Rovenko v. Bokovoy

Decision Date30 December 1950
Docket NumberNo. 7225,7225
Citation45 N.W.2d 492,77 N.D. 740
PartiesROVENKO et al. v. BOKOVOY.
CourtNorth Dakota Supreme Court

Syllabus by the Court.

1. An agent will not be allowed to acquire rights adverse to those of his principal by failing to perform the fiduciary duties owed to his principal.

2. A constructive trust will be imposed by the courts in order to do equity and prevent unjust enrichment when title to property is acquired by fraud, duress, undue influence, or is acquired or retained in violation of a fiduciary duty. McDonald v. Miller, 73 N.D. 474, 16 N.W.2d 270, 156 A.L.R. 1328.

3. The trustee of a constructive trust can claim the real property of his trust by adverse possession only if he clearly makes claim of ownership to the knowledge of the beneficiary and thereafter occupies the property adversely, openly and notoriously for a long enough period to allow the statute of limitations to run.

4. The burden is on one claiming property by adverse possession to prove that by clear and convincing evidence and every reasonable intendment will be made in favor of the true owner.

5. The evidence is examined and it is held:

1. That the real property left by plaintiff, Mary Rovenko and her husband, Maxim, now deceased, in care of the defendant as their agent and to which he acquired title on foreclosure has been and is now held by defendant together with the proceeds of the lands sold by him and of the crops received by him in trust for the plaintiffs, subject to such credits as he may be found entitled to on an accounting.

2. That because of the unsatisfactory state of the evidence on the accounting of said trust and in the interest of justice the matter of accounting must be remanded to the District Court for a new trial.

Halvorson & Halstead, Minot, for appellants.

O. B. Herigstad, Minot, for respondent.

GRIMSON, Judge.

The plaintiffs bring this action for an accounting by the defendant of what they claim to be a constructive trust.

In their complaint plaintiffs allege that the plaintiff, Mary Rovenko, is the widow of one Maxim Rovenko and that the other plaintiffs are their sons and daughters. That Maxim and Mary Rovenko had homesteaded a quarter of land in Ward County, North Dakota, and later bought two additional eighty acre tracts of land in said county. That in 1918 they moved with their children to Canada and left the defendant, Alex Bokovoy, Mary Rovenko's half brother, as their agent to look after and care for said real estate. That he accepted said trust as agent and assumed the management and care of the property. That said land was encumbered but that said Alex Bokovoy, the defendant, retained all of the rents and profits of all the lands, together with $200.00 advanced by the plaintiff, Mary, in 1923 for the payment of interest and taxes and for protecting the title. That Maxim Rovenko died July 29, 1923. That the plaintiffs reposed implicit confidence in the defendant and relied thereon. That they left the care of the property entirely with him. That they allowed the matter to run along for years in view of the indebtedness which had to be liquidated out of the rents and profits. That defendant failed to account. Instead when the plaintiff, Mary, came to North Dakota in 1944 she found that he had taken title to all the lands and sold all of them except the homestead. That he refused to account. Plaintiffs allege that the acts of the defendant were fraudulent and constituted a breach of trust and ask that he be required to account for the handling of the property and that the petitioner, Mary Rovenko, be adjudged the owner of the homestead.

The defendant admits that Maxim Rovenko was the owner of the lands described when he moved to Canada in 1918. That he died and that the plaintiffs are his widow and children. Defendant also admits that he looked after the lands upon the removal of Maxim and his family to Canada. As a defense he alleges that he accounted for the crops but that they were insufficient to pay the taxes and interest on the indebtedness so that the mortgages were foreclosed. That he then purchased the lands with his own money and became owner thereof. That in 1927 he offered to convey all the lands to the plaintiff, Mary Rovenko, upon her paying the defendant the amounts he had paid for the lands but that the plaintiff did not accept said offer. Defendant further alleges that he conveyed 80 acres of the land to plaintiff's brother, Steve Bokovoy, at her request. Finally, defendant alleges that any cause of action the plaintiff might have against the defendant accrued more than twenty years before the bringing of this action and is outlawed and barred by the statute of limitations.

Each of the parties offered evidence in support of the allegations of their pleadings. The main dispute in the evidence is whether plaintiff, Mary, after advancing $200.00 in 1923 to help pay what was due on the lands, came back in 1924 and was assured by the defendant that he was paying the interest and taxes and everything was all right or whether she came back in 1927 and was told by defendant he had taken sheriff's deed to all the lands but that she could have them if she reimbursed him for the money he had advanced.

The evidence clearly shows not only the relationship of principal and agent between the Rovenkos and the defendant but also the close family relationship. The defendant was Maxim Rovenko's brother-in-law, the plaintiff, Mary Rovenko being the defendant's half sister. The evidence further shows that the defendant was a business man conducting both a wholesale and retail grocery business. The Rovenkos were farmers. Judging from the evidence of Mary, she had not much education nor experience in business matters. She clearly placed implicit confidence in her half brother. The relations thus existing were of the highest fiduciary nature. Of such relations Chief Justice Cardozo of the Court of Appeals of New York in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546, 62 A.L.R. 1, writes:

'Many forms of conduct permissible in a workaday world for those acting at arm's length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and investerate.'

Regarding such relations the following principles have been laid down:

'The law is also well settled that an agent will not be allowed to acquire rights adverse to those of his principal by failing to perform the duties which he owes to his principal; nor to use his position or knowledge obtained therein, to acquire interests adverse to his principal; and if he does so, he will be held to hold such rights or interests in trust for his principal.' 1 Clark and Skyles on the Law of Agency (Obligations of Agent, Sec. 415) p. 932.

'In the absence of full knowledge and consent on the part of his principal, an agent may not acquire any right or title in the subject matter of the agency by the use of his position or any information acquired by him during the course of his employment.' 3 C.J.S., Agency, Sec. 140, p. 12.

The Rovenkos Left in the care and control of the defendant, Alex Bokovoy, their 160 acre homestead and two separate tracts of 80 acres each. The evidence shows a first mortgage of $1500.00 on the 160 acre tract and a second mortgage of $150.00. It shows that on one 80 acre tract there was a first mortgage of $1000.00 and a commission mortgage of $100.00 and on the other 80 acre tract a first mortgage of $700.00 and a second mortgage of $105.00. All these mortgages were drawing 10% interest. That makes a total of $355.50 interest due every year. Apparently Maxim Rovenko came back in the fall of 1920 for the $700.00 mortgage is dated Nov. 22, 1920, and acknowledged by him in McLean County but by Mary in Alberta, Canada. The abstract also shows that at that time he paid off some mortgages. The inference is that he made a settlement of his current debts at that time.

The evidence further shows that on the 160 acre tract there were 148 acres cultivated at that time. On one of the 80 acre tracts about 70 acres and on the other about 75 acres, making a total of cultivated land upon the property of 293 acres. The defendant had all this land rented out. For some of these tracts he at times furnished the seed and paid one-half of the thresh bill and one-half twine and received one-half of the proceeds. One of the tracts he rented first for one-third net to the landlord in the elevator, later this was changed to one-fourth and finally all of the land was rented on the terms of one-fourth of the proceeds to the landlord.

From the proceeds of the crop, if sufficient, it was the duty of the defendant to pay the $355.50 interest and the taxes. In the statement, Exhibit 3, made by the defendant in 1929 he includes taxes for the two 80 acre tracts as $65.00 and taxes on the 160 acre tract for two years at $120.00 which would be $60.00 per year. At that rate the annual taxes on all of the land would be $125.00. The interest and taxes then would amount to approximately $475.50.

The defendant says he has no books and kept no account of the crops but he admits that he has $300.00 for the crops on the 160 acre tract during 1923 the year of redemption. He further admits that he had $266.00 for the crops on the two 80 acre tracts during the year of redemption after their foreclosure. That would make an income of $566.00 per year. While the income would vary according to yields and prices, no showing is made in the evidence of different conditions prevailing in 1920, 1921 or 1922. If income of such amount had been applied promptly on the payment of interest and taxes, he should have been able to keep the interest and taxes paid. He did succeed in having the $1500.00 mortgage on the 160 acre tract...

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16 cases
  • William Clairmont, Inc. v. State
    • United States
    • North Dakota Supreme Court
    • December 19, 1977
    ...with constructive trusts of property, as in McDonald v. Miller, 73 N.D. 474, 16 N.W.2d 270, 156 A.L.R. 1328 (1944); Rovenko v. Bokovoy, 77 N.D. 740, 45 N.W.2d 492 (1950); and Scheid v. Scheid, 239 N.W.2d 833 (N.D.1976). These cases are not in point. They involve allegations of fraud, duress......
  • Woodland v. Woodland
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    • North Dakota Supreme Court
    • December 8, 1966
    ...to establish adverse possession for the statutory period by clear and convincing evidence. Ellison v. Strandback, supra; Rovenko v. Bokovoy, 77 N.D. 740, 45 N.W.2d 492; Morgan v. Jenson, 47 N.D. 137, 181 N.W. In order to prove adverse possession, plaintiff must prove that possession of the ......
  • Lindvig v. Lindvig, 11007
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    • North Dakota Supreme Court
    • April 10, 1986
    ...a prescriptive right, and that every reasonable intendment should be made in favor of the true owner.' " Rovenko v. Bokovoy, 77 N.D. 740, 753, 45 N.W.2d 492, 498 (1950) (quoting Lindokken v. Paulson, 224 Wis. 470, 475, 272 N.W. 453, 455 (1937) ). We have observed that acts which might evide......
  • Hendrickson v. Syverson
    • United States
    • North Dakota Supreme Court
    • May 1, 1957
    ...the test and upheld the contentions of the proponents of the trust. The plaintiff apparently places great reliance upon Rovenko v. Bokovoy, 77 N.D. 740, 45 N.W.2d 492. In that case the defendant was left in charge of lands belonging to nonresidents. He failed in his duties as an agent with ......
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