Sykes v. Reeves

Where a plaintiff comes into equity seeking to recover property from the defendant by enforcing a constructive trust of the property, because of the alleged fraud of the defendant in obtaining the property, his petition must disclose an offer to restore to the defendant the amount expended by the defendant in acquiring the property. A prayer in such a petition that the land be sold and that the defendant be paid from the proceeds of the sale does not constitute a sufficient offer to do equity, in the absence of other facts excusing a tender. Since the instant petition, in so far as it sought a constructive trust, was fatally defective for failure to allege a tender, and did not otherwise state a cause of action for any of the relief sought, the court erred in overruling the general demurrer.

Nos. 14409, 14429. FEBRUARY 11, 1943. REHEARING DENIED MARCH 11, 1943. The petition of Mrs. A. L. Sykes against Hershel Reeves alleged substantially the following: In April, 1941, the plaintiff sold the defendant a house and ten acres of land in land lot 182 in the 23d district and third section of Floyd County, Georgia, for $800. The ten acres was a part of a fifteen-acre tract to which W. E. Cole held the legal title as security for a debt of the petitioner. To carry out the trade the plaintiff and W. E. Cole joined in executing a deed to the defendant to the entire fifteen-acre tract. The defendant gave the Home Building and Loan Association of Floyd County a deed to the fifteen-acre tract to secure a loan of $300 to apply on the purchase-price. To complete the trade the defendant was to convey a described five-acre portion of the fifteen-acre tract to the plaintiff, such conveyance to be subject to the loan of the building and loan association. To further complete the trade the defendant was to convey to the plaintiff the ten-acre tract to secure the balance of the purchase-price due to her, amounting to $356; and under the agreement this balance of the purchase-price was to be paid to the plaintiff in stated monthly payments. However, the defendant has refused the plaintiff's frequent demands that he complete the trade in accordance with their agreement, and this refusal is a fraud on the plaintiff, and is a willful and malicious effort on his part to retain title to the whole fifteen-acre tract without any further payment. The petition prayed that the defendant be enjoined from disposing of the title to the land in question; that title to the five-acre tract be decreed in the plaintiff, subject to the loan of the Home Building and Loan Association; for judgment against the defendant for $356, the balance of the purchase-price, and $100 attorney's fees; that these sums be decreed to be a lien on ten-acre tract of land; and for general relief. The defendant demurred generally and specially to this petition, and answered denying all of the material allegations thereof.

The plaintiff amended her petition by making substantially the following allegations: On October 21, 1940, the plaintiff owned a described fifteen-acre tract of land on which two dwelling-houses were located. Being indebted to Emmett Cole $314.53 for funeral expenses of her husband and for money advanced to her by Cole, the plaintiff on that date conveyed the described land to Cole in satisfaction of the indebtedness to him, with the understanding that the plaintiff was to have the use of the land during her lifetime, and that Cole was to pay the expenses of her funeral. The written agreement was as follows: "I have taken title to Mrs. Sykes' place in Etowah District. She owes me $214.53, and I pay $100 she owed John Camp Davis. I agree that she may use the place as long as she may live, subject only to taxes, and I am to bury her the same as I did her husband. It is understood that Herschel Reeves may have the place by paying all charges on said place, plus accumulated interest at 8%, within a reasonable time of two months after her death. This October 21, 1940. Emmett Cole." About April 28, 1941, the plaintiff and the defendant, who was at that time in possession of the land as the tenant of the plaintiff, worked out an agreement for the purchase and sale of ten acres of the land, including the larger of the dwelling-houses, for $800. Cole agreed to and did accept $354.69 in full satisfaction of his claim against the entire tract of land, and executed a warranty deed to the defendant. Title to the entire fifteen-acre tract was placed in the defendant in order to enable him to get a $300 loan from the Home Building and Loan Association, the defendant agreeing that when the loan was closed he would convey to the plaintiff five acres of the land including the smaller dwelling-house, subject to the loan of the building and loan association. In addition to the $354.69 paid to Cole, the defendant paid to the plaintiff $100, leaving a balance of $345.31 due to her. Relying on the defendant's promise to convey the five acres to her when he had procured the loan, the plaintiff agreed that Cole should convey the entire tract to the defendant. However, after title had been thus placed in him, the defendant repudiated his agreement and refused to convey the five acres to the plaintiff or to pay the balance of the purchase-money. At the time the defendant agreed to convey the five acres to her, he had no intention of so doing, but, on the contrary, made the promise for the fraudulent purpose of obtaining title to the land. Having thus fraudulently obtained the title, the defendant now claims title to the entire tract as his own. By reason of these facts, he now holds title to the land as trustee for the plaintiff as the real owner thereof. The five acres to be conveyed to the plaintiff was to include the smaller dwelling, but no definite agreement as to the exact location thereof by metes and bounds was made, it being agreed and understood that the parties would get together after the defendant had obtained the loan from the building and loan association, and fix the boundaries. However, the defendant repudiated his agreement to convey the five-acre tract, and also his agreement to pay the balance of the purchase-price. The plaintiff struck the portion of the original petition in which it was alleged that the balance of the purchase-price was to be paid by stated monthly payments, and all allegations inconsistent with the allegations and prayers of the amendment.

The plaintiff prayed, that a commissioner or commissioners be appointed to measure and lay off a five-acre tract, and that title to this tract be decreed in the plaintiff, this tract to include the smaller dwelling-house, and to be laid off in any uniform shape that the defendant might select, or, if the defendant failed to act, to be laid off in such shape as the commissioners or the court might determine; that she have judgment for the balance of the purchase-money due to her, and that this judgment be decreed to be a special lien on the defendant's ten acres; or, if in the opinion of the court the foregoing prayers can not be granted or the granting of the same is impractical, that the title to the entire fifteen acres be decreed in the defendant as trustee for the plaintiff, and the entire tract ordered sold by the court, subject to the loan of the Home Building and Loan Association; and that the plaintiff have the balance of the proceeds of the sale after reimbursing the defendant for the amounts which he had paid out in pursuance of the sale agreement, less a reasonable rental for the property; and for an accounting and general relief.

The defendant demurred to the petition as amended, on the ground that "the same seeks to recover upon an alleged contract concerning the title to land, and there being no allegation that said contract was in writing signed by the party to be charged, the same fails to set forth any cause of action." The court entered the following order: "The within demurrer and the demurrer to plaintiff's petition as amended are overruled."

When the case came on for trial, the court sustained objections to the admission of certain depositions of the plaintiff. When counsel for the plaintiff stated to the court that the plaintiff could not make out her case without the evidence contained in these depositions, although she had other evidence to sustain some of the material issues of the case, the court entered an order of nonsuit. The plaintiff excepted, assigning error on the rulings just stated. The defendant by cross-bill excepted to the overruling of his demurrers. 1. "In all cases where a trust is sought to be implied, the court may hear parol evidence of the nature of the transaction, or the circumstances, or conduct of the parties, either to imply or rebut a trust." Code, § 108-108. "While an express trust must be created by writing, and can not be proved by parol, implied trusts may be established by parol evidence, although the effect of such evidence is to alter or vary a written instrument, and although the defendant sets up and insists upon the statute of frauds." Jenkins v. Lane,154 Ga. 454 (3-a) (115 S.E. 126). It follows that the fact that the agreement involved in the instant case was not in writing did not render the petition subject to general demurrer, if it stated facts authorizing a trust to be implied. "A trust is implied where, from any fraud, one person obtains title to property which rightfully belongs to another. An implied trust arises wherever a person acquires the legal title to land or other property by means of an intentionally false and fraudulent verbal promise to hold the same for a certain specified purpose; and after having thus fraudulently obtained title, he retains, uses, and claims the property absolutely as his own, so that the whole transaction by means of which the ownership is obtained is in fact a scheme of actual deceit." Jenkins v. Lane, supra. Where a person makes a false promise for the purpose of inducing another person to transfer property to him, intending at the time to violate the promise later, and the other person is thereby induced to transfer the property, the person thus obtaining the property is guilty of such fraud as to constitute him a constructive trustee for the benefit of the other party; and this is true though there is no disparity of mental capacity and no confidential relation exists between the parties. Brown v. Doane, 86 Ga. 32 (12 (S.E. 179, 11 L.R.A. 381); 3 Scott on Trusts, § 468. The plaintiff alleged that she allowed title to the fifteen-acre tract of land to be placed in the defendant in order to enable him to obtain a loan to apply on the purchase-price of ten acres of the land, with the understanding that the defendant was to reconvey to her the remaining five acres after he had obtained the loan; and that the defendant's promise to reconvey the five acres was false and fraudulent, and he never intended to perform the same. It was also alleged that the defendant's promise to pay the balance of the purchase-price was fraudulent in that when it was made he had no intention of fulfilling it. Under the rules of law stated above, the petition alleged sufficient facts on which to base a constructive or implied trust. However, "where the plaintiff seeks to recover property from the defendant by enforcing a constructive trust of the property, the plaintiff must restore to the defendant the amount expended by the defendant in acquiring the property." 3 Scott on Trusts, § 479. The principle that he who would have equity must do equity (Code, § 37-104) is as applicable to one who seeks to have the court declare a constructive trust on the ground of fraud as it is to one who seeks any other equitable relief because of the fraud of the defendant. See Grant v.Hart, 192 Ga. 153 (3) (14 S.E.2d 860). In seeking to have the court impress a trust on the property, the plaintiff sought to be placed in statu quo. Before equity will grant her such relief, she must offer to do equity — tender to the defendant that which she admittedly received in the transaction. It appears from the petition that the defendant paid $454.69 on the purchase-price of the land. While it appears that the defendant used the land as security to obtain a loan of $300, and the plaintiff would not be required to tender to him this portion of the purchase-money received, no excuse for failing to tender the remaining $154.69 is alleged. In the prayer the plaintiff asked the court to order that the land be sold, and that the defendant be paid from the proceeds of this sale; but this does not amount to an offer to do equity. The defendant's right to be reimbursed can not be made dependent on whether or not the land sells for enough to repay him. The failure to make a tender rendered the petition subject to general demurrer. While some of the prayers sought the alternative relief of specific performance of the oral contract, and no tender would be necessary if such relief were appropriate in this case, the petition failed to state a case for specific performance. "A court of equity will not decree specific performance of a contract for the sale of land, where it is not clear that the exact terms of the contract were agreed upon and understood." Georgia Southern FloridaRailway Co. v. Taylor, 142 Ga. 350 (82 S.E. 1058). The petition discloses that the boundaries of the five acres to be conveyed to the plaintiff were never agreed upon, and therefore that the contract was too indefinite for specific performance.Higginbotham v. Cooper, 116 Ga. 741 (42 S.E. 1000). The error in overruling the general demurrer rendered the further proceedings nugatory, and no ruling will be made on the errors assigned in the main bill.

Judgment reversed on the cross-bill of exceptions. Writ oferror on main bill dismissed. All the Justices concur, exceptReid, C. J., absent because of illness.