Schofield v. Spencer

253 P. 833, 43 Idaho 243, 1926 Ida. LEXIS 50

• Court: Idaho Supreme Court
• Decided: October 30, 1926
• Status: Published

Opinions

WM. E. LEE, C. J.

With the understanding that certain real property in Owyhee county belonged to the estate of John Sharp, Sr.,, deceased, appellant Schofield agreed with the executors to pay $4,000 therefor. He paid $1,000 and signed three promissory notes for the balance, payable to the “executors of the estate of John Sharp, Sr., deceased.” The notes, together with a deed and other papers, were put in escrow with instructions to deliver them to Schofield on the final payment of the three notes. The deed was executed by Daniel S. Spencer, in whose name the record title stood. Schofield objected to the deed, and commenced an action for the return of the money paid and the three notes. Spencer appeared and answered, alleging, among other things, that he held the title to the land in trust for the estate of Sharp. The executors intervened and demanded judgment against Schofield on two of the notes. Judgment was obtained by Spencer and the executors, from which this appeal is prosecuted.

The form of the deed was not the subject of agreement between the parties other than that it was implied and is not denied that appellant was to receive a full and complete title to the real property, a title in fee simple. The lower court found as a matter of law that the deed tendered conveyed “a good and marketable title.” There can be no doubt that appellant was entitled, under the agreement, to receive a marketable title. (Brady v. Bank of Commerce, 41 Okl. 473, Ann. Cas. 1915B, 1019, 138 Pac. 1020; Speakman v. Forepaugh, 44 Pa. 363; Maupin on Marketable Titles, sec. 283.) The abstract of title furnished appellant shows that Spencer held title under a deed absolute in form and without restrictions or limitations. However, the record is conclusive that appellant had been informed by the executors and knew that Spencer was a mere trustee for the estate of Sharp and had no ' beneficial interest whatever in the property. The abstract of title neither made reference to the estate of Sharp nor showed any administration of his estate.

The question for determination is whether one who holds title to real property under a deed absolute in form and containing no limitations or reservations, but who in fact is a trustee and holds title in trust for the benefit of the estate of a deceased person, may convey good title, in the absence of a showing of consent to the conveyance on the part of cestui que trust, where the grantee knows of the existence of the trust.

It is well settled that a purchaser of real property from one who holds it in trust for another, with knowledge of the existence of the trust relation, will not be accorded protection as a bona fide purchaser, but will be deemed a trustee for the benefit of the cestui que trust to the extent of such equitable interest.

Conceding, as contended by respondents, that in the case of “simple or dry” trusts, a deed by a trustee, with the consent of the cestui que trust, will pass a good title (2 Washburn on Real Property, 6th ed., secs. 1490, 1502; Arrington v. Cherry, 10 Ga. 429; Partner v. Converse, 5 Gray (Mass.), 336; 39 Cyc. 355), there was no consent of cestuis que trustent to the execution of this deed. That the deed was made at the request of the executors of Sharp’s estate will not aid respondents, for it was not shown that such executors were the cestuis que trustent. One who has contracted to sell and give a good and marketable title to real property, which stands on the public records in the name of another but which is actually held in trust for the benefit of the estate of a deceased person, cannot require the purchaser, who knows of the existence of the trust relation, to accept the deed of the trustee, as a conveyance of a good and marketable title to the property, where the cestuis que trustent do not join in or consent to the conveyance. (39 Cyc. 373, subd. b (1); 26 R. C. L. 1296, sec. 148; Wormley v. Wormley, 8 Wheat. (U. S.) 421, 5 L. ed. 651; Graff v. Castleman, 5 Rand. (26 Va.) 195, 16 Am. Dec. 741; Snyder v. Collier, 85 Neb. 552, 133 Am. St. 683, 123 N. W. 552; and note to Tyler v. Herring, 19 Am. St. 266.)

The purchaser contracted to buy the real property, and was to receive a good title thereto, both legal and equitable. In view of his knowledge that actual ownership of the land was in cestuis que trustent and that Spencer held the mere legal title, the deed from Spencer could convey nothing more, than the legal title. The court erred in concluding as a matter of law that the deed “ .... conveys a good and marketable title to the plaintiff.....” It is unnecessary to determine other questions presented.

Judgment reversed. Costs to appellant.

Givens and Taylor, JJ., concur.