Court Opinion

ID: 3841168
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:10:26.927356+00
Date Added: 2024-06-11T07:40:33.638361
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 646 
This is an appeal from an order of the trial court sustaining the demurrer of defendants to plaintiff's amended complaint and a consequent order of dismissal.
See 26 R.C.L. 1186.
Constitutional Law, 12 C.J., sec. 580, p. 983, n. 53. Injunctions, 32 C.J., sec. 530, p. 319, n. 31; sec. 534, p. 323, n. 70. Notice, 46 C.J., sec. 12, p. 540, n. 31; sec. 28, p. 543, n. 10. Trusts, 39 Cyc., p. 53, n. 88, p. 248, n. 35, p. 459, n. 43. *Page 647 
The facts in the case appear to be substantially as follows:
During all the time of the transaction that resulted in this litigation, the plaintiff was the co-owner with his wife, Maud A. Heitkemper, of Lot 14, Block 11, in Goldsmith's Addition to the City of Portland, on which, in the year 1908, he built a residence at a cost of about $8,500. On and prior to October 28, 1910, and ever since that date, Mrs. R. Becker, J.R. Krausee, R.W. Schmeer, A.L. Levy, C.J. Cook, William Gadsby and H.J. Thorsen, or their successors, were the owners of certain other lots in that addition, and, with one or two exceptions, occupied residences situate thereon. On the same date, the Gile Investment Company, a corporation, owned two vacant lots in that addition, known and described as Lots 16 and 17, Block 11, Goldsmith's Addition to Portland. The plaintiff alleges:
"That the plaintiff and the other owners and occupants of residence property hereinbefore specifically named, prior to the 28th day of October, 1910, were apprehensive that the owner of the said lots 16 and 17 in block 11, aforesaid, or their successors, would build thereon and use thereon apartments or flats, to the detriment of the said district as a residence district and of the owners of the property hereinbefore specifically mentioned.
"That in order to prevent the building of an apartment or flat upon the said property owned by the Gile Investment Company, they agreed together and with each other upon a plan, which was a joint enterprise, as follows:
"They agreed, each with the others, to buy from the said Gile Investment Company, the property described in paragraph 4 of this amended complaint, and to pay therefor the sum of $12,000. * * The terms of said purchase were to be the sum of *Page 648 
$4,500.00 to be paid in cash, and the balance of $7,500 to be secured by a mortgage on said property."
They likewise agreed upon the proportionate amount of the cash payment of $4,500 to be paid by each party to the joint enterprise. As to the payment of the balance of $7,500, plaintiff alleges:
"It was further agreed between them that they would pay the sum of $7,500 secured by the mortgage, and also assessments, taxes, and charges of every kind, in the same proportions as the payments made by them severally on the first payment of $4,500 as aforesaid.
"It was further agreed that the said contributors should be the owners of the said real property in the proportions of their several payments as aforesaid. The interest of the plaintiff would be and is a one-ninth of the whole of the said property."
In order to effectuate the purpose of the enterprise, it was agreed that the property should never be sold to any person for the purpose of building or using on either or both of the lots, or with authority to build or use thereon, an apartment house or flats; but that the property should be sold thereafter with the restriction against constructing an apartment house or flats thereon. The arrangements completed, the contributors agreed to appoint, and did appoint, R.W. Schmeer as their agent, to effect the purchase of the above-described real property of the corporation, for the benefit of all the members of the joint enterprise, Schmeer to take the legal title thereof in his name, and to hold the same as trustee for the benefit of, and to effect the purpose of, the contributors. Schmeer, who will be remembered as one of the parties to the joint agreement, agreed to accept the trusteeship according to the terms of his appointment. Accordingly, the plaintiff *Page 649 
and all other members of the joint enterprise paid to the Gile Investment Company the respective amounts of their several contributions to the cash payment of $4,500, and, on October 28, 1910, procured from that company a deed to Schmeer, trustee, the word "trustee" being written after the name of the grantee in order to advise the world that Schmeer held the property in trust. Schmeer accepted the deed and entered into possession of the property as agent and trustee of the plaintiff and the other contributors, and agreed with plaintiff and the other contributors that he would hold the legal title in trust, according to the terms set out above. On October 29, 1910, the deed was duly recorded at page 230, Book 511, Deed Records of Multnomah County. Simultaneously with the execution of the deed, and in accordance with the agreement of the members of the joint enterprise, Schmeer, as trustee, made and executed to the Gile Investment Company, in payment of the balance of the purchase price, his note for $7,500, secured by mortgage on the property. At this point, Schmeer executed and delivered the following declaration:
"To All to Whom These Presents May Concern:
"I, R.W. Schmeer, of the city of Portland, County of Multnomah, State of Oregon, certify:
"That Whereas, the Gile Investment Company, a private corporation of the city of Portland, county of Multnomah, state of Oregon, has by its deed bearing even date herewith, for the consideration of Twelve Thousand ($12,000) Dollars, granted and conveyed to me in fee simple, all of Lots 16 and 17, Block 11, in Goldsmith's Addition to the city of Portland, county of Multnomah, state of Oregon, as by said deed will more fully appear; and *Page 650 
"Whereas, I have this day paid Forty-five Hundred ($4500) Dollars on account of the purchase price and executed and delivered to said Gile Investment Company a mortgage upon said premises, as security for the payment of my note of Seven Thousand Five Hundred ($7,500) Dollars, three years at 6 per cent. per annum, to secure the balance of the purchase price expressed in said deed;
"Now, Know Ye, That I, the said R.W. Schmeer, do by these presents make known, admit and declare that said premises were so conveyed to me, and that I now hold, and will continue to hold, the same, in trust only, for the use and benefit of the following parties, their executors and administrators, in proportion to the amounts each has contributed to the first payment of Forty-five Hundred ($4500) Dollars on account of the said purchase price of Twelve Thousand ($12,000) Dollars, which is as follows, to wit:
  H.J. Thorsen, .................... $ 650.00 Mrs. R. Becker, ..................   700.00 J.R. Krausse, ....................   500.00 Frank A. Heitkemper, .............   500.00 A.L. Levy, .......................   500.00 C.J. Cook, .......................   500.00 William Gadsby ...................   500.00 R.W. Schmeer, ....................   650.00 ________ $4500.00
and that I have no beneficial interest therein, except the sum of Six Hundred Fifty ($650) Dollars paid by me as herein stated. And I do further admit that the sum of Forty-five Hundred ($4500) Dollars on account of the purchase price of Twelve Thousand ($12,000) Dollars expressed in said deed to me was paid by me for the benefit of said parties. And I do, for myself, my heirs, executors and administrators, covenant and agree to and with said parties and each of them, and with their and each of their *Page 651 
executors, administrators and assigns, that I will hold, manage and dispose of said real property as in my judgment may seem best, and I will convey the said real property by a good and sufficient deed to the purchaser of the said property when the same is sold, and after deducting any and all sums paid for assessments, taxes, and charges of every kind that may have been paid or advanced by me for the benefit of said property and the payment of said mortgage and interest, that the balance remaining shall be paid to the several parties in interest in proportion to their payments on account of the said purchase price, assessments, taxes, costs, mortgage and interest.
"In witness whereof, I have hereunto set my hand and seal, this 28th day of October, 1910.
"(Signed) R.W. SCHMEER. (Seal)
"Witnesses:
       "C.H. CHAMBREAU. "F.C. SCHMEER."
Thereupon, and as a part of the same transaction, the following writing was executed and delivered to Schmeer:
"The undersigned, property owners and residents in the vicinity of the hereinbefore-described real property, for the purpose of preventing the purchase of said real estate by a stranger and the possible erection thereon of an apartment house or flats, which we consider will be detrimental to the appearance and value of our several residences and lots, have appointed R.W. Schmeer our trustee to purchase and hold the title of said real estate, and we have contributed to the said purchase price the several amounts as hereinbefore stated, and we hereby further agree to reimburse our said trustee on demand for any and all sums paid for assessments, taxes, and charges of every kind that he may pay on account of said property and said mortgage and interest. *Page 652 
"We hereby agree to the terms and conditions of the Declaration of Trust signed by R.W. Schmeer.
        "(Signed)    H.J. THORSEN. "MRS. R. BECKER, "By CLAUDE DEF. SMITH, "Attorney in Fact.
                    "J.R. KRAUSSE. "FRANK A. HEITKEMPER. "A.L. LEVY. "C.J. COOK. "WM. GADSBY."
Thereafter, Schmeer held and managed the property as trustee.
It appears that, prior to November 29, 1926, Schmeer negotiated with the trustors hereinbefore named, or their successors, in an attempt to buy their interest in the property, or to get their consent to selling it without the restrictions against apartment houses or flats contained in his declaration of trust and in the written agreement made at the same time and as a part of the same transaction; and that, except as to the plaintiff, he either bought the interests of the several trustors, or procured their consent to selling the property free from such restrictions; and at various times Schmeer sought authority from plaintiff to sell the property free from the restrictions named, but that plaintiff at all times refused to give his consent to such sale. Despite plaintiff's refusal, Schmeer, on November 29, 1926, in violation of the terms of the trust, made, executed and delivered to defendant A. Larrowe a deed to the north half of Lots 16 and 17, Block 11, Goldsmith's Addition to the City of Portland, being the north half of the trust property. In and by this deed of conveyance, Schmeer described himself as trustee. He likewise executed the same as trustee, and in his *Page 653 
individual name, his wife, Ann C. Schmeer, joining therein. The consideration recited in the deed was $10; but the amount actually paid by Larrowe was $3,500. It contained certain restrictions upon the use of the property, but expressly exempted from such restrictions the restriction against using the property for flat or apartment house purposes. This instrument was recorded November 30, 1926, in Book 1087, Deed Records of Multnomah County, at page 63.
Plaintiff alleges that Larrowe, the grantee in the last-named deed, made the purchase and received the property with notice appearing upon the face of his deed to the effect that Schmeer made the same in the double capacity of trustee and owner in his individual right and interest in the property; that besides the notice of the trust contained in the deed from Gile Investment Company to Schmeer as trustee, and in the deed from Schmeer, as trustee, and in his individual right, to A. Larrowe, defendant Larrowe had other notice and knowledge that Schmeer held the property as trustee, and with no authority to sell the same free from the restrictions of the trust against the use of the property for the purpose of apartments or flats; that Larrowe had actual knowledge that Schmeer was a trustee and not the owner in his own right of the property, in this: That in the examination of the chain of his title Larrowe actually examined and read the recitals in the deed from Gile Investment Company to R.W. Schmeer as trustee, and knew therefrom that he was trustee, and not the owner thereof beyond the interest of his individual contribution to the trust.
Plaintiff then avers that, by reason of the declaration, each of the subscribers to the trust, including R.W. Schmeer, became and were co-owners of *Page 654 
the beneficial interest in the property, and in equity entitled to be treated as cotenants thereof; that each had with the other a confidential relation; that whatever interest or estate in the property was created in defendant Larrowe by the deed to him of R.W. Schmeer as trustee and individually, constitutes him a co-owner, and in equity a cotenant with the plaintiff in the property, and that the plaintiff is the owner of one ninth of the beneficial interest in that property.
Plaintiff then alleges that defendant Larrowe, notwithstanding the terms of the trust, and notice and knowledge to him, went into possession of the north half of Lots 16 and 17, Block 11, Goldsmith's Addition to Portland, and commenced the construction of an apartment house thereon; that at the time he sold the property to Larrowe, Schmeer, the trustee, knew that Larrowe intended to build an apartment house upon that property, and that Schmeer wilfully and intentionally violated the terms of his trust and exceeded his authority in making the sale.
The complaint sets out a letter bearing date June 12, 1927, addressed to A. Larrowe by plaintiff, notifying him that Schmeer was but a trustee of the property, and alleges that Larrowe ignored the notice.
Plaintiff alleges that, by reason of the premises, he is entitled to have the trust agreement enforced against Larrowe, who holds the title subject to the trust hereinabove set out. After alleging that he has no plain, speedy or adequate remedy at law, plaintiff prays for a decree perpetually enjoining defendant Larrowe from proceeding further with the *Page 655 
erection of the apartment house building on the property described herein, and for other relief.
AFFIRMED.
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 P. 883,242 P. 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, appears 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 *Page 656 
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 Gile 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, Trustee," *Page 657 
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 ofFletcher v. Kidder, 163 Cal. 769 (127 P. 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. *Page 658 
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 OF THE STATE OF 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 contained *Page 659 
in the deed from Gile 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. Pl.  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 P. 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 *Page 660 
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 bona fide
purchaser for value is well stated in Hyland v. Hyland,19 Or. 51 (23 P. 811). See, also, Bailey v. Hickey, 99 Or. 251
(195 P. 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 ofDuester v. Alvin, 74 Or. 544 (145 P. 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 *Page 661 
that neither apartment houses or flats should be 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.
It is so ordered.
AFFIRMED.
COSHOW, C.J., and BEAN and BELT, JJ., concur.