Court Opinion

ID: 9517212
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:09:28.672305+00
Date Added: 2024-06-11T09:41:37.453700
License: Public Domain

Mr. JUSTICE JONES, dissenting: The majority has misinterpreted the facts of this case and applied the wrong principles of law to the facts, and, as an understandable consequence, has reached the wrong result. I therefore respectfully dissent. Even though the defendants agreed voluntarily and gratuitously to act for the plaintiff in purchasing the land in question, and advanced the purchase price therefor, they are nevertheless held in equity to have acted for the plaintiff, and they will be deemed to hold the property in a constructive trust for the benefit of the plaintiff. Morals and good conscience require this result and all authorities are agreed that that result must pertain. I will refer to the Restatement Restitution; Scott on Trusts; Bogert, Trusts and Trustees; and cases of the Illinois Supreme Court and Appellate Courts. The Restatement of Restitution §194(2) (1937) provides: “A person who agrees with another to purchase property on behalf of the other and purchases the property for himself individually holds it upon a constructive trust for the other, even though he is not under a duty to purchase the property for the other.” Since the Restatement Comment on subsection (2) is so pertinent and apt, I will quote from it at length. “The rule stated in Subsection (2) is applicable where a person undertakes as fiduciary to purchase property and purchases it for himself, even though he would be under no liability for failing to acquire it for the beneficiary if he did not acquire it for himself. This is true whether or not there is a preexisting fiduciary relation between the parties. Thus, it is applicable where one person gratuitously and orally undertakes to purchase land on behalf of another. In such a case he is under no liability if he fails to acquire the property, since there is no consideration for his undertaking and no other circumstances imposing upon him a duty to acquire the property. If, however, in violation of his undertaking as fiduciary he acquires the property for himself, he holds it upon a constructive trust for the person for whom he undertook to acquire it. Where one person orally undertakes to purchase land on behalf of another, it may be urged that the other cannot enforce a constructive trust because the undertaking is oral and there is no compliance with the provisions of the Statute of Frauds. The answer to this objection is that the other is not enforcing an oral contract, but is enforcing a constructive trust based upon the violation of fiduciary duty. The undertaking to act for the other is sufficient to constitute the relation of principal and agent between them. The relation arises although no consideration is paid or agreed to be paid by the principal to the agent; and the relation may arise although its creation is not evidenced by a written instrument, even though the agent is to purchase land for his principal. It is sufficient to create the relation that the one authorizes the other to act for him in making the purchase and the other undertakes to do so. If the agent purchases for himself the property which he has undertaken to purchase for his principal, he holds the property so purchased upon a constructive trust for his principal. The rule is applicable not only where a person is employed professionally to purchase the property for the employer, as in the case of a real estate broker, but also where a person gratuitously agrees to purchase the property on behalf of another. The rule stated in this Section is applicable where one person agrees to purchase property on behalf of another, whether he undertakes to purchase it in the name of the other, or in his own name, or in their joint names.” (Emphasis added.) (Restatement of Restitution 797-799 (1937).) Scott on Trusts §499 (3d ed. 1967) discusses the rule and its applicability to various factual situations. At page 3543 the author states: “Even though there was no pre-existing fiduciary relation, and even though the defendant was not employed professionally by the complainant, and even though no continuing fiduciary relation was contemplated, yet if the defendant undertakes with the complainant to purchase property for him, and purchases the property for himself, he can be charged as constructive trustee of the property. Although the oral undertaking is not enforceable as a contract, because of lack of consideration or because the property is an interest in land, yet a fiduciary relation is created and the fiduciary will not be permitted to profit through a breach of his duty as fiduciary. By undertaking to purchase the property for the complainant, the relation of principal and agent is created. Such a relation arises where one person undertakes to act for and in behalf of another, even though the undertaking is gratuitous and oral. Accordingly, it is held that a person who undertakes to purchase land for another and who purchases it for himself is chargeable as constructive trustee of the property, even though the undertaking is gratuitous and oral.” (Emphasis added.) To the same effect is Bogert, Trusts and Trustees §488 (2d ed. 1960). The rule of the Restatement, Scott, and Bogert was predated by the early Illinois case of Switzer v. Skiles (1846), 8 Ill. (3 Gilm.) 529, which is a case factually similar to the one under consideration, i.e., a person undertook voluntarily and gratuitously to purchase land on behalf of others and, subsequent to the purchase, kept the land for his own use and benefit. The court brushed aside the defense to Statute of Frauds and declared a constructive trust, stating: “He [defendant] did not profess to act for himself in the purchase of the lots. He undertook to purchase them for the benefit of those who had succeeded to the possessory rights of Miller. This precluded him from acting on his own account in the transaction. A person who agrees to act for another is not allowed to deal in the business of the agency for his own benefit, and if he take a conveyance in his own name of an estate which he agreed to purchase for another, he will, in Equity, be considered as holding the estate in trust for his principal. * * * A court of equity will not permit the defendant, after obtaining the title to the property under such circumstances, to sacrifice and disregard the interests of those for whom he acted, and convert the property to his own use. 1 Story’s Eq. Jur. sec. 223. To allow him to appropriate to his own use the fruits of the purchase, would be permitting him to take advantage of his own wrong, and thereby perpetrate a gross fraud on the complainants. He cannot escape the consequences of such iniquitous conduct by sheltering himself behind the Statute of Frauds, the provisions of which statute were designed to furnish a protection against fraud, and not to be set up as a shield and support for fraud. * * * He cannot now set up the want of consideration as an excuse for not complying with the terms of his undertaking. This might have been a valid reason for declining to enter on the performance of his agreement in the first instance, but it cannot shield him from responsibility after he has once entered on the execution of the trust. It is sufficient that he undertook to perform the trust and thereby obtained the trust property. A mere agreement to execute a trust in futuro, without compensation, is not obligatory; but when the trust is undertaken and actually commenced, the trustee is bound to proceed and execute it with the same diligence and good faith, as if he were to receive a liberal reward for his services. The confidence reposed in him, the actual entering on the duties of the trust, and the injury which may result to the beneficiary if he do not faithfully perform it, are regarded as a good and sufficient consideration. 2 Kent’s Com. 466; Rutgers v. Lucet, 2 Johns. Cases, 92.” 8 Ill. (3 Gilm.) 529, 534-35. Other Illinois cases have applied the same principle in similar factual situations. In Dennis v. McCagg, 32 Ill. 429, the court stated: “Here then, is the most abundant proof of the relation in which McCagg stood to these parties, as a confidential agent, intrusted with the conduct of business, claiming the highest exhibition of morality and integrity; a volunteer, if you please, but still professing to act not for himself, but for others who had placed their confidence in him. In equity he was disabled from dealing in the matter of his agency, on his own account, 1 Lead. Cas. in Eq. (White v. Tudors) 75, and the agency being established, he will be compelled to transfer the benefit of his contract, although he may swear he purchased on his own account.” (32 Ill. 429, 444.) Also see Doner v. Phoenix Joint Stock Land Bank, 381 Ill. 106, 45 N.E.2d 20; Watson v. Union Iron & Steel Co., 15 Ill. App. 509. Any further citations would needlessly expand an already too long dissertation but additional case authorities abound. For instance, Mianulli v. Gunagan (1954), 32 N.J. Super. 212, 108 A. 2d 200, is practically identical on its facts to the case under consideration here and, in reliance upon the Restatement of Restitution §194 and Scott on Trusts, as above set forth, imposed a constructive trust on the purchaser who had used his own funds in making the purchase. It is my opinion that the majority has placed far too narrow an interpretation on the term “fiduciary or confidential relationship,” as used in the context of a constructive trust. I take issue with the majority’s interpretation of the evidence relating to the transactions between plaintiff and defendants. Such mistakes have apparently guided them to the erroneous conclusion they have reached. The majority opinion states that the record reflects that plaintiff identified the property and the person from whom the owner’s name and address could be obtained before any oral agreement was made to purchase the property jointly. This is incorrect. The testimony shows that Robert Ray and Emerson Winter went to the land in question and there agreed that Ray would purchase the land and later convey to Winter the 20 acres south of the road. After the two men made this agreement, they went to the home of William Marsh, a neighboring landowner and the overseer of the 60 acres for Mullikin (the owner). They told Marsh of their agreement for dividing up the land. (Prior to this time Ray had contacted Marsh, Marsh had given Ray Mullikin’s name and phone number, and Ray had contacted Mullikin and obtained Mullikin’s promise to hold the land for him.) The following is taken from the abstract of testimony prepared by defendants. Testimony of plaintiff Robert Ray: “A. No, sir. Mr. Mullikin had told me he’s [sic] hold it for me. Q. When did Mr. Mullikin tell you that? A. It was in July, Before Mr. and Mrs. Winter came to Thompsonville. We [witness and Mr. Winter] went to Bill Marsh’s home while we was over there at the ground. We was going to tell him that we was goin’ to divide it up. Yes, sir, we told him that.” Testimony of William Marsh: “Q. I’ll ask you again, Mr. Marsh, if you know the purpose for Mr. Winter being in your home? A. Well, they were there and they were talking about buying that place and dividin’ it up, one takin’ one part and one the other. That’s right, they were talking about this in my presence. No, I don’t know the terms of the agreement. That’s right, they were talking about dividing the property. Yes, sir, the property is naturally divided by a road. Approximately 40 acres lie north of the road. Would be approximately 20 lie south of the road. Q. Do you know, Mr. Marsh, who was to get the property north of the road? A. Robert Ray. Q. And do you know, of your own personal knowledge, who was to get the property south of the road? A. The Winters.” Testimony of defendant Emerson Winter: “So we went up there and he said, ‘This is the 20 acres and this is the 40 acres,’ and he said, "You can have this.’ I said ‘Fair enough.’ So we went up there and he introduced me to this Mr. Rose and he wanted to sell me some ground. I said, Tm a poor retired G.I., you know.’ That’s a by-word, you know, poor G.I., you know, and he, this Mr. Rose said that, ‘If you want it, you’d better get it.’ He said, ‘Someone else was lookin’ at it,’ and I said, “Ray, if you can’t get it, then,’ I said ‘I will.’ ” (Winter is mistakenly referring to Marsh as “Mr. Rose.”) It is significant, too, that the defendants did not obtain the name and phone number of the owner from Marsh (the overseer), but rather they obtained it from plaintiff. Testimony of defendant Joyce Winter: “Yes, I called him [Mullikin] on the phone. I came to know Mr. Mullikin through — Mr. Ray gave us the phone number to call. This was August 15th, of 1972. July the 28th was the date of our visit to Thompsonville.” Testimony of defendant Emerson Winter: “So that night I call Ray up, I got the phone number, I called it from there and I called Mr. Marsh up, I called Ray up, and I said ‘Ray,’ I said, ‘Why don’t you call Mr. Marsh up?’ and he said, ‘No you call him up,’ and I said, ‘Well, give me his phone number.’ He said, ‘OK’, so he gave it to me. Sol called Mr. Mullikin. Now, wait, I got the name mixed up-Mr. Mullikin’s phone number. So he gave me Mr. Mullikin’s phone number and I called Mr. Mullikin up and I said, ‘Mr. Mullikin, this is Mr. Winter,’ and I said, ‘talkin’ to Ray down here in Thompsonville that he wanted to buy and he couldn’t get the money for,’ and he said ‘OK’ he said, ‘You can have it then.’ ” The testimony of plaintiff Ray relates the agreement between plaintiff and defendants to have defendants Winter purchase the entire 60 acres and later convey the 40 acres north of the' road to plaintiff. Testimony of plaintiff Robert Ray: “Q. When did you next hear from either Mr. or Mrs. Winter? A. It was probably a couple of weeks afterward. By phone. Q. With whom did you talk on the phone? A. Mr. Winter. He was afraid that land was goin’ to get away from us and he was wantin’ to go ahead and buy it then and I told him I couldn’t until September. He wanted to know then how about him goin’ ahead and gettin’ it in his name and then when I got-whenever I got ready he would convey the land north of the road over to me. Yes, sir, that was agreeable to me. Q. Did you consult Mr. Marsh about this arrangement? A. No, sir, I told Mr. Mullikin. Yes, sir, I explained the arrangement to Mr. Mullikin. O 0 O Q. You say that you had talked to Mr. Mullikin; and when was the first time you talked to him? A. It was in July. Q. And he said that he would hold the property for you? A. Yes, sir. # # # Q. What did you talk to him about on the second time? A. About my and Mr. Winter’s agreement to go ahead and let Mr. Winter have the ground with the understanding that he was goin’ to turn it over north of the road to me. Q. What did you talk to him about the first time? A. About the ground. If it was for sale, how much it was and would he hold it for me. Q. And then you had another call to him in August; and what was the purpose of that call? A. To tell him about mine and Mr. Winter’s agreement.” In his testimony, defendant Emerson Winter denied that he agreed with plaintiff Ray to convey 40 of the 60 acres to Ray after making the purchase from Mullikin. However, that such an agreement actually existed is clear from the actions of the parties subsequent to the time of the agreement. For example, in a letter sent from defendant Joyce Winter to Lodema Ray (plaintiff’s wife) on January 18,1973, Joyce Winter stated: “But now Spike [Emerson Winter] feels that he has to keep all the ground as he has so much involved — tied up in it.” Obviously, if Winter “now” felt he had to keep “all” the ground, at some prior time he must have intended not to keep all of it. This letter was admitted into evidence at trial and appears in the record. The full body of the letter reads: “Dear Lodema, Received your card yesterday. Was sorry to learn of Dale’s dad. having a coronary. Sure hope that all turns out well for him. Now, about the land. I find this so difficult to put down in words as I don’t want you to feel hurt or angry. But now Spike [Emerson Winter] feels that he has to keep all the ground as he has so much involved — tied up in it. What seemed to be such a simple thing in the beginning has grown from a mole hill into a -mountain. Bob [Robert Ray] didn’t want to involve your place at all in mortgage yet Spike offered ours, and this made1 me very unhappy. In fact, I can honestly tell you that I just didn’t care if the loan and everything else involved came through at all. I prayed much about it. Finally when it did come the day before Thanksgiving it was all on one deed including stamps etc. So now Spike says that the way things now are he would like to really settle down there, build a home and do some farming. We would have come see you only Spike has had the flu. Only went back to work on Tues., missing over a week of work. We shall hope to get down to see you. Please write and let me know how you feel about all this. With love in my heart. Joyce” It is apparent from the testimony of Emerson Winter that it was not until some time after Winter had dealt with Mullikin that Winter decided not to convey the 40 acres to Ray. Even after Winter dealt with Mullikin, Winter still only wanted to have 20 of the 60 acres. In fact, it was only because Ray wrote a “nasty” letter to Winter that Winter • ultimately refused to convey. Testimony of Emerson Winter: “Q. So that the sequence would have been this letter — which is evidence — , a letter written by Mr. Ray to you, and then a letter from you to Mr. Ray saying ‘If all this hadn’t happened we could get together’? We could get together on what? A. Well, get together on the ground. Like I — he didn’t want the 60 acres. I mean, I had to buy the 60 acres to get the 20 acres, because he couldn’t — he didn’t have the money, sir. No, sir, I didn’t want the 60 acres. Q. Have you been furnished with a copy of this complaint in this lawsuit? A. I think so. Yeah. Q. You didn’t want the ground? A. Not the 60 acres, no, sir. I’m retired. I didn’t have the money — I ain’t got the money. Q. When did you decide that you did want the ground? A. When he wouldn’t give me no money on it. In other words, I wasn’t mortgagin’ my house, sir, for a man that I didn’t know. Q. When was he supposed to have given you money on it? A. In August. In August or Sep — when—when it went through. Q. Now wait. It didn’t go through until October 24th. That’s the date of the deed. A. He’s gettin’ me mixed up here. He wouldn’t mortgage his house for the ground, and the only way I could get this ground — 20 acres — was to buy the whole 60 acres, so actually, like I say, I really didn’t want the 60 acres, because I didn’t want to mortgage my house for him, right? OK, so I mortgaged my house and he didn’t and where does that leave me with the ground? e # e Q. Well, why did you not try to buy just the 20 acres? A. I was dealm with Ray. Ray said he wanted to sell me the 20 acres. Q. All right; and you only wanted the 20 acres? A. Right. Q. You didn’t want the 60 acres? A. Not to pay the mortgage my house. No, sir.” The majority says that there is no evidence of an intent to defraud plaintiff at the time of the alleged agreement. They also say that there is no evidence to establish that a confidential relation existed between defendants and plaintiff at the time of the agreement, and that friendship and the exchange of favors does not establish a fiduciary relationship. These statements are but a recital of truisms which have no real relevance to the case. The majority has erred in looking to the nature of the relationship between the parties antecedent to the agreement. They have ignored the rule of law applicable to this case as it is plainly expressed in the Illinois cases, the Restatement, Scott on Trusts, and the other authorities cited above. That rule is that the fiduciary or confidential relationship arises at the time of the agreement, no antecedent relationship is necessary. “The undertaking to act for the other is sufficient to constitute the relation of principal and agent between them. * e ° It is sufficient to create the relation that the one authorizes the other to act for him in making the purchase and the other undertakes to do so.” Restatement of Restitution §194, Comment on subsection (2) (1937). In the instant case, plaintiff located the 60 acres, contacted the owner, Mullikin, negotiated the sale-purchase agreement at the admittedly attractive price, and obtained Mullikin’s agreement to hold the land until the fall of the year. Plaintiff then, after learning of the desire of defendants, his friends, to purchase some land, took defendants into his confidence by telling them of the land owned by Mullikin and of the agreement he had negotiated with Mullikin. Plaintiff then offered to sell defendants 20 acres of this land (about which defendants would otherwise not have been aware) at no profit to himself. Eventually plaintiff, at the suggestion of defendants, advised defendants of how they could contact Mullikin to purchase the land, with the understanding that the 60 acres would be divided between plaintiff and defendants as originally agreed. Defendants then reneged on their agreement with plaintiff, stripped plaintiff of his admittedly attractive deal, and kept the entire 60 acres for themselves. These facts are solidly established by the evidence of record, they are even apparent from the testimony of defendants. The letter from Mrs. Winter to Mrs. Ray shows conclusively that the defendants changed their minds and decided to keep all the land. Such evidence, if not ignored, is not only persuasive, it is conclusive. For the trial of this case a six-man jury was empanelled, at the request of defendants, to hear the evidence. Their verdict, although advisory only in this chancery case, was favorable to plaintiff. In addition, over plaintiffs objections, special interrogatories were submitted by defendants and answered by the jury favorably to plaintiff. Moreover, under the above set of facts the trial court found both that fraud had occurred and that a fiduciary relationship had existed and imposed a constructive trust. Under the authorities above quoted and referred to the trial court and jury were unquestionably correct. I would affirm.