Wood v. Rabe

Full title: GEORGE W. WOOD, Appellant, v . RUDOLPH F. RABE et al., Executors, etc.…

Court: Court of Appeals of the State of New York

Date published: Oct 7, 1884

96 N.Y. 414 (N.Y. 1884)

Opinion

Argued March 14, 1884

Decided October 7, 1884

Robert E. Deyo for appellant. Randolph F. Rabe for respondents.

ANDREWS, J.

The trial court found, in substance, that no agreement was ever made between the plaintiff and his mother, that the latter should use the judgment confessed by the plaintiff to her November 27, 1855, to redeem the premises from the sale on the Stilwell judgment for the plaintiff's benefit, or that after such redemption she would convey the interest which she should acquire thereby to the plaintiff on payment of her claims on the property. This finding, although among the findings of fact, must have been intended as a finding of law, and to embody the conclusion reached by the General Term in its opinion on the first appeal, that the oral agreement to the effect stated in the finding, made between Mrs. Mulock and the plaintiff, did not in law or equity create any obligation, or, either separately or in connection with the other facts and circumstances, furnish any basis for equitable relief, for the reason that the agreement was void by the statute of frauds. Any other construction of the finding would make it inconsistent with the undisputed evidence. The proof is clear that the plaintiff confessed the judgment of November 27, 1855, at the request of his mother and upon the advice of her attorney, his former guardian, to enable her to redeem from the sale on the Stilwell execution for his benefit, and upon her promise to hold the interest acquired and re-invest him with his former estate in the land upon being paid her liens and advances.

There is a moral aspect to this case which strongly appeals to the sentiment of equity and justice. The mother of the plaintiff has acquired the legal title to property devised to him by his grandfather, of the value of at least $10,000 for a consideration, including her own debt, not exceeding $3,200, of which property she was at the time in possession as life tenant under the same will, under an agreement made with the plaintiff when he was in great straits, by which she promised to hold the property for his benefit and re-convey to him on payment of her lien and advances, which agreement she subsequently repudiated. Moreover, when the agreement was made the plaintiff was a young man recently passed his majority, and he confessed the judgment not only at the solicitation of his mother, but under the advise of his mother's legal adviser, his former guardian, upon the most solemn assurance of both that he might implicitly rely upon his mother's promise to re-convey the property.

But neither courts of equity or law sit to enforce mere moral obligations, and the question to be determined is whether a court of equity in accordance with its established principles and jurisdiction, can compel a performance of this agreement, notwithstanding the statute of frauds which makes void oral contracts for the sale of lands (1 R.S. 135, § 8), and forbids the creation of any trust relating to lands, except trusts arising by implication and operation of law, unless by deed or conveyance in writing, subscribed by the party creating the trust or his duly authorized agent (§§ 6, 7). The agreement proved was not in any ordinary sense an agreement for the sale of land, and does not, we think, properly come under the eighth section. It was rather an executory agreement on the one side to confess judgment, and on the other to acquire the title to the land by redemption under the statute and hold it on the trust to convey to the plaintiff upon the condition stated. In other words it created, so far as the words and the essential nature of the transaction could do so, an executory trust for the benefit of the plaintiff.

But being oral, the trust was void within the sixth section of the statute, unless the transaction constituted a trust by implication or operation of law, and was therefore within the exception in the seventh section. It is not easy to ascertain from-the adjudged cases the exact scope of the exception in the Stat. Car. 11, of trusts arising by "implication or construction of law," or of the equivalent exception in our statute, of trusts arising by "implication or operation of law." It is not difficult to name trusts which unequivocally are trusts arising by implication or operation of law. Trusts arising from the presumed intention of the parties, indicated by their acts, although not expressly declared, and those arising from the application of some settled principle of equity to the situation, furnish many instances of implied or constructive trusts. Resulting trusts at common law arising from the payment of purchase money, or where the trust is not declared, or is declared only in part, or for any reason fails, are illustrations of the former class, and those arising by equitable construction independently of intention from dealings by trustees or quasi trustees with trust property furnish many examples of the latter.

But there is a large class of so-called constructive trusts, or trusts ex maleficio, where courts of equity treat the holder of the legal title to land as a trustee, and, through the medium of an assumed trust, makes that title subservient to the circumvention of fraud and the attainment of justice. Trusts of this character are not, I assume, within the exception in the statute. If they were so considered, then wherever a court of equity acting upon its own principles, would, independently of the statute of frauds, separate the legal title and the beneficial interest, and fasten a trust upon the property to subserve the purposes of justice, no question under the statute would arise, for the obvious reason that the case was by its terms excepted from its operation, and the statute would never be an obstacle to relief. (But see Davies v. Otty, 35 Beav. 208; Seichrist's Appeal, 66 Penn. St. 237.) So where a trust is sought to be established from the violation of an oral agreement purporting to create a trust, and a court of equity upholds the trust and enforces specific performance, the trust is not an implied or constructive trust within the statute. (See Bellasis v. Compton, 2 Vern. 294.) The court in granting relief in case of an oral agreement proceeds upon the ground of fraud, actual or constructive, and enforces the agreement notwithstanding the statute, by reason of the special circumstances.

The plaintiff in this case seeks to fasten a trust upon the legal title of his mother to the property in question, by force of an oral agreement within the statute, in connection with the circumstances. It is important in determining the question arising in the case, to ascertain whether there was any consideration for the agreement between the plaintiff and his mother, because neither a court of equity nor law enforces contracts, written or oral, in the absence of any legal or equitable consideration. When the agreement of November 27, 1855, was made, the plaintiff had an interest in the land. It is true that his time for redemption had expired. He could not after the expiration of a year from the execution sale, by payment of the judgment, or in any other way by his own act alone, divest the purchaser of his right to a deed on the expiration of the fifteen months. But until the expiration of the fifteen months the title to land sold on execution remains in the judgment debtor. The statute declares that "the title of the judgment debtor shall not be divested by such sale, until the expiration of fifteen months from the time of such sale." (2 Rev. St. 373, § 61.) During the whole fifteen months the judgment debtor is entitled to possession, and to receive the rents and profits of the land, and this is an interest which can be reached by creditor's bill. ( Farnham v. Campbell, 10 Paige, 598.) The debtor also, after the expiration of the year and before the expiration of the fifteen months, has a mortgageable interest in the land, and he may subject it to incumbrances, created after that time, under which the incumbrancers, by redemption, may acquire the title of the original purchaser. The statute expressly enacts that any person having a judgment "rendered at any time before the expiration of fifteen months from the time of such sale, or having a mortgage duly recorded within the same period, and which shall be a lien or charge upon the premises sold," shall be entitled to acquire the rights of the original purchaser, etc. (§ 51.) The statute does not apply alone to judgments and mortgages in force at the time the debtor's right to redeem expired. It extends to judgments and mortgages made and entered after that time, and upon a new consideration. This was decided by the former Supreme Court under a similar provision in the statute of 1820. ( Van Rensselaer v. Sheriff Onondaga, 1 Cow. 443; Van Rensselaer v. Sheriff Albany, id. 501; Snyder v. Warren, 2 id. 518; Ex parte, Peru Iron Co., 7 id. 540.) It is manifest that the right of the judgment debtor to mortgage or incumber the land during the three months succeeding the expiration of the year from the sale, may be, and was in this case, a valuable one. By exercising it the debtor, who for any reason has allowed his time for redemption to go by, may in effect sell the equity of redemption. In this case land worth $10,000, was sold for $750, and the debtor's time to redeem had expired. He had, notwithstanding, an interest of great value in his right to mortgage or incumber the property, which he could use for his protection, and to secure himself against the sacrifice of his property. While the plaintiff was in this situation, at his mother's request he confessed the judgment of November 27, 1855. The confession of the judgment was an act he was not bound to perform, and in consenting to the arrangement proposed, he relinquished his claim that the money received from his mother was a gift, and relying upon her promise, he forbore, as may be assumed, to take any other steps to protect his interest. Mrs. Mulock also, by reason of the confession of judgment, acquired a lien on the property before the right of the original purchaser to a deed became absolute, and thereby obtained security for her debt, which she might not, and probably would not have been able to do if she had been put to the necessity of a suit to obtain judgment. These circumstances furnish ample consideration for her agreement with the plaintiff. (See Wile v. Wilson, 93 N.Y. 255; Sanford v. Huxford, 32 Mich. 313.)

There are two principles upon which a court of equity acts in exercising its remedial jurisdiction, which taken together in our opinion entitle the plaintiff to maintain this action. One is that it will not permit the statute of frauds to be used as an instrument of fraud, and the other, that when a person through the influence of a confidential relation acquires title to property, or obtains an advantage which he cannot conscientiously retain, the court, to prevent the abuse of confidence, will grant relief.

"The statute of frauds," observes Lord REDESDALE in Bond v. Hopkins (1 S. L. 433), "says that no action or suit shall be maintained on an agreement relating to lands which is not in writing, signed by the party to be charged therewith; and yet the court is in the daily habit of relieving where the party seeking the relief has been put into a situation which makes it against conscience in the other party to insist on a want of writing so signed, as a bar to his relief." The principle upon which the court proceeds in such cases is clearly expressed by Lord WESTBURY in McCormick v. Grogan (L.R., 4 E. I. Appeals, 82). "The court" he says, "does not set aside the act of Parliament, but it fastens upon the individual who gets the title under that act, and imposes upon him a personal obligation, because he applies the act as an instrument for accomplishing a fraud." It is true that the fraud upon which the court acts in such cases must be something more than that which in a moral sense arises from a mere breach of an oral agreement. ( Levy v. Brush, 45 N.Y. 589; Wheeler v. Reynolds, 66 id. 229.)

But in this case there was on the part of Mrs. Mulock something more than the ordinary case of a mere breach of a parol agreement, and on the part of the plaintiff something more than a bare reliance on the word, honor, or promise of another. It was a transaction between parent and child, a relation which, if not fiduciary in the strict sense, was nevertheless one ordinarily involving the greatest confidence on one side, and the greatest influence on the other. The mother was the original actor. She induced the plaintiff, a young man just arrived at age, and with limited experience, to confess judgment and to forbear other measures to protect himself against impending loss, upon her promise to protect his interests, assuring him in substance that as a son he could safely rely upon the promise of his mother. It was for his interest and not hers that she professed to be acting, and her attorney united with her in urging the plaintiff to acquiesce in the proposed arrangement. It was on the part of the son the case of a confidence induced, not by the bare promise of another, but by the promise and the confidential relation conjoined. The confidence in fact, had its spring and origin in the relation, and that relation was a controlling ingredient moving his action. It would be a gross wrong to permit that confidence to be betrayed, and we are of opinion that the statute of frauds cannot be invoked as a bar to relief. The principle, that when one uses a confidential relation to acquire an advantage which he ought not in equity and good conscience to retain the court will convert him into a trustee, and compel him to restore what he has unjustly acquired, or seeks unjustly to retain, has frequently been applied to transactions within the statute of frauds. The rule governing dealings between persons standing in fiduciary relations is applicable to parent and child, and courts carefully scrutinize them, to protect the latter against any undue advantage being taken by the former. ( Archer v. Hudson, 7 Beav. 551; Hoghton v. Hoghton, 15 id. 278; Wright v. Vanderplank, 8 DeG., M. G. 133.) The trust sought to be enforced in this case does not arise exclusively from the agreement, but from the agreement in connection with the other circumstances, the interest of the plaintiff in the land, the confidential relation of the parties, the youth and inexperience of the plaintiff, the fact that he acted without independent advice, and the injustice which would result in case the agreement should not be enforced. Therefore, without passing upon the question whether independently of the peculiar circumstances attending the agreement it could be enforced in equity, we are of opinion that, upon the case as presented, the agreement in connection with the circumstances make out a case for relief notwithstanding the statute. (See Heron v. Heron, 2 Atk. 160; Young v. Peachy, id. 254; Ryan v. Dox, 34 N.Y. 307; Perry on Trusts, § 226.)

The judgment should therefore be reversed and a new trial granted.

All concur.

Judgment reversed.