Shepherd v. Dougan, 6459

Citation76 P.2d 442,58 Idaho 543
Decision Date14 October 1937
Docket Number6459
PartiesALFRED W. SHEPHERD, Executor Under the Last Will and Testament of JOSEPH R. SHEPHERD, Deceased; EMILY RICH, F. J. FOULGER and JESSE P. RICH, Executors Under the Last Will and Testament of WILLIAM L. RICH, Deceased; MARY A. HUNT and SAMUEL W. MATHEWS, Respondents, v. JOSEPHINE B. DOUGAN, Administratrix of the Estate of JOHN DOUGAN, Deceased, and JOSEPHINE B. DOUGAN, Appellant
CourtUnited States State Supreme Court of Idaho

TRUSTS-RESULTING TRUSTS, CREATION OF-VOID CONTRACT, EFFECT OF-RIGHTS OF PARTIES-LIMITATION OF ACTIONS-EQUITABLE LIENS-INTEREST ON TRUST FUNDS.

1. In determining whether resulting trust has arisen from circumstances, every case must depend upon its own particular facts.

2. That real estate purchase contract was void would not prevent resulting trust from arising against vendor in purchaser's favor, since resulting trust is implied from acts of parties rather than from contract.

3. "Resulting trusts" do not arise out of legally enforceable contracts, but from acts and conduct of parties apart from contracts, where acts of alleged trustee are consistent only with purpose to hold property in trust notwithstanding that alleged trustee never agreed thereto and might have really intended to resist trust.

4. Where husband executed real estate purchase contract covering community property without wife joining, accepted payments on contract, making of repairs, and payment of taxes and insurance premiums, and on wife's death took sole title to realty, resulting trust for amount of payments and value of improvements arose in purchaser's favor, irrespective of husband's intention, and such trust was binding on husband's grantees who knew of contract and took assignment thereof.

5. Where resulting trust was created April 5, 1927, when vendor in void realty purchase contract accepted payments and improvements on realty from purchaser, right of action on such trust did not accrue until June 1, 1936, when vendor assigned contract and executed deed to third parties, and hence purchaser's administratrix' cross-suit to enforce trust filed October 1, 1936, was not barred by four-year statute of limitations. (I. C. A., sec. 5-224.)

6. No right of action on trust created and continued with consent of trustee and beneficiary accrues until trust is repudiated.

7. Where husband sold community realty under void contract wherein wife did not join, but accepted purchaser's payments of contract installments, repairs, taxes, and insurance premiums, and acquired full title to realty on wife's death before repudiating transaction by conveying realty and assigning contract to third parties who had notice of circumstances, purchaser's administratrix was entitled to equitable lien on realty for difference between amounts spent for repairs, taxes, insurance premiums, and contract payments, less reasonable monthly rental value of realty during period of purchaser's possession.

PETITION FOR REHEARING.

8. In action in ejectment joined with suit to quiet title against purchaser under real estate contract, wherein purchaser brought cross-suit to have the property impressed with an equitable lien, and case was tried upon theory that the contract was void, contract must be treated as void on appeal.

9. A purchaser of land under void contract could not be treated as having abandoned or refused to perform the contract, nor as in default under terms thereof, and hence would not be denied equitable lien for loss incurred under contract.

10. The charging of interest on trust funds against a trustee depends on requirements of justice under facts of the particular case.

11. An administratrix of purchaser of realty under void contract claiming equitable lien for money spent for repairs, taxes and insurance premiums, would be allowed interest at statutory rate on the net balance due her, after deducting reasonable rental, from date when administratrix lost possession of the premises.

APPEAL from the District Court of the Fifth Judicial District, for Bear Lake County. Hon. Jay L. Downing, Judge.

Action in ejectment joined with suit to quiet title. Crosssuit to have the property involved in the controversy impressed with an equitable lien. Judgment for plaintiffs. Reversed and remanded with instructions.

Reversed and remanded with instructions. Costs awarded to appellant.

Charles E. Harris and L. E. Glennon, for Appellant.

After strict performance is waived by accepting payments, the vendor may not declare a forfeiture without giving notice designating the grounds upon which forfeiture is claimed, and allowing a reasonable time to make delinquent payments. ( Sullivan v. Burcaw, 35 Idaho 755, 208 P. 841; Seeley v. Security Nat. Bank, 40 Idaho 574, 235 P. 976; Berding v. Northwestern Securities Co., 36 Idaho 384, 211 P. 62; Rynhart v. Welch, 156 Ore. 48, 65 P.2d 1420.)

The fundamental right of the defendant to recover payments made on the purchase price and for taxes, insurance and improvements, less the reasonable rental value of the property during the period of occupancy, does not appear to be questioned. All parties agree that the written instrument designated as "Uniform Real Estate Contract" is void in so far as it relates to the real estate, because not executed by Mrs. Shepherd. Under such circumstances, the purchaser is entitled to recover such payments and expenditures. (Elliott v. Craig, 45 Idaho 15, 260 P. 433; 41 C. J. 38, sec. 17; Whyte v. Rosencrantz, 123 Cal. 634, 56 P. 436, 69 Am. St. 90.)

This court has clearly recognized this principle in holding that the purchaser is entitled to recover purchase money paid, although the contract of sale is void. (Elliott v. Craig, supra; Sorensen v. Larue, 47 Idaho 772, 278 P. 1016; McDuffee v. Hayden etc. Irr. Co., 25 Idaho 370, 138 P. 503; 20 L. R. A., N. S., 175, annotator's statement of the rule; Page on Contracts, vol. 2, sec. 1071.)

The claim of lien here is not based upon the void contract, but is founded upon the equitable principle which recognizes an equitable lien arising out of the dealings of the parties. Such a lien has long been recognized and enforced by courts of equity for the purpose of effecting natural justice between the parties. (37 C. J. 308, sec. 5; Foulkes v. Sengstacken, 83 Ore. 118, 163 P. 311; Elliott v. Walker, 145 Ky. 71, 140 S.W. 51; Elterman v. Hyman, 192 N.Y. 113, 84 N.E. 937, 127 Am. St. 862, 15 Ann. Cas. 819; Newman v. Moore, (Ky.) 17 S.W. 740.)

From the time of payment of any part of the purchase money the vendor holds the legal title to a proportionate interest in the property in trust for the purchaser. (66 C. J. 1028; Stewart v. Mann, 85 Ore. 68, 165 P. 590, 1169; Jennison v. Leonard, 21 Wall. (U. S.) 302, 22 L.Ed. 539, at p. 542; Pima Farms Co. v. Elliott, 32 Ariz. 342, 258 P. 304.)

The trust referred to in the foregoing authorities is what is known as a resulting trust--one not created by any agreement or intention of the parties but implied by law and recognized by courts of equity (65 C. J. 222, 368, secs. 13, 143), where it is stated:

"A resulting trust does not arise out of the contract of the parties but arises by implication of law from their acts and conduct apart from any contract, it being the creature of equity." (National Bank of Idaho v. D. W. Standrod & Co., 47 Idaho 93, 272 P. 700; American Min. Co. v. Trask, 28 Idaho 642, 156 P. 1136; O'Donnell v. McCool, 89 Wash. 537, 154 P. 1090.)

The statute of limitations precluding actions at law does not apply to the enforcement of rights under such a trust so long as the parties can be restored to their former positions or justice can still be done. (65 C. J. 868, sec. 756; Olympia Mining & Milling Co. v. Kerns, 24 Idaho 481, 135 P. 255; Nasholds v. McDonell, 6 Idaho 377, 55 P. 894; Coe v. Sloan, 16 Idaho 49, 100 P. 354; American Min. Co. v. Trask, supra.)

Darwin E. Haddock and Jesse R. S. Budge, for Respondents.

The instrument signed on April 5, 1927, by F. T. Shepherd and John Dougan, purporting to be a contract of sale of said property, was and is absolutely void. (McKinney v. Merritt, 35 Idaho 600, 208 P. 244; Elliott v. Craig, 45 Idaho 15, 260 P. 433.)

A person who has made payments on the purchase price of real property under a void contract has an action on implied contract for money had and received, but such action is maintainable only against the person to whom the payment was made. (Barker v. Fordville Land Co., 264 Mich. 95, 249 N.W. 491; Central Land Co. v. Laidley, 32 W.Va. 134, 9 S.E. 61, 25 Am. St. 797, 3 L. R. A. 826; Montgomery v. Meyerstein, 186 Cal. 459, 199 P. 800.)

Appellant's cross-complaint is an action on implied contract for money had and received; that is, an action on a contract not founded upon an instrument in writing within section 5-217, Idaho Code 1932. (Thomas v. Pacific Beach Co., 115 Cal. 136, 46 P. 899.)

As to such an action, the statute begins to run on a claim for instalments paid on the purchase price of real property from the dates the payments were made. Therefore, her claims to payments made more than four years prior to the commencement of the action are barred.) (66 C. J. 1517; Smith v. Bach, 53 Cal.App. 63, 199 P. 1106; McShane v. McQuillin, 47 Idaho 542, 277 P. 554; Hennessey v. Stempel, 52 La. Ann. 449, 26 So. 1004; Jefferson County v. Burlington R. R. Co., 66 Iowa 385, 16 N.W. 561, 23 N.W. 899; Seattle v. Walker, 87 Wash. 609, 152 P. 330.)

Even if the instrument of April 5, 1927, had been valid appellant could have asserted no claim of lien under it for the reason that no lien for purchase money can be claimed by a vendee who is in default. (Merrill v. Merrill, 103 Cal 287, 35 P. 768, 37 P. 392; Kane v. Gwinn Inv. Co., 123 Wash. 320, 212 P. 256; Wilson v. Smith, 69 Cal.App. 211, 230 P. 963; ...

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