Faxon v. Folvey , 110 Mass. 392 ( 1872 )

Colt, J.

The land demanded was conveyed by French to Morse in 1861, to be held under a verbal agreement as security for the indorsement of a note. Although absolute in form, it was a conveyance in trust. French afterwards gave his note to Morse for the amount paid on account of this indorsement, and took a writing signed by him, dated August 11,1862, stating that he had received of French a deed of land in Quincy which was to be reconveyed to him, his heirs and assigns, upon payment of the note then given.

These facts appear in the tenant’s case, and are not attempted to be controlled by the demandant. They show that Morse held the land from the first as trustee under a trust which, within the requirements of the statute, Gen. Sts. e. 100, § 19, is fully proved by the writing relied on. The writing is something more than an agreement to sell the land. Its form is a receipt for a deed which had been before delivered with an agreement to convey back on payment of the sum named, and implies that it was intended as the declaration of a trust upon which the land was and had been held. It identifies and connects itself with the land, because no other deed between the parties was shown to which it could refer. The object and nature of the trust are stated with sufficient certainty, and as a declaration of trust it is not necessary that it be made at the time of the delivery of the deed. Arms v. Ashley, 4 Pick. 71. Burrell v. Joy, 16 Mass. 221. Perry on Trusts, § 82. Browne on St. of Frauds, § 97.

The Bankrupt Act (U. S. St. 1867, c. 176) § 14, declares that no property held by the bankrupt in trust shall pass by the assignment. Assignees take only the estate which the bankrupt had a beneficial as well as legal interest in, and which is to be applied to the payment of his debts. The statute applies to all estates where the trust can be legally established, and is effectual against one claiming under the assignee who is not in the position of a purchaser without notice. This is decisive, for the facts reported are sufficient to charge the demandant as well as the assignee with notice of the trust. In general it is enough if such notice be given that the purchaser is put upon his inquiry. Information of a fact coming from a source which ought to be heeded is sufficient. Both were told here that Morse and French claimed that Morse had no interest in the land, to which the demandant answered that Morse owed him and he was going to get something out of it if he could. He took the chance. George v. Kent, 7 Allen, 16. Hawley v. Cramer, 4 Cowen, 717. The payment of the note reduced the title of Morse to a mere naked trust.

The legal title to the land is therefore still held by Morse in trust. The demandant must recover on the strength of his own title. He cannot disturb the tenant’s possession without showing some right in himself to that possession, and the deed under which he claims gives him none.

The tenant, in addition to his other defences, contended that the original deed from French to Morse which was introduced as the foundation of the demandant’s title was executed on the Lord’s day and was therefore void. The jury have found that it was so executed and delivered, and have also found that the demandant took his deed without notice. This all becomes immaterial as a defence. The tenant’s rights are sustained on other grounds. The demandant however now insists that the trust cannot be established by showing the illegal agreement of the parties on the Lord’s day, and that the absolute title therefore passed to Morse. But the answer is that the rule that no action based on a contract made on the Lord’s day can be maintained to enforce its obligations in favor of either party cannot be so applied as to enlarge the interest which was conveyed to Morse by the transaction, or to defeat the equitable title of French. It was an agreement executed by the delivery of the deed. The apparent title conveyed was qualified by the trust imposed upon it as effectually as if the terms of the trust were contained in the deed itself. Neither party to the transaction or those claiming under them can be permitted to take advantage of the alleged illegal act. The title, such as it was, passed to the grantee, and was held, as we have found, in trust. The purpose of the trust declared was neither immoral, contrary to the statutes, or contrary to public policy; the only illegality charged is in the time when by the conveyance and agreement the trust was created. Under such circumstances the law does not interfere to undo what the parties have done by setting aside their deeds. Neither party can now assert rights inconsistent with the conveyances. Myers v. Meinrath, 101 Mass. 366. Atwood v. Fisk, Ib. 363. Hall v. Corcoran, 107 Mass. 251. Judgment for the tenant.