McLaughlin v. Fulton

Mr. Justice Clark delivered the opinion of the court, October 29th 1883. On the 28th day of March 1872, John Dunn conveyed the title to the lands in controversy to William A. Fulton ; the consideration of the purchase as expressed in the deed being $3,150. Eleanor Fulton, the mother of William, in her lifetime claimed that the purchase was in part made with her money, and that her son held the title to that extent in trust for her. She died in January 1880, having first made a last will and testament, wherein she devised all her estate, real and personal, to Rachel Fulton, the plaintiff below. William A. Fulton, having taken the title in his own name, entered it on record on the 7th day of May 1872. He subsequently became largely indebted; judgments were obtained against him, and the lands in dispute were levied upon by the sheriff, and sold on the 12th day of May 1879, to J. B. Chamber, trustee for the Apollo Savings Bank, for the sum of $1,401. Lawrence McLaughlin having, by deed of 10th June 1881, purchased the title of the Apollo Savings Bank, the defendants below went into possession under the sheriff’s title. The subject of this litigation, the thing in action, is the land, and it seems very clear at the outset that Eleanor Fulton, through the operation of her will, is to be taken as the assignor of the land ; her rights therein, whatever they were, passed under it to Rachel, the plaintiff. The title of Rachel was dependent altogether upon the true nature of the transaction involving the purchase of the land from John Dunn ; the conveyance from Dunn formed a link in the chain of her title, as well as of the title of William and Lawrence McLaughlin. Rachel, under the assignment of the will, claimed the alleged trust on the land under William’s deed, while McLaughlin claimed under the same title, repudiating the trust. Thus the deed from Dunn is the common source of title to both parties, and the matter of fact in controversy, which is the alleged trust, springs directly out of that transaction. The relations of the parties, therefore, show such privity between them as brings them clearly within the proviso of the Act of 15th April-1869, under the construction adopted in Craig v. Brendel, 19 P. F. Smith 153, and other cases. If William A. Fulton’s interest in the land had not been [169] sold by the sheriff, and this controversy had been one between Rachel and William, there could be no doubt whatever as to the incompetency of both as witnesses, to establish facts occuring in the lifetime of Eleanor. It seems equally clear that if the defendants below, who claim under William, had been called in their own behalf, to'prove the acts and declarations of Eleanor, touching the alleged trust, they would certainly have been incompetent for that purpose. The Act of 1869 expressly provides that it “ shall not apply ” where the assignor of the thing or contract in action may be dead; such actions are to be tried as if the Act of 1869 had not been passed, and, therefore, all parties and interested persons, on both sides, are incompetent to testify as to any facts occurring prior to the death of the assignor. William A. Fulton was not a party, and as a consequence of the sheriff’s sale he appears to be without interest in the suit; but Rachel was a party, and interested in the result. She was, therefore, an incompetent vdtness for the purpose for which she was offered and examined. The 8th assignment of error is therefore sustained. The testimony of Rachel Fulton being thus eliminated from the case, it stands mainly upon that of William A. Fulton, her brother. There is perhaps enough left, however, as the case is now presented, to justify a submission to the jury. When the cause is again tried, facts may be developed which would readily justify a different conclusion. If the testimony of William A. Fulton is believed, however, the $3,000 which was realized from the sale of the Armstrong county farm to Ford, was certainly the money of Eleanor Fulton. The old lady was then seventy-two years of age ; she was illiterate, could neither write nor read writing, and was altogether unacquainted with ordinary business matters. The transaction with Ford was conducted by William in behalf of his mother, and it was undoubtedly true, if his testimony is believed, that as a son he occupied in regard to her fiduciary relation of a very peculiar character. When the money was paid, William took charge of it for her. He was then a single man, and conducted the business of the family, and his mother certainly reposed in him the highest degree of confidence, submitting wholly to his judgment without question. He invested a large part of the money received from Ford in the purchase of the Reed farm; as we understand him, he invested $2,000 at the first, and afterwards the proceeds of the sale of the house and lot in Apollo. There does not appear to have been any especial direction given for the purchase of this or any other particular farm, but an investment in land somewhere was contemplated. William bought this tract at his own suggestion, [170] upon his own judgment, and in his own name, but not with’ his own money. He says lie may have told her that her money went into the purchase, but he never told her of the condition of the title. Pour years later he sold the Reed farm to Sloan, and purchased the Dunn tract, now in dispute. The whole sum realized from this sale, after paying Reed, was about $3,000. Of this sum $1,000. was received by William at the time of the sale in the fall or winter of 1871, and $2,000. in a short time after-wards at the delivery of the conveyance. This fund, or the greater part of it, is distinctly traced into the purchase of the Dunn farm. William testifies that he paid out of money that may have been his own one hundred dollars, or less, at the making of the contract in December 1871, or January 1872, but it is clear that he relied upon the money of his mother then in his hands or control as the means of payment of the purchase. The $100 was perhaps the earnest of the bargain, and he had at the time $1,000 of the money received-of Sloan in his hands. It is certainly true that a resulting trust in lands must arise if it at all, at the inception of the title, either through fraud in the acquisition of it, or through payment of the purchase-money by which it is obtained: Barnet v. Dougherty, 32 Pa. St. 371; Cross & Gault’s Appeal, 1 Out. 471; Pricke v. Magee, 10 W. N. C. 50. A distinction is, however, to be taken between a resulting trust properly so called, where the purchaser of lands pays the purchase-money, but takes the conveyance in the name of another, and, what is sometimes so called, when an agent holding a fund for investment purchases with that fund, and takes the conveyance in his own name, as there is a very substantial difference between them both in quality and extent of the relief that can be called for: Wallace v. Duffield, 2 S. & R. 521: Lynch v. Cox, 11 Harris 265; Bispham’s Equity 86; Brightly’s Eq. 343. In the former case the trust results from the voluntary act of the real purchaser; in the latter it is implied from the wanton act of the merely nominal purchaser of the land, and the owner of the fund may at his election consider the purchase as made for his use: Phillips v. Crammond, 2 W. C. C. 445; Oliver v. Piott, 3 How. 333. When the fund in the hands of the agent or trustee at the time of the purchase is the purchaser’s only reliance and means of payment, and is the instrument in his hands for procuring the title and conveyance, he will not be permitted to defeat the trust by showing he had acquired a merely inceptive equitable interest by payment of an inconsiderable amount of his own money at the purchase.. In such case, at the most, he would only be entitled to liavo his interest determined by an inquiry as to the amount of the [171] respective investments. Nor is William’s testimony consistent with the presumption of an advancement or loan to him by his mother. lie says he conducted the transaction in her behalf, and that, although the titles were taken, and the lands charged with liens in his name, she was ignorant of these facts. If the fund, in its original state, was covered with a trust in favor of the mother, no change of that state can divest it of the trust, and, in accordance with this principle, equity will follow the fund through every transmutation for the benefit of the cestui quo trust. The case rested mainly upon the testimony of William A. Fulton. If his statement of the facts is a correct one, the property in dispute was paid for to a large extent with the money of Eleanor Fulton ; his testimony to that effect, if believed, is clear and unequivocal and justified a submission to the jury. His credibility was a question for the juiy. The possession of Eleanor Fulton, although not exclusive, covered the entire period of the alleged trust, until after the sheriff’s sale, and must, if the trust be established, be referable to it and in execution of it, as every possession where there is title is supposed to be in subordination to it. The plaintiff was therefore not barred by the provisions of the 6th section of the Act of 27th April 1856: Clark v. Trindle, 2 P. F. Smith 492; Douglass v. Lucas, 13 P. F. Smith 9. Nor can the defendants below be regarded as purchasers without notice. The possession of Eleanor Fulton was exclusive at the time of the sale, and was notice of title to the whole world, and actual personal notice was given at the sale. The notice at the sale, explained the possession, defined the claim under it, and thus purchasers were fully informed of the nature of her title. Judgment reversed, and venire facias de novo awarded.