Filson v. Fountain, 9664.

• Decision Date: 18 October 1948
• Docket Number: No. 9664.,9664.
• Citation: 84 US App. DC 46,171 F.2d 999
• Parties: FILSON et al. v. FOUNTAIN.
• Court: U.S. Court of Appeals — District of Columbia Circuit

84 US App. DC 46, 171 F.2d 999 (1948)

FILSON et al. v. FOUNTAIN.

No. 9664.

United States Court of Appeals District of Columbia Circuit.

Argued May 10, 1948.

Decided October 18, 1948.

Mr. Camden R. McAtee, of Washington, D.C., for appellants.

Mr. William M. Aiken, of Washington, D.C., for appellee.

Before EDGERTON, CLARK, and WILBUR K. MILLER, JJ.

CLARK, J.

This is an appeal from a dismissal in the District Court of a civil action, by one brother against another, for adjudication, recovery and enforcement of a claim for $6,000 as his unsatisfied equity arising out of a deed, related writings and transactions between the brothers with reference to certain improved real estate in New Jersey.

Paul Filson and Brainard Fountain were brothers, Filson having taken the name of his adoptive parents. In March of 1937, Filson, then bedridden, purchased a house and lot in Englewood, New Jersey, for $7,000 cash.¹ On March 8, 1937, four days after the date of the contract of sale of the property to Filson,² the brothers executed in New Jersey a written agreement by which Filson agreed to give clear title to Fountain and wife by June 1, 1937, and also agreed to give the Fountains $3,000 to be used by the Fountains for improvement of the property. In return, the Fountains agreed to take title to the premises and to give back an eleven-year mortgage in an amount not exceeding $10,000. Shortly after the execution of this agreement Filson did give Fountain $3,000 for improvements but this amount, less about $166, was soon returned by Fountain who indicated that the house could not be adequately improved for that amount. Nothing further was done under the agreement by either party thereto and that agreement was apparently abandoned by tacit understanding between the parties.

Sometime in May of 1937, Filson applied for, and in August received, a $6,000 building and loan mortgage on the premises. Late in July, 1937, Fountain and wife moved into the premises, which were then still being remodeled by Filson. From August to December the Fountains paid rent in the form of monthly payments on the building and loan mortgage. In October, the improvements were completed at a total cost to Filson of about $8,000.

On December 24, 1937, Filson borrowed $3,000 from his (and Fountain's) mother, giving in return a second mortgage on the premises. Fountain also signed the bond in that transaction allegedly as additional security to the mother. That same day, Filson and wife deeded the property to Fountain and wife in consideration of the Fountains' assumption of the two mortgages. This deed was absolute in form, reciting an express consideration with habendum to the use of the grantees, their heirs and assigns forever. There was executed simultaneously with the deed to the Fountains an option agreement whereby, for a recited consideration, the Fountains agreed to give the Filsons a three-year first option to repurchase the property for $9,000. It was also agreed between the parties at that time and in writing that the option to repurchase may be terminated by payment to the Filsons of $6,000. This option was never exercised by either party and expired on December 24, 1940. It was Fountain's testimony by deposition that Filson agreed (apparently orally) to pay interest on the second mortgage and that Filson did partially pay such interest during 1938 and 1939.

In June, 1941, the Fountains refinanced the two mortgages by paying off and discharging completely the second mortgage and by making a new mortgage in the amount of $6,000 to the building and loan association. This latter mortgage is the only remaining encumbrance on the property and it had, at the time this litigation commenced, been about half paid off.

Without notice of any kind to the Filsons, the Fountains offered the property for sale in August, 1945. A buyer was found and a contract of sale drawn up, but this sale was never consummated due, according to Fountain's testimony, to the buyer's inability to pay the agreed price ($15,600) and the Fountains still have title to the property. As soon as Filson learned of the proposed sale he called Fountain, who was then living in Washington, D. C., and inquired about his (the Filsons') equity in the property. Fountain then told Filson that he believed Filson had no remaining equity in the property.³

The depositions of Filson and of Fountain, from which the bulk of the foregoing information was gleaned, were taken in Washington on November 19, 1945.

In their complaint, filed below in 1946, the Filsons allege that the conveyance to the Fountains was for a principal consideration of $15,000, to be evidenced by the Fountains' assumption of $9,000 in mortgages and the further payment of $6,000 by the Fountains to the Filsons. Accordingly, recovery was sought on the theory of a resulting trust in favor of the Filsons in the amount of $6,000 plus interest. Fountain, joint defendant with his wife, died after this action was instituted. The Filsons moved to substitute in his place his wife in her representative capacity. This motion was denied for want of prosecution. In May, 1947, the matter came on for hearing on the defendant's motion for summary judgment and on plaintiffs' motion to vacate the order denying the motion for substitution. Summary judgment was given for defendant Fountain and plaintiffs' motion to vacate was denied. The trial judge entered no findings of fact and no conclusions of law, but these are not required in the circumstances of this case.⁴

Since the land involved in this suit is in New Jersey, the law of that state must govern any decision here with regard to the interests, legal or equitable, of the parties in that property, and all parties concede that this is so. As indicated above, the complaint filed below sought equitable relief in the form of a declaration of a resulting trust in favor of the Filsons. The trial court refused to grant this relief and sustained the defendant's motion for summary judgment, relying, according to the parties, on the case of Down v. Down, Ch. 1912; 80 N.J.Eq. 68, 82 A. 322, 324. In that case a husband and wife joined in an absolute conveyance of land to a third party who was a mere conduit of title and who in turn conveyed absolutely to the wife. Each of the two conveyances was absolute in form, recited a specific money consideration and was to the use of the grantee. In construing the effect of these conveyances, the New Jersey court held that both legal and equitable title to the land was in the wife and that no resulting trust could arise in favor of the husband. The following rule of law is stated in the Down case:

"But, should it be thought that the views above expressed too closely confine the field of operation of resulting trusts, I think it is clear that the accepted doctrine that a resulting trust cannot arise in favor of a grantor, in the absence of fraud, under a deed of conveyance expressing a money consideration, with declaration to the use of the grantee, must be regarded as operative to deny relief to cross-complainant in this suit."⁵

This is the prevailing law of New Jersey as to resulting trusts.⁶

Applying the facts of the instant case to the principle above set forth it is immediately apparent that the trial court in this case correctly ruled, by implication, that there was no resulting trust in favor of the Filsons because the deed of December 24, 1937, recited an express consideration and granted the property to the use of the grantee Fountains. However, it does not follow from this that the Filsons should be denied all relief as was done by the trial court in this case. The record shows that the Filsons' complaint contained a general prayer for "all other relief to which they appear entitled." This was sufficient to entitle them to any other appropriate relief which may be granted by a court of equity.⁷ We believe that the...