Walsh v. McBride

McSherry, J., delivered the opinion of the Court. William Walsh and Frederick Minke purchased from Adrian Hedían certain real estate for the sum of fourteen hundred dollars, and agreed between themselves that each should pay one-half of the stipulated consideration. When Hedían delivered the deed which conveyed the property to Walsh and Minke, Minke was not prepared to pay his half of the purchase money, and Mr. Walsh paid the whole amount. The deed was delivered July 3rd, 1884. On September 29th of the same year a note was signed by Minke, and endorsed by Mr. Walsh and Mr. Williams, for $1400, to enable Mr. Walsh to realize the said $1400 paid by him to Hedían. This note Mr. Walsh procured to be discounted, and he received the proceeds. The note was renewed several times, and was finally reduced to $1,322. 50 by payments made out of the rent received from the property. The last renewal is now long overdue and unpaid. The property was formerly owned by F. Haley. Both Walsh and Minke had lost as endorsers of Haley, and they “purchased this property with the hope that they could sell it to some advantage.” In January, 1886, Minke died, and in June following Mr. Walsh filed a bill in the Circuit Court for Alleghany County, against Minke’s heirs-at-law, charging that he, Walsh, and “Minke became tenants in common of said land, and said Minke’s interest therein became subject to a lien in favor of” Walsh “for the purchase money therefor paid by him,” and that Walsh “Avas and is entitled by subrogation to the rights of the vendor of said land, the said Hedían, — to a — 55 — lien or charge upon said Minke’s undivided interest in said land for the purchase money thereof paid by ” Walsh. ' The defendants answered the bill, and denied the existence of any such lien. After hearing, the Circuit Court dismissed the hill, and from that decree this appeal was taken. It will he observed that the single theory upon which the bill is founded is that Mr. Walsh is “entitled by subrogation to the rights of the vendor of said land.” In other words, he invokes the familiar doctrine that a surety who pays the purchase money is entitled by subrogation to the lien of the vendor. Winder vs. Diffenderffer, 2 Bland, 166; Ghiselin and Worthington vs. Fergusson, 4 H. & J., 522; Magruder vs. Peter, 11 G. & J., 219; Welch vs. Parran, et al., 2 Gill, 320. But to entitle him to relief on this ground he must have been a surety for Minke, and as such surety-bound for Minke’s share of the purchase money; he must have paid that debt of Minke’s, and the vendor’s lien must not have been waived, abandoned, or extinguished. Had Mr. Walsh, instead of paying the purchase money, become surety on a bond or note of Minke to Hedian for Minke’s share of the purchase money, and had the deed been then delivered by Hedian, and had there been no express preservation of the vendor's lien, there can be no doubt that the lien would have been extinguished. And had Mr. Walsh subsequently paid the bond or note he could have claimed no priority over Minke’s other creditors. This is the specific proposition decided in Carrico vs. The Farmers and Merchants’ Nat. Bk., 33 Md., 235; and that case seems to us to be decisive of this. In the case just cited it appeared that Waters purchased two farms from Williams. By the terms of the contract the purchaser was to pay a part of the purchase money on January 1st, 1860, and the balance in four equal annual instalments, to be secured by bond, with approved security. The — 56 — cash payment was made, and a bond, with Carrico and others as sureties thereon, was given for the deferred payments, and thereupon Williams conveyed the farms to Waters. Subsequently Waters, being heavily indebted, applied for the benefit of the insolvent laws, and was duly discharged thereunder. Carrico, one of the sureties, paid the purchase money due on the land, and in the distribution of the insolvent’s assets claimed that he was by subrogation entitled to the lien held by the vendor for the unpaid purchase money. Upon the authority of Schwarz vs. Stein, 29 Md., 112, McGonigal vs. Plummer, 30 Md., 422, and in conformity with the great preponderance of opinions of the other American Courts upon this subject, it was held, that when the legal title has been conveyed to the vendee, and he has given his note, with the responsibility of a third person thereon as, security for the unpaid purchase money, the lien will be considered as waived, unless it be made plainly to appear that it was the intention of the parties that it should be retained; and that in such case the onus of showing the intention to preserve the lien rests with the vendee, or those claiming in his stead. The claim set up by Carrico, the surety, was disallowed, because the vendor’s lien had been extinguished. Now, the payment by Mr. Walsh for Minke of the latter’s share of the purchase money in cash, assuming that the payment was made by Walsh as surety for Minke, placed Walsh in no better position than he would have occupied had he become surety on a bond or note of Minke’s; because there was no preservation whatever of the vendor’s lien; and in fact, there was no longer any such lien in existence. By the payment of the whole purchase money in cash, and by the conveyance of the legal title to the real purchasers, the equitable lien of the vendor was completely extinguished. Being thus extinguished, the vendor had no longer any lien or charge upon the pro — 57 — perty/and Mr. Walsh, was clearly therefore, not entitled, by subrogation or otherwise, to a lien or charge which had actually ceased to exist. There is nothing in the case of Meluy vs. Cooper cited by Chanceller Bland in a note to Winder vs. Diffenderffer, supra, at all in conflict with the conclusion just announced. The facts in Meluy vs. Cooper were these: One Sherwood, as trustee under a decree, sold certain property to Cooper; Cooper agreed to allow Meluy to become a joint purchaser, each to pay one-half of the purchase money, and Cooper took possession, and then died, without having paid any part of the purchase money, and Meluy afterwards paid the money, but no deed ivas obtained from, the trustee. Meluy claimed a lien on Cooper’s half for the purchase money which he, Meluy, became bound as surety to pay, and had in fact paid. The relief prayed was for a sale of the property to reimburse the surety. The defendants admitted these allegations, and a decree was passed for a sale. There are several features of mai-ked difference between the case last cited and the one at bar. Meluy was not a joint purchaser from the trustee, but was surety for Cooper. Between Cooper and himself there was an independent contract that Meluy should purchase a one-half interest. When Meluy, who was bound as surety, paid the purchase money to the trustee, no deed was given, and the surety was allowed to have the benefit of the equitable lien of the vendor. This was undoubtedly correct, because that lien had not been waived or extinguished, as it certainly was in the case now before us. We do not deem it necessary to review the decisions of other Courts to which our attention has been called, because we think the cases cited from our own reports are entirely conclusive on this subject. It has been suggested that the payment by Mr. Walsh of the whole purchase money, under the circumstances — 58 — stated, created a resulting trust in his favor. In our opinion that position is not tenable. In all species of resulting trusts, intention is an essential element, although that intention is never expressed by any words of direct creation. 3 Pom. Eq., sec. 2031. As the trust results to the real purchaser by operation of law, which is merely an arbitrary implication in the absence of reasonable proof to the contrary, the nominal purchaser is at liberty to rebut the presumption by the production of parol evidence, showing the intention of conferring the beneficial interest. The trust will not be raised in opposition to the declaration of the person who advances the money, nor in opposition to the, agreement of the parties on which the conveyance is founded, or to the obvious purpose and design of the transaction. 1 Lewin on Trusts, (star page) 170; Rider vs. Kidder, 10 Ves., 360; Garrick vs. Taylor, 29 Beav., 79; Standing vs. Bowring, L. R., 27 Ch. Div., 341; Botsford vs. Burr, 2 John. C., 416; Steere vs. Steere, 5 John. C., 18; White vs. Carpenter, 2 Paige, 265; 2 Story Eq., sec. 1202; Adams Eq., 33; Hill on Trustees, 96 and 97. The evidence to rebut need not, perhaps, be as strong as evidence to create a trust. Nicholson vs. Mulligan, 3 Ir. Rep. Eq., 308. When a clear understanding is had at the time the purchase is made, the money paid, and the deed taken, by which understanding the nominal purchaser was to have both the legal and the beneficial interest, it is incompetent for the person who paid the purchase money to put a different construction upon the transaction at a subsequent time, and claim a resulting trust in the estate contrary to the understanding and intension at the time. 1 Perry on Trusts, (3rd Ed.) sec. 140. It is perfectly clear from this record, that it was the intention of both Mr. Walsh and Minke that Minke should have a legal and a beneficial interest in the property. It was bought by them to enable them both to — 59 — reimburse themselves for the losses they had sustained as sureties for Haley. This of itself would rebut the mere legal implication arising from the payment of the purchase money by Mr. Walsh. But in addition to this, the theory of the bill of complaint is utterly at variance with any idea of a resulting trust. The bill claims a lien on Minke’s interest as a tenant in common. Eor such a lien to exist Minke must have had a beneficial interest, and not merely a naked legal title in trust for Walsh. If Minke had a beneficial interest, he was clearly not a trustee for Walsh, and if he was a tenant in common he had a beneficial interest as well as the legal title. Hence, the suggestion that he held as trustee for Walsh is distinctly repudiated by the bill itself. To support a resulting trust, every material averment of the second paragraph of the bill must be not merely disregarded, but actually reversed. The allegation that Walsh and Minke were tenants in common must be treated as though it asserted that Minke had no beneficial interest in the land at all; and the statement that Minke’s interest in the property became subj ect to a lien in favor of Walsh must be read as though it charged that Minke was only a trustee for Walsh, holding the legal title for the benefit of the latter. In fine, the intention of the parties must be overthrown, and a presumption of law substituted therefor, even though that presumption is allowed to prevail only when there are no circumstances shown which indicate the existence of a different purpose. Looking to the face of the bill- of complaint and the agreed statement of facts, the substance of which has already been set forth, it is, we conceive, impossible to escape the conclusion that it was intended Minke should have a beneficial interest in the property. Upon no other hypothesis can a satisfactory explanation be given of the $1400 note transaction. The moment it appears or is conceded that it was originally intended — 60 — Minke should have a beneficial interest in the property, as well as the legal title, the foundation of a resulting trust is cut away; because the legal implication upon which alone such a trust depends can never, as we have seen, exist in contravention of the agreement of the parties. Hence the money advanced by Mr. Walsh for Minke must be treated as a mere loan upon the personal credit- of the borrower. (Decided 6th February, 1890.) Entertaining these views, we must affirm the decree passed by the Circuit Court. Decree affirmed.