Shepherd v. Dougan

76 P.2d 442, 58 Idaho 543, 1937 Ida. LEXIS 49

Opinions

HO'LDEN, J.

At the trial it was stipulated, among other things, that about April 5th, 1927, Fred T. Shepherd and Mary Elizabeth Shepherd were husband and wife; that Mary Elizabeth Shepherd died intestate December 22, 1934; that on April 5, 1927, John Dougan and Josephine B. Dougan were husband and wife; that John Dougan died intestate August 14, 1935; that April 5, 1927, Fred T. Shepherd and John Dougan executed an instrument for the sale and purchase of the hotel property in question; that Mary Elizabeth Shepherd did not either sign or acknowledge the said instrument ; that the said instrument was assigned by Fred T. Shepherd to respondents; that the Dougans went into possession of the hotel April 10, 1927, and remained in possession until the death of John Dougan; that following the death of John Dougan, Josephine B. Dougan, his widow, remained in possession, personally, and as administratrix, until final judgment was rendered and entered herein; that under the said instrument dated April 5, 1927, as aforesaid, the Dougans paid Shepherd on the purchase price of the hotel, and expended for improvements, fire insurance premiums, and taxes, the total sum of $19,533.02; that the hotel was the community property of Fred T. Shepherd and Mary Elizabeth Shepherd; that upon the death of Mary Elizabeth Shepherd the ‘ ‘ whole legal title” to the hotel passed to and vested in Fred T. Shepherd; that June 1, 1936, Fred T. Shepherd (widower), by warranty deed, for a consideration of $11,798.36, conveyed the hotel in the following proportions: To Alfred W. Shepherd, Executor of the Estate of Joseph R. Shepherd, deceased, an undivided one-half interest; to Emily Rich, F. J. Foulger and Jesse P. Rich, Executors of the Estate of William L. Rich, deceased, an undivided one-fourth interest; to Mary A. Hunt, sole distributee of the Estate of John A. Hunt, de ceased, an undivided one-eighth interest, and to Samuel W. Mathews, an undivided one-eighth interest; that following the execution and delivery of said conveyance the said grantees (respondents) repudiated said instrument dated April 5, 1927, and served upon appellant a notice of default, reading in part, as follows: “The present owners and holders (respondents) of said contract (referring to the said instrument dated April 5, .1927) hereby notify you by reason of the failure to make said payments hereinbefore referred to, your rights under said contract are hereby declared forfeited, and you are also hereby notified that because of said default and pursuant to said contract, you have become and now are, and are hereby declared to be a Tenant at Will of the undersigned, and as such you are hereby required to remove from the premises above mentioned, and surrender possession thereof, on or before the 2nd day of July, 1936”; that respondents demanded possession of the hotel, claiming that the Dougans had defaulted in making payments under said instrument dated April 5, 1927; that neither the said Fred T. Shepherd, nor respondents, have ever repaid, or offered to repay, any part of the sums paid by the Dougans on the purchase price of the hotel, for improvements, fire insurance, and taxes, as aforesaid; that Josephine B. Dougan is the surviving spouse of the said John Dougan; that the reasonable value of the use and occupation of the hotel is $100 per month; that appellant offered to surrender possession of the hotel upon payment to her of the sums paid out as aforesaid, less the said reasonable value of the use and occupation of the hotel; that no claim was ever presented to either of said estates.

Upon the facts so stipulated, the court made and filed findings of fact and conclusions of law, and decreed that the respondents were and are the owners in fee simple of the hotel property in the proportions hereinbefore stated; that respondents were entitled to immediate possession of said property; that appellant Josephine B. Dougan had no interest whatever in said hotel property or any part thereof, either individually or as administratrix of the estate of John Dougan, deceased; that the said Josephine B. Dougan and all persons claiming under her, were forever barred from asserting any claim to, or right, title, or interest in, said hotel property, or on any part thereof, or any lien thereon. From which judgment and decree Josephine B. Dougan appeals.

While numerous contentions are made by counsel for the respective parties, after a full and careful investigation of the law applicable to the facts stipulated by the parties and found by the court, we have concluded* that the decisive questions presented by the record are: 1. Did a trust arise from the acts and conduct of Fred T. Shepherd and John Dougan and Josephine B. Dougan stipulated by the parties and found by the court ? 2. Is recovery barred by the provisions of section 5-224, I. C. A., pleaded by respondents, assuming, but not deciding, that respondents may plead the bar of the statute?

It is contended by respondents that “a resulting trust is raised only when there is fraud in the acquisition of the title, or where the money of one is used to pay for real property the title to which is taken in the name of another,” and, in support of that contention, respondents cite and rely upon Motherwell v. Taylor, 2 Ida. 254, 10 Pac. 304, Pittock v. Pittock, 15 Ida. 426, 98 Pac. 719, and American Min. Co. v. Trask, 28 Ida. 642, 156 Pac. 1136.

It appears in the Motherwell case, supra, that Motherwell and others brought suit against Frank Taylor “to declare a partnership and a resulting trust in favor of the plaintiffs in certain mining property,” and that it was the theory of the plaintiffs (Motherwell and others) that a mining partnership had been entered into between the plaintiffs and the defendant, Frank Taylor. Plaintiffs averred that at the time the alleged partnership was formed defendant Taylor agreed to negotiate for, and, if possible, buy in, for the alleged partnership, from one Joseph Taylor, a conflicting claim called the “Far West,” in the Davitt mine; that defendant Taylor purchased the “Far West” mining claim, together with another claim called the ‘ ‘ Snow Fly, ’ ’ then a prospect, for $600; that defendant Taylor loaned the $600 to the alleged partnership and took as security for such loan the ores on the dump and in sight in the Davitt mine; that afterward the loan was re paid to defendant Taylor from the proceeds of the Davitt mine; that defendant Taylor fraudulently concealed from the plaintiffs the fact that he had purchased an interest in the “Snow Fly,” and that plaintiffs did not ascertain the fact for more than a year after the transaction. The plaintiffs claimed that a resulting trust arose from the facts so alleged. The case was tried by the court. It found: That there was no partnership entered into until after the purchase of the claims from Joseph Taylor; that defendant Frank Taylor paid for the entire property purchased from Joseph Taylor with his (defendant’s) own funds; that defendant Taylor did not take any security from plaintiffs for the money so paid for the claims; that after the purchase, the $600 was repaid from the proceeds of the Davitt mine; that there urns no fraudulent concealment of the facts on the part of defendant Frank Taylor; that it was not partnership funds that purchased the claims and that there was no resulting trust.

On the appeal of the Motherwell case, supra, this court said:

“The question is, Was the money used by the defendant Taylor, in the purchase of the two claims, partnership funds 1 If it was not, then there is no resulting trust. As we understand the law applicable to this ease, it was the payment of the purchase money at the time the title was obtained that would raise a trust of this kind, and neither a promise to pay nor after-payment is sufficient. Here the defendant paid his own money, and we cannot see that he took any security therefor. Certainly there was nothing said or done which would have made the plaintiffs personally liable to the defendant, Taylor, for the money; nor was there any note or other security in writing taken, nor property pledged and delivered to defendant. We conclude from the record that defendant purchased the claims with the view of getting his money back from the proceeds of the mine, if he could do so, and that there was no partnership at the time of the purchase.”

It will be noted that what we held in the Motherwell case, supra, was this: That defendant Taylor purchased the mining claims with his own money; that he did not take any security therefor; that neither a promise to pay nor an after- payment was sufficient to raise a resulting trust; that payment of the purchase price with his (defendant’s) own .money, at the time title to the mining claims was obtained, was determinative of the question as to whether a trust arose; that, therefore, there was no resulting trust. This court did not hold, as the author of the syllabus states, that “a resulting trust is raised only when there is fraud in the acquisition of title” (emphasis ours), nor did we hold that a resulting trust is raised only “where the money of one is used to pay for real property, the title to which is taken in the name of another at the time said title is taken.” What this court did hold was that no trust arose, or resulted, from the facts and circumstances found by the trial court in the Motherwell case.

Nor does the Pittock case, supra, support the contention of the respondents. In that case this court held that “a resulting trust arises by operation of law in favor of a person who advances the purchase money for land, though the title be taken in the name of another; or in favor of a person for whom it is advanced by way of a loan, the title being taken in the name of the lender ....,” but we did not hold that a trust could arise only when the purchase money is paid by one person and title is taken in the name of another. « And in the Trask case, supra, it was held that “if one obtains a title to land by artifice or concealment equity will enforce a trust in favor of the party justly entitled thereto. ” It is quite apparent that it was not held in the Trask case that a trust can result only where there is fraud in the acquisition of title, nor was it held that a trust can result only where one obtains title to land by artifice or concealment.

While trusts have been divided, with reference to their creation, into express trusts, implied trusts, and resulting or constructive trusts, the circumstances under which resulting trusts may arise are too numerous to make it possible to say that resulting trusts can arise only from certain stated sets of facts, and from no other. Hence, every case must depend and be decided upon its own particular facts and circumstances. Here, the question is, Did a resulting trust arise from the particular facts and circumstances stipulated by the parties and found by the trial court ?

The facts upon which a determination of that question depends are, briefly, as follows:

April 5, 1927, Fred T. Shepherd and John Dougan executed an instrument termed a Uniform Eeal Estate Contract, which had for its purpose the sale and purchase of the hotel property in question. At the time of its execution the Dougans paid Shepherd the sum of $7,660.27. They went into possession of the hotel property April 10, 1927, and continued making payments from time to time for a number of years, to the making of which Shepherd consented. And the Dougans, after going into possession of the hotel, paid the taxes and continued from time to time, for a period of several years, to pay the taxes on the hotel until they had expended for that purpose the sum of $2,390.44. After going into possession of the hotel the Dougans also repaired the hotel and made improvements and continued from time to time to repair the hotel and to make improvements, expending for that purpose the sum of $1305.31. And after going into possession of the hotel the Dougans also caused the hotel to be insured, and kept it insured, and for that purpose continued from time to time to pay the insurance premiums totaling $1747, to which Shepherd also consented, and accepted the benefits.

In connection with these facts and circumstances it must be remembered that Shepherd assigned said instrument to the respondents, and also that the deed from Shepherd to respondents recites a consideration of but $11,798.36. The assignment of the instrument to respondents and the consideration recited in the deed rather strongly indicate that the parties to the deed recognized and acknowledged that the Dougans had a substantial equity in the hotel property.

That the instrument dated April 5, 1927, is void would not prevent a resulting trust from arising because a resulting trust is a trust implied by law from the transaction of the parties. It never arises out of contract or agreement that is legally enforceable, “but arises by implication of law from their acts and conduct apart from any contract, the law implying a trust where the acts of the party to be charged as trustee have been such as are in honesty and fair dealing consistent only with a purpose to hold the property in trust, notwithstanding such party may never have agreed to the trust and may have really intended to resist it.”' (O’Donnell v. McCool et al., 89 Wash. 537, 154 Pac. 1090, 1094; 65 C. J. 36S, sec. 14 3 see, also, National Bank v. D. W. Standrod & Co., 47 Ida. 93, 100, 272 Pac. 700.)

Shepherd could not, as a matter of honesty and fair dealing, consent to the making of and accept payments and consent to the making of repairs, and the payment of taxes and insurance premiums, and accept the benefits, totaling $19,533.02, in the manner and as shown by the record in this case, with any purpose but to hold the hotel property in trust for the Dougans. Consequently, the law implies a purpose on his part to so hold the property, and that, too, regardless of what his actual purpose and intention was. Equity will not permit him to take the sole title to the property upon the death of his wife and thereafter continue to accept payments and deal with appellant in relation to the property as if the contract were valid and binding, without at the same time becoming liable to appellant as trustee of the fund and benefit so received. Respondents here, having notice of the terms and conditions of the instrument, and having taken an assignment thereof, and having notice of the nature of Shepherd’s title and the possession of appellant, are now in no more favorable position to resist appellant’s prayer than is Shepherd himself.

Is the relief sought by appellant barred by section 5-224, 'i. C. A. ? That section provides as follows:

“Aotion for other relief. — An action for relief not herein-before provided for must be commenced within four years after the cause of action shall have accrued. ’ ’

The trust in the case at bar was created at the time John Dougan paid Shepherd the sum of $7,660.27 on April 5, 1927. It was created by and with the consent of both Shepherd and Dougan in that Dougan consented to and did make such payment and that Shepherd consented to and accepted it, and the trust necessarily continued throughout the period that Dougan continued to make payments, repair the hotel, pay taxes and insurance premiums, and Shepherd con- tinned to consent to the making of snch payments and repairs and to the payment of the taxes and insurance premiums. Therefore, we are here dealing with a trust created and continued by and with the consent of the trustee and cestui que trust. As to such a trust, no right of action accrues until the trust is repudiated. (Brasch v. Brasch, 55 Ida. 777, 47 Pac. (2d) 676.) The earliest date on which it could be claimed the trust was repudiated is June 1, 1936 — the date Shepherd assigned the instrument termed a Uniform Real Estate Contract and executed a deed to respondents. Respondents filed their complaint August 13, 1936, and appellant filed her cross-complaint October 1, 1936, so that her cross-suit is not barred by the statute.

The Dougans went into possession of the hotel April 10, 1927. While in possession they paid Shepherd and expended for repairs, taxes, and insurance premiums, a total of $19,533.02. Appellant is entitled to interest on the respective sums making up that total from the date of each payment and expenditure at the statutory rate in force at the time. Against said sums, and interest thereon, a rental charge shall be made monthly, and deducted monthly, commencing April 10, 1927, the date the Dougans went into possession of the hotel, and ending April 2, 1937, the date respondents went into possession. The entire interest of Mary Elizabeth Shepherd having passed to and vested in her husband, Fred T. Shepherd, by operation of law, prior to the date he executed said deed, to respondents, appellant is entitled to an equitable lien on the hotel property for the difference between said sums, plus interest thereon, computed as above directed, and the rental value, to be charged and deducted, as aforesaid, not affected by Shepherd’s deed to respondents because they had notice.

The judgment is reversed and the cause remanded to the trial court with instructions to take such further evidence as may be necessary, if any, to enable it to compute the difference between said sums paid and expended, as aforesaid, together with interest thereon, and the rental value of the hotel to be charged and deducted as herein directed, to make and file appropriate findings of fact and conclusions of law, and to enter a decree awarding a lien for such difference on the hotel property in favor of appellant. Costs awarded to appellant.

(February 7, 1938.) Morgan, C. J., and Ailshie and Givens, JJ., concur. Budge, J., did not sit at the hearing nor participate in the opinion.