Powell v. Adler

• Court: Oklahoma Supreme Court
• Writing for the Court: HOOKER, C.
• Citation: Powell v. Adler, 172 P. 55, 69 Okla. 291, 1918 OK 158 (Okla. 1918)
• Decision Date: 12 March 1918
• Docket Number: Case Number: 7784
• Parties: POWELL v. ADLER.

1918 OK 158

172 P. 55

69 Okla. 291

POWELL v. ADLER.

Case Number: 7784

Supreme Court of Oklahoma

Decided: March 12, 1918

Syllabus

¶0 1. Trusts--Constructive--Purchase of Realty by Agent-- Frauds, Statute of.

Where one assumes to act as the agent of another in the purchase of real estate, and by the terms of a parol agreement between them the agent is to pay for the same with his own money and cause the property to be conveyed to his principal, but in violation of his agreement causes the same to be conveyed to himself and refuses to convey the property to his principal, an action may be maintained in equity to compel him to do so, and the same is not within the statute of frauds.

2. Specific Performance--Ability to Perform.

While a court of equity may enforce contracts made by the parties, it cannot make new and different contracts and compel the performance of them. In this case, in view of the fact that the principal is not in a position to comply with the contract made with the agent, that is, to issue to him stock in the company for the property which the agent was to buy for it, a judgment of the court, directing the agent to convey the property to the principal upon the payment of the purchase price to him, cannot be sustained.

HOOKER, C.

¶1 Prior to the fall of 1912 the United Mining & Milling Company, a corporation, was engaged in the operation and development of a mine near Davis, Okla. There were a number of stockholders and directors, and about the time given above, owing to unsuccessful business, it was concluded to close the mill located upon the lease then owned by the company, and about the 1st of January, 1913, the directors convened for the purpose of discussing ways and means whereby the business of the company might be more properly operated. The plaintiff in error was present at that meeting; he being a stockholder and presumed to occupy the position of associate manager of the enterprise. No record of this meeting was kept, but the testimony of those present conclusively establishes: That the plaintiff in error and another made to the directors of the company a proposition that, if they would increase the capital stock of the company from $ 50,000 to $ 100 000, and deliver to them the increase, they would pay certain debts of the corporation, erect a mill upon the property leased by it, and in addition thereto would purchase the fee in said property for the corporation. This proposition was accepted by the company, and it was agreed that the plaintiff in error would go to Oklahoma and purchase said property for the corporation, make provision for the erection of the mill and the adjustment of the indebtedness of the company, and that the corporation would increase its capital stock to $ 100,000, and deliver to the plaintiff in error and his associates the capital stock agreed upon. That thereupon the plaintiff in error went to Davis, Okla., carrying a letter of instruction from one of the directors present to the cashier of a bank at Davis, Okla., and informed the cashier of said bank that his mission at Davis was to purchase this property for his company. The plaintiff in error acquired an option upon this property in his own name, and in a short time thereafter consummated this deal by taking a deed to the property in his own name instead of the corporation, and refused to convey it to the company, although requested by it so to do. Thereafter a receiver was appointed to take charge of the assets of this company, and said receiver instituted this action in March, 1914, alleging in his petition the facts as outlined above, and tendering to the plaintiff in error the amount of money expended by him, and praying that the company be adjudged the owner of the equitable title, and that the plaintiff in error, as the holder of the legal title, be declared a trustee for said company, and that he be compelled to convey the same to the company. The answer of the plaintiff in error consisted of a general denial.

¶2 Upon the trial of this cause the lower court gave a judgment in favor of the defendant in error and against the plaintiff in error, declaring the plaintiff in error a trustee of said property, and directing him to make a conveyance to the company upon the payment of some of the money expended by him in the purchase thereof. From this judgment the defendant has appealed, and has assigned the following reasons why the judgment rendered is erroneous: First, that the contract set out in the plaintiff's petition and established by the evidence was within the statute of frauds: second, that by reason of the failure of the corporation to increase its capital stock, it is impossible for the court to specifically enforce the agreement between the parties by the delivering of certain stock in the company to the plaintiff in error, and that to require the plaintiff in error to accept the amount of the purchase money instead of the stock in the corporation would be the substitution of a new and entirely different contract.

¶3 Plaintiff in error asserts that the legal question involved in proposition No. 1 is governed by the fifth subdivision of section 941 of Revised Laws of 1910, which reads:

"Fifth. An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; and such agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent be in writing, subscribed by the party sought to be charged."

¶4 And in support thereof, Sugden on Vendors, p. 438, is quoted:

"Where a man merely employs another person by parol, as an agent to buy an estate, who buys it for himself and denies the trust, and no part of the purchase money is paid by the principal, and there is no written agreement, he cannot compel the agent to convey the estate to him, as that would be directly in the teeth of the statute of frauds, even if the agent be afterwards convicted of perjury in denying the trust."

¶5 Also Story on Equity, § 1201a, is relied upon, which is as follows:

"But the doctrine is strictly limited to cases where the purchase has been made in the name of one person and the purchase money has been paid by another. For where a man employs another person by parol as an agent to buy an estate for him, and the latter buys it accordingly in his own name, and no part of the purchase money is paid by the principal there, if the agent denies the trust and there is no written agreement or document establishing it, he cannot, by a suit in equity, compel the agent to convey the estate to him; for as has been truly said, that would be decidedly in the teeth of the statute of frauds."

¶6 Also Brown on Statute of Frauds (5th Ed.) § 96a, is cited:

"* * * It has been stated to be the law that, where one man employs another by parol as agent to buy an estate for him, and the latter buys it in his own name, with his own money, and denies the agency, the one who employed him cannot, by a suit in equity, compel a conveyance of the estate; for that, it is said, would be decidedly in the teeth of the statute of frauds. The case put is not that of an agreement that one party shall take title in his own name, and pay his own money, and afterward convey to the other, for that is evidently a contract to transfer an interest in land which one of them is afterwards to obtain. * * *"

¶7 See, also, Kellum v. Smith, 33 Pa. 158; Taliaferro v. Taliaferro, 6 Ala. 404; Raub v. Smith, 61 Mich. 543, 28 N.W. 676, 1 Am. St. Rep. 619; Robbins v. Kimball, 55 Ark. 414, 18 S.W. 457, 29 Am. St. Rep. 45; Burden v. Sheridan, 36 Iowa 125, 14 Am. Rep. 5O5.

¶8 The authorities above cited sustain the proposition, in order for a resulting trust to be established, the consideration must be advanced by a person who claims under such trust, and that no resulting trust can be created where the purchase money is advanced and the title taken in the party advancing the money.

¶9 It is admitted that the plaintiff in error used his own money in making the purchase of this property. Now, is this case within the statute of frauds? We think not. Under the evidence here a duty was delegated by the corporation to Powell which he was to exercise for the betterment of the company. This duty involved the exercise of good faith, trust and confidence. His mission was to purchase this property for the company in order that it might own the fee to the property upon which it then had a lease; he betrayed this trust and violated the confidence that the directors of the company had reposed in him when he was sent upon this mission. Clark & Skyles on the Law of Agency, vol. 1, p. 907, says:

"It is well settled that an agent occupies a fiduciary relation towards his principal, and that he is bound, in the execution of the agency, to act in the most perfect good faith and with loyalty to the interests of his principal; and so sedulously is this principal guarded that all departures from it are esteemed frauds upon the confidence bestowed. * * *"

¶10 And at page 909 thereof it is said:

"Good faith and loyalty to a principal's interest requires of an agent that he shall not take advantage of his position, and the confidence reposed in him, to deal with the principal's property, during the course of his agency, so as to make a profit out of it himself, beyond his lawful compensation. All profits accruing from the subject-matter of agency properly belong to the principal, and it is a fraud upon the latter for the agent to deal with or use the property so as to take these profits, or a part thereof, to himself. * * *"

¶11 And at page 919 thereof, it is said:

"It is also a well-settled rule that if an agent undertakes to purchase property for his principal, he cannot be permitted to deal in the matter of that agency for his own benefit and upon his own account; and if he purchased such property for himself, and takes a conveyance thereto in his own name, without his principal's knowledge or

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