Trice v. Comstock

• Decision Date: 24 March 1903
• Docket Number: 1,808.
• Citation: 121 F. 620
• Parties: TRICE et al. v. COMSTOCK et al.
• Court: U.S. Court of Appeals — Eighth Circuit

121 F. 620

TRICE et al. v. COMSTOCK et al.

No. 1,808.

United States Court of Appeals, Eighth Circuit.

March 24, 1903

Syllabus by the Court.

Wherever one person is placed in such a relation to another by the act or consent of that other, or by the act of a third person, or of the law, that he becomes interested for him, or interested with him, in any subject of property or business, he is in such a fiduciary relation with him that he is prohibited from acquiring rights in that subject antagonistic to the person with whose interests he has become associated.

A violation of this inhibition, and the acquisition by one of the parties, by means of interest or information acquired through the fiduciary relation of any property or interest which prevents or hinders his correlate in accomplishing the object of the agency, charges the property thus acquired with a constructive trust for the benefit of the latter, which may be enforced or renounced by him, at his option.

The test of such a trust is the fiduciary relation, and a betrayal of the confidence imposed under it to acquire the property. Neither a legal nor equitable interest by either party, during the relation, in the property subsequently acquired, nor authority in either to buy or sell it, nor damage to the party betrayed, nor the existence of the fiduciary relation at the time the confidence is abused, is indispensable to the existence and enforcement of the trust. The existence of the relation, and a subsequent abuse of the confidence bestowed under it for the purpose of acquiring the property, are alone sufficient to authorize the enforcement of the trust.

Real estate dealers who were engaged in procuring from owners options to purchase their property at fixed prices, and in selling it at higher prices, retaining the difference themselves as their profits, employed a resident of another state as their agent to solicit and conduct to their county probable purchasers of lands, and agreed to pay him his traveling expenses and 50 cents an acre on all the lands sold to the customers he brought. The agent conducted a probable purchaser to his principals. He and the possible customer were shown a tract of 1,925 acres by his principals, which was for sale at the rate of $20 an acre by the owners, but in which the principals had no interest and upon which they had no contract. In this way the agent learned the location and value of the land. He was paid the expenses of his trip by his principals under the contract of agency. Three months later he renounced his agency, and one month thereafter, and while his principals were still endeavoring to sell the land to the possible customer whom he had conducted to them, the agent bought the land of the owners for himself at the price of $20 an acre. Held, the title to the land obtained by the agent was charged with a constructive trust for the use and benefit of his principals, which a court of equity would enforce.

The principle, 'He who comes into equity must do so with clean hands,' repels a complainant only when his iniquity consists of wrongful conduct in the acts or transactions which raise the equity he seeks to enforce.

The actual payment before notice of the purchase price is indispensable to the maintenance of the claim that one is a bona fide purchaser of property for value without notice.

B. G Thurman and R. B. Robinson (H. H. McCluer, on the brief), for appellants.

John C Tarsney, for appellees.

This is an appeal from a decree which dismissed a bill exhibited by Charles Y. Trice and David A. Beamer to charge the title of 1,925 acres of land, held by the defendant James C. Comstock, with a trust for the use and benefit of the complainants. The pleadings contained many allegations and denials, but the evidence disclosed these facts:

Trice and Beamer were engaged in dealing in real estate at Lamar, in Barton county, Mo. They were in the habit of obtaining the right to purchase lands at fixed prices from the owners, of selling them at higher prices, and of making the difference themselves. Sometimes they procured contracts from the owners whereby it was stipulated that they might sell the lands and retain for their compensation the difference between the prices fixed in the agreements and the prices at which they were able to sell them. The land in controversy in this suit was situated in Barton county. It consisted of 1,925 acres, and the title to it was in Alfred P. Reid and Eoline G. Green, the executor and executrix of the will of Henry B. Buckwater, who had died in 1897. George E. Bowling, of Barton county, had been the agent of Buckwater to rent and care for these lands for many years prior to his death, and was the agent of the executors for the same purpose after his decease. Bowling claimed that he had power from the executors to sell the lands, but this claim is not sustained by the evidence. The lands were for sale by the executors at the price of $20 per acre, and the complainants were aware of this fact. Bowling informed Trice and Beamer that he had the right to sell the lands for that price, and made an agreement with them to the effect that they should have the option or right to purchase them at that rate, and Trice and Beamer supposed that he had the power to make this contract. George H. Reitmeyer was a dealer in real estate at Maquoketa, in the state of Iowa. C. W. Comstock was a banker at Lost Nation, in that state, and James C. Comstock was his brother.

In this state of the case, the complainants, Trice and Beamer, made an agreement with Reitmeyer and C. W. Comstock to the effect that the complainants appointed Reitmeyer and Comstock their agents to procure and conduct to Barton county, Mo., purchasers for lands controlled by Trice and Beamer in that county, and agreed to pay them for their services one-half the railroad fare of the intending purchasers, all the railroad fare and traveling expenses of the agents in conducting the customers from Iowa to Missouri and return, and $1 per acre for all lands in Barton county, Mo., sold to customers furnished by Reitmeyer and Comstock. In May, 1899, Reitmeyer and Comstock entered upon the discharge of their duties as agents for the complainants under the contract. The complainants wrote a general description of the 1,925 acres of land here in controversy to Comstock, and he conducted to Barton county a Mr. Shirk for the purpose of inducing him to buy this tract of land. The complainants took Comstock and Shirk to the lands, drove them around and over a portion of them, showed the corn-cribs, the products of the property, its character and quality, and the rents it was likely to produce. They were not successful at that time in inducing Mr. Shirk to purchase, but continued their endeavors to sell the land to him after he returned to Iowa. C. W. Comstock learned the character, quality, and location of this land, its rental value, its occupation, the probable amount of rents it would produce, and essentially all the facts he ever learned concerning its value, under and by virtue of his services as one of the agents of Trice and Beamer to conduct customers to the land for the purpose of enabling them to sell it. The complainants paid Comstock his railroad fare and traveling expenses from Iowa to Barton county, Mo., and return, and a portion or all of the expense of Mr. Shirk. In August, 1899, Comstock conducted a party of land seekers from Iowa to Barton county, and the complainants displayed the lands which they controlled to them, and endeavored to induce them to purchase. At that time Comstock notified the complainants that he would bring no more customers to Barton county, and that all relations between them were closed. But Reitmeyer and Trice and Beamer were still negotiating to persuade Mr. Shirk to buy these lands. While these negotiations were pending, and on September 15, 1899, Comstock bought an option to purchase the land from Reid and Green, the executors of the will of Buckwater, and paid $75 for it. About October 12, 1899, C. W. Comstock assigned this option to his brother, James C. Comstock. On or about October 16, 1899, C. W. Comstock paid Reid and Green $1,925 on account of the purchase of this land, and on January 4, 1900, James C. Comstock deposited $10,000 with C. W. Comstock, out of which, he testifies, the $2,000 was paid back to C. W. Comstock. About March 1, 1900, James C. Comstock paid, out of this deposit of $10,000, $6,000 in part payment of the purchase price of the land, and secured a deed to it from Reid and Green. At the same time he executed his note for the sum of $30,000, and a trust deed or mortgage of the land to Reid and Green to secure its payment. Before he obtained this deed or paid the $6,000 he was notified of the claim of Trice and Beamer, which is presented in this suit. James C. Comstock never paid C. W. Comstock anything for the option on the land, although the latter estimated its value at far in excess of its purchase price. C. W. Comstock conducted the negotiations and managed all the business relative to the land after he assigned the option to his brother, as before.

On April 30, 1900, the complainants exhibited their bill against C. W. Comstock and James C. Comstock to the judges of the Circuit Court, in which they prayed that the defendants might be decreed to hold the title to these lands in trust for their use and benefit, and that they might be directed to convey them accordingly. The court below held that the foregoing facts disclosed no equity which entitled the complainants to relief, and dismissed the bill.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge (after stating the case as above,).

For reasons of public policy, founded in a profound knowledge of the...