Opinion ID: 1230428
Heading Depth: 2
Heading Rank: 3

Heading: The Court's Refusal to Award Appellant Compensation for Benefits Conferred.

Text: Sanguinetti contends that the court erred in failing to require the Streckers, as a condition to the cancellation of the deeds, to compensate him for certain benefits conferred upon them. He identifies these benefits as payment of the note to South Lake Tahoe Savings and Loan, improvements to the breakwater and marina, obligations incurred to associates for legal and other services, and Sanguinetti's personal services in obtaining permits and overseeing the development. The basic issue to be determined is whether the Streckers, by the award of the return of their property, plus $15,000 in compensatory damages awarded by the jury, were unjustly enriched. Restatement of Restitution, § 1 (1937). We conclude that in the circumstances of this case the court's decision to award the Streckers cancellation of the deed without requiring a setoff against the jury verdict met the fundamental requirement that equitable relief be granted on equitable terms. Robinson v. Kind, 25 Nev. 261, 62 P. 705 (1900). We first note that any restitution to which Sanguinetti may be entitled must be weighed against the damages to the Streckers' interests occasioned by his fraudulent conduct. The property as returned to the Streckers was encumbered by a deed of trust to the First National Bank of Nevada, [3] executed by Sanguinetti without the concurrence of the Streckers, upon which some $94,000 remained due at the time of the trial. The Streckers were also entitled to the rental value of the property during the period of Sanguinetti's possession. Heward v. Sutton, 75 Nev. 452, 345 P.2d 772 (1959). Sanguinetti first claims restitution under Morgalia v. Kaupp, 70 Nev. 257, 265 P.2d 1069 (1954), in which this court held that a defrauded grantee was entitled to return of her property and to damages in the amount of a valid encumbrance on the property for which defendant was responsible, but that a setoff against those damages was required in the amount of the consideration for the fraudulent transfer. The evidence in this case does not support the view that Sanguinetti's services or expenditures constituted consideration for the fraudulent transfer. They were rendered or made only after he had fraudulently acquired title to the property, and his own testimony was that the consideration for the transfer was only the prospect of financial gain. He is therefore not entitled to restitution on this ground. Sanguinetti next claims restitution under Robinson, in which this court held that a remand was required by, among other things, the failure of the lower court to take into account the expenditures of a fraudulent grantee for taxes and a watchman's services in connection with the property. The decision in Robinson reflects the general rule that even a fraudulent grantee is entitled to reimbursement of necessary expenditures in preserving the property. Morris v. Hanssen, 336 Mo. 169, 78 S.W.2d 87, 95 (1934). The bulk of the claims of Sanguinetti do not fall within this category. The Streckers, not he, paid the taxes on the property during the entire period in question. The personal services of Sanguinetti, as well as those of his associates (who submitted their bills to him only after this litigation had begun), were not offered to preserve the property but to pursue his grandiose scheme of development. On the other hand, his payment of the note to South Lake Tahoe Savings and Loan does fall within the rule, Blixt v. Janowiak, 177 Wis. 175, 188 N.W. 89 (1922), and did relieve the Streckers' property of an encumbrance amounting to some $50,000. Against this, however, must be weighed the new encumbrance, for which the Streckers are obligated in the amount of some $94,000, as well as the loss of potential rent during the period of Sanguinetti's occupation of the property. In light of these detriments, the court below was not compelled to find that the $15,000 compensatory award unjustly enriched the Streckers. Sanguinetti also suggests that the improvements to the property, apparently financed primarily by the loan from First National Bank of Nevada, must be thrown into the balance as well. This we decline to do. One who holds land under a fraudulent deed is entitled to restitution of the value of his improvements, or their cost, whichever is least, if he made them in the reasonable, good-faith belief that he held valid title to the land. Restatement of Restitution, § 42(1), at 167 (1937); Madrid v. Spears, 250 F.2d 51 (10th Cir.1957). Sanguinetti's failure to secure all of the necessary permits, for which he had assumed responsibility, has cast the value of the improvements in grave doubt. Most important, his fraudulent conduct entirely deprives him of any claim of reasonable, good-faith mistake. The record suggests that Sanguinetti has been disappointed in his expectation that he would be amply compensated out of the future profits from the land which he had fraudulently acquired. In effect, he asks to be insulated from the risk of loss in his fraudulent scheme. This no court of equity is required to do.