Chapman v. Hughes , 134 Cal. 641 ( 1901 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] In the decision in this case rendered in Bank, April 7, 1900, it was held that the finding of the trial court upholding the deed of conveyance made by Thomas E. Hughes to his daughter-in-law, Matilda B. Hughes, was unsupported, and that the conveyance was void, or, at least, voidable at the instance of the cestui que trust, Chapman. A rehearing was granted for further consideration of this single proposition. The finding of the court was, that the deed was made pursuant to a sale by Thomas E. Hughes to Matilda B. Hughes for a valuable consideration, and that at the time of the sale she had no notice of any right, title, or claim of interest of the plaintiff in or to any portion of the land. The two facts thus declared by this finding are, — 1. That a valuable consideration was given; 2. That the grantee took without any notice of plaintiff's rights in the property.

1. The evidence as to consideration is to the last degree unsatisfactory. After a most careful reading of all the testimony upon the point, it is impossible to say what consideration Matilda B. Hughes paid for the land. The original record upon the books of Hughes shows that the deed was a gift to his daughter, and his first evidence upon the trial of the case was to this effect. Subsequently, he modified his evidence, and testified that, on thinking it over, he remembered that there was "quite a consideration" for the deed; that his firm was indebted to his daughter-in-law, and that on account of the deed she canceled "some of the indebtedness," and that there was a "kind of a settlement" between them. What indebtedness she canceled, and to what extent, nowhere appears. What kind of a settlement was had, is not disclosed.

2. But, passing this consideration, with the concession that the evidence, though unsatisfactory, is still sufficient to support the finding as to consideration, and turning to the second proposition, namely, that the grantee had no notice of plaintiff's rights, there is not only nothing in the evidence to support this finding, but the direct and positive evidence of the parties interested in upholding this deed is against it. William M. Hughes was the son of Thomas E. Hughes, was his partner in business, and in the particular business touching the sales of these lands, knew all about the condition of the title, and of the contracts and trust existing between plaintiff and his father. He acted for his wife, as her agent, in the matter, or as he phrased it, "the Tillie B. Hughes land was transacted by myself." The full knowledge which the agent thus possessed was knowledge chargeable to the principal in a transaction managed wholly by him and within the scope of his authority, and the situation thus presented is that of a trustee who conveys trust land to one taking with notice, in extinguishment of the private debt of that trustee. Such a conveyance is not only void, as being in contravention of the terms of the trust (Civ. Code, sec. 870), but it is void upon consideration of the general equitable principle that a trustee cannot so sell in payment of his own debt. (Frink v. Roe, 70 Cal. 296.) And where the conveyance is made to one taking with notice, it will be voidable at the instance of the cestui que trust.

Such is the case here presented. But it is urged that the evidence of the Hugheses is that plaintiff, Chapman, knew of and assented to this conveyance. If this should be proven and found to be true, doubtless an estoppel in pais would be raised against plaintiff, and he would not be heard to disavow the act to which previously he had formally assented, the parties having changed their condition upon the assurance of his consent. But the answer to this is, that such an estoppel should have been pleaded, proved, and found. It was not pleaded, nor is there any finding in the case to support the position.

It is concluded, therefore, that the finding under consideration is unsupported by the evidence, and must fall, and with it must fall the deed to Matilda B. Hughes.

Consolidated in the transcript were appeals from three separate actions which were united and tried together by order of the court. In deciding the action, the court entered separate findings, judgments, and decrees. To the end, therefore, that the record in this case, or in these cases, may be made free from uncertainty, it is ordered that the judgments appealed from be reversed and the cause or causes remanded for further proceedings in conformity with the views here expressed and with those expressed in the opinion of this court rendered April 7, 1900.

Garoutte, J., McFarland, J., Van Dyke, J., and Temple, J., concurred.

The following is the opinion rendered in Bank, April 7, 1900: —