Frankenstein v. North

Mr. Presiding Justice Adams delivered the opinion of the court. Appellants’ counsel attack the decree on the following several grounds: That the premises in question are not to be regarded as personalty, as between complainants and the equitable owners thereof, the members of the Harlem Land Syndicate; that there was no express trust manifested by writing, as required by section 9 of chapter 59 of the statute of frauds, and no resulting trust in favor of the equitable owners, and that the conveyance of July 15, 1896, by North to Barr, was fraudulent as to complainants. It may be conceded that the declaration of trust executed by Andrew Rehm and others, the grantees of Addison M. Holton, June 27, 1889, was rendered of no effect by the conveyance from those grantees to John G. Lobstein, and that there was not thereafter any written declaration of trust, within the meaning of section 9 of the statute of frauds. Whether there was a resulting trust in favor of the members of the syndicate, who were partners in the venture, while the legal title was held by Lobstein and North, respectively, is a question of law. In Wallace v. Carpenter, 85 Ill. 590, Carpenter, Wallace and two other persons, purchased a tract of land on speculation, each to pay one-quarter of the expenses of the purchase, and to have one-quarter of the land or the proceeds thereof. For convenience in selling, the contract was taken in the name of Carpenter, and it was agreed that the deed should also be taken in his name. A part of the first installment of the purchase money was paid by Carpenter for himself and his partners in the venture. Carpenter, before a conveyance was made in pursuance of the contract, sold the land at a profit of $4,800, and refused to account with Wallace for his share of the profits. It was contended that the contract between the partners was void under the statute of frauds, but the court decided the contrary, holding as to Wallace that “A resulting trust in his favor grew, by operation of law, out of the transaction, which entitled him to one-quarter of all the benefits growing out of that payment. The benefits which did grow out of that payment were the profits of $4,800.” In Speyer v. Desjardins, 144 Ill. 641, which was an appeal from a decree sustaining a demurrer to, and dismissing appellant's bill, it appeared from the bill that Speyer' and Desjardins had purchased as partners, land on speculation, the profits to be equally divided, and that the title was taken in the name of Desjardins, who claimed to be the sole owner. The court reversed the decree, holding, among other things, that “ an agreement for a partnership for the purpose of dealing and trading in lands for profit is not within the statute, and that the fact of the existence of the partnership and the extent of each party’s interest may also be shown by parol, is now quite generally accepted as the established doctrine,” citing numerous cases. The court further held that a resulting trust in favor of Speyer to the extent of his interest arose by operation of law. See also Towle v. Wadsworth, 147 Ill. 80, 96; Allison v. Perry, 130 Id. 9; Perry on Trusts, 4th Ed., Sec. 132. In Phillips v. North et al., 77 Ill. 243, which was a creditor’s bill in aid of an execution, it appeared that North, the judgment debtor, some months before the judgment was rendered, was the legal owner of certain lots which he conveyed t.o A. in exchange for another lot, and that A. conveyed the latter lot to North’s wife. But it further appeared that Mrs. North was the equitable owner of the first mentioned lots, that they were paid for with her money and that they were first conveyed to North, but subsequently were sold and conveyed by North and wife to another person, who, in part consideration for such eonvey•.ance to him, conveyed to Mrs. North the lot in controversy. The court held that the conveyance was not fraudulent as to the complaining creditor, saying : “ It abundantly appears from the sworn and uncontradicted answers of the defendants that the property given in exchange for the lot in controversy was owned by Mrs. North, paid for by money derived from a source other than her husband. If this be true, and it is not controverted, then in equity she was the undoubted owner of this lot, and the unauthorized conveyance to her husband rendered him, in equity, her trustee, which would have, on a proper application, compelled him to convey to her; and, holding in trust for her, he had the legal right to reconvey to Allen and have him transfer the legal title to Mrs. North, and thus unite the legal and equitable title where it belonged.” In view of these authorities, we are of opinion that there was a trust in favor of the persons composing the syndicate, and who were partners in the venture, to the extent of their respective interest, when the property was conveyed to Lobstein, and that the trust followed the property when it was conveyed by Lobstein to North, in favor of the new or “ Harlem Land Syndicate,” of which North was a member, and that had North claimed to be the sole owner of the property, to the exclusion of his partners in the venture, and attempted to appropriate it to his own use, as, for instance, by conveying it to complainants in satisfaction of the indebtedness to them of North and Taylor, a court of equity, on proper application, would have restrained him from so doing. Whether the trust with which the premises were charged, in favor of the partnership, while North held the title, ■was, or not, a resulting trust, in the strict sense in which those words are used in text-books and adjudged cases, matters not; it was a trust which the law would imply from the circumstances in evidence, and being such, it was not necessary, under the statute, that it should be manifested by a written instrument. • The deed from North to Barr was executed and recorded July 16, 1896, and the deed from Mrs. North to Barr, of date July 16, 1896, was recorded August 25, 1896. The attachment suits were not commenced until August 28, 1896. Assuming the validity of the assignment of North’s personal interest to Barr, the record shows that the interest of each of the members of the “ Harlem Land Syndicate ” in the southern part of the subdivision, including the premises conveyed to North and by him and his wife to Barr, was in proportion to the investments made by them, as follows: Agnes Fuellgraff, $3,500; C. A. Conkey, $1,000; George A. Bobbins, $1,000; Alfred E. Barr, $3,500; in all $9,000, North having only one-ninth interest, and his co-partners eight-ninths. It does not appear from the evidence that complainants, or any of them, in fact, gave credit to North and Taylor on the faith of the ownership of North of the premises in question, or even that they knew that the legal title was in North until about the time of the commencement of the attachment suits. North was not in possession of the premises. The evidence shows they were vacant and unoccupied. The conveyance was made by Lobstein to North October 26, 1895, and was recorded November 9, 1895. Frankenstein testified to a balance due him from the bank December 26, 1895, of $952, and Sprich that he had been depositing in the bank since 1894. Foster failed to testify how long he had been a depositor. When the deposits included in the balances testified to were made does not appear. Appellants’ counsel now claim the right to subject the premises, of at least the value of $10,000, in which North had originally only one-ninth interest, which he assigned to Barr, to the payment of judgments amounting to $2,393.12, exclusive of costs, to the exclusion of the equitable rights of Barr and his co-partners in the venture, insisting that the complainants have the superior equity, and this notwithstanding the legal title- was vested in Barr prior to the commencement of the attachment suits; and there is no evidence of actual fraud in any of the conveyances. In this view we can not concur. The assignment by North to Barr of date August 15, 1896, before the attachment suits were commenced, divested N orth of all beneficial interest in the premises in question. That North and Taylor were indebted to Kerr and Barr, for whose use the assignment was made, in an amount in excess of North’s investment in the premises, is not controverted, and that a debtor in failing circumstances may, in good faith, prefer a creditor, is incontrovertible. Tomlinson v. Matthews, 98 Ill. 178, and cases there cited. Ah between North and Barr, who were partners in the venture, North’s interest, he and Barr being partners, could pass as personalty. Speyer v. Desjardins et al., 144 Ill. 641. At the time the attachment writs were levied North had no interest, legal or equitable, in the premises levied on. The decree will be afiirmed.