Walton v. Karnes

McKee, J. This case as presented by the record is this: By a verbal arrangement between plaintiff and defendant in the action, entered into pending a contest between the plaintiff and other persons, before the land agent of the Southern Pacific [256]Railroad Company, for the right to purchase from the company the southwest quarter of section 3, township 14 south, range 22 east, M. D. base and meridian, the defendant agreed, “if the contract of sale should be awarded plaintiff to advance for him the money necessary to make the first payment upon the land, and the plaintiff agreed to repay the defendant the moneys advanced by him for that purpose with interest at one and a half per cent per month from the date of the advances until paid, and to secure their payment by causing the contract of sale to be issued in the name of the defendant to be held by him until repayment when the contract was to be assigned to the plaintiff.”

The right to purchase was awarded to the plaintiff, and on the 15th of December, 1881, defendant advanced for him the sum of $492, as the first payment of the purchase money of the land. At plaintiff’s request the contract of sale was made in the name of the defendant and delivered to him. Twelve months after the transaction of purchase another payment for interest in advance becoming due on the contract, defendant, at plaintiff’s request, advanced it for the plaintiff upon the same terms as to interest and security. These advances and the interest thereon aggregated the sum of $895. This sum the plaintiff on the 22d of January, 1883, tendered to the defendant, with a request for the assignment of the contract. The defendant refused to accept the money or to assign the contract, and he contends that he had the right to do so, because, as the verbal agreement between him and the plaintiff related to real property, it was void.

But it is not void; because as the contract of sale was taken by the defendant as security for repayment of the advances made by him for the plaintiff in purchasing the land, a resulting trust in the land was created to the extent of the advances. Section 853 of the Civil Code declares: “ When a transfer of real property is made to one person, and the consideration thereof is paid by, or for another, a trust is presumed to result in favor of the person by, or for whom such payment was made.”

Where a resulting trust exists the Statute of Frauds has no application. (Millard v. Hathaway, 27 Cal. 139.)