L. H. Miller v. C. Allen Belville

• Decision Date: 13 November 1924
• Citation: 126 A. 590,98 Vt. 243
• Parties: L. H. MILLER v. C. ALLEN BELVILLE
• Court: Vermont Supreme Court

126 A. 590

98 Vt. 243

L. H. MILLER v. C. ALLEN BELVILLE

Supreme Court of Vermont

November 13, 1924

October Term, 1924.

ACTION OF TORT for fraud in purchase and sale of real estate. Plea general issue. Trial by jury at the September Term, 1919 Washington County, Butler, J., presiding. Verdict and judgment for plaintiff. The defendant excepted. The opinion states the case. Affirmed.

Judgment affirmed.

F L. Laird for the defendant.

Dutton & Morse for the plaintiff.

Present: WATSON, C. J., POWERS, TAYLOR, and SLACK, JJ.

OPINION

POWERS

The plaintiff owned a farm in the town of Worcester. On September 14, 1915, he conveyed it to one Slayton, taking back a mortgage thereon conditioned for the performance of certain agreements therein referred to. Slayton did not perform these conditions and on March 25, 1918, quitclaimed the premises to the defendant. In the fall of that year, these parties entered into a new agreement regarding the farm, by the terms of which the defendant and his wife were to quitclaim the property to the plaintiff, who was then to convey to them that part of the farm that was cleared--supposed to be about one hundred acres. The defendant was to pay the plaintiff $ 800; $ 300 in a certain Vigeaut note, and $ 500 in the defendant's notes--all to be secured by a mortgage on the cleared land so conveyed. They met at the town clerk's office in Worcester on January 4, 1919, to make and pass the papers necessary to carry this arrangement into effect. The town clerk made for them a quitclaim deed of the whole farm from the defendant and his wife to the plaintiff, and a warranty deed of the cleared land from the plaintiff to the defendant and his wife. But she did not feel competent to make the mortgage called for by the arrangement, and advised the parties to go to a lawyer for that. Thereupon the warranty deed was executed by the plaintiff, and intrusted to the defendant to be used in making the mortgage. And it was agreed that when the mortgage and notes were made and turned over, both deed and mortgage should be placed on record. The quitclaim deed was then executed by the defendant, but his wife was not present, so it was left with the town clerk, and the defendant was to have his wife call at the office and execute it on her part. It was to be recorded when the other papers were. The plaintiff then paid the clerk for recording the quitclaim deed, and to save himself another trip to Worcester, and relying upon the defendant's carrying out the arrangement on his part, he discharged his Slayton mortgage on the record, leaving thereby, a clear record title to the farm in the defendant.

The confidence thus reposed in the defendant turned out to be sadly misplaced; for he did nothing toward performing his part of the agreement. On the contrary, having first obtained his quitclaim deed from the possession of the town clerk by false representations, he quitclaimed the farm to E. G. Foss. This deed was dated April 15, 1919, and was recorded on the 26th.

Early in May of that year, the plaintiff had an opportunity to sell the property to one George Dame, but understood and said that he could not convey full title on account of the defendant's interest therein. So Dame sought the defendant, who, without disclosing the fact that he had deeded to Foss, gave him a quitclaim deed of the whole place running to the plaintiff. Thereupon, the plaintiff, being wholly ignorant of the Foss deed, conveyed the farm to Dame by a warranty deed. Shortly thereafter Dame brought suit against the plaintiff on his covenant of warranty, and this suit was pending at the time of the trial below. There was little if any conflict in the evidence so far as the controlling facts are concerned.

On the record it must be taken that the defendant was innocent of any fraud in obtaining the advantage that the discharge of the Slayton mortgage gave him, and that his original intention was to carry out the agreement. For, though he was fully aware that the plaintiff's act left him with full title to the farm, he wrote the plaintiff on January 14, 1919, to the effect that he would complete the papers, and that he would not "take any advantage" of him. But by April 8 of that year the defendant's moral fibre had begun to crumble; on that day he sent the plaintiff a letter containing a thinly-veiled warning, if not threat, of impending trouble; and just a week later his fraudulent purpose was not only fully formulated, but it was consummated by the deed to Foss.

The action is not predicated upon anything, that transpired at the town clerk's office. It could not be, for as we have seen, the defendant committed no fraud on that occasion. Nor is it based upon the defendant's failure to carry out his agreement to complete the papers. It could not be, for a broken promise is no fraud. Alletson v. Powers, 72 Vt. 417, 48 A. 647. It is founded wholly upon the defendant's repudiation of his agreement and, for his own benefit, conveying to Foss the title that was given into his keeping as above set forth. The trial below resulted in a verdict and judgment for the plaintiff, and the defendant alleges error.

At the close of the evidence, the defendant moved for a directed verdict on various grounds, and excepted when his motion was overruled.

It was urged below as it is here that by the plaintiff's own testimony, he voluntarily discharged the Slayton mortgage to serve his own convenience. Closely related to, if not identical with this claim are those insisting that no representations or inducements on the part of the defendant were relied upon by the plaintiff when he discharged that mortgage. But the plaintiff relied upon the defendant's promise to have the papers made complete and the arrangement carried into effect.

The warranty deed entrusted to the defendant does not affect the rights of the parties here, for the defendant does not seem to have made any improper use of it. He did not have it recorded, and the record does not show that he claimed under it. That deed aside, the defendant held the title to the farm in a dual capacity. The Slayton interest he owned, outright. He could do as he pleased with it. It was unaffected by the arrangement made at the town clerk's office, so long as that arrangement remained executory. So far as the Foss deed covered that interest, it was not a fraud upon this plaintiff, for to that extent it merely conveyed what the defendant rightfully owned. But the plaintiff's interest in the farm, represented by the Slayton mortgage, which passed to the defendant by the discharge of the mortgage was, in the circumstances, held by the defendant as a constructive trustee. It is a familiar principle in equity that a trust is implied whenever the circumstances are such that the person taking the legal estate, whether by fraud or otherwise, cannot enjoy the beneficial interest without violating the rules of honesty and fair dealing. It is true that some hold that a fraud must exist at the time the title is acquired--an element lacking here, as we have seen; some say that this fraudulent intent will be inferred from a subsequent failure to perform the agreement under which the title is obtained; while still others take the ground that fraud at the outset is established by proof of subsequent fraud. It is enough here to say that the best considered modern cases go to the extent of holding that when one conveys the title to his property to another in reliance upon the latter's promise, a conscientious obligation is imposed, a violation of which for the grantee's own advantage is such a fraud that equity will make him a constructive trustee for the benefit of the grantor or his beneficiary. And this will be so, though the grantee enters into the agreement with an honest intention of performing it. Springer v. Springer, 144 Md. 465, 125 A. 162; Bray v. Timms, 162 Ark. 247, 258 S.W. 338; Ridky v. Ridky, 226 Mich. 459, 198 N.W. 229; Nester v. Gross, 66 Minn. 371, 69 N.W. 39; Lefkowitz v. Silver, 182 N.C. 339, 109 S.E. 56, 23 A. L. R. 1491; Moore v. Crawford, 130 U.S. 122, 32 L.Ed. 878, 9 S.Ct. 447; Arntson v....