Martian v. Martian

• Decision Date: 20 January 1987
• Docket Number: Nos. 11187,11205,s. 11187
• Parties: Betty L. MARTIAN, Plaintiff and Appellee, v. Nick MARTIAN, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 849

399 N.W.2d 849

Betty L. MARTIAN, Plaintiff and Appellee, v. Nick MARTIAN, Defendant and Appellant.

Civ. Nos. 11187, 11205.

Supreme Court of North Dakota.

Jan. 20, 1987.

Lundberg, Nodland, Lucas & Schulz, Bismarck, for plaintiff and appellee; argued by Irvin B. Nodland.

Kenner Law Firm, Minot, for defendant and appellant; argued by Carl O. Flagstad.

MESCHKE, Justice.

Nick Martian appeals from a post-divorce judgment which imposed a constructive trust on the marital home to enforce payments to Betty Martian for property division as well as for spousal support, and which reduced, rather than eliminated, his spousal support obligation. We hold that the decree ordering sale of the still jointly-owned home to pay amounts due was appropriate equitable relief. We modify the continuation of the "constructive trust" for future support payments and otherwise affirm.

Martian v. Martian, 328 N.W.2d 844 (N.D.1983), affirmed a judgment granting Betty a divorce from Nick after 36 years of marriage. The judgment awarded Betty $500 per month spousal support and divided the marital property, setting aside their jointly-owned home to Nick but requiring him either to pay Betty $50,000 within 30 days or to surrender the home to be sold and the proceeds distributed. Because the time for Nick's election was stayed on appeal, the case was remanded for designation of a new deadline.

Upon remand, however, the parties stipulated and an amended judgment was entered that Nick pay Betty $11,712.93 immediately; $10,000 on April 10, 1984; $10,000 on April 10, 1985; $10,000 on April 10, 1986; and $8,287.07 on April 10, 1987. The provisions about sale of the home and distribution of its proceeds were dropped, but neither the stipulation nor the amended judgment dealt with transfer of Betty's interest in the jointly-owned home.

Nick paid the initial amount of $11,712.93 and the 1984 installment of $10,000, but defaulted on support payments for April, May and June of 1983. On Betty's motion, on June 9, 1983, the trial court found that Nick was able to make the payments, held him in contempt, and ordered him to pay $1,750 in arrearages and attorney fees.

Nick again defaulted on his support payments. In March, 1984, Betty sued for delinquent support from December of 1983 to March of 1984. While this action was pending, in April of 1984, Nick lent $8,390 to the "Mary Center of North America Shrine" without obtaining a promissory note or security. Likewise, on May 13, 1984, Nick made a handwritten document which purported to transfer to the Shrine virtually all his property, including his car, pickup truck, trailers, machinery, equipment, tools, household furnishings and antiques, but which reserved to Nick the right to retain and use any of the items. Three days later, Nick responded to Betty's motion for summary judgment for the delinquent support payments, arguing that a hearing should be held because of his recent retirement and his recent "transfer of property," stating: "I have decided to follow the lifestyle of St. Francis of Assisi: chastity, obedience, and poverty."

The Court granted Betty summary judgment for $2,098.80. When Nick failed to pay, Betty levied on Nick's bank account. After the levy, with costs, Nick still owed, and has yet to pay, $858.01 on that judgment. In spite of this, later in 1984 Nick turned over more money to the Shrine, again without security, increasing his total "loan" to the Shrine to $10,700. Nick has since testified that the "apostolate director" of the Shrine misappropriated the money and fled to Canada.

Nick again defaulted on support payments after June, 1984. He also failed to pay the $10,000 installment on property division due on April 10, 1985. In June, 1985, Betty sued Nick again for delinquent support and the missed $10,000 installment. She also sought a constructive trust on the jointly-owned home, asking that Nick be ordered to vacate the home so that it could be sold and the proceeds applied on amounts due her, and that remaining proceeds be held in trust as security for future payments.

Nick admitted the amounts due, but defended on the theory that the claim for a constructive trust failed to state grounds for relief and that a constructive trust was "not necessary since the Plaintiff is well secured for the indebtedness owed by virtue of the fact that she is a joint owner of the real property." Nick also moved to amend the divorce judgment to eliminate his spousal support obligation because of changed circumstances.

After trial of the consolidated cases, the trial court determined that Nick had acknowledged Betty's ownership interest in the home; that the home remained as security for property settlement payments under the amended judgment; that Betty was entitled to have a trust imposed upon the home; that the home be sold and that from the proceeds, Betty receive all amounts due her on the division of property (including the installments of $10,000 and $8,287.07, which were not due until April 10, 1986 and April 10, 1987, respectively); and that remaining proceeds be held pending decision on spousal support issues. Later, the court decreed that Betty also be paid all past due support out of remaining proceeds; that Betty have a continuing lien on remaining proceeds for future support payments; and that Nick's monthly support obligation be reduced to $300.

On this appeal, Nick argues that the trial court erred in imposing a constructive trust upon the jointly-owned home and in continuing Nick's obligation to pay support. His main argument is that this case does not fit one of the categories outlined for an implied trust in N.D.C.C., Sec. 59-01-06, ¹ and therefor the trial court was "without statutory authority to impose the implied trust" to enforce Betty's judgment. Nick points out that the equitable relief decreed is the same as the provision for enforcement of property division in the initial judgment which was deleted by agreement after remand of the first appeal. On the other hand, Betty argues that Nick's evasive conduct is "wrongfully detaining" her property which qualifies for an implied trust under N.D.C.C., Sec. 59-01-06. Betty urges that Nick's misapplication of his assets can only be remedied by imposing a trust on the still jointly-owned home.

N.D.C.C., Sec. 14-05-25 outlines the power of a trial court to enforce payments due upon divorce:

"The court may require either party to give reasonable security for providing maintenance or making any payments required under the provisions of this chapter, and may enforce the same by appointment of a receiver or by any other remedy applicable to the case." (emphasis added.)

The trial court was thus authorized to employ any "remedy applicable to the case" to enforce payments adjudged for both property division and support. Therefore, we consider whether sale of the still jointly-owned home to pay those amounts was a "remedy applicable to the case."

Nick's argument that the trial court was "without statutory authority to impose the implied trust" assumes that Sec. 59-01-06 is an exclusive list of situations which qualify for an equitable remedy. We do not agree that the equitable powers of our trial courts are so narrowly confined. See N.D.C.C., Sec. 32-04-02. A judicial decree for sale of property to apply the proceeds on an adjudicated obligation is well within the range of equitable powers of a trial court for a wide variety of reasons. For example, see N.D.C.C., Sec. 32-08.1-03. The circumstances of this case justify imposition of a post-judgment equitable remedy, however characterized. Several distinct, but established, doctrines of "equitable lien" support such an equitable remedy in this case.

One form of equitable lien is equivalent to a constructive trust. This formulation is summarized in the Comment to Sec. 161 on "Equitable Lien" in the Restatement of Restitution:

"A court of equity may give restitution to the plaintiff and prevent the unjust enrichment of the defendant not only by imposing a constructive trust and compelling the surrender to the plaintiff of property held by the defendant (see Sec. 160), but also by imposing an equitable lien upon the property in favor of the plaintiff. In some situations the plaintiff is entitled only to enforce an equitable lien; in others he can at his option enforce either an equitable lien or a constructive trust.

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"Where property is held by one person subject to an equitable lien, the person having the equitable lien can enforce it by a proceeding in equity. Where the equitable lien is on a fund, for example a bank deposit, it is enforced by a direction to pay the claimant out of the fund. Where the equitable lien is upon other property the court will ordinarily decree that unless the holder of the property pays the amount of the lien the property be sold and out of the proceeds the amount of the lien be paid. Where, however, the person holding the property is not at fault, and where the foreclosure of the lien by a sale of the property would cause a hardship to the holder of the property, the court will not necessarily order an immediate sale of the property." Restatement of Restitution, Sec. 161 comment a and b (1937).

The connection between an implied trust and an implied equitable lien is generally recognized. See 51 Am.Jur.2d Liens Sec. 24.

Implication of this form of "equitable lien" for amounts adjudicated to be due to a former spouse is not unusual. Thus, in Matter of Bailey, 20 B.R. 906 (Bankr.W.D.Wis.1982), an equitable lien was imposed in favor of a former wife on property set aside to the husband by an earlier divorce decree, where she had not yet quitclaimed her interest in the property when the husband filed bankruptcy still owing her a $23,100 property division payment which was a dischargeable debt. See also Sullivan v. Sullivan, 393 N.W.2d 521 (Minn.App.1986) where a constructive trust was imposed on a lake cottage set aside to...