Fairchild v. Rasdall

— 384 — By the Court, Paine, J. This suit was brought by the plaintiffs as administrator and administratrix of the estate of Abel Rasdall, deceased, to enjoin the defendant from proceeding in a suit to recover possession of certain real estate in the city of Madison, and to compel a conveyance by him to the plaintiffs. The grounds set forth for relief are that the plaintiffs’ intestate, having in a personal encounter in 1843, dangerously wounded a man named Smith, and being apprehensive of arrest and prosecution, and desirous to so arrange his affairs that he might escape from the country, conveyed the property in question to the defendant, who was his brother j and that although the deed was absolute on its face, and purported to be for the consideration of $2,000, yet that it was without consideration, and that the defendant agreed to hold the property in trust, for the use and benefit of the deceased and his heirs. There was also an allegation in the complaint, that there was a deficiency of assets in the hands of the plaintiffs to pay the debts of the deceased, for the purpose of enabling the plaintiffs to recover, under the provisions of § 16, chap. 100, of our present Revised Statutes, which authorize administrators, in such cases, to sue for and recover, for the benefit of creditors, any property which the deceased may have conveyed in such a manner that the conveyance was void, as against creditors. But there was no proof offered to sustain this allegation, and the case must, therefore, be decided as though it had not been made. We have no doubt, from the evidence presented, that the conveyance was made by the deceased under the circumstances, and with the understanding set forth in the bill, though this is denied by the answer. And were this evidence proper to be received, it would fully sustain the decision of the court below. But it was parol evidence, and was all objected to by the defendant’s counsel, and the objection is fatal. It is one of those cases where the real merits and justice of — 385 — the matter create a strong desire to escape from the application of the stern rule of law, which prohibits an inquiry by means of parol evidence. But the barrier is too strong to be broken over; and while it restrains us, furnishes its own justification in the fact, that though, in individual instances like the present, it may work hardship, yet in the main it promotes private security and the general good. We do not feel called upon to cite authorities, to show that in the absence of fraud, accident, or mistake, parol evidence cannot be received to prove that a deed, absolute on its face, was given in trust for the benefit of the grantor; and we have not been able 'to find any thing in this case to make it an exception. We cannot see why, if this evidence is to be received to establish this trust, every other deed in the state may not be shown by parol to have been given upon trust, and the statute of frauds be entirely annulled. But the counsel for the complainants, seeming conscious of the difficulty of sustaining the admissibility of this evidence for the purpose of establishing the trust, yet contended that although inadmissible for that purpose directly, it should be admitted, and the relief granted, on the ground of fraud. This presents a question of very great importance, and in view of the authorities on the subject, of no little difficulty. There is no doubt that if any fraud had been alleged, by means of which the defendant procured the conveyance from his brother to himself, or any mistake, by which the instrument was made absolute, instead of expressing the trust intended, parol evidence would have been admissible to show such fraud or mistake. This conveyance would thus stand upon the same footing with all other contracts, and come within the conceded power of courts of equity to inquire, by parol evidence, into frauds or mistakes in their procurement or execution. But no such fraud or mistake is alleged here. On the con — 386 — trary, it appears from the whole tenor of the complaint, that the conveyance was made by Abel Rasdall, upon his own motion, and without any solicitation or instigation of the defendant, and that it was intended to be, as it is, absolute on its face. The only fraud alleged, therefore, is that of the defendant’s now claiming the property in violation of the parol trust, and whether that constitutes such a fraud, as will justify a court of equity in overturning the written contract of the parties upon parol evidence, is the question presented. It cannot be denied that'if the court can, by any legal means, arrive at the existence of the parol trust, then the violation of it by the defendant, in wresting their inheritance from the family of his dead brother, is most grossly fraudulent. And to avoid such injustice, courts of equity have frequently seized upon the slightest circumstances connected with the procurement of the conveyance, to avoid the operation of the statute of frauds. And there are cases, the principle of which would warrant the assertion that the attempt by the defendant to claim the rights which this deed, on its face, gives him, contrary to the parol trust, is such a fraud as would justify the relief upon parol evidence. But I confess my inability to see how, upon principle, this position can be sustained, consistently with a due observance of the statute. Placing the relief in such cases upon the ground of fraud, is implied by admitting that the parol evidence cannot be admitted to establish the trust, for the purpose of enforcing it, directly as a trust. And this is also expressly admitted. But it seems apparent to my. mind that to say, in such a case, it shall be admitted to establish the fraud, is equally a violation of the- statute. Because the fraud consists only in the refusal to execute the trust. The court, therefore, cannot say that there is a fraud, without first saying that there is a trust. And the parol evidence, if admitted, must be .admitted to — 387 — establish the trust, in order that the court may charge the party with fraud in setting up his claim against it. Conceding then, that they cannot execute the trust .directly in such case, because it cannot be proved by parol, is it not a mere evasion of the statute to say, that they will allow it to be proved by parol for the purpose of enforcing it indirectly, by charging the party with fraud for refusing to execute it? Such a course does not relieve the’ court from the charge of violating the statute, but subjects it to the odium of an attempted, but unsuccessful evasion. It may be said that fraud ought not to be tolerated. That is very true, but that is not the question. The question is, whether the court, without violating the law, can get at the fraud. There is no doubt that trusts ought to be enforced; but that is 'not a sufficient reason for admitting parol evidence to establish them. When the party offers this, the court says no ; the law forbids it. So, however desirable it may be to prevent fraud, if the fraud cannot be established, except by first showing a trust by parol, is not the same answer equally applicable ? If not, it is difficult to see that the statute of frauds is to have any practical effect; for although trusts and agreements contrary to the written contracts of parties, cannot be proved by parol so as to be enforced as such, yet they may be proved and held of sufficient force to charge the party with fraud in not observing them. And the result is practically the same. It is for courts to say to the parties, "These agreements are not valid, not binding; we cannot compel you to observe them; yet if you do not observe them without being compelled, we will hold that to be a fraud on your part, and for the fraud, will compel you to execute them.” It is impossible to reconcile with principle very many of the adjudications upon the statute of frauds. Courts seem to — 388 — have been so intent upon administering justice in the particular case, that they have frequently lost sight of its provision, and their action has often amounted to little less than the exercise of the right to appeal, or suspend its operation whenever they deemed that the real justice of the case required it. But the progress of adjudication upon the subject has been marked by many strong protests against the wide departure from principle, and the regrets expressed by courts that it had ever obtained. And the current of modern authority is in favor of returning to the due observance of the provisions of this law, according to their obvious intent. But the distinction between fraud in procuring a conveyance, and that which arises only from the refusal to execute a parol trust or agreement, connected with a conveyance obtained without fraud, is not only clear upon principle, but is not without sanction. In Whitton vs. Russell, 1 Atk., 448, a testator was about to alter his will, so as to give one of the legatees fifteen pounds per annum more than he had already given him. It was suggested by the 'attorney, that if the other legatees would give a bond to pay the amount, it would be sufficient, and one of the others being present, promised that they would do it, and the will was not altered. The bill was filed to enforce the promise, but the chancellor held it to be “ against the statute of frauds,” and he adds, “ neither is there any ground for relief on the head of accident or fraud. Every breach of promise is not a fraud, nor does it appear that the testator was drawn in by this promise not to add the legacy to this codicil.” The inference produced by the statement of facts in that case, is that the promise did induce the testator not to alter his will, in which case it would have been a fraud in procuring the will; but assuming it to be otherwise, as stated by the chancellor, it was then the refusal by one having the legal title without fraud, to execute a trust — 389 — which the testator had by parol declared, and which the de-visee had promised to execute. And this the chancellor held was not a fraud. He could only have meant that it was not such a fraud as could be relieved against, because in morals it was certainly a fraud. In the case of Hoge vs. Hoge, 1 Watts, 163, this very point was decided. The question arose as to the admissibility of parol evidence to show that a devise of lands was in trust, and it was conceded on all hands that it could not be admitted, except on the ground of fraud; and the question then occurred whether the mere refusal to perform the trust, was such a fraud as would justify its admission. Upon this point the court says: “ The question has been as to the circumstances which constitute such a fraud as will be made the foundation of a decree. A mere refusal to perform the trust is undoubtedly not enough, else the statute, which requires a will of land to be in writing, would be altogether inoperative and it seems to be requisite that there should appear to have been an agency active or passive, on the part of the devisee, in procuring the devise,” And having found as a matter of fact that there was such agency in that case, they granted the relief on the ground of fraud. And all the authorities referred to in the opinion, are cases in which there was some promise on the part of the defendant, by which the property was procured by himself, or by which he prevented a different disposition of it. The same distinction is recognized in Pinnock vs. Clough, 16 Verm., 500. In the cases of Dean vs. Dean et al., 6 Conn., 284; Bandor vs. Snyder, 5 Barb. S. C. Rep., 63 ; Lathrop vs. Hoyt, 7 id., 59, and other similar cases which might be cited, the hardship of enforcing the statute was equally great as in this case, and in some of them the courts expressed their willingness to escape from its application if possible. But there was no suggestion that the mere refusal of the defendants to execute — 390 — the parol trusts, was such a fraud as would take the case out of its provisions. But the strongest support that seems to exist for the opposite view, may perhaps be derived from the cause of decision admitting parol evidence to show that a deed absolute on its face was given as security, and thereby converting it into a mortgage. It is true, there are some cases which have denied its admissibility, for that purpose, as in Streator vs. Jones, 11 Murphy, 449, and in Thompson vs. Patton, 5 Littel, 74, which also both sustain the position that the fraud which justifies the admissibility of parol evidence, must be such as affects the transfer or disposition of the property. But there is a very long list of cases which have held parol evidence admissible, to thus, convert a deed into a mortgage. Some of them however recognize the distinction we have asserted, as in Thomas vs. McCormick, 9 Dana, 109. But many others have gone to the extent of saying that though there was no fraud or mistake in procuring or executing the deed, yet that the mere attempt to use the deed as absolute, is such a fraud as justifies the admissibility of parol evidence and the relief upon it. See McIntyre vs. Humphreys, 1 Hoff. Ch. Rep., 34, where the vice chancellor says it is “ too late” to dispute the general doctrine, and that “ the restriction of the rule adopted in some cases, that it must be shown that a defea-sance was not made through accident, fraud or mistake, does not prevail” in New York. The question is discussed to some extent in Rogan vs. Walker et al., 1 Wis. Rep., 537, decided by Justice Smith on stipulation. In that case there was a condition in the deed itself, and a bond was given by the complainant, which alone justifies the decision made; and so the learned judge held. But he then proceeded to show that even if there had been no such written evidence, parol evidence would have been admissible on the ground of fraud, and that the attempt to — 391 — use a deed given as security, as absolute, was a sufficient fraud for the purpose. He cites many authorities which undoubtedly sustain the position, but in commenting on the cases heretofore cited from Barbour’s Reports, he held them not applicable, because they were cases of “ express trusts” sought to be proved by parol, and says: “ The court very properly decided that the statute of frauds was an insurmountable barrier.” The ground of distinction suggested is, that the equity of redemption arises out of the transactions of the parties, and not out of the parol agreement. This distinction may be material in determining whether the admissibility of parol evidence is to be determined by the statute of frauds, or by the general rule prohibiting such evidence to contradict the written contracts of the parties. It is conceded that fraud may take a case out of either the statute or the rule. But I suppose it would not be contended that in the absence of fraud there is any thing in the peculiar nature of the equity of redemption that can have that effect. On the contrary, justifying its admission on the ground of fraud, which is the ground upon which it is placed by all these cases, is admitting that the case could not otherwise be taken out of the rule. The question under consideration therefore was, what was a sufficient fraud for the purpose ? And in determining this question, I can see no distinction between an express trust and a parol agreement making a deed a mortgage. If the refusal to abide by the latter is to be held on principle, to be such a fraud as takes the case out of the rule, and justifies parol evidence, I can see no reason why a refusal to execute an express trust, evidenced only by parol, should not be so held. The injustice, the wrong and the fraud are not only as great, but greater in the latter case than in the former. For in the former the party would only get the land for the money he had loaned, while in the latter he would get it for nothing. — 392 — And if these cases are to be held correct upon principle, we can see no reason why the refusal by any party to perform a parol agreement, within the statute of frauds, should not be held such a fraud as would take the case out of the statute whenever such refusal would work hardship and injustice upon the opposite party. But we must say that we think these decisions cannot be sustained upon principle, and that, if established by authority too firmly to be shaken, it must be regarded as an invasion upon the statute which cannot justify • still further encroachment. And it is perhaps not so settled on authority as to be beyond question. In Stevens vs. Cooper, 1 J. C. R., 425, the question was, whether the effect of a mortgage could be varied by parol evidence, and Chancellor Kent, after referring to the general rule prohibiting such evidence as settled beyond discussion, adds : “Nor does this case come within any exception admitted here to the operation of the rule; for there is no allegation of fraud, mistake or surprise in making or executing the mortgage, and those I believe are the only cases in which’ parol evidence is admissible in this court against a contract in writing.” It seems impossible upon principle to distinguish this case from that of the admissibility of parol evidence to vary the effect of a deed. And in Webb vs. Rice, 6 Hill, 219, it is decided that such evidence is inadmissible in a court of law, and it is intimated that it could not be received in equity except to show fraud or mistake in the execution of the instrument. The dissenting opinions of Justice Bronson in Webb vs. Rice, 1 Hill, 606, and Swart vs. Service, 21 Wend., 36, show clearly that he confines the fraud, which is to justify the admission of parol evidence, to such as affected the execution of the instrument. And Mr. Justice Cowen, who delivered the opinion of, the court in the latter case, rested it entirely on previous decisions in that state, by which they felt bound. But in speaking of these decisions he says: “For — 393 — one, I was always at a loss to see on what principle the doctrine could be rested either at law or in equity, unless fraud or mistake were shown, in obtaining an absolute deed, where it should have been a mortgage.” “ Short of that the evidence is a direct contradiction of the deed; and I am not aware that it has ever been allowed in any other courts of equity or law.” But we will not pursue this part of the subject further. We do not of course purpose to pass upon the question, whether in the absence of fraud or mistake in its execution, an absolute deed can be converted by parol evidence into a mortgage. . That question is not before us, but it is so nearly allied to the one before us, that we could not well determine the latter, without inquiring how it was affected by the decisions to which we have alluded. And as we think the rule they have established does not rest upon principle, however it may be determined upon authority, we do not feel warranted in following the rule which they would by analogy suggest. And we must hold that as the deed was made absolute to the defendant without any mistake, or fraud on his part, his mere refusal to perform the trust, is not such a fraud as will justify the admission of parol evidence, and the enforcement of the trust. The reason is, that the law forbids us tobe informed that there was a ¡trust by that kind of evidence. It may and does undoubtedly work hardship in this case, and that we regret; but if parties will, in face of the positive provisions of the statute, risk their interests upon the honor or justice of others, and the security fails them, they have no right to ask courts to violate the law to furnish relief. The counsel for the complainants contended that if we should be of the opinion that the trust could not be established, then it appearing that the consideration was not paid, they should be entitled to a vendor’s lien for the amount expressed in the deed. The case of Leman vs. Whitley, 4 Russ, — 394 — 423, is relied on, and would seem to sustain the position. The bill was filed to establish a trust and obtain a re-conveyance. The court held parol evidence inadmissible, but decreed a vendor’s lien for the consideration, under the prayer for general relief. We have felt a strong desire to follow this case, but upon a careful examination of the whole subject, have come to the conclusion that we cannot do so. The bill does'not claim a vendor’s lien. It proceeds upon an entirely different hypothesis. It alleges, it is true, that the consideration never was paid.; but not for the purpose of recovering it, but because it was never intended or agreed to be paid. There is nothing in the bill to indicate to the defendant that he was to resist a claim for a vendor’s lien, and we cannot but see that it would work a surprise upon him to grant such relief upon this bill. Rathbun vs. Rathbun, 6 Barb., 98 ; and Philbrook vs. Delano, 29 Maine, 410 ; and Dean vs. Dean, 6 Conn, 284, all hold that such relief could not be granted on a bill filed to establish the trust, without indicating in any way an intent to proceed for a lien. And we think this the only just rule upon the subject We are compelled therefore upon the whole case, to reverse the judgment of the court below, and direct a decree to be entered dismissing the complaint. At the same time we may express the hope that the defendant’s conscience, to which his brother has trusted, may not suffer him so far to violate that trust, as to detain their just inheritance from his wife and children. Note. — After the announcement of this decision the appellants moved the ' court to so far alter the decision in the case, as to allow them to dismiss the hill without prejudice, in the court below. That motion was granted by this court, and the costs of each party was borne by himself.