Court Opinion

ID: 9627765
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:53:38.259206+00
Date Added: 2024-06-11T18:06:49.790134
License: Public Domain

Hamley, C. J.
(dissenting) — I am in agreement with the majority that actual fraud, as a basis for establishing a constructive trust, was not proved.
*338I also agree that it is the rule in this state that a relationship of trust and confidence between one making a conveyance in reliance on the grantee’s oral promise, and such grantee, is insufficient to establish a constructive trust, in the absence of a showing of actual fraud. Our rule in this regard appears to be out of harmony with the general rule elsewhere. See 1 Restatement of Trusts 135, § 44, and comment c; Restatement of Restitution 730, § 182, and comment c; 3 (part 1) Bogert, Trusts and Trustees, 205 et seq., § 496; 35 A. L. R. 280; 45 A. L. R. 851; 80 A. L. R. 195; 129 A. L. R. 689; 159 A. L. R. 997, annotations. I would favor a revision of our rule, if there were a majority to join me.
This dissent, however, is not directed to the point just mentioned, but is limited to the matters discussed in the last five paragraphs of the majority opinion. The majority there considers, but rejects, respondent’s contention that the judgment is sustainable, to the extent that it requires a division of net proceeds, on the ground that it gives effect to an oral express trust with respect to the proceeds of a sale of timber, which trust is not within the statute of frauds, because it does not involve an interest in land.
The majority finds this contention to be without merit, for two reasons. The first such reason is that the 1924 transaction involved the sale of real estate, was accomplished by deed, not by a bill of sale, and concerned standing timber which partakes of the realty. It is apparently the view of the majority that, because of these circumstances, the recognition of an oral express trust in the proceeds of the timber sale would run counter to RCW 64.04.010 and .020, relating to the conveyance of real estate or any interest therein by deed/
With all due respect, it appears to me that the reason thus given misses the point of the contention. Respondent does not deny that the transaction involves an interest in land. The conveyance itself relates to specifically described acreage, and the agreement pertains to timber which, as the majority correctly points out, partakes of the realty.
What respondent contends is that, though the conveyance *339and agreement to sell involve an interest in land, the proceeds of the timber sale, if and when made, do not represent an interest in land, and may therefore be the subject of an express oral trust. As I see it, the majority has not dealt with this contention, which is a matter of first impression in this state.
The fourth and seventh sections of the English Statute of Frauds (Statute 29, Charles II, chapter 3, enacted in 1676), requiring, respectively, that contracts for an interest in, or trust concerning, land be in writing, have no counterpart in our statute of frauds. RCW 19.36.010 [cf. Rem. Rev. Stat., § 5825]. See Richards v. Redelsheimer, 36 Wash. 325, 78 Pac. 934. However, our statute requiring every conveyance of real estate or any interest therein and every contract creating or evidencing an encumbrance upon real estate to be by deed (RCW 64.04.010 [cf. Rem. Rev. Stat., § 10550]) has been made to serve the same purpose. In re Swartwood & Welsher Estates, 198 Wash. 557, 89 P. (2d) 203; 1 Bogert, Trusts and Trustees, 394, § 64.
In. other jurisdictions which depend upon similar statutes to serve the purpose of a statute of frauds relating' to interests in land, the weight of authority appears to be that an oral promise to hold in trust the proceeds of a sale of land is not violative of the statute of frauds. See the cases cited in 154 A. L. R. 385, 389, annotation; 1 Restatement of Trusts 155, § 52, comment g; Restatement of Restitution 736, § 182, comment e; 3 (part 1) Bogert, Trusts and Trustees, 194, § 495; 1 Scott on Trusts 285, § 52.1.
The A. L. R. annotation referred to above contains the following statement introductory to the citation of decisions from fifteen jurisdictions:
“The rule appears to be general that an agreement as to the disposal of the proceeds of the sale of real estate is not rendered unenforceable as to such proceeds by the fact that in so far as the real estate itself is concerned, the agreement does not satisfy the provision of the statute of frauds relating to contracts for the sale of real property or an interest therein.” (p. 389)
*340Comment g, of 1 Restatement of Trusts 155, § 52, reads as follow's:
“g. Transfer of land on oral trust of land and of proceeds. If the owner of land transfers it to another person upon an oral trust to sell the land and to hold the proceeds in trust, the beneficiary cannot compel the transferee to sell the land; if, however, he does sell the land there is a valid contract to hold the proceeds in trust, and although the transfer of the land is the consideration for the promise to hold the proceeds in trust, the proceeds are personal property and the contract is not required by the Statute of Frauds to be in writing.”
Bogert has this to say on the point:
“If land is conveyed on an oral promise to sell it and pay all or part of the proceeds to the donor or another, as previously stated, there should be no difficulty in enforcing an express trust in the money after the sale has occurred. The transaction should be regarded as a contract, made upon valuable consideration, to hold personalty in trust if and when it is acquired.” (3 (part 1) Bogert, Trusts and Trustees, 194, § 495.)
I believe that this rule should be recognized and applied in this state.
The second reason advanced by the majority why an oral express trust in the proceeds of this timber sale should not be recognized is predicated upon our statute (RCW 19-.36.010), requiring agreements not to be performed in one year to be in writing.
I agree fully with the view of the majority that the agreement to sell the timber was not to be performed in one year, and is therefore unenforcible. But the question is whether, having performed the agreement to sell the timber, the promisor is obliged to divide the proceeds. This question is not dealt with by the majority.
There is here no question as to the enforcibility of a contract to take care of the property, pay the taxes, and sell the timber. All of this has been done. Respondent seeks only to obtain an accounting and payment of moneys owing to him under a contract otherwise fully performed. The provision of the statute of frauds in question is inapplicable where *341the contract is fully performed except for the adjustment of expenses and the division of profits arising from the transaction. Price v. Felumlee, 60 Ohio App. 34, 19 N. E. (2d) 290.
There is, also, another reason why this provision of the statute of frauds is not a defense to this action. If someone hands me a rare book, upon my oral promise to sell the book two years later and divide the proceeds, my promise is unenforcible. But that does not mean that I may forever retain the book for myself, or the proceeds of the sale, if I choose to sell it.
Stating this proposition in the form of a general rule, if one who has received consideration under a contract which is unenforcible under this provision of the statute of frauds invokes the statute as a defense, he is under the duty of returning the consideration, in order to avoid unjust enrichment. Union Savings & Trust Co. v. Krumm, 88 Wash. 20, 152 Pac. 681; Cone v. Ariss, 13 Wn. (2d) 650, 126 P. (2d) 591. We will not permit the statute of frauds to be used to perpetuate a fraud. Garbrick v. Franz, 13 Wn. (2d) 427, 125 P. (2d) 295. The fact that the plaintiff has not specifically pleaded unjust enrichment is immaterial, if the facts pleaded and proved establish a right to recover on such theory. Seekamp v. Small, 39 Wn. (2d) 578, 237 P. (2d) 489. In view of the agreement originally reached by the parties, it would appear that one half of the net proceeds of the 1951 timber sale fairly measures the original consideration advanced by respondent.
The foregoing reasons lead me to believe that the judgment is sustainable, to the extent that it requires a division of net proceeds. That this would accomplish a just result is verified by the majority’s conclusion that the trial court did not err in finding that there was an oral agreement to sell the land or timber and divide the net proceeds.
Accordingly, I would remand the cause, with directions to delete from the judgment all provisions reciting that Knevage holds the title to an undivided one-half interest in the property in question as trustee for respondent, and re*342quiring Knevage to execute and deliver to respondent a deed conveying such interest to respondent. In all other respects I would affirm. • •
Finley and Rosellini, JJ., concur with Hamley, C. J.
April 4, 1956. Petition for rehearing denied.