Mortell v. Beckman

• Decision Date: 20 March 1959
• Docket Number: No. 35018,35018
• Citation: 16 Ill.2d 209,157 N.E.2d 63
• Parties: J. L. MORTELL, Appellant, v. Louis E. BECKMAN et al., Appellees.
• Court: Illinois Supreme Court

Page 63

157 N.E.2d 63

16 Ill.2d 209

J. L. MORTELL, Appellant, v. Louis E. BECKMAN et al., Appellees.

No. 35018.

Supreme Court of Illinois.

March 20, 1959.

Bishop, Burdett, Falasz & Doherty, Chicago, Gray, McIntire, Petersen & Ackman, Kankakee (John H. Bishop, Chicago, Donald Gray, Kankakee, and Robert J. Burdett, Chicago, of counsel), for appellant.

Werner W. Schroeder and James E. Hastings, Chicago, and Edwin W. Sale, Kankakee, for appellees.

DAILY, Chief Justice.

Plaintiff, J. L. Mortell, appeals from a decree of the circuit court of Kankakee County which dismissed for want of equity his complaint to declare a constructive trust in certain real property purchased by defendant Louis E. Beckman. Joined as parties defendant were Elizabeth Beckman, his spouse, and Louise E. Hickey, with whom Beckman had made and partially performed a contract to purchase the land in question. A freehold is involved and the single issue for determination is whether defendant was plaintiff's agent for the purchase of such land.

Undisputed facts show that plaintiff is an officer of a manufacturing company and a successful business man. Defendant, likewise successful and prominent in civic affairs, is a realtor who has developed several subdivisions. Both have other interests and both are members of the Kankakee Country Club, which owns a 76-acre tract improved with a 9-hole golf course, but the two men had experienced no business dealings together prior to the incidents out of which this litigation arose. Defendant's home, which he purchased in 1952, adjoins the club land on the northwest while the land featured in this suit, an undeveloped 11 1/2-acre tract referred to as the Hickey property, adjoins the property of both the club and defendant on the north. When defendant purchased his home in 1952 he sought also to buy the Hickey property, his stated purpose being to control its development and thus protect his home, but he was then able to purchase only the 188 feet nearest his home because the Hickey family did not wish to sell. He did, however, obtain an oral promise that he would be notified of any offers and given first opportunity to meet them.

During the summer of 1954 there was a desire on the part of some club members to expand the club by constructing a swimming pool and enlarging the golf course to 18 holes. Other members were opposed due to the poor financial condition of the club. Plaintiff, who was a director and club treasurer, was one of the principal advocates of expansion and it was his testimony that he made investigation and drew out a design for an 18-hole golf course which contemplated the use of 8 1/4 acres of the Hickey tract. In late September or early October, five or six influential members of the club, including Arthur Beckman, defendant's cousin, met at the home of plaintiff's brother to discuss a slate of club officers which would be favorable to expansion. The matter of utilizing and purchasing the Hickey land was discussed and met with approval, but those present agreed the purchase could not be made without the consent of the entire membership. Plaintiff then proposed that he would buy the property without obligation to the club, and that he would resell to the club at his cost if, within three years, the club was agreeable and financially able to make the purchase. It does not appear, however, that any binding agreement was ever entered into between the club and plaintiff. This plan likewise was approved by the meeting and shortly thereafter plaintiff engaged Blaine Johnson, a real-estate broker and a club member, to negotiate with the Hickeys for the purchase of their land. Defendant's cousin informed him of the meeting, whereupon he went to the Hickey residence and receive assurance that the promise to give him a first refusal of the property would be kept. In this regard there is no question but what Blaine Johnson contacted the Hickeys on several occasions in October, or that his final offer was $35,000, and it appears that a son of Louise E. Hickey kept defendant informed of the negotiations.

Defendant and plaintiff met and conversed on several occasions during October and early November, but what resulted from those meetings is a matter of dispute. In any event defendant entered into a contract to purchase the property for $35,000 on December 5, 1954, and his refusal to meet plaintiff's subsequent demands for a conveyance of 8 1/4 acres led to this litigation. It is defendant's position that he purchased the property in his own right, not as agent for plaintiff, and that, at best, he had but an oral contract to convey to plaintiff which fails because of the Statute of Frauds and because there was no meeting of the minds as to essential terms. This was the finding of the chancellor and the scope of plaintiff's appeal embraces only the theory that defendant purchased 8 1/4 acres of the land as his agent.

Equity will raise a trust by construction in two instances. First, where there is a fiduciary or confidential relationship and a subsequent abuse of such relation; second, where actual fraud makes it necessary to protect the rights of the defrauded party and promote the interests of society. Kapraun v. Kapraun, 12 Ill.2d 348, 146 N.E.2d 7; Carroll v. Caldwell, 12 Ill.2d 487, 147 N.E.2d 69; Kochorimbus v. Maggos, 323 Ill. 510, 154 N.E. 235. Plaintiff in this case predicates his claim to such a trust on the first ground, contending that defendant occupied the fiduciary relation of agent for the purchase of 8 1/4 acres of the property in question and that he abused such relation by purchasing and retaining the property for himself. It is the settled law of this jurisdiction, to which both parties agree, that where one occupies the fiduciary relation of agent for another, and thereby gains something for himself which in equity and good conscience he should not be permitted to keep, equity will raise a constructive trust and compel him either to turn it over to the equitable owner, or to otherwise execute the trust as the court may direct. Black v. Gray, 411 Ill. 503, 104 N.E.2d 212; Doner v. Phoenix Joint Stock Land Bank, 381 Ill. 106, 45 N.E.2d 20. At the same time, however, it is equally well established that where one party agrees to sell to another after making a purchase for himself, no basis for a fiduciary relationship exists, and if the agreement to resell is oral, it cannot be enforced. Stephenson v. Thompson, 13 Ill. 186; Perry v. McHenry, 13 Ill. 227; Walter v. Klock, 55 Ill. 362; see also Davis v. Stambaugh, 163 Ill. 557, 45 N.E. 170; 20 I.L.P. Statute of Frauds § 53. Dispute arises in this case, however, over the factual question of whether a relationship of principal and agent ever came into existence, and plaintiff's brief concedes that ultimate determination rests on the credibility of the witnesses.

The focal point of the remaining evidence is a so-called 'bank meeting' which occurred either in late October or early November. It is plaintiff's contention that complete agreement was reached at that time, including an accord that defendant was to act as his agent for the acquisition of the 8 1/4 acres. Defendant denies both that an agency was created, or that complete agreement was reached.

Detailing his actions prior to the bank meeting, defendant testified...