Opinion
January 15, 1952. Rehearing Denied February 6, 1952.
Appeal from the Circuit Court for Dade County, Stanley Milledge, J.
Watkins Cohen, Tallahassee, and Roth Williams, Miami, for appellants.
Anderson Nadeau, Miami, for appellees.
In this suit the appellants, who were the plaintiffs below, filed a bill for declaratory judgment and other relief to impose a trust upon certain lands in Dade County.
It was alleged that W.V. Blackwell owned a certain tract of land and died intestate in 1930, when the property passed to his wife and four children. The taxes were not paid from 1930 until 1945, but no tax deed had been issued. There was a land boom in Dade County in 1944 and the land greatly increased in value.
Victor J. Tatham, who was a tax expert and engaged principally in the business of buying tax sales certificates, or property at tax sales, in searching the records in 1945 discovered the tax situation with regard to this property. He then conceived and put into operation a scheme to gain the confidence of the widow and while pretending to be assisting her in protecting the property, he intended to gain the whole of it for himself. He went to the owner, the widow, and obtained some deeds to the property from her, who trusted him. During these visits to her home he had her execute to him a deed to the property on the pretense that he could better handle the transaction. In the course of the dealings he had prepared a deed from the children to the widow and then from the widow to himself, or to his corporation. Other allegations of the bill of complaint sufficiently alleged the facts, which, if true, would constitute fraud; and make the defendants hold title to the lands as a constructive trustee for the plaintiffs, appellants here.
No motion to dismiss the bill of complaint or other attack was made upon it. The defendant answered the bill, claiming to be the fee-simple title holder, and that the same had been gained by virtue of a purchase from the widow. Voluminous testimony was introduced and numerous exhibits placed in the record.
The trial Judge heard all of the testimony himself. In the final decree the trial Judge stated: "Upon examination of the entire record, testimony that was transcribed, exhibits introduced, arguments and briefs submitted, it appears that the testimony and exhibits do not permit of defendants' conclusion that the transaction was merely a sale. On the other hand it appears that both Mr. Tatham and Mrs. Blackwell were to make something out of the transaction." (Italics supplied.)
In the final decree the Chancellor then proceeded to decree that The Travis Company, a corporation, was the record title holder of the property and is a constructive trustee for one-half interest in the property and held the same in trust for the plaintiffs, appellants here. In the decree he also appointed a special master to execute the decree and ordered the property sold, and after the re-payment of certain sums which the appellee, Tatham, had paid, to divide the proceeds equally between the plaintiffs, appellants, and Victor J. Tatham and The Travis Company, a Florida corporation.
An appeal was taken from this decree.
The defendants below, appellees here, filed cross-assignments.
Two main questions are raised by the appellants and two by the appellees.
We will handle these questions in reverse order because if the questions propounded by the appellees should be answered in their favor, a discussion of the questions propounded by the appellants will not be necessary. The questions propounded by each of the parties are so closely related some of them may be consolidated for the purpose of this opinion.
The first question propounded by the appellees is: "Are the allegations of the complaint sufficient to establish a constructive trust?"
The appellees evidently thought so because they made no motion to dismiss the bill of complaint, but filed an answer and went to trial. The material allegations of the bill of complaint have heretofore been stated and we find they are sufficient to establish a constructive trust.
The second question propounded by the appellees is: "Can a constructive trust be established upon parol evidence that is so weak it is virtually no evidence and which is given by one person who is not an immediate party to the transaction and whose testimony contradicts executed deeds and where there is no allegation in the complaint of tender consideration paid by the alleged trustee ex mal officio?"
This is not a fair question. It is based upon the assumption that there was virtually no evidence and that which was produced was by only one person who is not a party to the transaction and which contradicts executed deeds. What the appellees really contend is that the evidence is not sufficient to establish a constructive trust and from the brief filed by the appellees and from oral argument it appears that they contend there must be some particular act which must be proved in order to show fraud. Fraud may be proven by showing a series of distinct acts, each of which may be a badge of fraud and when taken together as a whole, constitute fraud. That is true in this case.
We will briefly summarize what the parol testimony and exhibits show.
Tatham is an expert in tax matters and is engaged particularly in redeeming tax distressed properties. Mrs. Blackwell had absolutely no knowledge about tax matters or tax certificates or reverted property. Tatham, after having searched the records and found the condition of taxes with reference to this property, went to see Mrs. Blackwell in the daytime, but she was not at home. He then went to see her at night on two different occasions. He advised Mrs. Blackwell that his business was redeeming tax certificates. On the first visit, after Tatham had convinced Mrs. Blackwell of his knowledge about tax matters, she turned over a box to him filled with tax certificates and other papers. On this occasion he stayed there from 1 to 1 1/2 hours. Mrs. Blackwell was a widow with four children and before that she was a housewife. After the death of her husband, she worked, but had nothing to do with real estate. Tatham had a deed drawn in his office which was turned over to Mrs. Blackwell to have the children sign conveying the property to her. He then had a second deed drawn in his office which he had Mrs. Blackwell sign, deeding the property to a corporation, which he owned or controlled. Before Tatham went to see Mrs. Blackwell he had made a search of the tax records and knew that Mrs. Blackwell had the equity of redemption to the lands involved in this suit. Mrs. Blackwell did not know the value of the land in question and had the impression that her interest was very small or worthless. Tatham did not disclose to her anything about the value of this land but told her, as an expert, that her property needed protection. Tatham had a letter composed and drafted in his office directed to the Clerk of the Circuit Court of Dade County to the effect that she was in financial difficulty; that her husband had no estate except small equities, and the estate was not probated. In order to save her extra costs, she requested the Clerk to allow her agent to bid this property in, in her name, at the February 7th sale.
At the time of this transaction it was the established and recognized custom for the last record title holder to be allowed to buy property at Murphy Sales without competitive bidding. The testimony shows that in order to take advantage of this custom, the above-mentioned letter was prepared by Tatham in his office and was executed by Mrs. Blackwell.
Tatham employed one Ralph Franks to attend the Murphy Sale to represent Mrs. Blackwell. The letter written by Mrs. Blackwell was given to Franks by Tatham. Franks understood that he was bidding for Mrs. Blackwell. Tatham told Franks that he was bidding the property for Mrs. Blackwell, and Franks knew that the signed letter by the owner was necessary to show authority in order for him to get the advantage of the custom then existing with reference to Murphy Sales. After Franks received the deeds pursuant to the tax sale he had them recorded and returned to himself, and then mailed them to Mr. Tatham. Tatham was present at this sale and heard the announcement by the Clerk that Franks was bidding for Mrs. Blackwell. In order to take advantage of the custom about Murphy Sales Tatham never had the deeds recorded which he received from Mrs. Blackwell.
It appears that the minimum value of this property was $15,000.00 and Tatham's contention was that he was by the scheme above outlined to obtain this property for a total sum of less than $300.00, which he had advanced or paid to the Blackwells.
The custom existing about the Murphy Tax Sales standing alone would not be sufficient to show fraud. The mere execution and delivery of the letter by Mrs. Blackwell standing alone would probably not show fraud, but taking each piece of testimony and each exhibit as badges of fraud, they show a scheme to perpetrate a fraud, and the Chancellor who heard the testimony was fully justified in finding that Mr. Tatham started out in the very beginning with a scheme to perpetrate fraud, and if he is permitted to obtain this property by reason of the deeds which he holds, he would have perpetrated a fraud.
We, therefore, hold that the allegations of the complaint and the testimony in support of the allegations are sufficient to establish a constructive trust in favor of the appellants, and that the appellees merely hold a naked legal title, as Trustees for the appellants.
The important question propounded by the appellants, and based upon the assignment of error, is: "Where the Trial Judge finds as a matter of fact that a person is guilty of fraud in procuring title to a tract of land, can he place the defrauder in a better position than he would have attained if the fraud had not been committed?"
The appellants and the appellees agree that "half of a loaf" for the appellants and "half of a loaf" for the appellees is unsatisfactory, and it was error to enter a decree to that effect. We agree with the parties in this contention. If fraud existed, and we so find, then it existed as to all of the land and not to half of it.
The defrauded parties, the appellants in this case, are entitled to be restored to their original position, and the title to the lands re-established. Pomeroy on Equity Jurisprudence, 4th Edition, Page 180. That part of the decree which in effect will give to Tatham the one-half interest in the land, or a one-half interest in the net proceeds after the sale of the land, is erroneous. Having reached this conclusion, it is also clear that the part of the decree ordering the sale of the land was error.
The assignment of error to the effect that all of the costs should not have been taxed against the defendants below, appellees here, is without merit.
Affirmed in part, and reversed in part, with directions to the Court below to take further proceedings in accordance with this opinion.
SEBRING, C.J., and TERRELL and ROBERTS, JJ., concur.