Case Name: MARSHALL v. GUSTIN
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1918-01-22
Citations: 89 Or. 53
Docket Number: 
Parties: MARSHALL v. GUSTIN.
Judges: Mr. Chiee Justice McBride, Mr. Justice Bean and Mr. Justice Harris concur.
Reporter: Oregon Reports
Volume: 89
Pages: 53–66

Head Matter:
Argued December 14, 1917,
reversed January 22,
rehearing allowed April 9,
argued on rehearing April 26,
decree reversing Circuit Court adhered to June 4, 1918.
MARSHALL v. GUSTIN.
(170 Pac. 312; 173 Pac. 461.)
Appeal and Error — Matters Reviewable — Demurrer—Grounds.
1. A demurrer on grounds other than the running of limitations does not raise such question on appeal.
Cancellation of Instruments — Demurrer—Equitable Jurisdiction.
2. Where it appears inferentially that defendant was holding land as a guardian when she fraudulently prevailed upon plaintiffs to sell to her at an inadequate price, a complaint was not demurrable as not calling for equitable jurisdiction, although the court might not be able to grant the specific relief prayed for.
Guardian and Ward — Recovery of Property — Equity or Law — Inconsistent Remedies.
3. Where defendant was appointed guardian of plaintiffs and of personal property in Oregon, but not in1 Washington as to land there, and she purchased such land from them fraudulently at an inadequate price, equity had no jurisdiction of an action for the difference between the price received and the value of the land, it being necessary in such case that plaintiffs either affirm the transaction and sue for damages or repudiate the bargain and call upon equity to place them in statu quo, but both remedies cannot be had in one action.
[Powers of guardian in chancery and at common law, see note in 18 Am. Dec. 689.]
ON REHEARING.
Infants — Sale of Land — Fraud of Purchaser — Remedy.
4. Remedy of infants induced by fraud to sell their land for less than its value, they, on arriving at majority, choosing to affirm the sale, and not asking to have it set aside, is only at law for damages; there being nothing calling for an investigation that a jury cannot readily make.
Bean, J., dissenting.
From Multnomah: Robert G. Morrow, Judge.
Department 1. Statement hy Mr. Justice Benson.
This is a suit in equity. The substance of the complaint is that the plaintiffs were two of the eight children of C. A. Marshall, who died intestate, November 20, 1905, leaving to his heirs among other property seventy-five acres of land in Clarke County, Washington; that the defendant, who is a sister of decedent, was the duly appointed guardian of the persons and estates of the minor heirs, including plaintiffs, and taking advantage of their youth and inexperience wrongfully and falsely represented to plaintiff George A. Marshall that his undivided one eighth of the land was worth not to exceed $170, when in truth it was worth $1,000, and by reason of such false representation obtained from him a deed thereto for the consideration of $170; that in like manner she secured from Lavina A. Marshall a deed for his undivided one eighth of the land for a consideration of $68. The pleading contains further allegations to the effect that plaintiffs placed confidence in the statements of their aunt and guardian and relied thereon and suffered loss thereby; that immediately after securing the second deed she sold the property for a price in excess of $8,000 — receiving in payment some cash, and some promissory notes secured by a mortgage on the land, for a balance of $6,412.50, wbicb notes and mortgage are still owned by and in the possession of defendant. It is further alleged that plaintiffs did not discover and could not by the exercise of reasonable diligence have discovered the fraud which had been perpetrated until a short time before the commencement of the suit. The prayer of the complaint is as follows:
“1. That the said defendant be required to account to the said plaintiffs for the difference between the true value of their interests in the land so conveyed, and the amounts paid to them by her at the time of their conveyance to her..
“2. That said defendant be held to be a trustee for the said plaintiffs, of their interests in the profits made by her in the sale of the said lands.
“3. That the said notes given in part payment of the purchase price in the sale of the said lands be impressed with a trust to the extent of the plaintiffs’ interest therein, and that the said notes be sold to satisfy the amounts due to the said plaintiffs, and for such other and further relief as to the court may appear just and equitable, and for the costs and disbursements of this suit.”
Defendant demurred to the complaint upon the ground that it does not state facts sufficient to constitute a cause of suit, and the further ground “that it appears upon the face of the complaint that the court has no jurisdiction of the subject matter of the suit.” The demurrer having been overruled the defendant answered with some admissions and denials, and affirmatively pleaded certain counterclaims to which a reply was filed and a trial had, which resulted in a decree in favor of plaintiffs in the following form:
“Now, therefore, by reason of the premises and of the aforesaid findings of fact and conclusions of law, it is considered, adjudged and decreed, that the plaintiff, George Amos Marshall, do have and recover of and from the defendant, Nellie Gustin, the sum of Six Hundred Twenty and 85/100 ($620.85) Dollars, with interest thereon at the rate of six per cent per annum from October 11th, 1911; and it is further ordered that the plaintiff, Lavina A. Marshall, do also have and recover of and from the said defendant, Nellie Gustin, the full sum of Five Hundred Seventy ($570.00) Dollars, with interest thereon at the rate of 6% per annum from October 11th, 1911; and it is further ordered, that the plaintiffs have and recover of and from the defendants their eosts and disbursements, taxed at $-
Reversed. Suit Dismissed.
For appellants there was a brief over the names of Mr. Henry J. Westbrook and Messrs. Christopher son & Matthews, with oral arguments by Mr. Q. L. Matthews and Mr. Westbrook.
For respondents there was a brief over the names of Mr. Edward J. Brazell and Mr. Martin W. Hawkins, with an oral argument by Mr. Brazell.

Opinion:
BENSON, J. —
Defendant urges that the demurrer should have been sustained upon two grounds: (1) That it appears upon the face of the complaint that the statute of limitations has run against the claims of both plaintiffs; and (2) that the facts alleged do not disclose a case calling for the interposition of a court of equity.
As to the first of these, it is sufficient to say that no demurrer was interposed upon that ground, and it cannot now be considered: Portland v. Coffey, 67 Or. 507 (135 Pac. 358).
As to the second contention it may be remarked that from the complaint it appears, at least inferentially, that the defendant was holding the real estate described therein as guardian of plaintiffs at the time of the transfer of the land to her. Such a trust relation existing between the parties creates a condition calling'for the exercise of equitable jurisdiction and although the court might not be able to grant the specific relief prayed for, it would be justified in following the trust property or its proceeds for the relief of the cestui que trust. "We must therefore hold that the complaint is not vulnerable to a demurrer upon this ground.
A careful examination of the evidence discloses the following facts: The father of plaintiffs died, leaving an estate consisting of seventy-five acres of land in Clarke County, Washington, and a. life insurance policy in Portland, upon which was collected the sum of $1,904.85. The County Court of Multnomah County appointed defendant guardian of the minor children, including plaintiffs, and of the personal estate just referred to. The estate in Washington was administered, but there is no evidence that any guardian or trustee was ever appointed to manage it. There is no question as to the integrity and propriety of defendant's care of the children and of the funds which came into her hands as guardian.- On September 18, 1909, plaintiff George Amos Marshall conveyed his one-eighth interest in the land to defendant, and in September, 1911, Lavina Marshall conveyed his one-eighth interest to defendant, the expressed consideration in the deeds being $170 and $68 respectively. Bach of the plaintiffs was twenty years old when he made his conveyance. Thereafter, having acquired by purchase the interests of the other heirs, defendant sold the land in connection with an adjacent 160 acre tract of which she was the owner, for the expressed consideration of $8,812.50, receiving a partial payment in cash and, for the balance, accepting two notes for the aggre gate sum of $6,412.50, secured by a mortgage upon the land. The testimony is very largely directed to the relative values of the 75 acre tract and the 160 acre tract which were sold as one at the rate of $37.50 per acre. It is not necessary to consider this evidence since under the pleadings and the facts already stated it sufficiently appears that the plaintiffs have not made a case calling for the interposition of a court of equity. It is true that the prayer asks that the defendant be declared a trustee of their interests in the profits arising from the sale of the land by defendant, but they can have no interest in such profits unless they were part owners of the land at the time of such sale, which, according to their allegations, they were not. It must be remembered that they are not seeking a rescission of their contracts, or a cancellation of their deeds, but simply to recover the difference between the price received by them and the true value of the property and for this relief they have a complete remedy at law. When a party has been induced by fraud and deceit to part with his property for an inadequate consideration he has his election of two remedies: He may affirm the transaction and have his action for damages, or he may repudiate the bargain and call upon a court of equity to aid him in placing the parties in the position they occupied before the deal was consummated, but he cannot have both remedies.
It is evident from the decree itself that the trial court found no ground for equitable interference, since a money judgment is all that was allowed and, in that event, the money judgmént could not under any view of the matter be sustained. In the ease of Oregon-Wash. R. & N. Co. v. Reed, decided December 27,1917, not yet reported, this court through Mr. Justice Moore says:
"This being so, the element of damages which the defendants may have sustained is necessarily eliminated, for the right to recover such compensation in a suit must depend upon some equity which enables the court to secure and retain jurisdiction of the subject matter, and as an incident thereof to award the damages inflicted."
In Zinn v. Zinn, 54 W. Va. 483 (46 S. E. 202), the same doctrine is thus expressed:
"All that plaintiff has any claim to whatever is the oil royalties and gas rentals reserved in the lease of Preston G. Zinn, and all he claims by his bill is these oil royalties. This is mere pecuniary demand for the royalties already received by plaintiff and is not maintainable under the alleged heads of equitable jurisdiction."
We do not wish to be understood as holding that in a proper case a court of equity will not exert its power where a trustee has violated the conditions of his trust or has acted in bad faith in the execution thereof. However, when the facts proven and the relief sought justify nothing further than pecuniary recompense for the wrong, there is nothing upon which equitable jurisdiction can base its action.
The decree must be reversed and one entered here dismissing the suit, without prejudice.
Reversed. Suit Dismissed.
Mr. Chiee Justice McBride, Mr. Justice Bean and Mr. Justice Harris concur.