Opinion
February 14, 1949.
1. Equity — demurrer, admission by.
A demurrer admits, for the time being, all material facts well pleaded in the bill.
2. Equity — when demurrer should be overruled.
If there be sufficient equity on the face of the bill to require an investigation of the facts, a demurrer should be overruled.
3. Mortgages — ambiguity in note secured by, when not ambiguous.
A note secured by mortgage contained provision that the principal was payable in ten successive equal annual installments, the last of which installments would fall due on a certain stated date, was not ambiguous because not stated in what year first installment was due, and therefore did not require reformation or foreclosure in chancery instead of sale by trustee.
4. Mortgages — sale by trustee — inadequacy of price.
The fact that at a sale by the trustee the mortgaged property brought but little more than 50 per cent of its actual value is not, of itself, a sufficient ground for setting aside sale, but the inadequacy of price may be taken into consideration with other inequities in determining whether the sale will be allowed to stand.
5. Mortgages — assignment by Federal Farm Mortgage Corporation.
Under Federal Farm Mortgage Corporation Act, 12 U.S.C.A. paragraph 1020b, note and deed of trust in favor of Land Bank Commissioner became the property of Federal Farm Mortgage Corporation and the latter had the right to assign the note and deed of trust to a named assignee.
6. Mortgages — agreement to reduce annual payments in return for mineral lease — sufficiency of consideration.
Agreement by holder of mortgage that he would reduce the annual payments in a stipulated amount if mortgagor would give holder a mineral lease on the property, and the lease was accordingly executed, is supported by a sufficient consideration.
7. Mortgages — foreclose when no part of debt due.
A foreclose sale by a trustee when no part of secured debt is in default at the time is without authority and a bill which so charges in matter of fact states a case for equitable relief.
8. Mortgages — credits due mortgagor sufficient to discharge installment payments.
When a bill to set aside a foreclosure alleges that the mortgagor was entitled to have credited to his debt certain specified items, and these as stated were sufficient to discharge any indebtedness due at the time of the foreclose, a case is stated for equitable relief good against demurrer.
9. Trusts — express, implied — when within and when not within statute of frauds.
Express trusts are void unless reduced to writing and signed but implied trusts are not required to be in writing and may be established by parol testimony from the acts of the parties. Sec. 269, Code 1942.
10. Trusts — implied trust — wrongful purchase at foreclosure.
When a mortgage foreclosure has been advertised and the mortgagor has made definite and dependable arrangements for obtaining the money to pay off the indebtedness, but before completing that transaction the principal defendant intervened and insisted that, for reasons of special friendship towards the mortgagor, he be permitted to make the loan, and his promise and continued promises to do so were reasonably relied on by the mortgagor until too late to obtain the money under the original arrangement and the principal defendant himself, and for himself, through an agent, purchased the property at the sale, a bill to set aside the sale, charging the facts as stated, is sufficient for equitable relief against the defendant as a constructive trustee, especially when taken together with inadequacy in the foreclosure sale price.
Headnotes as approved by Hall, J.
APPEAL from the chancery court of Holmes County, M.B. MONTGOMERY, Chancellor.
E.L. Shelton and L.F. Easterling, for appellants.
The demurrer of the several defendants should have been overruled and they required to answer. In order to test the correctness of the ruling of the court below the amended bill of complaint in all its parts must be looked to. No inferences will be indulged in to help out the demurrer if the bill states a cause of action. It is well settled that if the bill of complaint shows a right to recover anything or that the complainants are entitled to any relief, then a general demurrer thereto should be overruled.
In the case of Morton v. Grenada Academies, 8 Smedes M. (16 Miss.) 773, it was said: "A demurrer to a bill for want of equity on its face will not be sustained, unless the court be satisfied that no discovery or proof called for properly by the bill can make the subject-matter of the suit a proper case for equity cognizance."
In the case of Hill v. Ouzts, 190 Miss. 341, 200 So. 259, it was held: "If any relief prayed for can be granted, the bill is good against demurrer." See also Goosby v. Byrd, 194 Miss. 568, 13 So.2d 33.
In Graves v. Hull, 27 Miss. 419, and in Anding v. Davis, 38 Miss. 574, it was held that: "A demurrer to a whole bill must be overruled if the bill taken together, entitled complainant to some kind of relief."
In Garner v. Lyles, 35 Miss. 176, it was said: "A bill good as to one defendant is good against his demurrer, the other defendants not having appeared."
In Gibson v. James, 37 Miss. 164, it was said: "If the ground of demurrer assigned as to all complainants be bad as to one, the demurrer must be overruled."
In Sharer v. Sharer, 50 Miss. 113, it was said: "Where the complainant's bill charges a combination to cheat and defraud the complainant, and the defendant filed a general demurrer to the bill; held, that the demurrer to that part of the bill charging defendants with a combination to cheat and defraud, was bad. That part of the bill required an answer, and the demurrer should have been overruled."
In Gully v. Bridges, 170 Miss. 891, 156 So. 511, it was held: "If bill has some merits and construed as a whole shows good cause of action, it will stand as against general demurrer."
The extension agreement was based on a valuable consideration and by reason of same the defendant, Wallace, was precluded from foreclosing, the debt not being due. The amended bill of complaint charges in detail the extension agreement and the consideration therefor moving between the defendant Wallace and the complainants, to-wit: an agreement by the complainants to execute an oil, gas and mineral lease on the lands in controversy to the appellee Wallace and his associates. The chancellor in his opinion correctly enunciates the principles of law appertaining to an extension agreement under the state of facts outlined by the chancellor, but the court evidently did not examine the amended bill of complaint very carefully for the court states that at the time of the extension agreement, the complainants held no estate in the lands, nor was there vested in them any right to possession, nor any estate whatsoever in the minerals. In this the lower court is in grievous error, for the amended bill charges that at the time of the extension agreement the complainants were the owners of said lands, they being the sole heirs at law of Eddie Beamon, who died on the 1st day of January, 1939.
The extension agreement was legal and binding, based on a valuable consideration and the case of Martin v. Dixie Planing Mill, 199 Miss. 455, 24 So.2d 332, is very much in point, as are the cases and authorities set out in the opinion.
The amount of bid at the foreclosure sale was wholly inadequate. The amended bill of complaint charges that the purchase price at the foreclosure sale was wholly inadequate and so small as to shock the conscience and for that reason the sale was null and void. The amended bill of complainant and the exhibits thereto clearly and forcibly demonstrate that the sum of $4,200.00 bid at the foreclosure sale, subject to the first deed of trust to the Federal Land Bank, was wholly inadequate. At the time of the sale the land consisted of 245 acres of valuable farm lands in Holmes County. There were excellent oil prospects. The lands were in a block to be drilled by the defendant, Fleishman, who wished to lease these lands for oil and gas purposes. Immediately (two days) after the sale the lands were leased to Fleishman for the sum of $5,000.00. The defendants, E.R. Whitaker and G.D. Hunt, purchased 50/239ths of the minerals for $1,000.00, and the defendant, Mrs. Winnifred Elizabeth McMillin, purchased 25/239ths of the minerals for the sum of $500.00. Thus on the face of the record the minerals alone under these lands were worth and selling for $20.00 per acre. It thus appears that the value of said lands for oil and gas purposes alone was approximately $10,000.00. This figure does not include the surface, which was valuable farming lands. The defendants purchased these lands for $4,200.00, plus a second mortgage of approximately, say, $1,100.00, and within a month's time, according to the record, realized $5,000.00 from the lease and sold $1,500.00 worth of minerals, or a total of $6,500.00, and still had the surface and 174/239ths of the minerals left. Even assuming that the surface was worth $4,000.00 (which is not a violent assumption, as the Federal Land Bank had loaned $1,900.00 on it in 1935), the market value of the lands at the time of the sale was between $12,500.00 and $15,000.00.
The demurrer as to this feature of the bill should have been overruled and the defendants required to answer.
The amended bill of complaint shows on its face an implied trust. The amended bill of complaint alleges an express agreement between the defendant, R.M. Bridgforth, and the complainants whereby Bridgforth was to advance for complainants' benefit the money necessary to save the land and take a deed in his own name as security for the payment of the money so advanced by him, all of which the amended bill of complaint alleges was done. The amended bill charges that R.M. Bridgforth was the confidential and financial advisor of the complainants and had been for many, many years and that the complainants relied on and trusted the said R.M. Bridgforth, and that the said R.M. Bridgforth stood in a fiduciary relationship toward the complainants; that the defendant R.M. Bridgforth knowing the value of the land for oil and gas possibilities conspired with the defendants C.V. Maxwell, Edwin B. Bridgforth, his son, and H.A. Fleishman, whereby instead of R.M. Bridgforth attending the sale, he would put up the money and have C.V. Maxwell attend the sale and bid in the land for the said R.M. Bridgforth, and that R.M. Bridgforth, his son, Edwin B. Bridgforth, and C.V. Maxwell would lease the lands for oil and gas to Fleishman and divide the profits; that all of the defendants knew of this express agreement with the complainants and they conspired to defraud the complainants out of their lands; that Maxwell, but that this was merely a conduit, a method to carry out their agreement and in tention to defraud the complainants; that they did defraud the complainants and divided the spoils; that Maxwell later conveyed a part of the lands and minerals to Edwin B. Bridgforth, the son of R.M. Bridgforth, but that in truth and in fact these conveyances were for the benefit of R.M. Bridgforth, and that R.M. Bridgforth is asserting his title to one-half of the lands. The complainants offer to do equity.
The facts alleged in the amended bill of complaint come squarely within the facts in the cases of Robinson v. Leflore, 59 Miss. 148; Thomas v. Thomas, 62 Miss. 531; Wilson v. Hoffman, 104 Miss. 743, 61 So. 699; Comfort v. Winters, 108 Miss. 330, 66 So. 532; Tanous v. White et al., 186 Miss. 556, 191 So. 278; and Shepherd v. Johnston, 201 Miss. 99, 28 So.2d 661; instead of the cases of Miazza v. Yerger, 53 Miss. 135; and Bush v. Bush, 134 Miss. 523, 99 So. 151; as was held by the learned chancellor.
We ask the court to examine the cases of Lampkin v. McCreight, 117 Miss. 658, 78 So. 578; Murphy v. Sloan, 24 Miss. 658; Fairly v Fairly, 38 Miss. 280; and Winn v. Dillion, 27 Miss. 658; all recognizing the principle of law in this State, that: "One accepting employment to get a deed of an outstanding interest in his employer's land, having secretly repudiated the agreement and taken deed to himself, is a trustee ex maleficio of the title." Lampkin v. McCreight, supra.
The complainants had already made arrangements with another party, so the bill alleges, to loan them sufficient money to take care of the indebtedness but the defendant R.M. Bridgforth came to the home of the complainant Wille Triplett and persuaded him to let Bridgforth handle the matter for the complainants, and entered into the express agreement above referred to. What was said by the court in the case of Soggins v. Heard, 31 Miss. 426, 428, is pertinent here: "No question is made, as to the trust, in regard to the slaves; the only point is, whether it attached to the land.
It is not now an open question, that when a party agrees before the sale to purchase property about to be sold under an execution against a party, and to give such party the benefit of the purchase, that the agreement is binding, and will be enforced. The defendant, upon the faith of such an agreement, may have ceased his efforts to raise the money for the purpose of paying off the execution, and thus preventing a sale of his property. It will not do to say that the party promising, was moved merely by friendly or benevolent considerations, and may, therefore, at his option, decline a compliance with his agreement. Such considerations constitute the foundation of almost every trust, and the trustee should be held to account as nearly as possible, in the same spirit in which he originally contracted. But it is said that the agreement, if in fact made, was void under the Statute of Frauds. The statute has reference alone to the sale of lands, and not to a contract to purchase by one person for the benefit of another."
It would have taken very little cash to have stopped this sale and had the complainants had access to the information possessed by R.M. Bridgforth, Fleishman, and the other defendants that an oil well was to be drilled near the lands of the complainants, and that Fleishman wanted to lease the lands and was willing to pay the sum of $5,000.00 for the lease, and had not the defendant R.M. Bridgforth actually and wilfully misled the complainants in order to perpetrate the fraud, then the complainants, of course, would have gone ahead and transacted the matter with the other party, and their property would have been saved. But the defendant R.M. Bridgforth, knowing these facts, and knowing he had already made arrangements to lease the lands to Fleishman, wilfully and knowingly misled the complainants to their hurt and they have suffered an irreparable loss.
L. Barrett Jones, for appellees.
The original bill did not contain any allegations of any consideration for the alleged agreement between complainants and J.D. Wallace to extend the time for the payment of the mortgage. Hence, on the hearing of the demurrers, the Court held the agreement not support by a valid consideration and void under the rule announced in Thompson v. Waynne, 127 Miss. 733, 90 So. 482, and Framers Merchants Bank v. Meyers et ux., 155 Miss. 740, 124 So. 763. Complainants in their original bill allege there was a consideration for this agreement, the consideration being an agreement to execute an oil, gas and mineral lease on the lands in question to J.D. Wallace and his associates, and that this agreement constitutes a valid consideration under the rule announced in Martin v. Dixie Planing Mill, 24 So.2d 332. The contention is not sound. Martin v. Dixie Planing Mill recognizes the rule that in order for a promise to constitute a valuable consideration, capable of supporting the contract, there must be some benefit to the promisor or some loss, detriment, or inconvenience to the promisee. It is true the consideration to be sufficient in law need not be adequate and is sufficient if the person to whom the promise is made refrains from doing anything which he has the right to do, whether there be any actual loss to him or actual benefit to the party making the promise or not. But there must be something of benefit or value or forbearance in the consideration. Here the complainants held only an unrecorded agreement to convey the lands to them on payment of purchase price. This agreement created in complainants no estate in the lands, nor did it confer on them any right of possession or other right of ownership. Consequently, by agreeing to the mineral lease, they parted with nothing of value, they held no title to any of the minerals, nor did Wallace receive anything of value, nor did he forbear because of any inducement in the consideration. The alleged agreement to extend the time for payment of the mortgage was not supported by a lawful consideration and was void.
The only other change in allegations of fact made by the amended bill is with reference to allegations of fact upon which complainants seek to establish a resulting trust in the lands. Counsel relies on Tannous et al. v. White et al., 191 So. 278, and Shepherd et ux. v. Johnson, 28 So.2d 661 in support of his position here. These cases are not in point here, in my humble judgment.
In Tannous et al. v. White et al., supra, Punchard agreed to sell 87 acres of land to Garfield White and Jim Jenkins, that had been leased to them for several years and which was in their possession. Not having the $600.00 purchase price they borrowed it from Tannous, who took a deed in his own name as security for the payment of the debt. The court held that the loan had been consummated and the $600.00 was the money of White and Jenkins and when their money was used by Tannous to buy the land and take title in himself, the did so as trustee for White and Jenkins, for, because of the ownership of the money by White and Jenkins, a resulting trust arose in their favor.
In Shepherd et ux. v. Johnston, supra, J.H. Shepherd and wife were in possession of the lands involved under a lease contract. Before the lease expired the owners offered to sell them the land for $4200.00. Not having the $4200.00, the Shepherds approached Dr. S.W. Johnston for a loan, and he agreed to put up the $4200.00 for the deed, with a one-half interest to be owned by the Shepherds and the other one-half interest to be owned by himself, but the title to be taken in the name of Mrs. Mattie H. Johnston in order that the title might be held by her as trustee and as security for the loan until the Shepherds should fully repay the same, whereupon Mrs. Johnston would execute a deed conveying to the Shepherds their one-half interest. The court held that the loan had been consummated, the $2100.00 was the money of the Shepherds and the suit was not predicated on the oral agreement between the Shepherds and Dr. Johnston for the loan and purchase of the property, but upon the resulting trust by which the wife of Dr. Johnston acquired the titled, and that the resulting trust arose when the Shepherds discharged the debt to Dr. Johnston. Here it was the Shepherds' money that bought the land, Dr. Johnston received payment of the debt from the Shepherds, and naturally a resulting trust arose in favor of the Shepherds.
Let us bear in mind that no trust results from the breach of a parol contract, and that parol proof cannot be received to establish a resulting trust in lands, purchased by an agent, and paid for by his own funds, no money of the principal being used for the payment; for the relation of principal and agent depends upon the agreement existing between them, and the trust in such case must arise from the agreement and not from the transaction, and where a trust arises from an agreement, it is within the Statute of Frauds and must be in writing. This is almost the exact language of Judge Cambell in Miazza v. Yerger et al., 53 Miss. 135. Parol testimony is admissible to prove the transaction out of which a resulting trust arises by operation of law from the acts of a party, but it is not admissible to prove an express contract by one to purchase lands for another for this would be to establish an express trust, founded in contract, and within the Statute of Frauds. Sec. 269, Code of 1942; Miazza v. Yerger et al., supra.
As was the case in Miazza v. Yerger, the loan was not consummated. The funds used for the purchase belonged to defendants. It is plain that in the case at bar appellants' assertion of rights against Bridgforth and the other defendants to the land bought by them rests not upon the acts of a party out of which a resulting trust arises by operation of law, but the right that appellants assert rests upon their allegation of the existence and breach by Bridgforth of a parol agreement to attend the sale and buy the property for them. Such an agreement constitutes an express trust and is not enforceable in the courts of this State unless in writing. The point is that appellants' claim is not to a trust arising or resulting by operation of law, but to one created by express agreement. Miazza v. Yerger is identical in its facts with the case at bar, and the decision there is controlling here. See also the following authorities: McDowell v. Federal Land Bank, 127 So. 288; Hiller v. Jones, 66 Miss. 636, 6 So. 465; Swift Co. v. Everett, 171 Miss. 410, 157 So. 476; Jones v. Grimes, 115 Miss. 874, 76 So. 735; Federal Land Bank v. McCraney, 171 Miss. 191, 157 So. 248; Fulgham v. Burnett, 151 Miss. 111, 117 So. 514; Flynt v. Hubbard, 57 Miss. 471; Marks v. Toney, 18 So.2d 452; Bush v. Bush, 134 Miss. 523, 99 So. 151, and the cases therein cited; 5 L.R.A. (N.S.) 112, and the note and cases annotated to it; Barron v. Federal Land Bank of New Orleans, 182 Miss. 50, 180 So. 74.
Sam Triplett and others, alleging themselves to be the sole heirs at law of Edie Beamon, deceased, filed a bill of complaint against Edwin B. Bridgforth, R.M. Bridgforth, C.V. Maxwell, Pat M. Barrett, Trustee, Winnifred Elizabeth McMillin, J.D. Wallace, G.D. Hunt, E.R. Whitaker and H.A. Fleishman, praying that a trustee's sale under a deed of trust on approximately 245 acres of land in Holmes County, be declared void, and, in the alternative, that the defendants be held to be trustees holding the legal title thereto for the benefit of complainants and for an accounting between the parties. A demurrer was sustained to the original bill, and thereupon the complainants, by leave of the court, filed an amended bill of complaint. The defendants filed separate general demurrers to this amended bill, which were likewise sustained by the Chancellor, and, the complainants having declined to plead further, the amended bill was dismissed. From that action the complainants appeal.
(Hn 1) In approaching the points raised by appellants, let it be remembered that for the time being and for all purposes of the argument of the test of the law presented by the demurrers they admit all material facts which are well pleaded in the bill. Griffith's Chancery Practice, Sec. 288. (Hn 2) Let it also be remembered that if there be sufficient equity on the fact of the bill to require an investigation of the facts, a demurrer should be overruled. Griffith's Chancery Practice, Sec. 291, Gully v. Bridges, 170 Miss. 891, 156 So. 511.
The amended bill is rather lengthy and we shall summarize only those allegations which bear directly upon the points herein decided or which are necessary to an understanding thereof. It charges that complainants are the owners of the lands in suit; that said lands were conveyed on November 18, 1911, by Capt. W.R. Bridgforth, father of defendant R.M. Bridgforth, to Edie Beamon for a consideration of $700 cash and four notes aggregating $1800; that at said time Edie Beamon and two of her sons, Willie Triplett and Sam Triplett, were in possession of said land and were cultivating the same, having rented it from Capt. W.R. Bridgforth for many years prior thereto; that on December 11, 1915, Edie Beamon reconveyed the land to Capt. Bridgforth in consideration of a cancellation of the indebtedness owing to him; that thereafter on January 2, 1926, Capt. Bridgforth again conveyed the said land to Edie Beamon in consideration of five notes for $500 each, due consecutively over a period of five years and secured by a deed of trust thereon; that successive deeds of trust were thereafter given to Capt. Bridgforth by Edie Beamon on December 3, 1926, December 1, 1931, and December 22, 1933, the last being for $1397.70; that in 1935 Capt. Bridgforth assisted Edie Beamon in consummating two loans on the property, one being from The Federal Land Bank for $1100 and the other being to the Land Bank Commissioner for $800, for which she gave first and second deeds of trust, respectively, on the lands in suit, and out of the proceeds of these loans Capt. Bridgforth was paid the balance due him by Edie Beamon, and he cancelled of record the deeds of trust held by him and executed another deed to Edie Beamon correcting a defect in the description contained in his former deed of January 2, 1926; that Edie Beamon died intestate on January 1, 1939, leaving the complainants as her sole and only heirs at law.
The amended bill alleges that in 1940 there was considerable oil activity in that section, that in April and May 1940 certain of the complainants executed oil, gas and mineral leases on these lands which were assigned shortly afterward to the defendant J.D. Wallace; that on July 13, 1940, said Wallace purchased and obtained assignments unto himself of the aforementioned deeds of trust held by The Federal Land Bank and Land Bank Commissioner and at about the same time came to the home of complainant, Willie Triplett, who was then residing on said lands, and informed Triplett that he, Wallace, had purchased said notes and securities, that all he wanted was interest on his money, and that he would permit Triplett to liquidate the indebtedness by payments of $100 per year; that the agents of Wallace had talked with Triplett shortly prior thereto and had also assured Triplett that Wallace would permit him to retire the indebtedness by easy payments, and further that Wallace desired another oil, gas and mineral lease on the lands, and that Willie Triplett agreed to execute the same, and did thereafter execute the same to Wallace in consideration of the extension of the indebtedness; that said sum of $100 was paid each year thereafter up to and including the year 1944.
The amended bill further alleges that in 1945 the defendant H.A. Fleishman proposed to drill an oil well near said land, and that the value of mineral rights therein increased considerably; that because of this activity the defendant Wallace, in violation of said agreement and at a time when none of said indebtedness was in default or arrears, called upon defendant Pat M. Barrett, Trustee, to foreclose the deed of trust which was originally given to Land Bank Commissioner, and accordingly the said trustee proceeded to advertise said land for sale to be held on June 18, 1945; that Willie Triplett, while knowing that said indebtedness was not in default, applied to another party with ample financial means for a loan to take up the entire indebtedness owing to Wallace, and this friend agreed to go with him on Friday before the sale was to be held on Monday and to pay off Wallace in full and take an assignment of the indebtedness and securities.
The amended bill further alleges that defendant R.M. Bridgforth then same to the home of complainant, Willie Triplett, and told him that the land was being advertised for sale, and that Triplett then told Mr. Bridgforth that he had already arranged to have a friend take up the indebtedness and thereupon the said R.M. Bridgforth asserted that he was a friend of complainants and wanted to help them, and that his son Edwin B. Bridgforth had several oil wells and was getting a large amount of money every month and had more money than he knew what to do with and that he would like to lend it out for interest, and that he, R.M. Bridgforth, would lend for his said son enough money at 6% interest to secure a transfer of the indebtedness from Wallace, and insisted that complainants allow him to lend the money for his said son; that said R.M. Bridgforth represented himself to be a friend of Willie Triplett and expressed a desire to assist him and protect him against the foreclosure, and then and there agreed that he would get the necessary money and go with Willie Triplett on Friday before the sale and take up the indebtedness to Wallace and take an assignment from Wallace.
The amended bill further alleges that on the appointed day Willie Triplett waited at his home all the morning and R.M. Bridgforth did not come as agreed upon, and he thereupon became uneasy and in the afternoon of the same day he went to the home of R.M. Bridgforth to see why he had not come as agreed upon, and he then found said Bridgforth sick in bed, but Mr. Bridgforth had him come into the sick room and told him that he was physically unable to go and take up the indebtedness and would not be able to go on the next day, but that Triplett need not worry, that he, R.M. Bridgforth, had made arrangements for someone else to be at the sale and if unable to get an assignment from Wallace that this party would go ahead and bid in the property at the sale so as to protect complainants' interest and his interest to the amount of the money that he was advancing and that complainants could thereafter give him a deed of trust to secure the same and agreed that he would convey the property to complainants, but in the meantime would take the deed as security for the amount necessary to purchase at the sale, and said R.M. Bridgforth assured Triplett that if he should be unable to get to the sale that Triplett need not worry and that he, Bridgforth, would have some representative present with the money to carry out his agreement; that Willie Triplett went to the place of sale on the date advertised and was unable to find Mr. Bridgforth, that Bridgforth had not been there that day, and thereupon, prior to the sale, Triplett went to the home of Mr. Bridgforth at another town several miles away, and Bridgforth was not at home and could not be found, and it was then too late for Triplett to get back to the place of sale in time to stop it.
The amended bill further charges that complainants relied upon and had implicit confidence in R.M. Bridgforth, that if Bridgforth had not agreed to advance the money to take up the indebtedness to Wallace and had not agreed to represent and protect complainants' interest in case he could not purchase the notes and deeds of trust by buying in the property or having someone present to buy it in for complainants and taking the deed in his name as security for the amount of money advanced, complainant was able financially to prevent and could have prevented the foreclosure sale in question; that Willie Triplett wholly relied upon the promises and agreements of the said R.M. Bridgforth and was thereby prevented by said Bridgforth from preventing the foreclosure.
The amended bill further charges that at said time there was a big demand for oil, gas and mineral lease rights under the lands in controversy and surrounding lands, and that R.M. Bridgforth was interested therein and conceived the idea of misleading complainants and bidding on the same and securing it in order to lease it to H.H. Fleishman who was to drill an oil well in that area; that said Bridgforth, prior to the foreclosure sale, had already arranged to lease said property to said Fleishman for the sum of $5,000, and that said R.M. Bridgforth procured the defendant C.V. Maxwell to appear at the foreclosure sale and to purchase the property thereat, with the understanding that R.M. Bridgforth would put up the necessary money and that the title would be taken in the name of the defendant Maxwell, and that under said agreement said Maxwell was to transfer to defendant Edwin B. Bridgforth, son of R.M. Bridgforth, a one-half interest in the land and one-half of what they secured for the oil, gas and mineral lease and mineral rights under said land, and that pursuant to said confederation and conspiracy the said R.M. Bridgforth did not attend the sale but had the said C.V. Maxwell to appear and bid in the property for said R.M. Bridgforth under the aforesaid agreement and understanding; that at the foreclosure sale the said C.V. Maxwell did appear and became the highest bidder for the sum of $4200, pursuant to said alleged agreement and understanding, and a trustee's deed was executed by defendant Pat M. Barrett, Trustee, to said C.V. Maxwell; that some days thereafter the defendant R.M. Bridgforth came to the home of Willie Triplett and stated to him that he and Mr. C.V. Maxwell had bought in the property at the trustee's sale and were claiming it as their own, and asked him to point out the lines and advised him that he, Bridgforth, and C.V. Maxwell were going to divide the property between themselves.
The amended bill charges that two days after the sale C.V. Maxwell executed an oil, gas and mineral lease on the land in question for a cash consideration of $5,000, and within less than a month sold to defendants Hunt and Whitaker an undivided 50/239ths mineral interest for a cash consideration of $1000, and on July 19, 1945, C.V. Maxwell conveyed to Edwin B. Bridgforth an undivided one-half interest in the lands and an undivided one-half interest in the mineral rights remaining after the sale to Hunt and Whitaker, and on July 27, 1945, C.V. Maxwell conveyed to defendant Winnifred Elizabeth McMillin an undivided 25/239ths interest in the minerals in said land for a cash consideration of $500, and that all of said parties had knowledge and notice of the said facts.
The amended bill further charges that the conveyances from Maxwell to Edwin B. Bridgforth were made for the benefit of R.M. Bridgforth; that R.M. Bridgforth is now claiming and asserting a claim to an undivided one-half interest in the land, and is attempting to collect rent from Willie Triplett for the year 1945, and that R.M. Bridgforth and Maxwell have given him notice to vacate the property and are preventing him from disposing of his crops.
It is alleged that the attempted sale is void because the deed of trust had not been properly assigned from Land Bank Commissioner to J.D. Wallace, and further that J.D. Wallace was precluded from foreclosing the same because of his above mentioned agreement with Willie Triplett; also that the sale is void because it was made before there was any default in the payment of said indebtedness to Wallace, and that even if there had been no agreement with Wallace the debt was still not due at the time of foreclosure.
Copies of a great many of the above mentioned conveyances, including a copy of the deed of trust to Land Bank Commissioner, are attached as exhibits to the amended bill.
Three points are raised by appellants which we feel should be disposed of at the outset.
It is argued that the deed of trust which was foreclosed by the trustee is so ambiguous as to when the indebtedness is due that it should first be reformed or a foreclosure there of had by an original proceeding in the chancery court. The note is set out in full in the body of the deed of trust. It contains the usual promise to pay the principal sum of $800 with interest thereon at the rate of 5% per annum, the interest to be payable annually on the first day in November of each year, and "said principal sum being payable on an amortization plan, in 10 equal successive annual installments of $80.00 each, the first such installment being payable on the 1st day of November —, and the remaining installments being payable on each succeeding interest payment date to and including the 1st day of November 1947." It is argued that since the note does not recite in what year the first payment of principal is due, it is so ambiguous that it is impossible to ascertain in what year the first payment of principal should be made. (Hn 3) While it is true that in preparing the deed of trust the note, as copied therein, does not specifically state in what year the first payment of principal is due, and through apparent inadvertence the year was omitted, still the note does provide that the principal is payable in 10 equal successive annual installments, the last of which shall fall due on November 1, 1947. It is thus plainly apparent that since the last payment is due November 1, 1947, and since the note is payable in ten equal successive annual installments, the first installment of principal must have been due on November 1, 1938. We therefore find that there is no such ambiguity in the note as to require its reformation or as to require a foreclosure by a proceeding in Chancery.
It is also contended by appellants that the amount bid at the foreclosure sale is so inadequate as to vitiate the sale. The amount of the bid was $4200 and the sale was made subject to the first deed of trust given originally to The Federal Land Bank. According to the exhibits to the amended bill there was due on this first deed of trust at the time of assignment to Wallace the sum of $992.04. The total bid, therefore, was for an amount around $5100 to $5200. The amended bill alleges that the property at that time was worth $10,000. (Hn 4) Thus it is seen that the property brought a little more than 50% of its value. In the case of Weyburn v. Watkins, 90 Miss. 728, 44 So. 145, this Court held that a sale of land made by a trustee in foreclosing a deed of trust, where the property brought 40% of its true value, would not be set aside for mere inadequacy of price, if the sale was otherwise valid. We therefore hold that the amount bid at the sale in this case was sufficient and that the sale should not be set aside on that ground alone. However, inadequacy of price may be taken into consideration along with other inequities in determining whether such a sale should be set aside, as will be seen later in this opinion.
(Hn 5) It is argued by appellants that the assignment by Federal Farm Mortgage Corporation to J.D. Wallace of the note and deed of trust in favor of Land Bank Commissioner is ineffective to transfer to Wallace any rights therein. These instruments are attached as exhibits to the amended bill of complaint and they show that both the note and the deed of trust are in favor of "Land Bank Commissioner, acting pursuant to Part 3 of the Act of Congress known as the `Emergency Farm Mortgage Act of 1933'" and in addition thereto paragraph 6 of the deed of trust provides that this instrument and the loan it secures is subject, in all respects, to the provisions of said Act and any amendments and supplements thereto. Land Bank Commissioner was created by an Act of Congress and is a creature of the Federal Government. 12 U.S.C.A., sec. 1016. Subsequently Congress created Federal Farm Mortgage Corporation and provided for a capital subscription thereto and then provided that for the purpose of such capital subscription, the funds and proceeds thereof made available to Land Bank Commissioner and the mortgages taken by the Commissioner and the credit instruments secured thereby are hereby transferred to Federal Farm Mortgage Corporation. 12 U.S.C.A., sec. 1020b. By this Act the note and deed of trust in favor of Land Bank Commissioner became the property of Federal Farm Mortgage Corporation, and that corporation had the right to transfer and assign the note and deed of trust to J.D. Wallace. Therefore we find no merit in this contention of appellants. Sullivan v. Federal Farm Mortgage Corporation, 62 Ga. App. 402, 8 S.E.2d 126.
In a written opinion oppearing in the record here the Chancellor held that there was not a sufficient consideration for the alleged agreement on the part of Wallace to the effect that he would reduce the payments on the deed of trust and notes to $100 per year provided he should be granted an oil, gas and mineral lease on the lands. (Hn 6) It is charged in the amended bill that such an agreement was made, and in support of this charge there is attached as an exhibit a copy of an oil, gas and mineral lease from Willie Triplett to J.D. Wallace. We are of the opinion that this was a sufficient consideration for the alleged extension agreement and that this feature of the case falls squarely within the rule announced in Martin v. Dixie Planing Mill, 199 Miss. 455, 24 So.2d 332, and the authorities therein cited. (Hn 7) The amended bill charges that pursuant to this agreement the appellants paid the sum of $100 each year on the indebtedness to Wallace up to the time of the foreclosure, and that by reason thereof they were not in default or arrears at the time of the foreclosure. If these allegations be true, as the demurrers admit, the trustee had no authority to proceed with the foreclosure and the amended bill states a case for equitable relief. For this reason we find that the Chancellor erred in sustaining the demurrers.
(Hn 8) Aside from the alleged extension agreement, the amended bill further charges that the complainants were entitled to certain additional credits on the indebtedness, particularly for the delay rentals on the oil, gas and mineral lease, and that, when given credit for these items along with the annual cash payments of $100.00, there was nothing in arrears at the time of the foreclosure. By these averments there was also stated a case for equitable relief, and the complainants should have been permitted to offer their proof in support thereof, and should not have been foreclosed from so doing by sustaining the demurrers. (Hn 9) Finally, the appellants contend that under the allegations of their amended bill there is stated a case which creates an implied trust in their favor. Because of this contention we have heretofore stated at considerable length the charges of the amended bill. In his written opinion the Chancellor held that the case stated is within the statute of frauds, Section 269, Mississippi Code of 1942, and that it is controlled by the decision in Miazza v. Yerger, 53 Miss. 135. The appellees rely wholly upon the Chancellor's opinion but it is our conclusion that the same is clearly erroneous. The first portion of the cited section of the statute of frauds requires all declarations or creations of trust to be in writing and signed, but the latter portion modifies or qualifies the first portion by providing "but where any trust shall arise or result, by implication of law, out of a conveyance of land, such trust or confidence shall be of the like force and effect the same as it would have been if this statute had not been passed." Pursuant to this section of our statute of frauds the courts in this state have consistently held that express trusts are void unless reduced to writing and signed, but that resulting trusts or implied trusts are not required to be in writing but may be established by parol testimony from the acts of the parties, and we are of the opinion that this case, under the allegations of the amended bill, falls squarely within the latter class. Miazza v Yerger, supra, is clearly a case coming under the first class, but the opinion therein recognizes resulting or implied trusts when it says "Parol evidence is admissible to prove the transaction out of which a trust arises by the acts of a party," and that "no one can hold a benefit acquired by fraud or a breach of his duty." In that case Mrs. Miazza did not hold the fee simple title to the land as did the complainants in the case at bar; in that case there was not involved any fraud of Yerger in causing Mrs. Miazza to relax her efforts to raise the money with which to purchase the land; in fact she had her arrangements made with one Helm to advance her the money with which to purchase, but Yerger, in purchasing at the sale, did not use the money which Helm was to advance but, instead, used his own money; in that case there was not involved any inadequacy of consideration coupled with the other acts of the purchasing party in obtaining title in his own name. Other distinctions between this case and the Miazza case will appear from a discussion of the authorities under which (Hn 10) we hold that the amended bill stated a good cause of action for creation of an implied trust.
In Suggins v. Heard, 31 Miss. 426, this Court said: "It is not now an open question, that when a party agrees before the sale to purchase property about to be sold under an execution against a party, and to give such party the benefit of the purchase, that the agreement is binding and will be enforced. The defendant, upon the faith of such an agreement, may have ceased his efforts to raise the money for the purpose of paying off the execution, and thus preventing a sale of his property. It will not do to say that the party promising was moved merely by friendly or benevolent considerations, and may, therefore, at his option, decline a compliance with his agreement. Such considerations constitute the foundation of almost every trust, and the trustee should be held to account as nearly as possible in the same spirit in which he originally contracted."
The facts in this case are quite similar to those in Elmslie v. Mayor, Miss., 35 So. 201, 202 (not reported in the State Reports), wherein this Court said: "Joined to the gross inadequacy of consideration are so many circumstances indicating surprise, unfairness, and undue advantage taken of appellant that a court of conscience should not permit this sale to stand."
This case is also similar in many aspects to Wilson v. Hoffman, 104 Miss. 743, 61 So. 699, wherein it was held (syllabus): "Where plaintiffs, who had given a deed of trust upon their land which was about to be foreclosed, approached defendant, who agreed to advance the money necessary to save the land, and who accordingly purchased the land at the foreclosure sale, and took the deed to himself and paid the amount of the indebtedness, in such case while defendant acquired the legal title to the land he held it subject to a resulting trust."
Identically the same situation was shown in the case of Comfort v. Winters, 108 Miss. 330, 66 So. 532, where the court again followed the same rule and where the syllabus is verbatim the same as that just quoted from Wilson v. Hoffman.
This case is also very similar on the facts to Tchula Commercial Co. v. Jackson, 147 Miss. 296, 111 So. 874, wherein this Court adhered to its former decisions and quoted with approval from the early case of Soggins v. Heard, supra.
In some of its aspects this case is also similar to Foster v. Campbell, 145 Miss. 502, 113 So. 550, wherein this Court quoted with approval from Elmslie v. Mayor, supra, and held that a foreclosure sale should be cancelled in view of grossly inadequate price in connection with abuse of confidence.
The Mississippi decisions on this subject are abundantly supported by decisions from other jurisdictions. In 54 Am. Jur. (Trusts) Sec. 241, p. 184, it is said: "All authorities agree upon the principle that a constructive trust will arise where, in addition to the breach of agreement to purchase for the owner or one having an interest at such a sale, there are circumstances of fraud or abuse of confidence, conduct, or facts that would tend to raise an equitable estoppel to assert the defense of the statute of frauds. A constructive trust will be declared where it appears that the promisee or principal furnished the purchase money, or a part thereof; refrained from bidding by reason of the agreement, promise or agency relaxed his efforts to save the property from being sold, or to prevent a sale at a sacrifice; or where it appears that the promisor or agent bought in the property at a price greatly below its value, or that the agreement was known to other possible bidders and as a consequence chilled their bidding."
Numerous authorities are cited in the annotations to the above quotation which support the text thereof. The amended bill in this case charged positively that complainants had made arrangements with another party to advance the money necessary to save their property, and that R.M. Bridgforth intervened and insisted that he be permitted to make the loan, and that his promises were relied upon by virtue of the confidence placed in him, and that the efforts to obtain the money from the other party were relaxed.
In Slowey v. McMurray, 27 Mo. 113, 118, 72 Am. Dec. 251, it is said: "There is another class of cases growing out of the conduct of debtors and purchasers at public sales. This is where the purchaser becomes such under a state of facts as would make it a fraud to permit him to hold on to his bargain. As if a purchaser, by means of a promise to reconvey to his debtor, should induce a relaxation of the efforts on his part to prevent a sacrifice of his property, and thereby obtain it at an under price, or, if the purchaser, taking advantage of that reluctance invariably manifested by those attending public sales to interfere with any arrangement a debtor makes to save his property, should create an impression that he was buying for the debtor, thereby preventing competition, or by any other improper means obtain the property of a debtor at a sacrifice, such conduct would convert the purchaser into a trustee for the benefit of those who were defrauded by his conduct. Such cases go upon the ground of fraud, and courts will give relief without regard to the circumstances whether the agreement was a written or a verbal one, or whether it was supported by a consideration or not."
See also Arnold v. Cord, 16 Ind. 177.
We do not overlook the fact that in the Missouri case just cited there existed between the parties the relation of debtor and creditor, but the same rule has been applied in cases where such relationship did not exist. In the case of Strasner v. Carroll, 125 Ark. 34, 187 S.W. 1057, 1058, Ann. Cas. 1918E, 306, the facts were almost identical with those charged in the amended bill in the case at bar, even to the fact that Strasner had another friend who would have advanced the money to save his land from the foreclosure sale but relaxed his efforts to obtain the money from that party because of the promise of Carroll, upon which he relied, to appear at the sale and purchase the land in his own name for the benefit of Strasner. In that case the Supreme Court of Arkansas reversed a decree of the Chancellor in favor of Carroll on the facts and remanded the cause with directions to permit Strasner to redeem his land, quoted with approval from Slowey v. McMurray, supra, and said: "It is true the general rule is that a mere verbal agreement by which one of the parties thereto promises to buy in at a judicial sale lands of the other and hold the same for his benefit does not create a resulting or implied trust; the agreement itself being within the statute of frauds. There are, however, several well-recognized exceptions to the rule, and one of them is that where the purchasr of lands in which the other is interested becomes such under such a state of facts as would make it a fraud to permit him to hold on to his bargain."
In Patrick v. Kirkland, 53 Fla. 768, 43 So. 969, 125 Am. St. Rep. 1096, 12 Ann. Cas. 540, it was held: "A mere parol agreement, without consideration, to buy in land at an execution sale and to reconvey it to the judgment debtor upon payment of the purchase price and interest, may not create a trust in favor of the judgment debtor; but, where there is in the transaction an element of equity arising from fraud, confidential relation, refraining from bidding at the sale, or from further protection of the property from sale, gross inadequacy of the purchase price, the supplying by the debtor of a part of the purchase money, or otherwise, such circumstances may be shown by parol, and establish a trust."
The authorities are so numerous on this question that it would unduly extend this opinion to quote from them. The decree sustaining the demurrers to the amended bill was manifestly erroneous, and the same is therefore reversed and the cause remanded for a trial on the merits.
Reversed and remanded.
Montgomery, J., took no part in the decision.