, it seems to me the wrong would have to go unredressed. Of course, the fraud practised in no manner affects the question of the lien. That exists independently of the fraud. But it does illustrate and make plain the real necessity there is for application of this pmnciple in the practical administration of justice. Let a decree be entered in accordance with this opinion.