Cooper v. Thomason

• Decision Date: 15 June 1896
• Citation: 45 P. 296,30 Or. 161
• Parties: COOPER et al. v. THOMASON et al.
• Court: Oregon Supreme Court

45 P. 296

30 Or. 161

COOPER et al. v. THOMASON et al.

Supreme Court of Oregon

June 15, 1896

Appeal from circuit court, Polk county; George H. Burnett, Judge.

Action by J.S. Cooper and another against W.J. Thomason and others for specific performance, and to cancel a deed. From a decree for plaintiffs the defendants other than said Thomason appeal. Affirmed.

This is a suit to compel the specific performance of a contract for the purchase of land, and to have a deed therefor declared void and canceled. The material facts are that on March 3 1893, the defendant H. Christian, being the owner in fee of a tract of land in Polk county, executed, with his wife, Emily Christian, and delivered to the plaintiff J.S. Cooper, as trustee, a warranty deed therefor; that on the 25th of the next month, in consideration of the payment of $1,000, and the execution of a note for $6,100, payable in 90 days Cooper, as trustee, by the advice and with the consent of Christian, executed a warranty deed of said premises to the defendant W.J. Thomason, who immediately entered into and retained the possession thereof; that the deed and note were deposited with one W.H. Hawley, the cashier of the plaintiff the First National Bank of Independence, to be delivered to Thomason upon the payment of said note; that, at the date of the execution of the deed by Christian, he was indebted to said bank on his own account, and as a member of the firm of Klemsen & Christian, and on April 26, 1893, he had a partial settlement with the bank, and, upon being credited with the $1,000 so paid by Thomason, gave his note for $2,250, and took up some of his matured notes, but left in the bank several other notes on which he was liable as maker or indorser, amounting to $1,981.22; that on the next day the said firm settled their account with the bank by giving it their note for $2,368.11; that on May 2, 1893, Christian and wife executed to the defendant H. Hirschberg a quitclaim deed to said premises, which was recorded prior to the deed to Cooper; that, Thomason having made default in the payment of his note, this suit was instituted, and, the issues being joined, a trial was had by the court, which, having found for the plaintiff, rendered a decree granting the relief prayed for, from which the defendants Christian and wife and Hirschberg appeal.

M.L. Pipes and J.J. Daly, for appellants.

Geo. E Chamberlain, for respondents.

MOORE, J. (after stating the facts).

It is contended by counsel for the appellants that this is a suit to enforce a parol trust in lands, that the deed from Christian and wife to Cooper, "as trustee," failed to declare an express trust, and that parol evidence was inadmissible to explain the nature and purposes of the instrument, while counsel for the respondents maintain that the trust has been executed by the trustee with the consent of the beneficiaries, and, this being so, the bar of the statute of frauds is removed, and the door is opened for the admission of parol evidence to establish the material terms of the trust. The parol evidence admitted at the trial, of which the defendants complain, clearly shows that Christian being indebted to the First National Bank of Independence on his own account, and as a member of the firm of Klemsen &amp Christian, entered into a contract with Cooper, who was the president of said bank, by the terms of which he agreed to convey said premises to the latter, who was to sell the same and out of the proceeds arising therefrom discharge the obligations of Christian and the firm of which he was a member, including any advances that might be made, and pay the remainder, if any, to Christian, that, in pursuance of this agreement, Christian and wife executed to Cooper, as trustee, the said deed, without specifying therein the nature of the trust; that Cooper, with the consent of Christian, entered into a verbal contract with Thomason for the sale of said land; that in accordance therewith he, as trustee, made to him a deed thereof which was deposited with Hawley, and accounted with Christian for the payment made by Thomason; and that the bank, on the faith of the conveyance to Cooper, and the sale by him to Thomason, advanced money to Christian and the firm of Klemsen & Christian. The principal question for consideration is whether this evidence was admissible. If it be conceded that this is a suit to establish a parol trust in lands, it must be admitted that its introduction was in contravention of the statute of frauds, which provides that no trust or power concerning real property can be created, transferred, or declared otherwise than by operation of law, or by conveyance or other instrument in writing, subscribed by the party creating, transferring, or declaring the same, or by his lawful agent, under written authority, and executed with such formalities as are required by law. Section 781, Hill's Ann.Laws Or. The rule is universal that a parol declaration of a trust will not affect the land, and for this reason parol evidence is inadmissible to establish such a trust. In Fairchild v. Rasdall, 9 Wis. 379, the court, speaking of the universality of this rule, say: "We do not feel called upon to cite authorities to show that in the absence of fraud, accident, or mistake, parol evidence cannot be received to prove that a deed absolute on its face was given in trust for the benefit of the grantor." But if it be agreed that the land shall be sold and converted into money, and in pursuance thereof a sale is made, the subsequent declaration of the trust by the trustee will bind the proceeds or the money. 1 Perry, Trusts, § 86. The reason assigned for the existence of this rule is that a trust in personal property may be declared by parol, and a sale of the land by the trustee of a parol trust under an agreement to convert it into money changes the land into personal property, and the subsequent declaration of the trust by the trustee, being supported by the prior agreement, to hold the premises in trust, furnishes a sufficient consideration for the enforcement of the declaration. Hon v. Hon, 70 Ind. 135; Mohn v. Mohn, 112 Ind. 285, 13 N.E. 859; Maffitt's Adm'r v. Rynd, 69 Pa.St. 380; Wiseman v. Baylor, 69 Tex. 63, 6 S.W. 743. In Karr v. Washburn, 56 Wis. 303, 14 N.W. 189, it is held that a parol trust in land is not absolutely void, but void only at the election of the trustee. The court, speaking of the power and duty of the trustee under a parol trust in lands, say: "He may execute it or not, as he chooses; and the courts will not interfere to compel him to execute it, or to restrain him from doing so. If he refuses to execute it, from thenceforth the trust, which rests only upon a moral obligation, is a nullity." Tested by this rule, it appears that the land in question was converted into personal property by Cooper under a parol agreement to apply the proceeds to the satisfaction of Christian's debts, and that, having executed the trust, he subsequently declared his liability to Christian, and accounted with him for the money received from Thomason. Such a declaration of the trust in personal property rendered Cooper liable to Christian for any balance that might be left after the satisfaction of his debts, and an action could be maintained for its recovery. In such an action, parol evidence would be admissible to show the parol declarations of a trust in personal property, and such evidence must be admissible also, in equity, to prove a parol declaration of the trust in land, as a consideration for the subsequent declaration. The deed to Cooper having recited a consideration of $7,000, the conveyance of the land was either absolute or in trust, and, if the latter, the trust has been fully executed, and the subsequent declaration must take the case out of the statute; but, if the deed was absolute, Cooper would be liable to Christian for the balance of the fund,...