Opinion
17185.
SEPTEMBER 11, 1950.
Equitable petition. Before Judge Moore. Fulton Superior Court. May 2, 1950.
M. L. Kahn, for plaintiff in error.
J. V. Poole, contra.
1. The petition as amended was not subject to the general demurrers of the defendant.
2. In an action to set up a resulting trust, parol evidence as to an oral agreement between the parties at the time legal title was taken by the defendant, with regard to the purposes of the conveyance, is admissible to rebut the inference of a gift.
3. Where the evidence is conflicting as to the issues really involved, it is harmful error for the court to charge the jury on an issue not made by the pleadings or evidence, and is cause for a new trial.
No. 17185. SEPTEMBER 11, 1950.
Mrs. Louise Griffon filed an equitable petition against J. N. Clark, praying that the title and right of possession of a described tract of land in Atlanta be decreed to be in her, and that a deed executed by her to the defendant, dated September 24, 1948, be declared null and void. A general demurrer to the petition was overruled, and the defendant excepted pendente lite. The trial resulted in a verdict for the plaintiff. The defendant's motion for a new trial as amended was overruled, and he excepted, assigning error on the exceptions pendente lite and on the overruling of such motion.
The petition as amended alleged: The petitioner is the owner of a house and lot known as 584 Washington Street, Atlanta, in which she now lives. She and said J. N. Clark have been in business together for a number of years, the business consisting of rooming and boarding houses, real estate, painting, and restaurant business. In order to keep their business running, the petitioner has furnished said Clark much money, and has done an immense amount of work. At the instance and request of said Clark, on September 24, 1948, she executed to him a deed to said house and lot. The intention and reason for the execution of said deed was to provide some background or foundation for the benefit of J. N. Clark, to enable him to get credit for the benefit of the petitioner and himself, they at the time being in business together, he (said Clark) being in the control and management of their business. After Clark obtained said deed, instead of using his credit for the benefit of the petitioner, he began using the property for himself to the exclusion of the petitioner, and claiming the property as his own, stating to the petitioner that he had the deed to the house and lot and intended to keep the same, and has stated to her that he would dispose of the house and lot as he might see fit, to the exclusion of the petitioner. It was distinctly agreed and understood between the petitioner and said Clark that he would use said property for the benefit of the petitioner, and would deed the same back to her on her request. She has requested and demanded that he execute a deed back to her, which he refused and still refuses to do. The petitioner fears that the defendant will sell her house and lot, or encumber it in such a manner as to defeat her rights to and interest in the same, unless he be restrained and enjoined.
The petitioner bought said house and lot on July 13, 1942, and has paid for the same; she took possession thereof at the time she bought the same, and has been since and is now in possession thereof; the said J. N. Clark has never been in possession of this house and lot since said property was bought by the petitioner on July 13, 1942. There was no consideration for the execution of the deed to said Clark except for the purpose of enabling him to manage their business more readily and advantageously. Said Clark is utterly insolvent and wholly incapable of responding in damages for the loss of her said house and lot.
It appears from the evidence that the defendant Clark purchased the property here involved from one Mrs. Mizell in 1939, giving the latter a security deed for a part of the purchase-money. Clark defaulted in his payments, and Mrs. Mizell foreclosed the loan by selling the property in 1942, and according to the plaintiff's testimony she purchased it from Mrs. Mizell, paying about $400 of her own money on the indebtedness that was past due by Clark, receiving a warranty deed from Mrs. Mizell, and giving to her a security deed securing payment of the balance of the purchase-price. In 1945 she paid Mrs. Mizell the amount then due her, from the proceeds of other loans obtained on the property. After securing title to the property from Mrs. Mizell in 1942, the plaintiff operated the place as her own. The defendant rented a room from the plaintiff, and the latter finally had him evicted for non-payment of rent and he stayed away for two years, but thereafter she allowed him to return and occupy a room. She testified that Clark paid nothing on the debt due on the property after he defaulted in 1942, and had nothing to do with her acquiring the property from Mrs. Mizell.
As to the purpose for which she deeded the property to the defendant in 1948, she testified in part: "Clark was managing and controlling my restaurant business. You ask me what business was Clark in control of. Well, we was in the real estate business together. We was selling real estate. I had the car and carried the customers around. He gave me some profits out of the money, and then he got where he wouldn't give me no profit and I quit. He said, `If you will deed me the property where it will establish me a credit — I have got a lot of repairs that I can do but I can't do it without it.' I told him I would if he would go fifty-fifty with me we would do it and if he would do right about it. He said he would. He had several repair jobs then. . . Where you read in the petition that I stated my intention and reason for the execution of the deed to Clark was to provide some background or foundation for the benefit of petitioner and himself, [we] at the time being in business together — I mean by that if he had some property the people would credit him. . . I was supposed to deed the property to him so he could establish a credit. If he had the property, people would let him have lumber to build or something. That is what I mean. That is what that was put in there for. . . All the money that Mr. Kahn [counsel for the defendant] asked me about I paid out when I bought this place. Mr. Clark never has given me one nickel. . . This deed that you hand me is the deed that I made to Mr. Clark. It says here in the deed, `In consideration of the sum of $1000.' There was not any consideration, any money passed between us, not a penny." She testified that she had paid insurance and taxes on the property ever since she acquired it in 1942.
The defendant testified: He arranged for the plaintiff to acquire title to the property in 1942, to hold and manage for his benefit, and furnished her the money which was paid on the debt at the time Mrs. Mizell deeded the property to the plaintiff; and all other money paid on this debt was either furnished by him or collected by the plaintiff on rents from the house. In 1948 the plaintiff was in trouble with the OPA authorities by reason of violation of regulations as to charges for rent, and the defendant told her: "You better go up town with me now and fix this thing up, fix me a deed to the property." The plaintiff said that she would be glad to, and they fixed the deed and went to the OPA and "had all that changed over to me and appointed her as my manager then . . We are now talking about `48, about this deed and all. I permitted her to carry on until I got out of debt, providing she would account to me. I agreed to do that until all the notes was paid off and I gave her a place to stay and we would share the profits after everything was paid off. She refused to do it; wouldn't even talk to me about it and bawled me out, and said she was running that place. Up until the time this suit was brought, prior to the time of the filing of this suit, she did not claim that she was the absolute owner of that property. She was just managing it. These various payments that she claimed to have been made in paying taxes, insurance, notes and mortgages, and all that stuff, not one dime came out of her money. It all came out of the rents. It was mine in reality."
1. We construe the petition as amended as being an action seeking to have equity declare that the defendant holds title to the property in question in trust for the benefit of the plaintiff, under the provisions of Code §§ 108-106 (1), 108-107. The petition does not set forth any allegations of fraud on the part of the defendant, not charge that the plaintiff was induced to execute the deed upon any fraudulent misrepresentations of fact by the defendant, nor that the defendant made any promise to induce the execution of the deed, which he had no intention to keep; and therefore the petition does not attempt to charge the defendant as a trustee ex maleficio under Code § 108-106 (2). See also King v. King, 161 Ga. 19 (2) ( 129 S.E. 649); Mays v. Perry, 196 Ga. 729 ( 27 S.E.2d 698).
In substance, the petition alleges that the plaintiff made the deed to the defendant without any consideration, on his request and agreement that he, the defendant, would hold the property for the benefit of the plaintiff and convey it back at her request; that the plaintiff has remained in possession of the property since making the deed; and that the defendant has broken his agreement by refusing her request to convey the property back to her. The petition as amended was not subject to the general demurrers interposed. Swift v. Nevius, 138 Ga. 229 ( 75 S.E. 8); McDonald v. Dabney, 161 Ga. 711 (10) ( 132 S.E. 547); Guffin v. Kelly, 191 Ga. 880 (1) ( 14 S.E.2d 50); Hudson v. Evans, 198 Ga. 775 (2) ( 32 S.E.2d 793).
2. Special ground 1 of the motion for a new trial complains that the court erred in permitting a witness for the plaintiff to testify that she heard the defendant request the plaintiff to deed the property in question to him for the purpose of giving him a background of credit, and that after establishing his credit he would deed the property back to the plaintiff. This evidence was objected to upon the ground that it was an attempt to vary and contradict the terms of the deed conveying the property to the defendant, and also an effort to assert an express trust by parol evidence.
We have construed the petition as one seeking to set up a resulting trust. Accordingly, parol evidence is admissible for the purpose of implying a trust, or to show the nature of the transaction and the circumstances or conduct of the parties. Code, § 108-108. Evidence of a verbal agreement between the parties at the time the plaintiff executed the deed was admissible, not as fixing the interests to be owned by the parties, but as rebutting the inference of a gift by the plaintiff. Stevens v. Stevens, 204 Ga. 340 (2) ( 49 S.E.2d 895).
3. The court charged the jury as follows: "Now I charge you, gentlemen, that wilful misrepresentation of a material fact made to induce another to act and upon which he does act to his injury, will give a right of action in the injured party. In order for the plaintiff to prevail in a case like this, it is necessary first that a representation should have been made as set up in the plaintiff's petition. Now the defendant contends that he never made any such representation, and that is the first question for you to determine in this case, whether or not any such representation as contended for by the defendant to the plaintiff; and if it was made, was it a false representation. It has to be material, and the person who made it must know that it was false or was ignorant of the truth. It must have been done with the intent that the plaintiff should act upon this representation, and she was ignorant as to its falsity, that she relied on its truthfulness, and that she has a right to rely on it, and that she was consequently injured by reason of the false statement which the defendant knew was false and which she did not know was false and which she relied upon as the reason for her action."
Special ground 2 asserts that this charge was erroneous and injurious, because the question of fraud and deceit was not made an issue either by the pleadings or the evidence, nor in any manner involved in the case.
We think this exception is well taken. "Instructions inapplicable to the pleadings and the evidence should not be given to the jury; and where such instructions submit to the jury an issue and a theory not supported by the pleadings and the evidence, a new trial will be granted." Hand v. Matthews, 153 Ga. 75 (3) ( 111 S.E. 408). "It is erroneous for a trial judge to charge the jury upon issues not made by the pleadings or evidence in the case on trial; and where this is done, when the evidence is conflicting on the issues really involved, in a way which may mislead the jury, it is cause for a new trial." Southern Railway Co. v. Gresham, 114 Ga. 183 (2) ( 39 S.E. 883). See also Southern Cotton Oil Co. v. Skipper, 125 Ga. 368 (7) ( 54 S.E. 110); Goldberg v. Provident Washington Insurance Co., 144 Ga. 783 (3) ( 87 S.E. 1077).
We have ruled in the first division of this opinion that the petition as amended sought to impose a resulting trust, under the provisions of Code § 108-106 (1), on the property to which the defendant held legal title, and not under subdivision (2) of that section. The petition does not charge the defendant with having made any fraudulent misrepresentations of fact, either past, present, or future, or that his statements that he wanted the title to the property to establish credit for himself, and that he would hold the property for the plaintiff's benefit and convey the title back to her at her request, were deceitfully or fraudulently made with a present intention of not carrying out his agreements. Nor is there any evidence, direct or circumstantial, that warrants the conclusion that the defendant's conduct was fraudulent. All that the evidence shows, in so far as fraud is concerned, is that the plaintiff conveyed the property to the defendant by reason of an oral promise, which, after obtaining title but not possession, he failed to keep. "A complainant who seeks relief based on the doctrine of trusts ex maleficio must allege more than the breach of a verbal promise. There must be an unequivocal allegation of positive fraud accompanying the promise, by means of which the acquisition of the legal title was consummated. General allegations as to an entire course of fraudulent conduct are not sufficient, in the absence of a specific averment that the promise was made to be broken." Mays v. Perry, 196 Ga. 729 (supra).
Neither the pleadings nor the evidence made fraud an issue in the case. The evidence on the material issues being sharply in conflict, it was harmful error for the court in its charge to submit to the jury the question of fraud, and such error requires the grant of a new trial.
In view of the foregoing ruling, it becomes unnecessary to pass upon the general grounds of the motion for a new trial.
Judgment reversed. All the Justices concur, except Atkinson, P. J., who concurs in the judgment of reversal, but dissents from the ruling in division one of the opinion.