MacRae v. MacRae

• Decision Date: 15 December 1930
• Docket Number: Civil 2934
• Citation: 37 Ariz. 307,294 P. 280
• Parties: KATHERINE V. MacRAE, Appellant, v. THOMAS MacRAE, Appellee
• Court: Arizona Supreme Court

294 P. 280

37 Ariz. 307

KATHERINE V. MacRAE, Appellant, v. THOMAS MacRAE, Appellee

Civil No. 2934

Supreme Court of Arizona

December 15, 1930

APPEAL from a judgment of the Superior Court of the County of Pinal. Albert M. Sames, Judge. Judgment reversed and cause remanded with instructions to dismiss.

Messrs Moore, Elliott & Shimmell, for Appellant.

Messrs Kibbey, Bennett, Gust, Smith & Rosenfeld and Messrs. Swenson & Swenson, for Appellee.

OPINION

LOCKWOOD, C. J.

This is an appeal from a judgment of the superior court of Pinal county holding that Thomas MacRae, hereinafter called defendant, is the owner as his sole and separate property of certain lands described in the pleadings, as against John H Betts, Jr., and Edna Betts, his wife, and Katherine V. MacRae, which latter we shall hereinafter call plaintiff, and that they have no title or interest in the premises, and directing that Betts and his wife, the holders of the legal title to the property at the beginning of the action, execute a deed conveying it to defendant. The Betts filed a disclaimer in the action, alleging that they held merely the legal title in trust, and were willing to convey the land to either plaintiff or defendant, in accordance with the judgment of the court. The real issue which was determined by the trial court, and which is before us on review, is whether the conveyance should be made to defendant or to plaintiff.

We desire to preface our consideration of the case by complimenting counsel for both plaintiff and defendant upon the very able, clear and complete manner in which they have briefed it. The issues were presented as directed by the rules of the court, and each legal proposition raised was lucidly discussed and the authorities exhaustively cited and analyzed. While there is considerable conflict on certain phases of the testimony, yet the facts necessary for our determination of the case are so conclusively established, either by the undisputed evidence, the admissions of the parties, or the findings of the trial court, that we state them as follows:

In 1917, defendant, then being a single man, filed on the land in question as a desert entry under the land laws of the United States, and thereafter caused the work required by law to be performed and payments for the land to be made in such manner that, when final certificate was issued to him in May, 1921, it was unquestionably his sole and separate property. Shortly thereafter defendant and plaintiff together executed a deed to said land in favor of plaintiff, the deed reciting that it was to be hers as separate, and not as community, property, which deed was duly recorded. Thereafter, in September, 1922, plaintiff and defendant jointly deeded the property to Betts, which deed was also recorded.

The reason for the first conveyance, as given by defendant, was that in 1921 he had engaged in a certain business deal in Texas with W. W. Vaughn, plaintiff's brother, and that thereafter he had been informed by Vaughn that the latter was heavily involved financially. Later he (MacRae) was told by his lawyer in Fort Worth, Texas, that there was danger under the laws of Texas that he had, by virtue of his actions, become a constructive partner of Vaughn's and might be liable for the latter's debts. He and his wife discussed the matter, and she suggested that the property be protected against any liability for such debts by being placed in the hands of someone as trustee. He thought over the matter for some months, and finally decided to turn the property over to his secretary, a Mrs. Stewart, as trustee. When defendant informed plaintiff of his intention to that effect, she advised him that, if he was going to deed it to another, it might as well be her, since she would be with him in case it was necessary to transfer it quickly to anyone else. He therefore accepted the suggestion and executed deeds conveying the land to plaintiff, for the express purpose of avoiding any possible liability on account of his transactions with Vaughn in Texas. It also appears from defendant's testimony that a suit was actually commenced against him and Vaughn in Texas, arising out of the transactions above referred to, and that he filed an answer denying any liability therein.

The transfer from plaintiff to Betts was made on account of a certain lawsuit brought against defendant in the superior court of Pinal county. He had entered into negotiations with a Dr. Crump for the improvement of the property, and, fearing that the Arizona suit mentioned above might affect the deal, caused plaintiff to transfer the land to Betts to avoid its being tied up by attachment or otherwise. Judgment was later rendered against him in the suit for a much smaller sum than the amount claimed, which judgment he promptly settled.

We may also take the evidence as sufficient to support the finding of the trial court to the effect that plaintiff, at the time defendant conveyed the property to her, promised to reconvey it to him on demand, and that as a matter of fact there was no actual liability on his part on account of the Texas transactions with Vaughn, and his apprehensions thereon were unfounded. If any other facts appear to be material for the purposes of the opinion, they will be stated later in the proper connection.

The first question of law which arises is whether or not an express oral trust, such as defendant alleges to have existed between himself and plaintiff through her promise to reconvey the land to him on demand, can be proved by parol, since it is admitted there is no written evidence of such agreement and it is denied by plaintiff. Both plaintiff and defendant have favored us with an exhaustive review of the authorities upon this point. This court considered the question in the cases of Scribner v. Meade, 10 Ariz. 143, 85 P. 477, Wright v. Young, 20 Ariz. 46, 176 P. 583, and Cashion v. Bank of Arizona, 30 Ariz. 172, 245 P. 360.

In the case last cited we held specifically that, while an express oral trust might be created, it could not be proved except by writing stating the terms and conditions of the trust. We have reconsidered the matter and read the cases cited by counsel for plaintiff and defendant bearing thereon, and, regardless of what may be the situation in other states, we are satisfied with the rule adopted by us in the case last cited, and reiterate its holding. Defendant MacRae, therefore, could not recover on the theory of an express trust.

It is claimed by defendant, however, that, even though this be true, he may nevertheless recover on the theory of a constructive trust, on his allegations in his amended answer "that although said deeds were absolute in form as aforesaid and although said deeds recite a consideration yet in truth and in fact there was no consideration therefor and no money was paid or intended to be paid as a consideration for said deeds and said deeds were made by the grantors therein named and accepted by the grantee therein named in trust and for the purpose and with the intent that said Katherine V. MacRae should merely hold the naked title to said real property and upon her agreement to reconvey the legal title to said property to this defendant or to his order upon demand by this defendant; that this defendant had at all times confidence in his said wife and her devotion and fidelity to him and that he made the deeds having confidence in his said wife and her representations and promises and relying on the same."

A constructive trust is one which does not arise by agreement or from the intention of the parties, but by operation of law, and fraud, actual or constructive, is an essential element thereto. Actual fraud is not always necessary, but such a trust will arise whenever the circumstances under which the property was acquired make it inequitable that it should be retained by the one who holds the legal title. These trusts are also known as trusts ex maleficio or trusts ex delicto. Their forms and varieties are practically without limit, as they are raised by courts of equity whenever it becomes necessary under the particular circumstances of the case to prevent a failure of justice, but the element of fraud, either actual or implied, must always be present.

It is urged by defendant that the facts in the case at bar show a constructive trust for two reasons: First, because of the breach of the oral agreement to reconvey found by the court, and, second, because the transaction was between persons in a fiduciary or confidential relation. The mere violation of a parol promise made by the grantee to the grantor to hold the land in trust and to reconvey it on demand does not create a constructive trust in the grantee, in the absence of fraud in procuring the conveyance. Kemp v. Kemp, 248 Mass. 354, 142 N.E. 779; Moseley v. Moseley, 86 Ala. 289, 5 So. 732; Davis v. Stambaugh, 163 Ill. 557, 45 N.E. 170; Parrish v. Parrish, 33 Or. 486, 54 P. 352.

There is nothing in the evidence to justify a holding that plaintiff did anything as preliminary to or in connection with the conveyance in question fraudulent in its nature, and, were she a stranger to defendant, no constructive trust could be sustained. But it is urged that when confidential relations exist between two parties, the rule is different, and, even though no active fraud by the grantee in the procuring of a conveyance be shown, the mere existence of the confidential relation, when coupled with a promise to reconvey, creates a constructive trust.

The cases on this point are not in entire harmony. We are of the opinion, however, that the better rule is that contended for by defendant. The relationship of husband and wife is confidential in the highest degree. It is presumed by the law that they...