Scribner v. Meade

KENT, C. J. (after making the foregoing statement).— The complaint in the action alleged a payment by the plaintiff of his half of the purchase price of the property, and an express agreement on the part of the defendant to convey to the plaintiff a half interest therein. Neither the evidence taken in the case, nor the findings of the court support the allegations of the complaint in this regard; nor do facts appear in the record or in the findings of the court which show such representations, acts, or conduct in regard to the premises as would justify the application of the doctrine of equitable estoppel. The trial court seems to have applied either the doctrine of equitable estoppel, or to have concluded that, by the action of the parties and the premises the defendant, as the agent of the plaintiff, was impressed with a constructive trust in favor of the plaintiff, his principal. This latter theory is the one on which the appellee seeks to uphold the judgment in this court. There is no substantial conflict in the evidence. Stating it as favorably as possible for the plaintiff, it appears that Meade and Scribner were old friends, living together in the same house, and had had various business transactions together. Meade had on deposit with Scribner some five thousand dollars, against which Meade drew from time to time, Scribner acting as Meade’s banker in this regard. The property in question belonged to Meade’s wife, being held in trust by Warren. Scribner, who was the lessee of the property, had held an option to purchase the property. The property was offered to Scribner by Warren, the trustee, for fifteen hundred dollars. Scribner and Meade had several conversations about a prospective purchase of the property and its value, and it was agreed between them that the property should be purchased for fifteen hundred dollars, each to have a half interest. At that time Meade had on deposit with Scribner [148] about four thousand dollars, and Meade told Scribner that he could pay for his (Meade’s) half interest out of the funds in his hands. There is no evidence that Scribner ever agreed so to use Meade’s money. Scribner purchased the property for fifteen hundred dollars, tailing the title in his own name, but paying the full purchase price himself, and not any part thereof with Meade’s money. Scribner took the deed in his own name, and after its receipt told Meade thereof, and offered to deed Meade a half interest. Meade asked, however, to have the matter remain in abeyance, and did not accept the deed, and no deed was ever given him. At this time Meade and Scribner were friendly, and it is apparent that up to this time Scribner intended, in making the purchase, to allow Meade a half interest therein. Matters were allowed to remain in this state for a year and a half, Scribner being in possession of the property and expending money thereon. Differences having then arisen between them a settlement of Meade’s money account in Scribner’s hands was had, when Meade learned, as he claims for the first time, that Scribner had not used any of Meade’s money in the purchase of the property. On such settlement it appeared, however, that Meade had cheeked against the fund in Scribner’s hands until it was reduced below the sum of seven hundred and fifty dollars, which was half of the purchase price. Meade thereupon sent Scribner a check for the balance, sufficient to make the sum in Scribner’s hands equal the amount of seven hundred and fifty dollars, and demanded a deed to a half interest in the property. Scribner returned the check and gave no deed. Meade then brought this action. Upon such a state of facts, was the district court right in its conclusion that Scribner in his purchase of the property acted as Meade’s agent as to the purchase of one half thereof, and that as to such half Meade was entitled to a conveyance thereof upon his payment into court for Scribner’s benefit a sum sufficient to cover half of the purchase price ? It is apparent that there is a wide variance between the pleadings and the proof. The complaint alleges a payment by Meade of half of the purchase price, and an express agreement on Scribner’s part to take the title in his own name and convey to Meade a half interest. The proof shows, looking at it in the most favorable light to Meade, that there was an [149] agreement between Meade and Scribner that each should have a half interest, and that Scribner should deed such half to Meade, but that Meade paid no part of the purchase price. It is clear from the evidence and the findings of the court, that there can be no recovery upon the theory of an express trust. It is also clear that there can be no recovery upon the theory of a resulting trust, for in order for such a trust to arise upon a purchase, it is indispensable that the payment should have been made by the beneficiary, or that an absolute obligation to pay should have been incurred by him as a part of the original transaction of purchase, at or before the time of the conveyance. 2 Pomeroy’s Equity Jurisprudence, sec. 1037; In re Stanger, (D. C.) 35 Fed. 239; Woodside v. Hewel, 109 Gal. 481, 42 Pac. 152. The appellee claims, however, that a constructive trust has been imposed, his contention being that where it appears that an agent employed by his principal to negotiate for the purchase of land, purchases in his own name and with his own money, the transaction, on account of the circumstances, will be held to be impressed with reasons of equity and justice with a constructive trust in favor of the principal. If we could ignore the fact that the pleadings raise no such issue, and that upon the evidence the relation of Scribner was rather that of a bailee holding his funds subject to Meade’s orders, than that of an agent to purchase or negotiate a purchase for Meade, we still do not think that a constructive trust could be held to be impressed. As said by Mr. Pomeroy, such trusts “include all those instances where a trust is raised by the doctrines of equity for the purpose of working out justice in the most efficient manner, where there is no intention of the parties to create such a relation, and in most cases contrary to the intention of the one holding the legal title, and where there is no express implied written or verbal declaration of the trust. . . . They are often termed trusts in inviium,, and this phrase furnishes a criterion generally accurate and sufficient for determining what trusts are truly 'constructive.” An exhaustive analysis would show, I think, that all instances, of constructive trusts, properly so called, may be referred to, what equity denominates fraud, either actual or constructive, as an essential element, and as their final source.” 2 Pomeroy’s Equity Jurisprudence, sec. 1044. One form of such [150] constructive trust ex maleficio is where a person obtains the title to land by means of an intentional false verbal promise to convey to a third person, and having thus fraudulently obtained the property retains it. Equity regards such person as holding it charged with a constructive trust. The trust in such a ease arises wholly from the fraud, and is in most jurisdictions expressly excluded from the operation of the statute of frauds. 2 Pomeroy’s Equity Jurisprudence, sec. 1055. In all such cases, however, as pointed out, fraud actual or constructive must be found. Not only is the complaint here lacking in any allegation sufficient to cover such claim, but there is no finding of the trial court of actual fraud, or of such facts as would show constructive fraud, and the evidence does not support such claim. At best, the facts disclose a mere verbal promise to purchase and convey, and a subsequent refusal. This is not sufficient to impose such trust. Furthermore, such a promise, not being in writing, is not enforceable under our statute of frauds (Rev. Stats. Ariz. 1901, par. 2696). Spencer v. Lawton, 14 R. I. 494. To quote again from Mr. Pomeroy: “The foregoing cases should be carefully distinguished from those in which there is a mere verbal promise to purchase and convey land. In order that the doctrine of trusts ex maleficio with respect to land may be enforced under any circumstances, there must be something more than a mere verbal promise, however unequivocal, otherwise the statute of frauds would be virtually abrogated; there must be an element of positive fraud accompanying the promise, and by means of which the acquisition of the legal title is wrongfully consummated. Equity does not pretend to enforce verbal promises in the face of the statute; it endeavors to prevent and punish fraud by taking from the wrongdoer the fruits of his deceit, and it accomplishes this object by its beneficial and far-reaching doctrine of constructive trusts.” The case of Dunphy v. Ryan, 116 U. S. 491, 6 Sup. Ct. 486, 29 L. Ed. 703, is a case almost identical with the case the appellee seeks to make upon the evidence, and the findings of the trial court. There, however, under a similar agreement as is contended is in the case before us, the defendant by cross-complaint sought to compel the plaintiff to take a deed to the property he had purchased, the converse of the case at bar, where the plaintiff seeks to obtain such deed. The court [151] there held that the general denial of the making of the contract alleged was sufficient to let in the defense of the statute of frauds; that such a contract was clearly within the statute, it being simply a verbal agreement to convey land for a certain consideration; that a contract so void by the statute could not be enforced directly or collaterally; that the fact that the purchaser was acting as the agent of the plaintiff, as well as for himself, did not avail to take the case out from the operation of the statute, the suit being based upon, and brought to enforce, the void contract; that the contract being void under the statute, there was no obligation upon the plaintiff to accept the deed tendered to him, or to pay any part of the purchase money; that the case, neither in the averments nor in the prayer, was one for equitable relief, and that the mere breach of a verbal promise for the purchase of the lands would not justify the interference of a court of equity, there being no fraud in such refusal. The case fully meets the contentions of the appellee, and is conclusive of this appeal. We think that the trial court in the findings made by it went outside of the issues raised by the pleadings, and furthermore, that upon the findings as made by it, and upon the evidence, the trial court was in error in its conclusions that the defendant held a half interest in the property in trust for the plaintiff, which he was obligated to convey to him. The judgment of the district court is reversed, and the case remanded for a new trial. SLOAN, J., CAMPBELL, J., and NAYE, J., concur.