Hunter v. Hunter

• Decision Date: 14 June 1972
• Docket Number: No. 568A97,568A97
• Citation: 283 N.E.2d 775,152 Ind.App. 365
• Parties: Orval D. HUNTER, Administrator of the Estate of Ray E. Hunter, Deceased, and Hilda Hunter, Appellants, v. Iva HUNTER and Frankie Ferguson, Appellees.
• Court: Indiana Appellate Court

Page 775

283 N.E.2d 775

152 Ind.App. 365

Orval D. HUNTER, Administrator of the Estate of Ray E Hunter, Deceased, and Hilda Hunter, Appellants, v. Iva HUNTER and Frankie Ferguson, Appellees.

No. 568A97.

Court of Appeals of Indiana, Second District.

June 14, 1972.

Rehearing Denied July 27, 1972.

Seal & Seal, Washington, James B. Sparks, Bloomfield, for appellants.

Ferguson, Berry, Ferguson & Bridges, Bloomington, for appellees.

BUCHANAN, Judge.

STATEMENT OF THE CASE AND FACTS--This is an appeal from a judgment imposing a constructive trust on certain real estate held by defendant-appellant Orval D. Hunter (Orval) as Administrator of the Estate of Ray E. Hunter (Ray) in favor of plaintiff-appellees Iva Hunter and Frankie Ferguson (Iva and Frankie), sisters of Ray, on the theory of violation of a confidential or fiduciary relationship.

In April of 1956, Ray, Iva, and Frankie became equal co-owners of the Hunter family farm (the farm) by reason of their mother's death. In the early part of May of 1956, Iva and Frankie, without consideration, conveyed their interests in the farm by warranty deed to their brother Ray. Our examination of the record indicates no evidence of any promise or representation made by Ray to his sisters at the time of the conveyance nor is there evidence indicating the reasons for the conveyance or the conduct of Ray with respect thereto. Apparently at all times the parties were adults and under no disabilities.

After the conveyance, neither Iva nor Frankie shared in the responsibilities of the management and operation of the farm--presumably Ray did operate the farm and received the benefits therefrom.

In May of 1966, Ray wrote but did not execute what purported to be a holographic ill which devised the farm to Iva and Frankie upon his death. Subsequent to the drafting of this writing there was evidence that Ray stated a desire to keep the farm in the family, and that on his death he wanted the farm to go to Iva and Frankie. During his lifetime, however, Ray did not convey the farm to Iva and Frankie nor did he do so by will.

Ray married near the end of May of 1966, and died interstate a few weeks later on June 5, 1966. His widow inherited the farm as his next of kin.

Iva and Frankie then brought this action to impose a constructive trust on the farm alleging, inter alia, that in return for the conveyances Ray would manage the farm for their mutual benefit and subsequently would either reconvey to Iva and Frankie or devise it to them by will; further, it was alleged that Ray made this promise knowing that it was false with the intent to deceive them and to induce them to execute deeds to the farm without any consideration for the ostensible purpose of Ray's convenience in management of the farm; and that they reposed the utmost trust and confidence in Ray and relied on his false promise to their detriment.

After trial on June 19, 1967, the trial court entered judgment for Iva and Frankie on September 21, 1967, and made the following Findings of Fact and Conclusions of Law:

'FINDINGS OF FACT

'1. Ray E. Hunter, deceased, was the only brother of Iva Hunter and Frankie Ferguson, Plaintiffs.

'2. That Iva Hunter and Frankie Ferguson were the only sisters of Ray E. Hunter, deceased.

'3. That because they were brothers and sisters and (sic) confidential relationship existed between Ray E. Hunter on the one hand and Iva Hunter and Frankie Ferguson, on the other.

'4. That on April 27, 1956, Ray E. Hunter, Iva Hunter, and Frankie Ferguson became equal co-owners of an undivided interest of the Hunter Family Farm, situate in Greene County, Indiana.

'5. That in the early part of May, 1956, Iva Hunter and Frankie Ferguson conveyed their undivided interest in the Hunter Family Farm to Ray E. Hunter.

'6. That neither Iva Hunter or Frankie Ferguson shared in the responsibility for or the benefit of management and operation of the Hunter Family Farm after they conveyed their interest to Ray E. Hunter.

'7. That neither Iva Hunter nor Frankie Ferguson received any consideration whatsoever for their conveyance of the Hunter Family Farm to Ray E. Hunter.

'8. That Ray E. Hunter died intestate in residence at the Hunter Family Farm on June 5, 1966.

'9. That Ray E. Hunter did not during his lifetime reconvey the Hunter Family Farm in Greene County, Indiana, to Iva Hunter and Frankie Ferguson.

'10. That Iva Hunter and Frankie Ferguson did not receive the Hunter Family Farm by inheritance upon the death of Ray E. Hunter because Ray E. Hunter was survived by his wife, Hilda Hunter.

'11. That Ray E. Hunter executed a holographic will on May 18, 1966.

'12. That said holographic will directed conveyance of the Hunter Family Farm in Greene County, Indiana, to Iva Hunter and Frankie Ferguson.

'13. That subsequent to execution of the holographic will Ray E. Hunter stated a purpose to keep the Hunter Family Farm in Greene County, Indiana, in the family.

'14. That because he was their brother, did receive the Hunter Family Farm from his sisters without paying any consideration, did state a purpose to keep the Hunter Family Farm in the family, and did attempt to will the Hunter Family Farm to his sisters, Ray E. Hunter did promise prior to receiving conveyance of their interest in the Hunter Family Farm, to reconvey the Hunter Family Farm to Iva Hunter and Frankie Ferguson.

'From the foregoing facts, the court concludes:

'CONCLUSIONS OF LAW

'1. That the law is with the Plaintiffs.

'2. That Ray E. Hunter's failure to reconvey the Hunter Family Farm in Greene County, Indiana, to Iva Hunter and Frankie Ferguson was a constructive fraud of the rights and interests of Iva Hunter and Frankie Ferguson.

'3. That a constructive trust may be created whether the fraud existed at the outset of the transaction or arose by the later conduct of the party.

'4. That a constructive trust of lands will be raised by the court in favor of the original grantor, where the original grantor has been defrauded by the original grantee, and received no consideration for the original conveyance.

'Let judgment be entered accordingly.

'Dated this 21st day of Sept. 1967.'

Orval then filed a Motion for a New Trial. The court heard argument on the Motion and entered a second judgment, again for Iva and Frankie, which compelled Orval to reconvey the farm to Iva and Frankie. Orval now appeals, alleging as error that the decision of the court was not sustained by sufficient evidence, was contrary to law and various errors of law occurring at the trial.

ISSUE--Because of the result reached in this case there is no necessity of considering the assigned errors occurring at the trial. We deem the issue to be:

Was there sufficient evidence to support the trial court's finding that a constructive trust was created when Iva and Frankie conveyed their interests in the farm to Ray?

Orval contends that there is no evidence of fraud or constructive fraud perpetrated by Ray. Similarly, there is no evidence of record that Ray made a promise to Iva and Frankie at the time of the conveyance to reconvey the farm to Iva and Frankie during his life or after his death. Consequently, Orval argues that the facts are not sufficient to cfreate a constructive trust.

Iva and Frankie take the position that there was a confidential relationship between Ray, on the one hand, and Iva and Frankie, on the other. This relationship, combined with the conveyance without consideration and Ray's purported promise to reconvey at a later date, was sufficient to give rise to constructive fraud.

DECISION--It is our opinion that the evidence of record was insufficient to support the imposition of a constructive trust on the farm in favor of Iva and Frankie. Further, findings of fact 3, 11 and 14 and conclusions of law 1, 2 and 3 are clearly erroneous and No. 4 is questionable.

The use of the constructive trust as an equitable device for achieving justice has not been neglected in Indiana. This interesting area of historic equitable jurisdiction has often been treated by our Indiana courts. Therefore we see no need to exhaustively analyze or review the cases but will restate a few fundamental principles, particularly those that dispose of this case.

A constructive trust is a fiction of equity, devised for the purpose of making equitable remedies available against one who through fraud or other wrongful means acquires the property of another. Brown v. Brown, (1956) 235 Ind. 563, 135 N.E.2d 614; Koenig v. Leas, (1959) 240 Ind. 449, 165 N.E.2d 134. See generally: 5 Scott, On Trusts 3410 et seq. (3rd ed. 1967). Trusts are thus constructed by the court irrespective of the intent of the parties, in defiance of the statute of frauds to uphold justice and avoid unjust enrichment. The underlying principle is that the statute of frauds may not be invoked to aid in the perpetration of a fraud. Ransdel v. Moore, (1899) 153 Ind. 393, 53 N.E. 767; Terry v. Davenport, (1915) 185 Ind. 561, 112 N.E. 998; Alexander v. Spaulding, (1902) 160 Ind. 176, 66 N.E. 694.

Indiana courts have limited the imposition of a constructive trust to instances where there is actual fraud or there exists a breach of a duty arising out of a confidential or fiduciary relationship which necessitates the presumption that fraud be inferred. The breach of duty necessary to create a constructive trust was described by the court in Brown v. Brown, supra, 235 Ind. at page 568, 135 N.E.2d at page 616:

"a breach of legal or equitable duty which, irrespective of the moral guilt of the fraud feasor, the law declares fraudulent because of its tendency to deceive others, to violate public or private confidence or to injure public interests. Neither actual dishonesty nor intent to deceive is an essential element of constructive fraud.' Daly v. Showers, 1937, 104 Ind.App. 480, 486, 8 N.E.2d 139.'

If the confidential relationship is found to exist, then fraud can be presumed or inferred due to a violation or breach of the...