Bartholomew v. Guthrie

The opinion of the court was delivered by Smith, J.:

The defendant in error presents two objections to the consideration of the errors complained of by the plaintiff in error:

(1) The order overruling the demurrer shows that plaintiff elected to stand on his demurrer, but no judgment was entered. This objection is not well taken. Section 542 of the code of civil procedure expressly provides:

“The supreme court may also reverse, vacate or modify any of the following orders of a district court:' . . . 2. An order . . . that sustains or overrules a demurrer.” (Gen. Stat. 1901, §5019.)

(2) It is urged that the petition does not allege facts sufficient to constitute a cause of action, and that, as the demurrer should search the record and be *710 sustained as to the first pleading found insufficient, it should have been sustained as to the petition and not considered as to the answer. The defendant in error is wrong in this contention. While the cause of action set forth in the petition is apparently based upon an express trust in lands or the proceeds thereof created by parol agreement, and such agreement would under section 7875 of the General Statutes of 1901 be ineffective to create a trust, yet the facts stated are such that a trust arises therefrom by implication of law. It is alléged, in substance, that the grantors were the owners of certain land, which was in litigation, and that they conveyed it to their attorney at law, who had been theretofore and was at the time and thereafter employed to protect their interest therein. The conveyance was presumably made for the purpose of facilitating some compromise of the suit or sale of the land, and, as alleged in the petition, was made under an agreement and understanding — not alleged to be in writing — that the grantee “should institute and prosecute a suit” against certain parties claiming ownership of the land, and “should pay over and turn over to them [the grantors] the fruits of such litigation.”

Regarded as a trust in land, this lacks the allegation that the agreement was in writing to make it effective. Indeed, since the defendant filed his motion to have the petition made more definite and certain by stating whether this agreement was in writing or oral, we must construe the allegation most strongly against the pleader and consider it as oral. But if the agreement was verbal it does not thereby debar, but aids, the implication of law that a trust arises from the facts. (Franklin v. Colley, 10 Kan. 260 .)

It may be questioned whether the contract purported to create a trust in the lands, to which refer-, ence will be made later, or merely in “the fruits of the litigation.” Be this as it may, the law would imply a *711 trust in the land so long as the title thereto was held by the grantee, and in the proceeds of the land when it was converted. It follows that the petition was not demurrable on the ground urged.

It remains, then, to determine whether the demurrer should have been sustained to the second and fourth defenses, or to either. As to the second defense— that, not the plaintiff, but the administrator of his mother’s estate, was entitled to recover the portion claimed by plaintiff — much depends upon the inheritance which descended to the plaintiff upon the death of his mother and sister, as the facts were set forth in the petition to which this defense was pleaded. No portion of the legal title descended to the plaintiff, for that title, as stated in the petition, had been conveyed by the mother and sister to the defendant, and neither of them was seized of such title at their respective deaths. From the same source we learn that at the time of the conveyance to the defendant the title to the land was in dispute, and the mother and sister, being unable to get a settlement or adjustment of the adverse claims, conveyed the land to the defendant for the very purpose of “instituting and prosecuting” a suit, not to have the adverse claims adjudged void or groundless, but to have that which was claimed to be an adverse title in fee adjudged to be only a lien— a mortgage. There is no allegation or intimation in the petition that the grantors were able, or expected, to redeem the land if the defendant should be, as he was, successful in the suit. The defendant undertook a service which involved the expenditure of time and money, and it must have been contemplated that he should be recompensed out of this land, already encumbered beyond the powers of the grantors to redeem. So it was not contemplated that the defendant, if successful, should reconvey the land to his grantors. The petition itself says:

“It was also expressly agreed and understood be *712 tween said Elizabeth and Sarah E. Bartholomew and said defendant that the defendant should pay and turn over to them the fruits of such litigation.”

Equity will not imply a greater or a different trust than the circumstances, including the understanding and purpose of the parties, render necessary to protect the interests of a beneficiary who is innocent of wrong; especially when, as in this case, the trustee appears to have acted with fidelity and in accordance with the purpose of the conveyance of the land to him, at least so far as the compromising of the litigation and receiving the fruits thereof are concerned. The land, in any event, was lost to the grantors. It was even doubtful if they had any conveyable interest therein. They quitclaimed this doubtful title to the defendant with the understanding that he should begin litigation in his own name, and that he should account for the fruits of the litigation if, by chance, he should be able to make it bear fruit.

The allegation of the petition that the land was conveyed to defendant in trust for the use of the grantors is a conclusion of law rather than of fact, and the court was not bound thereby. The court evidently construed this agreement as creating the defendant a trustee of the problematical “fruits of the litigation” and that, if such fruits materialized, it was contemplated that they would be in the form of personal property, and that as such they became assets in the hands of the administrator of the deceased mother’s estate, and, with this view, overruled the demurrer to the second defense. Even if this was erroneous, which we are not prepared to say, it is difficult to see how the plaintiff was prejudiced thereby, since the fourth defense, including as it does the facts stated in the third defense in regard to the disposition of “the fruits of the litigation,” alleges, in substance, that the entire sum of $1798 received by the defendant in the settlement was expended in the payment of the ex *713 penses and attorney’s fees incurred in the suit, and in returning to the estate of John B. Bartholomew the money advanced by him for that purpose. That such expenses were to be paid before “paying over the fruits” is certainly an implied condition of the contract as set forth in the petition. This seems to be the real issue in the case — whether the charges alleged to have been paid were legal and reasonable, and were, with the expenses for which credit is claimed, actually paid. This is in the nature of an accounting with the trustee.

We are not called upon to decide whether or not the order of the probate court of Shawnee county in making final settlement of the estate of John B. Bartholomew, and ordering disbursement to the widow, was res judicata as to plaintiff and determinative of his rights, as that question was not necessarily involved in the demurrer. It is enough to sustain the decision of the court if the facts stated in the fourth defense, being admitted as true, constituted even a partial defense to the claim set forth in the petition. Even a cursory reading of this defense will disclose that at least some, if not all, of the expenditures alleged to have been made by John B. Bartholomew in his lifetime were claimed to be advancements made to the defendant, or at defendant’s instance, for the very purpose of carrying on the litigation and removing liens from the real estate conveyed, which made it more valuable and added to the “fruits of the litigation.” Such advancements were in the nature of debts of the trustee, as such, and the trustee had the implied power, and it was his duty even, to pay the same.

The decision of the court in overruling the demurrer to both defenses is sustained, and the case is remanded for further proceedings.

All the Justices concurring.