Gary-Wheaton Bank v. Meyer

• Decision Date: 31 December 1984
• Docket Number: No. 83-1062,GARY-WHEATON,83-1062
• Citation: 130 Ill.App.3d 87,473 N.E.2d 548,85 Ill.Dec. 180
• Parties: , 85 Ill.Dec. 180 BANK, an Illinois banking corporation, Plaintiff-Appellant, v. Edward MEYER, Sr., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 548

473 N.E.2d 548

130 Ill.App.3d 87, 85 Ill.Dec. 180

GARY-WHEATON BANK, an Illinois banking corporation Plaintiff-Appellant, v. Edward MEYER, Sr., Defendant-Appellee.

No. 83-1062.

Appellate Court of Illinois,

Second District.

Dec. 31, 1984.

Rehearing Denied Feb. 11, 1985.

Nigro & Westfall, Craig C. Westfall, Glendale Heights, for plaintiff-appellant.

Donovan & Roberts, Robert R. Verchota, Rodney W. Equi and Keith E. Roberts, Sr., Wheaton, for defendant-appellee.

LINDBERG, Justice.

Plaintiff, Gary-Wheaton Bank, appeals from the denial by the circuit court of DuPage County of its motion for a turnover order. Plaintiff contended that a conveyance of a one-third beneficial interest in a trust consisting of a single-family residence from defendant Edward Meyer, Sr. to Edward Meyer, Jr. was fraudulent.

On appeal, the plaintiff contends: (1) the trial court's finding of a resulting trust was against the manifest weight of the evidence; (2) the trial court's finding that the conveyance from Edward Meyer, Sr. to Edward Meyer, Jr. was not fraudulent was against the manifest weight of the evidence; (3) the trial court's finding that estoppel does not operate to deny Gertrude Wagemann's ownership of the property was against the manifest weight of the evidence. Because we hold the court's findings were against the manifest weight of the evidence, we reverse and remand.

In August 1982 defendant Edward Meyer, Sr. (Meyer, Sr.) was delinquent on unsecured loans from plaintiff Gary-Wheaton Bank (bank). The bank proposed to Meyer, Sr. that the loans be rewritten with Meyer, Sr.'s residence as collateral on the loans. Meyer, Sr. rejected the proposal and the bank filed suit.

Summons and complaint were served. Meyer, Sr. did not appear and a default judgment was entered on January 10, 1983, in the amount of $15,243.02. On October 25, 1983, the judgment was increased an additional $6,207.08 because of a second loan judgment.

The bank issued a citation to discover assets citing Chicago Title and Trust Company whereupon documents relating to a trust agreement were discovered. The trust agreement was dated January 17, 1961, and listed Meyer, Sr., Meyer, Sr.'s wife (Mary Meyer), and Gertrude W. Wagemann (Wagemann), Mary Meyer's mother, as beneficiaries of the trust to be held as joint tenants.

The corpus of the trust is a single-family residence at 26 W 110 Embden Lane, Wheaton. Wagemann, Meyer, Sr., Mary Meyer, and Meyer, Sr.'s son, Edward Meyer, Jr. (Meyer, Jr.), presently live there.

On November 11, 1982, Meyer, Sr. conveyed his one-third interest to Meyer, Jr. The assignment was predated October 25, 1982, Meyer, Jr.'s birthday. At trial both Wagemann and Meyer, Sr. testified this conveyance was in response to a request by Wagemann. The assignment was accepted by Chicago Title and Trust on December 7, 1982.

In seeking to declare the conveyance void, the bank claimed it was fraudulent to avoid creditors. Meyer, Jr. appeared to defend the action. He is one of the citees. The other citee is Chicago Title and Trust Company. After hearing the evidence, the trial court denied the bank's motion to set aside the conveyance. The trial court held:

"1) That the real estate in question which is requested to be transferred under the motion for a turnover order was purchased with funds wholly from the estate of Gertrude Wagemann.

2) That the property was placed in trust and the defendant in this cause named as a beneficiary of that trust without any consideration paid by the defendant.

3) That although the defendant resided in the property throughout the period of ownership and may have on occasion contributed to the maintenance of the property, his contributions toward said maintenance could not and will not be considered by me as evidence of a contribution to the purchase or evidence of ownership.

4) It is a further finding that although Gertrude W. Wagemann allowed the defendant, Edward B. Meyer, to be a beneficiary of a trust, it was not such an act as would estop her from claiming the ownership by reason of the creditors allegedly relying upon his undisclosed interest in the real estate. I further find that although one time eleven years previously the plaintiff may have relied to some degree on the defendant's disclosure of his interest to lend him money, it would be difficult for me to believe that the loans which are the subject of the underlying action herein were made on the basis of this undisclosed interest eleven years previously and not on the basis of the relationship which arose between Mr. Meyer and Mr. Monson over the period of years.

Therefore, I find no estoppel on the respondent, Gertrude W. Wagemann, to deny her ownership in the property or to deny Mr. Meyer's ownership in the property, and I do not find as a matter of law that the Gary-Wheaton Bank relied on the disclosed, undivided interest of Mr. Meyer as the basis for making the loans the subject of this underlying action. Inasmuch as all the funds used for the purchase of this home and the great majority of maintenance of this home were supplied by Gertrude W. Wagemann, there should be and is clearly a resulting trust, and transfer or conveyance by Edward B. Meyer, Sr., to his son Edward B. Meyer, Jr., at the request of Gertrude W. Wagemann was not a fraudulent conveyance as against the Gary-Wheaton Bank, and therefore the motion of the Gary-Wheaton Bank will be denied."

Resulting Trust.

The bank contends the trial court's finding of a resulting trust in favor of Wagemann was against the manifest weight of the evidence. The bank argues: (1) necessary requirements for a resulting trust are not present; and (2) where an express trust exists there can be no resulting trust.

A resulting trust arises by operation of law where one person furnishes consideration for property and conveys title to another. Whether or not such a resulting trust arises depends upon the intention of the person who furnishes the purchase price at the time of the conveyance. A resulting trust arises at the instant legal title is taken. The theory of a resulting trust is founded upon a natural equity that one who pays for the property should enjoy it, unless he intended by the vesting of title, to confer a beneficial interest upon the grantee. (Prassa v. Corcoran (1962), 24 Ill.2d 288, 291, 181 N.E.2d 138.) He alone shall enjoy that which he has purchased. (Cadena v. Cadena (1983), 116 Ill.App.3d 153, 155, 72 Ill.Dec. 139, 452 N.E.2d 71, 72.) The burden of proof is upon the party seeking to establish a resulting trust and the evidence must be clear, convincing and unmistakable. In re Estate of Wilson (1980), 81 Ill.2d 349, 356, 43 Ill.Dec. 23, 410 N.E.2d 23. A resulting trust will not be sustained where the transaction can be construed in any other reasonable fashion. A resulting trust may be rebutted where evidence establishes the grantor intended to confer a beneficial interest in the property upon the grantee. A fact considered indicative of the grantor's intent to make a gift exists where the grantor takes title to the property in the name of himself and another person jointly. Such conveyance, in the absence of evidence of a different intention has been held to be demonstrative of the grantor's intention to convey a gift of an undivided interest in the property of a joint tenant. Cadena v. Cadena (1983), 116 Ill.App.3d 153, 155, 72 Ill.Dec. 139, 452 N.E.2d 71, 72.

When property is transferred from one family member to another, a presumption arises in favor of a gift which will negate a resulting trust. It is immaterial that the child-recipient is an adult. Moore v. Moore (1956), 9 Ill.2d 556, 557, 138 N.E.2d 562.

Where a deed, absolute in terms and without condition, conveys real estate to two persons as joint tenants, the language of the deed is sufficient to show an expressed intent to convey both legal title and beneficial interest to the two grantees as joint tenants, but if the purchase price was paid by only one of such grantees, this indicates an intent that the grantee is the only one beneficially interested in the property, and under such facts the expressed intent as shown by the deed must give way to the rule of equity which protects the party paying the purchase price by raising a resulting trust in his favor. Prassa v. Corcoran (1962), 24 Ill.2d 288, 292, 181 N.E.2d 138.

Finally, if an express trust exists, there can be no resulting trust. (Baker v. LeMire (1934), 355 Ill. 626, 631, 189 N.E. 904.) In order to have a valid express trust, the following conditions must be present:

"(1) intent of the party to create a trust, which may be shown by a declaration of the trust by the settlor or by circumstances which show the settlor intended to create a trust;

(2) a definite subject matter of trust property;

(3) ascertainable beneficiaries;

(4) a trustee;

(5) specification of a trust purpose and how the trust is to be performed;

(6) delivery of the trust property to the trustee."

Estate of Wilkening (1982), 109 Ill.App.3d 934, 940-41, 65 Ill.Dec. 366, 441 N.E.2d 158, 163.

In the case at bar the trial court held a resulting trust arose in favor of Wagemann by her having paid the full purchase price of the house and putting it in trust with her daughter, herself, and Meyer, Sr. There are three reasons why the trust must fail: (1) Meyer, Sr. had a beneficial interest, (2) an express trust already existed, and (3) evidence that a resulting trust was intended was not unmistakeable, clear or convincing.

First, in a resulting trust, the grantee must not acquire a beneficial interest in the property. (Prassa v. Corcoran (1962), 24 Ill.2d 288, 181 N.E.2d 138.) In the case at bar, Meyer, Sr. did acquire a beneficial interest. He was listed as a joint tenant with a one-third undivided beneficial interest in the trust. Under the law of joint tenancy, "four unities" must be present at the time of the tenancy's creation. One of these unities is interest. (Harms...