Greil Bros. v. Brooks

MAYFIELD, J. This is an appeal from a decree overruling a demurrer to the original bill. The case made by the bill is well stated by counsel as follows:.: “The original bill was filed by the appellee against appellants, Greil Bros. Company, Anderson Crenshaw, and C. E. Brooks, alleging, in substance: That appellee was the owner of certain lands located in Lowndes county and had been for several years. That she had intrusted the leasing and renting of these lands, and the collection of the rents therefrom, for a number- of years to her husband, C. E. Brooks; that in September, 1908, her husband entered into a lease of the land for a term of five years with one Anderson Crenshaw, a copy of the lease being attached as ‘Exhibit A’ to the bill. That her husband, instead of having the lease and the rent notes made payable to her, executed the lease in his own name, and had the notes made payable directly to himself. (The notes, or copies thereof, are not attached as exhibits to the bill.) That in having the lease executed in his own name, and taking the rent notes payable to himself, her husband acted without her knowledge, consent, or authority, and that she was ignorant of such facts, and did not discover them until a short time before the filing of the bill. That her husband transferred the rent notes — not the lease — to Griel Bros. Company, one of the appellants, as collateral security for his indebtedness to said Griel Bros. Company. That said Griel Bros. Company had collected the rent notes payable during the year 1909, and a portion of [582] the notes payable in 1910, and that said company was holding the balance of the notes as collateral to the payment of her husband’s indebtedness to said company. The bill further alleges that the indebtedness was not appellee’s indebtedness, but that of her husband, and that she never authorized or consented that the rent notes should be transferred, or the rents from the property applied in payment of the indebtedness to said Griel Bros. Company. “The relief prayed is in the alternative, namely, (1) that the lease and rent notes be reformed so as to show that they were executed in the name of the appellee, instead of her husband, and that she be authorized to collect the rents from the land for the remainder of the term of the lease, or, if mistaken in this, (2) that the lease and rent notes be set aside and canceled as a cloud upon appellee’s title to the lands mentioned. A temporary Avrit of injunction is prayed for, and also an accounting*, hut no injunction ever issued. “Appellant Griel Bros. Company filed a demurrer, assigning numerous grounds, which demurrer appears on pages 10-12 of the record. The respondents C. E. Brooks and Anderson Crenshaw did not appear in the lower court. “The case was submitted on demurrer to the bill, and the court rendered a decree overruling the demurrer, AA-riting an opinion, the opinion and decree being set out in the record on pages 12-18. * * “All of the assignments of error go to the ruling of the chancellor in rendering the decree overruling the demurrer of Griel Bros. Company to the bill of complaint.” The chancellor, we think, properly held that the bill did not make a case entitling the complainant to either one of the two specified reliefs prayed — that is, to reform [583] the lease contract or to remove a cloud from title — and this for the reasons assigned hy the chancellor in his •opinion, which the reporter Avill set out in reporting this case. We cannot agree Avith the chancellor, hoAvever, that the hill makes a case for relief under the general prayer, on the theory that the bill shows a constructive trust enforceable against the tenant and the appellant Griel Bros. Company. If this were a contest solely between the principal and the agent, and the rights of third parties Avere not involved, the chancellor might be correct in his conclusions. There is nothing in the bill to shoAV that the tenant, Crenshaw, had any notice Avhatever that the relation of principal and agent existed between complainant and her husband, or that the latter was acting as her agent in making the lease or taking the notes, or that he did not have the authority to make the lease in his own name and take the notes payable to himself, as he did. There is likewise no averment or pretense that Griel Bros. Company, transferee of such notes, had any knoAAdedge of the relation of principal and agent between complainant and her husband or of the lack of authority on his part to make the lease and take the notes, as he did, or of lack of authority to transfer and assign them to appellant. Following the rule that pleadings must be construed most strongly against the pleader, the bill in the present shape is susceptible of the construction that C. E. Brooks, the husband and agent of the complainant, transferred and assigned the notes in question to the appellant Griel Bros. Company as collateral security for a debt contemporaneous with the transfer and assignment of the notes, and that Griel Bros. Company had no notice, actual or constructive, of the complainant’s interest or rights in or to the notes. If this be true, the complainant would not be entitled to maintain [584] this bill against Griel Bros. Company on the theory of a resulting trust. That company would then be a bona fide holder of the notes for value Avithout notice of the complainant’s equity. The bill also sho ws that the notes Avere transferred and assigned before maturity, and for value. This would make the title and rights of Griel Bros. Company, which is not shoAvn. to have had any notice, either actual or constructive, of the trust, better than the claim of the complainant’s right to enforce this resulting trust. If the bill had sIioavu that Griel Brothers Company had any notice, either actual or constructiA^e, of the complainant’s rights or trust in or to the notes AA’hen they Avere acquired, or that it acquired them as collateral security for a pre-existing debt, the right of the complainant to enforce this trust might be different but the bill contains no such .aArennents, and for this reason the demurrers upon this ground should haAre been sustained. The case is distinguishable from that of Robinson v. Pierce, 118 Ala. 297, 24 South. 984, 45 L. R. A. 66, 72 Am. St. Rep. 160, by reason of the fact that the trust spoken of in that case was an express trust, and the parties claiming against it Avere chargeable Avith notice and knoAvledge of the recital of the trust in the muniments of title through AAdaich they claimed. The bill in this case is also defective in failing to aver that the tenant, who rented the lands from complainant’s husband, had knoAAdedge or notice of the relation of principal and agent, or that of trustee and cestui que trust betAveen the complainant and her husband, or that he Avas in fact renting the land of the complainant, and not .that of the husband, he having rented the same from the husband of the complainant, individually and personally, and not from him as agent or trustee, and having executed his notes to him for the purchase price, [585] and they having been transferred and assigned by the husband to Griel Bros. Company for a valuable consideration, we do not think that the resulting trust could have been enforced against said company. The only wrong complained of in the bill is that the husband executed the notes in payment of the rent, in his own name, instead of in his wife’s name, and that he transferred and assigned them before maturity to Griel Bros. The bill shows no wrong, whatever, upon the part either of the tenant or of Griel Bros. Company; nor does it allege any knowledge or notice, either actual or constructive, upon the part of either of them of the wrongs and injuries by the husband in the bill complained of. Until the bill is amended in these respects, it is, we think, without equity against the appellant. The decree of the chancellor overruling the demurrer to the bill is therefore reversed; and a decree will be here renderd, sustaining the demurrers. Reversed, rendered, and remanded. Anderson, McClellan, and Sayre, JJ., concur in the conclusion. Somerville, J., concurs in the opinion and decision. Simpson, J., dissents. Dowdell, C. J., not sitting.