Lewis v. VanCleve ( 1922 )

Mr. Justice Farmer

delivered the opinion of the court:

This is an appeal from a decree of the circuit court of Macon county dismissing a bill filed by appellants, as complainants, to foreclose a trust deed on certain real estate. In addition to praying a foreclosure of the trust deed the bill prayed that certain deeds purporting to convey the property to defendant James A. Henson be declared null and void and set aside as a cloud on the title to the property. The master in chancery to whom the cause was referred to take testimony and report his conclusions, reported that Henson held title superior to that through which complainants claimed, and that they were not entitled to a decree as prayed in the bill. The chancellor overruled exceptions to the master’s report, entered a decree approving and confirming it, denied any of the relief prayed in the bill, and adjudged and decreed that the persons who executed the notes secured by the trust deed sought to be foreclosed pay the amount due on said notes to the complainants. This appeal is prosecuted from that decree.

The facts alleged in the bill are, that prior to June, 1911, Helen G. Terhune was the owner in fee simple of lot 4, in block 6, of a certain addition to the city of Decatur, and she and her husband, Isaac IT. Terhune, occupied the premises as a homestead; that prior to June, 1911, Helen and her husband became jointly indebted to numerous persons, who were demanding payment and were threatening to secure judgments; that on June'3, 1911, they conveyed said premises to their son, William G. Terhune, who resided on the premises with his parents; that the conveyance was made to defraud creditors, and it was fraudulently agreed and understood between the grantors and grantee that it was made for the purpose of delaying and defrauding the grantors’ creditors, and with the distinct understanding between the parties that William should hold the property in trust for his motliér and would at her request convey the premises back to her or to such person as she designated; that the family continued to reside on the premises until September 21, 1911, when William executed a general warranty deed to his mother conveying the premises back to her in fee simple, in conformity with the agreement made when she conveyed the property to him, which deed was duly recorded; that there was nothing on the records of Macon county which showed any defect in Mrs. Terhune’s title and complainants had no notice that there were any defects or imperfections. After the deed was made by William to his mother, she and her son became indebted to George P. VanCleve, which indebtedness was evidenced by notes signed by them, and on the 31st day of July, 1912, VanCleve secured a judgment against them for $52.87, February 10, 1914, another judgment against them for $310, and January 9, 1914, another judgment for $215.83. On the 23d of March, 1914, Mrs. Terhune, being then a widow, conveyed the premises to VanCleve for a consideration of $2500, which was partly paid by the satisfaction of the judgments mentioned and the balance in cash. The bill alleges William acted in the transaction resulting in the conveyance to VanCleve for his mother and received a part of the consideration, which he appropriated and ever since has retained. In March, 1914, VanCleve secured a loan on the premises for $1000, and he and his wife executed a trust deed to Guy P. Lewis, as trustee, to secure the payment of the note given for $1000, due three years after date. That is the trust deed the bill in this case was filed to foreclose. Subsequently VanCleve and wife conveyed the premises to Albert T. Summers, and he conveyed them to Phoebe Weygandt subject to the trust deed. On the 27th of April, 1915, William G. Terhune and wife, for the consideration of one dollar, executed a deed to the premises to James A. Henson, an attorney at law, who represented Terhune. On the same day William signed and filed for record an instrument in writing repudiating and disaffirming all deeds and contracts relating to the premises theretofore made by him, for the reason that at the time they were made he was a minor under twenty-one years of age. Again, on March 6, 1917, he made a warranty deed for the same premises to the same grantee for the same consideration for the purpose of confirming and ratifying his deed of April 27, 1915, and disaffirming the deed made to his mother in 1911. Again, on March 16 of the same year he made a deed to the same grantee for the same preffiises, the purpose of which was stated to be to confirm and ratify his deed of April 27, 1915, and disaffirm the deed to his mother in 1911. At the time these deeds were made by William the premises were not in the possession of the Terhunes. The bill alleges that the deed from Mrs. Terhune to her son, and the deed from him back to his mother, were without consideration. Henson answered the bill at length, setting up the reasons why he denied complainants were entitled to the relief prayed.

William G. Terhune was seventeen or eighteen years old when his mother made the deed to him and when he made the deed back to her. No consideration was paid for either conveyance, and the evidence shows the deed to the son was made to protect the property from creditors until further arrangements were made, and that the son conveyed it back to her when requested. Appellants contend that Terhune never had any title to the premises except as a mere trustee under a trust created to defraud creditors; that any creditor might have compelled him to make the conveyance, and on that ground he could not disaffirm it; also that he fraudulently and falsely represented to VanCleve when he was negotiating with him, as his mother’s agent, for the sale of the property, that he was of age when he made the deed to his mother and that he received a valuable part of the consideration for it, which he has ever since retained, and he is now estopped to disaffirm his deed to his mother. Appellants discuss at length, and cite numerous authorities to support the proposition contended for, that a minor, where he is charged as trustee, is bound to carry out the trust the same as an adult, and, where he can be compelled to perform the trust, any deed or contract made by him which it was his legal duty to make is valid and binding on him and cannot be disaffirmed. Appellees concede that where an infant does only what the law would compel him to do, such as where he takes title under such circumstances that the law raises a constructive trust, he cannot disaffirm his performance of the trust, but they contend the trust alleged in the bill in this case was an express trust, and that even if it were in writing, which it was not, an infant may repudiate and disaffirm the trust, and any conveyance made thereunder, upon becoming of age.

In our view of the case it will not be necessary to discuss many of the questions argued in the briefs. The evidence abundantly shows William G. Terhune paid no consideration to his mother for the lot but that she conveyed it to him to protect it against creditors until she was relieved from that apprehended danger, and when that time arrived, at her request the son re-conveyed to her. Title remained in her of record until March, 1914. It is true, the son was a minor when he made the deed to his mother, in June, 1911. His mother and father were both dead at the time of the trial of this case and he did not appear to be certain of his exact age, but, as we understand the evidence, he was about seventeen or eighteen years old in June, 1911. He testified he was married on his birthday when he was twenty-one years old, and that his wedding day was March 11, 1914. He was therefore twenty-one years old when the deed was made by his mother to VanCleve, March 23, 1914. VanCleve testified Terhune told him, while they were negotiating for the sale of the premises to him, that he was twenty-one when he made the deed to his mother. He transacted all the business for his mother connected with the sale of the lot to VanCleve, who testified he did not remember that he saw her about it. He participated in the benefits of the consideration paid for the lot by the satisfaction of judgments against him to the amount of nearly $600, and VanCleve testified that there was talk that Terhune was to get a sum of money. The bill alleges these facts, and appellants contend that he could not thereafter be permitted to disaffirm his deed to his mother and convey the lot to a stranger.

It is not improper to note in this connection that all three of the deeds Terhune made to Henson, — one in April, 1915, and two in March, 1917, — expressed the consideration to be one dollar. Henson testified he paid $900 or $1000 for the property by giving Terhune credit for legal services rendered during a period of possibly a year, and thought he had also given a check for $600, but he was unable to find any book containing his account or any check or stub of a check showing any such payment. His memory as to his knowledge of the condition of the title as disclosed by the records and the judgments against Terhune and his mother was very defective, but he was bound to know everything disclosed by the records. He testified he prepared and had served on VanCleve, Mrs. Weygandt, Mrs. Terhune and the trustee in the trust deed, notice that Terhune had conveyed the property to him and filed the same for record.

Appellees rely on Wieland v. Kobick, 110 Ill. 16, and some other decisions, that a person is not estopped by his false representations at the time of making a deed or contract from setting up infancy as a defense. That was an ejectment suit. Plaintiff had sold and conveyed the premises, the deed reciting she was unmarried and of age. She was, in fact, only seventeen years old, and after coming of age she filed a disaffirmance of her deed and demanded possession of the premises. The court held she was not estopped to disaffirm the deed; and that seems to be in harmony with the weight of authority, though the decisions are by no means unanimous. We are of opinion, however, that under the facts of this case it is not controlled by the rule in Wieland v. Kobick, supra.

Penn v. Heisey, 19 Ill. 295, is a case where a bill in chancery was filed by Heisey to enjoin the prosecution of an ejectment suit brought by Penn and his wife. The facts were, that Gideon Minor, guardian of the minor heirs of Oliver Minor, deceased, — Mrs. Penn being one of them,— regularly sold by authority of law, at guardian’s sale, a certain lot belonging to the heirs of Oliver Minor but made no report of the sale and it was never confirmed, which the court held made the sale void and that no title passed to the purchaser. The proof showed the guardian charged himself with the proceeds of the sale and disbursed part of the heirs’ share for their maintenance and education, and with the remainder of their part ($200) he purchased eighty-acres of valuable land, which the heirs sold and received the money for. The heirs examined the accounts of their guardian, had knowledge of his acts and made no objections, and the court stated the question to be, “Are not plaintiffs in error estopped from setting up title to this lot when they have received and enjoyed the benefits of the proceeds of its sale and it is now in the possession of an innocent purchaser without notice?” and said: “The proof in this case shows that the plaintiffs knew all the facts respecting the sale of the lot by their guardian and the purchase and conveyance of other lands out of the proceeds. An equitable estoppel prevents a party from using a title which in good conscience ought to inure to the use of another, and if such a case was ever presented we think this one. Such estoppels are, and should be, favored in law, honor and conscience for the truest and best of reasons; that a man having received a benefit in one character, the value of the thing or of the property, shall not afterwards receive the thing or property itself in the same or another character. This principle, so equitable and legal, runs throughout all the transactions and contracts of civilized life. Here the plaintiffs in error received the proceeds of the sale of this lot, a part in the nurture and education of the wife and a part in eighty acres of land, which they have sold. * * * .We take it that a minor may, and ought to be, bound by his silence if of age sufficient to know his position in regard to his property. He has no more right to commit a fraud than an adult. This principle of equitable estoppels of this character applies to infants as well as adults; to insolvent sureties and guardians as well as persons acting for themselves ; and they have place as well when the proceeds arise from a sale by authority of law as when they spring from the act of the party. (Commonwealth v. Sherman’s Admr. 6 Pa. St. 346.) In this case the ancestor, Oliver Minor, died in 1833, seized of this lot. The decree for the sale of the lot passed in 1835. Seven years after, in 1842, when the plaintiff in error, Eliza, was nearly or quite marriageable, the lot was sold under an execution against the purchaser of it at the guardian’s sale. Eliza married in 1846. He held and occupied it ten years and sold it to George Strain in 1852. He occupied and sold it to the defendant in error for the consideration of $1400 in March, 1853. The ejectment suit is commenced in 1854 and this bill of complaint filed the same year. It appears, then, from the time of the sale of the lot under execution to the sale to Strain the plaintiff in error was of an age and in a condition to know all about this property, and by her silence must be considered as having inspired a confidence that she was content with the nurture and education and land she had received out of the proceeds of the sale of the lot. Up to the purchase by the complainant she had been seven years married, and she and her husband both knew the condition of the property, the various transfers of it and of the improvements made upon it without asserting or suggesting any claim.” That case was cited with approval, quoted from at length and adhered to in Dickson v. New York Biscuit Co. 211 Ill. 468.

“Since the estoppel of a person to declare the truth and assert his rights based thereon, because of his contrary and misleading acts or declarations, gives to those acts or declarations a contractual force, estoppel will not ordinarily be based on the acts or declarations of infants, but ca'ses may arise in which, for the prevention of fraud or unfairness, a court of equity may decree such an estoppel: Upon that principle it is well settled that no person, whether under legal disability or not, will in equity be permitted to receive and retain that which forms the consideration for an invalid sale or disposition of his property, and at the same time to re-take the property to the prejudice of those who have in good faith acted upon the transaction as valid. It has been held, even at law, that a minor may and ought to be bound by his silence if of age sufficient to know his position in regard to his property. He has no more right to commit a fraud than an adult.” (14 R. C. L. sec. 16, p. 232.)

It has been laid down that as a general rule the doctrine of estoppel has no application to infants, but there are many cases recognizing an exception to this rule or denying its application in case the conduct of the infant on which the estoppel is sought to be based has been intentional and fraudulent and the infant was at the time of years of discretion. (22 Cyc. 512.) Taking William G. Terhune’s own testimony, he was of age March 11, 1914, and he acted for his mother in selling and conveying the property to VanCleve on March 23, 1914. He received and appropriated part of the consideration paid for the property and afterwards conveyed it to another party who knew at least all the facts appearing of record, for a doubtful consideration, and dis-affirmed the deed to his mother in 1911. To sustain his deeds to Henson as paramount to the trust deed would be to aid him in perpetrating a deliberate and intended fraud, which the court said in the Penn case, supra, he had no more right to commit than an adult. We do not arrive at our conclusion on the ground simply that Terhune represented he was of age when he made the deed to his mother, but on the ground that after attaining his majority he actively engaged in assisting her to sell the property and himself received the benefit of a part of the consideration paid for it. Surely a court of equity cannot be so impotent and bound by technical rules as to be required to stamp with approval a transaction so fraudulent and immoral as to shock every sense of justice and fairness.

The decree is reversed and the cause remanded, with directions to the circuit court to grant a decree as prayed.

Reversed and remanded, with directions.