Coman v. Coman

• Decision Date: 29 March 1973
• Docket Number: Civil No. 326-1969
• Parties: HARRY J. COMAN, Plaintiff v. SYLVIA R. COMAN, Defendant
• Court: U.S. District Court — Virgin Islands

9 V.I. 473

HARRY J. COMAN, Plaintiff v. SYLVIA R. COMAN, Defendant

Civil No. 326-1969

District Court of the Virgin Islands Div. of St. Croix

March 29, 1973

Action for divorce. District Court, Christian, Chief Judge, held that court would find that husband purchased and was the beneficial owner of securities to which his brother and sister held title, and that a resulting trust in husband's favor existed, and would, though finding did not bind brother and sister as they were not parties to the action, consider husband as owner for purposes of fixing alimony and child support, where, inter alia, evidence showed that husband's income was enough to enable him to purchase the securities and income of those holding them was not, nor was income of their parents, who allegedly gave them some of the securities in gift, the remainder allegedly having been purchased with reinvested income from the securities, husband held every incident of ownership and brother and sister held only title and never had possession, received any income from the securities or managed them, and husband's testimony on the issue consisted almost completely of absence of knowledge, memory and information and lacked credibility, candor and consistency.

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NICHOLS & SILVERLIGHT, ESQS. (ATTORNEY IRWIN J. SILVERLIGHTof counsel), Christiansted, St. Croix, V.I., for plaintiff

GRUNERT, STOUT, HYMES & MAYER, ESQS. (ATTORNEY RICHARD E. GRUNERTof counsel), St. Thomas, V.I., for defendant

CHRISTIAN, Chief Judge

MEMORANDUM OPINION

On March 9, 1971, the Court ordered that the parties in this suit be each granted a decree of divorce absolute on the ground of incompatibility of temperament. Incidental questions of property settlement, alimony and support were reserved for the further order of the Court. On June 24, 1971, a supplemental hearing on the matters reserved was held. It is with these issues that this Memorandum deals.

Defendant has asked the Court to award custody of the minor children to her, to award her lump sum alimony inthe amount of $300,000, child support in the amount of $1,000 per month, with a retroactive award of $500 per month to June 19, 1969, and compensation for her share of the parties' furnishings sold by Plaintiff when he vacated the marital home. Additionally, she asks attorney's fees in the amount of $50,000.

Plaintiff, Harry Coman, has opposed all of these requests except for custody of the children, and has insisted that he is incapable of contributing any sum whatsoever to the support of his wife or children. He has requested that defendant contribute some regular sums toward his support, citing his own financial circumstances which he described as extremely poor, and her regular income which he considers more than adequate.

[1] The chasm which divides the litigants in their prayers for relief is the significance of certain assets, primarily securities, held in the names of Rebecca Knapp, plaintiff's sister, Morris Cohen, his brother, and the children of the parties, Stacie and Sari (or in plaintiff's name on their behalf). As to the extensive holdings in the names of Knapp and Cohen, Mrs. Coman charges that they are in actuality the property of her husband, who has always managed, possessed, and received the dividends from these shares to the total exclusion of the record title-holders. The evidence adduced tends to bear her out in this respect. Plaintiff, on the other hand, denies ownership, characterizing himself as a mere representative or manager for his siblings, entirely without beneficial interest in such securities. As to the children's trust assets, originally consisting of securities, but recently transferred to real estate and possibly to other unknown investments, plaintiff concedes their equitable ownership but strongly contends that the value involved is well below the figure defendant urges. Furthermore, he suggests that the present real estate investments are as yet non-income produc-ing, prohibiting any contribution to the children's support from this source.¹

[2-7] Turning first to the securities in the name of Knapp and Cohen, the general rule is that record title to personal property raises a legal presumption of ownership, but, much like possession and other indices of ownership, the presumption created is rebuttable, 73 C.J.S. Property § 19, p. 216. The strength of the presumption varies with the surrounding circumstances. As one court explained, speaking of real rather than personal property but relevant nonetheless to this inquiry:

Real estate is presumed to be owned by the person in whose name the record title stands, and such presumption is strengthened by the number of years the record title has remained the same, and by the record titleholder continuing in the exclusive possession and control and management thereof as the apparently exclusive owner. Ward v. Ward, 172 P.2d 978, 980 (Okla. 1946).

Expanding on this premise, it is reasonable to conclude that the legal presumption is relatively weaker where the record titleholder has enjoyed no such dominion over the property, and upon this basis, a very real question presents itself as to the "ownership" of the stock in issue. Moreover, under applicable New York law, which must govern with respect to property acquired in that jurisdiction, Restatement of Conflicts, Second § 290, where one person took title to property and the purchase price was paid by another, a resulting trust arose in favor of the purchaser unless a contrary intention was evident. (New York Estates, Powers and Trusts Law, § 7-13 abolished such trusts effective September 1, 1967). Because retroactiveapplication is not to be imputed to statutes absent a clearly expressed intent that such be given, Herman Schwabe, Inc. v. United Shoe Machinery Corp., 274 F.2d 608 [2nd Cir. 1960], cert. den. 363 U.S. 811, and for the further reason that statutory action in derogation of the common law is never to be assumed, Texas & Pacific Ry. v. Abilene Cotton Oil Co., 204 U.S. 426 (1907), I must conclude that as to assets acquired prior to the date of the above-cited legislation, the common law doctrine of resulting trust is applicable, Restatement of Trusts, Second § 440.² I also find it reasonable to infer that, because plaintiff was disbarred in May, 1967 (Tran. Vol. I p. 16), any funds he may have invested in the securities here in issue would have predated the change in New York law, and I will proceed on that assumption.

[8] A possible further objection to any decision by this Court on the issue of ownership of the securities held in the names of Knapp and Cohen has been articulated by defendant in her brief, to assist the Court in rendering a proper verdict, as the plaintiff elected not to treat the question in his argument to the Court. That issue revolves around the absence of Knapp and Cohen from this Court's jurisdiction and failure to make them parties, denying them an opportunity, should they desire it, to defend their title. It is clear that any decision by this Court on the ownership of these securities would not be res judicata as to the non-parties, Luther v. Kinion, 202 S.W. 589 (Mo. 1918); cf. Hardy v. Bankers Life & Casualty Co., 232 F.2d 205 (7 Cir. 1956), cert. den. 351 U.S. 984. Such a decision, however, would be binding as between these parties, and considering the burdensome history of the litigation be-tween them concerning this question,³ I am convinced that justice as well as judicial economy will best be served by a prompt decision, particularly because the issue has been so thoroughly litigated by both parties in this forum, which plaintiff himself elected to enter.

[9] The crucial question as to ownership of the Knapp-Cohen stock is the source of purchase money, for by definition, the doctrine of resulting trust requires a preliminary determination of that question, Restatement of Trusts, Second § 440. The burden of proof rests upon the party seeking to establish the trust, in this instance, Mrs. Coman. Should payment by Mr. Coman be established, a presumption comes into operation, that a trust exists, which he would have to rebut in order to prevent imposition of a trust, Bogart, Trusts and Trustees, Second Edition, § 454, p. 522, and cases collected at n. 53, 54.

[10-12] The initial burden, as imposed by most courts, is heavier, however, than a preponderance of the evidence. The majority appears to call for "clear and convincing evidence", Carr v. Yokohama Specie Bank, Ltd. of San Francisco, 99 F.Supp. 4, affd. 200 F.2d 251 (9 Cir. 1951), U.S. v. Schroeder, 242 F.Supp. 430, affd. 348 F.2d 223 (8 Cir. 1965); although there is respectable authority to the contrary, Strieker v. Morgan, 158 F.Supp. 830, affd. 268 F.2d 882 (5 Cir.), cert. den. 361 U.S. 963 (1960); Mac-Kenzie v. Fritzinger, 370 Mich. 284, 121 N.W.2d 410 (1963). After review of both lines of authority, I conclude that the majority rule should apply in the Virgin Islands, Title 1 V.I.C. § 4. The test, as more fully explained in the case law, sets a middle ground between the customary civil rule—preponderance of the evidence—and the criminal rule—beyond a reasonable doubt. "Clear and convincing" evidence is that measure of proof which will produce inthe court or jury a firm belief or conviction concerning the issue in question, and it is not synonymous with clear and unequivocal proof, Hobson v. Eaton, (6 Cir. 1968) 399 F.2d 781, 784. Applying the above-stated rule to the evidence presented in this cause, I am fully satisfied that defendant has adequately established her husband as the beneficial owner of the securities in question. I shall outline below, the evidence which impels me to this conclusion. That evidence, though wholly circumstantial, is, when viewed in its entirety, more than sufficient to satisfy a reasonable mind.

Plaintiff explained that all stocks in the names of Knapp and Cohen were derived in one of two ways:...