Opinion
October 25, 1948.
1. Vendor and vendee — oral contract to purchase land — express trust.
A prospective purchaser agreed orally with a land owner to purchase a specified tract, and to have the title examined at his own expense and to report to the land owner any defect found in the title. The prospective purchaser discovered on the examination that the title was in the State, whereupon he applied to the State to purchase the land, and reported to the land owner that he was no longer interested in it. On the contention by the land owner that the title secured from the State was in trust for him; held that the agreement relied on by the land owner being an express trust, if any trust at all, amounted to nothing, because not in writing, citing Miazza v. Yerger, 53 Miss. 135.
2. Estoppel.
A party who desires to purchase a tract of land from the State, the real owner under a forfeited tax title, and who has a pending application on file with the State Land Office so to purchase, is not estopped because of a statement that he was not interested in the land and did not expect to purchase it made by him to a prospective purchaser from the former owners, for the reason that the defect in the title of the former owners was equally available to the prospective purchaser from the public records, the applicant to purchase from the State being under no obligation to furnish information which he had obtained at his own expense as regards the condition of the title and he made no statement which would lead the prospective purchaser away from an examination into the title.
3. Estoppel — promissory estoppel.
An estoppel may not be predicated upon statements of an intention, except as to a promissory estoppel by which the party estopped has made a statement of intention which when fairly interpreted is a promise to forego or waive some existing interest or right, but this exception may not be extended so far as to hold that any mere statement of a present intention by a prospective purchaser to another prospective purchaser, neither of them having any present, legal, or equitable interest would bind the person making the statement not to purchase an outstanding title from another party when the latter is wholly disconnected from the negotiations which transpired between all the other parties.
On Suggestion of Error. (37 So.2d 775)4. Equity — clean hands.
The complainant was not barred from relief under the equity maxim of clean hands.
Roberds, J., dissenting.
APPEAL from the chancery court of Smith County, LESTER CLARK, Chancellor.
Dent Dent, for appellant.
The demurrers to the Amendment to the cross-bill should have been sustained, one of the reasons being that the Amendment to the cross-bill attempted to enforce a parol contract relating to the sale of land and obnoxious to the Statute of Frauds, section 264 et seq., Mississippi Code 1942. In general the Amendment charges conclusions and at most charges that appellant breached his duty in not informing appellees-intervenors that title to the land was in the State of Mississippi, and under the Statute a breach of such duty, if it was a breach of duty, is not a proper foundation for a bill in equity because such duty arises, if it arises, out of the agreement of the parties and not the acts and transactions of the parties. In Miazza v. Yerger, 53 Miss. 135, the court said: "And the trust in such case must arise from the agreement and not from the transaction, and where a trust arises from an agreement, it is within the Statute of Frauds and must be in writing.
In 26 R.C.L. 1244, it is said: "There must be a salutary and proper limitation of the doctrine of parol trusts, and it will be found in confining the equity to enforce trusts arising out of parol agreements to transactions involving some element of fraud or of bad faith, apart from the mere breach of the agreement itself, which makes it inequitable that the vendee should hold the legal title absolutely or discharged by any trust." This announcement is approved Harris v. Bailey Ave. Park, 32 So.2d 689, and is very applicable to the case at bar. There is no hint in any of the testimony that the appellant was guilty of bad faith or fraud; though the court found there was a fiduciary relationship between appellant and intervenors-appellees, we think the testimony and proof expressly negate the conclusion of the learned chancellor; and the only disputed material fact was whether or not appellant informed the Crumptons that the title was defective because of the tax sale, and this could be nothing more than the "breach of the agreement itself."
The only breach of duty is that the appellant did not notify the appellees that the title to the land was in the State of Mississippi and permit appellees to perfect same. In Lewis v. Williams, 186 Miss. 701, 191 So. 479, it is said: "Where fraud is relied upon, it must be based solely upon the false promise." And in 37 C.J.S., page 755, it is said: "Thus in order to justify the exercise of equitable jurisdiction, the fraud complained of must be something more than mere refusal of a party to perform his agreement, since either party has the right to refuse to execute a parol contract within the operation of the statute, and the exercise of that right is no more a fraud than a breach of any other contract. And the word fraud as sued here means actual, positive fraud, and not mere reliance on the honor, word, or promise of defendant."
We further think that the allegations in the amendment to the cross-bill about the going to the bank, agreeing on the purchase price, arranging for the loan, etc., can be of no help to appellees because part performance of an oral contract for sale of land does not take the case out of Statute requiring such contracts to be in writing. Milam v. Paxton, 160 Miss. 562, 134 So. 171.
Homer Currie and T.J. Wills, for appellees.
The court found under the facts, as set forth in the special finding of facts and the decree, that because of the relationship established between appellant and W.B. Crumpton and Norvelle Crumpton, intervenors that appellant would not be permitted, in equity, to hold the title. That as a matter of law Wilson held as Trustee for the Crumptons. The court further held that Martin had been substituted to the right of the Crumptons. The court further held and decreed, that the title held by appellant Wilson was in trust for the Crumptons. That Wilson was entitled to be reimbursed the money and expenses that he had expended in procuring the title from the State.
It was said in 65 Corpus Juris, page 476:
"(6) Violation of confidential or fiduciary relation — (a) In general. It is a general rule that one who occupies a confidential or fiduciary relation to another in respect of business or property, and who by the use of knowledge obtained through such relations, or by the betrayal of confidence reposed in him or some breach of duty imposed upon him under it, acquired title to or an interest in the subject matter of the transaction antagonistic to that of his correlate holds such title or interest subject to a constructive trust in the latter's favor which the cestui que trust may enforce or renounce at his option, unless he has waived the breach of faith, in which case no trust exists or can be enforced broadly speaking, the rule applies whenever influence has been acquired and is abused or confidence has been reposed and is betrayed."
Griffith says in his Chancery Practice, Paragraph 47:
"No person bound to acts for another can act for himself. This is a principle as old as the first among laws, and it has a specially wide application in the process and proceedings in chancery as a court of conscience. Under it, for instance no next friend, no guardian, no guardian ad litem, no commissioner of the court can purchase at any sale where there is being sold any property of his ward or of any of those for whom he has duty to perform in the cause. This disability and dis-qualification imposed by the maxim runs through all the procedure and includes trustees, fiduciary and in a large measure all of those in confidential relation so that no officer, agent or fiduciary shall be permitted in any respect to have any such connection or acquire any such interest as may come in conflict with those for whom in any substantial respect he is or may be required to act as to any portion of the matter in hand." See Winn v. Dillon, 27 Miss. 499; Jackson v. Jefferson, 159 So. 486; Old Ladies Home Association v. Grubb's Estate, 2 So.2d 593; Rimmer v. Austin, 4 So.2d 334; Jones v. Crawford, 30 So.2d 57; see also volume 15, A. and E. Encl. Law 2d 1196 (4).
Homer Currie and T.J. Wills, for appellee.
The opinion sets out in the second paragraph, that appellee obligates himself to look up the title, and if anything was wrong with the title to notify appellant who would do the necessary to perfect it.
The opinion then sets forth the fact that appellee discovered a defect in the title, and then violating his own promise and without conscience proceeded to take the title against appellant with whom he was dealing.
The opinion then recites, that appellee was under no obligation to appellant to keep faith with his promise. In effect the court has said that a man's promise is worth nothing and, that in a court of equity he is not required to have a conscience.
We now turn to an old and ancient treatise on Chancery Practice in Mississippi, a work so well known to the Mississippi Bar, that they cling to it as their Bible in Law.
In paragraph 32 of this out of date treatise we find the leading sentence, "The court of equity is a court of conscience." The paragraph says that a man who invokes the jurisdiction of equity must come with clean hands, and in asking the court to take cognizance of his suit in equity he shall on his part do any equity that in conscience his case requires that he should do.
It is true, that in a court of law a promise that is not in writing may fall within the condemnation of the statute of frauds. When, however, the man without conscience seeks relief in equity; a court of equity, and a court of conscience, heretofore has searched the record and if he has not done equity he is denied relief.
Then again in paragraph 42 this old antiquated treatise that for a quarter of a century has been so dear to the Mississippi Bar says, "He who comes into equity must come with clean hands." Meaning, of course, that there must be no conscious violation of a promise that has been made.
Then when we turn to paragraph 43, we read "He who seeks equity must do equity."
This is not the law now. Wilson v. Martin et al., has repealed that grand treatise of Mississippi Chancery Practice. All that you have to do now is to mislead your victims by promises made never to be performed, enrich yourself with ill-gotten booty, and a court of chancery will protect you.
(Hn 4) The suggestion of error was overruled without an opinion.
The facts in this case are disputed at every turn, but we shall consider them proved in appellees' behalf so far as a reasonable interpretation of the testimony will permit.
The Crumptons, appellees, thinking that they owned the land here involved, desired to sell it, and appellant Wilson was interested in acquiring it. On or about January 1, 1947, they made an oral contract by which the Crumptons agreed to sell it to Wilson, and Wilson agreed to buy it for a stated cash price. To obtain the purchase money it was necessary for Wilson to negotiate a loan from the bank with the land as security. They went together to the bank and the banker agreed to make the loan when furnished an attorney's certificate that the title was clear; whereupon it was further agreed that Wilson would have the title examined (at his own expense) and would report to the Crumptons any defects found in the title and that the Crumptons would then take the necessary steps to make the title good.
Wilson went to the county courthouse and employed an attorney to look into the title. In due course the attorney reported to Wilson that the land had been sold to the State in 1933 for delinquent taxes and had not been redeemed. Wilson then went to a notary, who prepared a formal application to the State Land Office for the purchase of the land by him, Wilson, but Wilson said nothing to the Crumptons about what had been discovered in the title examination. Not hearing from Wilson, one of the Crumptons inquired of him about it and Wilson stated to him that he, Wilson, was no longer interested in the land, and did not intend to buy it, — saying nothing of his application to the State Land Office.
Appellee Martin was also a prospective purchaser of the land, and when Wilson advised the Crumptons that he was no longer interested, they went to Martin who agreed to buy it, if in fact Wilson no longer wanted it, and Wilson repeated to Martin what he had already told the Crumptons, that is, that he, Wilson, was no longer interested in the land and did not intend to buy it. Martin thereupon went back to the Crumptons and purchased the land under a warranty deed, dated April 28, 1947.
When the conversations between the several parties, above outlined, occurred, Wilson had heard nothing from his application in the land office, and it later transpired that the records in the land office touching the tax sale were incomplete, but this was later corrected and appellant received the forfeited tax land patent on September 17, 1947. No contention is urged here which would challenge the validity of the tax sale or the sufficiency of the application to purchase from the State or the due and proper execution of the State's patent to appellant Wilson as grantee therein.
Wilson, a few months later, filed his bill to cancel Martin's deed as a cloud on his title; and defense was made on the contention that because Wilson did not inform the Crumptons as he agreed to do about what he had found on an examination of the title and did not thereby alert the Crumptons to the necessity to purchase the State's title, he, Wilson, in acquiring that title became a trustee for the Crumptons with no right to hold against the Crumptons' grantee, Martin, Wilson's only right being to have reimbursement for what he paid for the patent, and the court so decreed.
(Hn 1) It is at once to be seen that what appellees are relying on is the failure of Wilson to live up to his stated contract with the Crumptons, his obligation, if any, being plainly within the coverage of the oral contract. But being within the express terms of the contract, it was an express trust, if any trust at all, and not being in writing amounted to nothing. Sec. 269, Code 1942; Miazza v. Yerger, 53 Miss. 135. What appellant Wilson ultimately did was in effect what Yerger did in the cited case.
(Hn 2) This leaves only the question whether Wilson's statement to Martin, the purchaser from the Crumptons, that he, Wilson, was not interested in the land and did not intend to purchase it, may be invoked as an estoppel in favor of Martin. In the first place, on this inquiry we are met with the fact that the immediate cause of any injury to Martin was that his vendors, the Crumptons, had no title, a fact revealed by the public records equally available to Martin and the Crumptons as to appellant. Wilson said nothing to Martin about the title and nothing to lead him away from an examination into it. Martin's neglect to examine into the title, as most prudent purchasers do, is not chargeable to Wilson, and none would suppose that he was under any obligation legal or equitable to volunteer to Martin any information as to the condition of the title or want of title.
In the second place, the statement by Wilson of his intention not to purchase was not of a past or present fact, intention not being a fact within the ordinary rules relating to estoppel for the very obvious reason that an intention may change while present or past facts are fixed. 10 Am. Jur., Estoppel, Sec. 52, p. 657. An exception to the general rule is permitted in what is called the promissory estoppel where the party estopped has made a statement of intention which, when fairly interpreted, is a promise that he will forego or waive some existing interest or right, which being reasonably acted on by the other party would result in his injury if the promise or waiver is not kept. 10 Am. Jur., Estoppel, Sec. 53, p. 658. But, as already mentioned, Wilson had in the land no interest or right whatever — except the right to try to purchase from the State, and Martin had an equal right in that respect.
(Hn 3) Some cases have extended the doctrine of the promissory estoppel beyond the dependable anchorage of a present right or interest; but we have found none which has ventured so far as to hold that any mere statement of present intention by a prospective purchaser to another prospective purchaser, neither of them having any present legal or equitable interest, would bind the person making the statement not to purchase an outstanding title from another party when the latter is wholly disconnected from the negotiations which transpired between all the other parties. We think that to so hold would be impracticable as not being within dependable safeguards, and we must decline it. In Lusk-Harbison-Jones v. Universal Credit Co., 164 Miss. 693, 145 So. 623, we called attention to the necessity of caution in dealing with the principle involved in promises without consideration, such as that now before us so far as Wilson and Martin are concerned, and we must now adhere to that caution.
In our opinion no defense has been made out against appellant's title and that the decree should and must be reversed and a decree entered here adjudging appellant's title to be good as against the appellees herein, but we will remand the cause on the sole issues of rents and improvements.
Reversed, decree here, and remanded.
On Suggestion of Error.
I have concluded the Suggestion of Error should be sustained. One of the cardinal maxims of equity is that he who comes into equity must come with clean hands. The fertility of the mind of man in devising schemes to defraud is so great the courts have not undertaken to announce a definition which will include all of them. In 23 Am. Jur. 753, Sec. 2, one definition is "anything which is calculated to deceive, whether it is a single act or a combination of circumstances, or acts or words, which amount to the suppression of the truth, or mere silence." The facts disclosed in the original opinion are sufficient, in my opinion, to demonstrate that appellant was guilty of legal fraud, and that he does not come into equity with clean hands. His bill should be dismissed.