Opinion
18934.
ARGUED APRIL 11, 1955.
DECIDED MAY 9, 1955.
Equitable petition. Before Judge Thomas. Pierce Superior Court. January 29, 1955.
Memory, Barnes Memory, for plaintiff in error.
Lee S. Purdom, Harvey D. Griffin, contra.
1. The allegations of the petition as amended are sufficient to allege inceptive fraud, as distinguished from the failure to perform some act in the future according to an agreement, and the trial court did not err in overruling the defendant's general and special grounds of demurrer.
2. Where a promise was made by a grantee as an inducement or consideration for the execution of a warranty deed by the grantor, by which promise he agreed to take title to the property, farm it, pay off the debt existing thereon, and then reconvey it to the grantor, evidence showing a mere failure to comply with his promise was insufficient to establish an inceptive fraudulent intent; and there being no other evidence showing that, at the time the agreement was made, it was done with the intent to defraud, or that the farm had been worked out of debt, the evidence was insufficient to support the verdict for the grantor.
3. The instruction of the court, that express trusts are those created and manifested by agreement of the parties, stated a correct principle of law which, considered in connection with the charge as a whole, could not have been misleading or confusing to the jury.
4. The trial court erred in failing to instruct the jury that, to entitle the petitioner to a reconveyance of the property, the proof submitted to establish the oral contract must be shown so clearly, strongly, and satisfactorily as to leave no reasonable doubt as to the agreement.
ARGUED APRIL 11, 1955 — DECIDED MAY 9, 1955.
Mrs. Mina Lee Dixon filed in Pierce Superior Court, against H. A. Dixon, a petition, which as amended alleged substantially the following: Petitioner is the owner of and is living on a described tract of farm land, which was inherited from her father and which is worth, and has, for the last three years, been worth not less than $4,000. Defendant, by taking advantage of petitioner's lack of business ability, and her implicit and full confidence in defendant, and his good faith, honesty, promises, and integrity, procured an absolute deed to be made to him by petitioner to the property in question, upon his false and fraudulent representation and promise that he would use the deed for her benefit, thus defrauding her out of her property. On October 24, 1947, petitioner borrowed from L. H. Oden $1,200 for the purpose of building a house on the land, and executed to him a security deed to cover the indebtedness. Petitioner and her husband suffered illness and sickness for a great portion of the time thereafter, and due largely to these circumstances, she had not been able to pay off the loan by the latter part of 1951, at which time the debt, including interest, amounted to about $1,440, and she was advised by Mr. Oden that he would foreclose if the loan was not paid. At the time the place was worth at least $4,000, and petitioner could have sold it for at least $3,500 cash, and had an offer of $3,500 for it. However, both she and her husband were most anxious to retain the land, which was their home, and did not wish to sell it, or permit it to be sold for collection of the debt. The defendant is the older brother of petitioner's husband. He was a successful business man, engaged as a contractor and builder, and petitioner and her husband both had great respect for his business ability, and felt that he was capable of advising them and aiding them in making some arrangement whereby they could retain their home. The relations between defendant and petitioner and her husband were most cordial and close, and he had always advised petitioner to the best of his ability when called on to do so. Petitioner's husband worked for defendant a good deal of the time, and he had the utmost confidence in his brother and so did petitioner. Both thought that they could depend upon defendant for advice. aid, and assistance freely, and they trusted him implicitly, and depended upon him for advice and aid. Therefore, petitioner went to defendant to ask him for his advice and aid in saving her home for her and her husband. She and her husband told defendant of the conditions faced by them, and of their extreme desire not to be forced to sell their home, but to keep it, and sought his advice and assistance in the matter. After a thorough discussion, defendant said he would help them. He said that he would take charge of the operation of the farm for petitioner, and would undertake to work it out of debt for them and save the home place for them, but that it would be necessary, in order for him to handle the matter, that petitioner make over the place to him in such manner as to place him in control of the property and in such way that he could handle the sale of tobacco grown on the farm under the government allotment plan. He represented orally that the property must be made over to him in order that he could be in position to handle the sale of tobacco under the government plan. This representation was not true, and was known by defendant not to be true, but was believed by both petitioner and her husband, who both reposed entire confidence in defendant. The statements of defendant that he would undertake to manage the operation of the farm for petitioner, and work it out of debt for her, and in order to do so, it would be necessary for petitioner to make over the place to him so that he would have control, and so that he could manage the sale of tobacco under the government allotment plan were believed entirely by petitioner, and induced her to execute papers thereafter prepared by defendant. The untrue representations were made by defendant for the purpose of inducing petitioner to execute the papers. Defendant at the same time orally represented to petitioner that, as soon as the indebtedness was worked out for her by him and paid off for her, he would give the land back to her. Petitioner had complete confidence in defendant and believing and relying upon the truth of his representations, and upon his desire to act for her in the matter, and to save her home for her, readily agreed to do whatever he had advised was necessary in order for him to act for her in saving the home place for her. The paper which petitioner afterwards found was a deed was executed without any consideration in money being paid to her, and she was induced to sign same solely by reason of the untrue representations made to her by defendant, which she believed to be true. By reason of the untrue representations of defendant, she was induced to believe that defendant honestly intended to take control of the operation of the farm for her, and to work it out of debt for her, and to save her home for her because of his love for his brother, the husband of petitioner and his friendship for petitioner as the wife of his brother. Plaintiff has learned that all of the representations of defendant were false, and were made by him for the purpose of inducing petitioner to sign the deed, and thus to secure title to the home place for himself, and not to protect and save the place for petitioner, and that defendant at the time of making the representations knew they were untrue, and never intended to act for petitioner in the matter. Defendant almost immediately made arrangements with the Blackshear Bank to borrow sufficient funds on her property to pay off L. H. Oden, and borrowed the money on her home place as the sole security therefor, and the loan of L. H. Oden was paid off. Thereafter, petitioner allowed defendant to assume control of the farm operations on the place and to handle same for her, but she did not surrender possession of the place nor move from same until after suit was filed. She had no knowledge of the fraudulent effort of defendant to claim the property as his own until a short time before suit was filed, but thought that he was acting for her as he had represented in good faith. Defendant by reason of the untrue representations made by him fraudulently, which were believed and depended upon by petitioner, has secured apparent title to her home place. Now he seeks fraudulently to retain the property for his use. By reason of such fraud he is legally a trustee for petitioner and holds the property under an implied trust, and title should be decreed to be vested in petitioner, and after an equitable accounting between the parties the deed should be canceled, or else defendant should be required to reconvey the property to petitioner. Defendant has paid to L. H. Oden the amount owing to him by petitioner, and had the security deed from petitioner to L. H. Oden canceled. Defendant has made a sufficient amount of money out of the operation of the farm to reimburse him for the money paid out on behalf of petitioner. If, however, it should appear, upon an accounting by defendant of his receipts and disbursements in the operation of the farm, that the profits derived therefrom are insufficient to reimburse him, petitioner is ready and willing to do equity in the matter and to pay him the difference so that he will receive back all that he has paid out on her behalf. Defendant is claiming the land as his own, refuses to give it back to petitioner, has given her and her husband verbal notice to vacate their home, and says that he is not going to give it back to her as he promised to do at the time he got her to sign the deed, and denies that he made such promise. Defendant is undertaking to sell the property. The petitioner prayed: that process issue; that the court decree that the defendant holds title to the property under an implied trust arising from fraudulent conduct on his part, which induced petitioner to execute the deed to him, and that the equitable title was at all times vested in petitioner; that, in order to vest title in petitioner immediately, the court either decree that defendant shall make a deed of reconveyance to petitioner, or that the deed from petitioner to defendant be canceled; that the result of an accounting be taken into consideration, and the decree so moulded as to protect the equities of both parties; that, should it be determined that defendant is in equity entitled to receive from petitioner any amount of money, he be decreed to have a first lien against the land for the part of such amount so determined; that petitioner have judgment against defendant for attorney's fees; that petitioner have such other and further relief as the nature of her case may require.
To the petition as amended defendant interposed general and special grounds of demurrer, and also filed an answer. The trial court overruled each of the grounds of demurrer.
The jury returned a verdict in favor of petitioner. Defendant's amended motion for a new trial was denied, and he excepted to that judgment and to the order overruling his grounds of demurrer. Other facts will be stated in the opinion.
1. The court did not err in overruling the general and special demurrers of the defendant.
The allegations in the petition as amended; to the effect that defendant would take the property, operate the farm, pay it out of debt, and then reconvey it to petitioner and her children, would be an attempt to assert an express trust by parol, and engraft it on a deed, which cannot be done. Jones v. Jones, 196 Ga. 492 (1a) ( 26 S.E.2d 602); pantone v. Pantone, 202 Ga. 733 (2) ( 44 S.E.2d 548). But the allegations of the petition as amended are sufficient to allege inceptive fraud, as distinguished from the failure to perform some act in the future according to an agreement. Williford v. Swint, 181 Ga. 44 (1) ( 181 S.E. 227). The petition as amended here alleged that the promise of defendant was the consideration inducing petitioner to make the deed, and that when it was made defendant had no intention of complying with it, which, together with the other allegations, set forth a cause of action. Brinson v. Hester, 185 Ga. 761 ( 196 S.E. 412); Schneider v. Smith, 189 Ga. 704 ( 7 S.E.2d 76); Pantone v. Pantone, 202 Ga. 733 (supra).
The cases relied upon by plaintiff in error are distinguishable as instances where there had been an effort to engraft an express trust upon a deed by parol, where no question of fraud in the procurement was made, or else where the allegations were not sufficient to show fraud.
As stated by plaintiff in error, the demurrer raised the same question as the 7th ground of the amended motion for new trial, and the ruling on the demurrer disposed of the 7th ground of the amended motion.
2. The general grounds and the 3rd, 5th, and 6th grounds of the amended motion will be dealt with together, the latter being an elaboration of the general grounds. A promise to take title to the property, farm it, pay off the debt existing thereon, and then to reconvey it to the petitioner, made as an inducement or consideration for the execution of a deed by petitioner, does not constitute fraud, so as to authorize cancellation of the deed, or a decree of specific performance of the agreement to convey, unless the promise was made with the present intention not to comply with it. A mere failure to comply with the promise would be insufficient to establish such fraudulent intent. Brinson v. Hester, 185 Ga. 761 (1) ( 196 S.E. 412), supra, and cases cited; Pantone v. Pantone, 203 Ga. 347 ( 46 S.E.2d 498).
Petitioner contends that defendant represented to her that it was necessary for her to make over the place to him in order for him to sell the tobacco made on the place under the government allotment plan; that these statements were false, known by him at the time to be false, and were made to induce her to deed the place to him, and that, relying upon said false and fraudulent statements, she did deed it to him.
There was no evidence that defendant knew the statement to be false at the time he made it, or that the promise of the defendant to reconvey title to petitioner was made with the intention to defraud as above defined.
Code § 37-703 provides: "Misrepresentation of a material fact, made wilfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitutes legal fraud." The question next arises, was there a misrepresentation of a material fact made recklessly without knowledge, or made by mistake and innocently by the defendant and in each instance acted upon by the petitioner?
The only evidence as to whether the alleged statement was false and a misrepresentation of fact is the following testimony of defendant on cross-examination: "I sold the tobacco. I sold that under this allotment plan of the government allotting me so much tobacco and giving me the authority to sell it. That's the only way I know you can sell it. You have to have that card before you can sell it. The card is issued in the name of the owner of the land. I believe that card was issued in the name of Frank A. Dixon when I got the place and I had it changed to me. It is now in the name of Frank A. Dixon. I could have sold the tobacco under the name of Frank A. Dixon. I could have rented the place from him and have sold it."
While we entertain grave doubt as to whether this constitutes any evidence of misrepresentation or false statement of a material fact on the part of defendant, it is not necessary to say here, because the government allotment plan is fixed by statute of the Congress of the United States and rules and regulations promulgated under authority thereof.
"The general rule is well settled that fraud cannot be predicated upon misrepresentations of law or misrepresentations as to matters of law." 23 Am. Jur. 809, § 45; 37 C. J. S. 323, § 55; Swofford v. Glaze, 207 Ga. 532, 535 ( 63 S.E.2d 342). The basis for this generally is that everyone is presumed to know the law, and therefore cannot in legal contemplation be deceived by erroneous statements of law. It has been held that this principle of law is especially true where there is no confidential relationship between the parties. Hart v. Waldo, 117 Ga. 590 ( 43 S.E. 998); Manget Realty Co. v. Carolina Realty Co., 169 Ga. 495, 504 ( 150 S.E. 828); Claxton Bank v. Smith, 34 Ga. App. 265 ( 129 S.E. 142); Beckman v. Atlantic Refining Co., 53 Ga. App. 671 (2) ( 187 S.E. 158).
It is claimed that a confidential relationship existed here, because cause of brother and sister-in-law relationship, and because of past dealings and trust and confidence reposed in defendant by petitioner and her husband, defendant's brother; but a confidential relationship recognized under the law of this State (Code § 37-707) is not shown here. See Crawford v. Crawford, 134 Ga. 114, 119 ( 67 S.E. 673, 28 L.R.A. (NS) 353, 19 Ann. Cas. 932); Dover v. Burns, 186 Ga. 19, 26 ( 196 S.E. 785); Johnson v. Sherrer, 197 Ga. 392, 395 ( 29 S.E.2d 581).
The evidence further failed to show that the alleged oral agreement that defendant was to take the land, farm it, and pay it out of debt, had been performed. The burden was upon petitioner to prove by a preponderance of the evidence that this had been done. The best that could be said for the evidence of petitioner is that the farming operations of defendant during the three years he had the place had grossed more than the debt owed by petitioner to L. H. Oden, but petitioner made no effort to show that the net income was sufficient to pay it out of debt. The court recognizes that it costs money to raise tobacco and other farm products, and whether defendant took in more than he paid out in the operation of the farm is in no way established by the evidence. Furthermore, the evidence shows that defendant made repairs upon the dwelling and the tobacco barns, and he would be entitled to credit for these expenditures in determining the net income from the farm, as he would if he paid taxes on the place or insurance on the houses.
In the absence of proof that the farm had earned enough to pay it out of debt, petitioner would be required to show a tender by her to defendant of the amount due, and there is no allegation or proof of tender. In fact, petitioner prayed that, if defendant had not earned enough out of the farm to pay off the indebtedness, he be required to reconvey it to her and take a lien upon the property. The evidence is undisputed that defendant paid off petitioner's debt to Oden with money borrowed by him, that he gave a deed to secure debt to secure his loan, and that there is a balance of $400 still due on his loan.
3. Ground 1 of the amended motion complains of the charge, "Express trusts are those created and manifested by agreement of the parties," on the ground that petitioner was relying upon an implied trust and not an express trust, and that it was misleading and confusing to the jury, especially since the trial judge did not charge that an express trust must be in writing.
The charge complained of was a correct statement of the law, and considered in connection with the charge as a whole could not have been misleading or confusing to the jury. The court's charge in that connection was as follows: "I charge you, gentlemen, that estates may be created, not for the benefit of the grantee, but for the use of some other person. They are termed trust estates. No formal words are necessary to create a trust estate. When a manifest intention that another person shall have the benefit of the property is exhibited, the grantee shall be declared a trustee. Trusts are either express or implied. Express trusts are those created and manifested by agreement of the parties. Implied trusts are such as are inferred by law from the nature of the transaction, or the conduct of the parties. Trusts are implied whenever the legal title is in one person, but the beneficial interest, either from the payment of the purchase money or other circumstances, is either wholly or partially in another."
4. Ground 2 of the amended motion, complaining of the charge to the effect that, while the terms of a written instrument could not be varied by parol evidence, if petitioner established by a preponderance of evidence the allegations as to fraud of defendant, which was alleged to have induced petitioner to make defendant a deed to the property, and that petitioner relied upon said fraudulent representations and was induced thereby and by her trust and confidence in defendant to sign a deed, she would be entitled to a verdict, and ground 4 complaining that the court should have instructed the jury that, to entitle petitioner to a reconveyance of the property, the proof submitted to establish same must be so strong, clear and satisfactory as to leave no reasonable doubt on the minds of the jury, are controlled by the same principle of law and will be considered together.
Petitioner here claims under an alleged oral agreement had with defendant that he would reconvey title to her as soon as the place paid itself out of debt and petitioner prayed for specific performance of this oral agreement, and the decree of the court ordered defendant to deed the property to petitioner.
It is well established by numerous decisions that, when a parol agreement whereby one is to receive title to land is sought to be enforced, the proof of such contract should be so clear, strong, and satisfactory, as to leave no reasonable doubt as to the agreement. Printup v. Mitchell, 17 Ga. 558 (16) (63 Am. D. 258); Barnett v. Henry, 200 Ga. 365 ( 37 S.E.2d 340); Fambrough v. Fambrough, 210 Ga. 87 (1) ( 78 S.E.2d 14).
This court is Suber v. Black, 168 Ga. 439 (3) ( 148 S.E. 81), held that it was error to charge that petitioner had to establish by a preponderance of the evidence the oral contract to convey land, and that the judge should have charged that such contract and the terms thereof must be established so clearly, strongly, and satisfactorily as to leave no reasonable doubt as to the agreement, citing a number of cases in support thereof. That rule has been invariable followed by this court.
In 54 Am. Jur. 480, § 621, the author says: "Many statements are to be found to the effect that parol evidence to prove a trust must be of such a nature as to banish every reasonable doubt, or leave no room for doubt, regarding the essential facts relied upon to establish the trust."
This court in Morrison v. Ball, 54 Ga. 212, had this to say: "A. having a bond for titles to a tract of land, makes an arrangement by parol with B., to the effect that B. shall pay the balance of the purchase money and take a deed, and that the land shall be traded for a city lot, B. to take a title in his own name and to sell the city lot, and after paying himself his advance and a debt due him, to pay to A., the profits made by the trade.: Held, that this was a trust, and that in a suit by A. for such profits, it was not error in the court to charge that it was necessary that the parol proof should be clear and satisfactory." In Price v. Price, 205 Ga. 623 (1) ( 54 S.E.2d 578), it was held: "Where a husband pays the purchase-money of land from his own funds and has the land conveyed to his wife, the presumption which the law raises is that the husband intended to make a gift to his wife; but the presumption is a rebuttable one, and a resulting trust in favor of the husband may be shown. Parol evidence of the nature of the transaction, or the circumstances, or the conduct of the parties, is admissible to rebut the presumption of a gift; but in order to rebut the presumption of a gift the proof must be clear and convincing."
In view of the foregoing, it was error for the trial court to charge the preponderance-of-evidence rule as applies to ordinary cases, without instructing the jury that, in cases like the one under consideration, to entitle the petitioner to a reconveyance of the property the proof submitted to establish the oral contract must be shown so clearly, strongly, and satisfactorily as to leave no reasonable doubt as to the agreement.
Under the preceding rulings, the trial court erred in denying the defendant's motion for a new trial. Judgment affirmed on the ruling on demurrer. Judgment reversed in refusing a new trial. All the Justices concur, except Wyatt, P. J., absent on account of illness.