Court Opinion

ID: 6916785
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:44:13.025797+00
Date Added: 2024-06-11T16:06:40.786416
License: Public Domain

BIGGS, Chief Judge
(dissenting).
My views in this case differ substantially from those of my colleagues:
(1) As to Fraud: There is ample evidence in the record to sustain the conclusion of the court below that Corey Bishop (Cornelius Below) induced Mildred Bishop by fraud to sign the deed naming Kelly, Ethel Bishop’s attorney, as “trustee”, and that Kelly was a party thereto, Mildred Bishop not knowing that Kelly was Ethel Bishop’s lawyer. D.C.V.I.1957, 152 F.Supp. 4, 7-8. The fraud of an agent or attorney is imputable to his principal. The obvious reason, as the court below found, for not including the cestui’s name in the “trust” deed was that Mildred Bishop would not have signed the deed had she known that it was for the benefit of Ethel Bishop.
Mildred Bishop owned Hammerfarm with Corey Bishop as a tenant-in-common. She had paid a substantial part of the purchase price. The court below so found and there is no substantial evidence to the contrary. Mildred Bishop believed that her interest in the property was in jeopardy and that if the property were put in Kelly’s hands as “trustee” both her interest and that of Corey would be protected from Ethel Bishop. The portions of Mildred Bishop’s testimony quoted in the opinion of this court bear out this view and I think the emphasis laid in the opinion on but two of the many phrases used by Mildren Bishop, viz., “a trust is something that keeps things from people”, and “to protect our interest”, cannot adequately support the conclusion drawn by this court that Mildred Bishop executed the deed to deprive Ethel Bishop of her dower right.
There is no evidence that Mildred Bishop executed the deed to Kelly to deprive Ethel Bishop of her dower right.1 There is no substantial evidence of fraudulent intent on Mildred Bishop’s-part. Mildred Bishop’s testimony considered as a whole, indicates that she was endeavoring to protect her own interest in the real estate.
The court below had both Mildred' Bishop and Ethel Bishop before it. It: had the opportunity to weigh their credibility. The question of Mildred: Bishop’s intent in executing the deed is a question of fact and this court has-made its own finding in derogation of' Rule 52(a), Fed.R.Civ.Proc., 28 U.S.C.. A court of appeals is not a fact finding: body.
Conceding that an ultimate conclusion, of legal fraud presents a mixed issue of law and fact, here the finding of fact, on which an ultimate conclusion of legal, fraud would have had to be bottomed was not made by the court below. But. even if this were not so I think it is. clear that this court has abused legal discretion in overruling the conclusions-of the District Court. These conclusions find overwhelming support in the. evidence. That Mildred Bishop under all the circumstances would knowingly have conveyed her interest in Hammer-farm to Ethel Bishop strains credulity..
(2) As to the Clean Hands Doctrine. Assuming arguendo that this court is-correct in its conclusions in respect to the issue of fraud referred to at “(1),”' supra, nonetheless this court has incorrectly applied the clean hands doctrine. That doctrine is, of course, that where-a conveyance of property has been executed with the purpose of defrauding creditors or others the grantor cannot attack the conveyance or obtain relief *503against it in a court of equity. But it is also the law that where a property owner conveys land to protect it against an alleged claim, where there is neither claimant nor legal claim, the doctrine does not apply. The record shows that no claim was made by Ethel Bishop as to Mildred Bishop’s property and it is astonishing that in the complete absence of this operative fact this court nonetheless obliterates Mildred Bishop’s own interest as a tenant-in-common in Hammerfarm. Ethel Bishop’s dower right did not attach and could not have attached to Mildred Bishop’s interest in the real estate held by her as a tenant-in-common with Corey.2
Most important of all the Virgin Islands Code specifically provides, Vol. I, Title 1, Section 4, “The rules of the Common Law, as expressed in the restatements of the law approved by the American Law Institute, and to the extent not so expressed, as generally understood and applied in the United States, shall be the rules of decision in the courts of the Virgin Islands in cases to which they apply, in the absence of local laws to the contrary.” While
the Virgin Islands Code of 1957 was not in effect at the time of the happening of the events complained of in the case at bar nonetheless this court in Callwood v. Virgin Islands Nat. Bank, 3 Cir., 1953, 221 F.2d 770, had already ruled that the decisional law of the Virgin Islands in case there was no applicable statute or ordinance was that embodied in the common law as expressed by the Restatements. There is no substantial difference between the common law as incorporated in the Restatements and the common law of England as adopted and understood in the United States. See Davies v. Otty, 35 Beav. 208 (Eng. 1865); 1 Scott, Trusts § 63, pp. 569-570 (2d ed. 1956).3
The Restatement, Trusts, commenting on Section 63, pp. 200-201, provides:
“[I]f the owner of a piece of land transfers it to another who agrees to hold it in trust for the transferor, and the purpose of the transferor in making the transfer was to prevent a judgment creditor from levying execution upon the land, the transferor can compel the transferee to reconvey the land if it was a homestead of the transferor’s up*504on which the creditor could not have levied execution.” The Restatement aside, the great weight of authority is to the same effect.
Professor Austin Scott points out that while the settlor’s state of mind in a case in which he attempts to defeat a creditor’s claim is as bad as though the claim were enforceable, nonetheless the refusal of a remedy to the settlor under such circumstances operates to cause a forfeiture of property disproportionate to the degree of his wickedness and the extent of harm done by him. 1 Scott, Trusts § 63, pp. 569-570 (2d ed. 1956).
Professor Scott also shows that courts have been too ready to deny relief to the settlor without consideration of the injustice which results. He states, “There is no doubt that as between the parties it is more just to require the trustee to surrender the property to the settlor than to permit the trustee to keep it.” 3 Scott, Trusts § 422, p. 2196 (1939 ed.). See also Wantulok v. Wantulok, 1950, 67 Wyo. 22, 214 P.2d 477, rehearing denied 223 P.2d 1030, 21 A.L.R.2d 572; Thompson v. Steinkamp, 1947, 120 Mont. 475, 187 P.2d 1018; Note, 44 Yale L.J. 173.
I think it is clear that when the Restatements of Trusts and Restitution were compiled, the American Law Institute adopted the principle of those decisions which precluded the forfeiture of the property of a transferor who attempted to prevent a person from enforcing a claim against the transferred property when the claim was non-existent or could not have been enforced against the property. In such cases the Restatement either allows the settlor to enforce the trust, Restatement, Trusts § 63, comment b to subsection (1), or, if the trust fails, to compel the trustee to reconvey the property to him. Restatement, Trusts § 422, comment c. See also, Restatement, Restitution § 140 and 4 Scott, Trusts § 422 (2d ed. 1956) 4, 5
(3) No Valid Trust. The so-called “trust” deed did not state the terms of the trust or name or describe a beneficiary. Ethel Bishop contended that the reason the cestui was not named was because she could not decide to use the name “Below” or the name “Bishop”. A more obvious reason, as has been pointed out, suggests itself. But it is black letter law that a trust, other than one which is charitable or honorary, cannot be created in favor of a person who is not named in the trust deed, and that in such a case the express trust will fail and a resulting trust will arise immediately in favor of the settlor. 2 Scott, Trusts § 112 (2d ed. 1956).
The court’s opinion therefore presents the anomaly of a court of equity employing the clean hands doctrine to preclude an attack on a fatally defective trust deed, one completely lacking in equity. This court permits an invalid trust to subsist and to work a forfeiture of the settlor’s property and a windfall to a third party.
(4) Conclusions. The rulings of the court would seem to err in three major areas and dislocate general legal principles and also the law of the Virgin Islands as heretofore carefully estab-ished by this very court. In my opinion there are special and important reasons why the decision of the court should not *505stand. Accordingly I dissent from the order denying rehearing.
Judge HASTIE also dissents and joins in so much of this opinion as concerns the application of the doctrine of clean hands.

. If, as was indeed the fact, Ethel Bishop was. Corey Bishop’s wife, the deed could not have deprived her of her dower right.

. It should be noted again that the property involved in this litigation was held by Mildred Bishop and Corey Bishop as tenants-in-common. While the characteristic attribute of a tenancy in common is a unity of possession, each share still constitutes a distinct estate. Thus while a claimant against a tenant-in-common can reach the particular debtor’s interest in the co-tenancy, and thus may become a tenant-in-common with the debtor’s co-tenants, or may canse a partition of the estate he cannot deprive the co-tenants of their property rights. Hay v. Crawford, 1945, 159 Kan. 723, 158 P.2d 463, 159 A.L.R. 388; Altobelli v. Montesi, 1938, 300 Mass. 396, 15 N.E. 2d 463; Rostan v. Huggins, 1939, 216 N.C. 386, 5 S.E.2d 162, 126 A.L.R. 410; Koubek v. Tenos, 1941, 343 Pa. 409, 22 A.2d 740.

. See also Dearman v. Dearman, 1842, 4 Ala. 521; Berniker v. Berniker, Cal.App. 1946, 174 P.2d 668, affirmed 1947, 30 Cal.2d 439, 182 P.2d 557; Vollaro v. Gargano, 1922, 97 Conn. 275, 116 A. 179; Rossow v. Peters, 1917, 277 Ill. 436, 115 N.E. 524; Warner v. Tullis, 1928, 206 Iowa 680, 218 N.W. 575; Hoff v. Hoff, 1920, 106 Kan. 542, 189 P. 613; Greffin’s Ex’r v. Lopez, 1817, 5 Mart., O. S., La., 145; Zak v. Zak, 1940, 305 Mass. 194, 25 N.E.24 169; Bloomingdale v. Chittenden, 1889, 74 Mich. 698, 42 N.W. 160; Burns v. Burns, 1913, 124 Minn. 176, 144 N.W. 761; Cook v. Mason, 1945, 353 Mo. 993, 185 S.W.2d 793, 157 A.L.R. 942; Kidd v. Kidd, 1951, 210 Miss. 465, 49 So.2d 824; Thompson v. Steinkamp, 1947, 120 Mont. 475, 387 P.2d 1018; Cowles v. Cowles, 1911, 89 Neb. 327, 131 N.W. 738; Collins v. Schump, 1911, 16 N.M. 537, 120 P. 331; Tiedemann v. Tiedemann, 1922, 201 App.Div. 614, 194 N.Y.S. 782, affirmed without opinion, 1923, 236 N.Y. 534, 142 N.E. 273; Brady v. Ellison, 1804, 3 N.C. 348; Hickey v. Ross, 1946, 197 Old. 543, 372 P.2d 771; Hanscom v. Hanscom, 1949, 186 Or. 541, 208 P.2d 330; Rivera v. White, 1901, 94 Tex. 538, 63 S.W. 125; Abslag v. Bock, 1926, 139 Wash. 198, 246 P. 300; Wilcoxon v. Carrier, 1949, 132 W.Va. 637, 53 S.E.2d 620.

. Corbin refers to the spectacle of another’s unjust enrichment as perverting the unclean hands doctrine. 6 Corbin, Contracts § 1463, p. 828 (1951). Mr. Justice Black in Johnson v. Yellow Cab Transit Co., 1943, 321 U.S. 383, 387, 64 S.Ct. 622, 88 L.Ed. 814, said: “The maxim that he who comes into equity must come with dean hands is not applied by way of punishment for an unclean litigant but ‘upon considerations that make for the advancement of right and justice.’ Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245, 54 S.Ct. 146, 78 L.Ed. 293. It is not a rigid formula which ‘trammels the free and just exercise of discretion.’ ”

. In conclusion upon this phase of the case I point out that but small emphasis was placed on the clean hands doctrine in the court below and there is but cursory reference to it in the briefs of the parties on appeal.