Humphreys v. Butler , 51 Ark. 351 ( 1888 )

Battle, J.

Edward Johnigan enlisted in the army of the United States during the late war between the States, and died in the service, and before the close of the war. At the time he enlisted he had a wife, Clarissa by name, and when he died he left her surviving. He also had a brother Jacob, who survived him. In 1871 Jacob, without the knowledge, consent or authority of his brother’s widow, collected from the United States $149.52 as bounty due his brother Edward, and invested it in a certain lot in Little Rock, which he purchased, and which cost him $400. Clarissa married one Butler. Having discovered Jacob’s collection and investment, they brought this action to divest him of the title to the lot, and to vest it in Clarissa, or to recover a decree for the amount collected in favor of Clarissa, and to have it decreed a lien on the lot and the lot sold to satisfy the same.

1. Constructive Trust: On land bought with money wrongfully converted. The amount due Edward as bounty at the time of . . . _ . death rightfully belonged to his widow. There is no controversy about Jacob having collected it, or the amount collected; and we think that the evidence clearly shows that invested it in the lot. But it is insisted that he stood in no fiduciary relation to Clarissa, and that when he collected the money due her, and invested it in the town lot, no trust resulted to her. It is true that he stood in no relation of confidence or trust to her. But it is not necessary that such a relation should have existed to entitle her to relief against the lot. Equity created a trust in invitum out of the collection and the investment of her money in the lot, with the view of subjecting the lot to the purposes of indemnity and recomp ence.

“One of the most common cases,” says JudgeStory, “in which a court of equity acts upon the ground of implied trust in invitum, is where a party receives money which he cannot conscientiously withhold from another party.” And. he states it to be a general principle that “whenever the property of a party has been wrongfully misapplied, or a trust fund has been wrongfully converted into another species of property, if its identity can be traced, it will be held in its new form liable to the rights of the original owner, or the cestui que trust.'” Story’s Eq. Jur., secs. 1255, 1258.

In 2 Pomeroy’s Equity Jurisprudence, the author says: “In general, whenever the legal title to property, real or personal, has been obtained through actual fraud, misrepresentations, concealments or through undue influence, duress, taking advantage of one’s necessities or weakness, or through any other similar means or under any other similar circumstances, which render it inconscientious for the holder of the legal title to retain and enjoy the beneficial interest, equity impresses a constructive trust on the property thus acquired in favor of the one who is truly and equitably entitled to the same, although he may never perhaps have had any legal estate therein; anda court of equity has jurisdiction to reach the property either in the hands of the original wrong-doer, or in the hands of any subsequent holder, until a purchaser of it in good faith and without notice acquires a higher right and takes the property relieved from the trust. The forms and varieties of these trusts, which are termed ex maleficio or ex delicto, are practically without limit. The principle is applied wherever it is necessary, for the obtaining of complete justice, although the law may also give the remedy of damages against the wrong-doer.” Sec. 1053.

It has been held that equity will charge land paid for in part with the proceeds of stolen property with a trust in favor of the owner of the property for the amount so used. National Mahanoe Bank v. Barry, 125 Mass., 20; Newton v. Porter, 69 N. Y,, 133 ; Bank of America v. Pollock, [4th ed.] ch. 215.

There is no good reason why the owner of property taken .and converted by one who has no right to its possession, should be less favorably situated in a court of equity, “in respect to his remedy to recover it, or the property into which it has been converted, than one who by an abuse of •trust, has been injured by the wrongful act of a trustee to whom the possession of trust property has been confided.’’

2. Same. Same: Equitable lien. '“The beautiful character, pervading excellence, if one may say so, of equity jurisprudence,’’ says Judge Story, “is it varies its adjustments and proportions so as to meet the •very form and pressure of each particular case, in all its complex habitudes.’’ While in the former case no relation of confidence or trust exists, it impresses a constructive trust upon the property obtained by the conversion for the benefit of the party whose effects have been used in obtaining it; •and, when such effects or the proceeds thereof, were a part of the price paid, it makes the property so obtained chargeable with an equitable lien in favor of such party and entitles him to a “judgment for the sale of the property as upon foreclosure in default of payment within a time named.” Bresnihan v. Shehan, 125 Mass,, 11, and cases cited; Wallace v. Duffield, 2 S. & R., 521; Day v. Roth, 18 N. Y., 448.

3. Practice in Supreme Court: Failure to make issue below. Appellant insists that the demand of appellees is stale and that a court of equity will not enforce it. But this issue was not raised in the court below. The defendant failed to plead the statute of limitations or that the demand was stale in the ■chancery court, and the evidence shows that this suit was brought within a reasonable time after the discovery of the collection by Jacob.

Appellee, Clarissa Butler, is entitled to judgment for the ,$149.52, and six per cent, per annum interest thereon..' Inasmuch as the evidence does not show when the money was actually received, and does show that it was invested in the lot on the 14th day of October, 1871, the interest should be computed from that date. The $149.52 being only a part of the price paid for the lot, she should have a lien thereon for the amount due her, and a decree for the sale of the lot to satisfy the lien in default of payment, within a specified time. 2 Perry on Trusts, [3d ed.] sec. 842; Scale v. Baker, 28 Bravan, 91; Price v. Blackmore, 6 Beavar,, 507; Lewis v. Maddocks, 17 Vesy, 48.

The decree of the chancery court is reversed, and this, cause is remanded, with an instruction to the court below to enter a decree in conformity with this opinion, and for other proceedings.