Lynch v. Lynch
| Decision Date | 20 May 2008 |
| Docket Number | No. SC 88923.,SC 88923. |
| Parties | John LYNCH, et al., Appellants, v. George A. LYNCH, et al., Respondents. |
| Court | Missouri Supreme Court |
Harold G. Johnson, Mitchell D. Johnson, St. Ann, for Appellants.
John M. Challis, Robert J. Selsor, St. Louis, for Respondents.
This appeal arises from the dismissal of a declaratory judgment action seeking the imposition of a constructive trust on assets that were designated under a living trust. The judgment of the trial court is reversed, and the case is remanded.
Harry Schoepp ("Husband") executed his last will and testament, which bequeathed his estate to his wife, Olivia Schoepp ("Wife"), unless she predeceased him. If she predeceased him, the estate would be paid to a joint revocable living trust which was executed the same day as the will.1 The will also stated that no gift, bequest, or devise was made to Wife's descendents, because they were provided for under the terms of the trust.2
The trust stated that Husband and Wife could transfer or convey assets to the trust, which would be administered under its terms. Under the trust, after the death of both Husband and Wife, the remaining assets were to be distributed equally to Wife's living children and Husband's sister.3 Although the will stated that Wife's descendents would be provided for in the trust, the trust specifically stated that "no portion of the trust estate shall go to the descendents of John J. Lynch [II]."4
Wife died in 2003, and Husband passed away in 2005. His will was admitted to probate and was not challenged. Additionally, no contrary will or any evidence thereof was ever filed.5 Husband's assets, which included those he received upon Wife's death, were administered and distributed according to the terms of the will and the trust. Although $75,000 of the trust's assets were from Husband's probated estate, the majority of the trust assets were from transfers made by Husband and Wife prior to either of their deaths.
Plaintiffs filed a declaratory judgment action in March 2006 seeking to have the trust assets placed in a constructive trust to be divided among both the named beneficiaries and themselves.6 They contend that the provision of the trust prohibiting the distribution of any assets to them should be found void and unenforceable due to Wife's Alzheimer's disease and Husband's undue influence. Defendants, the beneficiaries under the trust, moved to dismiss the petition, contending that Plaintiffs did not have standing to assert their claim. The trial court granted Defendants' motion to dismiss. This Court granted transfer after opinion by the court of appeals. Mo. Const. art. V, sec. 10.
The standard of review for a trial court's grant of a motion to dismiss is de novo. Moynihan v. Gunn, 204 S.W.3d 230, 232-33 (Mo.App.2006). When this Court reviews the dismissal of a petition for failure to state a claim, the facts contained in the petition are treated as true and they are construed liberally in favor of the plaintiffs. Ste. Genevieve Sch. Dist. R-II, et al. v. Bd. of Aldermen of Ste. Genevieve, et al., 66 S.W.3d 6, 11 (Mo. banc 2002). If the petition sets forth any set of facts that, if proven, would entitle the plaintiffs to relief, then the petition states a claim. Id. Plaintiffs' petition states a cause of action if "its averments invoke principles of substantive law [that] may entitle the plaintiff to relief." Asaro v. Cardinal Glennon Mem'l Hosp., 799 S.W.2d 595, 597 (Mo. banc 1990).
Plaintiffs had a choice to either file a constructive trust cause of action in the circuit court or to file a discovery of assets suit in the probate division under section 473.340, RSMo 2000.7 See Jarman v. Eisenhauer, 744 S.W.2d 780, 782 (Mo. banc 1988) ( that the circuit court has jurisdiction to entertain plaintiff's action for declaratory judgment after the death of one of the co-owners of an asset and that such jurisdiction is concurrent with the jurisdiction of the probate division in discovery of asset proceedings). Plaintiffs elected to file their "Petition for Declaratory Judgment and the Establishment and Imposition of a Constructive Trust" in circuit court, seeking a declaration that the trust provision that prohibited the trust assets from being distributed to them was void and unenforceable.8
Plaintiffs contend that because certain portions of the trust were void and unenforceable, the trial court erred in sustaining Defendants' motion to dismiss their cause of action. Their petition alleged that Wife "placed her confidence in her husband in the belief that he would act and respect her wishes to provide for [Plaintiffs] in the manor (sic) he promised he would and having failed in said promise the [Defendants] are unjustly enriched." Plaintiffs further stated that Wife "was subservient to and trusted her husband." They argue that Husband took advantage of his confidential relationship with Wife by excluding them as beneficiaries of the trust. They assert that, if they are successful in proving the allegations in their petition, a constructive trust on the trust assets should be imposed in their favor against Defendants.
Defendants contend that, even if the trial court found for Plaintiffs and determined that the challenged provision of the trust was void and unenforceable, the assets would revert to Husband's estate as a resulting trust and then be distributed according to the terms of his will. Defendants contend that Plaintiffs do not have standing. They argue that Plaintiffs cannot establish a legally cognizable interest in the outcome of the litigation because they are not named devisees under Husband's will and because they did not challenge it. Further, they assert that the statute of limitations to bring a will contest under section 473.083 has expired.
Although the statute of limitations for Plaintiffs to challenge Husband's will has expired, they are not seeking to challenge the will. They are claiming an interest in the trust. Defendants failed to raise in their pleadings at the trial court that the statute of limitations to contest the trust had run. As it is an affirmative defense, it was waived. Section 509.090; Agnew v. Union Const. Co., 291 S.W.2d 106, 108-09 (Mo.1956); Rule 55.08.
Plaintiffs dispute Defendants' claims that a resulting trust is the appropriate remedy under the facts of this case. They argue that a constructive trust should be imposed because they allege violations of confidence and fraud. In order to determine the applicability of constructive and resulting trusts, a brief explanation is helpful.
A constructive trust is an equitable device employed by "courts of equity to remedy a situation where a party has been wrongfully deprived of some right, title or interest in property as a result of fraud or violation of confidence or faith reposed in another." Kohm v. Kohm (In re Estate of Davis), 954 S.W.2d 374, 379 (Mo.App.1997). The touchstone for imposition of a constructive trust is injustice or unfairness, which may be the product of undue influence or abuse of a confidential relationship. Brown v. Brown, 152 S.W.3d 911, 918 (Mo.App.2005). It is "imposed where a person who holds title to property is under a duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it." Matlock v. Matlock, 815 S.W.2d 110, 114 (Mo.App.1991). A constructive trust arises without regard to the parties' intention. Id.
Alternatively, a resulting trust is implied by law to "meet the requirement of justice that a legal status be given to what is the clear intention of the parties." Brown, 152 S.W.3d at 920 n. 2. It arises where "property is transferred under circumstances that raise an inference that the person who makes the transfer or causes it to be made did not intend the transferee to take the beneficial interest in the property." Matlock, 815 S.W.2d at 114. If the owner of property "gratuitously transfers it and properly manifests an intention that the transferee should hold the property in trust but the trust fails, the transferee holds the trust estate upon a resulting trust for the transferor or his estate. . . ." Theodore Short Trust v. Fuller, 7 S.W.3d 482, 493 n. 14 (Mo.App.1999).9 However, the settlor may be refused the benefit of a resulting trust if he participated in an attempt to perpetrate a wrongful act. RONALD CHESTER & GEORGE GLEASON BOGERT, THE LAW OF TRUSTS AND TRUSTEES section 468 (3d ed.2005).
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