Carr v. Craig

• Decision Date: 06 June 1908
• Citation: 116 N.W. 720,138 Iowa 526
• Parties: CARR v. CRAIG.
• Court: Iowa Supreme Court

138 Iowa 526

116 N.W. 720

CARR

v.CRAIG.

Supreme Court of Iowa.

June 6, 1908.

Appeal from District Court, Adair County; Edmund Nichols, Judge.

In her original petition plaintiff asked to recover judgment, as against the defendant, for money which had been invested by her in part payment for a tract of land, to which she had allowed him to acquire the title, in an action to foreclose, brought against plaintiff and her husband with the agreement that he would refund to her all the money which she had invested in the land. In an amendment to her petition plaintiff asked that an accounting be had between her and the defendant as to the money invested by him in acquiring title, and that she be decreed to be the absolute owner of said premises on payment of the amount found due to him, if any. The court found that defendant had been allowed by plaintiff to acquire title to the premises on foreclosure, with the agreement to repay to plaintiff the sums of money invested by her in the land, and found that the value of plaintiff's interest in the land was $2,097.31, which was declared to be a lien and charge on such land in defendant's hands, and decreed that plaintiff have judgment against defendant for costs, and that a special execution issue for the sale of the premises to satisfy the amount of plaintiff's interest. Both parties appeal, but as defendant's appeal was first perfected, he will be designated as the appellant. Modified on plaintiff's appeal, and affirmed on defendant's appeal.Frank B. Wilson, for appellant.

Haddock & Haddock and Hager & Powell, for appellee.

McCLAIN, J.

The plaintiff is the sister of the defendant, and acquired title to the land involved in this suit by purchase from one Cole in 1893. It appears that, although plaintiff's husband, Clarence Carr, with whom she was living at the time of contracting with Cole, but from whom she subsequently separated, invested no money in the property, the deed by Cole was made to plaintiff and her husband as joint grantees, and that, subsequently, some negotiations were had between plaintiff and defendant with reference to a foreclosure proceeding, to be brought by defendant against plaintiff on account of an outstanding purchase-money mortgage, as the result of which plaintiff's husband's apparent title as owner in common with plaintiff should be extinguished. The method of accomplishing this extinguishment was, according to plaintiff's testimony, that defendant should buy in the property at foreclosure, and either account to plaintiff for the money which she had already invested, or hold title in trust for her, subject to the payment by her of whatever money defendant had invested in acquiring title.

1. We are first met with the question whether plaintiff was a creditor of defendant to the extent of the money which she had invested, with a claim on the land for its repayment, or whether defendant held the title under the foreclosure proceedings in trust for plaintiff, with an obligation on plaintiff's part to repay to him the amount of his investment. After an examination of the record we reach the conclusion that plaintiff has not established the claim, made in her amended petition, that defendant holds the title in trust with a duty to convey to plaintiff on the payment of the amounts expended by him in acquiring such title. To defeat a title, regular on its face, by parol evidence of a constructive or resulting trust, arising from an express or implied agreement that such title shall be acquired and held for another,the evidence must be clear and satisfactory. Cunningham v. Cunningham, 125 Iowa, 681, 101 N. W. 470;Andrew v. Andrew, 114 Iowa, 524, 87 N. W. 494;Murphy v. Hanscome, 76 Iowa, 192, 40 N. W. 717. The agreement between plaintiff and defendant, under which the latter was allowed to institute foreclosure proceedings against the plaintiff, and acquire a title without resistance on her part, was, according to plaintiff's own testimony, that he was to hold the land for her, or for repayment to her of the money which she had invested in the land; and such corroboration as there is in the record of her story indicates that defendant's promise was to see that she got back her money out of the land. The circumstances under which this arrangement was made, according to plaintiff's showing, lends countenance to such an agreement. Plaintiff had invested, according to her own account, but a small portion of the purchase price, and given mortgages for the balance, and was without means or income from the land or otherwise to keep up interest payments and pay off the installments of mortgage indebtedness as they fell due. Under these circumstances it seemed inevitable that she must lose everything that she had invested, unless some arrangement could be made by which the property could be taken care of for her. The evidence does not show such a solicitude for plaintiff's welfare on the part of defendant as that she would be justified in supposing that he was willing to buy up or assume the payment of the outstanding mortgages and hold title to the land, merely as security for his investment and liability, with the privilege on the part of the plaintiff to redeem the title by repayment of the investment, and there is no evidence that either party supposed plaintiff would ever be able to redeem under such arrangement, or that plaintiff was to become the debtor of defendant for the money invested by the latter. We believe the evidence, even should we concede the entire truthfulness of plaintiff's own testimony falls short of establishing, with any reasonable certainty, an agreement on the part of defendant to hold the title to the land in trust for plaintiff, and in this respect we find the complaint, made on plaintiff's appeal, as to the correctness of the decree of the lower court to be without foundation.

2. We are satisfied, however, that there was an arrangement between the defendant and the plaintiff by which the former was to acquire title, subject to a trust obligation to refund to the latter the money which she had invested in the property. As to such agreement there is a direct conflict in the evidence, but the circumstances point strongly to the truthfulness of plaintiff's testimony. That the plaintiff had some money invested is beyond controversy; the amount being in dispute. There seems to be no explanation of her voluntarily turning over to defendant, as she did, the evidence of payments made on the purchase price and on the mortgage indebtedness, enabling defendant to treat these payments as made by himself, in order to show a claim on which a foreclosure proceeding could be predicated, unless there was an arrangement by which some benefit therefrom was to accrue to the plaintiff. The relations of the parties at the time the arrangement for the foreclosure of the mortgage was made were friendly, and it is incredible that defendant should have been in good faith buying up claims against the plaintiff in order to cut off her interest in the property, and doing so by her consent and assistance, unless there was some arrangement by which she was to be benefited by the transaction. We agree with the lower court in holding that such an arrangement was made as testified to by plaintiff and that, as an inducement for not opposing, as well as for facilitating, the foreclosure proceedings, defendant promised that he would refund to plaintiff whatever money she had invested, and hold the title acquired by the foreclosure proceeding subject to a trust obligation to make such repayment. We see no difficulty about establishing such a trust obligation in a court of equity by parol evidence. Such evidence is not to be shut out on the ground that it tends to show an express trust in land in violation of the statute of frauds, but is admissible to establish a constructive trust, arising from the violation by the defendant of the confidence reposed in him by his own procurement, violation of which constituted a fraud. There is enough in this record to show that, while defendant induced plaintiff to allow him to acquire title to her land by foreclosure, by means of a promise to refund to her the money she had invested, his real intention was to acquire title, and hold it in violation of such agreement. This purpose is evidenced by his subsequent conduct. Under such circumstances a court of equity will treat the acts of the defendant as constructively fraudulent, and defeat his attempted wrong by imposing upon him a duty in...