Zartner v. Holzhauer

• Decision Date: 13 January 1931
• Citation: 234 N.W. 508,204 Wis. 18
• Parties: ZARTNER v. HOLZHAUER.
• Court: Wisconsin Supreme Court

204 Wis. 18

234 N.W. 508

ZARTNER

v.HOLZHAUER.^a1

Supreme Court of Wisconsin.

Jan. 13, 1931.

Appeal from an order of the Circuit Court for Milwaukee County; Charles L. Aarons, Circuit Judge. Reversed.

Action by Edward F. Zartner, residuary legatee of Emma Zartner, deceased, against Charles Holzhauer, defendant, to recover damages resulting from fraud and deceit practiced by said Charles Holzhauer on said Emma Zartner, deceased, in connection with a real estate transaction during her lifetime. From an order overruling a demurrer to an amended complaint, the defendant appeals.

The amended complaint in this action alleges that in and by the terms of the will of Emma Zartner, deceased, the plaintiff was made a residuary legatee, and that as such he is entitled to a one-fourth part of the residue of her estate; that during her lifetime said Emma Zartner was the owner of certain premises and buildings known as the Granada and Grand Rue Apartments; that the defendant Holzhauer was a close friend and confidant of the said Emma Zartner, deceased; that he was engaged in the real estate business; that said Emma Zartner employed him to secure a purchaser and make a sale of the said apartment premises; that he made no good-faith effort to secure a purchaser for said premises, but planned to secure them for himself for much less than said premises were worth; that he advised said Emma Zartner that he had not been offered more than $75,000 for said property and “fraudulently concealed from her that at least one prospective purchaser was still interested in said property and apparently willing to pay a higher figure”; that he thereupon asked said Emma Zartner to deed said premises to him and a friend for said price of $75,000, when he in fact knew that the property was worth $160,000, and the said Emma Zartner, not knowing the higher figure which said defendant had received for same, and not knowing of the defendant's failure and refusal to attempt to sell the same for a higher figure, and relying upon the defendant, and not knowing that he was scheming to secure the said property for himself at a very unfair price, accepted the said proposition to deed the said property to an agent and coconspirator of the said defendant, to wit, one William Daehn, and that through mesne conveyances from the said Daehn the record title of said property was eventually vested in the said defendant Holzhauer. Plaintiff further alleges that there was sufficient funds in said estate, outside of said property, to pay all expenses, legacies, and bequests, so that the value of said property, or the said property itself, but for any transfer thereof, would have been entirely included within the residuary clause of said will, and the plaintiff would have been entitled to one-fourth thereof in any event; that the residuary legatees have waived the right to cancel said conveyance because of said fraud, and this plaintiff has elected to bring his action in damage, and his one-fourth interest in said property was worth $21,250 more than the defendant paid the said Emma Zartner, and that his interest in the residuary clause of said will would have been $21,250 more had the defendant not been guilty of the fraud alleged.

The prayer is for judgment against said defendant in the sum of $21,250. Upon the hearing of a motion to make the complaint more definite and certain, counsel for plaintiff stated in open court that plaintiff seeks to recover on a cause of action claimed to have arisen during the lifetime of Emma Zartner for the violation of a primary right then existing in her favor, by reason of which violation plaintiff claims he has suffered damage as a residuary devisee under the will of said Emma Zartner, deceased.

The amended complaint was demurred to on the grounds (1) that the plaintiff has not legal capacity to sue, in that he seeks to recover on a cause of action at law for damages for deceit claimed to have arisen in favor of Emma Zartner, which cause of action did not survive and did not pass to him by assignment under the final decree in her estate or otherwise, and in that he seeks to split off and recover on a fractional part only of a cause of action which, if it exists at all, is vested in himself and others; and (2) that the amended complaint does not state facts sufficient to constitute a cause of action. A demurrer to the amended complaint was overruled, and the defendant appeals.McGovern, Curtis, Devos & Reiss, of Milwaukee (J. G. Hardgrove, of Milwaukee, of counsel), for appellant.

Walter D. Corrigan, Sr., and Clifton Williams, both of Milwaukee, for respondent.

OWEN, J.

The specific legal question involved is whether the plaintiff, as a residuary legatee of the estate of Emma Zartner, deceased, may maintain in his own name an action to recover a fractional part of the damages alleged to have been sustained by Emma Zartner during her lifetime because of fraud and deceit practiced upon her by the defendant. This question is raised by the demurrer on the ground that the complaint does not state a cause of action. McKenney v. Minahan, 119 Wis. 651, 97 N. W. 489. That the complaint sets forth facts constituting deceit which would have enabled the testatrix during her lifetime to rescind the conveyance, or to maintain an action to recover damages resulting from the deceit, is not challenged. The question is whether this plaintiff, as one of the residuary legatees under the will of Emma Zartner, deceased, may maintain this action to recover a fractional part of the damages resulting from the deceit.

[1] It is well established that equity will afford relief at the suit of heirs to place them in possession of, or to quiet their title in, real property, the legal title to which is held by another, under circumstances giving rise to a constructive trust. Such a constructive trust has often been declared at the suit of heirs where a conveyance from the ancestor has been obtained by fraud, by the practice of undue influence, through a breach of trust and confidence, for the breach of a condition subsequent, where the ancestor was non compos at the time of the delivery of the deed, and many like situations. Cole v. Getzinger, 96 Wis. 559, 71 N. W. 75;Borchert v. Borchert, 132 Wis. 593, 113 N. W. 35; Somervaill v. McDermott, 116 Wis. 504, 93 N. W. 553;Disch v. Timm, 101 Wis. 179, 72 N. W. 196;Armstrong v. Morrow, 166 Wis. 1, 163 N. W. 179, Ann. Cas. 1918E, 1156;Cheney v. Gleason, 125 Mass. 166;Abernathie v. Rich, 229 Ill. 412, 82 N. E. 308;Lane v. Lane, 106 Ky. 530, 50 S. W. 857;Canton v. McGraw, 67 Md. 583, 11 A. 287;Foxworth v. Bullock, 44 Miss. 457;Stewart v. Miller (Tex. Civ. App.) 271 S. W. 311; Notes in 2 A. L. R. 431 and 33 A. L. R. 51. This relief is not afforded on the theory that it is a right which survives, although it is said that remedies administered in equity do not die with the person. The law devolves such title as the ancestor may have had in and to the real estate upon the heirs, and, as said in Walling v. Thomas, 133 Ala. 426, 428, 31 So. 982, 983, the jurisdiction of a court of equity rests upon the “equitable right [of the heirs] to be invested with succession.”

[2] But the rights of heirs are not here involved. The rights of the plaintiff do not come to him by virtue of descent. The deceased in this instance left a will, and such rights as the plaintiff had in and to the property of the deceased must be traced under the will. “In one thing all writers agree, and that is in considering that there are two modes only, regarded as classes, of acquiring a title to land; namely, descent and purchase; purchase including every mode of acquisition known to the law, except that by which an heir, on the death of an ancestor, becomes substituted in his place as owner by the act of the law.” 3 Washburn on Real Property (6th Ed.) § 1824, p. 3. It is incumbent upon the plaintiff, therefore, to show, not only that his interest in this real estate came to him in the nature of an assignment or conveyance under and by virtue of the terms of the will, but that the interest he may claim was the subject of an assignment or conveyance.

[3][4] At the time of her death the legal title to these premises was not in the testatrix. It was in Holzhauer. She had conveyed the premises by her deed. This deed might have been voidable, but until rescinded by her it stood as a good conveyance and fixed the legal title of said premises in Holthauer. The only right she possessed with reference to said premises was the right to rescind the conveyance. It was early held in this state that the right to rescind a contract because of fraudulent representations could be exercised only by the one upon whom the fraud was perpetrated, and that such right did not pass by assignment. Crocker v. Bellangee, 6 Wis. *645, page 619, 70 Am. Dec. 489;Milwaukee & M. R. R. Co. v. Milwaukee & W. R. R. Co., 20 Wis. *174, page 183, 88 Am. Dec. 740. The same conclusion was reached by the Supreme Court of the United States in Graham v. La Crosse, etc., Ry. Co., 102 U. S. 148, 26 L. Ed. 106. See, also, Whitney v. Kelley, 94 Cal. 146, 29 P. 624, 15 L. R. A. 813, 28 Am. St. Rep. 106; Gray v. Ulrich, 8 Kan. 112; Weissenfels v. Cable, 208 Mo. 515, 532, 106 S. W. 1028. There is some...