Lyons v. Bodenhamer , 7 Kan. 455 ( 1871 )

The opinion of the court was delivered by

Kingman, C. J.:

The defendants in error, plaintiffs below, are the children and heirs-at-law of William S. Hart, who died in November, 1861. In October, -1861, Hart borrowed from the plaintiff in error, M'. B. Lyons, a land warrant belonging to his brother William Lyons, of Ohio, and located it upon a certain quarter section of lanc^ in the name of said William Lyons. It was borrowed to be replaced by another warrant in three loeeks, and if he did not replace it in three months, then the land was to .belong to William Lyons. M. B. Lyons was the agent of William as to the warrant; but it seems that M. B. Lyons had no authority to make such a disposition of the warrant, and that Hart was made aware of that fact when he borrowed it. The land was so entered in pursuance of an agreement between M. B. Lyons and Hart, and the certificate of location was delivered to M. B. Lyons, who retained it until after the expiration of three months after the location, and then transmitted it to William Lyons, in the State of Ohio. The legal title to the land remained in William Lyons until the 18th of July, 1866, and on that day he and his wife by deed of general warranty conveyed the land to M. B. Lyons. This conveyance was duly filed for record on the 21th of November, 1868. On the 7th of November, 1868, M. B. Lyons conveyed the land by deed of general warranty to plaintiff in error J ohn Clifton, which deed was filed for record on the 24th of November, 1868. Hart having died one month after he borrowed the warrant, and without replacing it, his family consisting of his widow and her children, the defendants in error, continued to reside on the land until the death of his widow in March, 1863. After the death of the widow, and until the 19th of March, 1866, the said land was occupied by tenants holding under contracts with the administrators of said Hart. Subsequently to the 19th of March, 1866, Amanda A. Bodenhamer, eldest daughter of said Hart, and her husband, and Henry H. Hart, son of Hart deceased, occupied said land and cultivated it up to the time when this action was decided in the court below, claiming it all the time as the children and heirs-at-law of William S. Hart deceased. The other defendants in error, Mary, John, and Elizabeth Hart, minor children of William S. Hart deceased, made said place their home, but not residing continuously thereon ; and the Bodenhamers and Henry H. Hart were living upon the land when Clifton bought it. On the 14th of March, 1863, M. B. Lyons was appointed administrator of the estate of William S. Hart, and joined in a lease of said land, after his appointment, whereby said land wa3 leased as land belonging to the estate; and while he was acting as the administrator he always treated the land as belonging to' the estate of William S. Hart, up to the 22d of June, 1867, at which time, and nearly a year subsequently to the deed from William Lyons to himself, in an account filed in the probate court of said county, in his settlement as administrator he charged said estate with the taxes on said lands paid by him for the years 1862,' 1863, 1864 and 1865, three of the receipts for which were taken in the nanle of Sarah Hart. One of the facts found by the court below was as follows: “ That John Clifton at the “time of his said purchase of said lands from M. B. “ Lyons, had constructive notice of the claim and title of “ Hárt’s heirs in and to the said lands; that he had “ actual knowledge of the residence thereon of said Wil- “ liam H. Bodenhamer; and that he had actual notice “ that the heirs of William S. Hart claimed some title “ and interest to and in said lands.” M. B. Lyons paid his brother $325 for the land, and Clifton paid M. B. Lyons $350 in hand, and gave his note for $450 more, for the land. The note was secured by mortgage on the land, which mortgage has never been recorded. The lands were worth $1,500 when Clifton purchased. Neither of the Lyons ever asked for another warrant in lieu of the one loaned to Hart. Neither of them ever" claimed rent, nor did they-ever notify the widow or heirs to leave the land, or make any effort to obtain possession. The land warrant'when loaned was worth $160. The case was tried by the court, and the foregoing is a brief synopsis of the findings of fact by the court. As conclusions of law the court found as follows:

“1st. That the plaintiffs herein, as the heirs-at-law of said William S. Hart deceased, are in equity the owners of said lands in the said petition of the plaintiffs set forth, and that said lands are charged with and subject to a lien and incumbrance of $325, and interest thereon at the rate of .seven per cent, per annum from the 18th of July, 1866, in favor of the holder of the legal title thereto.

“ 2d. That the said defendant John Clifton has the legal title to said lands; that he acquired the same with .notice of the plaintiffs’ equitable title thereto, and that he holds the same in trust for the said plaintiffs.

“ 3d. That the said legal title to the said lands ought to be conveyed to the said plaintiffs by the said defendant John Clifton, upon the payment to the said John Clifton by the said plaintiffs of the said sum $325, and interest as aforesaid.”

The district court gave judgment for the plaintiffs below, in accordance with said findings and conclusions of law; and this.court is asked to reverse the judgment and dismiss the petition.

i objections to ?vaRed.S8’h0'v Before entering upon the main questions involved in the record,' it becomes necessary to consider and settle two points made by the plaintiffs in error. Be* fore answering they made amotion to compel the plaintiffs to separately state and number their causes of action in the petition. This the court refused to do, and probably correctly; but no exception was taken to the ruling of the court, and therefore' if it was error it was waived. Again, the plaintiffs in error claim that their demurrer should have been sustained to the petition because there was a misjoinder of defendants in this, that "William Lyons was a necessary party, or, if not, then M. B. Lyons was an improper party. But an examination of the demurrer discloses the fact that the demurrer did. not make the misjoinder of parties defendant one of the grounds thereof; so that this alleged error does not really exist.

2. Adverse pos88Hue / pSf of notice. It is also claimed that' the finding of the court as to the notice to Clifton of the claim of Hart’s heirs, as above set forth, is not justified by the evidence. The ' ° v testimony on this point is embodied in the bill n . -i . _ or exceptions; ana it appears from the testimony of Bodenhamer that while he was living upon the land, Clifton and his son came to look at the land and asked him if he wanted to sell it. Bodenhamer said, “ No, he had no right to sell as it belonged to Hart’s heirs.” This conversation was in September 1868, and before Clifton bought the land, and was on the premises which were then occupied by Bodenhamer as the husband of one of the heirs of Hart. The improvements made by Hart, his widow, and heirs, were visible. It is true, that Clifton, while admitting the visit to the premises denies any mention by Bodenhamer as to the title, or any claim of Hart’s heirs. If the issue rested here, we . should be compelled to uphold the finding of the court below, on well-known and firmly settled principles; but the fact does not rest on so well-balanced testimony alone. Bodenhamer and Clifton had other conversations after Clifton purchased. So far as Bodenhamer claimed the land for Hart’s heirs, in these conversations, it was no notice. But in one of these conversations, Bodenhamer, according to his own testimony, asked Clifton “ if Lyons, when he sold him the land, did not tell him that the heirs of Hart were living on the land, and claiming it.” Clifton answered “it did not make any difference about that; he knew all about that, before, and it did not make any difference; that his title'was good.” This, Clifton as positively denies; but Mr. Northway, who heard this conversation at Mapleton, fully corroborates Bodenhamer. With this testimony, and the intrinsic evidence of the facts themselves, we are left in little doubt that the finding of the court is abundantly supported by the evidence, that Clifton purchased with notice of the claim of Hart’s heirs to the land. Whether he had a correct idea of j ust what that claim was, how it originated, and what was its value in law, is very doubtful; but that lie knew that the land was occupied by Hart’s heirs, that the improvements were made by Hart and his heirs, claiming a right of possession and title in some way, there can be no doubt. The simple fact that he purchased the land of a man familiar with its value, for about half its value, with deferred payments large enough to cover any possible loss, should the title he obtained prove defective, is significant of notice of some adverse claimant thereto. Further; when a man purchases land occupied by another, he is apt to inquire how it is held, and when and for what reason he may obtain possession. Concurring then in the conclusion of the court below, that Clifton purchased with notice, he stands in no better attitude than M. B. Lyons. He knew Lyons’ title, what equities existed in favor of Hart’s heirs, and must be adjudged to hold the same title that M. B. Lyons had, and no better. What that title exactly was, it may be more difficult to define, by a set formula, than to comprehend.

3. Tkost; impliwhaTftctsaw: create. The land warrant was “loaned” by the agent, M. B. Lyons, and was “ borrowed ” by Hart. These are facts found by the court — on what testimony we do u t " not know, as the record does not disclose, as ^ does not show the evidence on any point save the notice to Clifton. Where there is a loaning and borrowing, secured by a lien on real estate, the transaction is usually a mortgage, and is generally so held, even if the contract in terms does not make it so; thus, a deed in fee simple is held a mortgage if the court can ascertain that the consideration of the deed was money loaned, and the land is only held as security. In this case there would be no difficulty in holding the transaction a mortgage if Hart, at the time of the entry, had held the title to the lfind. The title was still in the government; and his possessory right was held in subordination to the right of the government to dispose of the land. There is an unerring indication of what the parties believed the transaction to be. William Lyons held the legal title, yet he did not' pay the taxes, did not ask. possession, or rent, for more than five years; and on the 18th of July 1866 sold the land to his brother and agent for $325. How M. B. Lyons considered the title is fully ' shown: He rented it as belonging to the estate; he charged the estate with the taxes; and when he became the holder of the legal title, he withheld it from record for.over two years, and until after he had sold it. It is worthyNf remark that, as administrator, he charged the estate, in a settlement, thereof,, with the taxes on the land nearly a year after he became the owner thereof. At that time he evidently held the legal title as security for the amount of the land warrant loaned to Hart. To infer otherwise would bo to suppose that his purpose was-to violate a trust he was administering as a sworn duty,, and against infant children little acquainted with and less able to protect their rights. We will not do him this wrong. The original transaction, then, being a loan,., and • so regarded by the parties, and each acting with confidence in the honesty and integrity of the other, the legal title was to be held as security by the party making-the .loan until he was made good by the borrower. There is no reason to doubt that the •whole business would have been closed up as agreed, had not the death of Hart,, within a month, prevented him from carrying out hisagreament. The judgment of the court below was in exact conformity with this arrangement of the parties, as near as the condition of things rendered possible ; and it; is a judgment that commends itself to the sense of justice of every individual, and we think is upheld by the prinpies of law. We have seen that the transaction was not a mortgage in the correct acceptation of that term. There was no writing between the parties; therefore there was no express trust: Sec. 1, p. 1096, Gen. Stat. But we think there was plainly and fairly a trust which resulted from the transaction itself by implication of law. Such a trust is not necessarily in writing, but most generally must arise from the act of the parties. In this case the court has found that Hart “ borrowed ” the land warrant, to be replaced in three months. It was then his; he was not to return, but to replace it; the security therefor being that William Lyons was to hold the legal title to the land till the land warrant was replaced. This state of facts the plaintiff in error claims brings the ease within the provisions of § 6 of ch. 114, Gen. Stat., and vests the title in William Lyons, free from any trust to Hai-t or his heirs. This might be the casé did not that section make its provisions subject to the provisions of the two next sections, one of which is as follows :

•“ Seo. 8. The provisions of the section next before the last shall not extend to cases * * * where it shall be made to appear that, ,b.y agreement, and without any fraudulent intent, the party to whom the conveyance was made, or in whom the title shall vest, was to hold the land, or some interest therein, in trust for the party paying the purchase money, or some part thereof.”

Now it can hardly be denied that the agreement between Hart and M. B. LyonB comes fairly within this last quoted clause of § 8, if it be admitted that the land warrant was loaned to Hart. The force of this was felt by the learned counsel for the plaintiffs in error, who sought to evade its force by contending that the warrant was not loaned at all, as it does not appear that William Lyons knew of the transaction. Still, it was a loan, and it is so found by the court. It is true that the court also finds that William Lyons did not know of the transaction at the time; but his agent did, and made the arrangement with Hart, understandingly. The principal has confirmed the action of his agent,'for although he lived all the time in Ohio, and it is found by the court that he had no knowledge of the terms of the loan of the land warrant to Hart, otherwise than is shown by the findings of the court, yet the facts, as found, that he paid no taxes, while he owned the land up to July, 1866; that he claimed no rent; that his brother, who bought it at a very low price, rented it as belonging to Hart’s estate, hardly leave room for believing that he did not know all about the trade. His agent had full notice; and it would hardly be questionable that he did not give his principal some definite information of how he became the owner of the land. If this be so, he has ratified the loan of the warrant by claiming to hold the legal title obtained through and by means of that loan. But while we have much confidence in holding that Wm. Lyons held the title in trust by express agreement under the third clause of § 8 of statute “ concerning trusts and powers,” passed in 1868, and remaining unchanged, still we can with certain assurance hold that, if there was no express agreement that Lyons should hold the title in trust for Hart, that then there was a trust arising by implication of law, out of the whole arrangement betweeh-the parties. Suppose Hart had lived, and within the three months had replaced the land warrant, and it had been accepted by M. B. Lyons, the agent, could "William Lyons have been compelled to surrender the legal title to the land to Hart ? Certainly, a court in the exercise of its equity power would have compelled him to do so, and because he held it in trust, and good faith required it; and this conclusion marks the .character of the arrangement when it was made, and "that character is not changed by the lapse of • time, or by the acts of the parties. Hart was bound to ■replace the warrant, by his agreement, land, or no land. ■He had some interest and some right in the land. The counsel for plaintiffs in error, knowing this, says it was a •“ conditional sale.” This suggestion is disposed of when we consider that Lyons had no land to sell until after the contract was made and the warrant had become Hart’s by the loan thereof to him. Two cases strikingly illustrative of this case are cited in the brief of defendants in error : Boyd v. McLean, 1 Johns. Ch. R., 582, and Millard v. Hathaway, 27 Cal., 139. In each of these cases the money which had been paid for the land had been borrowed of the trustee by the plaintiff, and title taken in the name of the trustee to secure the repayment of the loan ; and in each of the cases the borrower of the money had never had the money in his possession, it going direct from the trustee to the vendor; and in each of the cases there was no written agreement betweén the parties; and in each of them, as in this, did the trustee deny the trust and claim the land. In neither of the cases did the plaintiff make out as strong a case as Hart’s heirs have, and yet in both the defendants were held as trustees, and compelled to surrender the legal title. Further authorities are found in support of this point in ■defendants’ brief. We are sure that good conscience, fair dealing, and the law, all require that the judgment ■ be affirmed.

All the Justices concurring.