Porter v. O'Donovan

Mr. Justice Eakin delivered the opinion of the court. 1. It appears that O ’Donovan is a man of weak mind and easily influenced; that he has been in this country only five or six years, and is a longshoreman by occupation. He was in fegr of some legal proceedings being brought against him by the plaintiff, Porter, and confided to one German and to defendant E. P. McCarthy the story of his troubles with Porter, his fear — 6 — of litigation, and the condition of the title to his property, which he had conveyed to M. McCarthy. They immediately began to work on his fears and to take advantage of his confidence, and induced him to have a deed made by a person whose name they pretended was M. McCarthy, conveying to him the property standing on the record in the name of M. McCarthy. They represented to him that Porter would sue him, attach his property, and prosecute him criminally on account of the warranty in his deed to Porter, and because of the forged deed in the name of M. McCarthy; that a warrant of arrest had already been issued for him; and that the sheriff was looking for him to arrest him. On account of his fear of these proceedings, they induced him to put the property out of his name and leave the state. By reason of said influence he did execute deeds for the Porter property as well as for his other property to Katherine M. Dwyer, for the alleged consideration of $5,000, and before the delivery of the deeds or the payment of the price McCarthy sent Green and Moreland, who seemed to be acting on behalf of McCarthy, and O’Donovan, to look at the property. When O’Donovan was returning to the city, McCarthy met him at the Golf Links, and told bim that the sheriff was after him, and to wait there until the crowd had gone away. Then they went to Fulton and remained until dark, after which they went to the Lenox Hotel, and stayed in a room until 10 o ’clock, when McCarthy went to the depot and secured a ticket for San Francisco in the name of John J. Collins, and told O’Donovan that he should go by that name. At midnight McCarthy put him on the train and directed him to go to T. Cavanaugh, in San Francisco, a friend and former partner of McCarthy, and delivered to bim $350 and the two notes hereinbefore mentioned. These circumstances are set forth in the cross-complaint at great length, and the evidence upon — 7 — these matters is very voluminous. When O’Donovan attempted to collect the $1,500 note, he paid $100 to Cavanaugh to go to Portland to see about his affairs, and to collect the note, which Cavanaugh induced O’Donovan to indorse to him to avoid attachment by Porter. When Cavanaugh returned from Portland, he told O’Donovan that the sheriff was in McCarthy’s office twice while he was there. Cavanaugh collected the $1,500 note, paid $100 to his attorney, and, retaining $400 himself, turned over to O ’Donovan $1,000. In September, 1910, McCarthy went to San Francisco to see O’Donovan, and he and Cavanaugh told O’Donovan that, if he did not give up the $1,750 note, they would throw up the case and tell the sheriff about him; and thereby compelled him to surrender up the note, which they still retain. It needs no argument to show that the whole transaction is a rank fraud. Cavanaugh evidently was aiding McCarthy to keep O ’Donovan in fear and prevent him from returning to Oregon and to get his property away from him. However, the defense of Katherine M. Dwyer is that she is an innocent purchaser for value, without any knowledge of or participation in the fraud of McCarthy. She took no part in making the purchase of the property and did not see or talk with O’Donovan until the time she signed the notes; and A. J. Dwyer says that he bought the property with his wife’s money. At the time of the purchase there seems to have been little or- no talk of the terms of the sale. They had been arranged beforehand. A. J. Dwyer was the agent of his wife, Katherine, in the part he took in the purchase, and McCarthy was the person who made the terms of the sale and consummated it. Dwyer testifies that he and O’Donovan had but little talk; that O’Donovan came to his desk and offered him the property for $5,000. It does not appear that O’Donovan ever told him what property it — 8 — was, or where, but McCarthy informed A. J. Dwyer on the evening of March 30th that the O’Donovan property would be a good purchase. Dwyer had McCarthy get an option on the property, by the terms of which O’Donovan agreed to sell and convey the property to “The McCarthy Company,” if taken before April 2, 1910, for $5,000 cash net to him. The next day Dwyer and his wife met McCarthy and O’Donovan at Dwyer’s office, at which time there seems to have been no talk as to the terms of the sale, but Mrs. Dwyer signed the two notes, the payment of which was unsecured. A. J. Dwyer produced $500 in money, and the money and notes were delivered to McCarthy, who was directed to complete the transaction, and McCarthy went off with O’Donovan to make out the deeds. Dwyer admits that it was rather a strange transaction. He denied having any talk with O’Donovan about the property, but, when asked if he was acquainted with the value of the property, he said that in a general way he was; that from general inquiries made at the time, etc., he thought the property a good purchase at that price. Tie also admits that the only thing he knew about the Shamrock Investment Company was that a corporation was to be formed by McCarthy, and that O’Donovan was going to put his property into the company. Dwyer testifies that he left the completion of the transaction to McCarthy. The fact of the former business relations between A. J. Dwyer and McCarthy, and Mrs. Dwyer being McCarthy’s sister, the fact that A, J. Dwyer and McCarthy occupied the same office together, and that McCarthy still used the firm name of the McCarthy Company, together with the other circumstances, tended to show that A. J. Dwyer was in touch with the whole transaction, and to corroborate O ’Donovan in his testimony to that effect. When McCarthy found out that Porter had located O’Donovan, he became sufficiently interested to take a trip to California — 9 — to see O ’Donovan in order to guard the interests of the Dwyers, and he was again acting for the Dwyers when he brought back the $1,750 note. Dwyer says McCarthy took it upon himself to get the note back, with the promise from O’Donovan that O’Donovan would reimburse Dwyer for anything that he would be out in this suit. The proof tends strongly to bring home to A. J. Dwyer knowledge of the facts that were in the knowledge of McCarthy, as McCarthy was the actual agent of A. J. Dwyer and his wife in the purchase, and his acts in connection therewith were their acts. The evidence shows that 0 ’Donovan did not sell the property to Katherine M. Dwyer for $3,750. He did not agree to take notes, but was to have $5,000 in cash, and he did not consent to the sale; that was forced upon him, and their minds did not meet on the attempted purchase. Even the $500 which Dwyer admits was to be paid to O’Donovan was not so paid, and delivery of it to Dwyer’s agent, McCarthy, was not payment to O’Donovan. 2. The option was obtained only by fraud and by keeping O ’D onovan in fear. This was done by Dwyer’s agent, and Dwyer is chargeable with it, whether or not he knew of or participated in it. Dwyer cannot be allowed to benefit by so rank a transaction, known to and accomplished by his agent. 3. Contention is made in the brief of defendant that there can be no presumption of fraud, but it is said in Williamson v. North Pac. L. Co., 42 Or. 160 (70 Pac. 390): “Fraud is a question of fact, but need not be shown by positive evidence, as this can seldom be done. It is generally proved by circumstantial evidence, and maybe established by inference like any other disputed fact.” In the case of Phipps v. Willis, 53 Or. 195 (96 Pac. 868, 18 Ann. Cas. 119), it is said: “Nor is direct and positive proof essential to th“e establishment of fraud. It is always permissible to prove it by any cir — 10 — cumstances from which it may follow as a legitimate inference; this class of evidence in many instances being the only proof available”: See, also, Kabat v. Moore, 48 Or. 198 (85 Pac. 509). 4. All that was done by McCarthy was with knowledge of plaintiff’s rights. O’Donovan’s'relations with the plaintiff were the foundation of McCarthy’s power over O’Donovan, and his knowledge thereof affects the purchase by Dwyer and his wife, and taints it with the fraud as to plaintiff also. 5. So much of the decree of the Circuit Court as required O ’Donovan to convey to Katherine M. Dwyer the flats in California, and'which relates to matters that were not in issue was beyond the jurisdiction of that court, and the decree will be modified in relation thereto. The identity of the flats is not disclosed, nor is it shown what amount of money was invested in them, nor whether they are subject to deferred payments or to forfeiture for nonpayment. 6. The conveyances by O’Donovan to Katherine M. Dwyer should be set aside, except as to lot 10, block 2, Collinge addition to Portland, because they were obtained through fraud and fear; but, as Katherine M. Dwyer has sold said lot 10 of block 2 to an innocent purchaser, the title thereto will not be disturbed. The defendants, the Dwyers, will be required to. reconvey to O’Donovan tracts 3, 4, and 15 in the town of Pinehurst, Clackamas County, Oregon, lots 7 and 8, in block 6, Peck’s addition to East Portland, and the northeast quarter of the southwest quarter of the D. L. C. of John Stephenson, in.township 3 south, range 4 east of the Willamette meridian; that the defendants A. J. Dwyer, Katherine M. Dwyer, and E. P. McCarthy account to O’Donovan for the $875 received by them for said lot 10, block 2; that O ’Donovan repay to Katherine M. Dwyer the $350 received by him from McCarthy on account of Katherine M. Dwyer, and the — 11 — $1,000 received by him on the $1,500 note, less the said $875, namely, $475, with interest thereon from October 1,1910, and until the same be repaid it shall be decreed to be a lien on the northeast quarter of the southwest quarter of the D. L. C. of John Stephenson, in Clackamas County. The decree of the Circuit Court as to the rights of plaintiff and O’Donovan between themselves, having been made upon stipulation, is affirmed. Modified and Affirmed.