Croston v. Croston

• Citation: 247 N.E.2d 765,18 Ohio App.2d 159
• Parties: , 47 O.O.2d 260 CROSTON, Appellant, v. CROSTON et al., Appellee.
• Decision Date: 03 April 1969
• Court: Ohio Court of Appeals

Page 159

18 Ohio App.2d 159

247 N.E.2d 765, 47 O.O.2d 260

CROSTON, Appellant, v. CROSTON et al., Appellee.

Court of Appeals of Ohio, Fourth District, Washington County.

April 3, 1969.

Syllabus by the Court

1. A constructive trust is created by operation of law and arises where the holder of the legal estate in property cannot also enjoy the beneficial interest therein without violating some established principle of equity.

2. In order for a constructive trust to be imposed, the conduct of the parties must be such as to give rise to the exercise of equitable jurisdiction.

3. A constructive trust will be imposed where there is present fraud-actual or constructive-duress, undue influence, mistake, breach of a fiduciary obligation or abuse of a confidential relationship.

4. A resulting trust arises in favor of a person who transfers property or causes it to be transferred under circumstances raising a rebuttable inference that he intended to transfer to the other the bare legal title and not give him a beneficial interest.

5. Where a father voluntarily makes a down payment on real property for a son and daughter-in-law, by direct payment to the vendor, claiming the same to be a loan to be repaid when able, and the title to the real estate is taken in the joint names of the son and daughter-in-law, the balance of the purchase price being paid by a lending institution on a note or mortgage by the son and daughter-in-law to the institution, equitable relief is not available to the father-in-law by imposition of a constructive trust, resulting trust or equitable lien upon the real estate in a subsequent divorce action by the daughter-in-law against the son, in which the daughter-in-law seeks an award of the husband's half interest in the real property.

Hausser & Rawson, Marietta, for appellant.

Summers, Haupt & Theisen, Marietta, for appellee.

STEPHENSON, Judge.

This is an appeal on questions of law from a judgment rendered by the Common Pleas Court, in which a constructive trust was imposed on certain real property.

Virginia G. Croston, plaintiff, appellant herein, and Robert Harold Croston were wife and husband. Harold Croston, defendant, appellee herein, and Margaret Croston are the parents of Robert.

An action in divorce was filed on July 22, 1967, by Virginia G. Croston against Robert seeking a divorce and an award of Robert's half interest in real property purchased by them, in their joint names, as a home. Robert was served by publication and did not enter an appearance or testify at the trial.

Appellee, Harold Croston, requested permission to intervene as a party defendant, which permission the trial court granted. He filed an answer in which he claimed he had advanced the down payment for the real property and prayed for relief by way of a constructive trust or other equitable relief in the real property of Virginia and Robert.

Upon the imposition of the constructive trust, the appellant, feeling aggrieved at the ruling of the trial court, has appealed to this court on two grounds:

(1) 'The trial court erred in decreeing a constructive trust in favor of Harold Croston for his payment of $4,200.00 to assist his son and daughter-in-law to purchase their residence, (a) more than six years prior, (b) despite absence of obligation to repay and (c) despite presumption in law of gift where payment made to relative.'

(2) 'The findings and judgment of the court were contrary to the manifest weight of the evidence.'

The pleadings and the evidence establish without dispute that in 1960 Virginia and Robert desired to purchase a home, but were without funds for a down payment. The price of the property was $14,000. Harold Croston paid $4,200 directly to the vendor. A lending institution provided the balance. A note and mortgage were executed and delivered by Robert and Virginia to the lending institution for the balance. No instruments were requested or executed in favor of Harold Croston for the $4,200 down payment.

The factual dispute between the parties, which arises in the evidence, is whether the $4,200 payment constituted a gift, as claimed by Virginia, the appellant herein, or a loan to Virginia and Robert to be repaid when able, as claimed by Harold Croston, appellee herein.

The court below, in a finding of facts and conclusion of law, after finding grounds for divorce, found that Harold Croston had made the down payment and that it was furnished as an accommodation loan to plaintiff and her husband without specific terms of repayment and without interest. In the conclusion of law, the court found the real property should be awarded to plaintiff, but that for her to receive the entire interest in such property, free of any claim of the defendant Harold Croston, would constitute unconscionable and unjust enrichment to her, and that the premises should be impressed with an equitable lien in the sum of $4,200. In the journal entry, the court impressed a constructive trust on the premises.

As will be subsequently seen, we do not deem it necessary to discuss the presumption arising when consideration is furnished by a parent for a child, the degree of evidence necessary to establish a trust, or whether the trial court erred in its finding that an accommodation loan was made by Harold Croston to his son and the plaintiff.

If a gift or advancement was made, rather obviously, no trust could be imposed or any other equitable relief granted. The question for determination is whether assuming the correctness of defendant-appellee's contention, as found by the trial court, of an accommodation loan, may it serve as a basis for a constructive trust? We have concluded that it cannot.

A constructive trust has been defined to arise 'where a person holding title to property is subject to an equitable duty to convey it to another on ground that he would be unjustly enriched if he were permitted to retain it * * *.' (Emphasis added.) Restatement of the Law of Restitution 640, Section 160. In an early Ohio case, it was stated, that 'The trust claimed is one created by operation or implication of law, or a constructive trust, and arises where the holder of the legal estate in property cannot also enjoy the beneficial interest therein, without violating some established principle of equity, and the chief instances of such constructive trusts occur where the property has been acquired by fraud, actual or constructive.' (Emphasis added in part.) Kent v. Mahaffey, 10 Ohio St. 204 at 220.

It is defined in a more lengthy manner as 'a trust by operation of law which arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. It is raised by equity to satisfy the demands of justice. However, a constructive trust does not arise on every moral wrong in acquiring or holding property or on every abuse of confidence in business or other affairs; ordinarily such a trust arises and will be declared only on wrongful acquisitions or retentions of property by which equity, in accordance with its fundamental principles and the traditional exercise of its jurisdiction or in accordance with statutory provision, takes cognizance.' (Emphasis added.) 54 American Jurisprudence 167, Trusts, Section 218.

Emphasis has been placed on certain portions of the above definitions because they illustrate a controlling principle in the imposition of constructive trusts, namely, that the conduct of the parties must be such that it will give rise to the exercise...