Case Name: FRANK A. HEITKEMPER v. R. W. SCHMEER et al.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1929-03-05
Citations: 130 Or. 644
Docket Number: 
Parties: FRANK A. HEITKEMPER v. R. W. SCHMEER et al.
Judges: Coshow, C. J., and Bean and Belt, JJ., concur.
Reporter: Oregon Reports
Volume: 130
Pages: 644–668

Head Matter:
Argued February 15,
affirmed March 5,
argued on rehearing September 17, reversed and remanded October 22, 1929.
FRANK A. HEITKEMPER v. R. W. SCHMEER et al.
(275 Pac. 55; 281 Pac. 169.)
For appellant there was a brief over the names of Mr. Martin L. Pipes, Mr. John M. Pipes and Mr. George A. Pipes, with an oral argument by Mr. Martin L. Pipes.
For respondents there was a brief over the names of Messrs. Bronaugh c& Bronaugh, Messrs. Busted & Busted, Mr. Bartlett Cole and Mr. William S. Nash, with an oral argument by Mr. Earl C. Bronaugh.

Opinion:
BROWN, J.
The plaintiff contends that Schmeer is the trustee of a resulting trust, whereas it is the contention of the defendants that the trust is not a resulting, but an express, trust.
The case of Neppach v. Norval, 116 Or. 593 (240 Pac. 883, 242 Pac. 605), was a suit to declare a resulting trust in certain real estate; and, in dealing with the subject, this court said, at page 604:
"In this state an express trust is one created by contract of the parties intentionally and in writing. Every other trust is either constructive or resulting. ' '
In Bogert on Trusts, beginning at page 43, ap-, pears an interesting and comprehensive treatise on trusts and their necessary elements, in the course of which the author makes the following observation:
"In considering the origin of trusts, two classes are usually fixed. Those trusts which come into being because the parties concerned have formed the actual intent that they shall arise, have expressed that intent in writing or spoken words or otherwise, and have made the requisite property transfers, are called express trusts. Thus, if A executes a writing whereby he declares himself trustee of certain lands for B, using the words 'trustee' and 'cestui que trust/ and describing the particular land as the subject of the trust, there is an express trust."
'Then after stating the generally accepted rule requiring express trusts of real property to be manifested by a writing, Bogert says, at page 54:
"Any writing, however informal, is sufficient to satisfy the statute, if it contain a complete statement of the trust, and is signed or subscribed by the proper party."
The same author, continuing, at page 63 says that the writing may be composed of more than one document, but that, if two or more papers are relied upon, their connection must be shown "by physical attachment , or by reference to and adoption of one by another, or by clear reference to the same transaction upon the face of each."
In the case at bar, the papers relied upon to create the trust do not appear to be connected by physical attachment; but their connection is clearly indicated by their contents. The deed to R. W. Schmeer, trustee, conveys to him the subject matter of the trust. Obviously, this deed, with Schmeer's written declaration of trust, and the writing signed by the plaintiff and seven others, constitutes an express trust contract. The papers also afford a sufficient compliance with our statute with respect to the creation of a trust in real property. See Or. L., § 713, 804.
The plaintiff contends that the fact that the name of the grantee in the deed from Grile Investment Company appeared as' "R. W. Schmeer, Trustee," and the further fact that Schmeer's deed to his co-defendant, A. Larrowe, was executed by Schmeer personally and by "R. ~W. Schmeer, Trus tee," as well, constitutes notice to Larrowe that Schmeer held the title in trust, and placed upon Larrowe the duty of informing himself concerning the matter of the trust and the authority of the trustee. The question of notice, then, becomes the important factor in the case. Its importance is clearly illustrated by the following excerpt from Berry, Restrictions on Use of Real Property, Section 337:
"The contract in question is a restrictive agreement as to the use of the property, which may be enforced upon equitable grounds in favor of the lot designed to be benefited by the restriction. And it may be enforced against any owner of the lot, subject to the burden of the restriction, who took it with notice."
At Section 335, the same author says:
"One having no notice that a lot of ground is subject in any way to restrictions, and the same do not appear in the chain of title thereto, takes the same by purchase free from such restrictions."
This question has been passed upon in various jurisdictions. Among the decisions referring thereto, we mention the case of Fletcher v. Kidder, 163 Cal. 769 (127 Pac. 73), where it was held that the mere fact that the word "trustee" appeared in a stock certificate after the name of the holder was not evidence of ownership outside of the holder. In rendering its decision in that case, the court quoted from the case of Brewster v. Sime, 42 Cal. 139, 144, as follows:
"The mere addition of the word 'trustee' after the name in the certificate is not, in this state, of itself, nothing more appearing, to be deemed constructive notice of the equities of a secret owner of the stock."
See, also, Thompson v. Toland, 48 Cal. 99.
On the same point, Bogert on Trusts says, at pages 515,516:
"If the trust property is represented by a document, as, for example, a bond, certificate of stock, or note, and it appears on the face of such document that the holder owns as trustee, a purchaser will be held to have notice of the trust. But in some cases the bare word 'trustee' in the paper has not been deemed sufficient to charge a purchaser with notice."
But the defendant invokes the provisions of Chapter 436, General Laws of Oregon of 1919, codified as Section 9853, Or. L., being'
"An Act
"To declare the law in regard to deed made to parties in trust, or where the grantee is designated as trustee without any beneficiary being designated.
"Be It Enacted by the People op the State op Oregon :
"Sec. 1. Whenever a deed to real estate is made to a person in trust, or where he is designated as trustee and no beneficiary is indicated or named, it shall be presumed that the grantee is trustee for himself only, and a deed executed by him for said property shall convey to his grantee prima facie title thereto.
"Sec. 2. After five years from the recording of the last named deed, such presumption shall be conclusive as to any undisclosed beneficiary, and such title shall not be called in question by any one claiming as beneficiary under said first named deed."
This statute is remedial in its nature, and should be liberally construed to effectuate its purpose: 25 R. C. L., § 36, Statutes. It in no way interferes with vested rights of the parties hereto.
As appears from our statement of this case, the plaintiff avers that besides notice of the trust con- tamed in the deed from Grile Investment Company to Schmeer as trustee, and in the deed from Schmeer as trustee to Larrowe, defendant Larrowe had other notice and knowledge that Schmeer held the property as trustee, with no authority to sell the same free from the restrictions hereinbefore referred to. He fails, however, to allege the facts showing such other and additional notice. Therefore, this allegation is a mere conclusion, and is of no effect. Our view is supported by the following excerpts from 14 Ency. PI. & Pr. 1071:
"In averring notice, the usual rule prevails that facts, and not conclusions of law, should be pleaded. A general averment that the defendant had notice is not sufficient."
Further discoursing as to the sufficiency of the notice, 7 Bancroft's Code Practice and Remedies, at page 7707, under note 18, sets out the following general statement, couched in language clear and easily understood:
"Whatever is notice enough to excite attention and put a reasonably prudent person on his guard, and calls for inquiry, is notice of everything to which such inquiry might have led. When a person has sufficient information to lead him to a fact, he is deemed conversant of it (citations omitted). See Hawkes v. Hoffman, 56 Wash. 120 (24 L. R. A. (N. S.) 1038, 105 Pac. 156), declaring that the rule does not impute notice of every conceivable fact, however remote, that can be learned from inquiry; it imputes notice only of those facts that are naturally and reasonably connected with the fact known, and of which the known fact can be said to furnish a clew.
"Wilful ignorance is equivalent, in law, to actual knowledge. One who abstains from inquiry when inquiry ought to be made cannot be heard to say so, and to rely upon his ignorance."
Our practice is in harmony with this principle.
Nor do we intimate that, if heard upon the merits, the plaintiff's allegations that Larrowe took with notice would' relieve him of the necessity of pleading and proving that he (Larrowe), in good faith and without notice, purchased the property for a valuable consideration. The law of Iona fide purchaser for value is well stated in Hyland v. Hyland, 19 Or. 51 (23 Pac. 811). See, also, Bailey v. Hickey, 99 Or. 251 (195 Pac. 372), and the cases therein cited.
As to the contention that equity is without jurisdiction herein, we do not decide this case on that point. However, passing for the moment from out the pale of our deliberations on the material questions before us, we refer to the case of Duester v. Alvin, 74 Or. 544 (145 Pac. 660), where it was held that equity will enforce by injunction negative covenants and clauses in deeds restricting the use of land, although such covenants do not, in law, constitute assignments or covenants running with the land.
Briefly summarized, the record discloses that eight persons, one of whom was this plaintiff, and another the defendant Schmeer, conceived a plan for preserving from invasion by apartment houses or flats the residential district in which they lived. To accomplish their enterprise, they advanced the purchase price of the land hereinbefore described, and had the deed thereto executed to Schmeer, trustee. Schmeer issued to his associates in the enterprise a declaration of trust. His associates accepted the terms of the declaration, and empowered the trustee to sell and convey the land, under the restriction that neither apartment houses or flats should he erected thereon. The trustee eventually disposed of one half of the trust property contrary to the terms of the trust, in that he granted to the vendee the right to construct both apartments and flats thereon. The plaintiff, however, has failed to allege sufficient facts to show that the purchaser of the land had ample notice of the restrictions. It follows that the order of the lower court sustaining the demurrer should be affirmed.
For appellant there was a brief over the names of Mr. John M. Pipes and Mr. George A. Pipes, with an oral argument by Mr. Martin L. Pipes.
For respondents there was a brief over the names of Mr. Bartlett Cole, Messrs. Husted & Busted, Messrs. Bronaugh & Bronaugh and Mr. William 8. Nash, with an oral argument by Mr. Earl C. Bronaugh.
It is so ordered. Affirmed.
Coshow, C. J., and Bean and Belt, JJ., concur.
Reversed and remanded on rehearing October 22, 1929.