Ford v. Jordan

• Decision Date: 19 July 1985
• Docket Number: Nos. 84-355,84-356,s. 84-355
• Citation: 220 Neb. 492,370 N.W.2d 714
• Parties: Donovan FORD et al., Appellees, v. Darold L. JORDAN and Lois E. Jordan, Husband and Wife, Appellants. Darold L. JORDAN and Lois E. Jordan, Husband and Wife, Appellants, v. August ROSS, Individually and as Special Administrator of the Estate of Hazel Ford, Deceased, Appellee.
• Court: Nebraska Supreme Court

Page 714

370 N.W.2d 714

220 Neb. 492

Donovan FORD et al., Appellees, v. Darold L. JORDAN and Lois E. Jordan, Husband and Wife, Appellants.

Darold L. JORDAN and Lois E. Jordan, Husband and Wife, Appellants, v. August ROSS, Individually and as Special Administrator of the Estate of Hazel Ford, Deceased, Appellee.

Nos. 84-355, 84-356.

Supreme Court of Nebraska.

July 19, 1985.

Syllabus by the Court.

1. Trusts: Equity: Appeal and Error. A suit to impress a constructive trust is one in equity which this court reviews de novo on the record, giving consideration, where the evidence is in conflict, to the fact that the trial court observed the witnesses and their manner of testifying and accepted one version of the facts rather than the opposite.

2. Replevin: Actions: Judgments: Appeal and Error. Replevin is a law action wherein, where tried without a jury, the findings and disposition of the trial court have the effect of a jury verdict and will not be disturbed unless clearly wrong.

3. Trusts: Property: Equity. A constructive trust may arise by operation of law where legal title is acquired by virtue of a confidential relationship between the grantor and the grantee and under such circumstances that the grantee ought not, according to the rules of equity and good conscience, hold the benefits. Where such circumstances exist, a court of equity will raise a trust by construction and convert the grantee into a trustee of legal title for the benefit of the grantor.

4. Trusts: Evidence: Proof. The burden of proof is upon one seeking to establish the existence of a constructive trust to do so by evidence which is clear, satisfactory, and convincing in character.

5. Trusts. The existence of a constructive trust is to be determined by the particular facts, circumstances, and conditions of the individual case.

William J. Riley and Nick R. Taylor of Fitzgerald, Brown, Leahy, Strom, Schorr & Barmettler, Omaha, for appellants.

Annette E. Mason, Bruce G. Mason, and Mary Lou Kubichek of Ross & Mason, P.C., Omaha, for appellees.

KRIVOSHA, C.J., and BOSLAUGH, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.

CAPORALE, Justice.

The last will of the deceased Hazel Ford named her stepson, Donovan Ford, stepmother, Maude Clifton, and nephew, Jerry T. Clifton, the beneficiaries of her estate. The beneficiaries brought an action to impress a constructive trust on certain personal and real property which Hazel Ford had placed in joint tenancy with Darold L. and Lois E. Jordan, husband and wife, alleging that the Jordans had breached their confidential relationship with Hazel Ford. In turn, the Jordans brought a replevin action against the special administrator of Mrs. Ford's estate, attorney August Ross, alleging that he had taken possession of personal property belonging to the Jordans. After a jury was waived in the replevin action, both cases were consolidated and tried to the court. The trial court entered judgments impressing a constructive trust on the joint tenancy properties and ordering an accounting and transfer of the legal titles in and to the jointly held properties, in accordance with Mrs. Ford's will. The replevin action was dismissed. The assignments of error discussed in the Jordans' brief argue that the evidence does not support the imposition of a constructive trust on the jointly held properties nor the dismissal of the replevin action. We reverse and remand with the directions that the beneficiaries' action be dismissed and that judgment in the replevin action be entered returning to the Jordans the jointly held personal property.

We must first settle upon the scope of the reviews to be applied in these appeals.

A constructive trust is imposed when one has acquired legal title to property under such circumstances that he or she may not in good conscience retain the beneficial interest in the property. In such a situation, equity converts the legal titleholder into a trustee holding the title for the benefit of those entitled to the ownership thereof. Lauritzen v. Davis, 214 Neb. 547, 335 N.W.2d 520 (1983); Kuhlman v. Cargile, 200 Neb. 150, 262 N.W.2d 454 (1978). Thus, the beneficiaries' suit is one in equity, which we review de novo on the record, giving consideration, where the evidence is in conflict, to the fact that the trial court observed the witnesses and their manner of testifying and accepted one version of the facts rather than the opposite. Peterson v. Gering Irr. Dist., 219 Neb. 275, 363 N.W.2d 141 (1985).

On the other hand, replevin is a law action. Therefore, the cause having been tried without a jury, the findings and disposition of the trial court have the effect of a jury verdict and will not be disturbed unless clearly wrong. Schmode's, Inc. v. Wilkinson, 219 Neb. 209, 361 N.W.2d 557 (1985).

We now turn our attention to the facts. Mrs. Ford, a resident of Omaha, Nebraska, died on November 20, 1982, at the age of 77, by which time she had accumulated some stocks, tax-exempt bonds, and savings certificates which were kept at the United States National Bank in a safe-deposit box leased jointly by Mrs. Ford and the Jordans. Mrs. Ford had also acquired a personal residence which was titled in her name jointly with the Jordans. The value of Mrs. Ford's holdings totaled somewhat over $150,000. The parties agree that approximately two-thirds of the total holdings were titled in and to Mrs. Ford jointly with the Jordans, the remainder being subject to the terms of the Ford will.

Mrs. Ford's stepson lived in California until approximately 6 months prior to her death, when he moved back to Omaha to live with his stepmother and help her with her affairs. During the time he lived in California, he and his stepmother kept in frequent contact, and he characterizes himself as Mrs. Ford's "stepson and best friend."

The nephew is a psychiatrist who lived in California at the time of Mrs. Ford's death. He corresponded regularly with his aunt and visited her in Omaha at least once a year. He described his relationship with his aunt as "close and loving," and testified it was an important relationship for him.

Mrs. Ford's stepmother was living in California at the time of her stepdaughter's death and has since died.

The Jordans, also residents of Omaha, had met Mrs. Ford in the 1950s when she was working as a housekeeper for Mr. Jordan's mother. The Jordans saw Mrs. Ford only occasionally until 1976, when their relationship began to grow. As a result, the Jordans helped Mrs. Ford maintain her residence, gave her advice about major expenditures and about her investments, drove her to doctor appointments and to the grocery store, and generally helped her take care of her personal and business affairs.

Mr. Jordan had been a claims representative for the Metropolitan Utilities District for 24 years and had property management experience. Mrs. Jordan had secretarial experience, worked for an insurance adjusting firm for 24 years, had underwriting experience, and had also worked in the insurance and vault departments of a savings and loan institution.

After the death of her brother, Mrs. Ford, being unhappy with the administration of his estate, became concerned about the handling of her own affairs. The Jordans recommended an attorney to Mrs. Ford, as she was relying on the Jordans for advice and wanted them to become aware of her affairs. She and the Jordans then met with the attorney, who concluded that Mrs. Ford was not an experienced business person and that one of her concerns was how her property would be managed while she was still living, if she were to become unable to do so herself. At that time Mrs. Ford's stock was held solely by her, and some bank accounts were held jointly with some of her relatives. The attorney explained the consequences of joint ownership to Mrs. Ford and convinced himself that she understood the concept. The attorney also explained the operation of a durable power of attorney. He then drew a will and durable power of attorney in accordance with Mrs. Ford's instructions. The will named Mr. Jordan, or if he did not so act, Mrs. Jordan, as personal representative of the estate. The durable power of attorney named Mr. Jordan as attorney in fact. The documents were signed on August 7, 1976.

During 1976, Mrs. Ford added the Jordans' names to her United States National Bank checking account and to her safe-deposit box.

In 1979 Mrs. Ford sent a letter to her stepson, with a copy of her will, and stated in part: "My will is a simple will.... [E]verything is divided equally between you, Jerry and Bobby [Maude Clifton]...." Mrs. Ford also expressed concern about the way her affairs would be handled if she were incapacitated, and wrote:

They [the Jordans] are cosigners on all my banking business. They help me out on all business transactions, and have power of attorney to look after me in case I am not able to look after or take care of my own business or myself.... This is the best way to have it, so if anything happens to me, the state can not come in & tie up or freeze everything.

In the period from 1979 to her death, Mrs. Ford carried out, through the Jordans, several transactions which consisted of either transferring title to existing accounts, stocks, and bonds standing in her name alone to joint tenancy with the Jordans or purchasing assets and placing them jointly in her name and that of the Jordans. Mrs. Ford did not solicit advice independent from that of the Jordans. The stockbroker involved in the transactions was selected by the Jordans and had no contact with Mrs. Ford. The Jordans read and took care of the business mail Mrs. Ford received regarding their joint interests. Mrs. Jordan balanced Mrs. Ford's checkbook each month and kept an extensive record of all of Mrs. Ford's business transactions, which...