Taylor v. Calvert
| Decision Date | 17 May 1894 |
| Docket Number | 16,733 |
| Citation | 37 N.E. 531,138 Ind. 67 |
| Parties | Taylor v. Calvert et al |
| Court | Indiana Supreme Court |
From the Greene Circuit Court.
Judgment affirmed.
A. G Cavins, E. H. C. Cavins and W. L. Cavins, for appellant.
W. W Moffett and C. E. Davis, for appellees.
This is an action brought in the court below by the appellees against the appellant and James R. Hodges and Louisa M. Hodges, his wife, in two paragraphs, based upon the following state of facts: On March 23, 1874, the appellant Robert R. Taylor was appointed guardian of John I. and Mathew H. Calvert, as successor to James R. Hodges, whose bondsmen were insolvent. Hodges had converted the larger portion of his wards' funds, but executed to Taylor a note and mortgage on his only remaining farm or property as security for $ 711 of the money, and included in the mortgage a $ 200 note due to Taylor. This farm was, at the time, worth $ 2,000. When the mortgage was given there was in the hands of the sheriff of Greene county an execution against James R. Hodges, which was soon after levied upon the land. Sale was duly made on this execution to one Isom Sanders, who, a short time before the year for redemption expired, sold the certificate of purchase to the appellant, Taylor. Up to that time Taylor had taken no steps to procure funds with which to redeem from said sale or in any way to protect the mortgage of his said wards, but he afterwards reported to the court that he had bought the certificate of purchase, thinking he might save something for his wards out of the land. It does not appear that he ever afterwards took any steps to in any way use said certificate to save anything for his wards; but, on the contrary, after his wards became of age, asserted title in his own name to the land. When Taylor settled with his wards, he turned over to them the notes and mortgage and took credit for the same. When settling with Mathew, the last one of the wards, Taylor told him he could do nothing with the mortgage until Hodges died leaving his wife surviving, when he could foreclose the mortgage against her third of the land. Taylor has ever since held possession of the tract, enjoying the rents and profits.
Before the beginning of this suit John I. Calvert died, leaving his widow, now Mrs. Johnson, and the other defendants herein, except Mathew, his only heirs. There was no administration on his estate and he left no debts unpaid.
It is alleged in the first paragraph, that Taylor took the certificate of purchase in trust for his said wards, and avowedly for their benefit; that John I. Calvert arrived at the age of twenty-one on January 1, 1879, and Mathew H. Calvert became of age in December, 1881; that thereafter said Taylor repudiated the trust, and continues to hold said real estate and to receive the rents and profits thereof of the value of $ 3,500, and now holds possession of the real estate and denies appellees' right thereto. Appellees demand that after deducting amounts paid by appellant for rents they have judgment for the residue of rents and profits, a decree vesting title in them, a foreclosure against said James R. and Louisa M. Hodges, and all other proper relief.
The second paragraph of the complaint directly alleges that Taylor took the certificate of purchase to protect his wards' mortgage and equity of redemption in the land, but failed to redeem the same by paying himself out of his wards' money, but when the year expired took a deed in his own name, for the purpose, however, of holding the same, and promising to hold said deed as an additional security to him for money by him advanced in the purchase of the certificate until such time as he might be paid out of their funds, but though he had sufficient money of theirs thereafter did not redeem for them, but continued to hold said deed and certificate as security until his wards became of age, when he turned over to them the mortgage and notes, and settled with them without mentioning to the court the existence of said certificate; that said mortgage and notes are the property of the plaintiffs, and are yet unpaid; that defendant Taylor has had possession, appropriating the rents and profits to his own use, and has been fully reimbursed for all the money by him invested in said certificate of purchase; that said appellant made no mention of said certificate of purchase or deed or said real estate in either of the final reports as to said wards, but took their respective receipts for and made assignment to them respectively of their interests in said mortgage and note, and took credit therefor in his final reports; that said Taylor was finally discharged as guardian on January 10, 1883.
Prayer that the deed be set aside as to the appellant, and that the appellees be allowed to redeem and foreclose against said Hodges and Hodges, and for all other proper relief.
The defendants, James R. Hodges and Louisa M. Hodges, filed their answer to the complaint, disclaiming any interest in the real estate described in the complaint, or in the controversy involved in the issues tendered. Subsequently the appellant filed a demurrer to the complaint and each paragraph thereof, which was overruled and appellant excepted. Appellant then filed an answer in four paragraphs as follows:
1st. A general denial.
2d. A full statement of the facts in relation to all matters set out in the complaint, his final settlement as guardian and his discharge.
3d. The statute of limitations of six years.
4th. The statute of limitations of fifteen years.
In the 2d, 3d and 4th paragraphs, appellant answers the complaint except as to the inchoate interest in the land of Louisa M. Hodges. Appellant also filed a cross-complaint in two paragraphs. the first of which was afterwards withdrawn. The second paragraph of cross-complaint was to quiet title to the real estate in controversy in appellant. Appellees demurred to the 2d, 3d and 4th paragraphs of answer, and each paragraph of cross-complaint. James R. Hodges and Louisa M. Hodges filed a disclaimer to the cross-complaint of the appellant. The court sustained the demurrer to the third paragraph of appellant's answer, and appellant excepted, and the court overruled the demurrer to the 2d and 4th paragraphs of answer, and the second paragraph of cross-complaint to which the appellees excepted. The issues were closed, there was a trial by the court, and finding and judgment in favor of appellees against the appellant, decreeing that appellees were the owners of the real estate in controversy. There was a motion for a new trial by appellant, which was overruled and exception taken, and sixty days were given in which to file bills of exceptions. There was a motion for a new trial as of right under the statute, which was also overruled by the court, and exception taken by the appellant. Appeal to this court was prayed and granted, and the following errors assigned:
1st. The complaint does not state facts sufficient to constitute a cause of action.
2d. The court erred in overruling the demurrer to the first paragraph of the complaint.
3d. The court erred in overruling the demurrer to the second paragraph of the complaint.
4th. The court erred in sustaining the demurrer to the third paragraph of the answer.
5th. The court erred in overruling the motion to strike out the second paragraph of the reply.
6th. The court erred in overruling the motion for a new trial.
7th. The court erred in overruling the motion for a new trial as of right under the statute.
The first three specifications of error raise one question, the sufficiency of the complaint and each paragraph thereof. The first paragraph of the complaint is not, as the learned counsel for the appellant contend, drawn upon the theory of a resulting or implied trust arising from the fact that the money of one is used, and the title taken, in the name of another. The theory of this paragraph is that of a constructive trust growing out of a constructive fraud, or the violation of duty in a fiduciary relation. As we understand it, the appellees in this paragraph of the complaint present the theory that when Taylor, as their guardian, held the Hodges mortgage, he could not assume in relation to the land mortgaged any position in conflict or inconsistent with their interest, without first resigning his trust. He could not represent them in holding the mortgage and represent himself in holding an adverse lien, the certificate of purchase. As he did assume to purchase the certificate which was adverse and superior to the mortgage due the wards, the purchase would inure to their benefit, and he would be adjudged to hold the certificate as their trustee; and that too, whether he bought it with his own money or theirs; the only difference being that in the absence of actual fraud he would, if he invested his own money, be entitled to be reimbursed. The theory of this paragraph assumes that it can make no difference whether there was any fraud intended or not, nor whether Taylor designed from the beginning to hold the certificate for himself or avowedly for the protection of his wards. In other words, whether he intended to take the certificate in trust, or to take it for himself, the law will construe it to be held in trust for, and it will inure to the benefit of, his wards in whose interest his fiduciary relation compelled him to act, if he acted at all in the matter. The theory of the complaint assumes, further, that for all money invested by Taylor he has been fully compensated by rents and profits. It is true, as a general proposition, that a trust can only result where the beneficiary's money has been invested; but the doctrine applies to person's "dealing at arm's length," and by no means conflicts with...
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