Opinion
Decided October 9th, 1935.
The court of chancery cannot resort to speculation as to any fraud that may have existed in the conveyance of the premises to the defendant. There is no evidence to support complainant's contention that defendant holds the land in question in trust for the complainant.
On appeal from a decree of the court of chancery, advised by Vice-Chancellor Sooy, who filed the following opinion:
"The prayer for relief is:
"`That it be decreed that the premises in question is the property of Island Fertilizer Company, or complainant as its trustee; that said Edwin D. Holland holds the same in trust therefor; that he be required to grant and convey the premises to complainant; or that he have no interest whatever in the same.'
"The allegations of the bill of complaint upon which the prayer is based are:
"1. That the premises described in the bill of complaint were conveyed by the Atlantic Realty Company to Edwin D. Holland on March 28th, 1933;
"2. That the consideration of $600 for the conveyance was money of the Island Fertilizer Company and not that of the grantee.
"3. That said grantee has no financial or other interest in the premises conveyed.
"4. That said conveyance was in fraud of the stockholders and creditors of the Island Fertilizer Company.
"5. That the Island Fertilizer Company has been adjudicated a bankrupt and the complainant is trustee.
"On final hearing, complainant produced the witnesses hereinafter named, who testified substantially as hereinafter stated.
"Edward J. Holland, the father of the defendant, testified for the complainant that he and one Slape were the owners of all of the stock of the Island Fertilizer Company, they having purchased it from one McKeever, taking possession of the property in 1922 or 1923, and that the building thereon erected, a concrete and brick structure eighteen feet by forty feet, was built just prior to their purchase of the stock from McKeever.
"A lease between the Atlantic Realty Company and the Island Fertilizer Company was introduced in evidence, under which it appears that the Island Fertilizer Company had an option to purchase the locus in quo for the sum of $800.
"A Mr. Crowley, the president of the Atlantic Realty Company, testified that after the execution of the lease, upon just what date does not appear, but evidently some considerable time afterwards, McKeever paid to him, for the Atlantic Realty Company, ten years' rent in advance, and that it was then verbally agreed between McKeever, for the Island Fertilizer Company, and Crowley, for the Atlantic Realty Company, that the Island Fertilizer Company should have an option to purchase the locus in quo at any time within a ten-year period, for $800, and that if the option was not exercised within the ten-year period, the buildings erected on the lands would revert to the Atlantic Realty Company.
"It was after the expiration of the ten-year period that the defendant purchased the property in question, and his father, Edwin J. Holland, testified that Crowley offered the property to the Island Fertilizer Company prior to the time of the purchase by Edwin D. Holland, and that the matter of purchase was referred to the solicitor of the Island Fertilizer Company and that after sixty days' delay it was decided not to purchase. Mr. Crowley corroborated this testimony and said that after the refusal of the Island Fertilizer Company to purchase, he interested Edwin D. Holland in the purchase and sold it directly to him.
"Crowley, Edwin J. Holland and his son all testified that the $600, the consideration for the purchase, was paid out of moneys belonging to the defendant and not out of moneys in any way belonging to the Island Fertilizer Company, and there is no evidence as to the value of the premises.
"One of the reasons given for the Island Fertilizer Company not purchasing the property was that the banks had closed by reason of a failure and that the company had no cash and that the company knew that the title was in dispute.
"On this evidence, counsel for the complainant said that he intuitively knew that there was a fraud committed and that the court should so find.
"The trouble with the situation is that the court may not base a decree on intuition but must base it on evidence which clearly supports the averments of the bill of complaint, and there being no such evidence, the court cannot resort to speculation as to any fraud that may have existed in the transaction in question.
"The bill will be dismissed, with costs to the defendant."
Mr. Clarence L. Cole, for the appellant.
Mr. Morgan E. Thomas, for the respondent.
The decree appealed from will be affirmed, for the reasons stated in the opinion delivered by Vice-Chancellor Sooy in the court of chancery.
For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, LLOYD, CASE, BODINE, DONGES, HEHER, PERSKIE, VAN BUSKIRK, HETFIELD, DEAR, WELLS, JJ. 13.
For reversal — None.