Cravero v. Holleger

• Decision Date: 03 June 1989
• Docket Number: No. 951-K,951-K
• Citation: 566 A.2d 8
• Parties: Beverly C. CRAVERO, formerly Beverly C. Holleger, Plaintiff, v. Donald W. HOLLEGER and Saundra Lee Holleger, Defendants. Civ. A. . Submitted:
• Court: Court of Chancery of Delaware

Page 8

566 A.2d 8

Beverly C. CRAVERO, formerly Beverly C. Holleger, Plaintiff, v. Donald W. HOLLEGER and Saundra Lee Holleger, Defendants.

Civ. A. No. 951-K.

Court of Chancery of Delaware,

Kent County.

Submitted: June 3, 1989.

Decided: July 18, 1989.

William A. Denman, of Schmittinger & Rodriguez, P.A., Dover, for plaintiff.

Joshua M. Twilley and Charles W. Welch, III, of Twilley, Street and Braverman, Dover, for defendants.

OPINION

CHANDLER, Vice Chancellor.

This suit involves the equitable and legal title to approximately 27 acres of property located near Canterbury, Kent County and known as the Flying Dutchman Trailer Park (the "Flying Dutchman" or the "property"). Plaintiff Beverly C. Cravero, formerly Beverly C. Holleger ("ex-Wife"), is the former wife of a past owner and the developer of the property, Donald W. Holleger ("Husband"), now deceased. Husband's estate is one of the defendants in this action. ¹ Defendant Saundra Lee Holleger ("Widow") was the wife of Donald W. Holleger at the time of his death. She is the current record owner of the property and the executrix of Husband's estate. In order to effectuate a property settlement agreement entered into between Husband and ex-Wife, ex-Wife asks this Court to impose a constructive trust in her favor on the property and a mandatory injunction requiring Widow to convey to her an undivided one-half interest in the Flying Dutchman (subject to certain charges and accountings), or award to her its fair market value.

The defendants have moved for summary judgment. This is my Opinion with respect to that motion.

I. Background Facts

Husband and ex-Wife were married in 1948 and divorced on February 16, 1973. During the marriage, Husband and ex-Wife acquired as tenants by the entireties the property now known as the Flying Dutchman. A small trailer park was located on part of the property at the time of purchase. ² Husband and ex-Wife expanded and developed the property and trailer park during the marriage.

In contemplation of their divorce, ex-Wife and Husband entered into a property settlement agreement on December 20, 1972 (the "Agreement"). The Agreement was prepared by the lawyer for ex-Wife.

The Agreement divided the personal and real property of the marriage between Husband and ex-Wife. With respect to the Flying Dutchman, it provided as follows:

"2. (A). The husband shall have all of the real and personal property comprising the Flying Dutchman Trailer Park located near Canterbury, Kent County, Delaware, consisting of approximately 27 acres with the improvements thereon erected subject to the terms and conditions hereinafter set forth.

1. The husband shall pay to the wife $550 per month on the first of each month commencing on the date of the execution hereof for a term of 20 years. So long as there are minor children of this marriage residing with the wife, $100 per month of the aforesaid sum of $550 per month shall be regarded as child support paid by the husband for each such minor child residing with the wife. The balance of said sum of $350 per month paid by the husband to the wife, shall be in payment to the wife of her interest in the Flying Dutchman Trailer Park. The aforesaid monthly sum of $550 shall be reviewed each year and shall be modified either upwards or downwards depending on the fluctuation up or down of the cost of living as determined by the Federal Government when compared to the cost of living as determined for calendar year 1972.

2. The husband shall have the right to sell the business and property known as the Flying Dutchman Trailer Park at any time for a sum not less than $180,000 in which case the wife shall receive one half of the net proceeds of such sale after deducting normal expense of this sale. In the event of a sale as permitted by this paragraph and upon payment to the wife of her share as herein provided, the husband shall be relieved of any further payments to the wife under the terms hereof, but not child support, and further payments made to the wife hereunder up to the time of said sale for her support ($350 per month) shall be deducted from the one half share provided for the wife herein.

3. In the event the Flying Dutchman Trailer Park is not sold as herein provided at the time of husband's death, the husband if he is not married at the time of his death, shall devise the Flying Dutchman Trailer Park to the wife; in the event the husband has remarried and remains remarried at the time of his death, the husband shall by will devise the Flying Dutchman Trailer Park as follows: one half to the wife herein subject to a charge, however, against said one half interest in the sum equivalent to the total number of monthly payments computed at the rate of $300 per month paid to the wife in accordance with subparagraph 1 hereof; and the remainder to his second wife."

On August 20, 1973, ex-Wife executed a special warranty deed (the "1973 deed") conveying the property comprising the Flying Dutchman to Husband. This deed was recorded on August 27, 1973. Sometime thereafter, Husband executed a mortgage on the Flying Dutchman property together with a bond, in favor of ex-Wife, for $132,000. Across the top of the document of mortgage was printed the following language: "Not to be recorded during the life of Donald W. Holleger". ³

On October 12, 1973, Husband and Widow were married. They remained married until Husband's death on August 2, 1987. Throughout the course of this marriage, Husband and Widow continued to expand and develop the Flying Dutchman as a trailer park.

On November 4, 1974, Husband and Widow executed a deed (the "1974 deed") conveying the property to themselves as tenants by the entireties. This deed was recorded on November 12, 1974.

In November of 1977, Husband and ex-Wife executed an untitled document "to verify payments on the property settlement agreement/second mortgage on the property known as the Flying Dutchman Mobile Home Park between Donald W. Holleger and Beverly Holleger Cravero." This document indicates that Husband had made timely payments under the Agreement through November of 1977, had paid a total of $34,100 to ex-Wife at that time and would as of December 5, 1977 "owe a balance of $97,900 to be paid at the rate of $550 per month, the last payment being September 5, 1992, at which time Beverly Holleger Cravero will have received a total of $132,000 and will be paid in full." Husband apparently continued to make timely payments under the Agreement until after the filing of this action.

In the early 1980's, Husband developed a cancer. In anticipation of his death, on March 23, 1984, Husband and Widow executed a deed (the "1984 deed") conveying the property to Widow as sole owner. No consideration was given in connection with the conveyance, which was made in an attempt to reduce the taxes which would become due at Husband's death. This conveyance was not recorded until March 23, 1987.

In 1987, Husband became gravely ill with cancer. On being informed that he had not long to live, ex-Wife, who had masked the "not to be recorded" language on the face of the mortgage which Husband had executed in her favor, had the mortgage recorded by her attorney. At this time, ex-Wife discovered the November 4, 1974 and March 23, 1984 conveyances of the property in favor of Widow. On April 6, 1987, ex-Wife had a copy of the Agreement recorded. She filed this lawsuit on the same day.

On April 30, 1987, Husband's deposition was taken in connection with this lawsuit. Later that day, he entered an agreement to convey all his interest in the property to Widow via a quit-claim deed. A deed effectuating this transaction was filed on May 4, 1987. The stated consideration for this conveyance, $180,000, was not the result of any negotiation or appraisal.

The purchase was financed by a loan from the First National Bank of Wyoming for $180,000. Of this sum, $86,026.01 was deposited in a joint checking account maintained by Husband and Widow. These funds were then paid back to the First National Bank of Wyoming to reduce the principal on the loan. $35,200 of the proceeds of the sale were sent by Husband to ex-Wife. After receiving this payment, ex-Wife satisfied the mortgage which she held on the property, but specifically reserved all claims which she had on the property based upon the Agreement.

On August 3, 1987, Husband died. In his will, he devised his entire estate to Widow, who was also named executrix.

Ex-Wife has introduced evidence that the fair market value of the property as of May 1, 1987, was $915,000.

II. The Agreement as Trust

Ex-Wife argues that the Agreement creates a trust, with herself as the settlor and cestui que trust, Husband as the trustee and her undivided one-half interest in the property as the trust corpus. ⁴ Husband would thus be subject to all the fiduciary duties encumbent upon a trustee, and ex-Wife argues that, as a consequence, she is entitled to the relief which she seeks in this suit.

Defendants contend that the Agreement is not a trust, and that it gives ex-Wife only personal contractual rights. I agree.

Nowhere in the Agreement are there express words of trust. This alone, however, is not fatal to ex-Wife's argument. No particular words or form are required in order to create an express trust. Bodley v. Jones, Del. Ch., 32 A.2d 436 (1943); Walsh v. St. Joseph Home for the Aged, Del.Ch., 303 A.2d 691 (1973). All that is required is that the parties intended that a relationship, which equity would describe as a trust, exist. "When a question arises as to whether or not an agreement creates a trust, the courts look objectively at the result to determine the matter.... The question in each instance is whether the kind of relationship known to the law as a trust has been created." Fulweiler v. Spruance, Del.Supr., 222 A.2d 555, 560 (1966). It is the intent of the settlor as expressed in the agreement itself which is controlling as to whether a trust has been...