Surasky v. Weintraub

March 6, 1912. The first opinion was delivered by The complaint sets forth five causes of action; the first seeks to have a resulting trust declared in certain lands, and the second is for an accounting. The others are not involved in this appeal.

His Honor, the Circuit Judge, who heard the case, ruled that there was a resulting trust in favor of the plaintiffs, under the first cause of action; but, that under the second cause of action, nothing was due the plaintiffs, for the reason that they applied the salary of the defendant, Weintraub, for superintending the farming operations, in payment of his proportionate part of the expenses.

The defendant, Weintraub, appealed upon exceptions, which will be reported, except the first which was withdrawn.

The main question in the case is, whether his Honor, the Circuit Judge, erred in ruling, that there was a resulting trust in favor of the plaintiffs.

In the first place, the facts alleged in the first and second causes of action (which will be reported) show, that the money advanced by the plaintiffs to Weintraub was a loan, and that there was error in declaring a resulting trust.

In the second place, the testimony of the plaintiff themselves, is to the same effect.

The plaintiff, Samuel Surasky, testified as follows: "When that day came and you purchased this land, and $500 was due, what was said about Mr. Charles Weintraub paying his part of the $500, on the day it was purchased? He agreed to give us his one-fifth interest in the place, for us to pay out the money until he could pay it back. * * * Did you or did you not agree to let the title go in his name, in that same agreement? At first we agreed to do it, and we had to hold it for the debt, until he paid for it. * * * At the time the place was purchased, when he agreed to let you have his one-fifth interest, until he paid you back, was any time agreed on, when he should pay you for the money advanced? Yes, sir; he agreed we shall pay his one-fifth, and he will pay back in January, 1909."

On cross-examination he testified: "As I understand you, that agreement was, that the title should be made out to all five of you, but with the understanding that his share or one-fifth interest, should stand good for whatever moneys you advanced to pay his part? It was no understanding; he agreed that we shall keep it, until he pays his one-fifth part. It was to protect you, from losing what money you advanced for his share? We agreed we should keep that, for the money we paid the Cowards, until he paid us back. And the title was made to him and all of you? Yes, the five. * * * You say he was to pay you back that first payment, on the following January, 1909? Yes, sir. When was he to pay you back, what you advanced for him? In January, 1909, his part of the interest then due. In January, 1910? No, he said in 1909, when he came to the payment, he said he agreed for us to keep it, he didn't have any money, but we should carry it on. When did he say he would pay you back, what you advanced to the Cowards, his part of the interest then due? He said he would try to pay it in January, 1910, but he did not. In January, 1910, when you made this payment to the Cowards, did you talk with him, about advancing his share? We wrote to him, to come at once. Did he come? No, sir. You advanced the installment in 1910, without his coming or without his writing about it? Yes, sir."

Hyman Surasky testified as follows: "What agreement, if any, did you make with Mr. Weintraub, about furnishing his money? Before we bought the place, we asked him if he had his money to pay his share. He said he had some debts owing him, and some stock of goods, but he had none then, but would have it by January 1st, but could not get it now, but he agreed to let us pay Mr. Coward his fifth, and let us hold his share until he paid."

On cross-examination he testified: "As I understand Mr. Weintraub agreed, that his one-fifth interest in the property should be as security for the money you advanced to pay his share? He said it should belong to us, until he paid it. Why was title made out to him, as well as to you all? Well, I believe that the agreement was, we knew that he had money owing to him, and we fully trusted him, that he would pay on January 1, 1909, his part. How much money in goods did he say he had owing to him, with which he could pay you back, on January 1st, his part? Between $200 and $300."

A resulting trust is not dependent upon the agreement of parties, but arises by operation of law whenever the money of one person is used in the purchase of land, and the title is made to another. He who is vested with the legal title, becomes a trustee, and cannot hold the land against the person, whose money was used in paying for the land.

The doctrine of resulting trusts has no application, when there is an express agreement between the parties; and parol evidence is admissible for the purpose of showing that a deed though absolute on its face, was intended as security for a loan. Brownlee v. Martin, 21 S.C. 392.

The trust must be coequal with the deed, and cannot arise from any subsequent transactions. Ex parte Trenholm,19 S.C. 126.

Therefore, in determining whether there was a resulting trust in this case, we must look to the status of the parties, at the time the deed was executed. Weintraub joined in executing the bond and mortgage to the Cowards, for the purchase money of the land, and thereby incurred an equal liability with the other mortgagors; and, to declare that there was a resulting trust at that time, would take from him his share of the land, but leave him liable to the Cowards, for his proportion of the unpaid purchase money. It is true, the Cowards in their answer state, that "they are perfectly willing, and hereby waive all and any rights to any judgment, that they might be entitled to, against the defendant, Charles Weintraub, by way of a deficiency;" but subsequent transactions cannot give rise to a resulting trust.

The testimony of the plaintiffs shows, that they do not contend that Weintraub did not have an equal interest with each of them in the land, when the deed and mortgage were executed, but that by failing to pay the amount advanced by them for him, he thereby forfeited his interest in the land.

As the failure to pay, took place after the deed was executed, it could not have the effect of raising a resulting trust.

The fact that the salary of Weintraub, was applied by the plaintiffs to the expense account, is inconsistent with the theory, that there was a resulting trust, and tends to show that he was recognized after the said agreement, as one of the owners of the land, and jointly liable for the purchase money. The agreement to pay him for his services, was a part of the contract hereinbefore mentioned, made by the plaintiffs and said defendant, on the 6th of July, 1908.

The following principles are applicable to this case: "The rule is well settled, that where one person lends money to another, to be used by the borrower, in the purchase of land, no resulting trust arises in favor of the lender, in the land purchased by the borrower, title to which is taken in the latter's name. And this has been held true, though at the time of the loan, it was agreed between the borrower and the lender, that the interest in the land to be purchased by the borrower, should vest in the lender, to the extent of his loans." 15 Enc. of Law 1149-50.

The principle just stated applies with greater force when, as in this case, the borrower and the lender are both liable under a mortgage executed by them, in favor of the vendor to secure payment of the purchase money.

A resulting trust may be established by parol evidence, but when the proposed testimony shows an agreement beyond what the law would imply, it involves an express agreement, inconsistent with a resulting trust. Bell v.Edwards, 78 S.C. 490, 59 S.E. 535.

"A resulting trust arises in favor of one who pays the purchase money of an estate and takes title in the name of another, because of the presumption, that he who pays for a thing, intends a beneficial interest therein for himself; but this presumption cannot arise when a contrary intent appears, since it is based on the absence of evidence of such contrary intent." Manning v. Screvens, 56 S.C. 83,34 S.E. 22.

"Such a trust must arise, if at all, at the time the purchase is made. The funds must then be advanced and invested. It cannot be made by after advances, or funds subsequently furnished. It does not arise upon subsequent payments, under a contract by another to purchase." Olcott v. Bynum, 17 Wall. 59.

The exceptions raising this question are sustained. Although there was not a resulting trust, and the money advanced, must be regarded in the nature of a loan, secured by the interest of Weintraub in the land, it does not follow that the plaintiffs are not entitled to relief. The plaintiffs have an equitable mortgage on the interest of Weintraub in the land, and there is no reason why, under the authority of Philips v. Anthony, 47 S.C. 46, 25 S.E. 294, they may not in this action apply for such an order, as will subject the interest of Weintraub, to the payment of the amount due them by him.

Conceding that the agreement between Weintraub and the Suraskys, whereby the interest of Weintraub in the land, should stand as security for the amount advanced by them, was obnoxious to the statute of frauds, nevertheless, when the Suraskys performed their part of the agreement, by advancing the money, Weintraub was estopped from relying upon such statute.

In the case of Walker v. Ry., 26 S.C. 80, 1 S.E. 366, it was held, that if a parol agreement, was obnoxious to the statute of frauds, still one party cannot avail himself of this statute after full performance of the agreement by the other. The Court therein used this language: "But even if the contract when originally made was obnoxious to the statute, yet after it had been fully performed by the plaintiff, the defendant could not then avail itself of the statute." Citing Bailey v. Moore, 2 Bail. 214; Gee v. Hicks, Rich. Eq. Cas. 17; Carter v. Brown, 3 S.C. 298, to which may be added Brownlee v. Martin, 21 S.C. 392, and Turnipseed v.Sirrine, 57 S.C. 559, 35 S.E. 157.

For the foregoing reasons I dissent from so much of the opinion of Mr. Justice Woods, as is inconsistent with the views herein expressed.

MR. JUSTICE WOODS. I concur in the conclusion that there was no resulting trust in favor of the plaintiffs, but I dissent from the last proposition laid down in the opinion of the Chief Justice that the plaintiffs have an equitable mortgage on the interest of the defendant, Weintraub, in the land. An equitable mortgage is not created by the mere advance of money accompanied by a parol agreement of the debtor that the creditor shall have a mortgage. There was no part performance nor was there any promise to make a mortgage in the future from Weintraub to the Suraskys. Upon the purchase of the land by Weintraub and the Suraskys together and the making of the title to all of them, Weintraub took possession for all the parties including himself, under the right which he had in common with the Suraskys to enter and hold the land as a tenant in common. A mere promise by Weintraub to the Suraskys to pay his portion of the purchase money advanced by them, and his agreement that they should have a lien therefor cannot create an equitable mortgage as long as the statute of frauds remains the law of the land. None of the cases cited by the Chief Justice sustain the position that a lien on land can be created in favor of a creditor advancing money, by a mere parol agreement from the debtor that the debt shall be a lien, and I do not think any authority for such a proposition can be found. The subject has been discussed at length in the opinion of the case of folk v. Brooks, soon to be filed, and I refer to that opinion for a fuller statement of the reasons for my conclusions on this point. It follows that the plaintiffs are entitled to recover an ordinary money judgment against Weintraub for the sum of one hundred dollars loaned to him to purchase his share of the land with interest thereon from the date of the loan. They will also be entitled to subrogation to the rights of the Cowards as mortgagees to the extent of any sum they may pay on the portion of the mortgage debt owing by Weintraub.

The judgment of this Court is that the judgment of the Circuit Court be modified to conform to the conclusions herein expressed.

MESSRS. JUSTICE HYDRICK, WATTS and FRASER concur.