Martin v. Kehl

• Decision Date: 21 July 1983
• Parties: Edward L. MARTIN, Plaintiff and Respondent, v. Patricia A. KEHL, Defendant and Appellant. Civ. 66749.
• Court: California Court of Appeals Court of Appeals

Page 312

193 Cal.Rptr. 312

145 Cal.App.3d 228

Edward L. MARTIN, Plaintiff and Respondent, v. Patricia A. KEHL, Defendant and Appellant.

Civ. 66749.

Court of Appeal, Second District, Division 7, California.

July 21, 1983.

Novak, Cooper & Wohlgemuth, Mark S. Gottlieb, Los Angeles, for defendant and appellant.

Michael H. Ehrlich, Los Angeles, for plaintiff and respondent.

THOMPSON, Justice.

Defendant Patricia Kehl appeals from the judgment declaring her a constructive trustee for plaintiff Edward Martin of one-half the real property located at 5917 Alonzo Avenue, Encino.

Prior to March 21, 1973, plaintiff, defendant, and Donald Gillingham (then defendant's boyfriend and her husband as of 1977) made an oral agreement that plaintiff and Gillingham would purchase the property, each becoming a 50 per cent owner thereof, but that record title would be put in the name of defendant who needed a place to live. As provided for by the agreement, plaintiff and Gillingham each contributed $900 to cover the required down payment and the balance of the purchase price was secured by a purchase money first trust deed loan. The agreement further provided that so long as defendant occupied the property, in lieu of rent, she would pay the monthly trust deed payments and would take care of minor maintenance; but if and when she vacated the property, it would be sold and plaintiff would receive one-half of the net proceeds.

Following close of escrow and recording of title in her name, defendant occupied the property. In October 1973, shortly after close of escrow, plaintiff tendered to defendant a grant deed which she never executed. She lived continuously in the house until May 1978, when she vacated the premises and rented it for the rest of the year to tenants who, as their rent, paid the bank payments as well as the water and power bills. In June 1978 plaintiff wrote defendant demanding that the property be sold or he be paid his equity share. Defendant failed to comply. Then, in October 1978, plaintiff filed a complaint asking for dissolution and accounting of the alleged partnership formed by the oral agreement, a constructive trust on one-half the property, and for "[s]uch other and further relief as the Court may deem just and proper."

In her answer defendant denied there was any agreement for plaintiff to own one-half the property and alleged as affirmative defenses the action was barred by the statute of limitations, laches, and the statute of frauds.

At trial it was undisputed that plaintiff provided one-half of the cash down payment and the remainder of the financing was obtained through a purchase money trust deed loan. Plaintiff testified to the previously recited terms of the oral agreement whereby he would have a one-half ownership but title would be placed in defendant's name in order to obtain the maximum loan. This testimony was corroborated by the seller of the property. Plaintiff further testified that they had never verbally agreed that defendant would have to sign a deed. He said he considered she rejected the terms of the agreement when she moved out of the house, not when she failed to sign the deed in 1973. Defendant Following the trial court's announcement of intended decision in favor of plaintiff, plaintiff prepared proposed findings. Defendant objected to them and filed a request for a special finding that she and defendant "never entered into a partnership or fiduciary relationship between themselves." The court then prepared and signed the findings of fact and conclusions of law. There was no mention of a partnership or fiduciary relationship in any of the findings.

admitted that plaintiff paid one-half of the down payment to the escrow company but claimed he lent her the $900 with the understanding that she would pay him back the money whenever she sold the house with whatever "bonus" she decided to give him.

In the findings of fact and conclusions of law the court found an oral agreement and recited the previously mentioned material terms. The court further found that "defendant was not required to deed plaintiff's one-half interest in said property to him so long as defendant occupied the property;" and "the oral agreement did not require defendant to sign the grant deed ... which plaintiff tendered to defendant in October, 1973, as defendant was still occupying the property at that time." The court concluded that the statute of limitations did not bar the cause of action because it did not accrue until defendant vacated the property in May 1978. The court imposed a constructive trust in favor of plaintiff of a one-half undivided interest in the real property and specified the amount that should be paid as reimbursement to each of the parties prior to plaintiff receiving his 50 per cent of the proceeds of the sale. This appeal followed entry of judgment.

CONTENTIONS

Defendant contends that (1) the court erred in imposing a constructive trust because, without a finding of a fiduciary relationship, the oral agreement was unenforceable under the statute of frauds; (2) the cause of action is barred by the statute of limitations and laches; (3) the judgment must be reversed for failure to join an indispensable party; and (4) in any event, plaintiff should not have been awarded a one-half interest. Plaintiff controverts all the contentions.

SUMMARY

The trial court could impose a constructive trust herein to prevent unjust enrichment without a finding of a fiduciary relationship. And, in any event, this is a classic case for imposition of a resulting trust. The cause of action is not barred by the statute of limitations or laches. Defendant has waived any objection of failure to join an indispensable party. Moreover, the court properly awarded plaintiff a one-half interest in the property. Accordingly, the judgment will be affirmed.

A CONSTRUCTIVE TRUST IS PROPER WITHOUT A FINDING OF A FIDUCIARY RELATIONSHIP IN ORDER TO PREVENT UNJUST ENRICHMENT

Defendant contends that the imposition of a constructive trust was improper in view of the lack of an express finding of the existence of a partnership, despite her request for a special finding on that issue. While we agree with defendant that under the mandate of former Code of Civil Procedure section 634, we cannot infer in plaintiff's favor a finding of a partnership or other fiduciary relationship (Jordan v. Consolidated Mut. Ins. Co. (1976) 59 Cal.App.3d 26, 46, 130 Cal.Rptr. 446; City of National City v. California Water & Tel. Co. (1962) 204 Cal.App.2d 540, 545, 22 Cal.Rptr. 560), the judgment can still be upheld on the basis of the findings that were made, which are supported by the evidence.

The trial court possessed broad equitable powers to fashion a remedy which would prevent defendant from being unjustly enriched at plaintiff's expense. "A constructive trust is a remedial device primarily created to prevent unjust enrichment; equity compels the restoration to another of property to which the holder thereof is not justly entitled." (Kraus v. Willow Park Defendant, however, argues that in the absence of a finding of a fiduciary relationship or fraud, her failure to perform the oral agreement to convey real property here cannot give rise to a constructive trust and the agreement is unenforceable under the statute of frauds. Defendant's reliance on Mazzera v. Wolf (1947) 30 Cal.2d 531, 537, 183 P.2d 649, is misplaced. It is true that where one party merely orally promises to buy land for another and thereafter buys it for himself with his own money there is no basis for a constructive trust. (Ibid.; Elliott v. Wood (1949) 95 Cal.App.2d 314, 317, 212 P.2d 906; Bradley v. Duty (1946) 73 Cal.App.2d 522, 526, 166 P.2d 914.) But, here, there was far more than a mere unenforceable promise that was broken. While the title was taken in defendant's name, the property was bought with plaintiff's money.

Public Golf Course (1977) 73 Cal.App.3d 354, 373, 140 Cal.Rptr. 744; see 5 Scott on Trusts (3d ed. 1967) § 462, p. 3413.)

"The essence of the constructive trust theory is to prevent unjust enrichment and to prevent a person from taking advantage of his own wrongdoing." (Nevarez v. Nevarez (1962) 202 Cal.App.2d 596, 602, 21 Cal.Rptr. 70.) In such a trust based upon wrongdoing, an oral promise is sufficient and the existence or absence of a confidential relationship between the parties, in the strict sense, is not controlling. (Fowler v. Fowler (1964) 227 Cal.App.2d 741, 746, 39 Cal.Rptr. 101; Rankin v. Satir (1946) 75 Cal.App.2d 691, 695, 171 P.2d 78.)

The principal constructive trust situations are set forth in Civil Code section 2223 and 2224. Section 2223 provides that "[o]ne who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner." (Emphasis added.) Section 2224 provides that "[o]ne who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it." (Emphasis added.) The only conditions necessary to create a constructive trust are those stated in the above sections. (Kraus v. Willow Park Public Golf Course, supra, 73 Cal.App.3d 354, 373, 140 Cal.Rptr. 744; Estrada v. Garcia (1955) 132 Cal.App.2d 545, 552, 282 P.2d 547; Rankin v. Satir, supra, 75 Cal.App.2d at p. 695, 171 P.2d 78.) In order to provide the necessary flexibility to apply an equitable doctrine to individual cases, these sections state general principles for a court's guidance rather than restrictive rules. (Elliott v. Elliott (1964) 231 Cal.App.2d 205, 211, 41 Cal.Rptr. 686.) Thus, it has been pointed out that "a constructive trust may be imposed in practically any case where there is a wrongful acquisition or detention of property to which another is entitled." (Weiss v. Marcus (1975) 51 Cal.App.3d 590, 600, 124 Cal.Rptr. 297;...