Duff v. Wilson , 72 Pa. 442 ( 1873 )

The opinion of the court was delivered, by

Sharswood, J.

— When this case Avas here before (19 P. F. Smith 316), the only question presented upon the record was upon the rejection of an offer by Wilson, the defendant below, to prove an eviction under the proceedings upon the Kifer mortgage. The learned judge below thought that as Smathers had sold to Duff, clear of all encumbrances, and was, therefore, bound to indemnify him against that mortgage, Wilson, his surety for the rent, could not set up the eviction as a defence. We came to a different conclusion, and reversed the judgment.

On the second trial the evidence before rejected was admitted; and it was shown by the plaintiff, in rebuttal, that by an article of agreement of August 25th 1865, Smathers had agreed to sell and convey to Wilson all his interest in the premises, giving Smathers, however, the right to redeem in two years. It was a mortgage, but Wilson took possession, and continued so until after the period fixed for redemption. Being thus in possession, it also appears that he procured an assignment of the Kifer mortgage to his brother-in-law Henderson, by whom the proceedings on the mortgage were instituted and- carried on; and he (Henderson), having become the purchaser at the sheriff’s sale, afterwards, by deed, conveyed the title thus acquired to Wilson. That Henderson was merely the trustee of Wilson appears by Henderson’s own testimony : “ I don’t recollect the amount of the bid, but it was a trifle, and I paid nothing but the costs when I got the deed. I can hardly say that the costs were paid with my money, for I paid a portion of the costs with Mr. Wilson’s money, which I had. at the time. There was an account between us.” And again : “ When I took the mortgage I paid no money, and when I made the deed to Wilson I received no money.”

Smathers being the owner of the whole tract had conveyed a moiety to Duff, who had leased to Smathers his moiety for five years. It is clear, then, that Wilson, by the article of August 25th 1859, became in equity tenant in common with Duff, in such a relation with him, that if he bought in an outstanding encumbrance on the common property, it must, at the election of his co-tenant, enure to his benefit. This is very well settled in this state. When several persons have a joint or common interest in an estate one cannot purchase an encumbrance or an outstanding title, and set it up against the rest, for the purpose of depriving them of their interest: Weaver v. Wible, 1 Casey 270; Lloyd v. Lynch, 4 Casey 419; Keller v. Auble, 8 P. F. Smith 410. The fact that the purchase was made in the name of a third person is of no consequence: Painter v. Henderson, 7 Barr 50. -Wherever the acts of a person standing in a confidential relation may admit of two constructions, one right and the other tortious, the presumption is in favor of the former. Equity will, therefore, consider the purchase as bond- fide, and intended for the benefit of all those with whom he is associated in interest. He is a trustee for them, and is entitled to be reimbursed all the purchase has cost him before he can be required to convey to them. To apply these principles to this case. If Wilson bought the mortgage, and had proceedings instituted upon it, under which, though he was in form turned out of possession, and Henderson put in, yet as Henderson was his agent or trustee, he is not entitled to set this up as an eviction as against Duff. The most he can claim is by way of set-off, Duff’s proportion of the expenses of obtaining the mortgage.

But this is on the hypothesis that he acted bond, fide. It is only when the party has acted honestly, or what is the same thing, in the absence of evidence of dishonesty must be presumed to have so acted, that he has any claim to reimbursement. In case of positive fraud, the rule is otherwise: McGinn v. Shaeffer, 7 Watts 412; Chronister v. Bushey, 7 W. & S. 152; Beeson v. Beeson, 9 Barr 279. We think that, upon the evidence in the case, there was a question of actual fraud to be submitted to the jury. If it was the fact that Wilson was a party to an agreement with Duff and Gilmore that the Kifer mortgage should be bought for their common benefit and protection — that Wilson, secretly and, especially, by false representations to the agent of the mortgagee, procured the assignment to Henderson for his own exclusive benefit — that he proceeded on the mortgage, without making Duff a party as terretenant, and without giving him any notice — these were facts which, unless explained or contradicted by other testimony, might well lead a jury reasonably to the conclusion that the whole transaction was a trick, op the part of Wilson, to get the title of Duff for a very inadequate price, and to escape also from his obligation both as assignee in possession of the lease to Smathers, and of his own contract, by which he became surety for Smathers for the rest.

Judgment reversed, and venire facias de novo awarded.