Hudak v. Procek
| Decision Date | 17 June 2002 |
| Docket Number | No. 416, 2000.,416, 2000. |
| Citation | 806 A.2d 140 |
| Parties | John HUDAK, Jr., and John M. Hudak, Defendants Below-Appellants, v. Anna PROCEK, Plaintiff Below-Appellee. |
| Court | Supreme Court of Delaware |
David J. Ferry, Jr., Esquire (argued) and Rick S. Miller, Esquire, Ferry & Joseph, P.A., Wilmington, Delaware, for Appellants.
Laraine A. Ryan, Esquire, Hockessin, Delaware, for Appellee.
Before VEASEY, Chief Justice, WALSH, HOLLAND, BERGER, Justices, and HARTNETT, Justice (Retired)1, constituting the Court en banc. VEASEY, Chief Justice (for the majority).
The issue before the Court on this appeal is whether or not the decision reached by the Court of Chancery after trial was based on findings of fact that are clearly erroneous or not the product of an orderly and logical deductive process. The trial judge found that the evidence rebutted the legal presumption that when parents provide funds for the purchase of property in the name of their daughter they intend a gift to the daughter. The trial judge also found that the complaint was not barred by laches.
The Court of Chancery imposed a resulting trust in favor of the surviving mother on a house purchased in 1978 with funds belonging to the mother and her late husband where title was placed in her late daughter's name. The effect of this decision is to defeat the claim to the house of the daughter's surviving husband and their son, who became the legal titleholders after the daughter's death.
This is the second appeal from a judgment of the Court of Chancery in this case. In the first appeal ("Hudak I"),2 we reversed the trial court's judgment imposing a resulting trust on the house in the mother's favor on the ground that the Court of Chancery had applied the wrong legal presumption. In that decision, we held that, in these circumstances, a gift to the daughter from her parents must be presumed, although the presumption is rebuttable. In Hudak I we also upheld the determination of the Court of Chancery that the mother's claim was not barred by laches. We remanded the matter to the Court of Chancery for further consideration, applying the correct legal presumption and the proper burden of proof necessary to rebut the presumption.
On remand, the Court of Chancery, applying the correct legal presumption, concluded on the basis of evidence adduced at trial that the mother had rebutted the presumption. The trial judge found that the mother and her late husband had not intended in 1978 to make a present, unconditional gift of the disputed property to their late daughter when they provided the money to the daughter to purchase the house.
On this appeal, our scope of review is narrow and accords considerable deference to the trial judge's factual findings unless they are clearly erroneous or not the product of an orderly and logical deductive process.3 We conclude that the Court of Chancery applied the correct legal standards in this case. We have reviewed the entire record and have tested the trial judge's factual findings in accordance with the appropriate standard of review.
Based upon our review of the record, and with the required exercise of judicial restraint, we conclude that the factual findings of the Court of Chancery are rationally supported by clear and convincing evidence and are the product of an orderly and logical deductive process. Viewing those factual findings as a whole, we find that they are entitled to deference whether or not we would independently have reached the same conclusions.
Thus, the conclusion of the Court of Chancery that the mother rebutted the legal presumption of a gift to her daughter was not clearly erroneous and was the product of an orderly and logical deductive process. We also find no error in the trial court's conclusion that the mother's claim was not barred by the doctrine of laches. Finally, the remedy of a resulting trust imposed by the trial court was not an abuse of discretion. Accordingly, we affirm the judgment of the Court of Chancery and remand for proceedings consistent with this Opinion.
Anna Procek and her husband John immigrated to New Jersey from Czechoslovakia. Although the Proceks lived in the United States for many years, they never became fully immersed in the American way of life. The Proceks did not drive, and they used cash to pay all of their debts and make necessary purchases. They lived in an ethnic neighborhood in New Jersey near family and close friends where they could retain their Czech culture.
In 1978, the Proceks were in their mid-seventies. Although in good health, the Proceks sold their home in New Jersey and moved to Delaware to be near their eldest daughter, Helen Hudak, who encouraged them to move closer to her and promised to take care of them in their advancing years.
Because the Proceks were not native English speakers and were not experienced in handling real estate transactions, they gave Helen the cash proceeds from the sale of their New Jersey house and asked Helen to buy a house for them in Delaware. Helen did so and used a substantial portion of the Proceks' funds to purchase a house for the Proceks one block from her home. To carry out the purchase, Helen hired a lawyer, deceased at the time of trial, to conduct the real estate settlement. The Proceks were not present at the settlement transaction. Title of the house was put solely in Helen's name, although she was married to John Hudak, Jr., and had been married to him since 1955.
The Proceks immediately moved into the property and lived there continuously and exclusively. The Hudaks lived nearby. For years the Proceks paid all of the expenses associated with the property, such as the utilities, sewer, taxes, insurance, and upkeep. Helen took them to stores and to medical appointments, and she assisted with their finances. The Proceks gave cash to Helen who wrote checks to pay the Proceks' bills. Helen's husband, John, also would assist the Proceks on occasion with house repairs and transportation to appointments.
After a short illness, Helen died prematurely and unexpectedly of cancer in April 1990. Upon Helen's death, title to the Proceks' house passed from Helen's estate to her husband, John. Earlier in 1990, shortly before she died, Helen had offered to transfer legal title to the Proceks, but they declined.
At some point thereafter, the Proceks evidently became concerned that Hudak might remarry, and the Proceks might be forced out of their house. John Procek, plaintiff's late husband, and Hudak signed an agreement, dated June 1, 1990, providing that the Proceks could live in the house for the rest of their lives. Anna Procek did not sign this agreement, and the record does not reveal that she acquiesced in the agreement. John Procek died in 1993. Anna continued to live in the house until 1996 when, due to her advanced age, she moved out of the house and moved in with another daughter, Irene Setz.
Shortly thereafter, Anna's surviving daughters, Irene and Annie, both asked Hudak to sell the house and to divide the proceeds equally among the three of them. Hudak refused. He moved into the disputed property,4 and in October 1996, he transferred title to himself and his son jointly.5 His daughter, Marilyn, moved into his former residence. Anna Procek then filed her complaint requesting the Court of Chancery to impose a resulting trust on the property in her favor.
At the time of trial in 1998, the plaintiff, Anna Procek, was 94 years old. Procek and Hudak both testified at trial. Also testifying for Procek was her daughter, Irene Setz, Helen's sister. Testifying on behalf of Hudak was his daughter, Marilyn Brill.6 The Court of Chancery, after trial on the merits, found that Anna Procek, and not John Hudak, is the rightful owner of the property.
On appeal, this Court reversed the judgment of the Court of Chancery on the ground that the trial court applied the wrong presumption. After further consideration on remand, the trial judge, applying the correct legal presumption, concluded that the evidence rebutted the legal presumption of an unconditional gift from the Proceks to Helen Hudak when the property was placed in Helen's name in 1978. The Court of Chancery ordered a resulting trust in favor of plaintiff Anna Procek. The defendants again appeal.
A resulting trust is an equitable remedy by which a court of equity may give effect to the intentions of the parties to a transaction.7 As a general rule, equity will presume, absent contrary evidence, that the person supplying the purchase money for property intends to retain a beneficial interest in the property and that title is placed in the name of another for some incidental reason.8 The court therefore may impose a resulting trust requiring the person with legal title to hold that title for the benefit of the person supplying the purchase money. A resulting trust thus is not a trust at all. It is an equitable remedy designed to prevent unjust enrichment and to ensure that legal formalities do not frustrate the original intent of the transacting parties.9
In Hudak I, we held that when the person supplying the purchase money is a parent who places legal title to property in the name of a child, the opposite legal presumption arises. That presumption, which is rebuttable, is that the parent intended to make a gift of the property to the child and did not intend to retain an ownership interest in the property.10 This presumption is founded on the premise that people generally intend to transfer legal title to close family members only when they wish to make a gift.11 The person against whom the presumption operates, i.e. the donor parent, must produce clear and convincing evidence to rebut the presumption of a gift.
In order to rebut a legal presumption, courts uniformly have applied an intermediate standard of proof that is more...
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