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honest acquisition of the land, the devisee cannot honestly retain it, and equity should compel him to surrender it to the heir as the representative of the testator. It is quite possible that the courts, in giving C the benefit of the trust in cases of devises by A to B upon an oral trust for C, and in refusing him any relief in cases of similar conveyances inter vivos, were influenced by the practical consideration that in the latter case the grantor, recovering his property by the principle of restitution, would still be in a position to accomplish his purpose, whereas in the case of the devise the accomplishment of his purpose would depend wholly upon the will of his heir. This view finds confirmation in a recent New York case, in which the grantee in a conveyance executed by one upon his deathbed agreed orally to deal with the property for the benefit of a third person, and was compelled by the court to carry out his promise.
3. Conveyances by the seller, by direction of the buyer, to a third person.
In the old days of uses, when the title to the bulk of the land in England was not in the owners but in feoffees to the use of the owners, it was natural to presume, as the courts did presume, that one who received a conveyance from a seller by the direction of the buyer was to hold in trust for the buyer. But after the extirpation of uses by the Statute of Uses in 1536, the custom of the country changed, nor did it revive with the introduction, a century later, of the modern passive trust. Accordingly, after the Statute of Uses there was no reason for any presumption that the grantee of a seller was a trustee for the one who paid the purchase money. But the courts, nevertheless, continued to raise the presumption, and furthermore treated this presumption of fact, based upon the supposed intention of the parties, as if it were a rule of law, so that these presumed trusts arising from the payment of the purchase money were deemed to be trusts by operation of law and therefore within the exception to the statute of frauds. This doctrine was criticized by Chancellor Kent in Boyd v. McLean, and in several states has been modified by legislation. The statutes, however, differ in form and effect.
In Indiana and Kansas the statute abolishes the presumption of a trust resulting from the mere fact that one person pays the purchase money for a conveyance to another, but provides expressly
1 Ahrens z: Tones, 169 N. Y. 555.
i Johns. (N. Y.) 582, 585.
that whenever the trustee actually agrees, although only by word of mouth, to hold in trust for the buyer, the trust is valid.1
In Kentucky the statute abolishes not only the presumption of a trust, but the trust itself, providing, however, that the grantee, who refuses to perform the oral trust, shall reimburse the buyer for the purchase money paid by him to the seller.2
In Michigan and Minnesota the statute abolishes the trust and gives the buyer no relief of any kind against the grantee, thereby working a forfeiture upon the confiding buyer to the unmerited profit of the faithless grantee.
The language of the New York statute is almost identical with that of the Michigan and Minnesota statutes, but the courts are not agreed as to its effect. In some cases the statute has been interpreted, in accordance with the Michigan and Minnesota decisions, as penalizing the buyer to the advantage of the grantee. In others the courts have declared that the statute has merely abolished the presumption of a resulting trust, and does not prevent the creation of a valid trust, if there was in fact an agreement, although not in writing, that the grantee was to be a trustee for the buyer. This interpretation, it will be seen, gives to the New York statute the same effect which is secured in express terms by the Indiana and Kansas statutes.
Of these three statutory doctrines it may be said that the Michigan and Minnesota rule is shockingly unjust in enriching the faithless grantee at the expense of the trusting buyer; that the Kentucky
Glidewell v. Spaugh, 26 Ind. 319; Franklin v. Colley, 10 Kan. 260. 2 Martin v. Martin, 5 Bush (Ky.) 47, 56; Manners v. Bradbury, 81 Ky. 153, 157.
8 Groesbeck v. Seeley, 13 Mich. 329; Newton v. Sly, 15 Mich. 391 ; Winans v. Winans, 99 Mich. 74; Chapman v. Chapman, 114 Mich. 144 ; Irvine v. Marshall, 7 Minn. 286; Johnson v. Johnson, 16 Minn. 512 ; Haaven 2. Hoaas, 60 Minn. 313; Anderson v. Anderson, 81 Minn. 329 ; Ryan v. Williams, 92 Minn. 506.
4 Hurst v. Harper, 14 Hun (N Y.) 280; Stebbins v. Morris, 23 Blatchf. (U. S.) 181; Siemon v. Schurck, 29 N. Y. 598, 611.
6 Gage v. Gage, 83 Hun (N. Y.) 362; Smith v. Balcom, 24 N. Y. App. Div. 437 (semble) ; Jeremiah v. Pitcher, 26 N. Y. App. Div. 402 ; aff. 163 N. Y. 574.
In New York, if the grantee takes the title, agreeing orally with the buyer to hold it in trust for a third person, the latter may enforce the trust. Siemon v. Schurck, 29 N. Y. 598 ; Gilbert v. Gilbert, 2 Abb. App. (N. Y.) 256; McCahill v. McCahill, 11 N. Y. Misc. 258. This result seems as unwarranted by the statute as it is by the decisions prior to the statute. In Michigan and Minnesota the third person gets, in such a case, no rights. Shafter v. Huntington, 53 Mich. 310; Connelly v. Sheridan, 41 Minn. 18. Upon the sound principle of restitutio in integrum, it is submitted, the grantee should be charged as a constructive trustee for the buyer. See Randall v. Constans, 33 Minn. 329, 336–338.
rule is a close approximation to justice; and that the Indiana and Kansas rule does complete justice. This rule also makes for consistency in the law; for it is everywhere agreed that if the grantee takes the conveyance as a security for a debt due from the buyer, however small the debt or however valuable the land, he cannot, although he repudiates his agreement to reconvey upon payment of the debt, keep the land after payment or tender by the buyer. On the other hand, in Michigan and Minnesota, and possibly in New York, the gratuitous grantee who breaks faith with the buyer may keep the land, while the equally faithless grantee who took the title as security and who is paid off must surrender the land.
It is a step forward, even if a short step, to abolish the artificial presumption of a resulting trust because of the mere payment of the purchase money, for such a presumption favors the buyer unduly. But it is a long step backward to declare that the statute penalizes the innocent buyer to the aggrandizement of the unconscionable grantee.
Nor is such a declaration called for by the language of the statute. The provision that there shall be no resulting trust in favor of the purchaser against the grantee, means simply that the law shall not enforce the trust based upon the presumed intention of the parties, – that is, a trust implied in fact, which would arise, if at all, at the time of the payment of the purchase money. But the constructive trust created to prevent the dishonest enrichment of the grantee at the expense of the buyer is enforced in defiance of the grantee's intention, arises only after the grantee has repudiated the intended trust, and is protected by another provision of the statute excepting trusts arising by operation of law from the prohibition of the statute.
It is to be hoped, therefore, that the later New York decisions on this point may prevail over the earlier ones. It is greatly to be wished, also, that the simple principle which requires every one, who is unassailable because of the statute of frauds for the breach of his express trust or promise, to make restitution, in specie if practicable, otherwise in value, of whatever he has received upon the faith of his oral undertaking, might receive widespread recognition and appreciation. Such recognition and appreciation would have helped greatly in simplifying the law and promoting justice in the three classes of trusts under consideration in this article.
James Barr Ames.
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CONTRACTS TO PERFORM TO THE SATISFACTION OF THE OTHER PARTY IN ANOTHER STATE. — A contract to furnish goods to the satisfaction of the other party is, by the general rule, undischarged so long as that party is honestly dissatisfied with them. In New York and a few other states, however, performance to the satisfaction of a jury discharges such a contract, unless involving matters of taste.? Whether the New York rule is one of construction or of positive law is not wholly clear. There is talk in several cases 8 of a genuine search after the parties' intention, and no actual holding is irreconcilable with it. But positive rules couched in terms of construction are not unknown to the law. A layman would not easily be persuaded that "to my satisfaction ” really bears a double meaning. In the absence of such a phrase the law would require performance to the satisfaction of a jury any. how. Moreover, the rule undeniably first took shape as one in defiance of intention. “That which the law shall say a contracting party ought in reason to be satisfied with, that the law will say he is satisfied with,” 5 — is an early judicial formula, much quoted.
Assuming, then, that this is a rule of the positive law of contract, it may be further analyzed. Does it operate upon the creation of contract, or is it concerned alone with performance? Does New York raise an obligation different from that expressed, and bind the promisor only to satisfy either his promisee or a jury, or does New York create an obligation precisely as stipulated, and permit it afterwards to be discharged in a different way?
1 Inman Mfg. Co. v. American Cereal Co., 124 Ia. 737.
2 Duplex Safety Boiler Co. v. Garden, 101 N. Ý. 387. See Wald's Pollock, Contracts, 3 ed., 51 n. See also 9 Cyc. 618, 620.
3 See Doll v. Noble, 116 N. Y. 230, Russell v. Allerton, 108 N. Y. 288; Hummel v. Stern, 21 N. Y. App. Div. 544; aff. 164 N. Y.603. Cf. Nolan v. Whitney, 88 N. Y. 648.
4 Folliard v. Wallace, 2 Johns. (N. Y.) 395.
Under a territorial law it seems fundamental that the creation of a contractual obligation, its validity and magnitude, depends upon the law of the place of making. Once created, its performance is governed by the law of the place of performance, which alone can raise a cause of action for breach, and which (within constitutional limits) may, therefore, alter its performance. An agreement to perform to the promisee's satisfaction, made in a jurisdiction where the usual rule prevails, creates, then, an obligation to satisfy the promisee, no matter where performable ; but if performance be in New York, performance there to a jury's satisfaction doubtless discharges the obligation. As to foreign obligations the New York rule is one of performance. But as to those of domestic origin, may not New York refuse to create at home what she condemns from abroad? Does she waste her energy in creating obligations which she shall inevitably modify in the performance? Does she not rather bring them forth just as they shall be perforined? Were the law in the habit of writing bargains for persons sui juris, this argument would have weight. But when policy requires it to interfere with freedom of contract, the law does not mold over the bargain that offends it, but inexorably strikes it down. It is unscientific to conceive of the law as incorporating into the obligations it raises all the defenses which upon various contingencies it may provide.
That such an analysis may be of vital importance, appears from the facts of a recent Iowa case. The plaintiff by his New York agent agreed in writing in Illinois to install machinery in Iowa to the full satisfaction of the defendant. By Iowa law he would be required to satisfy his promisee ; by Illinois law 8 a jury only. In an action for the price the plaintiff offered evidence that the language of the agreement meant “performance which ought to satisfy,” and that the defendant had reasonable cause so to understand it. This the court ruled out as violating the parol evidence rule. Inman Mfg. Co. v. American Cereal Co., 110 N. W. Rep. 287. Parties normally use language in the sense with which they are familiar, i.e., that of their domicile. They cannot be presumed to mean it in the sense attached thereto in whatever part of the world their contract happens to be performable. To use the parol evidence rule as a means of saddling on the parties the local meaning of the place of persormance or of the forum, seems a blind perversion. If this be true matter of interpretation, the court should have heard the evidence. If, again, it be matter of positive Illinois law of the creation of contract, the evidence was equally admissible. When the law of the place of making raises an obligation different from that expressed by the parties, a foreign forum must ascertain its precise extent. But if, as seems sounder, this be matter of performance only; if Illinois raise the obligation just as the parties express it, her collateral rule modifying performance has obviously no application to performance in another state. Having taken the obligation as Illinois created it, it is for Iowa to say whether a different performance shall satisfy it. Iowa says it shall not; the evidence was therefore irrelevant. Under the Illinois doctrine that the creation of contractual obligations is governed by the law of the place of performance, this result would equally follow. 10
6 See 16 Harv. L. Rev. 58 ; 17 ibid. 568 ; Mutual Life Ins. Co. v. Cohen, 179 U. S 262.
7 Russell v. Allerton, supra.