Adams v. Jankouskas

• Decision Date: 15 September 1982
• Citation: 452 A.2d 148
• Parties: Charlotte ADAMS, Executrix to the Estate of Stella Jankouskas a/k/a Stella Jann, Jan's Apartments, Inc., a corporation of the State of Delaware, Dolores Adams, Executrix for the Estate of Eugene Grez, and Dolores Adams, individually, Defendants Below, Appellants, v. John J. JANKOUSKAS, a/k/a John J. Jann, Plaintiff Below, Appellee.
• Court: United States State Supreme Court of Delaware

Page 148

452 A.2d 148

Charlotte ADAMS, Executrix to the Estate of Stella Jankouskas a/k/a Stella Jann, Jan's Apartments, Inc., a corporation of the State of Delaware, Dolores Adams Executrix for the Estate of Eugene Grez, and Dolores Adams individually, Defendants Below, Appellants, v. John J. JANKOUSKAS, a/k/a John J. Jann, Plaintiff Below, Appellee.

Supreme Court of Delaware.

Submitted June 15, 1982.

Decided Sept. 15, 1982.

On appeal from the Court of Chancery of the State of Delaware in and for New Castle County. Affirmed in part, reversed and remanded in part.

L. Coleman Dorsey, Wilmington, for defendants below, appellants.

Kenneth M. Roseman, D'Angelo, Ciconte & Roseman, Wilmington, for plaintiff below, appellee.

Before QUILLEN, HORSEY and MOORE, Justices.

MOORE, Justice:

In this appeal we face certain unique questions of Delaware law arising from a post-trial decision of the Court of Chancery imposing either a constructive or resulting trust on half of the assets, claimed to be part of the estate of Stella Jankouskas, also known as Stella Jann (Stella), in favor of John Jankouskas, also known as John Jann (John). These questions include not only the propriety of imposing such a trust, but the applicability to this action of Delaware's non-claim statute (12 Del.C. § 2102), requiring the presentation of claims within 6 months of the opening of an estate. The former Chancellor ruled that the unusual aspects of the relationship between John and Stella justified the imposition of a trust, and that John's cause of action was not within the purview of the non-claim statute. We affirm those rulings. However, we reverse and remand for a re-calculation of the award to John, including an apportionment of taxes, costs, fees and expenses necessary for, and directly attributable to, the maintenance and preservation of the assets John has received or been awarded.

I

On December 23, 1944 John married Stella in Elkton, Maryland. Both had been married before, and each had children by their prior marriages. Stella, then known as Stella Grez, was divorced, but records indicate that John's divorce from his first wife was not final until 1947. ¹

At the time of the marriage, Stella was the owner and operator of a small beauty shop which she had purchased a few months earlier. She apparently saved parsimoniously to buy the shop (even putting her 2 young sons by her previous marriage in an orphanage), but when she married John it was not a particularly profitable enterprise. Before the marriage John had held a string of jobs with various companies and, at the time of the marriage, he was earning approximately $150 a week. In 1948, he secured employment with the duPont Company where he worked until his retirement in 1978.

With the assistance of counsel Stella set up a corporation in July 1947 named "Jan's Apartments", and all 100 shares of the common stock of the corporation were issued in her name. In addition to accumulating other assets, the initial investment of "Jan's Apartments" was in an apartment building at 829 Washington Street which John renovated. About five years later Stella moved her beauty parlor to this building. The corporation also acquired a house at 2409 Franklin Street, which became John and Stella's family residence. John paid monthly rent to the Corporation for their joint use of the house.

Stella was clearly the dominant partner in the marriage and she mainly controlled the family finances. From the beginning of the marriage John surrendered his paycheck to Stella, who then deposited it either in their joint account or the corporate account of Jan's Apartments. John in turn received a nominal sum from Stella for spending money. Early in the marriage the funds in the joint account were used primarily for basic living expenses, but later some of these funds were invested by Stella in stocks, bonds, certificates of deposit and other assets.

The trial testimony indicates that John and Stella voluntarily pooled John's earnings from duPont, and the earnings of the beauty parlor and the corporation. ² Several witnesses testified that John and Stella were saving "so that they could enjoy their retirement together". In effect they were "planning for the future" and setting aside a "nest egg" for their old age. John testified that the pooling was based upon their agreement that, "what's mine is yours and what's yours is mine". According to John, the understanding was "if [he] died she had everything and if she died [he] had everything".

Stella died in October 1977 leaving an estate valued at over $350,000, approximately $40,000 of which consisted of personal property held in their joint names. Except for this property, a diamond ring, an automobile and $10,000 in cash, all bequeathed to John, Stella's will purported to make her niece, Dolores Adams, the daughter of Stella's sister and executrix, her sole ultimate beneficiary. Virtually all the assets acquired by either party during the marriage were considered by the executrix to be assets of Stella's estate.

In November 1977, John went to the offices of the attorney for the estate and received certain items bequeathed to him in the will, including the jointly held savings bonds and securities, and executed a receipt for them. On September 18, 1978, he again went to counsel's office and received the remaining items of the bequest, but this time he executed both a receipt and release. John was not represented by counsel on either occasion. Subsequently, John brought this action on September 27, 1979, almost two years after Stella's death. Following trial, the former Chancellor awarded John 50% of the estate left by Stella on the theory that the transactions between Stella and John created a constructive or resulting trust on Stella's part for the benefit of John.

II

In their appeal defendants rely on four basic theories. First, there is insufficient evidence to support the imposition by the Court of Chancery of a constructive or resulting trust; second, John's claims are barred by the Delaware "non-claims" statute; third, John's claims are barred by his execution of a release; and fourth, John's claims are barred by the doctrine of laches. In the alternative, defendants also assert that the Court of Chancery erred in determining which assets were to be the subject of the trust and in refusing to assess against John certain taxes, costs, fees and expenses incurred by the defendants.

III

When reviewing the findings of fact of the Court of Chancery, this Court will accept them if they are supported by the record and are the product of an orderly and logical deductive process. We will make contrary findings only if the findings below are clearly wrong and justice requires that they be overturned. Levitt v. Bouvier, Del.Supr., 287 A.2d 671 (1972); Application of Delaware Racing Association, Del.Supr., 213 A.2d 203 (1965). And where, as here, the trial court was faced with conflicting testimony, we accord great deference to the findings of the trial judge who heard all the witnesses. See In re Two Minor Children, Del.Supr., 173 A.2d 876 (1961).

The Chancellor imposed a constructive or resulting trust over the assets of the estate held by Stella's executrix. ³ These two trust theories are similar in that they are both "implied" trusts, that is, their existence is not based upon a valid written trust agreement. Although a constructive trust and a resulting trust are similar in effect, they are based upon entirely different theories.

A resulting trust arises from the presumed intentions of the parties and upon the circumstances surrounding the particular transaction. Bodley v. Jones, Del.Supr., 30 Del.Ch. 480, 59 A.2d 463 (1947); Greenly v. Greenly, Del.Ch., 29 Del.Ch. 297, 49 A.2d 126 (1946). In imposing a resulting trust, the court presumes, absent contrary evidence, that the person supplying the purchase money for property intends that its purchase will inure to his benefit, and the fact that title is in the name of another is for some incidental reason. Greenly v. Greenly, 49 A.2d at 129; Branca v. Branca, Del.Supr., 443 A.2d 929 (1982). See also 5 Scott, The Law of Trusts § 440 (3rd ed. 1967); Bogert, The Law of Trusts and Trustees § 454 (rev. 2nd ed. 1977). Conversely, a constructive trust does not arise from the presumed intent of the parties, but is imposed when a defendant's fraudulent, unfair or unconscionable conduct causes him to be unjustly enriched at the expense of another to whom he owed some duty. ⁴ Opdyke v. Kent Liquor Mart, Inc., Del.Supr., 181 A.2d 579 (1962); Brophy v. Cities Service Co., Del.Ch., 70 A.2d 5 (1949); Greenly v. Greenly, 49 A.2d at 129.

Although most resulting trust cases involve the purchase of real property, the theory upon which they are based equally applies to acquisitions of personality. Bogert, supra, at § 454, p. 627. It has also been applied to situations in which the purchase price for property has been paid out of partnership or community assets. Bogert, supra, at § 454, p. 630. In a case involving purchases made with partnership or community funds, the trust "results" in favor of the partnership or the community. Id. This rule is applicable when, as here, the property was bought with joint funds.

In reviewing the evidence, the Chancellor found:

Here, it is established by the evidence adduced at trial that at the inception of their marriage both parties contributed their earnings to a species of joint account, petitioner's contributions initially constituting a large percentage of such funding. The evidence also establishes that title to such acquisitions was placed in the name of the decedent. I am satisfied after trial that the source of funds used by the decedent to acquire her initial holdings was from the parties' pooled funds since there is no other credible source of money for such acquisitions.

There is ample competent evidence in the record supporting these findings. Virtually everyone...