Case ID: ad_24/html/0437-01.html
Source: Caselaw Access Project
Author: {"author": "Adams, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Reuben L. Smith, Appellant, v. Clara S. Balcom and George W. Smith, Individually, and as Executors, etc., of Martha J. Smith, Deceased, and Others, Respondents.
    
      Agreement to bid in real property for the benefit of another who pays the consideration therefor—when a title so acquired is held in trust— Statute of Uses and Trusts.
    
    Upon the sale of certain premises which one Reuben L. Smith had conveyed to George FT. Smith simply in order to facilitate such sale for his (Reuben’s) benefit, the assignment of a mortgage representing part of the consideration for the sale was taken by Martha J. Smith, the wife of George F. Smith, she agreeing to hold it as trustee for Reuben L. Smith. Subsequently, Reuben L. Smith entered into an agreement with George F\ Smith, whereby George FI Smith was, upon the foreclosure of the mortgage, to purchase the mortgaged premises for Reuben L. Smith’s benefit, and in pursuance of this agreement George F. Smith bid in the property, but, being financially embarrassed, the title was taken in the name of his wife, the consideration paid by her being represented by the mortgage.
    
      
      Held, that the case came within the rule that where equities have arisen out of the agreement between the parties, section 51 of the Statute of Uses and Trusts (1 R. S. 728), providing that where a grant is made to one person and another person pays the consideration therefor, no trust shall result in favor of the person making the payment, does not apply; and that the executors of Martha J. Smith, having power to convey her real estate, would be compelled to convey the land in question to Reuben L. Smith.
    Appeal by the plaintiff, Reuben L. Smith, from' so much of a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Erie on the 21st day of January, 1897, upon the decision of the court rendered after a trial at the Erie Special Term, as adjudges that certain lands situate in the town of Tonawanda, Erie county, described in the complaint in the action, vested in Martha J. Smith, deceased, absolutely as against the plaintiff, and that the plaintiff’s complaint be dismissed as to such premises.
    
      Frank Brundage, for the appellant.
    
      H. C. Day, for the respondents.
   Adams, J. :

The plaintiff seeks by this action to have certain premises situate in the towns"of Cheektowaga and Tonawanda, Erie county, the legal title to which is in the defendant Clara S. Balcom, as the residuary devisee of one Martha J. Smith, deceased, adjudged to be the property of the plaintiff, and to have been held in trust for him by Mrs. Smith at the time of her death.

Upon the trial it was conceded that the plaintiff was entitled to a conveyance of the Cheektowaga lands, and consequently the only-question which it will be necessary to consider upon this review is that which is involved in the plaintiff’s claim to the Tonawanda premises. The facts upon which this claim is founded are apparently free from controversy, and, as established by the judgment appealed from, they are in substance these, viz.:

In June, 1886, the plaintiff became the owner of a house and lot in the city of Buffalo, the purchase price of which, including some personal property, was $10,500. After making such purchase, the plaintiff obtained possession of the premises and continued in the occupation thereof until the fall of 1886, when he removed to Ithaca, in this State; but, before leaving Buffalo, he entered into an oral agreement with one Philo A. Balcom, who is his cousin and the son-in-law and business partner of his uncle, George W. Smith, by the terms of which Balcom was to lease and, as soon as possible thereafter, sell these premises for the plaintiff. Subsequently, and on the 19th day of October, 1887, at the request of Balcom, and upon his representation that it would facilitate the sale of the premises, the plaintiff and his wife executed a deed thereof to the defendant George W. Smith. There was no consideration paid by either Smith or Balcom for the transfer of the property, and the deed thereof was executed and delivered for the sole purpose of enabling Balcom to effect a sale of the premises therein described. Shortly thereafter a sale was effected, and, at the request of the plaintiff, George W. Smith conveyed the house and lot to John Thomas, the purchaser. In part payment of the purchase price Thomas, at the request of the defendant Smith, assigned to Martha J. Smith, then the wife of George W. Smith, a half interest in a certain mortgage, which, with the consent of all parties interested, was afterwards exchanged for a mortgage of $2,420.25 on lands in Tonawanda, Martha J. Smith taking title to this last-mentioned mortgage by assignment from one Frank F. Williams. Subsequently Martha J. Smith, at the request of the plaintiff, assigned the $2,420.25 mortgage to the Buffalo Loan, Trust and Safe Deposit Company as collateral security for the plaintiff’s note of about $1,000. At the time this mortgage was assigned, it was agreed by and between George W. Smith, Philo A. Balcom, the plaintiff, and the Buffalo Loan, Trust and Safe Deposit Company that the mortgage should be immediately foreclosed, and that the property covered by it should be purchased in the interest and for the benefit of the plaintiff. In pursuance of this agreement the mortgage was thereupon foreclosed, and, upon the foreclosure sale, the mortgaged property was hid in by George W. Smith, at the request of the plaintiff, but, as his firm was financially embarrassed at that time, the purchase was made and the title taken in the name of his wife, Martha J. Smith. After the sale had been consummated, and while the title to the premises was in Martha J. Smith, she, at the request of the plaintiff, executed a mortgage upon the premises as security for the amount owing by the plaintiff to the company upon the note theretofore given by him.

Thereafter, and on the 11th day of October, 1894, Martha J. Smith died, leaving a last will and testament of which the defendants, George W. Smith and Clara S. Balcom, are the executors, with full power to convey any and all property of which the testatrix died seized.

After having duly qualified the executors were requested by the plaintiff to convey to him the premises in question, but this they declined to do, and the present action was thereupon brought.

The theory upon which the plaintiff seeks to recover is that Martha J. Smith took the title to the premises which were conveyed to her in the manner hereinbefore, detailed, impressed with all the existing equities in favor of the plaintiff which resulted from the agreement theretofore entered into between him and the defendant George W. Smith that the latter should take the premises simply as trustee for the former, to the end that a sale might be made more easily and to better advantage.. It was held, however, by the learned trial court that the plaintiff’s contention could not be sustained without violating section 51 of the Statute of Uses and Trusts, which section reads as follows, viz.: “ Where a grant for a valuable consideration shall be made to one person, and the consideration therefor shall be paid by another, no use or trust shall result in favor of the person by whom such payment shall be made, but the title shall vest in the person named as the alienee in such conveyance, subject only to the provisions of the next section.” (1 R. S. 728, § 51.)

It is probably true that the grant of the premises in question to Martha J. Smith was made for a consideration paid by the plaintiff, that is, they were sold upon the foreclosure of a mortgage which, although purporting to belong to the nominal purchaser, was in fact the property of the plaintiff. As to this there is no dispute whatever, and we fail to find anything in the record which shows that Martha J. Smith had the slightest equity in these premises; she paid nothing for them; she expended nothing upon them; she was simply the medium, and undoubtedly the conscious and willing medium, through which the agreement between her husband and the plaintiff was effected. There is no pretense that this trust was created to hinder or delay the plaintiff’s creditors or for any purpose which was not entirely legitimate, and the learned trial court has expressly found that Mrs. Smith took the title to the mortgage which furnished the consideration for the premises purchased by her at the foreclosure sale at the request of her husband and Balcom, and with the understanding upon her part that she was taking the assignment of the same as trustee for the benefit of the plaintiff.

To permit her or her representatives, in these circumstances, to invoke the aid of the statute in the perpetration of a wrong which falls but little, if any, short of a gross fraud, will be putting the statute to a very different use from the one designed by its framers.

It has been repeatedly held that a court of equity will not permit the Statute of Frauds to be used as an instrument of fraud, and also that the section upon which the decision of the trial court rests has no application to a case where equities have arisen out of the agreement of the parties. (Ryan v. Dox, 34 N. Y. 307; Carr v. Carr, 52 id. 251, 261; Robbins v. Robbins, 89 id. 251; Wood v. Rabe, 96 id. 414; Bitter v. Jones, 28 Hun, 492; Gage v. Gage, 83 id. 362.)

This, as we have seen, is clearly a case belonging to the latter class, and it, therefore, as we think, falls within the rule above stated, and is one in which a court of equity is called upon to exercise its remedial jurisdiction.

So much of the judgment as is appealed from should, therefore, be reversed and a new trial granted, with costs to the appellant to abide the event.

All concurred.

So much of the judgment as is appealed from reversed and a new trial ordered, with costs to the appellant to abide the event.