March v. Gerstenschlager

• Decision Date: 13 January 1969
• Docket Number: No. 1,No. 53488,53488,1
• Parties: Mary Allene MARCH, Respondent, v. Arnold Laclede GERSTENSCHLAGER, Individually, Arnold Laclede Gerstenschlager, as Trustee for Plaintiff, Mary Allene March, St. Francois County Building and Loan Association, a Corporation, and J. O. Swink, as Trustee under Deed of Trust for St. Francois County Building and Loan Association, a Corporation, Appellants
• Court: Missouri Supreme Court

Page 6

436 S.W.2d 6

Mary Allene MARCH, Respondent, v. Arnold Laclede GERSTENSCHLAGER, Individually, Arnold Laclede Gerstenschlager, as Trustee for Plaintiff, Mary Allene March, St. Francois County Building and Loan Association, a Corporation, and J. O. Swink, as Trustee under Deed of Trust for St. Francois County Building and Loan Association, a Corporation, Appellants.

No. 53488.

Supreme Court of Missouri, Division No. 1.

Jan. 13, 1969.

James H. Connor, Jr., St. Louis, and Harold L. Satz, Theodore D. Ponfil, Satz & Ponfil, St. Louis, for respondent Mary Allene March.

Robert A. McIlrath, Flat River, for appellants.

HIGGINS, Commissioner.

Action in equity to establish a trust in real estate.

Respondent contends that this appeal should be dismissed because it contains allegations of error which were not preserved for review by a motion for new trial; however, under Civil Rule 73.01(d), V.A.M.R., no motion for new trial is necessary for an appellate review of a court-tried case, Russell v. Russell, Mo., 427 S.W.2d 471, 475(1, 2), and this case is thus for review in the manner specified by Civil Rule 73.01(d), to resolve, from a consideration of all the admissible evidence, 'the question of the sufficiency of the evidence to support the judgment,' and the judgment 'shall not be set aside unless clearly erroneous.' Civil Rules 73.01(d) and 79.03.

Plaintiff alleges: that she was married to Arnold Laclede Gerstenschlager, July 3, 1938, and divorced from him June 14, 1950; that St. Francois County Building & Loan Association claims an interest in the real estate under a deed of trust executed to it by Arnold Laclede Gerstenschlager, and that J. O. Swink is named trustee in the deed of trust; that on May 18, 1946, during their marriage, plaintiff and Laclede acquired the real estate as tenants by the entireties; that, subsequent to the divorce, Laclede, on September 5, 1950, executed a quitclaim deed to plaintiff conveying all his interest in the real estate to her; that on May 23, 1952, plaintiff deeded the real estate to Arnold Laclede Gerstenschlager to hold in trust and confidence for her pending her divorce from her then husband, Paul Jones Rivers, and that Laclede accepted the deed and title as trustee and straw party for plaintiff until the Rivers divorce was completed; that he agreed and promised to reconvey the real estate to her upon demand, and that his promises were fraudulent, untrue, and made with intent that she rely on them to her damage and loss of her real estate; that he has refused to reconvey the real estate upon her numerous demands.

Under the statute of frauds, Section 456.010, V.A.M.S., 'All declarations or creations of trust or confidence of any lands * * * shall be manifested and proved by some writing signed by the party who is * * * enabled to declare such trusts * * * or else they shall be void * * *.' An exception is provided in Section 456.030, V.A.M.S., 'When any conveyance shall be made of any lands * * * by which a trust or confidence may arise or result by implication of law, such trust or confidence shall be of like force as the same would have been if the act had not been made.' Appellants say that if a trust is to be 'sifted' from the evidence adduced in support of the petition, it is a trust arising by implication of law, and they recognize that '(A)n exception to the Statute of Frauds is allowed in order to permit parole (sic) testimony to establish an implied trust.'

The rule respecting the sufficiency of evidence to establish an implied trust has been variously stated: '* * * it is well settled that to establish an implied trust, whether it be a resulting or a constructive trust, 'an extraordinary degree of proof is required.' * * * The rule is variously stated in the cases as, that to establish such trusts 'the evidence * * * must be so cogent, clear, unequivocal, and positive as to banish doubt from the mind of the chancellor,' * * * (t)he proof must be 'so clear, so unequivocal, so cogent, and impelling as to exclude every reasonable doubt from the chancellor's mind,' * * * and a preponderance of the evidence is not sufficient; the evidence must be so 'unquestionable in its character, so clear, cogent, and convincing that no reasonable doubt can be entertained of its truth. '' Norton v. Norton, Mo., 43 S.W.2d 1024, 1032(6). See also Ferguson v. Robinson, 258 Mo. 113, 167 S.W. 447, 453; Little v. Nettee, 338 Mo. 1223, 93 S.W.2d 1000; Suhre v. Busch, 343 Mo. 679, 123 S.W.2d 8; Scholle v. Laumann, Mo.App., 139 S.W.2d 1067; Decker v. Fittge, 365 Mo. 139, 276 S.W.2d 144, 147(1).

Plaintiff's petition sought establishment of a trust in the real estate in question on the theory that Arnold Laclede Gerstenschlager falsely misrepresented to her that if she conveyed the property to him he would hold it for her and reconvey upon her demand. The trial court found that Arnold Laclede Gerstenschlager had misrepresented his intention to reconvey and that he was, therefore, a trustee of the real estate for plaintiff and ordered him to reconvey the property to plaintiff.

Although some confusion has been evident in definition and constitutent elements of a constructive trust, Swon v. Huddleston, Mo., 282 S.W.2d 18, 25, 55 A.L.R.2d 205, '(t)hey are not technical trusts and in imposing or declaring a constructive trust a court of equity merely uses the machinery of a trust to prevent fraud or provide a remedy in cases of fraud, actual or constructive, by making the person who has wrongfully acquired property, or has acquired property under such circumstances as make it inequitable for him to retain it, a trustee for the person defrauded or injured by such fraudulent or wrongful conduct. * * * a constructive trust is the method of formula used by a court of equity as a means of effecting restitution or of rectifying a situation where, as the result of the violation of confidence or faith reposed in another, or fraudulent act or conduct of such other, the plaintiff, who seeks the aid of equity, has been wrongfully deprived of, or has lost, some title, right, equity, interest, expectancy, or benefit, in the property which, otherwise and but for such fraudulent or wrongful act or conduct, he would have had. * * * In most cases * * * the object and purpose of a court of equity in imposing a constructive trust is 'to restore to plaintiff property of which he has been unjustly deprived and to take from the defendant property the retention of which by him would result in a corresponding unjust enrichment of the defendant; in other words the effect is to prevent a loss to the plaintiff and a corresponding gain to the defendant, and to put each of them in a position in which he was before the defendant acquired the property.' Restatement of the Law of Restitution, p. 643.' Suhre v. Busch, supra, 123 S.W.2d l.c. 15--16(1--4). See also Basman v. Frank, Mo., 250 S.W.2d 989, 993(2); Musser v. General Realty Co., Mo., 313 S.W.2d 5, 9. Many cases say that such a trust must be based on a fraud, actual or constructive; others proceed upon the theory of unjust enrichment or of an unfair or wrongful holding, without any proof of fraudulent intent. Swon v. Huddleston, supra.

There is clear, cogent, and convincing evidence within the meaning of these authorities to prove plaintiff's petition and to show that prior to and at the time plaintiff deeded the property to Arnold Laclede Gerstenschlager he represented and promised that he would hold the property for her until after her pending divorce, that he had no intention of reconveying, that he refused to reconvey, and that plaintiff conveyed her property in reliance upon his false representation to her injury and damage.

It is undisputed: that plaintiff and Arnold Laclede Gerstenschlager were married July 3, 1938, and divorced June 14, 1950; that they acquired the real estate in question as tenants by entirety May 18, 1946; that he conveyed all his interest in the property to her September 5, 1950; that the conveyance in issue was executed and delivered to him May 23, 1952, when divorce proceedings were pending between plaintiff and Paul Rivers; that plaintiff subsequently divorced Paul Rivers; that Arnold Laclede Gerstenschlager did not reconvey the property; that the only interest of St. Francois County Building & Loan and J. O. Swink, trustee, is by virtue of a deed of trust, Account No. 2113--286, placed on the property by Laclede, which paid prior notes secured by deeds of trust executed by plaintiff and Laclede, and that interest has been recognized and protected by the decree.

The evidence on the disputed issues is also of the necessary substance. According to plaintiff, she and Arnold Laclede Gerstenschlager paid $1,300 for the property and improved it by construction of a restaurant and four rental cottages. The improvements were financed by $10,000 of plaintiff's own money, a loan of $10,000 from St. Francois Building & Loan, Account No. 1586, and a loan of $2,500 from B. H. Jennings, both secured by deeds of trust. No disposition of the property was made at the time of the Gerstenschlager divorce June...