Angermiller v. Ewald

Laughlin, J. : This is an action by the sole residuary legatee of John Halk, deceased, to obtain a decree of the court adjudging that the defendant took and held the title to the premises described in the complaint in trust for the plaintiff’s testator, and after the latter’s death, [692] in trust for his estate and for his heirs and devisees, and that the defendant holds the proceeds of a sale of the premises made by him after the death of Halk in trust for the plaintiff as sole residuary legatee and devisee of said Halk, and requiring him to account therefor. The relief for which the plaintiff prayed has been awarded by the judgment, from which the appeal is taken. ' The findings of the court with respect to the material facts are sustained by the evidence, but I am of opinion that the conclusions of law are not warranted" thereby. It appears that on the 5th day of December, 1902, the testator negotiated the purchase of the premises described "in the complaint,, which "are situate in the borough of Manhattan, Hew York. The purchase- price was $14,500, of which he paid with his own check the sum of $8,500. The title to the premises was by his direction taken in the name of the defendant, who was an intimate friend, of his, and who gave-a bond and mortgage on the premises to secure the payment of the balance of the purchase price. At this time the plaintiff’s testator was living separate and apart from his wife,, but .without a divorce or legal separation.. The defendant paid no part of the purchase price. The deed was taken in the name of the defendant individually, and not as trustee, and it contained nothing to indicate that it was intended as other than a conveyance.of the premises to the defendant in fee simple absolute, nor was any declaration of trust or other instrument in writing relating to the question executed. There is nó other evidence tending to show that the defendant took title to the premises' in trust or bearing upon the question as to the purpose for which title was vested in him. The case is, therefore, not only lacking in proof- of fraud on the. part of the defendant in inducing the conveyance to him, but there is no evidence that even a parol agreement was made between the defendant and the plaintiff’s testator by which this property was to be held in trust for the latter. The case falls directly within the provisions of section 74 of the Real Property Law (Laws of 1896, chap. 547), and not within either of the two exceptions therein made. That section provides as follows: “ A grant of real property for a valuable consideration to one person, the consideration being paid by another, is presumed fraudulent as against the creditors, at that time, of the person paying the [693] consideration, and, unless a fraudulent intent is disproved, a trust results in favor of such creditors, to an extent necessary to satisfy their just demands, but the title vests in the grantee, and no use or trust results from the payment to the person'paying the consideration or in his favor, unless the grantee either, “ 1. Takes the same as an absolute conveyance, in his own name, without the consent or knowledge of the person paying the consideration; or, “ 2. In violation of some trust purchases the property so conveyed with money or property belonging to another.” The provisions of the' statute herein quoted have always been given full force and effect by the courts, except in cases of fraud or mistake, where to do so would be to permit a fraud either actual or constructive to be perpetrated on an innocent party. (See Robbins v. Robbins, 89 N. Y. 251.) In Gerard on Titles to Real Estate (4th ed. p. 261), the learned author, in discussing the provisions of the Revised Statutes (1 R. S. 728, §§ 51-53), from which this section of the Real Property Law was taken, says: “ Where there has been mistake or fraud, parol evidence may be given to establish a trust, although a conveyance may be absolute, but the evidence must be clear and positive and define the trusts, and except in case of mistake ór fraud, no trust in land can be established in this way.” I am of opinion that this case falls within the doctrine of Fagan v. McDonnell, No. 1 (115 App. Div. 89; affd., 191 N. Y. 515), in that there is no evidence of any agreement between the defendant and the plaintiff’s testator showing that the conveyance was made to-the defendant for plaintiff’s testator. If it appeared that there was an agreement between them by which the title was to be taken in the name of the defendant, who was to hold it for a particular purpose and for a given time for the plaintiff’s testator, then it may well be that further proof that the latter performed the.agreement by paying the purchase price in part and allowing the title to be taken in the name of the defendant, without defendant being given possession or exercising acts of ownership, would be sufficient to warrant a court of equity in impressing a trust upon the fund Which is the proceeds of the sale of the land. (See Jeremiah v. Pitcher, 26 App. Div. 402; affd., 163 N. Y. 574; Ryan v. Dox, 34 id. 307; [694] Church of St. Stanislaus v. Algemeine Verein, 31 App. Div. 133; affd., 164 N. Y. 606.) In the. case at bar, however, there is nothing to show that the plaintiff’s testator entered, into possession of the premises'in question, which consisted of vacant lots, which distinguishes this case from Jeremiah v. Pitcher, and Church of St. Stanislaus v. Algemeine Verein (supra). The principal difficulty with the plaintiff’s case is that there is-not a scintilla of competent evidence tending to show' any agreement between the plaintiff’s testator and the defendant with respect to the property. It does appear that the plaintiff’s testator negotiated the purchase of the property, but the inference would be,- since title was taken in the name of the'defendant, if the facts give rise to any inference, that he was acting for-the defendant. This is not overcome by the fact that he paid the cash part of the consideration. He may have, owed the defendant the amount, or he may have loaned the money to the defendant. - It is doubtful in these circumstances whether his declaration's made to the agent of the vendor prior tó the execution of the conveyance in the presence or brought to the attention of the defendant, were competent; and it is perfectly clear that like declarations made by him subsequent to the conveyance, Which were admitted over the objection and excep-' tion duly taken by counsel for the.appellant,, were incompetent. It follows, therefore, that the judgment should be reversed and a new trial granted,, with costs to the appellant to abide the event. Ingraham, McLaughlin and Clarke, JJ., concurred; Houghton, J., dissented.