Green v. Drummond

31 Md. 71, 1869 Md. LEXIS 80

• Court: Court of Appeals of Maryland
• Decided: June 24, 1869
• Status: Published

Opinion

Bartol, C. J.,

delivered the opinion of the Court.

There can be no doubt that the alleged agreement between Green, the appellant, and Levin J. Drummond, as set out in the bill of complaint, was an agreement within the 4th section of the Statute of Frauds.

The allegation in the bill is, “ that Green and Drummond agreed to become jointly the purchasers of the property, each party to furnish one-half of the purchase-money, and to hold the same in undivided moieties.”' The purchase was made in the name of Drummond alone, who was reported by the executors as the sole purchaser, and -the sale was ratified as made to him. Green being no party to the contract made with the executors, nor in any manner known to them as purchaser; his alleged agreement was made with Drummond, and as stated in the bill, was a mere parol agreement, not evidenced by any writing.

This brings the case precisely within the ruling of this Court in Hollida vs. Shoop, 4 Md., 465; and within the case of Parker vs. Bodley, 4 Bibb, 102, which was cited and adopted in Hollida vs. Shoop, 4 Md., 474. It is unnecessary to refer to other authorities in support of the position that contracts to purchase land are within the 4 th section of the Statute, and can be evidenced only by some note or memorandum in writing, signed by the party to be charged therewith.

If the case of the appellant rested only upon the alleged agreement, he must fail in maintaining his bill upon parol evidence merely. Rut it has been contended, that upon the pleadings and proof, there was a trust created in favor of the appellant. The effbct of the agreement being, as alleged, to charge Drummond, as trustee of the appellant, to the extent of one moiety of the land. Here we are met by the provisions of the 7th section of the Statute, which declares that “ all declarations or creations of trusts, or confidences of any lands, &c., shall be manifested and proved by some writing, &e., or else they shall bo utterly void, and of none effect.”

Under this section, it is not competent to prove by parol an express or conventional trust. As decided in Dorsey vs. Clarke, 4 H. & J., 556, “ if a party who buys land, agrees by parol to hold it for another, or to give that other the benefit of the purchase upon the payment by him of the purchase-money, such a conventional trust could not be enforced. It would be within the Statute, and could be evidenced only by writing.

Is this a case of a constructive or resulting trust within the saving of the 8th section of the Statute ?

Upon this question we have had more difficulty in arriving at a satisfactory conclusion. It is very clearly established by the evidence, that at the time the arrangement was concluded with the executors, under which Drummond was accepted by them as the purchaser, and $10,000 of the purchase-money was paid, a considerable part of the money so paid was furnished by Green, the complainant ; not as a loan to Drummond to be repaid, but as part of the purchase-money, with the intention of securing to Green an interest in the property as part owner.

It has been argued that the effect of this transaction was to create a resulting trust in the property in favor of Green, to the extent or in the proportion of the money so paid or furnished by him; thus bringing the case within the provisions of the 8th section of the Statute. It being well settled that such constructive or resulting trusts, arising by operation of law, may be proved by parol evidence.

The language of the 8th section is as follows:

“ Provided always, that where any conveyance shall be made of any lands or tenements, by which a trust or confidence shall, or may arise, or result by the implication or construction of law, or be transferred or extinguished by an act or operation of law, then, and in every such case, such trust or confidence shall be of the like force and effect as the same would have been if this Statute had not been made, anything hereinbefore contained, to the contrary notwithstanding.”

One of the classes of trusts coming within the purview of this section is thus defined:

“ Where, upon a purchase of property, the conveyance of the legal estate is taken in the name of one person, while the consideration is given or paid by another, the parties being strangers to each other, a presumptive or resulting trust immediately arises by virtue of the transaction, and the person named in the conveyance will be a trustee for the party from whom the consideration proceeds.” Hill on Trustees, 92 M. “ In such ease the payment of the consideration-money may be proved by parol, as before the Statute. The payment of the money is the foundation of the trust.” 4 H. J., 556.

We consider it well settled upon reason and authority, that if a part of the purchase-money be so paid, there will arise in the same manner a resulting trust pro tanto in favor of the party so paying. But the question here presented is, whether a trust of this kind can arise upon an executory contract merely; or where there has been no conveyance of the legal title.

The Judge of the Superior Court decided that there being no deed or conveyance of the legal title from the executors to Drummond, a resulting trust could not arise under the 8th section of the Statute.

A very full and careful examination of the authorities has convinced us that the decision of the Judge below on this question is correct.

The words of the Statute seem plainly to apply only to cases where “« conveyance shall be made of lands.” Trusts of this description “must arise,if at all, at the time of the execution of the conveyance.” In all cases there must be a mutation of the legal title, and the trust arises by operation of law “ from contemporaneous circumstances, giving a different direction to the equitable title from that taken by the legal title.”

In support of these positions the following authorities may be cited. 3 Sug. on Vendors, 174 n. 1; Lewin on Trusts, ch. 8, p. 176; Dyer vs. Dyer, 2 Cox, 92; Jackson vs. Morse, 16 John., 199; Murray vs. Rogers, 3 Paige, 398; Page vs. Page, 8 N. H., 187; Baker vs. Vining, 80 Maine, 121; Dorsey vs. Clarke, 4 H. & J., 551.

The contract of purchase by Drummond from, the executors, and the ratification of the sale by the Orphans’ Court, gave him only an equitable interest in the land; to convey the legal estate a deed from the executors is necessary ; and until the whole purchase-money is paid they are not bound to execute a deed. While the contract of purchase remained executory and before the conveyance of the legal estate to Drummond, no resulting trust within the meaning of the 8th section of the Statute could arise or be created in favor of Green.

The case of Cecil Bank vs. Snively, 23 Md., 253, has been cited, and relied on by the appellant in support of the position that such a trust may arise upon an executory contract of sale, without a conveyance.

In that case an attachment upon judgment against Lee & Welby was laid upon property claimed by Lawrence Snively, under a contract of purchase by him from Price ■& Bidgway, trustees, to whom it had been conveyed by Lee & Welby, with power to sell.

The evidence was that Snively, though nominally the purchaser, had, in fact, bought for Lee & Welby; that they furnished and paid all the purchase-money, so far as it had been paid, and that Snively stated he claimed no interest in the property, and held the contract only for the benefit of Lee & Welby. The effect of the decision was, that this evidence was sufficient in law to show that Lee & Welby had an interest in the property, liable to the attachment. In the argument of the case the interest of Lee & Welby was treated as a trust created by construction or operation of law; no point was made upon the words of the Statute, as to the effect of the absence of a conveyance ; in the opinion that fact was not adverted to, and the general principles applicable to such trusts were stated and discussed, perhaps unnecessarily, as they were not essential to the decision of the case.

There could bo no doubt of the right of the attaching creditors to treat the property as in fact belonging to Lee & ~Welby, who, according to the proof, were the real purchasers ; Snively being merely a nominal purchaser, and holding the contract for their benefit. It would have been a fraud upon the creditors to have denied to them the benefit of their attachment.

The judgment in Cecil Bank vs. Snively stands upon grounds independent of the 8th section of the Statute of Frauds, and is not in conflict with the principles here announced as governing the construction of the Statute.

It follows from what has been said—

1st. That the appellant is not entitled to claim a specific execution of the agreement, whereby, as alleged in the bill, it was agreed between him and Drummond that he should become a joint purchaser of the property, and hold to the extent of one moiety. Such an agreement, under the Statute, of Frauds, can be proved only by writing.

2d. It also follows, for the reasons before stated, that the appellant is not entitled to relief, upon the ground of a resulting or constructive trust in the property, under the 8th section of the Statute.

It remains to be considered whether, under the pleadings and proofs in the cause, the appellant is entitled to any, and what relief in a Court of Equity ?

A specific execution of the alleged agreement being denied, the question is, whether the bill should be retained for the purpose of awarding compensation for the purchase-money paid and advanced by him ?

It has been said to be a general rule of equity that “ no one shall avail himself of a law made for his protection, so as to injure another, and especially, not to enrich himself at his expense.” 3 Rand, 258.

“ The Statute of Frauds was intended to protect parties against feigned or incomplete agreements. But when one party induces another, on the faith of a parol contract, to place himself in a worse situation than he would have been if no agreement had existed, and especially if the former derives a benefit therefrom, at the expense of the latter, and avails himself of his legal advantage, he is guilty of a fraud, and uses the Statute for a purpose not intended, the injury of another, for his own profit. The fraud does not consist in availing himself of the Statute to protect himself; but in using it to appropriate to himself what justly belongs to another.” 3 Rand, 259.

To prevent such injustice, Courts of Equity, in cases where the party is not entitled to specific performance, often grant relief by decreeing just compensation; that is, by decreeing the repayment of the money expended on the faith of the contract. Many cases might be cited in which such relief has been granted.

Some conflict has arisen upon the question as to the particular circumstances under which a Court of Equity will entertain jurisdiction and grant relief, by awarding compensation to a party who fails to maintain his bill for specific performance. “ Such relief,” as stated by Judge Story, (2 Eq. J., sec. 794,) “ is ordinarily to be decreed in equity only as incidental to other relief sought by the bill and granted by the Court, or where there is no adequate remedy at law, or where some peculiar equity intervenes.”

In this case it seems to us doubtful whether the appellant could, by any proceeding at law, recover the money paid and advanced by him under the contract; for there he would be met by the provisions of the Statute, which ■would preclude him from giving evidence of such parol ■contract.

The money not being advanced as a loan to be repaid, but expended in pursuance of the agreement for the joint [purchase of land, in order to maintain an action at law to recover back the money, it would bo necessary to prove the contract under which it was paid, which he would be precluded from proving by parol, by reason of the provisions of the Statute, and thus his remedy at law might fail and justice be denied.” 3 Rand, 259, 260; White, Adm’x. vs. Coombs, Ex’r., 27 Md., 489.

In such ease, according to the authorities, a Court of Equity ought to give relief, because there is no remedy at law, or a very inadequate and precarious one.

In White & Tudor’s Leading Cases in Equity (65 Law Lib., 527), the rule upon which Courts of Equity proceed in such cases is thus stated:

“ When the specific execution of a parol agreement cannot be decreed in consequence of the uncertainty in its terms, or of the Statute being relied on, the Court will, if there is no remedy at law, or it is uncertain or embarrassed, or under circumstances of special equity, decree compensation to the-extent of the purchase-money paid, and the value of beneficial and lasting improvements.”

This proposition was cited with approbation by the Court of Appeals, in Bowie vs. Stonestreet, 6 Md., 431. The relief granted in that case was based upon this principle of equity.

In Phillips vs. Thompson, 1 John., Ch. R., 131, and Parkhurst vs. Van Cortlandt, Id., 273, which were bills for specific performance, Chancellor Kent, though denying the relief prayed in the the former because the plaintiff failed in proving the agreement, and in the latter because the proof of the agreement was imperfect, yet retained the bills in both cases, and in one directed an issue of quantum damnijicatus, and in the other referred the case to a master, to ascertain the amount due for expenditures made on the faith of the contract, so that compensation might be decreed. The case of Parkhurst vs. Van Cortlandt was cited by the Court of Appeals in Bowie vs. Stonestreet, and the principles therein asserted were recognized.

The Court of Appeals proceeded upon the same principle in awarding compensation, in the cases of Eakle vs. Eakle, decided at April Term, 1867, and in the more recent case of Nelson vs. Hagerstown Bank, 27 Md., 52, 76.

We refer also to Anthony vs. Leftwitch, 3 Rand, 238; Payne vs. Graves, 5 Leigh., 561; Johnston vs. Glancy, and others, 4 Blackford, 94, 99; King’s heirs vs. Thompson and wife, 9 Peters, 204; and to the cases cited by. Chancellor Kent, in Parkhurst vs. Van Cortlandt.

These authorities sufficiently establish the'jurisdiction and power of a Court of Equity to grant relief to the appellant in the present case by decreeing compensation.

The measure of compensation to which he will be entitled is a decree for the money paid and expended by him in the purchase of the property, with interest thereon.

While, in our opinion, the proof is perfectly clear and conclusive that a portion of the cash payment made to the executors was furnished by him, and that the amount so furnished exceeded $3,000, there is an absence of satisfactory evidence with regard to the precise amount thereof, and it will be necessary to refer the case to the Auditor, so that an account thereof may be stated upon the proof now in the cause, and other proof to be taken under the Court’s order for that purpose; and for the amount so ascertained, with interest thereon, the appellant will be entitled to a decree as against the personal representative of Levin J. Drummond, deceased; and in default of payment thereof out of the personal estate of Levin J. Drummond, he will be entitled, as a general creditor, by proper proceedings for that purpose, to enforce its payment out of the real estate of said Drummond, in the same manner as any general creditor might do. Inasmuch as we have determined that the property mentioned in the proceedings is not chargeable with any trust in favor of the appellant, it follows that he is not equitably entitled to any specific lien thereon for the amount so to be recovered by him. But as was decided in the case of Bowie vs. Stonestreet, he is to be considered as a general creditor against the assets of the estate for the amount which may ultimately be decreed to be due him, upon the principles before stated.

(Decided 24th June, 1869.)

And forasmuch as the appellant is not entitled to any relief as against the defendants Benjamin Silver, James Silver, and Silas B. Silver, executors, the bill as to them must be dismissed, and the decree of the Superior Court, so far as it dissolved the injunction heretofore granted, ought to be affirmed. But as there was error in dismissing the bill, the decree in that respect will be reversed, and in order that further proceedings may be had in the Court below, in accordance with the opinion of this Court, the cause will be remanded.

Affirmed in part, and reversed in part, and cause remanded.