Durward v. Nelson

• Decision Date: 20 February 1992
• Docket Number: No. 910170,910170
• Citation: 481 N.W.2d 586
• Court: North Dakota Supreme Court
• Parties: Terri DURWARD, f/k/a Terri Nelson, Plaintiff and Appellee, v. Carmie NELSON and Helen D. Nelson, husband and wife; Defendants and Appellants, Edward H. Christianson and Geneva J. Christianson, husband and wife; the Agricultural Stabilization and Conservation Service of Burke County, ND; Shell Western E & P Inc.; William Herbert Hunt Trust Estate; Monsanto Oil Company; Kinson Resources, Inc.; Jack A. Witkin; General Atlantic Energy Corporation; and Monsanto Company, Defendants. Civ.

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481 N.W.2d 586

Terri DURWARD, f/k/a Terri Nelson, Plaintiff and Appellee, v. Carmie NELSON and Helen D. Nelson, husband and wife Defendants and Appellants Edward H. Christianson and Geneva J. Christianson, husband and wife; the Agricultural Stabilization and Conservation Service of Burke County, ND; Shell Western E & P Inc. William Herbert Hunt Trust Estate; Monsanto Oil Company Kinson Resources, Inc.; Jack A. Witkin; General Atlantic Energy Corporation; and Monsanto Company, Defendants.

Civ. No. 910170.

Supreme Court of North Dakota.

Feb. 20, 1992.

Dean F. Bard (argued), of Bard & Bard, Bismarck, for plaintiff and appellee. Appearance by Terri Durward, appellee.

Ella Van Berkom (argued), of Ella Van Berkom Law Firm, Minot, for defendants and appellants.

MESCHKE, Justice.

Carmie and Helen D. Nelson [Nelsons] appeal from a judgment partitioning two quarter sections of land that the court found to be jointly owned by the Nelsons and Terri Durward. We affirm the partition of the land and remand for reconsideration of rents and profits awarded to Terri.

Terri married the Nelsons' son, Lowell, on October 16, 1976. On March 8, 1977, Edward and Geneva Christianson executed a contract for deed to convey the NW 1/4 of Section 24, Township 160 North, Range 90 West, in Burke County by warranty deed to Lowell and Terri for $40,000. The contract for deed specified a $1,000 downpayment, that Carmie paid, with the balance "based on an annual payment of 40% of the gross crops grown on the conveyed property with interest of Seven per cent 7% on the remaining balance." According to Geneva, Carmie made all the payments under that contract for deed. The final payment was made on February 20, 1985.

On May 3, 1979, the Christiansons executed another contract for deed to convey the SE 1/4 of Section 23, Township 160 North, Range 90 West, in Burke County by warranty deed to Lowell and Terri for $40,000. That contract for deed specified a $4,400 downpayment, that Carmie paid, with the balance in "an amount equivalent to 40.0% of the crop annually plus interest at the rate of 7% per annum." According to Geneva, Carmie also made all the payments under that contract for deed. The final payment was made on April 7, 1988.

Lowell and Terri were divorced on January 20, 1987. The divorce decree awarded Terri one-half of the couple's interests in the SE 1/4 of 23 and the NW 1/4 of Section 24. Terri and Lowell executed quit claim deeds conveying an undivided one-half interest in the two quarter sections to each other, and Lowell then executed a quit claim deed conveying his undivided one-half interest in the two tracts to the Nelsons.

Terri commenced this action to partition the two tracts of land. She also sought an accounting for one-half the rents and profits from the land and for her share of ASCS payments. The Nelsons admitted that Lowell and Terri were vendees under the two contracts for deed from the Christiansons; however, the Nelsons alleged that because they paid for the land, Terri did not have any ownership interest in it. They sought to quiet title to the land in their name.

The trial court reasoned that the case presented a collision between the presumption of a resulting trust when one person pays for property that is transferred to another, and the presumption of a gift when a parent pays for property that is transferred to a child. The trial court found that the presumption of a gift had not been rebutted by clear and convincing evidence, and concluded that the Nelsons and Terri each owned an undivided one-half interest in the two tracts of land. The court partitioned the two tracts, awarding Terri the SE 1/4 of Section 23 and awarding the Nelsons the NW 1/4 of Section 24. The court also awarded Terri $15 per acre for rent of the SE 1/4 of Section 23 for 1987, 1988, 1989, and 1990, and for her share of ASCS payments for those years, too. The Nelsons appealed.

The Nelsons argue that the trial court erred in determining that Terri had any ownership interest in the two tracts of land. They contend that the trial court erred in relying upon the presumption of a gift because there was no evidence that the Nelsons intended to give the land to Lowell and Terri. The Nelsons admit that the contracts for deed named Lowell and Terri as vendees; however, they assert that because Carmie paid for the property, the statutory presumption of an implied trust applies to the transfers from the Christiansons.

The relevant statute says:

Implied trust--How created. An implied trust arises in the following cases:

* * * * * *

4. When a transfer of real property is made to one person and the consideration therefor is paid by or for another, a trust is presumed to result in favor of the person by or for whom such payment is made.

NDCC 59-01-06(4). However, our caselaw also recognizes the general rule that there is a rebuttable presumption of a gift when a parent pays for property that is transferred to a child. Zundel v. Zundel, 278 N.W.2d 123 (N.D.1979); Schrank v. Meade, 145 N.W.2d 514 (N.D.1966); Shong v. Farmers' & Merchants' State Bank, 70 N.W.2d 907 (N.D.1955); Currie v. Look, 14 N.D. 482, 106 N.W. 131 (1905). See Restatement of Trusts 2d, Sec. 442 (1959) ["Where ... the transferee is a wife, child or other natural object of bounty of the person by whom the purchase price is paid, a resulting trust does not arise unless the [payor] manifests an intention that the transferee should not have the beneficial interest in the property."]. See also, Note, Trusts--Implied Trusts in North Dakota, 29 N.D.L.Rev. 58 (1953). The rebuttable presumption of a gift is based upon the close relationship that exists between a parent, as payor, and a child, as transferee. Bogert, Trusts and Trustees, Secs. 459, 460 (2d Ed.1991); 76 Am.Jur.2d Trusts Sec. 206 et. seq. (1975). When that relationship exists, the resulting presumption of a gift is rebutted by proof that the payor did not intend a gift, in which case an implied trust results. Zundel; Shong; Currie. See Restatement of Trusts 2d, Sec. 443 (1959) ["Where ... the transferee is a wife, child or other natural object of bounty of the person by whom the purchase price is paid, and the [payor] manifests an intention that the transferee should not have the beneficial interest in the property, a resulting trust arises."].

Because an implied trust contradicts the record title to real property, there must be clear and convincing evidence to establish that the consideration was paid by or for someone other than the holder of record title. Zundel. See Bogert, Trusts and Trustees, Sec. 464. When, as here, there is a close relationship between the payor and title holder, the presumption is one of gift, rather than one of a resulting trust. That presumption of gift must be rebutted by clear and convincing evidence that the Nelsons intended a resulting trust instead of a gift.

The trial court found that Carmie's initial intent was "to have the deed given to Lowell and Terri as tenants in common" and that "[t]he presumption of a gift has not been rebutted by clear and convincing evidence." Our review of a trial court's findings of fact about the application of the presumptions of a gift and a resulting trust is governed by the "clearly erroneous" standard of NDRCivP 52(a). Zundel. A finding of fact is clearly erroneous when, although there is some evidence to support it, the reviewing court, on the entire evidence is left with a definite and firm conviction that a mistake has been made. Zundel. We give due regard to the trial court's opportunity to assess the credibility of the witnesses. NDRCivP 52(a). Simply because we may have viewed the...