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(232 S. W.)

and M.

4. Trusts 211 - Trustee, while entitled to incur reasonable attorney's fee, cannot agree to convey interest in lands.

ing to bring, such suits. The railway com- | for plaintiff, but plaintiff declined to deal with pany could join McCardle and any one par- him, and informed him that he (plaintiff) had ticular client as defendants. It could main- turned the matter over to M., and that E. would tain an action as against McCardle alone have to see M. Held, that E. was chargeable as to bringing such suits for any or all with notice of the relations between plaintiff clients represented by him. The railway company had more than a passing interest in the perpetration of this fraud upon the laws of the state. It is being continuously harassed by these numerous garnishment proceedings, to which it is made a party, in the very act of perpetrating the fraud upon our laws. We are firmly convinced that the railway company can maintain an action to enjoin such frauds upon our laws. It was not necessary for it to have joined Campbell as party plaintiff.

While a trustee may employ counsel for the recovery or protection of the trust estate, he can only bind the estate of the beneficiary to payment of a reasonable attorney's fee; and hence, where a creditor of plaintiff undertook as trustee to recover lands of which plaintiff was the beneficial owner, such creditor could not charge the land with an agreement to convey to an attorney half of the lands as a con

All the other Judges concur in these addi- tingent fee, and such agreement is invalid tional views.

HENDERSON v. ELAM (three cases).

(Nos. 21237, 21802, 21803.)

(Supreme Court of Missouri, Division No. 1. (Supreme Court of Missouri, Division No. 1. Aug. 24, 1920. Motion for Rehearing Denied Sept. 3, 1920. Motion Based on Const. U. S. Sept. 3, 1920. Motion Based on Const. U. S. Amend. 14, § 1, Denied June 6, 1921.)

1. Fraudulent conveyances 188 Debtor conveying land held, on the evidence, not actuated by fraud so as to bar relief.

A debtor who, in order to extricate himself from his difficulties, mortgaged his lands, and, on demand of one who was assisting him, conveyed the fee to such person, held, on the evidence, not to have been actuated by fraudulent motives, so as to deprive him of the right to equitable aid to compel a reconveyance from

his grantee.

2. Trusts 100-Creditor purchasing at execution sale held to take debtor's property as trustee.

Plaintiff, in the course of extricating himself from financial difficulties, conveyed his property to A., who refused reconveyance. M., an injured creditor, suggested that plaintiff allow him to recover judgment, secure title at execution sale, thus defeating A.'s title, when M. would reconvey to plaintiff. M. secured judgment, and bought in the property at execution sale for a nominal sum. Held, that M. held the property as trustee for plaintiff, and was bound to reconvey to plaintiff on payment of his claim and reimbursement of expenses. 3. Trusts 357 (2)-Purchaser from trustee held chargeable with notice of rights of cestui que trust.

M., one of plaintiff creditors, agreed with plaintiff that if the latter would allow him to recover judgment and buy at execution sale land of which plaintiff was the equitable owner, he would reconvey to plaintiff. M. employed E. to perfect title to the land, agreeing to convey to him a half-interest therein as a contingent fee, and executed a deed to E. accordingly. Thereafter E. approached plaintiff, and solicited employment for a cash fee to recover the land

where the attorney knew, or was chargeable with knowledge, of plaintiff's rights.

5. Attorney and client 174-Attorney not entitled to lien on property.

Where plaintiff, after arranging that a creditor should recover lands of which he was the

beneficial owner, paid the creditor the amount
of his expenses, together with a reasonable at-
torney's fee, the attorney who induced the cred-
itor to give him a contract for one-half the
lands, as a contingent fee, cannot, being at least
chargeable with knowledge of the relations be-
tween the parties, subject the land to his lien.
6. Appeal and error 790 (3)-Propriety of
order appointing receiver will not be deter-
mined, the matter being moot.

Where a decree declaring that defendant held land as trustee for plaintiff was in all respects affirmed, and defendant had no further right in the property, an appeal from appointment of a receiver for the land during the pendency of defendant's appeal will be dismissed, the matter having become moot.

Appeal from Circuit Court, Lawrence County; Charles L. Henson, Judge.

Suit by E. P. Henderson against Oscar B. Elam. From a judgment for defendant plaintiff appeals, and defendant appeals from orders in respect to receivership in the principal case. Judgment reversed on plaintiff's appeal, and defendant's appeal from orders appointing receiver dismissed.

Theo. Alvord, of Pierce City, and J. E. Sater and D. S. Mayhew, both of Monett, for appellant.

Oscar B. Elam, of Springfield, pro se.

RAGLAND, C. Three appeals from the circuit court for Barry county in the suit of E. P. Henderson, plaintiff, against Oscar B. Elam, defendant, are pending in this court. No. 21,237 is the principal case. Nos. 21802 and 21803 are appeals from orders of the court in respect to the receivership in the principal case, and, at the request of the defendant, the plaintiff interposing no objec

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

tion, the two subsidiary appeals have been [prior to obtaining this loan Allen represented advanced on our docket and will be consider- to plaintiff that it could not be gotten un.. ed and disposed of with the appeal in the less plaintiff first gave Allen a quitclaim deed main case. to the land. Plaintiff accordingly executed The principal case is a suit in equity com- such deed. After the remainder of the origmenced May 5, 1917. It was instituted original mortgage debt had been discharged from inally against one T. J. Miller and the de- the proceeds of the new loan, plaintiff defendant, Elam. Its object was to have Miller and Elam declared trustees for the plaintiff in respect to the title they held to 360 acres of land in said county, to divest them of such title, and invest the plaintiff therewith. Pending the suit and before trial, Miller conveyed whatever title he had to plaintiff, who thereupon dismissed as to him, and the cause thereafter proceeded against Elam as the sole defendant. This case is a sequel to that of Miller v. Allen et al., 192 S. W. 967, decided by this court February 20, 1917. The opinion in that case sheds light on the facts disclosed by the record in this.

In July, 1905, plaintiff was the owner of a farm of 500 acres in Barry county on which he resided. In addition to the land and the crops growing thereon, he also possessed farm implements and live stock. His indebtedness at that time, secured and unsecured, exceeded $18,000. Being unable to meet these obligations, he sought the aid of one Allen. With Allen's assistance he obtained a loan (or loans) of $17,280, which he secured by a first, second, and third mortgage on his land. The proceeds of this loan paid all of his indebtedness except about $1,500, which he owed T. J. Miller. This latter debt was evidenced by a note, and Miller consented to a forbearance so that plaintiff could have an opportunity to realize from his stock and crops. As a further security for the loan of $17,280, Allen required plaintiff to execute, in connection with the three deeds of trust in the nature of mortgages, a deed conveying the land to him (Allen), subject to the deeds of trust, and to become a party to a lease whereby he obligated himself to pay Allen $3,000 a year as rent for the land and for the use of the live stock and farm implements thereon. Allen promised to reconvey the land when the debt was paid.

manded of Allen a reconveyance. The latter, however, though he had never paid a cent for the land, by the peculiar reasoning often resorted to in such situations, concluded that it was his in fact as well as in name, and refused to reconvey. Thereafter he claimed ownership of the land, but made no attempt to disturb plaintiff's possession until his (Allen's) title was challenged by plaintiff's creditor, Miller.

From the time when he executed the deeds of trust securing the $17,280 loan and made the conveyance to Allen to 1911 plaintiff paid but little, if anything, on his debt to Miller. Some time during the first part of the latter year Miller came to plaintiff and said to him in substance:

"I have heard you have been robbed by Allen and left in debt. If you will do as I tell you, I can win this land back for you and you will be able to pay me too."

He then outlined his plan, saying that under the law it was necessary that he first sue plaintiff and get a judgment against him; that he would then have the land advertised and sold to the highest bidder; that at such sale he would buy it in for plaintiff, and then proceed against Allen for getting the farm for nothing and leaving Miller unpaid; and that upon plaintiff paying him his debt and the expenses of the litigation, including attorney's fees, he would deed the land to plaintiff. At this juncture plaintiff said: "Will you deed it back to me, or do as Allen did?" Miller said: "Certainly I will. Don't rate me with Allen." Thereupon plaintiff assented to the plan and agreed to co-operate with Miller in putting it into execution. Subsequently Miller sued plaintiff in the circuit court for Barry county, and on July 11, 1911, obtained judgment by default for the sum of The lease seems to have been disregarded. $1,776.32. Execution issued and a levy therePlaintiff paid Allen all that he could realize under was made upon some of plaintiff's catfrom the sale of the products of the farm-tle. Plaintiff gave Miller a note for $1,100 not as rent, but for application on his mort- and a chattel mortgage on the cattle levied gage indebtedness. These payments were upon, and the execution was credited with substantial; they were sufficient not only to that amount and the levy released. The inpay the interest as it accrued, but to materi- terest of plaintiff in the 360 acres of land was ally reduce the principal. In December, 1909, then levied upon, and a sale thereof was had 140 acres of the land was sold by plaintiff November 15, 1911. When the sale was calland Allen for $7,000 and the proceeds paid on ed Allen made public announcement that the the debt. By means of the payments just land was his and whoever bought would buy mentioned the mortgage debt on August 1, a lawsuit. Plaintiff and Miller were present. 1910, had been reduced to $8,000. This bal- and Miller said to plaintiff: "I will attend ance having matured, for the purpose of ob- to it for you; buy it in so we can keep it in taining the money with which to pay it, our possession, so that you can get it back." Allen executed a deed of trust for $8,000 on Miller made the only bid, and the land was the remaining 360 acres of the land. Just sold to him for $25. In due course Miller re

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(232 S.W.)

and interest, paid or to be paid, and the expenses incurred in the litigation with Allen. The suit was then discontinued as to him, as already stated.

ceived a sheriff's deed conveying to him the [ have to see him. Plaintiff consulted counsel interest purchased. Miller's next step was to instead, with the result that this suit was ininstitute a suit to set aside the conveyances stituted. After this suit had been pending from plaintiff to Allen as fraudulent and to nearly a year Miller quitclaimed the land to have confirmed the title conveyed to him by plaintiff, taking back a deed of trust for $2,the sheriff's deed. He made Allen and the | 000, which was to reimburse him for taxes plaintiff and his wife parties defendant to this proceeding. The latter two defaulted in pleading, and plaintiff was Miller's chief witness in the case. Allen, however, filed a cross-bill, asserting title in fee, and praying that the sheriff's deed to Miller be set aside because it constituted a cloud on his title. Allen prevailed in the trial court, and a judgment was rendered in his favor November 1, 1912. From this judgment Miller prosecuted an appeal to this court, with the result that the judgment was reversed, and the trial court directed to render judgment for Miller confirming his title and setting aside the conveyances to Allen. Pursuant to this mandate such judgment was entered by the circuit court at its May term, 1917.

During the pendency of the proceedings as just detailed, plaintiff was making payments from time to time on Miller's judgment against him, continuing such payments after Miller's apparent defeat in the trial court and pending the appeal here. Prior to November 28, 1913, he had paid Miller the full amount of the judgment "in stock and money," and on that date Miller acknowledged of record full satisfaction thereof.

Defendant was Miller's attorney in both suits-the one against plaintiff and the one against Allen and others-from their inception to their final determination. He testified that soon after Miller purchased the land at the execution sale he was employed by Miller to perfect the latter's title and secure possession. In this connection he introduced in evidence a written contract bearing date November 17, 1911, which, after reciting the employment, further recited that Miller agreed "to pay his said attorney for his said services by sharing said lands and all income and profits derived therefrom after this date with his said attorney," and, further, "that the profits of the adventure" should be shared equally between Miller and the defendant. On May 14, 1917, Miller executed a deed which purported, "in consideration of professional services as a lawyer" rendered "under a contingent fee agreement made in 1911," to convey to defendant an undivided one-half interest in the 360 acres of land.

Within a few days after the decision of this court, on February 20, 1917, directing a judgment confirming Miller's title to the land in question, plaintiff went to Miller and demanded a conveyance. Miller told him that he could do nothing until the circuit court acted. Subsequent demands met with the same response. Finally Miller told plaintiff that he had turned the entire matter over to Mr. Elam (the defendant) and that he would

Plaintiff testified that, after he and his wife had been served with process as defendants in the suit of Miller v. Allen et al., defendant, Elam, came out to the farm and spent the night with them; that during his visit Elam proposed to get the land back for them for a fee of $3,000; and that plaintiff then told Elam that he had had an understanding with Miller and Miller would attend to the employment of an attorney for plaintiff. This testimony was uncontradicted. On April 6, 1917, defendant saw plaintiff at Monett, and induced him to employ defendant as an attorney to bring a suit against Allen for the loss by plaintiff of the 360 acres of land. The petition was immediately drawn and filed. The alleged cause of action therein stated was bottomed on Allen's conduct at the execution sale in claiming the land as his and in announcing that whoever bought it would buy a lawsuit, thereby causing, it was asserted, prospective purchasers to refrain from bidding, so that the land was sacrificed for $25, and thus lost to plaintiff, Henderson, to his damage in the sum of $25,000. The next day, April 7th, Elam wrote to Jacob Strock, a neighbor of Henderson's, saying that he had filed the suit just mentioned, and inclosing a copy of the petition. He told Strock that he had at hand all the evidence that was necessary to successfully maintain the suit except as to the value of the land on November 15, 1911, and asked his aid in finding a few of the best men to be had by whose testimony such proof could be made. He also inclosed in the letter three typewritten copies of the contract of his employment by Henderson; he requested Struck to have Henderson sign each in the presence of two good men as witnesses, to then give Henderson one, keep one himself, and mail the third to him (Elam). One of these copies defendant, Elam, introduced in evidence at the trial of this cause to show that on April 6, 1917, Henderson was making no claim to the land, but was trying to recover damages from Allen for its loss. Henderson's suit against Allen was dismissed shortly after the commencement of this action.

Defendant, Elam, testified that he never had information from any source of Henderson's claim to the lands in suit until after he (Elam) filed the suit for Henderson against Allen to recover damages for its loss; that the first information of such claim

came to him shortly before the sheriff served the papers upon him (May 7, 1917) making him a party defendant in this case. Miller was not introduced as a witness by either party.

The petition after setting out at length the facts heretofore narrated relative to the plaintiff's title in 1905, the giving of the deeds of trust, and the conveyance to Allen, the reduction of the original mortgage indebtedness, plaintiff's agreement with Miller looking to the recovery of the title from Allen, the subsequent acts of plaintiff and Miller pursuant thereto, and Miller's refusal to convey to plaintiff, further alleges that “plaintiff is informed and believes that defendant Miller has conveyed to defendant O. B. Elam some interest in said premises in derogation of the rights of plaintiff and in violation of the agreement of Miller with plaintiff." The prayer is that the court declare that the defendant Miller holds said land in trust for plaintiff in accordance with the contract and promise made by him; that any interest or title claimed by defendant Elam be held for naught; that plaintiff be vested with the entire title, and have general relief.

The answer, in addition to a great deal of irrelevant matter, alleges that the defendant is the owner of an undivided one-half interest in the lands described in the petition. As a basis for this claim it pleads the contract of employment between Miller and defendant, dated November 17, 1911, the performance thereof by defendant, and the execution of the deed from Miller to defendant May 14, 1917, as a compliance therewith on Miller's part.

The reply, among other things, alleges "that defendant Elam had personal knowledge and well knew that the suit instituted by Miller against Allen was to inure to the benefit of plaintiff, giving him full title to the lands in issue," etc.

Allen, supra), under the evidence in this case appellant himself was not actuated by such fraudulent intent in making them that a court of conscience, in a proper proceeding, would have refused him relief by compelling Allen to reconvey. But Allen was refusing to deed the land back to him. Miller, understanding the situation and seeking to speed the payment of his own debt, proposed to appellant a plan by which the title could be wrested from Miller and passed to appellant. Appellant assented to the plan and put himself wholly in Miller's hands. Miller thereupon deliberately proceeded to acquire appellant's title to the lands in question. He obtained a judgment against appellant in July, 1911, for $1,776.32. Immediately afterward appellant by mortgaging some of his cattle paid $1,100 on it. Miller then proceeded to levy on the land and appellant let it go to sale. It cannot be conceived that he would have stood quietly by without making any effort to discharge the small balance of $676, and permitted his equity in the land, worth probably $10,000, to be sold, had he not had an understanding with Miller that Miller would buy it for him. After having by his promises lulled appellant into inaction, and as a result thereof acquired appellant's title, Miller could not refuse to perform his promises without working a fraud on appellant. It follows, therefore, that when Miller obtained title to the land in suit at the execution sale he took it impressed with a trust by the terms of which he was bound to convey it to appellant when he was paid his judgment and reimbursed for the expenses reasonably incurred in the litigation. Phillips v. Jackson, 240 Mo. loc. cit. 335, 144 S. W. 112, and authorities cited.

[3] 2. The next question for consideration is whether respondent knew of the understanding between Miller and appellant, and, if so, when he acquired such knowl

The trial court found the issues for de- edge. Respondent testified that he knew fendant. Plaintiff appeals.

Appellant's position is that Miller, upon the acquisition of the title to the lands in controversy by purchase at the execution sale, held it in trust for appellant; that respondent at all times knew of the existence of the trust and the terms thereof; and that when he received the conveyance from Miller of an undivided one-half interest in the land he took it impressed with the trust.

nothing of appellant's claim to the land until after he had filed for appellant the suit against Allen on April 6, 1917, and shortly. before May 7th, the day respondent was served with process in the present case. Respondent, however, does not deny that, soon after he had instituted the suit of Miller against Allen to set aside Henderson's deeds to Allen, he went out to appellant's farm and spent the night with him, and during [1, 2] 1. Under the facts disclosed by the his visit sought to induce appellant to enrecord in this case, there can be no question ter into an agreement to pay him $3,000 as but that in 1911 appellant was the equitable a fee, if respondent succeeded in setting owner of the land in suit, subject to an in- aside Allen's deeds and getting the land cumbrance of $8,000. His previous convey- back for appellant. It is reasonably certain ances to Allen had been made under a spe- that respondent had not at that time entered cies of duress. He had had to comply with into the contract with Miller to get half of Allen's demands to extricate himself from a the land recovered as a contingent fee. It desperate financial situation. While the is fairly inferable that he knew the arconveyances to Allen were, as a matter of rangement between Miller and appellant, law, fraudulent as to creditors (Miller v. knew that under the agreement Miller was

(232 S.W.)

warranted only in obligating himself for a reimbursed out of the trust property provided reasonable attorney's fee for the services re- he acted in good faith. Under such circumquired, and that, having such knowledge, he stances and to such extent only could he sought to secure more advantageous terms bind the estate of his cestui que trust with from appellant himself. And, further, fail- respect to the payment of attorney's fees. ing to secure from appellant the kind of Denvir v. Park, 169 Mo. App. 335, 350, 152 contract he wanted, he then went to Miller, S. W. 604; Perry on Trusts (6th Ed.) § led him to believe that he was under neither 910. Certainly he was not authorized to legal nor moral obligation to carry out the treat such estate as a speculative "advencontract with appellant, and induced Miller ture" to be shared with enterprising counsel. to put the title to the land that had come Prior to the commencement of this suit to him as a providential windfall into hotch- appellant paid Miller his judgment in full. potch, with respondent's professional skill After its institution he fully reimbursed and shrewdness, to the end that the twain Miller for all the expenses incurred by the would share equally "the profits of the ad- latter in the litigation with Allen, including venture." Again, respondent's action in ad- an amount sufficient to discharge the fees of vising appellant to sue Allen for the loss of his counsel. Upon making such reimbursethe land, because Allen had claimed the land ment he became entitled to a conveyance of at the execution sale, and publicly proclaim- all the title to the land in controversy that ed that whoever bought it would buy a law- Miller had acquired. When respondent ensuit, if done in good faith, does not comport tered into the contract with Miller for an with respondent's learning in the law as we undivided one-half interest in that land as have conceived it. Respondent says that a contingent fee, he had full knowledge, or when he brought that suit he did not know what was tantamount to knowledge, of the appellant claimed the land. Yet when the trust upon which Miller held it. He therepetition in that case is read and considered fore acquired no beneficial interest under in connection with the attendant circum- the conveyance made pursuant to the constances, particularly the procurement and tract. placing by respondent, through the instrumentality of Strock, of the three typewritten copies of his contract of employment to bring the suit, the thought obtrudes itself that respondent's purpose in inducing appellant to bring the suit was to put appellant on a false trail, and save himself and Miller from pursuit, or, failing in that, secure valuable evidence to use against appellant in any suit he might thereafter bring against them. For a determination of the question under consideration, however, it is not necessary to draw any of the possible inferences just mentioned, and we do not draw them. Appellant told respondent before the latter had rendered any substantial service in the case of Miller against Allen that Miller would attend to the employment of counsel in that case for appellant. This was sufficient to put respondent on inquiry. He is chargeable, therefore, with all the facts which by a proper inquiry he might have ascertained. Beyond question such an inquiry would have disclosed to him appellant's beneficial ownership of the land; consequently he will not now be heard to say that he was ignorant of that fact.

[4, 5] 3. That Miller was wholly without authority to enter into a contract with respondent to convey to him an undivided onehalf of the land as a contingent fee for his services, that would be binding on appellant, is scarcely open to question. Under his agreement with appellant, Miller, like any other trustee, was under the duty to employ counsel, if reasonably necessary, for the recovery or protection of the trust estate. For such expenditures as were reasonably necessary in that behalf he was entitled to be

It does not appear whether Miller has ever paid respondent for his services. But whether he has or not there is nothing in the situation in which respondent has placed himself that invites the aid of a court of equity in subjecting the trust estate to such payment. Nor is there anything in the pleadings that would authorize the court to enforce in his favor an attorney's lien under the statute upon the fruits of the litigation in which the services were rendered.

From what has been said it follows that appellant is entitled to have defendant divested of all right, title, and interest in the land in suit, and to be himself invested therewith. The judgment is accordingly reversed, and the trial court is directed to render judgment for appellant conformably to the views herein expressed.

No. 21803 is an appeal by defendant from four several orders of the circuit court en bloc in overruling three of defendant's motions requesting the court to direct the receiver to pay defendant certain funds in the receiver's hands and a motion to discharge the receiver. Without setting out appellant's contentions on this appeal, based entirely on his claims to the rents and profits of the land in controversy, it is sufficient to say that all of such contentions are disposed of adversely to him in our opinion and decision in the principal case. The orders of the circuit court appealed from under this appeal should therefore be affirmed. It is so ordered.

[6] No. 21802 is an appeal by defendant from an order of the court refusing to vacate the order appointing a receiver. The order

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