Orne v. Kittanning Coal Co. , 114 Pa. 172 ( 1886 )

Mr. Justice Clark

delivered the opinion of the court,

By the terms of the contract of the 9th of October, 1856, it was agreed between T. G. Pomeroy and J. C. Heylman, that they would purchase, together, the Proctor title and. such other titles as might be necessary to secure to them the lands in controversy; that the legal title to said lands should be vested in Pomeroy, one-half for his own use and the other half for the use of Heylman; Pomeroy to convey the one-half, held in trust, to such person as Heylman might designate, “providing the purchase money for said J. C. Heylman’s interest is paid to the said T. G. Pomeroy, his heirs and assigns, at the cost of the same, with interest from the date of payment, before the execution of said deed.”

The plaintiffs claim title to an undivided part, as purchasers of the interest-of Heylman under the contract; the defendants claim as the holders of the title of Pomeroy.

The Kittanning Coal Company are admittedly invested, not only with the absolute title to Pomeroy’s half interest in the lands, purchased under the agreement, but with the legal title of Heylman’s half, according to the terms and conditions of the contract. It is plain then, that the Kittanning Coal Company, holding the full title of Pomeroy, are privies in estate with him, and in this controversy stand in his stead. It is not pretended, much less shown, that Heylman, or any of those claiming under him, were at any time in the possession of the premises ; the Allegheny Railroad Company, and their successors in title, the Kittanning Coal Company, from the date of, and indeed long prior to, the inception of Heylman’s equity, have admittedly held the exclusive actual occupancy of all the lands covered by this dispute.

This ejectment is one, therefore, by the holder of a merely equitable title, out of possession, against the holder of the legal title, in the admitted peaceful, actual and adverse oceu]eancy of the land. In. such a case, it is clear that an ejectment will not lie to turn the trustee out of the possession, until one-half of the purchase money advanced and one-half the expenses incurred by Pomeroy have been paid, or tendered in compliance with the contract.

The general rule is that in an ejectment founded on an equity only, the plaintiff, to be entitled to recover, must not only tender the money before suit brought, but to show his readiness to perform, he must also have it in court ready to be paid in the event of a verdict in his favor: Minster v. Morrison, 2 Yeates, 346 ; Gore v. Kinney, 10 Watts, 139 ; Eberly v. Lehman, 4 Out., 546. If, however, the equitable owner b.y the terms of his contract is entitled to, or by consent is once fairly put into, the possession under his title, and b3 force, fraud, or other illegal means is ousted therefrom, the rule as stated does not apply: Harris v. Bell, 10 S. & R., 39; Gregg v. Patterson, 9 Watts, 208; D’Arras v. Keyser, 2 Casey, 252; Chase v. Irwin, 6 Norris, 288.

In the very recent case of Bell v. Clark, 17 W. N. C., 44, the rule is thus stated: — “ Where the possession of the vendor is lawful, his vendee cannot maintain ejectment against him, without proof of a previous tender of the purchase monejq and he must maintain that tender by producing the money in court.” These cases have been followed by the still more recent case of McGrew v. Foster, in the eastern district, not yet reported.

It is contended, however, on part of the plaintiffs, that the purchase money has been fully paid, in accordance with the contract; that three certain notes, which Heylman gave to Pomeroy, on the 22d of September, 1858 ; one • for $997.58, at two months; one for $950.53, at four months, and one for $950.53, at six months, were for the purchase money and expenses of this joint purchase, and for reimbursement of Pomeroy for the money advanced on the contract; that all of these notes were, before the institution of this suit, fully paid, and that the contract was on Heylman’s part thus fully complied with, by means whereof he was entitled to a conveyance, and, therefore, to the possession as incident to his title.

On the other hand, however, it is alleged, and the jury has so found, that Heylman in the settlement, which resulted in the execution and delivery of these notes, perpetrated upon Pomeroy a most gross and glaring fraud; that by falsehood and forgery he deceived Pomeroy as to the amount he actually applied to the purchase of these titles, and that in consequence the notes did not, in fact, represent the sums which Heylman owed Pomeroy, under his contract.

In that settlement, Heylman received credit for $2,000, which he alleged he had paid for the interest of one Z. P. Lea; this money Pomeroy had advanced to Heylman upon the faith of a conveyance to him by Heylman, under authority of a letter of attorney from Lea, which Heylman himself had forged. He also received credit for $850 more than he paid of Pomeroy’s monej", for the interests of Miller, Myers, and Batchelor ; having falsely and fraudulently altered the true consideration mentioned in the respective deeds, to accomplish this purpose. These fraudulent transactions of Heylman are not denied; they are frankly admitted, and in addition, as we have already said, they have been found by the jury. The several sums of money of which Pomepoy was thus defrauded, with the interest thereon, actually exceed the amount covered by the obligations, taken at the settlement of the 22d of September, 1878; and although the obligations were accepted as securing the full amount of Heylman’s half of the purchase money, in no proper sense can it be said that the purchase money has been paid; indeed, the entire amount of it remains unpaid.

It is of little consequence, we think, that some of the transactions complained of occurred prior to the agreement of the 9th of October, 1856 ; for it is plain, from the subsequent settlement, either that the agreement was made upon the faith of, and embracing, these previous purchases; or, they were afterwards brought into it, and accepted by Pomeroy as part performance thereof; and if it be assumed that the fraud of Heylman was not in the making of the contract itself, but in the performance of it only, the result is the. same in this case, as without a full and fair performance on part of the plaintiffs or a tender thereof, there can be no recovery.

The case in either event is to be determined as if the parties to the suit were the original parties to the contract; the Kittanning Coal Company stand in Pomeroy’s place, as the holder of the legal title in possession, and the plaintiffs by setting up the equity of Heylman cannot deprive them of that possession, except upon showing that they are in no default, under their contract. It is one of the elementary and fundamental principles of equity, that “ he who seeks equity must do equity,” and another, that “ he who cometh into equity, must come with clean hands; ” the doors are shut against one, who, in his prior conduct in the very subject matter at issue, has violated good conscience, good faith or fair dealing.

Therefore, if the fraud of Heylman may be considered as having entered into the contract itself, at its execution, a court of equity will not afford a remedy for its enforcement in his favor; if it affected only the performance, as the plaintiffs assume, the defendants cannot be compelled to yield the possession until the purchase money has been paid.

Fraud, it is true, is not a marketable commodity; the right to avoid or to invalidate a contract, upon the ground of fraud, unless the fraud be of such a character as to render it absolutely void, is in some sense personal; fraud will not form the substance of an assignment, so as to constitute a cause of action in the hands of the assignee. It may pass, however, as incident to a proper subject of assignment. It can only be pleaded by him, whose option it is to affirm, or disaffirm the contract, or by his representatives, or for his interest, or in Ins right; as here, by his privies in estate: Waterman on Contracts, Story’s Eq. Jur., 1041, note.

Nor can we make any distinction, in principle, in this respect, between the ordinary case, arising upon articles between vendor and vendee, and this case, which is said to arise out of an agreement containing an express superadded declaration of trust. When an agreement for sale of land is fully executed in writing, the vendor thereby at once assumes the character of a trustee, and holds the legal title as trusteefor the vendee, under the terms and conditions of the contract. The trust which in equity is implied, is precisely of the same character as if it had been fully expressed on the face of the paper.

Upon a careful examination of the whole case we are of opinion the judgment must be affirmed.

Judgment affirmed.