Wasatch Min. Co. v. Jennings

• Decision Date: 02 September 1887
• Citation: 5 Utah 243,15 P. 65
• Court: Utah Supreme Court
• Parties: WASATCH MINING CO., RESPONDENT, v. JOSEPH A. JENNINGS AND OTHERS, APPELLANTS

15 P. 65

5 Utah 243

WASATCH MINING CO., RESPONDENT, v. JOSEPH A. JENNINGS AND OTHERS, APPELLANTS

Supreme Court of Utah

September 2, 1887

APPEAL from a decree of the district court of the third district and from an order refusing a new trial. The opinion states the facts.

Reversed and remanded.

Messrs Sheeks & Rawlins, and Mr. P. L. Williams, and Mr. Le Grand Young, for appellants.

The complaint stated no cause of action, or any matter entitling the plaintiff to equitable relief. According to its allegations the judgments, and all proceedings based thereon including the deed to Jennings and Clark were utterly void, not even creating a cloud upon the title alleged to be in the plaintiff. The remedy of the plaintiff, if it had any, was an action of ejectment, to recover the possession of the property: Lewis v. Cocks, 23 Wall., 466; Killain v. Ebbinghaus, 110 U.S. 568; Freeman on Judgments, Sec. 117; 3 Pomeroy's Equity, 431.

The agreement alleged in the complaint, to the effect that Jennings and Clark took the deed absolute in form, subject to a trust in favor of the plaintiff, not being founded upon an instrument of writing subscribed by the parties, was void under the statute of frauds, and the court erred in admitting oral evidence to establish it: Barnett v. Dougherty, 32 Penn. St., 371; Kellum v. Smith, 33 Penn. St., 158; Payne Admr. v. Patterson Admr., 77 Penn. St., 134; Bennett v. The Dollar Savings Bank, 87 Penn. St., 382; 103 Penn. St., 446; Levy v. Brush, 45 N.Y. 589; Wheeler v. Reynolds, 66 N.Y. 227, 236; Shafter v. Huntington, 53 Mich. 310; Watson v. Erb, 33 O. St., 35; 2 Story, Eq., 1201 a; Walter v. Klock, 55 Ill. 362; Lathrop v. Hoyt, 7 Barb., 59; Botsford v. Burr, 2 John. Ch., 405; Hall v. Shultz, 4 John., 240; Howland v. Blake, 97 U.S. 624; 7 Bissell, (C. C.) 40; 3 Sumner, (C. C.) 435; Richardson v. Johnson, 41 Wis. 100; 1 Jones on Mortgages, Sec. 324; Comp. Laws of Utah, Gen. Sec. 1010.

If the plaintiff desired to set aside the transaction, it was necessary that it should act promptly, otherwise its right to do so would be lost: Twin-Lick Oil Company, v. Marbury, 91 U.S. 587; Hotel Co. v. Wade, 97 U.S. 22, 23; Rolling Stock Co. v. Railroad, 34 O. St., 464; Morawetz on Corp., Sec. 245; 37 N. J. L., 102; 113 U.S. 326.

In this case the complaint not having been filed for more than five years after the cause of action accrued to apply for redemption, it was barred by the statute of limitations: Koch v. Briggs, 14 Cal. 256; Espinosa v. Gregory, 40 Cal. 59; 40 Cal. 117; Henry v. Hotaling, 41 Cal. 22; Grattan v. Wiggins, 23 Cal. 34, 35; Cunningham v. Hawkins, 24 Cal. 410; Arrington v. Liscom, 34 Cal. 372; Caufman v. Sayre, 2 B. Monroe, 202; King v. Meigher, 20 Minn. 264; 2 Jones on Mortgages, Sec. 1146; Montgomery v. Spect, 55 Cal. 252; Pico v. Gallardo, 52 Cal. 206.

As a general rule an ordinary mortgagee in possession, is only liable to exercise such care and diligence as is usually exercised by a provident owner. He is only liable for his net receipts after deducting the expenses such an owner would make: 2 Jones on Mortgages, Secs. 1123, 1125.

There is, however, a distinction between the rights of an ordinary mortgagee, and a grantee in possession under a deed absolute in form, given by way of security merely, in reference to accounting. Such a grantee, has not only all the rights of a mortgagee, but is also the general agent of the grantor, to manage the property in his discretion and is entitled to credit for all expenditures, both for repairs and permanent improvements, which the owner himself would or might make in the exercise of ordinary and reasonablecare: Harper's Appeal, 64 Penn. St., 315; Bernard v. Jennison, 27 Mich. 230; Bacon v. Cottrell, 13 Minn. 194; Rowena v. Sharp's Rifle Mfg. Co., 29 Conn. 282. 323; 2 Jones on Mortgages, Secs. 1117, 1137; 2 Lead. Cas. in Eq., 2011; Waters v. Slevenson, 13 Nev. 181.

Messrs. Sutherland & McBride, for respondent:

Constructive trust was imposed on directors in fiduciary relation: 2 Pomeroy Equity Jur., Secs. 1053, 955, 956; 1 Lead. Cases in Eq., 97; Home v. Feuda, 5 John. Ch., 388; Fogg v. Mann, 2 Sumn., 486; Weaver v. Webb, 1 Casey, 270; Llyod v. Lynch, Id., 419; Smiley v. Dixon, 1 Pen. and Watts, 439; Rothwell v. Dewers, 1 Black, 618; Bell v. Webb, 1 Gill, 163; Wade v. Pettibone, 11 Ohio 57; McDowell v. Melroy, 69 Ill. 498; Harper v. Perry, 27 Iowa 57; Case v. Carrol, 35 N.Y. 385; Torry v. Orleans Bank, 9 Prige., 650; Cumberland Coal Co. v. Sherman, 30 Barb., 553; Trotter v. Smith, 59 Ill. 240; Miller v. McGacker, 15 Abb. New Cases, 204; Wright v. Gray, 101 Ill. 233; Dickinson v. Codwise, 1 Sandf. Ch., 214; Cox v. Ornsman, 76 Ind. 210; David v. Tucker, 41 Conn. 197; Church v. Roland, 64 Pa. St., 442; Ryan v. Dax, 34 N.Y. 307; Coyote etc. Co. v. Rubble, 8 Ore., 300.

A person agreeing verbally to bid on lands for another at sheriff's will be decreed to hold in trust, though he takes the title in his own name: String v. Glasgow, 2 Murph., 289; Denton v. McKenzie, 1 Desau., 289; Brown v. Lynch, 1 Paige, 147; Lellard v. Casey, 2 Bibb, 459; Lang v. McKee, 13 Mich. 124; Rose v. Bates, 12 Mo. 30; Walford v. Harrington, 86 Pa. St., 39; Marlatt v. Warwick, 18 N. J. Eq., 108; Combs v. Little, 3 Green., Ch. 310; Beegle v. Wintz, 55 Pa. St., 369; Hidden v. Jordan, 21 Cal. 92; Sandfoss v. Janey, 35 Cal. 481.

Director will be held to be trustee: Corington, etc., R. R. Co. v. Browlen Heirs, 9 Bush., 470; Rothwell v. Dewees, 1 Black, 613; Bennett v. Austin, 81 N.Y. 308; Barrett v. Slewart, 3 Sandf. Ch., 15; Cameron v. Lewis, 56 Miss. 76; Scichrisf's Appeal, 66 Pa. St., 237; Onson v. Cown, 22 Wis. 329; Walford v. Herrington, 74 Pa. St., 311; Rose v. Hayden, 35 Kans., 106; S. C. 57 Am. R. 145; Judd v. Morsely, 30 Iowa 423; Bennon v. Bean, 9 Iowa, 395; Bryant v. Hendricks, 5 Id., 256.

On the case stated and found the statute of limitations commenced to run on the completion and discovery of the fraud--when the fiduciary person throws off the mask and proclaims his intention to retain the advantage which he is found to hold against conscience: Covington, etc., R. R. Co. v. Bowler, 9 Bush., 483; Currey v. Allen, 3 Cal., 254; Manning v. Hayden, 5 Sawyer, 379; Millard v. Hathaway, 27 Cal. 119, 145; 2 Pom. Eq., sec. 917 and notes; Schroder v. Johns, 27 Cal. 274; Beaubien v. Beaubien, 23 How., 207; Miller v. McIntyre, 6 Peters 66; Elmendorf v. Taylor, 10 Wheat., 152; Kane v. Bloodgood, 7 John. Ch., 90, 135; Michoud v. Girod, 4 How., 560.

Directors were trustees, and holding and working the property in violation of their trust. The rule in such accounting denies credit for expenses. Salisbury v. McCoon, 3 N.Y., 379; Nesbitt v. St. Paul Lumber Co., 21 Minn. 491; Bull v. Griswold, 19 Ill. 631; Isle Royal M. Co. v. Hertin, 37 Mich. 336; Symes v. Oliver, 13 Mich. 9; Grant v. Smith, 26 Mich. 201, 206, 208; Winchester v. Craig, 33 Mich. 205, 221, 222; Wather v. Wetmore, I. E. D. Smith, 7; Betts v. Lee, 5 John., 348; Curtin v. Groat, 6 John., 168; Brown v. Sax, 7 Cow., 95; Riddle v. Driver, 12 Ala. 590; Rice. v. Hallerbeck, 19 Barb., 664; Babcock v. Gill, 10 John., 287; Ellis v. Wise, 33 Ind. 127; Snyder v. Vaux, 2 Rawle, 423; Miller v. Humphries, 2 A. K. Marsh, 446: Davis v. Easley, 13 Ill. 192; Baker v. Wheeler, 8 Wend., 505; Bly v. U.S. 4 Dill., 466; Stuart v. Phelps, 39 Iowa 14; Benjamin v. Benjamin, 15 Conn. 347; U. S. v. Mills, 9 F. 684.

Wherever credits are allowed to mortgage for improvements good faith and innocent mistake, and no knowledge of facts which could render the title defective are essential: 3 Bon. Eq., sec. 1242, note 1; Jackson v. Loomis, 4 Com., 172; Hatcher v. Briggs, 6 Oregon, 31; Morrison v. Robinson, 31 Pa. St., 456; Russell v. Blake, 2 Pick., 507; Utterbach v. Barnes, 1 McLean, 242; Dothage v. Stuart, 35 Mo. 231; White v. Morn, 21 Cal. 34; McGarraty v. Byington, 12 Id., 426; Worthington v. Young, 8 Ohio 401; Bidell v. Shaw, 59 N.Y. 46; Moore v. Cable, 1 John. Ch., 384, 387; Wetmon v. Roberts, 10 How. Pr., 54; Williams v. Gibber, 20 How., 538-9; Coleman v. Wotherspoon, 66 Md. 289; Canal Bank v. Hudson, 14 U.S. 67, 82-83; Benedict v. Gilman, 4 Paige, 62; Frost v. Davis, 31 Ind. 40, 41; Micklo v. Delaye, 17 N.Y. 80; Dart v. Hercaler, 57 Ill. 450; Davidson v. Barelay, 63 Pa. St., 417; Green v. Dixon, 9 Wis., 539; Haven v. Adams, 8 Allen, 366; Bamberger v. Turner, 63 Ohio St. 267.

ZANE, C. J. HENDERSON, J., concurred. BOREMAN, J., dissented.

OPINION

ZANE, C. J.:

This is an appeal from the third district court of Utah. The plaintiff, a mining corporation, alleged in its complaint that on the second day of January, 1877, it was the owner in fee, and was in possession of, the Walker & Walker extension and the Buckey mines, and also of a portion of the Pinyon mine, described therein; and that these mines were of the value of $ 300,000; that on the second day of January, 1877 Gust. Norquist, Swan Oleson, and John Danielson obtained judgments against plaintiff aggregating $ 781.81; that executions were issued, in pursuance of which the mines were sold to the plaintiffs in those actions for the amount of such judgments and costs; that William Jennings, a stockholder and president of the corporation, and John Clark, also a stockholder, at a meeting of the stockholders agreed with the company to redeem the property from the sale, and to advance the moneys therefor; that it was agreed that such advance should be treated as a preferred debt; that as security for this advance the said Jennings and Clark should buy the certificates of sale, and should take the marshal's deed in their own names, and should hold the title until their advances, and interest thereon, should be refunded; that, in pursuance of such agreement, Jennings and Clark purchased the...