Case Name: WHITMER v. SCHENK
Court: Idaho Supreme Court
Jurisdiction: Idaho
Decision Date: 1906-01-18
Citations: 11 Idaho 702
Docket Number: 
Parties: WHITMER v. SCHENK
Judges: Sullivan, J., concurs.
Reporter: Idaho Reports
Volume: 11
Pages: 702–707

Head Matter:
(January 18, 1906.)
WHITMER v. SCHENK
[83 Pac. 775.]
Option to Purchase Mining Property — Forfeiture — Resulting Trust.
1. Where B. executes a deed in favor of A. for certain mining property and places it in eserow to be delivered to A. upon his payment to the holder of the escrow the purchase price to the credit of the grantor within a specified time, and prior to the expiration of the time in which such payment may be made B. sells and conveys the property to S., a third party, who has notice of the eserow to A., and of the terms and conditions thereof, and A. fails and negleets to make the payment due on the eserow, and makes no demand for the eserow deed and makes no offer of payment either to the grantor or holder of the eserow, and is not hindered or dissuaded from so doing by either B. or S., held that A. forfeited and lost all his rights under the eserow, and that S. cannot be held as trustee of a resulting trust for the use and benefit of A.
2. Upon fulfillment of the conditions of an eserow agreement and the delivery of the deed to the grantee, the deed will relate back to the date of making the escrow agreement for the purpose of cutting off any intervening rights or equities acquired by a third party who had notice of the terms and conditions of the escrow.
(Syllabus by the court.)
APPEAL from District Court in and for Blaine County, Honorable Lyttleton Price, Judge.
Action by plaintiff to establish a resulting trust. Respondent intervened in the court below asking to have a resulting trust decreed in ber favor against the defendant. Judgment for intervener and against plaintiff and defendant. Defendant appeals.
Reversed.
The facts are stated in the opinion.
R. F. Buller, for Appellant.
A party alleging a resulting or implied trust must prove clearly that the money belonged to him, and if the evidence is merely parol, it will be received with great caution. (Lurch v. Lurch, 10 Yes. Jr. 517; Plass v. Plass, 122 Cal. 3, 54 Pac. 372.) Trusts concerning real estate are of three kinds. (2 Pomeroy’s Equity Jurisprudence, sec. 1030 et seq.) This transaction comes under no one of the three. A latent ambiguity which is subject to be explained by parol evidence must be so explained if it is ever to be known. (Balfour v. Fresno Canal etc. Co., 123 Cal. 395, 55 Pae. 1062.) The general rule in reference to the admissibility of parol evidence to contradict or vary a written instrument does not apply to a controversy to which a stranger is a party. (Smith v. Moynihan, 44 Cal. 53-65.) As soon as the deed was deposited in escrow, the bank had nothing more to do with it. It was out of its power and delivered to all intents and purposes whenever the condition was fulfilled. (Millett v. Parker, 2 Met. (Ky.) 608-616; Shirley v. Ayres, 14 Ohio, 308, 45 Am. Dec. 546.)
McFadden & Brodhead and R. M. Angel, for Respondent Mary E. Angel.
The company had notice of the escrow from the bank to Angel. As a general rule, an officer or director of a corporation is chargeable with knowledge of all matters relating to the affairs of the corporation which he actually knows or which it is his duty to know. (21 Ency. of Law, p. 896.) Schenk knew of the deed in escrow and he was bound in law to know the terms thereof. (Cannon v. Hanley, 72 Cal. 133, 13 Pae. 315<) Where on a transfer of real property to one person the consideration is paid for another, a trust results in favor of the person for whom the consideration is paid, and it is not necessary that the consideration should have been paid by him. (Barroilhet v. Anspacher, 68 Cal. 116, 8 Pae. 804.) One who takes title to real estate purchased with the funds of another and for the benefit of the latter, holds as trustee and parol evidence is admissible to establish such trust. (Branstetter v. Mann, 6 Idaho, 580, 57 Pae. 433.) “If land is purchased in the name of one person, but the consideration is paid by another, such land, though conveyed to the former, will be held by him in trust for the latter.” (10 Am. & Eng. Eney. of Law, 8, 9, 11, 12, 25, 26, and notes and eases cited.)

Opinion:
AILSHIE, J.
— In December, 1901, the plaintiff, David Whitmer and Texas Angel, now deceased, entered into an agreement with one W. C. Picking, whereby they contracted and agreed to sell him the First and Second West Extension claims to the Queen of the Hills lode mining claim, for the consideration of $35,000, to be paid on or before December 4, 1903. Picking thereafter assigned his interest in this contract to the Bellevue Mining and Reduction Company. At the time of this transaction the First National Bank of Hailey owned an undivided one-third interest in the First West Extension and a one-half interest in the Second West Extension for which Angel had previously secured a deed to be executed by the bank and placed in escrow with the E. E. Stewart Hardware Company of Hailey, to be delivered to Angel upon the payment by him to the holder of the escrow on or before December 4, 1901, the sum of $2,500 to the credit of the bank. On June 27, 1901, in consideration of the performance of certain assessment work, the bank agreed with Angel to extend the escrow agreement to July 1, 1902. On June 12, 1902, Angel paid the bank the sum of $750 on this escrow agreement for which the bank issued its receipt, in which it was recited that "in consideration of which [the payment and assessment work] the option heretofore given on such extension is hereby extended for one year subject to all the conditions therein contained." No further payment was ever made, offered or tendered by Angel or on his account under this agreement. The Bellevue Mining and Reduction Company continued to work and develop the property and expended something upward of $10,000, and finally in the month of June, 1903, quit work and abandoned the property and apparently forfeited their option. About this time the appellant Schenk, who was secretary of the Bellevue Mining and Reduction Company, came to Idaho and after looking over the situation and conferring with Whitmer, and being advised that the company refused to put up any more money for the purchase of the property or development thereof, concluded that he would individually negotiate with the bank with a view to the purchase of its interest in the property in the hope that he might eventually save what he had invested in the enterprise. He accordingly engaged Whitmer to negotiate with the bank, and on the twenty-sixth day of June, 1903, the bank made, executed and delivered a deed to Whitmer in favor of Schenk for all its interest in the First and Second West Extension claims for and in consideration of the sum of $1,750.
This suit was commenced in the lower court by Whitmer to obtain a conveyance from Schenk to the plaintiff of all the interest conveyed by the bank on the theory that the purchase price paid should have been credited on the option from Whitmer and Angel and that the title received thereunder should inure to the benefit of the plaintiff. The administratrix of Angel's estate intervened and alleged that the $750 previously paid by Angel to the bank on his escrow agreement was a part of the purchase price paid for the bank's interest in these claims, and that Schenk should be held as a trustee for the estate to the extent of 750-2500 interest in the property. The court found against the plaintiff Whitmer and the defendant Schenk, and in favor of the intervener, and decreed that defendant holds a 750-2500 interest in the property as trustee for the Angel estate. It has been argued that the last extension granted by the bank on Angel's option had expired at the time the bank deeded the property to the appellant. This extension was made on June 12, 1903, and recites that the option is "hereby extended for one year." The appellant contends that the one year was to run from June 12th, and introduced considerable oral evidence to that effect. In fact all the evidence in the case was to that effect, unless it be said that the writing itself contradicts such evidence. The respondent contends that since the option didn't expire until July 1, 1902, and the extension was granted for one year, that it was intended that the year should run from the date on which the option would have expired instead of the date on which the extension was made. The court found, however, that the extension was to run one year from July 1, 1902, and that the option did not expire until July 1, 1903. The respondent contends in this court that Angel's option had not expired at the time the bank deeded this property to Schenk, and that therefore Schenk must be considered in law to have taken up the option in the interest of and for the use and benefit of Angel, and that Angel's equity in the property was therefore saved and preserved to the extent of $750, which he had previously paid thereon. It is admitted that appellant had notice of the escrow agreement which was in the hands of the E. E. Stewart Hardware Company, and" that any purchase he made was with notice of the existence, terms and conditions thereof. It clearly ap}3ears from the evidence that both the bank and Schenk at least understood and believed that the option to Angel had expired on the 12th of June and prior to the execution of the deed to Schenk. As we view the case, however, it is unnecessary for us to consider or discuss but one point involved. The question upon which we rest our decision and which is decisive of this case is this: Angel allowed his option to lapse and become forfeited without offering or attempting to make payment or comply with the escrow agreement. Neither does it appear that he either knew of or relied on the conveyance to Schenk. He never offered to pay the holders of the escrow agreement the balance due either before or after the time it became due. He was in no wise hindered, dissuaded or deceived by the sale to Schenk or the action of the bank. Schenk had notice of the option to Angel, and if it did not in fact expire until July 1st, then Angel could not have been in any manner injured or prejudiced by a prior sale to a purchaser with notice. A payment to the holder of the escrow in accordance with the requirements thereof, and within the time allowed would have entitled Angel to the deed, and this deed, after its delivery, would have related back to its execution for the purpose of cutting off any and all intervening rights acquired by a third party with notice of the existence and terms of the escrow. (McDonald v. Huff, 77 Cal. 279, 19 Pac. 199.) Angel having failed to comply or offer to comply with the terms of the option or escrow agreement, and this without any fault of the grantor or the appellant herein, all his rights and privileges thereunder lapsed. The appellant did not stand in any relation of trust or confidence toward Angel and was under no duty to share with him in the fruits of this purchase. The fact that Schenk secured the property from the bank for a less price than Angel had agreed to pay for it cannot affect either the legal or equitable rights of the parties in this suit. Angel's contract was an entirety. He was in no position to acquire a part interest to the bank's title nor an equity thereto without making a full payment. He was not prevented from making full payment therefor either by the conduct of the bank or the appellant to whom the bank sold, nor did the conduct of either the bank or appellant make it impossible or any more difficult for him to acquire a perfect title thereto.
The judgment is reversed and the cause remanded with directions to the trial court to make findings and enter judgment in accordance with the views herein expressed. Costs awarded to appellant.
Sullivan, J., concurs.
Stoekslager, C. J., sat at the hearing, but took no part in the decision.