Case Name: Elliott v. Armstrong
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1829-05-05
Citations: 2 Blackf. 198
Docket Number: 
Parties: Elliott v. Armstrong.
Judges: 
Reporter: Blackford
Volume: 2
Pages: 198–216

Head Matter:
Elliott v. Armstrong.
A trust estate in real property, as separate from the legal ownership, may either bé created by an express declaration of the trust; or it may be raised upon certain facta by implication of law.
The statute of frauds requires all declarations of trust in land to be proved by written testimony; but those trusts which arise by the mere operation of law, are excepted out of the statute and may be proved by paro) evidence.
If A. purchase land with his own money, and the deed be made to B., a trust results in favour of A., provided there be no circumstances in the case to rebut this presumption of the law.
To a bill in chancery by the grantee of a cestui que trust against the trustee to obtain the legal title, the grantor need not bé a party either as complainant or defendant,
'¡A. contracted to sell to B. certain real estate, in consideration that B. should give up a note held by him against A., and pay loA. a small sum of money. The giving up of the note to «2. was the principal part of the consideration. B. subsequently pledged the note to a third person, and absented himself from the country for 7 years, without paying any part of the purchase-money. Held, that A. was discharged from the contract.
The estate of a cestui que trust may be sold and conveyed by him, as well as any other estate.
A release, by the grantee, of the covenant of warranty contained in a conveyance of real estate, does not affect the validity of the conveyance.
The estate of a bare trustee is not subject to be sold on an execution against him.
The sale of veal estate on a void execution is a nullity, and vests no title in tire purchaser.
A complainant in chancery may prove, by parol evidence, in order to show a resulting trust, that the purchase-money for real estate conveyed to another was paid by himself, though the deed state that the money was paid by the grantee, and the answer contain a denial of the trust.
The absolute right of property and the right of possession in a note, which had been pledged for the payment of a debt, become, on payment of the debt, vested in the pledgor; and if the note be afterwards converted by the pledgee to his own use, he is liable to the pledgor in an action of trover.
In the sale of personal property, not in market overt, the general rule is, that, though the purchase be bona fide and for value, the purchaser receives no better title than that of which the seller was possessed. But bills of exchange and promissory notes are exceptions to this mle: when they are originally payable to bearer; or when, in the first instance, they are payable to order and afterwards by a blank endorsement become payable to bearer; they pass by delivery: and the purchaser who uses due caution, pays a valuable consideration, and takes them in the common course of business, has a good title against all the world, whether the seller had any title or not. A note payable to order, however, cannot pass without an endorsement either by the payee, or by some person in the payee’s name and by his authority.
The trust, in real estate conveyed to M.., resulting in favour of B. in consequence of his payment of the purchase-money, is a kind of arbitrary implication raised, to stand until some reasonable proof be brought to the contrary; and if the money was paid for the express purpose of vesting in ^2. both the beneficial and legal interest, no trust can result in favour ,of B.
u2. made a verbal contract for the purchase of a town lot, and, during »2.’s absence from the country, partly with his own money but principally with «2.’s property, completed the contract for «2., and took tlie deed in the name and for the benefit of *2. Held, that >/2.’s subsequent ratification of Bds acts, made him liable to B. for the amount paid for him by B.; and also rendered the lot as «/2.’s property liable, from the date of the deed, to a judgment against him in favour of B•
APPEAL from the Dearborn Circuit Court.
Tuesday, May 5.

Opinion:
Blackford, J.
This is a suit in chancery from the Dearborn Circuit Court. Armstrong was the complainant below, and Elliott the defendant. It is the case of a cestui que trust, demanding a conveyance of real estate from his trustee.
The bill states, that Vance and Dill, being indebted to Elliott in the sum of 67 dollars and 56 cents for cooper's work, gave him their due-bill, dated the 15th of March, 1805; and thereby acknowledged themselves indebted in that amount to Elliott or order;—that shortly afterwards, Vance, for the purpose of paying the said note, proposed to let Elliott have a town lot, numbered 171, in Lawrenceburgh, for 75 dollars; Elliott paying the difference between the amount of the note and the price of the lot; to which proposition Elliott seemed willing; and he was to receive a bond for a deed, as soon as he gave up the note and paid the said balance;—that in 1807 Elliotl left the Western country, having first transferred the note of Vance and Dill, by delivery, to Ruffin of Cincinnati, as collateral security for a debt which Ruffin, as Elliott's surety, was bound for to Vattier, and had afterwards to pay; and that Ruffin, having been told by Elliott that Vance and Dill would pay the note on sight, called upon Vance to his astonishment for payment;— that when Elliott transferred the note, he made no arrangement, nor has he made any since, for paying the consideration-money for the lot; nor did he signify then', nor has he signified since, any intention or wish to have the lot, in the manner proposed by Vance, or otherwise.
The bill further states, that in 1810, Horner, having-claims against Elliott, sued out an attachment against him, which was levied on the said lot, numbered 171, under'the impression that it was Elliott's; and that, in 1811, judgment was obtained on the attachment for upwards of 100 dollars; which judgment is assigned to the complainant;—that on Horner's discovering that Vance had still the legal and equitable title to the lot, Vance agreed to let Horner have it at the same price' that Elliott was to pay; that is, upon his getting up for Vance the said note, which was then Ruffin's, and paying Vance the balance of the consideration-money; and that with these terms Horner complied ;—that some doubts existed with Vance as to whom the deed ought to be made; whether directly to Horner, he haying paid the whole consideration-money; or to Elliott, so that Horner might sell the lot by virtue of his judgment on the attachment; that Vance, however, being advised so to do, made the deed to Elliott, but delivered it to Horner for his sole benefit; Horner having paid the whole of the purchase-money;—that Horner then took out execution on his judgment against Elliott, levied it upon the said lot, bought the same for 75 dollars at the sheriff's sale, and received the sheriff's deed; the said amount passing as a credit to Elliott upon the judgment;—¡-that in 1812, Horner, by virtue of the premises, took possession of the said lof, and continued to occupy -it and pay-the taxes until 1816; when the complainant, believing the lot to be Homer's in fee simple, purchased the same for 300 dollars, received a deed from him, took peaceable possession, and proceeded to make valuable improvements.
The bill further states, that Elliott returned to the country in 1819; and, being informed of the deed, and of the sale of the lot on execution, he said that the deed to him had been made without authority, and refused to take it out of the recorder's office; but hearing soon after, that the sheriff's sale was probably erroneous, if not void, he took the deed, and in an action of ejectment for the lot, commenced in 1819, recovered judgment against the complainant in 1821, on the ground that the sheriff's sale to Horner was void; which judgment Was affirmed by this Court in 1822; that until after the said judgment in ejectment, the complainant was ignorant of all the facts in relation to this his equitable defence, growing out of the trust and payment of the consideration-money; and that Elliott threatens that he will take possession of the lot, and the improvements.
The prayer of the bill is, that the defendant be compelled to convey the said lot to the complainant, and be enjoined from proceeding at law, &c.
To this bill the defendant answers as follows:—
That Vance and Dill, being indebted to the defendant for cooper's work, gave him their note about the time expressed in the bill, for about 70 dollars; that soon after, he contracted with Vance to take the lot, numbered 171, in satisfaction of the note, but took no bond or deed from Vance for the lot, as the title was yet in the government; that he does not recollect that the price of the lot' exceeded the amount of the note, but that if it did, he paid the difference in cooper's work; that immediately after the purchase, the defendant took possession of the said lot, occupied one of the two log buildings on it as a cooper's shop, and carried on the business of a cooper on the lot from the time of the purchase in 1805, until February or March, 1806, when he went to the Eastern states; leaving a journeyman of his at work on the lot, and Percival his general agent.
The answer also states, that when the defendant, in 1806, was about leaving the country, thinking some accident might happen to Him before his return, and Ruffin being his surety to Vattier for about 66 dollars, not due for several months, he left the said note with Ruffin as a collateral security, in case he should have to pay Vattier; the defendant supposing the lot might be had of Vance upon production of the note; but he denies that he ever sold the note to Ruffin, or told him that Vance would pay it upon sight; that after Ruffm had paid Vattier, and long before he had given up the note of Vance and Dill, Percival, the defendant's agent, placed in Ruffin's hands a note, belonging to the defendant, against Brown for about 80 dollars, to be collected; with instructions to Ruffin to pay himself out of the proceeds; and that judgment was obtained on this note against Brown, and the money, to wit, 87 dollars and 50 cents, paid to Ruffin, leaving a balance of about 20 dollars due to the defendant.
The defendant admits, that there was something due from him to Horner at the time of the attachment, and that judgment was thereon obtained as stated in the bill. He states that he has been informed and believes that Horner, so far from contracting with Vance for the said lot, procured a deed to be made for it to the defendant, not through mistake, but for the express purpose of selling it upon his said execution, as a mere equity could not be sold. He denies that he was ever the trustee of Horner, so far as he can understand his rights. He admits that the said lot was sold on execution, upon the said judgment, at the tíme stated in the bill; and that Horner, the judgment-creditor, became the purchaser and received the sheriff's deed.
The defendant admits that, on his return in 1819, he accepted the deed which had been made to him by Vance, and took it from the recorder. He admits having said, that Horner had •no right to have a deed executed, until the defendant chose to take it from Vance. He also admits that, immediately on his return, he took the necessary steps to regain possession of the lot, brought an ejectment in the same year, and afterwards .obtained a judgment against the complainant as stated in his bill. He denies all fraud, &c.
In addition to the answer, the defendant pleaded in bar, a release made by the Complainant to Horner, of the covenant of warranty, contained in Horner's conveyance of the premises to the complainant.
There is a general replication to the answer. To the plea no reply was required.
The material facts, presented by the exhibits and proofs contained in the record of this cause, are believed to be the following:—
Vance and Dill, inhabitants of Lazvrenceburgh, being indebted to Elliott, the defendant, who resided in the same place, for cooper's work, gave him their note, dated the 15th of March, 1805, for 67 dollars and 56 cents, that being the amount they owed him. This note reads as follows:—"Due Samuel Elliott or order 67 dollars and 56 cents, for value received. March 15th, 1805."
At some time during the same year, 1805, a conversation took place in Lazvrenceburgh between Vance and Elliott, respecting the sale by the fofmer to the latter of a lot in that town, numbered 171; the same which is-now the subject of dispute. In that conversation, Vance proposed to sell the lot to Elliott, and Elliott agreed to take it of him, at the price of 75 dollars. This was only a verbal contfact, and was not to be considered complete, until Elliott should give up the note of Vance and Dill of 67 dollars and 56 cents, and pay to Vance the difference between the amount of the note and the price of the lot. Immediately after this contract, and in consequence of it, Elliott took possession of the lot, and occupied a cabin on it as a cooper's shop, until some time in the year 1806,- when he left Lazvrenceburgh and went to JYezv-Hampshire; leaving some property on the lot, and a journeyman at work in the shop.
Previously to his going away, Elliott had become indebted to Vattier, of Cincinnati, in about 66 dollars, and had given to him a note for the amount payable at a future period, with Ruffin, of Cincinnati, as his surety. When Ruffin heard that Elliott was about to leave the country, he requested from him security against his liability to Vattier. Elliott, accordingly, placed in Ruffin's hands the note of Vance and Dill, as a collateral security and indemnity against the claim of Vattier; but he did not endorse it. This note Ruffin was to collect from Vance and Dill, in case he should be obliged to pay the debt due to Vattier, which would be due in a few months.
Elliott, when he went away, left some business unsettled. He owed some money, and there were some debts due to him. He appointed Percival, of Lazvrenceburgh, his general agent; and left with him, among other claims, a note against Brown, of Hamilton county, Ohio, for 87 dollars and 50 cents, payable in hogshead staves to be delivered at Lazvrenceburgh, one-half in June, and the other half in September, 1806. In the opinion of his agent, Elliott left sufficient property to pay his debts* if his business had been properly managed. The principal demand against him, beside that of Vattier, was one in favour of Horner, of Lawrenceburgh, for about 100 dollars.
Some time after Elliott's departure, Ruffin, as his surety, having been obliged to pay Vattier, called upon Vance for payment of the note of Vance and Dill, which Elliott liad left with Ruffin as a collateral security against the claim of Vattier. Vance was much surprised at this circumstance; and informed Ruffin, that he had made a verbal agreement with Elliott for the sale of a lot in Lawrenceburgh, and that he expected to pay the note in that way. Ruffin, hearing this, expressed his dissatisfaction with Elliott's conduct, and replied that he would let the matter rest for the present. After this, to wit, in 1807, Ruffin inquired of Percival as to what had become of Elliott, told him that he had paid the Vattier debt, and expressed some uneasiness about it. He also told Percival, that he had presented to Vance the note which Elliott had placed in his hands, but that Vance said he would plead the contract for the lot in bar of any suit upon the note. Ruffin, at the same time,inquired of Percival, if Elliott had not left any property which he could attach for the amount he had paid to Vattier. Percival, in reply, informed him of his having the note against Brown in favour of Elliott; which note he gave to Ruffin, and told him that he could make his money out of that. Percival took a receipt from Ruffin for this note against Brown, and shortly afterwards wrote to Elliott, informing him of the circumstance.
In the December following, judgment was obtained at Cincinnati for 90 dollars and 12 cents, besides costs, in the name of Elliott against Brown, on the note thus delivered to Ruffin by Percival, the agent of Elliott. St. Clair was the attorney on record. This judgment, with the interest and costs, was collected on various executions issued during the years 1808,1809, 1810, and 1811. The deputy sheriff states that, in 1810, the sheriff left with him sundry receipts on these executions; one by Thomas, which he thinks was signed by him as attorney, for 50 dollars and 50 cents; and two others by Ruffin, one for 5 dollars, the other for 20 dollars, signed by him, the witness believes, as agent for the plaintiff. The sheriff instructed his deputy, in 1810, to pay any money he should collect on the exe eution irt this Case, then iii his hands, to Ruffin; and it appears that the deputy applied to Ruffin for instructions relative to one of the executions, and was advised by him what to do. No instructions were ever given to the deputy, in this case, except by the sheriff and Ruffin, The two following receipts were given by Ruffin for money deceived by him on this debt against Brown: "Samuel Elliott v. Samuel Brozon. Execution to December term, 1810. Cincinnati, October Í2th, 1810, Received of Aaron Goforth, late sheriff of Hamilton county, the sum of 82 dollars in part of the above execution; 7 dollars of which were received of defendant, as per receipt given defendant. Signed, Wm. Ruffin." "Received., Cincinnati, 10th December, 1812, of Mr. Samuel Brown, the sum of 9 dollars, on account of the claim of Samuel Elliott against said Brown. Signed, William Ruffin.'' ,
In 1810, Elliott not having returned, Horher determined to collect by law, if possible, the money due to him from Elliott. Supposing the lot, numbered 171, in Lawrenceburgh, for which Elliott had formerly contracted with Vance, did really belong to Elliott, he sued out an attachment against him; and the same was accordingly levied upon that lot as Elliott's property. In June, 1811, judgment was obtained against Elliott, on this attachment, in favour of Horner, for about 100 dollars. The lot however, which had been attached as Elliott's, was not sold; Horner having discovered, on inquiry of Vance, that Elliott had no title to it in law or equity; that his contract with Vance for the lot, was a mere verbal one.; that Elliott had not complied with the terms on his part; and that Vance did not consider him as having any right to the property whatever.. Horner then consulted with his attorneys at law, as to the best means of securing his debt. The result of this consultation was, that as the lot had increased in value since Elliott's agreement for it, and would probably continue to do so, Horner should perfect Elliott's title to it, if Vance was willing, by complying with the terms which Elliott had agreed to perform; and after the title should be vested in Elliott, that Horner should levy his execution on the lot as Elliott's property, and become himself the purchaser at the sheriff's sale. Accordingly, Horner, with one of his attorneys, went to Vance and inquired tif him, whether he would be willing to make the title for the lot to EUiott, if Horner should pay up and fulfil Elliott's contract. To this Vance agreed. Horner then obtained from Ruffin, at Cincinnati, for 50 dollars, the note against Vance and Dill, by delivery merely, without endorsement. This note Horner gave up to Vance, and paid him the difference between the amount of the note and the original price of the lot; and Vance, immediately, to wit, on the 10th of March, 1812, executed the deed for the lot to Elliott at Horner's request. As soOn as this was done, Horner had the lot executed and sold as Elliott's property, purchased it himself at the sheriff's sale for 75 dollars, which sum was credited on his execution against Elliott, and then took possession of the premises. The object of this transaction was, to accommodate and beiiefit Horner, and t'o enable Vance to get up his note.
In 1816, Armstrong, the complainant, purchased the lot from Horner for 300 dollars, entered into possession, and made valuable improvements; and, in 1819, having paid the considerationfnoney, he received from Horner a general warranty deed for the property.
Elliott, who had been absent from the country about 13 years-, returned to Lawrenceburgh in 1819, about the time of the execution of the deed by Horner to Armstrong. Not long after Elliott's return, the recorder called on him with the deed which had been made to him by Vance in his absence, and demanded the recording fee. Elliott at first refused to pay and take the 'deed; but on being sued by the recorder, he paid the fee before the trial, and received the deed-. He soon afterwards, to wit, in 1819, brought an action of ejectment against Armstrong for the lot; and, in 1821, recovered a judgment against him, on the ground that the execution against Elliott, under which Horner had purchased the premises, was utterly void, and the 'sheriff's sale a nullity.
In 1823, Armstrong, for a valuable consideration, released Horner from the covenant of warranty, contained in Horner's conveyance to him of the premises in dispute.
This statement, we believe, contains all the material testimony given in the cause. The decree of the Circuit Court is in favour of the complainant, requiring the defendant to convey to him the legal title to the lot, and enjoining him from proceeding any further at law, &c. The defendant appeals to this Court.
The complainant in this suit admits, that the legal title to the lot which he claims, is vested in the* defendant, But it is contended, that the beneficial property is.; in the complainant; and that the defendant is bound to convey to him the legal estate. It is not to be questioned, but that the quality of separability of the use from the legal title, as contended for by the complainant, does exist in real property. One man may certainly have the legal estate merely as a trustee, whilst another, called the cestui que trust, has a right, in equity, to demand' the rents and profits and a conveyance of the legal title. This trust-estate in real property, as separate from the legal ownership, may either be created by an express declaration of the trust; or it may be raised upon certain facts by implication of law. The statute of frauds requires all declarations of trust- in land to be proved by written testimony; but those trusts which arise by the-mere, operation of law, are excepted out of the statute, and may be proved by parol evidence. The complainant here does not rely upon any express declaration pf trust in favour of his grantor. He goes upon the ground, that Horner paid the conside? ration for the lot; and that, by virtue of such payment, although the deed was made to Elliott, a trust resulted to Horner by im? plication of law. And there is no doubt but that the law upon this subject is, that if A. purchase land with his own money, and the deed be made to B., a trust results in favour of A.; pro? vided there be no circumstances in the case .to rebut this pre? sumption of the law. '
Some of the points taken by the defendant, in opposition to the complainant's demand, are very easily disposed of. He contends that Horner should h.aye been a party, either .com? plainant or defendant. The suit is by Armstrong, the grantee of Horner, against Elliottg There existed no interest in Horner, therefore he needed not to be a party complainant; and, .as there was nothing demanded of him, there was no occasion for his being a party defendant. Kerr v. Watts, 6 Wheat. 550, 559. In the case where an assignee of a mortgage brings a bill of foreclosure, it is held that the mortgagee need not be a party. Whitney v. M'Kinney, 7 Johns. Ch. Rep. 144, 147. We think there is nothing in this objection; The ground relied on by the defendant, that his parol contract with Vance gave.him an equitable estate, and that Horner was a purchaser with notice, has no foundation. If that contract of 1805 was originally binding on the vendor, we have no idea that it could remain so, after the defendant had pledged the note at Cincinnati, which was to have been given up as the greater part of the consideration for the lot; and after he had absented himself from the country for 7 years, without having paid or offered to pay any part of the consideration. 1 Maddock's Ch. 328.' It is contended that, assuming Homer to.be the cestui que trust, he could not sell the property to the complainant as set out in the bill. The law, however, is perfectly settled, that the estate of a cestui que trust may be conveyed as well, as any other. 1 Cruise, 493. The defendant relies upon the release by the complainant to Horner. That release, however, is merely of the covenant of warranty in Horner's deed to the complainant, and leaves the case just where it would have been, had the deed originally contained no covenant of warranty. The conveyance of the estate is as valid without that covenant as with it. Another ground taken by the defendant is, that when Horner purchased the lot at the sheriff's sale under his judgment against Elliott, his trust-estate, if he had any, was merged in the legal title thus acquired. The answer to this objection is, first, that if Elliott was a bare trustee, the estate was not subject to the execution against him; 1 Maddock's Ch. 363, 1 Cruise, 542; secondly, that the sale was at any rate a nullity, and vested no property in the purchaser, the execution being void. Such was the decision of this Court, in a case between these same parties, at the November term, 1822. Horner therefore acquired, under the sheriff's sale, no legal title by which his equitable right, if he had any, could have been merged.
These comparatively unimportant matters, introduced into the argument by the defendant, being thus disposed of, we come now to an examination of the substantial merits of the cause.
There are two principal questions involved in this suit:— First, did Horner pay the consideration, or any part of it, for the lot in dispute, out of his own money? And if so, then, secondly, is the presumption of law, thus raised in favour of Horner, destroyed bj anyrebutting evidence on the part of the defendant?
Previously to our examining these questions, it may be pro per to observe, that some of the depositions contain the general expressions, that Horner paid the whole of the consideration-money, and that the deed was made to Ellioll for the sole benefit of Iiorner. If these general expressions stood alone, they would probably settle the case, at once, in the complainant's favour; notwithstanding the deed states upon its face, that the consideration was paid by the defendant, and the answer denies the trust. Boyd v. M'Lean, 1 Johns. Ch. Rep. 582, 586. These expressions, however, are explained and modified in other parts of the same depositions. We find, that when these witnesses say that Horner paid the consideration-money, they mean that he paid it bjr getting the note against Vance and Dill from Ruffin, delivering it up to Vance, and paying the difference between the note and the price of the lot. And when they say, that the deed was made for Horner's benefit, their meaning is, that the absolute title was vested in Elliott to benefit Horner, by thus rendering the lot subject to his judgment against Elliott.
The first subject for our inquiry is, whether Iiorner paid, out of his own money, the consideration for the lot?
With respect to this point, the testimony is clear that a promissory note, given many years before by Vance and Dill, and payable to Elliott or order, was delivered up to Vance by Horner, as the principal part of the consideration for the lot. But it is a great matter of dispute between the parties, as to whom that note properly belonged at the time it was so delivered up to Vance; to wit, in October, 1812. The complainant contends, that it was the property of Ilomer. It is in proof that, in 1806, this note against Vance and Dill was delivered by Elliott to Ruffin, without endorsement, as a collateral security; to be collected by him, in case he should have to pay the debt of about 66 dollars due to Vattier. This was certainly no sale of the note to Ruffin. It was a mere pledge for the security of a debt; and the general property of the note, at all events, continued in Elliott. By this pledge, Ruffin, at most, had but the special property and the right of possession, which belong to a bailee: and even after he had paid Vattier, probably in 1807, he was only entitled to collect the note in Elliott's name, and pay himself for his advance to Vattier, out of the proceeds.
In 1812, this pledged note was sold by Ruffin, the pledgee, to Horner; and it is upon this sale alone, that Horner's right to the note, when he delivered it to Vance, is founded. That Ruffin had no power to sell this note in 1812, is contended for by the defendant, on the ground that Ruffin had been, a year and a-half before, repaid the debt for which the note was pledged. It is evident, from Ruffin's calling upon Vance in 1807 for payment, and from his inquiries of Percival in the same year, if Elliott had left any property that he could attach, that Ruffin was determined to be re-paid very soon, if possible. We have the positive testimony of Percival, the defendant's agent, that when thus inquired of by Ruffin, to wit, in 1807, he gave him the note against Brozan, which was for 87 dollars and 50 cents, and told him to make his money out of that. It is proved that afterwards, in the same year, a judgment on this note .against Brozan was obtained in Elliott's name at Cincinnati, where Ruffin lived; that when the sheriff gave to his deputy an execution in the case, he directed him to pay over to Ruffin any money he might collect on it; that the deputy sheriff asked and received instructions in® this business from Ruffin; and that the whole amount of this judgment against Brown, was finally collected on execution, during Elliott's absence from the country. We have also in evidence the receipt itself to the sheriff for 82 dollars, signed by Ruffin, dated long before his sale to Horner .of the pledged note, to wit, the 12th of October, 1810, and expressed to be in part payment of the execution in this case. These are strong proofs of the re-payment to Ruffin, in the manner and at the time alleged by the defendant.
The complainant has attempted to weaken the force of this testimony, by the deputy sheriff's statement, that he had seen a receipt for 50 dollars and 50 cents in the case against Brown, given by Thomas, he thinks, as attorney; and by Horner's deposition, that Ruffin had told him that what money he had received on the judgment against Brown, he had paid to Percival. These circumstances amount to nothing. The receipt of Thomas was not produced, nor was its absence accounted for. Besides, Thomas's authority does not appear,# St. Clair being the-only' attorney on record. As to what Horner says, relative to Ruffin's telling him that he had paid to Percival the money due from Brozan, it is mere hearsay testimony. Ruffin himself was á witness in the cause; and if he had not received or retained the money, for which he receipted to the sheriff, he was the proper person to be called on to explain the transaction. Percival, too, was a witness; and he cóuld have told whether Ruffin had ever paid to him this money. The complainant, however, did not think proper to ask either Ruffin or Percival a single question on this subject; and he must consequently submit to the presumption against his secondary evidence, which the want of that inquiry necessarily creates.
The defendant's evidence, therefore, on*this part of the case, 'stands unimpcached, and settles the fact, that in 1810 Ruffin deceived 82 dollars from Elliott's judgment against Brown. That amount was at least equal to Ruffin's claim for having paid the debt due to Vatiier; which, in 1807, did not exceed 66 dollars. It follows, that in 1810 the debt was paid to Ruffin, to secure Which the note against Vance and Bill had been pledged to Mm. That payment to Ruffin put an end to his control over the pledged note. From the time of that payihent, the absolute right of property and the right of possession in the note, were vested in Elliott. The .consequence is inevitable,—the sale of the note in 1812, about a year and a-half after the payment of the debt for which it was pledged, was made by Ruffin to Horner without authority; and this unlawful conversion of. Elliott's property, subjected Ruffin to an action of trover.
Perhaps, however, it may be said that Horner, by the purchase from Ruffin for a valuable consideration, became the owner of the note, although Ruffin, at the time, had no property in it, nor any authority to sell it. In the sale of personal property, not in market overt, the general rule is, that though the purchase be Iona fide and for value, the purchaser can receive no better title than that Of which the seller was possessed; and must, at all times, -yield to the claim of the rightful owner» To this general rule, however, there is ah exception in favour of negotiable instruments, such as bills of exchange and promissory notes. When these are originally made payable to bearer; or when, in the first instance, they are payable to order and afterwards by a blank endorsement become payable to bearer; they pass by delivery: and the purchaser, of them who uses due caution; pays a valuable consideration, and takes them in the course of business, has a good title against all the wbrld, whether the seller had any title or not. Wookey v. Pole, 4 Barn. & Ald. 6. Upon looking at this note, which was pledged to Ruffin and sold by him to Horner, we find at once, that it is not that kind of negotiable instrument which comes within the exception in favour of commerce. It was payable only to Elliott or order, and Elliott had not endorsed it, nor had any person for him; consequently it was not payable to bearer, and could not, like a bank note, be transferred by a bare delivery. Whether the property in this note could pass without endorsement, under any circumstances, need not be considered. Supposing it could, the transfer in such case must be governed, not by commercial law, but by the rules which regulate the sale of ordinary goods, out of market overt. Horner could receive no better title than Ruffin had. The buyer was not liable to any imposition in this case, the want of Elliotts endorsement being sufficient notice that the note was still his; and when Horner bought it, he did so at the risk of Ruffin's having no authority to sell it. This would be the case, even if Ruffin had endorsed the note in Elliotts name, having no authority to do so: because the law is, that if one man acts by the authority of another, those dealing with him must look to his authority. De Bouchout v. Goldsmid, 5 Ves. Jun. 211. This part of our case, is explained by the following authority: Maclish being owner of a ship, let it to the commissioners of the navy; and by a letter of attorney empowered Todd to receive the profits, give discharges, and do every thing relative to the premises which Maclish could do. Todd received from the commissioners of the navy, a navy bill for 1200 pounds payable to Maclish or his assigns; and sold it to Hawkes for a fair price; and Hawkes for a fair price sold it to Ekins. Maclish afterwards brought an action of trover against Ekins and recovered. The Court observed that it had been truly said, that the property in a bank note, if delivered in the course of trade for a valuable consideration, does pass by delivery: but that it is as true, that the property in a navy bill cannot pass without assignment; and as Todd had no power to assign the bill, the maxim caveat emptor applied to the case. Maclish v. Ekins, Sayer's Rep. 73.
With respect to this part of the case, therefore, it appears to us, that at the time of the sale of the note against Vance and Dill by Ruffin to Horner, to wit, in 1812, the debt had been paid for which the note was pledged, and that the right both of property and of possession in it was then in Elliott; that Ruffm had no authority to dispose of the note; and that as it was payable only to order, and was not endorsed, Horner acquired no property in it, although he paid for it a valuable consideration. ' ,
As the delivering up of this note to Vance, formed the greater part of the consideration for the lot in dispute; and as the payment of that consideration by Iiorner out of his own money, is the foundation of the complainant's bill, this decision,— that Horner never had any property in that note,—goes very far towards settling the whole of this case.
The trifling balance of the consideration for, tlie lot, was paid by Horner out of his own money. Whether the smallness of this sum is any objection to'the complainant's following it into the lot, if he be otherwise entitled, we shall not stop to inquire; but we will take it for granted that it is no objection. This introduces the second principal subject of inquiry, which is, whether the presumption of a trust to Iiorner, arising from this payment, is rebutted by the defendant's evidence?
From an examination of the testimony, it appears to us that the object of Horner, in' paying this little balance to Vance, was not to make a purchase from him of a beneficial estate in the lot in proportion to that amount. It seems to have been paid for Elliott by Horner, merely to induce Vance to perform his contract with Elliott by conveying to him the absolute title, and thus to cause the lot to be made subject to Horner's judgment against Elliott. The following extract from the deposition of Horner's attorney, very clearly explains this part of the case; though the occasion, really, seems not to require so particular a reference to it:— '
"In 1810, or 1811, after this deponent had commenced the practice of law-, he-, together with Symmes, was employed by Horner to sue out and conduct an attachment against Elliott, either as an absconding or non-resident debtor; and they prosecuted the suit to final judgment, which was obtained in June, 1811. In March, 1812, Symmes, Homer, and the deponent, consulted together on the best probable method of securing Horner's debt; and inasmuch as lots in Lawrenceburgh had then considerably increased in value, and might still increase, they concluded Horner's best method would be to perfect Elliott's title to the lot, if Vance would consent, and then to execute and sell, and become the purchaser. Homer, the deponent, and perhaps Symmes, went to Vance, and inquired of him whether, if Homer paid up and fulfilled Elliott's contract, he, Vance, would make the title to Elliott? After some conversation with Vance, and perhaps some persuasion from the deponent, Vance 'consented, moré especially as the -deponent urged the mattei* as the only method likely to secure Horner. Horner then went to Cincinnati, and purchased the note against Vance and Dill; (as deponent supposed, because he returned from thence with the note in his possession.) He delivered the note to Vance, and paid the residue of the purchase-money for the lot, which was in all perhaps 75 dollars. We then executed and sold the lot as Elliott's property, to wit, lot numbered 171, in the town of Lawrenceburgh, and Horner became the purchaser for 75 dollars, as the deponent believes."
This deposition certainly shows, that here was no new bar* gain and sale between Vance and Horner. It was the merely carrying into effect the old contract between Vance and Elliott. This, it is true, was to be for Horner's benefit; not, however, by Vesting in him the beneficial estate in any part of the lot, because the performance of Elliott's contract could not do that; but it was to be for his benefit, by vesting in Elliott the beneficial as well as the legal interest, and so rendering the lot subject to Horner's judgment against him. No words could make the matter plainer than this deposition does. The resulting trust* contended for by the complainant, is, in the language of Lord •Mansfield, a kind of arbitrary implication raised, to stand until some reasonable proof brought to the contrary. Sugd. 418. Supposing that the payment of the small balance Of the consideration, had it stood alone, would have raised a presumption, that the deed, though made to Elliott, gave a beneficial estate in the lot to Horner in proportion to that small sum; yet, undoubtedly, this mere presumption of law must yield to the truth of the case, when it is shown by positive testimony, that the object of Horner in making this payment was, in direct opposition to such a,presumption, to cause the beneficial estate to be vested in Elliott, conformably to the face of the deed; and when it is shown, too, that after the execution of the deed; Horner treated the lot as Elliott's property, by having his execution levied upon it as such, and buying it himself at the sheriff's sale.
This management of Elliott's business for him in his absence, by Horner, was ratified by Elliott soon after his return to the country; And the special benefit which had been contemplated by Horner, was thus confirmed to him. Upon Elliott's acceptance of the deed, the case stood precisely as if his contract with Vance had been completed by himself in person, instead of by Horner for him. By this recognition, Elliott became accountable to Horner for the balance of the consideration over and above the note, which had been advanced for him; and the liability of the lot, as Elliott's property, to Horner's judgment against him, from the date of the deed, was thereby established.
It appears to us, therefore, that the*facts accompanying the small advance of money by Horner for Elliott, repel the idea of any implied trust pro tanto, in favour of Homer, .on account of that payment. Indeed, it seems perfectly clear, that it was 8 or 10 years, at least, after Vance's deed to Elliott, and when the sheriff's sale to Horner had been determined to be void, and after Elliott had recovered the premises in the action of eject ment, that the complainant, looking around for a plank in the shipwreck, was the first to think pf the resulting trust set ptit in his bill.' 0 .
It may be supposed, perhaps, that we should notice, before we conclude, the suggestions of mistake and fraud,'made by the complainant for the'purpose of showing, that the defendant has no right to resist the claim of a resulting'trust set up in the bill. It is true, that Horner was under a mistake in .supposing the lot to be Elliott's, when he levied his attachment;' but it is also true, that before he had thought of completing Elliott's contract, that mistake was rectified, since he had discovered be? fore that time, as he states himself, and as the bill states, that Elv liott had no title at law or in equity. As to the idea of Horner's mistake of judgment in not causing the deed to be made tq himself, instead of to Elliott, we have nothing to do with that. We will observe, however, that as the note was Elliott's at the time, the policy of taking the deed to Horner, was not so clear q,s the complainant imagines.^ It is further contended, that ^ere was a ^rau^u^en^ concealment, by the defendant or his agent, of the claim now set up against the alleged trust. We have not been able, however, to discover any fraud in the case. The defendant was absent himself, and knew nothing of the proceedings. If his agent saw the complainant buying the lot, and making improvements on it, he might honestly think, as the complainant did, that the sheriff's sale to Horner was valid, and that Elliott had no further claim. There is no proof, that the discovery of the execution's being void, was made until after Elliott's return and acceptance of the deed in 1819, nor indeed at any time before the commencement of his action of ejectment.
Caswell, Starr, and Dunn, for the appellant,
Lane and Stevens, for the appellee.
From the general view which we have now taken of this cause, we have come to the conclusion, that the greater part of the consideration of the lot was the property, not of Horner, hut of the defendant; and that the small balance of it, paid by Horner, was paid under circumstances which entirely rebut the presumption of a resulting trust. We are also of opinion, that there was no mistake or fraud, that can have any influence on the case. The consequence is, the complainant is not entitled to the relief prayed for, and the Circuit Court should have dismissed his bill upon the merits. The decree of that Court, in favour of the complainant, is erroneous, and must be reversed.
Per Curiam.
The decree is reversed with costs. Cause rer manded, with directions to the Cir.cuit Court iq dismiss the bill3 &c.