Blount v. . Carroway

PeaRsoN, O. J. The counter claim is not put on the footing of the specific performance of a contract, but, on the footing of a constructive trust, growing out of the connection between Washington and Oarroway, as mortgagee and mortgagor, and their dealing in regard to the equity of redemption, and that Blount stands in the shoos of Washington. The jury find that Blount purchased the land as agent of Washington — issue II, and that Blount had notice of the agreement by Washington to convey the land to Lewis Hilliard, as trustee for Mrs. Oarroway — issue III. So Blount stands in the shoes of Washington, and the case will be considered as if the counter claim was set up against Washington, Blount holding the legal title, subject to the equities between Washington and Mrs. Oarroway. If Mrs. Oarroway is entitled to the locus in quo, the plaintiff cannot recoverfor he will be treated as if he had executed a deed to Hilliard, in trust for Mrs. Oarroway — equity considering that to be done which ought to have been done. A agrees, by parol, to sell to B an undivided third part of a *400 tract of land, tor $425; the money is paid, B enters into possession, and the two occupy jointly for several years, erect a mill, and make other improvements. B acquires no title, for the contract of sale is void under the statute. In tliese two supposed cases A and B are strangers, and had no prior connection or privity. In our case, 'Washington and Oarroway were not strangers, but were connected as mortgagee and mortgagor, which created a privity. The question is, does that make a difference, and take the agreement, to have a specified part of the land conveyed for the separate use of the wife of Carrowiiy, out of the operation of the statute, on the distinction between a contract to sell land and a case where a court of equity will convert the party taking the legal estate into a trustee, on the ground that otherwise the dealing would result in fraud, and an abuse of the confidence reposed. The agreement between Washington and Oarroway cannot be treated as nudum paettom, for it is supported by a valuable consideration, to-wit: the execution by Oarroway of a power of sale, without which Washington could not have sold, so as to convey a clear title; for although be bad the legal estate,' and might convey it, still the purchaser would taire subject ro the equ’ty of redemption. So it was for the interest of Wasliington to acquire a power to pass a clear title, without the exposure and delay incident to obtaining a decree of foreclosure. This is a valuable consideration, and takes the case out of the class of “ nude pacts.” Washington held the legal estate to secure the mortgage debt. Carroway liad the equity- of redemption. An agreement is made that Washington may sell and pass a clear title, in consideration that he will provide that the purchaser shall convoy, for the separate use of Mrs. Oarroway, ISO acres of land. Accordingly the land is sold, Blount purchases for Washington, and with notice of this dealing between Washington and Oarroway. We have the question: is this a parol contract to s-ell land., or is it a case where a ceurt of equity will convert *401 Blount into a trustee, and require him to convey the 150 acres to the separate use oí Mrs. Carroway, as had been agreed on ? Besides the three modes of creating a use or trust by consent of parties, to-wit: 1, a deed of bargain and sale; 2, a covenant to stand seized ; 3, a declaration of the use or trust, where the legal estate is passed by transmutation of possession, there is a fourth mode oí creating a trust “ in mmtum,” in which a court of equity, to prevent fraud, converts the party acquiring the legal title into a trustee, and requires him to convey the legal estate to the party entitled to the equity, on the ground that he cannot with a good conscience hold the legal estate. In such cases, as the Court acts on the ground that its interference is necessary to prevent fraud, the statute is out of the question, as the j urisdiction is assumed in furtherance of the policy of the statute. A numerous class of cases, under this doctrine, grows out of the relation of guardian and ward, attorney and client, and other confidential relations, where the party acquiring the legal title is converted into a trustee, not on the ground of actual fraud, but because of the facility of practising it, and he is required to prove that the dealing is entirely fair, or else is converted into a trustee, and will be required to convey the legal title, being held as a security merety for'i!the money actually advanced. Another class of cases, equally numerous, is where a deed, absolute on its face, is held to be a mere security for the debt, and the party holding the legal title is converted into a trustee, and required to convey on payment of the debt. In such cases, however, a mere parol agreement for redemption is not enough; facts de hors must be proved, inconsistent with the idea of an intention to make an absolute sale. Another class of cases, although not so numerous, is where one acquires the legal title, by means of an undertaking with the party entitled to the equitable estate, that he will hold the estate'subject to the equity. Here a refusal to carry out the *402 undertaking is a breach of the confidence reposed, and on that ground the party is converted into a trustee. Cloninger v. Summit, 2 Jones’ Eq. 513, is an instance under this class. In such cases, an agreement proved only by parol will not suffice: there must be facts de hors. In the case of Cloninger v. Summit, “ The plaintiff put the title bond in the control of the defendant, without which special confidence he could not have acguired the titleP Our case falls under this principle. Carroway executed a power of sale to Washington, without which special confidence he could not have made the sale. The title cannot be withheld from Mrs. Carroway without a breach of this special confidence. No error. Pee CuexAM. Judgment affirmed. Justice Rodman,.being a relative of the plaintiff, did not sit in this ease»