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Osin v. Johnson

Law Dictionary
CASE BRIEFS

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Property Law Keyed to Cribbet

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Bloomberg Law

Citation. 22 Ill.243 F.2d 653, 100 U.S. App. D.C. 230 (D.C. Cir. 1957)

Brief Fact Summary. The Appellant, Osin (Appellant), agreed to sell a parcel of land to the Appellee, Johnson (Appellee) and to that end executed and delivered a deed, taking back a note for $30,000 representing the purchase price. The Appellee fraudulently represented to the Appellant that he would prepare, execute and record a trust on the property to secure the Appellee’s purchase money note, which the Appellee failed to do. The Appellee later borrowed $11,000 against the property by executing deeds of trust on the property to Perpetual Building Association (Perpetual), which Perpetual took without notice of the prior debt to the Appellant.

Synopsis of Rule of Law. A constructive trust is a purely equitable device, which can be applied with great flexibility. It arises by operation of law from the occurrence of an unconscionable act for which no traditional relief is available. The acquisition of property through the fraudulent misrepresentation of a material fact has been held sufficient grounds to fasten a constructive trust on the property.


Facts. The Appellant agreed to sell a parcel of land to the Appellee and to that end executed and delivered a deed, taking back a note for $30,000 representing the purchase price. The Appellee fraudulently represented to the Appellant that he would prepare, execute and record a trust on the property to secure the Appellee’s purchase money note, which the Appellee failed to do. The Appellee later borrowed $11,000 against the property by executing deeds of trust on the property to Perpetual, which Perpetual took without notice of the prior debt to the Appellant. The Appellee also borrowed $3,300 from Glorius, secured by second deeds of trust on the property. Thereafter, creditors of the Appellee obtained judgments, which became liens on the real estate by operation of statute. Foreclosure proceedings were brought under the trust deeds executed by the Appellee and the Appellant brought this suit for equitable relief, joining the trust holders, and the judgment creditors subsequently int
ervened. The trial court, sitting without a jury, found that the Appellant conveyed title to the Appellee knowingly and in reliance on the Appellee’s assurances that he would record all the documents including the deed of trust, which secured the purchase money note. The trial court found that the trust holders and the judgment creditors had acquired interests, which were superior to that of the Appellant’s unrecorded claim. The Appellant appealed.

Issue. There are two basic issues:
Is the Appellant’s unrecorded claim (based on constructive trust) superior to the trust holders (who were bona fide purchasers for value without notice)?
Is the Appellant’s unrecorded claim superior to the judgment creditors?
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