Leahey v. Witte

• Decision Date: 18 June 1894
• Citation: 27 S.W. 402,123 Mo. 207
• Parties: Leahey v. Witte, Appellant
• Court: Missouri Supreme Court

27 S.W. 402

123 Mo. 207

Leahey v. Witte, Appellant

Supreme Court of Missouri

June 18, 1894

Appeal from St. Louis City Circuit Court. -- Hon. James E. Withrow Judge.

Reversed and remanded.

F. & Ed. L. Gottschalk for appellant.

(1) The petition does not state facts sufficient to constitute a cause of action. 1 Perry on Trusts, secs. 134, 215; 2 Story's Equity Juris., sec. 1201a; Botsford v Burr, 2 Johns. Ch. 406; Sherrill v. Crosby, 14 Johns. 358; Minot v. Mitchell, 30 Ind. 228; 3 Reed on Stat. of Frauds, sec. 929; Taylor v. Boardman, 24 Mich. 287; Hall v. Hall, 107 Mo. 101. (2) The mere breach of an agreement to hold for the execution debtor was not in itself a fraud. Fox v. Heffner, 1 W. & S. 372; Hames v. O'Conner, 10 Watts, 313; McNew v. Booth, 42 Mo. 190. (3) The finding was against the law and the evidence and should have been for the defendant. (4) Plaintiff's evidence does not come up to the requirements of the law. It must be clear and unequivocal and not merely preponderating. Johnson v. Quarles, 46 Mo. 423; Forrester v. Scoville, 51 Mo. 268; Shaw v. Shaw, 86 Mo. 595; Rogers v. Rogers, 87 Mo. 257; Taylor v. Von Schraeder, 107 Mo. 207; Gillispie v. Stone, 70 Mo. 505. (5) The agreement relied on is void under the statute of frauds. Baier v. Berberich, 6 Mo.App. 537; 77 Mo. 435; Hammond v. Cadwallader, 29 Mo. 167.

J. P. Vastine for respondent.

(1) Appellant is a trustee. McNew v. Booth, 42 Mo. 189; Grumley v. Webb, 44 Mo. 444. Respondent's petition is sustained by Baier v. Berberich, 6 Mo.App. 537 and 77 Mo. 413. (2) Fraud will not be tolerated under the guise of friendship. McDonald v. Fithian, 6 Ill. 269; Kehoe v. Taylor, 31 Mo.App. 588. (3) Respondent's evidence was clear, cogent and unequivocal. Rogers v. Rogers, 87 Mo. 257; Shaw v. Shaw, 86 Mo. 595; Forrester v. Scoville, 51 Mo. 268. (4) Agreement rests on parol no defense. Hall v. Hall, 107 Mo. 101; Turner v. Johnson, 95 Mo. 437; O'Fallon v. Clopton, 89 Mo. 284; Rogers v. Rogers, 87 Mo. 257; Damschroeder v. Thias, 51 Mo. 100; Rutherford v. Williams, 50 Mo. 18. (5) If confidence is reposed and is abused, equity will grant relief. Posten v. Balch, 69 Mo. 115; Street v. Goss, 62 Mo. 226; Turner v. Adams, 46 Mo. 95; Turner v. Adams, 44 Mo. 535; Keiser v. Gammon, 95 Mo. 217. (6) Decree is sustained by Baier v. Berberich, 6 Mo.App. 537 and 77 Mo. 413.

H. Clay Ewing, Special Judge. Black, C. J., Sherwood, Macfarlane and Burgess, JJ., concur. Brace and Gantt, JJ., dissent; Barclay, J., taking no part.

OPINION

In Banc

H. Clay Ewing, Special Judge.

On August 11, 1888, Bridget Leahey died seized of the house and lot in controversy, situated in the city of St Louis, which was subject to a deed of trust made by her to one Chas. Kuhn as trustee to secure a note for $ 8,000, with six interest notes for $ 240 each, payable at intervals of six months, and all dated April 5, 1888. This property she gave to her daughter, the plaintiff, by will.

At the time of her mother's demise plaintiff was a minor, and did not come of age until October 28, 1888. The notes secured by the deed of trust becoming due, and default being made in the payment thereof, the property was advertised for sale on the third day of June, 1889, at which sale the defendant became the purchaser thereof, at the price of $ 8,452, and received a deed therefor from the trustee.

The petition alleges that the property was bought by the defendant for $ 7,918, less than its value; that at divers times prior to the sale, and while the property was advertised for sale by the trustee, plaintiff solicited defendant to buy the property for her, and protect her interest therein, which defendant repeatedly promised to do; that she believed, trusted and relied on his promises; that said defendant had had business dealings with her mother, and was related to her, and plaintiff therefore the more readily relied on his promises; and made no further effort to cause the property to sell for its value at the sale, or to find someone else to protect her interest, and was therefore lulled into repose and nonaction under the belief that defendant would do as he had promised and buy in the property for her.

That plaintiff subsequently requested defendant to deed the property to her, subject to the deed of trust for $ 8,000, placed upon it by defendant the day after the sale, offering to pay him for his services, which he promised to do; but afterward refused, unless she paid him $ 3,000.

Plaintiff further avers that she is young and inexperienced in business; but that if she had not been satisfied with defendant's promises, she would have made diligent efforts to cause the property to sell for more than it did; and that it would have sold for near $ 8,000 more than defendant paid for it, and prays that Witte be held to be a trustee for her use, etc.

The answer was a general denial and a plea of the statute of frauds.

Upon hearing the evidence, the circuit court of the city of St. Louis found for the plaintiff, and the defendant brings the case here on appeal.

The circuit court ordered a reference and an account to be taken between the parties. The referee found the plaintiff's equity of redemption in the property to be $ 2,431.07, on which the decree of the circuit court was based.

The points insisted on by the appellant are: First. The petition does not state facts sufficient to constitute a cause of action. Second. The finding is against the law and the evidence, and should have been for defendant. Third. The statute of frauds.

I. Is the petition sufficient? The plaintiff in her petition does not in words charge the defendant with fraud, deception and false representation, with intent to cheat and defraud plaintiff, but allegations are made which, if true, would doubtless show an intention to cheat and defraud on his part, and which would create a constructive trust.

Section 218 [4 Ed.], Bispham's Principles of Equity, says: "Before leaving the subject of fraud which arises from facts and circumstances of imposition, notice must be taken of a class of cases in which the effect of the fraud has been held to be to create a trust -- the party committing the fraud being termed a trustee ex maleficio; and such a trust will arise in spite of the statute of frauds, -- or, to speak more correctly, the statute will not be held to apply to cases of that description. It has been already said, in discussing the nature of resulting trusts, that where no money is advanced by the beneficial owner and there is nothing more in the transaction than is implied from the violation of a parol agreement, equity will not decree the purchaser to be a trustee. This is true where there is no fraud; but not where there is fraud." See, also, Ib. sec. 91.

The petition alleges that plaintiff, having an interest in the mortgaged premises, at her solicitation defendant agreed to buy it in for her; that he consented to do so before the sale, and so told various witnesses; that he bought it at a great sacrifice; that she relied on his promises; that after the purchase he denied her rights and cast her off. Is not this a sufficient statement of facts in the petition which, if true, would show fraud and deceit, although fraud, in so many words, is not charged?

In the case of Slowey v. McMurray, 27 Mo. at page 118, Judge Scott says: "There is another class of cases growing out of the conduct of debtors and purchasers at public sales. This is where the purchaser becomes such under such a state of facts as would make it a fraud to permit him to hold on to his bargain. As if a purchaser, by means of a promise to reconvey to his debtor, should induce a relaxation of the efforts on his part to prevent a sacrifice of his property and thereby obtain it at an under price, or, if the purchaser, taking advantage of that reluctance invariably manifested by those attending public sales to interfere with any arrangement a debtor makes to save his property, should create an impression that he was buying for the debtor, thereby preventing competition, or by any other improper means obtains the property of a debtor at a sacrifice, such conduct would convert the purchaser into a trustee for the benefit of those who were defrauded by his conduct. Such cases go upon the ground of fraud, and courts will give relief without regard to the circumstances whether the agreement was a written or a verbal one, or whether it was supported by a consideration or not." Estill v. Miller, 3 Bibb 177.

In Rose v. Bates, 12 Mo. 30, the court says: "The agreement being established, Bates relies upon the statute of frauds to enable him to retain the property thus acquired. But this will not avail him in the present case, it being the peculiar province of a court of chancery to enforce contracts and agreements of this character. The agreement was not that Bates should convey real estate, the legal title to which was then in him, without a writing evidencing the agreement, but an agreement that Bates should bid in the property of Dr. Meredith, on which the complainant held a mortgage, and hold the same in trust for her benefit, and to be reconveyed on the payment of his debt, upon the tender to Bates of the amount due him under the agreement, he should, in equity and good conscience have conveyed the property to Mrs. Rose, and the statute never was designed to aid a party in committing a fraud, but was intended to prevent frauds, and consequently it can not be invoked to the aid of the defendant."

The allegations of the petition are fully sustained by the evidence, and leave no room for reasonable doubt in my mind. Rogers v. Rogers, 87 Mo. 257; Johnson v Quarles, 46 Mo. 423; Forrester v. Scoville, 51 Mo. 268; Ringo v. Richardson, 53 Mo. 385; Kennedy v. Kennedy, 57 Mo. 73...