Macgreal v. Taylor, 167 U.S. 688 (1897)

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MacGreal v. Taylor

No. 75

Argued October 28, 1896
Decided May 24, 1897
167 U.S. 688

APPEAL FROM THE COURT OF APPEALS

OF THE DISTRICT OF COLUMBIA

Syllabus

An infant female was the owner of an unimproved lot in the City of Washington upon which there were valid liens for unpaid purchase money and taxes. In order that those liens might be discharged and the property improved, she borrowed $8,000, and executed a deed of trust upon the lot to secure the loan. Part of the money so borrowed was used to pay of prior liens and taxes, and the balance was applied by her, or under her directions, in improving the lot. Upon arriving at majority, she disaffirmed her contract and deed of trust, and refused to pay the money borrowed by her. At the time the deed of trust was executed, no inquiries were made as to her age, nor did she make any representations in regard to it.

Held:

(1) An infant’s deed is voidable only, unless it appears upon its face to be to his prejudice, in which case it may be deemed void, and the infant is not estopped by his acts or declarations, or by his silence, during infancy, from asserting, on arriving at full age or within a reasonable time thereafter, the invalidity of such deed.

(2) If the money borrowed by the infant had been expended by her otherwise than in the improvement of her lot, the lender would have been without remedy, for it is not a condition of the disaffirmance by an infant of a contract made during infancy that the consideration received be returned if, prior to such disaffirmance and during infancy, the specific thing received has been disposed of, wasted or consumed and cannot be returned.

(3) Upon the disaffirmance by an infant of his contract, the contract is annulled on both sides, and the parties revert to the same situation as if the contract had not been made.

(4) In this case, the infant having disaffirmed her deed, she is not entitled, as between herself and the lender, to be protected except in the enjoyment of such rights in the property in question as she had at the time the deed of trust was executed, and the money borrowed by her having gone into the property which she holds in its improved condition, it is to be deemed to be in her hands within the meaning of the rule which entitles the other party to recover such of the consideration as remains in the infant’s hands at the time of disaffirmance. She is not entitled to make profit out of those whose money has been used at her request in protecting and improving her estate, but as the disaffirmance of her deed restores her rights in the property, a sale ought not to have the effect of depriving her altogether of the interest she had at the time the deed of trust was executed.

(6) The decree of sale in the present case was proper, but it was error to give to the lender a preference in the distribution of the proceeds for the entire debt secured by the deed of trust, without reference to the amount for which the property in its improved condition might sell. The decree should direct the proceeds to be applied first in repaying to the lender, with interest, the sums paid in discharge of the prior liens and taxes; second, in paying to the infant an amount equal to the value of the lot at the institution of the suit (less such prior liens and taxes) without interest on that amount, and without taking into consideration the value of the improvements placed on the lot; and, third, in paying to the appellees such of the proceeds of sale as may remain, not exceeding the balance due on the loan, with interest. This last sum would represent, so far as may be, the value of the improvements put upon the lot with the money borrowed. Any other decree will make the disaffirmance by the infant ineffectual, if the property, upon being sold, does not bring more than the debt attempted to be secured to the lender.

The case is stated in the opinion.