Alwood v. Mansfield

Mr. Justice McAllister delivered the opinion of the Court: It has been strenuously insisted by counsel for appellant, ■that the conveyance to Mansfield, although absolute in form, was, nevertheless, but a security for a loan, and should, therefore, be declared a mortgage, and appellant, who has succeeded to all the rights of her co-tenants in the lands, be permitted to redeem. This case has been twice considered by the court, and much, -care and deliberation given to it. It is the opinion of all the •members of the court, that the arrangement between Manning & Merriman, Hugh M. Alwood and Mansfield, under which both the deed to Manning, by his clients, and from him to Mansfield, were made, contemplated, as between these immediate parties, an absolute sale to Mansfield of the 1000 acres of land conveyed to him. The transaction shows nothing of the character of a loan, or of the relation of debtor and creditor. The weight of the evidence is almost wholly in favor of an absolute sale, and will justify no other conclusion. The next question in the natural order of this case is, whether, under the evidence, the transaction is impeachable, so far as relates to the interest of Hugh M. Alwood. It is the opinion of a majority of the court that it is not. If it had been between him and his solicitors, in its principal features, the case would have been different. But his position is this: He first applied to Mansfield for a loan. The latter expressly refused to make any loan on the land, but suggested a willingness to purchase and pay for a portion of the land. The unwillingness of Mansfield to make a loan, or rather his determination not to, must have been understood by Hugh M. Alwood, if he was a sane man. Then Mansfield proposed that if Manning would obtain a deed from Hugh and his sisters, he would purchase the 1000 acres, and pay the amount of the Ruekman decree. Hugh M. Alwood assented to this. Here he was dealing with Mansfield, between whom and himself no confidential relation existed. If he was deceived by any matters between Mansfield and Manning & Merriman, or if the latter exercised any undue influence over him, the case does not show it. The case, so far as he is concerned, ivas, from the beginning and throughout, based upon the ground, that the transaction was of the character of a loan and security, and not an absolute purchase. The entire weight of the evidence is against this theory, and so far as the evidence discloses, there is not only no basis for the position, but.explicit and extraordinary pains were taken at every step of the business to have him understand that it was not a loan and security, but an absolute sale. A man has no right to wilfully and perversely shut his eyes against the real nature of a transaction, and then, without proof of deception and fraud, ask a court of equity to give him relief on the ground that he understood it differently from what it was. If he was deceived by his solicitors, he has failed to show it. The emergency was great and pressing, we admit, but in every other respect he and Mansfield dealt at arm’s length. There was no confidential relation between them. He was privy to the entire arrangement for Manning to obtain the deed from his sisters, and convey absolutely to Mansfield. He could not have misunderstood it, and is guilty of the unpardonable conduct of going with Taggart to his sisters and representing to them that the deed to Manning was only to enable the latter to borrow money to pay off the Ruckman decree, when he must have known, if sane, that the purpose of it was to make an absolute sale of 1000 acres of the best of the lands for a sum merely sufficient to discharge that decree. But it is the opinion of a majority of the court, that the case, as respects the interest of Sarah Alwood and Esther A. Phillips, stands upon an entirely different footing. At the time they executed the deed to Manning, he and Merriman were their solicitors in a suit involving these very lands. Taggart came to them with a deed which had been prepared by Merriman, representing himself as the agent of Manning, requesting them to execute it. He told them that the object of the deed was to enable Manning to use the lands as security in raising the sum requisite to comply with the Ruckman decree, the time for which had, as they knew, nearly expired. He said that he understood that, unless the deed ivas made in time for him to go back to Peoria by the next morning, the land would be lost, or it would be too late to comply with the decree. Mrs. Phillips asked him what kind of a man Mr. Manning was. Taggart assured her he was a perfectly honest man, and would do as Hugh requested. She wanted a bond from Manning for their protection. Taggart assured her that it should be all right. Under these circumstances, without any intimation as to the arrangement already made, to sell 1000 acres of these lands absolutely to Mansfield, and acting under the belief created by the representations made to them, that the purpose of the deed was to enable Manning to use the lands as security to raise money with which to comply with the Ruckman decree, and without consideration, these two females, the clients of Manning & Merriman, executed this deed to one of their solicitors. The rules of law, relative to the duties of solicitors, are quite familiar. It is the duty of the solicitor to protect the "interest of his client. The client is entitled to the full benefit of the best exertions of his solicitor ; and the solicitor may not bring’ his own personal interest, in any way, into conflict with that which his duty requires him to do on behalf of his ' client. Manning & Merriman had a special and pecuniary interest in having-the Ruckman decree complied with, for without such compliance their mortgage was worthless. This interest was the motive, on their part, for the arrangement with Mansfield. Although by it they were to release their mortgage on the land, yet they were to have an agreement for its payment out of the proceeds of the land. When, by this arrangement, 1000 acres of the best of these lands were to be sacrificed as to their clients—a sacrifice of §10,000, at least, for the sake of securing their mortgage for $3000—is it not manifest that they thereby brought their own interest into direct conflict with their duty to their clients ? Their clients were a brother and two sisters, who were tenants in common of the lands. Their duty was to each individually. If they saw that the brother was" willing to join with them in a scheme to sacrifice the interests of his sisters, was it any palliation of the wrong on their part, that they were enabled to superadd to their own influence, growing out of the relation of solicitors and confidential advisers, that of a brother who had a similar dominion over the minds of these unprotected females ? Not- by any means. If these solicitors discovered that the brother was willing to lend his influence to the attempt to obtain this deed, it was their duty to intervene, apprise their clients and prevent the contemplated wrong, as readily as if he bad been- a stranger, instead of a brother. When, therefore, Merriman put into Taggart’s hands the deed to be executed, which was to cut off these female clients forever from the lands bargained to Mansfield, it was his duty to inform Taggart, if he was not already informed, of the proposed absolute sale, and require him to fully disclose it to these clients before they were asked to execute the deed. If Merriman had obtained the execution of the deed in person, could there have been any doubt of his duty to make a full disclosure ? And will it be tolerated that an attorney or solicitor may avoid that duty and obtain the conveyance of valuable property from clients without consideration, by sending a clerk instead of going in person ? But, it is said that Taggart was the mere agent of Hugh M. Alwood. It is venturing rather too far upon the credulity of the court to take that position in the face of the testimony in this case, which, from its very nature, calls for the severest scrutiny of a court of equity. It is not an uncommon artifice, in cases of overreaching and fraud, to so manage the transaction that the instrument, through whom the fraud is perpetrated, shall appear to be the agent either of the victim, or of some person other than the one who reaps the benefit of the fraud. It is true that Mansfield told Taggart that he would not pay him for going, but if he did go, he wanted him to investigate the title and see if it was good in the Alwoods. It was so managed that Hugh should first speak to Taggart about going. Still Merriman prepared the deed for his clients to execute, directed him to get it done, and at the same time guaranteed him his pay for going. Taggart was, at that time occupying Manning’s office, and it appears, though rather obscurely, that he had studied law with Manning & Merriman, and was very familiar with the Buckman litigation. He testifies himself, that he understood, at the time he went, that Manning & Merriman had a mortgage for $3000, their fees in the Buck-map case, and that if the decree was not complied with by the 15th of November, 1861, they would lose their fee. And when he saw the women, he, as several witnesses testify, represented himself as Manning’s agent. Then, when he returned, to whom did he report the result of his mission? To Hugh M. Alwood ? By no means. He first accounted for his agency to Merriman, who gave him the deed to get executed, informing him that it was executed and placed upon record. He then reports to Mansfield that he had investigated the title, found it good in the Ahvoods and free from incumbrance, except the mortgage to Manning & Merriman. The only remaining question is, whether Mansfield is so far affixed with notice as to place him in the position of Manning, in respect to the acquisition of the deed to the latter. The evidence shows, most conclusively, that he knew of the existence of the relation of solicitors and clients between Manning & Merriman, and Sarah Alwood and Mrs. Phillips; that he knew of the existence of the mortgage Manning & Merriman held, and its origin. Knowing these facts, and the pressure of circumstances under which the Ahvoods were placed in regard to the Ruckman decree, Mansfield was the one who proposed that Manning should obtain from his clients the deed which was to enable the former to obtain a title to this land for less than a third of its actual value, and Manning & Merriman to secure their $3000 without further trouble. He knew that a purchase by Manning was not contemplated, and that the only means of obtaining the deed 'was through the confidential relation subsisting. He was a direct party to the act of sending Taggart to obtain the deed in this way. “ The principles,” says an excellent author, “ which govern the cases of dealings of persons standing in a fiduciary relation, apply to persons who clothe themselves with a character which brings them within the range of the principle; or, who take instruments, securities or moneys, with notice that they have been obtained by a person filling a position of a fiduciary character, from a person towards whom he stands in such relation.” Bump’s Kerr on Frauds, 152, and cases in note 4. And again, on page 194, the same author says: “In the application of the principles of the court, there is no distinction between the case of one who himself exercises a direct influence, or of another who makes himself a party with the person who exercises the undue influence.” Mansfield, by making himself a party with Manning & Merriman, who filled the position of a fiduciary character towards those from whom the deed was obtained, was just as much bound to 'show, to the satisfaction of the court, that the parties to the deed were, notwithstanding the relation, substantially at arms’ length and on an equal footing, and that nothing had happened which might not have happened had no such relation existed, as Manning would have been, if the controversy were between him and his clients. The burden was upon him, under the circumstances of this case, as it would have been upon the solicitors themselves if they had attempted to hold the lands to the exclusion of the rights of their clients, to show that the transaction was in all respects just and fair. Instead of assuming that burden and making the proof required by an inflexible rule of public policy, none is attempted, and the evidence stands uncontradicted that the deed was obtained by concealment, misrepresentation and contrivance. “ Whenever the circumstances of a transaction are such that the person who takes the legal estate in property, can not also enjoy the beneficial interest, without necessarily violating some established' principle of equity, the court will immediately raise a constructive trust and fasten it upon , the conscience of the legal owner, so as to convert him into a trustee for the parties, who, in equity, are entitled to the beneficial enjoyment.” Hill on Trustees, 144. It is the opinion of a majority of the court, upon the whole case, that Mansfield should be declared a trustee for complainant, by virtue of a constructive trust, as respects and to the extent of all that portion of the land conveyed to him by Manning, which belonged to complainant and Esther A. Phillips, as heirs at law of A. J. and Benjamin Alwood; that upon an account being taken and stated by the master, in accordance with the rules and practice of equity in cases between trustee and cestui que trust, of the whole amount paid by Mansfield, to apply on the Ruckman decree, and all moneys expended by him in payment of taxes legally levied, or for necessary repairs upon the premises, with legal interest, and deducting therefrom all that he may have received as the rents, issues and profits of the land; then from the balance, if any there be, thus chargeable upon the whole lands, an amount should be ascertained bearing the same proportion to the whole sum, so chargeable upon the lands, as the portion and share of complainant and Esther A. Phillips therein, as such heirs at law, shall bear to the whole lands conveyed. This proportionate sum should be required to be paid by complainant in ninety days from the entry of the decree; and upon payment thereof within the time prescribed, the legal title of such portion as belonged to complainant and Esther A. Phillips, as aforesaid, should be required to be conveyed to complainant. Nor will the court be prevented from making such final determination of the cause on account of the purchase, by Pretty man, pendente lite, set up in defendants’ answer; but such conveyance will be held in subservience to the rights of the parties in this litigation. ' The decree of the court below dismissing the bill must be reversed and the cause remanded, with directions to the court below to proceed and render a decree in conformity with this opinion. Decree reversed.