Salter v. Beal

• Decision Date: 04 March 1947
• Parties: SALTER et al. v. BEAL et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

321 Mass. 105

71 N.E.2d 872

SALTER et al.

v.BEAL et al.

Supreme Judicial Court of Massachusetts, Suffolk.

March 4, 1947.

Report from Superior Court, Suffolk County; T. H. Dowd, Judge.

Action by Albert Salter and another against Joseph Beal and another to establish a constructive trust in certain machinery. The trial court overruled defendants' demurrer to the bill and reported the question to the Supreme Judicial Court.

Reversed and a decree entered sustaining the demurrer

Before FIELD, C. J., and LUMMUS, QUA, DOLAN, and SPALDING, JJ.

A. T. Wasserman, of Boston, for plaintiffs.

F. T. Leahy and P. Pinkney, both of Boston, for defendants.

QUA, Justice

The plaintiffs seek to establish a constructive trust in certain machinery alleged to have been purchased by the defendant Beal and to have been conveyed by him to the defendant Mason Machine Works Company. It is alleged that the company took the machinery with notice of the plaintiffs' rights. The trial judge overruled a demurrer by the defendants and reported the question to this court. G.L.(Ter.Ed.) c. 214, § 30

The principal issue is whether the allegations of the bill are sufficient to show that the defendant Beal, hereinafter called the defendant, came into such a fiduciary relation toward the plaintiffs and was guilty of such a breach of that relation that in law he became a constructive trustee of the machinery for the benefit of the plaintiffs.

The allegations of the bill on these points, stripped of all conclusions of law, are in substance these: The machinery, which was located in a plant at Taunton, had been offered to the plaintiffs for $25,000. The plaintiffs had no knowledge of the value of such machinery, and were wholly without experience or ability in appraising it. On or about September 5, 1940, the plaintiffs, ‘for consideration,’ employed the defendant, who was engaged in the used machinery business and was thoroughly familiar with the value of the machinery in question, to appraise it for the plaintiffs and to report whether $25,000 was a fair and advantageous price and whether the machinery should be purchased at that price, the defendant ‘assuring the plaintiffs that he would in good faith appraise the machinery * * * and that they could rely upon his judgment and representations and could repose in him confidence and trust.’ Shortly thereafter the defendant reported that he had appraised the machinery; that the price of $25,000 was not fair or advantageous but was excessive; and that in his opinion $20,000 was a fair price. He urged the plaintiffs not to offer more than $20,000. The plaintiffs offered that price but could not effect a purchase. The defendant's report was false, as he knew when he made it. He made it to deceive and defraud the plaintiffs and for the purpose of dissuading them from buying the machinery, so that he could obtain it for himself. The plaintiffs relied upon the report and upon the defendant's knowledge, ability and good faith as an appraiser. The defendant in fact appraised the machinery for a sum far in excess of $20,000. It was fairly worth at the time $100,000. In October, 1940, the defendant himself purchased the machinery for $28,000.

Taking these allegations at their face value, as for present purposes we must, there might be on general principles ground for argument that the defendant had entered into a relation of trust and confidence with the plaintiffs and had violated his trust. Reed v. A. E. Little Co., 256 Mass. 442, 152 N.E. 918. But we do not pursue that argument, since we think that a long course of decision in this Commonwealth in closely related cases precludes us from reaching the result desired by the plaintiffs. It must be regarded as settled that if the plaintiffs had employed the defendant actually to buy the machinery in their behalf and he had bought it for himself instead with his own money no constructive trust would have arisen in favor of the plaintiffs. The cases are collected in the footnote.¹ They include opinions written by distinguished judges. They have been criticized. Scott on Trusts, s. 499, at page 2417. There are authorities elsewhere to the contrary, but this court, while recognizing that fact, has heretofore felt bound to adhere to its own decisions. Tourtillotte v. Tourtillotte, 205 Mass. 547, 552, 91 N.E. 909. It is true that these cases involved land, and that they are largely rested upon the statutes of fraud or upon the absence of a resulting trust, but it cannot be supposed that the court would have allowed the statutes of fraud to stand in the way of a constructive trust, or would have stressed the absence of a resulting trust, if the court had believed that a mere engagement to buy property for another, without more, would create a fiduciary relation for breach of which a constructive trust would arise, and some of the later decisions particularly show that the court rejected the theory of a constructive trust arising in that situation. The cases cited in the footnote must be considered authority for the proposition that a mere engagement to buy in behalf of another without more is not deemed in this Commonwealth to create a fiduciary relation. The question was most recently discussed in Cann v. Barry, 293 Mass. 313, on page 316, 199 N.E. 905, on page 906, where we said: ‘It is settled in this commonwealth that no implied or constructive trust arises merely because the defendant has agreed orally to buy land as the plaintiff's agent and...