Court Opinion

ID: 8025006
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:33:47.669879+00
Date Added: 2024-06-11T16:36:47.568551
License: Public Domain

ON REHEARING
MR. JUSTICE ANGSTMAN:
Defendants filed a motion for rehearing herein only so far as the foregoing opinion promulgated on July 16, 1958, affects the interest of defendant, William Melby. That motion was granted.
Upon the rehearing on that question Justice Bottomly took part instead of Judge Elwell, who sat in his place on the original hearing.
*430This opinion, considering only the interest of William Melby, is therefore added to the foregoing opinion.
The record with respect to the interest of William Melby shows the following:
Camell, defendants’ agent, testified that he met R. M. Melby and his wife in August or September 1953 at their ranch. He discussed the matter of their selling their ranch several times. They finally signed the contract for the sale of the land involved here. He was asked:
“Q. In any of those discussions was the defendant William Melby present? A. Was he present?
“Q. Yes? A. I believe he was present the first time I called at the ranch, I believe he was. * * *
“ Q. Did he participate in any of these discussions? A. No he didn’t; I met him and talked to him a while.
“ Q. Did he at any time before September 24th, or on September 24th, assert he had any title in this property? * * * A. No he did not, not to me.”
Prior to mailing the contract of sale with plaintiff Camell examined the records of Petroleum County and found that the title stood in the name of Mr. and Mrs. Melby and that the records did not reveal that William Melby owned any interest in the property. Plaintiff testified that he was with Camell when the records were thus examined.
Camell then made the deal with plaintiff and accepted payment of $10,000. A day or two later he notified Mr. and Mrs. Melby that he had sold the ranch, and that Mr. Melby then said: “I will have to see Bill, now Bill has an interest in the ranch, I will have to discuss it, talk it over with him. * * * I will write Bill, he is in school and I don’t want to excite him, he is studying hard. I will write him then will let yon know what he said, his reaction on the deal.”
Later the witness Carnell received the letter from Mr. Melby in which he stated among other things “Son said O.K. to sell.” He. then gave Mr. Melby a check for $5,000 and arrangements were made to meet some ten days later in Mathers’ office in *431Roundup to complete the deal. Meanwhile Mr. Melby returned the check to the witness by mail, containing a letter in which it was stated: “Had another letter from son asking us to hold this deal off until he comes home for his vacation Christmas.” Carnell testified he met all three of the Melbys at Christmas time and Mr. Melby expressed satisfaction with the deal but said his son Bill, “don’t want to sell to Hughes.”
Mr. Melby also testified that Bill “was present one time when Carnell was at the ranch discussing the sale. ’ ’ He denied hat he had received a letter from his son saying it was O.K. to sell, but he assumed it was O.K. with his son. He testified also that he recorded the deed which placed a one-third interest in the son. In fact there were two deeds. One by Mr. and Mrs. Melby to Joan B. McKeever dated December 23, 1952, and the other dated December 24, 1952, by Joan McKeever to Mr. and Mrs. Melby and William Melby their son in equal shares. The son did not pay anything for the property. It was a gift to him and a gift tax was paid on it. The son was not at the ranch when he recorded the deeds. William Melby testified that he did not tell his parents to record the deeds. The deeds had been kept under the control of Mr. Melby in his desk. Mr. Melby also testified that he and his wife told Mr. Carnell before the contract was signed that the son had an interest and there would be no sale unless he was willing but so far as the record shows plaintiff Hughes knew nothing of this.
It is contended by counsel for defendant, William Melby, that because of sections 73-201 and 73-202 the right of William Melby has not been affected by the sale.
Section 73-201, R.C.M. 1947, reads:
“Every conveyance of real property acknowledged or proved, and certified and recorded as prescribed by law, from the time it is filed with the county clerk for record, is constructive notice of the contents thereof to subsequent purchasers and mortgagees; and a certified copy of any such recorded conveyance may be recorded in any other county, and when so re*432corded the record thereof shall have the same force and effect as though it was of the original conveyance.”
Section 73-202, R.C.M. 1947, provides:
“Every conveyance of real property, other than a lease for a term not exceeding one year, is void against any subsequent purchaser or encumbrancer, including an assignee of a mortgage, lease, or other conditional estate, of the same property, or any part thereof, in good faith and for a valuable consideration, whose conveyance is first duly recorded.”
Where, as here, William Melby received the property as a gift from his father, it is doubtful whether he can be classed as a good-faith purchaser for a valuable consideration within the meaning of section 73-202, supra. Foster v. Winstanley, 39 Mont. 314, 102 Pac. 574. We pass that point without a ruling.
Likewise where the deed to defendant William Melby was held by his father, as here, it is also doubtful whether it was ever delivered to William Melby. Plaintiff contends that when William Melby stood by, knowing that negotiations were being carried on by his father to sell the land, he will be estopped because of his failure to record his conveyance from relying on it as against one who acted upon the nonexistence of the conveyance as shown by the record. He relies on Marling v. Nommensen, 127 Wis. 363, 106 N.W. 844, 845, 5 L.R.A., N.S., 412, 7 Ann. Cas. 364. The court in that case said:
“A moment’s reflection must convince one that a prior purchaser may, by failure to record his conveyance, certainly in connection with other facts and circumstances, become estopped to rely on it against one whom he has led to believe and act upon its nonexistence, although he should afterwards get his conveyance on record before the later one.” We point out that in the note in 7 Ann. Cas. 367, it is stated that that ease is not supported by the authorities in other jurisdictions. We took note of that point in Hastings v. Wise, 91 Mont. 430, 8 Pac. (2d) 636.
There is however a long line of cases holding in substance that if a person stands by and allows another to purchase his *433property without giving him any notice of his title, a court of equity will treat it as fraudulent for the owners to afterwards try to assert his title. The cases supporting that rule are listed in the note in 50 A.L.R. 673.
We recognized the above rule in Yellowstone National Bank v. McCullough, 51 Mont. 590, 154 Pac. 919, 923, where the court quoted with approval from Wendell’s Ex’rs v. Van Rensselaer, 1 John’s. Ch., N.Y., 344, as follows:
“ ‘There is no principle better established in this court, nor one founded on more solid considerations of equity and public utility, than that which declares that if one man knowingly, though he does it passively, by looking on, suffers another to purchase and expend money on land, under an erroneous opinion of title, without making known his claim, he shall not afterwards be permitted to exercise his legal right against such person. It would be an act of fraud and injustice, and his conscience is bound by this equitable estoppel’.”
The court in that case did not apply the rule because the deed involved had been placed of record and that was held to be all the notice required to be given by the grantee named in the deed.
If we assume that William Melby actually had an interest in  this property before it was sold to plaintiff the evidence is sufficient to estop' him from now asserting it after he stood by knowing that his parents were about to sell it to plaintiff. Furthermore it is doubtful whether defendant William Melby ever acquired an interest in the property.
Here Mr. Melby, the father, conducted all the dealings with reference to the sale of the property. It was he who sought to make a gift of a third of the property to his son. He held the deed giving that interest to his son. He chose the time to place it of record. If he did any act making his gift ineffective he was to blame.
For him to negotiate a sale, through his agent Camell, with  plaintiff who acted on the supposition that Mr. Melby and his wife were the sole owners as shown by the record, and *434then to come forward with a deed of a one-third interest to the son, after the sale was made, would be allowing him to perpetrate a fraud and accomplish a gift to the detriment of an innocent purchaser for value.
We see no difference between this case where the deed to the son was executed before the sale to plaintiff bnt not recorded and one where the deed was made afterwards. It would operate as a fraud in either case. In effect Mr. Melby is estopped from accomplishing a gift to his son after first completing a sale of the property.
The judgment should be modified in- accordance with the views stated in the opinion promulgated on July 16, 1958, as well as with the views herein stated.
MR. CHIEF JUSTICE HARRISON, and MR. JUSTICE CASTLES, concur.