Court Opinion

ID: 6517483
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:27:59.406674+00
Date Added: 2024-06-11T15:55:03.793098
License: Public Domain

BRICKELL, G. J.
This appeal is taken from a decretal order overruling a demurrer to a bill of complaint filed by appellee on June 30, 1896, to have a trust declared in his favor in a large number of tracts *428of land, which are alleged to have been purchased at various times between the years of 1888 and 1891 by John W. King, a son of complainant, with money, notes, goods and accounts belonging to complainant. The said John W. King died intestate previously to the institution of the suit, and his estate had been duly declared insolvent, and the administrator, the heirs at law and distributees, and the creditors of the estate are made parties defendant to the bill.
When a trust is sought to be established and engrafted upon a conveyance, absolute in its terms, the complainant must by his bill distinctly and precisely aver the facts from which it is claimed to arise, and, when necessary, rebut by appropriate allegations any presumptions against the trust which may arise from the facts relied on. We are of the opinion the facts averred in the bill are totally insufficient to show any equity in the lands, or to create any trust therein, in favor of complainant. The only facts averred out of which it is claimed the trust arises, are, in substance, that John W. King,, while acting as complainant's confidential- agent and manager of his mercantile business, having exclusive control of the business, keeping the books, selling goods, collecting accounts, etc., received conveyances in his own name of the several tracts of land, which he had bought and paid for with money, goods, notes and accounts belonging to complainant. It is further averred that “complainant has elected to ratify and confirm, and does now ratify and confirm each and every one of said transactions referred ■ to and described in said Schedule A ; and he releases the several grantors therein mentioned from all responsibility" to him in any manner whatever with reference to said transactions schedule A. being a list of the several purchases of land made by the son, the dates thereof, the consideration paid, and the names of the grantors. These facts create neither a technical resulting trust, such as arises by implication of law when the purchase money of land is paid or advanced by one person, and the title is taken in the name of another, nor a constructive trust in invitum, such as the law will enforce when a trustee or agent misappropriates and invests in lands the funds of his cestui que trust or principal. • When an agent employs the money or property of his principal in the purchase of lands, *429without the knowledge or consent of the latter, taking the title in his own name, or in the name of a third person, at the election of the principal he may be made personally liable, or the money may be followed into the land, and a lien asserted on the land for the reimbursement of the principal, or a trust of the legal estate will result by implication of law.—Lehman v. Lewis, 62 Ala. 129 ; Preston v. McMillan, 58 Ala. 84. Such trust originates in the right to pursue a trust fund through its various transmutations into a new investment made in violation of the duties of the trustee, and it is immaterial, in such cases, whether the money of the principal was used at the time of or before the purchase, or subsequently thereto. It is, however, essential to the creation of a trust of this character that either the use of the principal’s money for this purpose, or the taking of title by the agent in his own name, be unauthorized or fraudulent.—Whaley v. Whaley, 71 Ala. 159. If the principal authorizes the transaction, or subsequently ratifies and adopts it, the incidents of the trust,- and the facts necessary, in law to create it, do not differ in any respect from those of a simple resulting trust. There are no averments in the bill tending directly to show whether the several purchases of land by the son, and the taking of title in his own name, were with or-without the knowledge and consent of his father; or whether the use by the son of his father’s money and property in payment of the purchase money was, or not, a wrongful and fraudulent misappropriation of the same; or whether the purchase money paid for the lands was paid before, at the time of, or after the execution and delivery of the deeds. For aught that appears in the bill to the contrary, the complainant may have authorized the purchase of the lands, the use of his money in payment therefor, and the taking of title in-his son’s name ; or his son may have purchased the lands on credit on his own account and in his own name, and afterwards used complainant’s money, with his consent, to pay the purchase money when it became due. But whether complainant authorized the transactions or not, the bill distinctly avers that he ratified and confirmed each and every purchase of land made by his son, and the ratification is reiterated in the bill with knowledge of all the facts alleged therein. The ratification by a *430principal of the unauthorized act of his agent relates back to the time of the performance of the act, and has the effect of a previous authorization of it, the principal thereby assuming all responsibility for the act, and relieving the agent from any liability.—Wood v. McCain, 7 Ala. 800; Clealand v. Walker, 11 Ala. 1058. Doubtless the averment referred to was not intended to have this effect, but it is susceptible of this construction, and must {xe so construed in considering the demurrer. It is manifest, therefore, that the case made by the bill is not that of a misappropriation by an agent of the funds of his principal and their investment in other property. It is equally clear that the facts alleged do not create a simple technical resulting trust. Such a trust has its origin solely in the facts that the purchase money of land is paid, or advanced by one person at the time of the purchase, and the title is taken in the name of another. ■ It is founded on the presumption that he who pays the purchase money intends to become the owner of the land, and therefore présupposes the authorized use of the money of him who asserts the trust, and is implied independently of any fraud, or of any fiduciary relation between the person who pays the money and him in whose name the title is taken, although the mere existence of such relation will not prevent the implication of such a trust. But the presumption of such intent does not arise unless the purchase money was paid before or at the time of the purchase, and hence it is universally held that the trust must have been coeval with the deeds and result.from the original transaction, or it can not exist at all. If the payment is not made before or at the time of the purchase, no equity is conferred upon him whose money is used to have a trust of this character declai’ed in his favor.—Preston v. McMillan, 58 Ala. 84; Lehman v. Lewis, 62 Ala. 129; Whaley v. Whaley, 71 Ala. 159 ; Tilford v. Torrey, 53 Ala. 120. As we have seen, the bill does not allege that the purchase money was paid before or at the time of the several purchases, and is therefore defective as a bill to have a technical resulting trust declared.
An exception to the rule that the law will presume a trust on the legal estate in favor of one who pays the purchase money of land, the title to which is taken in the name of another, exists where a parent or husband *431furnishes the purchase money, and the title is taken in the name of his child or wife. In such case the presumption of intention, to become the owner of the property arising from the payment of the purchase money, is rebutted by the stronger counter presumption of an intention to make an advancement to the child or wife. Hence the presumption of such a trust does not arise from the mere fact that the purchase money is supplied by the parent, and the conveyance is taken in the name of a son.—Hatton v. Landman, 28 Ala. 135. When, therefore, such relationship between the parties is shown by the averments of the bill, the presumption arising therefrom must be clearly rebutted by appropriate allegations. In the bill under consideration this presumption of an advancement is not rebutted by a supposed averment that in the purchase of the several tracts of land the son was acting as the agent of his father. The averment is, not that he was acting as the agent of'his father in these particular transactions, but simply that the several purchases were made and the deeds received during the period while he was acting as the agent and general manager of his father’s business.
The principle that a lien created by operation of law, as distinguished from one created by contract, is dissolved by the death of the person against whose property it is asserted, and the declaration of the insolvency of his estate, has application to only such liens as arise by operation of law for the enforcement of merely legal claims which are debts against the estate. The effect of a decree of insolvency is merely to determine the status of the estate, and to transfer to the probate court the exclusive jurisdiction of all legal claims against the estate, to be adjusted for the equal benefit of all the creditors. It has no effect whatever- upon the right to assert in a court of equity an equitable title to property, the legal title to which was in the decedent in his lifetime, and.to show that in equity and good conscience the property is not, in fact, a part of the assets of the estate; nor upon his right, where the facts authorize it, to have an equitable lien declared and enforced against such property for his reimbursement.
Trusts of the character sought to be established by the bill are not barred by the statute of limitations of six years. When a trustee or agent misappropriates *432trust funds and invests them in lands, the cestui que trust or principal may elect to call for a conveyance of the land to himself, or to have it sold for his reimbursement, and the fact that he elects the latter, does not make this statute applicable.—Thompson v. Hartline, 105 Ala. 267. The statute of limitations of ten yeai’s is sometimes applicable, where there has been'for such a length of time a positive denial of the trust, or adverse possession of the land, and no fraudulent concealment, but this ground of objection is not specified in the demurrer, and the averments of the bill do not show the facts necessary to make this statute applicable.
The demurrers to the bill were well taken and should have been sustained ; the decree overruling them must .be reversed and the cause remanded for further proceedings in conformity to this opinion.
Eeversed and remanded.