Gorski v. Gorski

• Decision Date: 07 February 1978
• Docket Number: No. 75-812,75-812
• Citation: 82 Wis.2d 248,262 N.W.2d 120
• Parties: Tadeusz GORSKI, Plaintiff-Appellant, v. George GORSKI, Defendant-Respondent.
• Court: Wisconsin Supreme Court

Page 120

262 N.W.2d 120

82 Wis.2d 248

Tadeusz GORSKI, Plaintiff-Appellant, v. George GORSKI, Defendant-Respondent.

No. 75-812.

Supreme Court of Wisconsin.

Submitted on Briefs Jan. 5, 1978.

Decided Feb. 7, 1978.

Tadeusz Gorski, plaintiff-appellant, commenced action against George Gorski, defendant-respondent, to recover certain funds of the plaintiff alleged to be in the possession of the defendant and for an accounting by the defendant. The defendant demurred to the third amended complaint. The trial court sustained the demurrer, and judgment was entered dismissing the complaint with prejudice. The plaintiff appeals.

William G. Ladewig, Milwaukee, submitted briefs for plaintiff-appellant.

Paul A. Piaskoski and Piaskoski & Flynn, Milwaukee, submitted brief for defendant-respondent.

CONNOR T. HANSEN, Justice.

The third amended complaint substantially alleges: That Tadeusz (plaintiff) and George (defendant) orally agreed in May, 1960, that Tadeusz would give his earnings and income to George, and that George would deposit and invest them for Tadeusz. This agreement would terminate on the request of either party. Pursuant to this agreement, Tadeusz gave George $3,328.61 in 1969, $4,599.64 in 1970, $6,792.48 in 1971, $7,961.74 in 1972, and $9,502.53 in 1973, for a total of $32,185, in the years 1969 to 1973. Tadeusz further alleges that he gave George monthly industrial accident checks in the sum of $193 each, during the period from January, 1969, to October, 1973, with the exception of three checks. These funds were to be expended for Tadeusz' living expenses, and the checks are alleged to have exceeded these expenses by an unknown amount. This unknown excess was to have been invested in accordance with the earlier agreement.

The complaint further alleges that Tadeusz terminated the agreement in October, 1973, and demanded an accounting and the return of his funds; that George returned certain funds but refused to make an accounting; that George has or should have records of the excess of the funds received over Tadeusz' living expenses, but that George has refused to render an accounting; that from incomplete records available to Tadeusz, it appears George must return an additional $10,603.71, plus the excess of the "industrial accident checks" over Tadeusz' living expenses from January, 1969, to October, 1973; and that George ". . . was in total charge of all investments and expenditures . . ." and has additional records of the handling of the funds, but that he has refused to disclose these records to Tadeusz, who is alleged to have only minimal records regarding the handling of the funds.

In De Bauche v. Knott, 69 Wis.2d 119, 121, 122, 230 N.W.2d 158, 160 (1975), we restated the well established rules applicable to a determination of whether a complaint is subject to a demurrer:

". . . The demurrer tests only the legal sufficiency of the pleading; all material statements of facts are considered true, while legal conclusions are not. As this court said in Scheeler v. Bahr (1969), 41 Wis.2d 473, 476, 164 N.W.2d 310, 311:

'On demurrer it is the duty of this court to accept the allegations of the complaint as true. A demurrer to a complaint admits all facts well pleaded, but denies that those facts have the legal consequences asserted by the plaintiff. When this court reviews a trial court's order on demurrer, it is obliged to construe the complaint liberally and to uphold it if it expressly or by reasonable inference states any cause of action. Sec. 263.07, Stats., sec. 263.27; Estate of Mayer (1965), 26 Wis.2d 671, 677, 133 N.W.2d 322.'

The point is not whether the complaint states the cause of action the plaintiff believes he has pleaded. The demurrer must fail if there is any cause of action made out. Milwaukee County v. Schmidt, Garden & Erikson (1969), 43 Wis.2d 445, 453, 168 N.W.2d 559. As this court said in Nelson v. La Crosse Trailer Corp. (1949), 254 Wis. 414, 417, 37 N.W.2d 63, 64:

'However, in determining whether a complaint is subject to a demurrer, the most liberal interpretation possible must be given to it. If the complaint states any facts on which the plaintiff can recover, it must be held to state a cause of action.'

The duty of the court is not to hypothesize whether the plaintiff can actually prove his allegations; that is the task of the trier of fact. The complaint withstands the challenge of the demurrer when the facts alleged, if they were proved, would constitute a cause of action. Theune v. Sheboygan (1973), 57 Wis.2d 417, 420, 204 N.W.2d 470."

The question on this appeal, therefore, is not whether the amended complaint stated the cause of action the plaintiff intended to plead, but whether the complaint expressly or by reasonable inference alleges facts sufficient to support any cause of action. On this appeal, Tadeusz contends that the complaint states two causes of action, one for an accounting, based on principles of agency; and the other for imposition of a constructive trust to prevent unjust enrichment.

Counsel for Tadeusz maintains that the complaint alleges facts sufficient to establish an agent-principal relationship between George and Tadeusz, and to support an action for an accounting by George. See : Alexopoulos v. Dakouras, 48 Wis.2d 32, 40, 179 N.W.2d 836 (1970), quoting Restatement, 2 Agency 2d, p. 185, sec. 382.

We arrive at the opposite conclusion. The plaintiff's cause of action for an accounting must fail because the complaint not only does not allege, but expressly negatives, the sine qua non of the agent principle relationship, the element of control.

"Agency" is defined as:

" '. . . the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.' " (Emphasis added.) Strupp v Farmers Mut. Automobile Ins. Co., 14 Wis.2d 158, 167, 109 N.W.2d 660 (1961), quoting Restatement, 1 Agency 2d, p. 7, sec. 1(1).

Under this definition:

". . . The relation of agency is created as the result of conduct by two parties manifesting that one of them is willing for the other to act for him subject to his control, and that the other consents so to act. The principal must in some manner indicate that the agent is to act for him, and the agent must act or agree to act on the principal's behalf and subject to his control. . . ." (Emphasis added.) Restatement, 1 Agency 2d, p. 8, sec. 1(1), Comment a.

The complaint in the instant case negates the existence of any control or right of control of the purported principle over the actions of his purported agent, which is a vital element in this cause of action. The complaint asserts that Tadeusz agreed to give his earnings and income to George for payment of Tadeusz' living expenses and for investment. The complaint is utterly barren of any allegation that Tadeusz retained any measure of control over these funds or George's handling of them. On the contrary, the complaint expressly avers that "(t)hat defendant was in total charge of all investments and expenditures, . . ."

This assertion unequivocally refutes any suggestion that Tadeusz retained power to control George's actions. This precludes the existence of an agency relation, and the alleged cause of action for an accounting is therefore fatally defective.

We are of the opinion, however, that given a most liberal construction, the amended complaint does allege facts sufficient to support a cause of action on the theory of a constructive trust.

A constructive trust is:

" ' ". . . a device in a court of equity to prevent unjust enrichment which arises from fraud or abuse of confidential relationship and is implied to accomplish justice . . ." ' " Meyer v. Ludwig, 65 Wis.2d 280, 285, 222 N.W.2d 679 (1974); Estate of Schmalz, 58 Wis.2d 220, 206 N.W.2d 141 (1973); Estate of Massouras, 16 Wis.2d 304, 114 N.W.2d 449 (1962).

This court has quoted with apparent approval the rule of the Restatement that:

" '. . . Where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it, a constructive trust arises.' " Restatement, Restitution, Constructive Trust, p. 640, sec. 160, quoted in Meyer v. Ludwig, supra, (65 Wis.2d) at 285 (222 N.W.2d 679); Estate of Schmalz, supra, (58 Wis.2d) at 228 (206 N.W.2d 141); Estate of Massouras, supra, (16 Wis.2d) at 313 (114 N.W.2d 449).

Despite the suggestion of this rule that unjust enrichment alone will give rise to a constructive trust, however, the decisions of this court have consistently required an additional showing. A constructive trust will be imposed only where, by means of ". . . actual or constructive fraud, duress, abuse of confidence, mistake, commission of a wrong, or by any form of unconscionable conduct," the one against whom the trust is imposed "has either obtained or holds the legal title to property which he ought not in equity and in good conscience beneficially enjoy . . ." Estate of Massouras, supra, 312, 114 N.W.2d 453; Estate of Demos, 50 Wis.2d 262, 268, 184 N.W.2d 117 (1971); Meyer v. Ludwig, supra, 65 Wis.2d at 286, 222 N.W.2d 679.

Therefore, to state a cause of action, the complaint in the instant case must state facts sufficient to show (1) unjust enrichment and (2) abuse of a confidential relationship, or some other form of unconscionable conduct. We believe these elements can be inferred from the instant complaint.

The element of unjust enrichment is supplied by the allegations that Tadeusz gave George more than $32,000 for expenditure and investment on Tadeusz' behalf; that George had agreed to apply the sums for Tadeusz' benefit; and that George failed to return or account for more than $10,603.71.

In Meyer v. Ludwig, supra, a mother had promised orally that she would turn over a parcel of land to her daughter and son-in-law, and in reliance upon the...