McDonald v. Miller
| Decision Date | 01 November 1944 |
| Docket Number | 6943. |
| Citation | 16 N.W.2d 270,73 N.D. 474 |
| Parties | McDONALD v. MILLER et al. |
| Court | North Dakota Supreme Court |
Syllabus by the Court.
1. A constructive trust will be imposed by the courts in order to do equity and prevent unjust enrichment when title to property is acquired by fraud, duress, undue influence, or is acquired or retained in violation of a fiduciary duty.
2. An express trust in real property cannot be created by parol.
3. The existence of a constructive or resulting trust in real property may be established by parol evidence that is clear convincing and satisfactory.
4. Where it is sought to impose a constructive trust upon a conveyance of real estate the existence of a confidential relationship between the grantor and grantee is of major importance to be considered in connection with other facts and circumstances in the case.
5. Where a grantor parts with all control over a deed by delivering it to a third person to be delivered to the grantee on the death of the grantor such delivery to the third person divests the grantor of title.
6. In an action to establish a constructive trust in connection with the conveyance of real estate, declarations of the grantor made prior to or contemporaneously with the execution and delivery of the conveyance are admissible in support of the trust; but declarations in support of the trust made subsequent to the conveyance and not in the presence of the grantee are not admissible.
7. Where a deed has been delivered to a third perason to be delivered to the grantee on the death of the grantor, and thus has become operative to divest the grantor of title subsequent declarations of the grantor tending to impeach the deed are inadmissible.
8. Subdivision 2 of Sec. 7871, Comp.Laws N.D.1913 may not be extended by interpretation but its application is confined to the letter thereof.
9. In an action between the son and daughter of a deceased grantor to impress a conveyance of real estate with a trust in property which never became a part of the grantor's estate, and neither party appears in the action in the capacity of executor, administrator, personal representative or heir of the decedent, the parties are not prohibited by Subdivision 2 of Sec. 7871, Comp.Laws N.D.1913, from testifying to transactions between themselves and the deceased.
Nilles, Oehlert & Nilles, of Fargo, for appellant.
Roy K. Redetzke, of Fargo, for respondent W. J. McDonald.
James W. Pollock, of Fargo, for respondent Merchants National Bank & Trust Co.
This case comes to us for trial de novo upon an appeal from a judgment decreeing that the defendant, Mae McDonald Miller, also known as Mae Olson, holds title to the northwest quarter of section 10, township 142, range 50, in trust for the use and benefit of the plaintiff and directing conveyance thereof to the plaintiff subject to certain specified liens and charges.
The record discloses that prior to 1910 Alexander McDonald and his wife, both of whom are now deceased, resided upon the above described land, the title to which was in Alexander McDonald. His wife owned the quarter section of land adjacent to the south which was the southwest quarter of the same section. The plaintiff and the defendant Mae McDonald Miller were their only children. In 1910 the plaintiff married and brought his bride to the farm home where they have continuously resided up to the present time. The plaintiff was given an outfit of farming equipment. In 1911 the father, Alexander McDonald, his wife and his daughter, Mae, left the farm and moved to the village of Gardner. Later they moved to Fargo, where they acquired a house in which the elder McDonalds lived until their respective deaths. In recent years the daughter, Mae, lived with them and cared for them in their last illnesses. The house in Fargo was deeded to Mae. In 1934 Mrs. Alexander McDonald also deeded to Mae the quarter section of land which she owned. After the death of his wife, Alexander McDonald on October 2, 1935, executed a warranty deed conveying the northwest quarter to Mae McDonald Miller as grantee which he left with one Frank Scott, president of the Merchants National Bank & Trust Company of Fargo, with instructions to deliver the deed to the grantee after his death. Alexander McDonald died on May 19, 1939, and shortly thereafter Mr. Scott delivered the deed to the grantee. It was recorded January 11, 1940.
The plaintiff seeks to impress the northwest quarter with a constructive trust of which he is the beneficiary. He contends that the deed to his sister which was left with Mr. Scott was executed with the understanding she was to deed the land in question to him as soon as he was free from debt, and the reason his father did not deed the land directly to him was because the father feared the creditors would seize the land if it was deeded to the son. Mae McDonald Miller denies the arrangement claimed by her brother and asserts the land is her own.
Constructive trusts are recognized by the statutes of this state and the decisions of this Court. The following sections of our 1913 Comp.Laws bear upon the situation under consideration:
A constructive trust will be imposed by the Courts in order to do equity and prevent unjust enrichment when title to property is acquired by fraud, duress, undue influence or is acquired or retained in violation of a fiduciary duty. Hanson v. Svarverud, 18 N.D. 550, 120 N.W. 550; Hughes v. Fargo Loan Agency, 46 N.D. 26, 178 N.W. 993.
'Where the defendant by fraud or other wrongful conduct prevents the plaintiff from receiving a gift or legacy, and obtains the property himself, he may be charged as constructive trustee for the plaintiff rather than for the person from whom he obtained the property.' Scott on Trusts, § 462.2.
In this state an express trust in real property cannot be created by parol. Sec. 5364, Comp.Laws N.D.1913; Cardiff v. Marquis, 17 N.D. 110, 114 N.W. 1088. On the other hand, a trust in land created by operation of law may be established by parol evidence. Fox v. Fox, 56 N.D. 899, 219 N.W. 784; Jaeger v. Sechser, 65 S.D. 38, 270 N.W. 531. However, to establish a trust in real property by parol testimony the evidence must be clear, convincing and satisfactory. Carter v. Carter, 14 N.D. 66, 103 N.W. 425; Fox v. Fox, supra.
In Cardiff v. Marquis, supra, a deed absolute on its face given by a daughter to her father was held to be given in trust though proof wupporting the trust was shown by parol testimony indicating constructive fraud based upon the relationship of confidence existing between the parties. It was also held that it was immaterial whether the fraud was intentional or not, or whether it existed when the conveyance was delivered. The Court quoted from Wood v. Rabe, 96 N.Y. 414, 48 Am.Rep. 640, as follows: [17 N.D. 110, 114 N.W. 1091.]
Where it is sought to impose a constructive trust the existence of a confidential relationship is of major importance. Hanson v. Svarverud, supra; Arntson v. First National Bank, 39 N.D. 408, 167 N.W. 760, L.R.A.1918F, 1038; Hughes v. Fargo Loan Agency, supra; Jaeger v. Sechser, supra.
In the case before us the confidential relationship is amply established. In addition to the fact that the grantor was the father of the grantee it is shown that at the time of the execution of the deed to his daughter he was aged and infirm. He was living with his daughter who not only cared for him but also accompanied him on such trips as he made in connection with his business. She assisted him in these transactions and at times transacted business for him. While there is no invariable rule by which to determine the existence of a confidential relationship we are satisfied that under the facts and circumstances presented by this record such a relationship did exist.
In Arntson v. First National Bank, supra, syllabus paragraph 6, this court said: 'Where confidential relations prevail between the parties to an oral trust, and trust is violated, law presumes that influence of confidence upon mind of person who confided was undue, and a case of a constructive trust arises, not, however, on ground of actual fraud, but because of facility for practicing it, and in such a case courts of equity will enforce promise to convey, even though it may be not in writing, as mere refusal to carry it out is constructively fraudulent.'
The ultimate question as to who should prevail in this law suit rests upon the sufficiency of evidence to meet the extraordinary degree of...
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