Deming v. Lee

SIMPSON, J.

The bill in this case was filed by the appellant, alleging that when the county was about to sell, at public outcry, a jail lot, which joined complainant’s property on one side and the property of defendants on the other, complainant made an oral agreement with defendants that Arthur Cunningham should purchase said jail lot at said sale, and hold the same in trust for complainant and defendants, said agreement fixing complainant’s interest as one-half, and that of the defendant’s together at one-half; that said Arthur Cunningham agreed to so act for said parties, and on the 25th day of August did purchase said property at said sale for $1,500, delivering to the commissioner who sold said property a certified bank check furnished by the complainant, which check was accepted by the commissioner, and the sale reported to and approved by the court; that after said sale, and before the conveyance to said Cunningham, complainant and defandants entered into another verbal contract, by which it was agreed that said Cunningham should convey the entire jail lot to the defendants, and the defendants would convey to complainant a certain other piece of property, described in the third section of the bill, and “complainant agreed to pay, in addition to a surrender to said Walter Lee and W. W. Pridgen, as partners aforesaid, of his said one-half interest in said trust property so purchased by said Cunningham for them, the sum of $500.00;” that the deed was made to said Cunningham, and he, on the same day, in accordance with the oral contract, conveyed the property to the defendants, and after said deeds were delivered said Cunningham received from the commissioner who had sold the lot the certified check, and defendants paid for the lot, all of which was done in pursuance of the oral agreement; that, although the complainant has tendered to said defendants said $500, with interest, and a deed, properly drawn up, conveying said lot which they had agreed to convey to him, they have wholly refused to receive said money and sign said deed, and complainant is still ready and willing to pay whatever is due, according to said agreement, and to carry out said oral agreement.

The bill also alleges that defendants have placed valuable improvements on the jail lot conveyed to them by Cunningham, as to the value of which complainant is not informed; but if the court shall determine that complainant is entitled to an undivided one-half interest in said property, complainant is able and willing, and offers to pay to defendants one-half the purchase price of said lot, Avith interest, one-half the costs of said improvements, “for Avhatever sum or sums the court may determine is just and equitable,” and submits himself to the orders of the court, agreeing to pay whatever sums the court may deem equitable.

The prayers of the bill are for a specific performance of the contract, or, in the alternative, for a reference to ascertain Avhat amount shall be paid by complainant for purchase money and improvements, and that the defendants be ordered to convey to him the one-half interest in said jail lot, etc. The defendants interposed a plea, setting up the statute of frauds, which was set -doivn for hearing as to its sufficiency. The chancellor • held it sufficient, and this appeal is from that decree.

There- can be no controversy as to the correctness of the. authorities cited by the chancellor, to the effect that an oral contract for the sale of lands is void under our statute of frauds, and cannot be enforced, but, in the language of Judge Pomeroy: “It is a most important principle, thoroughly established in equity, and applying in every transaction where the statute is invoked, that the statute of frauds, having been enacted for the purpose of preventing fraud, shall not be made the instrument of shielding, protecting, or aiding the party who relies upon it in the perpetration of a fraud, or in the consummation of a fraudulent scheme.” — 2 Pomeroy, Eq. Jur. (3d Ed.) § 921, p. 1658.

“If an oral contract provides for conveyances by both parties, a conveyance by one does not give him a right of action by law for the failure of the other party to convey, but he may recover the value of the land he has conveyed.” — 20 Cyc. 293.

Assumpsit lies for the recovery back of the money paid on the oral contract for the purchase of lands, void by the statute of frauds. — Allen v. Booker, 2 Stew. 21, 19 Am. Dec. 33; Flinn v. Barber, 59 Ala. 446; Flinn v. Barber, 64 Ala. 193; Nelson v. Shelby Mfg. & Imp. Co., 96 Ala. 515, 527, 11 South. 695, 38 Am. St. Rep. 116.

“One who has rendered services or transferred property- under a contract voidable under the statute may recover the value of the services or property, under the quantum meruit or the quantum valebat.” — Wolke v. Fleming, 103 Ind. 105, 110, 2 N. E. 325, 328, 53 Am. Rep. 495, 498.

" Where the plaintiff conveyed a lot to his father, on a verbal promise of the father to make a will, and thereby devise certain property to the son, and the father died without performing the agreement, it was held that, as the father’s verbal agreement was void and could not be enforced, a trust resulted in the land conveyed in favor of the son, and he was entitled to have the legal title of the property which he had conveyed vested back in him. — Russ v. Mebius, 16 Cal. 350, 355. It is true that in that case a question was raised as to whether the plaintiff, having made a deed to his father, reciting a consideration, could deny that recital; but that part of the opinion has no application to this case.

So the question arises, Did the complainant have such an interest in the jail lot as could be and was transferred to respondents on the faith of the parol promise? .

Without adverting to the fact that the agent in this case was not claiming any right to refuse to convey the legal title, but, on the contrary, was ready and willing to convey, in accordance with his agreement, we hold that the law, without any aid from his verbal agreement, fixed a trust on the property which entitled'the complainant to have the legal title conveyed, in accordance with Ms directions.

Mr. Pomeroy says: “In pursuance of the ancient equitable principle that the beneficial estate follows the consideration and attaches to the party from whom the consideration comes, the doctrine is settled in England and in a great majority of the American states that, where property is purchased and the conveyance of the legal title is taken in the name of the person, A., while the purchase price is paid by another person, B., a trust, at once results in favor of the party who pays the price, and the holder of the legal title becomes a trustee for him.” — 3 Pomeroy, Eq. Jur. (3d Ed.) § 1037, pp. 1991, 1992. In note 2 to this section, it is stated that: “This description assumes that the conveyance to A. is made Avith the knowledge and consent, express or implied, of B. who pays the price; that the Avkole transaction is in pursuance of a common understanding or arrangement. •If the conveyance is taken by A., secretly, contrary to B.’s wishes, in violation of a duty OAved to him, or in fraud of his rights, the trust which arises in B.’s favor is not ‘resulting,’ but ‘constructive.’ ”

This court has said, years ago, referring to our statute prohibiting the creation of trusts in land by parol, which is a “substantial re-enactment of the seventh and eighth sections of the English statute of frauds”: “If the purchase is made through an agent, AVho takes title in himself, the trust Avill result to the principal, aa'Iio advances the purchase money. Or, if a trustee employs the funds of the cestui que trust, or an agent the moneys of the principal, in the purchase of lands, the trustee or the agent may be made personally liable, or the money may be followed into the land, or a trust of the legal estate Avill result by implication of laAv.” — Lehman et al. v. Lewis, 62 Ala. 131, 132. This same principle is declared in numerous other cases; the distinction being made betAveen “resulting trusts” and “constructive trusts” and “trusts ex maleficio,” according to Avhether the funds of the principal were used and the title taken by the agent, Avith the consent or agreement of the principal, or done in violation of the duty of the agent. — Coles & Wife v. Allen et al., 64 Ala. 98, 106; Whaley v. Whaley, 71 Ala. 159; Long, Adm’r, v. King, 117 Ala. 423, 429, 430, 23 South. 534; Sanders v. Steele et al., 124 Ala. 415, 417, 418, 26 South. 882.

Where an agent, for. the purpose of purchasing the mineral interests in lands, purchased the fee-simple title, paid for same with his principal’s money, and took title in himself, he holds the title to the mineral interests in trust for his principal, and such resulting trust can be enforced by tbe principal or Ms grantee by divesting tbe legal title out of tbe agent and investing it in the principal or his grantee. — Milner v. Ruclcer, 112 Ala. 360, 363, 20 South. 510.

Where money to redeem lands is furnished to the mortgagor by a third person, under a parol agreement that upon the redemption of the land the same should be conveyed to the person furnisMng the money, a resulting trust is created in the lands in favor of said third person. — Tillman v. Murrell et al., 120 Ala. 239, 241, 24 South. 712.

Where one party, at the instance and request of another, acts as his agent in bidding off lands at auction, and paying for . it with funds of the principal, and takes the deed in his own name, a constructive trust arises, which creates an equitable estate capable of sale. — Sanford v. Hamner, 115 Ala. 408, 413, 414, 416, 22 South. 117, 119, 120.

The court held that, as the trust resulted from the breach of duty (the agent not being authorized to take the title in his own name), it was a “constructive,” as distinguished from a “resulting,” trust, stating: “This case is thus brought squarely within a well-defined, well-understood class of constructive trusts, which does not, like a resuling trust proper (which arises by a purchase, by one not a fiduciary, in his own name, and the payment of the purchase money in whole or in part by another, in favor of him who pays the purchase money), •depend upon, the presumed intention of the parties,” etc. It is the well-settled doctrine that this class of ■trusts “may be established by parol,” notwithstanding •the section in the Code.

Says Pomeroy: “The interest of the cestui que trust in a resulting trust is not a mere ‘eqiuty’; it is an equitable estate in the land or other thing, of which the legal title is vested in the trustee; and, as such, it may be conveyed, transferred, devised, or otherwise dealt with as property. * * * The cestui que trust is entitled to the remedy of compelling a conveyance or assignment of the legal estate to himself by the trustee.” — 3 Pomeroy, Eq. Jur. § 1043, pp. 2005, 2006.

Mr. Pomeroy also declares that a constructive trust arises whenever an agent or other person occupying a fiduciary position invests the funds of his principal and takes the title to himself, independently of any imputation of fraud, and without requiring any proof of an intention to violate the existing fiduciary obligation, because it assumes that the purchaser intended to act in pursuance of his fiduciary duty (3 Pomeroy, Eq. Jur. [3d Ed.] § 1049, p. 2020 et seq.) : “Whenever a person acquires the legal title to land or other property by means of an intentionally false or fraudulent verbal promise to hold the same for a certain specified purpose, as, for example, a promise to convey the land to a designated individual, or to reconvey it to the grantor, and the like, * * * equity regards such a person as holding the property charged with a constructive trust, and will compel him to fulfill the trust by conveying according to his engagement.”- — 3 Pomeroy, Eq. Jur. (3d Ed.) [ 1055,’pp. 2036, 2037.

In our case of Butts v. Cooper, 152 Ala. 375, 44 South. 616, the evidence did not show “that the cash payment which went into the purchase of the Cosby interest was the money of Butts”; hence the idea of a resulting trust was excluded; nor did it show that there was any violation of fiduciary relation. In fact, the evidence did not show a fiduciary relation; hence a constructive trust could not be declared.

In the present case, Cunningham, as the agent for complainant and defendants, purchased the jail lot with the funds of the complainant, used at the time of the purchase, and took the title in his own name for the purpose merely of conveying it to the proper parties; and, in whatever light we view the transaction, he held the legal title to at least half of said jail lot for the complainant, and even if he had refused to convey the legal title he could have been forced to do so. It necessarily results that the complainant had an equitable title in said lot, which he caused to be conveyed to the respondents, in reliance upon their oral promise to convey the other lot, and, on the principles above declared, he, not being able to enforce the parol agreement, has the right to recover back the interest in the jail lot conveyed to them.

It matters not whether the suit is to recover purchase money paid, or property conveyed, or for the value of property conveyed, or for services rendered, the broad and just equitable principle is that, where one, by virtue of a parol agreement, Avhich cannot be enforced, has received money, or property, or personal services, as a consideration for that which he has orally agreed to convey, and claims the benefit of the statute to prevent the enforcement of his parol agreement, he has received money, property, or services, for which he has paid no consideration, and Avhich, ex sequo et bono, belong to the other party; and a court of equity will not allow him to retain it, and will force him to return the property, Avhere that is demanded and can be done, or will require him to pay for what he has received. “Equity will not permit a party to retain property, obtained on the faith of a verbal contract, to consummate a fraud by retaining the property and refusing to perform the contract.” — Baker v. Scott, 2 Thomp. & C. (N. Y.) 606; Peabody v. Fellows, 177 Mass. 290, 58 N. E. 1019; Ramey et al. v. Slone et al. (Ky.) 62 S. W. 879; Moyer v. Moyer, 21 Hun, 67, 72; Ryan et al. v. Dox, 34 N. Y. 307, 319, 90 Am. Dec. 696.

Our case of Kent et al. v. Dean, 128 Ala. 600, 609, 610, 30 South. 543, 546, though not strictly identical with the case at bar, is, nevertheless,- along the line of the same general broad equitable principles; and this court, quoting from Pomeroy, says: “Whenever the legal title to property, real or personal, has been obtained through actual fraud, misrepresentations, concealments, or through undue influence, duress, taking advantage of one’s weakness or necessities, or through any other similar mean's, or under any other similar circumstances which render it unconscientious for the holder of the legal title to retain and enjoy the beneficial interest, equity impresses a constructive trust on the property thus acquired in favor of the one who is truly and equitably entitled to the same, although he may never, perhaps, have had the legal estate therein; and a court of equity has jurisdiction to reach the property in the hands of the original wrongdoer, or in the hands of a subsequent holder, until a purchaser of it, in good faith and without notice, acquires a higher right, and takes the property relieved of the trust.”

In the present case, Cunningham, as the agent of complainant and defendants, purchased the property and deposited complainant’s certified check to pay for it. Thereupon the equitable title vested in complainant and defendants, with the right to have the legal title vested in them. The complainant surrendered that equitable title under the parol agreement, which the defendants refuse to carry out, and it is inequitable, under the authorities cited, to allow them to retain the property thus received, while refusing to carry out their .agreement.

The general principle is that the party who has parted with something on the faith of a parol promise, which is unenforceable, will be placed in statu quo. What was the status of the complainant before he made the last parol agreement? He was the owner of at least onerhalf of the jail lot, having paid for it; so whatever profit in said lot there was, over the amount paid for it, he was entitled to. He surrendered this half interest in consideration of the parol agreement, and his money was returned to him. To place him in statu quo, and to do equity, it necessarily follows that he should be reinvested with his interest in said lot, and, that being done, it is just and equitable that he should repay the money which had been returned to him,

The plea was to the entire bill, and, although bad as to the specific performance feature of the bill, was good as to the alternative feature. The statute of frauds is no answer to this claim, and the decree of the court will be reversed and a decree here rendered, declaring the plea insufficient.

Reversed and rendered.

Anderson, Sayre, and Somerville, JJ., concur. Dowdell, C. J., and McClellan and Mayfield, JJ., dissent.

McClellan, J., entertains the opinion that the decree should be affirmed upon the apt authority of Patton v. Beecher, 62 Ala. 579; Brock v. Brock, 90 Ala. 86, 8 South. 11, 9 L. R. A. 287; Smith v. Smith, 153 Ala. 504, 45 South. 168.