Lewis v. Schafer

• Decision Date: 28 March 1933
• Docket Number: Case Number: 20496
• Citation: 1933 OK 203,20 P.2d 1048,163 Okla. 94
• Parties: LEWIS v. SCHAFER
• Court: Oklahoma Supreme Court

1933 OK 203

20 P.2d 1048

163 Okla. 94

LEWIS v. SCHAFER

Case Number: 20496

Supreme Court of Oklahoma

Decided: March 28, 1933

Syllabus

¶0 1. Equity--Jurisdiction -- Complete Relief Administered Regardless of Pleadings.

It is a fundamental rule that equity, having once attached in a proper proceeding, will administer complete relief on all questions properly raised by the evidence, regardless of whether or not such question or issues are specifically raised by the pleadings, as equity will not permit a mere form to conceal the real position and substantial rights of the parties. It always attempts to get at the substance of things and to ascertain, uphold, and enforce rights and duties which spring from the real relations of parties. It will not suffer the mere appearance and external form to conceal the true purposes, objects, and consequences of a transaction.

2. Trusts--Constructive Trust Impressed Upon Property in Favor of Rightful Owner.

Where a party obtains the legal title to property, not only by fraud or by violation of confidence, or of fiduciary relations, but in any other unconscientious manner, so that he cannot equitably retain it against the rightful owner, equity carries out its theory of a double ownership, equitable and legal, by impressing a constructive trust upon the property in favor of the one who is in good conscience entitled to it, and who is considered in equity as the beneficial owner.

3. Same--Judgment Canceling Deed Executed by Plaintiff Sustained.

Record examined, and held, that the judgment of the trial court is not against the clear weight of the evidence.

Appeal from District Court, Creek County; Thomas S. Harris, Judge.

Action by Pearl E. Schafer against Mildred B. Lewis. Judgment for plaintiff, and defendant appeals. Affirmed.

Davidson & Williams, for plaintiff in error.

H. B. Martin, D. Clayton Arnold, and Ferrell Martin, for defendant in error.

OSBORN, J.

¶1 This action was commenced in the district court of Creek county by Pearl E. Schafer against Mildred B. Lewis for the cancellation of a deed to an undivided one-half interest in certain lands in Creek county.

¶2 The cause came on for trial on October 23, 1928, and the court found the issues in favor of plaintiff and ordered the deed canceled, and defendant has appealed.

¶3 The record shows that the plaintiff, as a trained nurse, was employed by A. E. Lewis, husband of the defendant, on March 4, 1918, to take care of his children; that she remained in his employ until some time in the year of 1924; that her salary was to be $ 35 per week, and was later increased to $ 45 per week, later reduced to $ 20 per week. The record further shows that at the time she entered the employ of the Lewis family she owned some stocks and real estate worth several thousand dollars. It appears that A. E. Lewis was president of the Liberty National Bank of Tulsa, and that his brother, W. L. Lewis, was vice president.

¶4 Plaintiff testified that she did not draw her salary at regular intervals, but had an account at the Liberty National Bank, and from time to time she was credited at the bank in the amounts of salary due her from Lewis. She further testified that she imposed great trust and confidence in her employer, and that at his suggestion she permitted him to use her money, as well as the securities which she owned; that she bought other stocks during the time she was employed by Lewis; that he handled the transactions for her, and that she knew very little about any of the details. She further testified that her employer at numerous times mentioned her faithfulness as an employee, and told her that he considered her as one of the family and as a reward for her loyalty, he intended "to do something nice for her, " and, as she understood it, he was going to present her with some land which might have oil value.

¶5 The record shows that on June 27, 1922, she executed a note in the Liberty National Bank for $ 7,500, secured by certain stocks that she owned. Her testimony in regard to the transaction is very vague, but the testimony of A. E. Lewis is that this note was given for the purchase of bank stock which he later sold for plaintiff at a profit of $ 500, which he paid her by check. The record also shows that on June 2, 1923, plaintiff executed a note for $ 3,882.50 to the bank, secured by 15 shares of stock in the Prairie Oil & Gas Company, and in regard to this note her testimony is likewise vague and indefinite, but the testimony offered by the defense was to the effect that this note was given to buy the Prairie Oil & Gas Company stock.

¶6 The record further shows that during the month of October, 1923, A. E. Lewis and W. L. Lewis deeded to plaintiff the land in question. The deed was dated back to May 10, 1923 and was filed for record October 18, 1923. It is further shown that on October 15, 1923, the plaintiff executed a mortgage on this land in the sum of $ 8,400 to the Liberty National Bank to secure a note of the same amount executed at the same time. The record shows that out of the proceeds of the $ 8,400 note, a balance due on the note for $ 7,500 was paid, and the interest and a small part of the principal of the $ 3,882.50 note was paid. It appears that the $ 7,500 note had been reduced prior to this time to the sum of $ 5,744, which, together with the other payments made out of the proceeds of the latter note, made a total of $ 6,390.74. The record is silent as to what was done with the balance of the $ 8,400 note.

¶7 The record shows that on November 5, 1923, the Liberty National Bank sold out to the Security National Bank of Tulsa, and that among the assets transferred was plaintiff's $ 8,400 note and the mortgage securing it.

¶8 It is further shown that about November 11, 1923, plaintiff approached A. E. Lewis in regard to her money that he had used; that he stated to her that he could not pay her the money, but would give her a note that would be as "good as gold"; that they figured up the total of his indebtedness to her for money he had used, including a $ 1,000 Liberty Bond, which, with all interest due, amounted to $ 8,051.40, for which he gave her his promissory note dated November 1, 1923, upon which he later made some payments, leaving a balance due of $ 5,640.40; that a petition in bankruptcy against A. E. Lewis was later filed, and he subsequently received a discharge in bankruptcy. The record further shows that a transaction was had between the Security National Bank and the defendant, Mrs. Mildred B. Lewis, whereby she deeded her interest in their home to the bank and received a number of notes which had been transferred to the Security National Bank as assets of the Liberty National Bank, and among them was the $ 8,400 note signed by plaintiff.

¶9 The defendant and her husband, A. E. Lewis, testified that they made a proposition to plaintiff to deliver her this note if she would execute a deed to Mrs. Lewis for the land in question; that this proposition was favorable to plaintiff, and that she duly executed the deed and delivered the same to Mrs. Lewis, and that the mortgage and note were immediately canceled. The testimony of the plaintiff in this connection is that she signed the deed in question at the instigation of A. E. Lewis; that he did not tell her that it was a deed; that she did not read the instrument, and that by reason of the explanation he made at the time she was induced to believe that it was merely some formal paper which would give him authority to act as her agent in the transaction of some business matters; that by reason of their close relationship for the several years, she had implicit trust and confidence in him, and except for the fiduciary relationship existing between them she would never have signed the deed, as she had no intention whatever of transferring the land, and that the entire transaction was wholly without consideration.

¶10 Since this is an equity case, this court will examine and weigh the evidence, but the findings and judgment of the trial court will not be disturbed on appeal unless it is made to appear that such findings and judgment are against the clear weight of the evidence. McKay v. Kelly, 130 Okla. 62, 264 P. 814; Cull v. Cavanaugh, 95 Okla. 157, 218 P. 299; Thomas v. Halsell, 63 Okla. 203, 164 P. 458.

¶11 The question as to whether a fiduciary relationship existed is to be determined wholly upon the record facts herein. The courts have generally refrained from defining the particular instances of fiduciary relationship in such manner that other and new cases might be excluded. The expression "fiduciary relationship" is one of broad meaning, including both technical relations and those informal relations which exist whenever one man trusts and relies upon another. Reeves v. Crum, 97 Okla. 293, 225 P. 177.

¶12 In the case of Derdyn v. Low, 94 Okla. 41, 220 P. 945, it is said:

"A 'confidential relation' arises by reason of kinship between the parties or professional, business, or social relations that would reasonably lead an ordinarily prudent person in the management of his business affairs to repose that degree of confidence in the defendant which largely results in the substitution of the will of the defendant for that of the plaintiff in the material matters involved in the transaction."

¶13 The following quotation has been adopted by this court in the case of McDaniel v. Schroeder, 128 Okla. 91, 261 P. 224:

"'Whenever two persons stand in such relation that, while it continues, confidence is necessarily reposed by one, and the influence * * * of that confidence is possessed by the other, and this confidence is abused, or the influence is exerted to obtain an advantage at the expense of the confiding party, the person so availing himself of his position will not be permitted to retain the advantage, although the transaction could not have been impeached if no such confidential relation had existed.' 2 Pom. Eq. Jur. (3rd Ed.) 956."

¶14 After a...