Allen v. Jackson

Mr. Justice Scholfield delivered the opinion of the Court: We have not had the benefit of any argument, in the present case, on behalf of the defendants in error, and we may, therefore, have misapprehended some of the facts; but as we have been able to gather them from the abstract and argument of plaintiffs in error, they are, so far as important to any question to be considered by us, in brief, as follows: The Woodruff heirs owned a tract of land adjoining, or at least in the near vicinity of, the town of Marseilles, in La Salle county, which they contracted to sell and convey, for a consideration to be thereafter paid, to Roderick Clark. Clark was one of the organizers and incorporators of “The Marseilles Land and Water Power Company,” and on the 2d of April, A. D. 1867, he conveyed the tract to that company. In June of that year the company caused the tract to be laid off into lots, and platted, and in that and the next -succeeding year the complainants became the owners of certain of these lots through purchases from the company for valuable considerations paid, and title was conveyed to them by warranty deeds of the company. The payments not having been made to the Woodruff heirs for the tract of land, as provided for by their contract with Clark, on the 3d of October, A. D. 1878, they filed their bill in chancery in the circuit court of La Salle county, against the Marseilles Land and Water Power Company and the complainants and others, praying that it be decreed that the amount due on the contract with Clark be paid within a day to be named, and that in default, the company’s rights thereunder be terminated, and the parties in possession surrender that possession. Decree was rendered on the 10th of January, A. D. 1881, in conformity with the prayer of the bill; and the amount due not being paid, as provided by the decree, on the 18th of January, A. D. 1881, it was finally decreed that complainants in the present suit surrender possession, etc. Amzi F. Jackson was a director in the Marseilles Land and Water Power Company from 1875, and the president of that ■company from April, 1880. While acting as director and president of the company, and after the complainants in the present suit had been served with summons in the suit by the Woodruff heirs, against them and the Marseilles Land and Water Power Company, they applied to him to know, in substance and effect, whether the company would .protect them in that suit, and what steps they should take to protect their rights to the property they respectively held under their several warranty deeds from that company, and they were assured by him that the company would protect their rights, and that "they should pay no attention to the suit. Belying on this assurance, complainants made no defence to that suit, and made no effort to pay the money found due by the decree. A portion of the Woodruff heirs conveyed their interest in the tract to Barnes, on the 23d of December, A. D. 1880, and on the 29th of October, A. D. 1881, Barnes and the remaining WoodTuff heirs sold and conveyed to Jackson. A receiver of the Marseilles Land and Water Power Company was appointed on the 30th of December, A. D. 1880. The present bill was filed on the 29th of September, A. D. 1882, and summons was issued and served the same day, and on the 3d of November, A. D. 1882, Amzi F. Jackson conveyed to Hiram Jackson. The court below, on hearing, decreed that the bill be dismissed. A party may voluntarily assume a confidential relation "towards another, and if he shall do so, he can not thereafter do any act for his own gain at the expense of that relation. Kerr ■on Fraud and Mistake, (Bump’s ed.) 151, 179; Reed et al. v. Peterson, 91 Ill. 295. Where “a person obtains the legal title to property by virtue of a confidential relation and influence, ■under such circumstances that he ought not, according to the rules of equity and good conscience as administered in chancery, to hold and enjoy the beneficial interests of the property, courts of equity, in order to administer complete justice between the parties, will raise a trust, by construction, out of such circumstances or relations, and this trust they will fasten upon the conscience of the offending party, and will convert him into a trustee of the legal title, and order him to hold it, or to execute the trust in such manner as to protect the rights of the defrauded party, and promote the safety and interests of society.” Perry on Trusts, (1st ed.) 166. See, also, Kerr on Fraud and Mistake, (Bump’s ed.) 150; Beach et al. v. Dyer et al. 93 Ill. 295; Doyle v. Wiley, 15 id. 576 ; Trotter v. Smith et al. 59 id. 240; Tiffany & Bullard on Trusts, 113, 115, 120. It was the duty of the Marseilles Land and Water Power-Company to protect the interests of the complainants, because it had so covenanted. The position of Jackson was such that he could have known, and it was his duty to know, whether the company was able to do so or not. The complainants were therefore authorized to believe and rely upon his representations in that regard. By directing them to make no defence, but to trust to the company, he voluntarily assumed a confidential relation; and it would seem to be a palpable violation of the principles of natural justice, that he, having induced inaction on their part until it was too late to preserve their rights, should be allowed to then become, himself, the purchaser of the property. It is equitable that as respects their rights, the title to the property should be held to be in precisely the same situation that it was when he assured the complainants that their rights should be protected. What rights they then had they now have. They then would have been entitled to have had an account of all that had been paid, and that in selling the property for the payment of the balance due, that, part then unsold by the company should be first sold, and should there still remain a balance, the lots should be sold for its payment in the inverse order of their alienation, as in the case of successive sales of lands mortgaged when foreclosure is decreed. Iglehart et al. v. Crane et al. 42 Ill. 261. The decree is reversed, and the cause remanded for further proceedings consistent with this opinion. Decree reversed.