Walston v. Smith

• Citation: 70 Vt. 19,39 A. 252
• Parties: WALSTON et al. v. SMITH et al.
• Decision Date: 03 December 1897
• Court: United States State Supreme Court of Vermont

39 A. 252

70 Vt. 19

WALSTON et al.

v. SMITH et al.

Supreme Court of Vermont. Addison.

Dec. 3, 1897.

Appeal in chancery, Addison county; Taft, Chancellor.

Bill by Harry M. Walston and others against Elizabeth Smith and others to have a trust declared. The cause came on for hearing upon the pleadings, the original and supplemental reports of the master, and exceptions of both parties thereto. The exceptions were overruled pro forma, and the bill dismissed, with costs. The orators appealed. Reversed.

L. P. Wilbur and Stewart & Wilds, for appellants.

Daniel Roberts and Elihu B. Taft, for appellees.

ROSS, C. J. The solicitor for the defendants concedes that when this case was before this court, as found in 67 Vt. 542, 32 Atl. 486, the court properly held, on the findings of the master, that by the conveyance from the intestate to Norton the latter took simply the title to the premises, as a passive trustee, for the beneficial use of the intestate; and that, except to a bona fide purchaser for value without notice, Norton, without the consent and direction of the intestate, could convey no greater title than he (Norton) held. But he contends that, it now being found by the master that the conveyance to Elizabeth, the wife of the intestate, was made with the consent and by the direction of the intestate, the deed concludes the intestate and those interested through him, so that against the plea of the statute of frauds, relied upon in the answer, no parol testimony could be received and considered by the master to determine whether Elizabeth took the same in trust for the intestate. He reasons: "Starting with the proposition that Norton was but a passive trustee of the title for Smith, without Interest, he was at all times subject to the direction of Smith as to its disposition." That "Norton was trustee for Smith, not for Smith's wife, nor for his creditors, nor for such as might be his heirs at his death." That "the trust under which Norton held the title did not necessarily or naturally follow to his grantee. If the conveyance was made by consent and direction of Smith, it went according to the terms of conveyance, unless otherwise restricted in the mode provided by law." That "the conveyance of lands by a husband to his wife is universally through a trustee." Hence he concludes: "This was, in legal effect, a direct conveyance from Smith to his wife, and the only recognized mode in which he could convey to her." If the conveyance to Norton had been made for the purpose of having him convey to the wife, Norton would have taken the title in trust for the wife He would have taken and held it for the sole purpose of transferring it to her, and have held the title in trust for her sole use and benefit. In such case the conveyance of the title to the wife through Norton would have been a direct conveyance of it from the husband to the wife. No right or interest, legal or equitable, after such conveyance to Norton, would have remained in the husband. No trust in behalf of the husband could result from such conveyance. Unquestionably, the cases cited by the solicitor for the defendants, holding that, if the husband conveys real estate to a third person for the sole purpose of having such third person convey it to his wife, and such third person makes the conveyance, no trust of any kind arises out of such conveyance in favor of the husband, are properly decided. Such cases are clearly distinguishable from the case under consideration. Here, on the facts found by the master, Norton, by the conveyance from the intestate, took the title as a passive trustee for the sole benefit of the intestate. The intestate was to remain in possession, and manage the property. As held, when this case was before this court, in 67 Vt., and 32 Atl., Norton could convey, when the conveyance alone is considered, no greater rights or title to the estate then he held. It is immaterial in this respect whether Norton held the property impressed with an express or an implied trust in favor of the intestate. "Wherever property, real or personal, which is already impressed with or subject to a trust of any kind, express or by operation of law, is conveyed or transferred by the trustee, not in the course of executing or carrying into effect the terms of an express trust, or devolves from a trustee to a third person, who is a mere volunteer, or who is a purchaser with actual or constructive notice of the trust, then the rule is universal that such heir, devisee, successor, or other voluntary transferee, or such purchaser with notice, acquires and holds the property subject to the same trust which before existed, and becomes himself a trustee for the original beneficiary." 2 Pom Eq. Jur. 1048. This, in substance, this court held when it previously had the case under consideration. The solicitor for the defendants concedes that that decision was correct. No new facts have been brought into the case bearing upon the operation of the conveyance by Norton, considered by itself. It follows, therefore, that by that conveyance, when the conveyance alone is considered, Mrs. Smith took the title to the property subject to the same trust which was impressed upon it when Norton held the title, to hold for the beneficial use of the intestate. It is found that she bad full notice of the trust, and paid nothing for the conveyance. She does not stand as a bona fide purchaser without notice. The trust impressed upon the property when Norton held the title, by his conveyance, considered by itself, remained when the title came to Mrs. Smith. Whether that conveyance created strictly a resulting trust need not be determined. To consider it a resulting trust is to regard it in the light most favorable to Mrs. Smith.

By the concession of the parties, the intestate, while Norton held the legal title, was the equitable owner of the property. The property conveyed by the intestate to Norton, by the concession of the parties, became a trust estate. In kind, it was such a trust as arises by implication and operation of law. As said in the American notes to Dyer v. Dyer, 1 White & T. Lead. Cas. Eq. 339: "The trust which results by implication and operation of law from the payment of the purchase money, or part of it, and without any agreement, is a pure and simple trust of the ownership of the land. It is not an interest in the proceeds of the land, nor a lien upon it for the advance, nor an equity or right to a sum of money to be raised out of it, or upon the security of it." However created, such was the trust in regard to this property existing between the intestate and Norton when Norton held the title. By Norton's deed of this property, when considered by itself, to Mrs. Smith, the same trust continued, or a trust in every essential a resulting trust. If the conveyance by Norton had been to a stranger, under the circumstances in which it is found to have been made to Mrs. Smith,—with notice, and without consideration,—the same identical trust would follow. To render the conveyance valid and freed from the trust under which Norton held the title, the burden was on Mrs. Smith to establish that she took the title from Norton without notice of the trust, and for a valuable consideration, or under such circumstances that the law would presume the property conveyed to be a gift. The master has found that she had notice of the trust, and paid nothing for the conveyance. Hence from the conveyance, considered by itself, with these circumstances added, the same trust under which Norton held the property would continue or be implied if no other facts were shown. A new fact, or "circumstance of evidence," has been brought into the case,—the fact that the intestate consented to and directed the conveyance by Norton to his wife. This is frequently spoken of as "a circumstance of evidence." 1 Lewin, Trusts, *171; 1 Perry, Trusts, § 143. When this "circumstance of evidence" is shown where, under the facts, otherwise a trust would continue, or be implied to follow the conveyance of the property, then, because of the obligation of the person who furnishes the consideration for the conveyance to support the grantee, if nothing more is shown, a presumption or implication arises that he intended the conveyance as an advancement or gift. But this presumption or implication may be rebutted by circumstances or parol testimony. It is so held universally. It then becomes a question of what was the intention of the real parties to the transaction, or of the person furnishing the consideration for the conveyance and of the grantee therein. 2 Pom. Eq. Jur. §§ 1040, 1041; 1 Lewin, Trusts, *176; 1 Perry, Trusts, § 147; American notes to Dyer v. Dyer, 1 White & T. Lead. Cas. Eq. 345-347. Perry uses this language: "Whether a purchase in the name of wife or child is an advancement or not is a question of pure intention, though presumed, in the first instance, to be a provision and settlement. Therefore any antecedent or contemporaneous acts or facts may be received, either to rebut or support the presumption." He says (section 134): "A trust results from the acts, and not from the agreements, of the parties, or rather from the acts accompanied by the agreements; but no trust can be set up by mere parol agreements, or, as has been said, no trust results from the breach of a mere parol contract." In the American notes to Dyer v. Dyer, after considering the doctrine as applied at different times and by various courts, on page 347 the writer concludes: "When the doctrine is once taken up that the intention of the parties is not to be found in the legal construction of an instrument, and that you are to infer it from extrinsic circumstances nothing short of a general admission of all parol evidence that throws light on the intention, and is in its nature competent can be adopted." Hence all the evidence and circumstances received and considered in regard to the intention of the intestate and of Mrs....