Summary
In Millard v. Hathaway (27 Cal. 119), this Court discuss questions relating to this class of trusts, and as we construe the case, confined implied trusts (so far as concerns this case), to the instance of one man receiving a title bought with the money of another.
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[Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] Rehearing 27 Cal. 119 at 146.
Appeal from the District Court, Third Judicial District, Alameda County.
COUNSEL:
Did or did not the facts in law constitute a loan from Hathaway to Millard and his associates? This is purely a legal question; and as a legal question, does it admit of serious doubt or argument? Millard applied for what, in popular phraseology, he terms a loan. What he really wants is to find a man to advance the necessary sum to make the purchase of which he is to have the benefit. While yet in fieri, it is talked of between the parties as a loan--but that does not make it such. The legal character of the transaction does not depend on the preliminary negotiations, or the language employed in them, but on the actual contract into which they ultimately merged and were absorbed.
That contract was all put in writing. It consisted of the deed from Higuera to Hathaway, which conveyed the land, and the agreement, Exhibit No. 1, signed by Millard, Scott and Scribner, reciting that he had purchased and paid for it in his own name, but for their account, and promising repayment. To vary it by parol was, of course, incompetent for either of the parties. It expresses, of necessity, the truth, and the whole truth about the matter. And it expresses, as clearly as language can, money paid, laid out, and expended by Hathaway, to and for the use of Millard and his companions, and at their request.
If Hathaway had sued them for the money, he should have sued for money paid, laid out, and expended. (Comyn on Contracts, 4th Am. edit. p. 451.) If Higuera, after receiving the money, had declined delivering the deed, Hathaway, not Millard, could have recovered it back from him as money had and received. If, before paying the money to Higuera, it had been stolen from Hathaway, he would have had no claim for it against Millard, Scott and Scribner, for he brought them under no obligation to him till he had actually paid for the land for their account. And in such case an indictment against the thief would necessarily have charged the money as Hathaway's money.
It is plain, therefore, that there was no loan from Hathaway to Millard, Scott and Scribner, and hence, that it was Hathaway's money, not theirs, which paid for the land. In a word, the distinct declaration in the written contract, Exhibit No. 1, that Hathaway had purchased the land and paid themoney to Higuera for the account of Millard, Scott and Scribner, precludes them in any action (save a bill in equity to reform the contract) from giving any parol evidence to vary or explain it. When one man purchases and pays for land, and takes the title in the name of another, the law ordinarily implies a trust for the benefit of the one who purchased and paid, because it presumes such to have been the intent of the parties. But if their actual intent is shown to have been different, the presumption is destroyed, and no trust is then to be implied. (Sidmouth v. Sidmouth, 2 Beav. 447; Scawin v. Scawin, 1 Young & C. 65.)
An express contract being proved, the law will not raise any implied one, for that would be to presume against the fact as proved. Expressum facit cessare tacitum. (Broom's Max., Am. ed. 414.)
Now, in this case the proof was perfectly conclusive and uncontradicted; it is found by the judge below, and is, in fact, the very corner-stone of the plaintiff's whole case, that C. W. Hathaway was not to convey to Millard, Scott and Scribner, until he had been repaid his purchase-money. He made the purchase and payment " for their account" and benefit, and took the title, not on any implied trust for them, but on an express parol contract that he was to hold it on his own security. It is not claimed or pretended that he was under any obligation to convey till his advance was repaid him.
In conclusion, then, the trust which the plaintiff has here attempted to set up, is one required by the Statute of Frauds to be evidenced by the deed of the parties creating or declaring the trust. It is not a trust implied by law, for it rests on no implication whatever, but on the express contract of the parties. Such a contract is not only within the letter of the statute, but most obviously within the very mischief intended to be prevented by it.
But supposing C. W. Hathaway took a trust estate in the land for the benefit of Millard, there is an insuperable objection to the plaintiff's recovery in the plea of the Statute of Limitations.
It must be borne in mind that the object of the action is to compel E. V. Hathaway to convey the land on the ground that he took the title from C. W. Hathaway with notice of the trust. The plaintiff claims that E. V. Hathaway paid nothing for the land, and had notice of the trust. He, on theother hand, insists that he paid a valuable consideration for it, and that there was no trust in fact, so that it was not possible he could have notice of it.
The truth appears to be, that E. V. Hathaway paid C. W. Hathaway forty-five thousand dollars for his business, including his claims against the Millards and this land, and that he had actual notice of the original transaction with Millard, Scott and Scribner, whatever it was. If it created a resulting trust, he took the land with notice of the facts from which that trust resulted. We assume then, for the purposes of this branch of the argument, that the original transaction gave rise to a trust. E. V. Hathaway has bought the land from the trustee with notice of the trust. He can be charged as a trustee by the plaintiff, but it is of necessity in invitum. It is not a trust resting in contract either express or implied, but arises purely and simply by operation of law and against the will of the trustee. In such case the Statute of Limitations begins to run from the moment of conveyance to E. V. Hathaway. (Murdock v. Hughes, 7 Smede & M. 219; Williams v. First Presbyterian Society of Cincinnati, 1 Ohio, 488.)
John T. Doyle and W. W. Crane, Jr., for Appellant.
A. M. Crane and Edward Tompkins, for Respondents.
In October, 1861, Hathaway held as a mere naked trustee. Every dollar of his loan, principal and interest, had been repaid. Millard owned the entire land. Hathaway's mortgage had been paid off, and he held the bare naked legal title. Millard had the whole interest in the land. It was his in equity, wholly and entirely.
Could his estate or interest in this land be conveyed or surrendered by parol, without writing? The sixth section of our Statute of Frauds (Wood's Dig. 106) would seem to be conclusive that it could not be done.
Plaintiff had a trust estate in the land, comprising its entire value. The words of the statute are very plain, viz.: " Nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by deed or conveyance in writing, subscribed by the party," etc.
It is argued by appellants that this trust, being created without writing, may be cancelled or surrendered in the same manner in which it was created. This we admit. But the trust was created by the " act oroperation of law." Millard paid the purchase-money, and Hathaway took the deed. Upon these facts the " operation of law" raised the resulting trust. This trust could no doubt be cancelled or " surrendered" in the same manner, i. e., " by act or operation of law" --namely, Millard's trust estate might be extinguished or passed to another by judicial sale of his interest. This would be by act of law.
Again: If Millard had stood by when C. W. Hathaway conveyed to E. V. Hathaway, and stated that he had no interest in or claim to the land, in such case his trust estate would have stood extinguished by estoppel.
Again: In case of Millard's death, intestate, the trust would, " by operation of law," have passed to his heirs.
In these various ways, and others which might be named, the trust could be extinguished, assigned or surrendered, " by act or operation of law," but we utterly deny the proposition that the trust could be surrendered by a parol contract--the land all the time, and even until now, remaining in the full and entire possession of the plaintiff. This trust could no more be conveyed by mere word of mouth than could a fee simple or freehold interest in the lands. It occupies the same dignity, and is classed in the same category, by statute, with those interests.
But, as if to clinch the matter and close all question as to the meaning of the sixth section above quoted, we have section twenty-five (Wood's Digest, 108), which defines the terms before used, and the enactment is, " The terms 'estate and interest in lands,' shall be construed to embrace every estate and interest, present and future, vested and contingent."
The court below, in its opinion, after showing how the loan had been repaid in 1861, says: " These payments satisfied in full the obligation of Thomas Millard, and from that time he was entitled to a conveyance." This is common sense as well as law. (Sherwood v. Dunbar , 6 Cal. 25.)
" Such trusts as are cognizable, and can only be enforced in equity (our case) cannot, so long as they subsist, as between trustee and cestui que trust, be reached by the Statute of Limitations." (Ang. on Lim. 161; Kane v. Bloodgood, 7 Johns. Ch. 90.) " In general, lapse of time is no bar to a trust clearly established to have once existed." (Prevost v. Gratz, 6 Wheat. 481.) " But if the trustee denies the right of his cestui que trust, and the possession of the property becomes adverse, lapse of time from that period may constitute a bar in equity." (7 Johns. Ch. 90.) " But it must be shown that an open denial of the existence of the trust has been brought home to plaintiff." (Ang. on Lim. 172, Sec. 9, last clause.)
To apply these principles to this case. So far from showing any denial of the trust on the part of defendants, we only propose to refer to a leading case, decided by Chancellor Kent nearly half a century ago, for the purpose of showing how entirely like, in its leading facts, that case was to this. We refer to Boyd v. McLean, 1 Johns. Ch. 582.
In that case, the Boyds contracted to buy the land of one Colden; in this case, plaintiff, Scott and Scribner, contracted to buy of Higuera. In that case the Boyds borrowed one thousand five hundred dollars of McLean to pay for the land; in this case, plaintiff and his associates borrowed eight thousand five hundred dollars of Hathaway for the same purpose. In that case, the deed was made directly from Colden, the vendor, to McLean, the money-lender; in this case, the deed was made directly from Higuera, the vendor, to Hathaway, the money-lender.
Inthat case, as in this, the defendant denied in his answer that he ever made any loan to plaintiff to enable him to pay for the land, but sets up, as in this case, that he bought the land with his own money, and on his own account, and that the deed to him was absolute, and not by way of security. The answer of defendant in that case, like that of E. V. Hathaway in this (and the coincidence is remarkable), sets up that about the time of the purchase he did make a verbal parol agreement with plaintiffs to sell them the land upon payment of one thousand five hundred dollars, and interest, in two years. In that case, as in this, the plaintiffs were in possession, and, as in this case, the answer sets up the Statute of Frauds. It, perhaps, would not be possible to find any two cases in all the reports more exactly resembling each other in all their leading facts.
Chancellor Kent decreed an accounting and conveyance. We cite, also, the following authorities: Bottsford v. Burr, 2 Johns. Ch. 582; Livingston v. Livingston, Id. 409; 2 Sto. Eq. Jur. 1201; Osborn v. Endicott , 6 Cal. 153; Foot v. Colvin, 3 Johns. R. 216; Simson v. Eckstein , 22 Cal. 580; Bayles v. Baxter , 22 Cal. 575.
The appellants, in their brief, appear to lay great stress upon the point that because there was a parol contract defining the conditions of the trust, or the terms upon which Hathaway was to convey the land (i. e., on the repayment of the loan and interest), that, therefore, the transaction loses its character of an implied trust, and becomes an express trust, resting in parol, and hence void by statute.
But this case of Boyd v. McLean is a full answer to this objection also. On reading the case it will be seen that the condition of the trust was that Boyd should repay the one thousand five hundred dollars, and interest, in four years, upon which the land was to be conveyed to him; and this condition or agreement rested entirely in parol. And also in the case of Bayles v. Baxter (22 Cal. 580), above quoted, it was argued by counsel for appellants that because there was a verbal contract to reconvey, that therefore there could be no implied or resulting trust. In reply to this, Mr. Justice Crocker (Cope and Norton concurring) says: " The fact that defendant agreed by parol to do what the law would compel him to do (i. e., hold the title subjectto the rights of the plaintiffs, and convey to them on demand after a certain time), makes the trust none the less a trust created by operation of law." The principle of both these cases is, that when a resulting or implied trust has been created, the conditions or agreement upon which the trust is to be executed may be shown by parol. (4 J. J. Marsh. 593.)
JUDGES: Shafter, J.
OPINION
SHAFTER, Judge
By the Court, Shafter, J., on petition for rehearing:
It is insisted that the decision is opposed to Cunningham v. Hawkins (24 Cal. 406), so far as the defense of the Statute of Limitations is concerned. It was held in that case that the mortgagor, after the lapse of four years, lost the right to pay or tender the mortgage debt in exoneration of the land mortgaged. But it does not follow from that, that a mortgagee loses either the power or right to accept payment of the debt after the statute has run upon it; and should he do so, then, the debt being extinguished by the payment, the land would be disincumbered by the direct force of the fact, and no bill to redeem would be either necessary or possible. In this case it may be admitted that Hathaway could not have compelled a repayment of the borrowed money after the four years had run, and that after that date the plaintiff had no power to make an effective tender. But the defendant was at liberty to accept payment in full, and having chosen to do so, he cannot relieve himself of liability to execute the trust according to its terms, on the ground that he might have refused to take the money. By force of the stipulation of August 25, 1855, no action could accrue to the plaintiff to compel a conveyance until the whole of the borrowed money had been repaid. After the lapse of four years it rested with Hathaway to say whether that event should ever happen or not. By his own voluntary action he allowed it to happen, and then, for the first time, Millard was clothed with a right of action against him. This is an answer to the objection that Hathaway never promised in writing to execute the trust. No written renewal is necessary to save a claim from the bar of the statute, in case the statute has not run upon it at the time when an action is brought to enforce it.
We have not overlooked the point made for appellant, that C. W. Hathaway, by conveying to E. V. Hathaway, " asserted a right in himself adverse to his cestui que trust, and that the latter came in as a stranger asserting a right in himself, also adverse in its character." The proposition was fully considered, and was replied to, not directly, to be sure, but by advancing another proposition presenting the law of the facts stated as understood by us. In the pressure of business we often find it necessary to meet views presented by counsel by giving a direct exposition of our own.
By the expression " that the tendency of the evidence was that the possession of the land had been in Millard or his tenants since 1855," we would be understood to mean that there was evidence in the case tending to prove the fact, and that we could not rejudge the question upon the testimony. But we do not consider that it is a matter of any moment whether E. V. Hathaway was or was not in possession after the conveyance of the land and the assignment of the debt to him, for there is no plea that E. V. Hathaway had been in adverse possession of the land for five years.
It is urged that " a parol discharge of a written contract is available in equity to repel a claim upon that contract." We have not time to enter upon a critical examination of the authorities bearing upon that question; nor do we consider it at all material to do so. In the first place, we are not dealing with a contract " within the Statute of Frauds," but with a trust confessedly without it; and, in the second place, our statute expressly provides that the trusts to which it belongs can be surrendered only by act and operation of law, or by deed signed by the party, or by his agent thereunto duly authorized in writing. This provision, in our judgment, settles the question.
The court below has found directly, that the borrowed money had all been repaid with interest at the rate of three per cent. per month, as stipulated in the contract of loan. There was a conflict of evidence upon the point, and we are satisfied with the result at which the court arrived; and if we were not entirely satisfied with it, we could not, as the bar is fully advised, rejudge the question upon the testimony. In a large proportion of the cases that come to this Court, we are invited and urged to reverse judgments on the ground that the conclusions of fact arrived at are not justified by the evidence; but under the settled practice of this Court, such attempts must always prove abortive, except in extreme cases.
In the opinion delivered, we said nothing about the newly discovered evidence as a ground of new trial, for the reason that the counsel of the appellants made no allusion to it in either of their briefs. In the first place, it is admitted in both answers, in effect, that the eight thousand five hundred dollars and interest, was paid and received on account of the land contract; and assuming that to have been the fact, we do not consider the general business relations of the two Millards to have been a material question. And in the second place, the evidence alleged to be newly discovered, is merely cumulative, and does not fall within any of the exceptions to the general rule prohibiting the granting of new trials on the ground of newly discovered evidence of that character.
Rehearing denied.