McGrath v. Hilding

• Decision Date: 07 April 1977
• Citation: 41 N.Y.2d 625,363 N.E.2d 328,394 N.Y.S.2d 603
• Parties: , 363 N.E.2d 328 Doreen McGRATH, Respondent, v. Roy F. HILDING, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 603

394 N.Y.S.2d 603

41 N.Y.2d 625, 363 N.E.2d 328

Doreen McGRATH, Respondent, v. Roy F. HILDING, Appellant.

Court of Appeals of New York.

April 7, 1977.

Charles M. Schutzman, Wantagh, for appellant.

Herbert Sachs, Bellmore, for respondent.

BREITEL, Chief Judge.

Plaintiff Doreen McGrath, a wife of three months of defendant Hilding, having divorced him, and then evidently having remarried her former husband McGrath, sought equitable relief against Hilding based on a constructive trust. Relying on an oral premarital promise by Hilding to give her a tenancy by the entirety in the home owned by him, she contributed money to construct an extension with two additional bedrooms to accommodate her children by the former marriage. In lieu of the half interest in the property, if that were not available, she sought equitable relief either for half the value of the home or, at least, for the money she advanced.

Supreme Court, after trial, held that Hilding had been unjustly enriched, and granted plaintiff judgment for $3,950, the money the court found that she had advanced. From a divided affirmance at the Appellate Division, Hilding appeals.

The issue is whether a court of equity, called upon to remedy enrichment allegedly gained unjustly from abuse of a confidential relationship, may grant relief without regard to or examination of the conduct of plaintiff affecting the transaction from which the alleged unjust enrichment arose.

There should be a reversal and a new trial. The powers of a court of equity are not so circumscribed that the inequitable conduct of one who invokes its relief may escape its scrutiny and evaluation. From the unduly restricted and sparse record made at trial it is unclear whether Hilding was indeed unjustly enriched. Plaintiff's proof, accepted by the trial court and affirmed by the Appellate Division, does show that Hilding failed to convey, as he had orally promised, half his interest in his home in exchange for his new wife's contribution. But those facts do not conclude the matter. Repeatedly rejecting, as collateral, proof that plaintiff may have grievously breached the marital relationship, the trial court abrogated its responsibility to view the transaction realistically in its human setting, and, as a result, awarded equitable relief on too naked a record.

A widower with four children, Hilding met plaintiff in February, 1971. At the time, she was living apart from her then husband, McGrath, pursuant to a separation agreement. By summer, although plaintiff was not yet divorced from McGrath, she and Hilding became engaged. The new couple set a wedding date and discussed living arrangements. Hilding testified that, while he would have "preferred to wait until 1972", to accommodate plaintiff's desire to have the two families together by Christmas he suggested they move into his house. Plaintiff, however, was hesitant to occupy the bedroom her new husband had shared with his former wife and was also concerned about adequate sleeping arrangements for the two of her three children who were in her custody. It was finally decided that the couple would build an extension to Hilding's house.

In September, 1971, plaintiff and McGrath were divorced. In late October or early November, she received $8,900 of the proceeds from the sale of the McGrath home, jointly owned by the McGrath couple.

The addition to the Hilding home cost $7,900, half paid by plaintiff. It is an affirmed finding of fact, not reviewable by this court, that plaintiff's contribution was in reliance on Hilding's promise "to put her name" on the deed to his home. The contractor completed his work before November 27, the day the Hilding-McGrath couple were married.

After a one-week honeymoon, plaintiff and two of her children, as planned, came to live with defendant. The marriage was ill-fated. There is testimony that by early January the couple had already discussed divorce. Prompted by an argument at home some time around January 8, plaintiff met her ex-husband McGrath at a restaurant and went, with her children, to stay overnight in his apartment. She returned to Hilding the next morning. In short order Hilding found himself alone again when his wife went to Florida for a week. On February 6 plaintiff left Hilding for the last time, and the two obtained a quick divorce later that month in the Dominican Republic. Plaintiff, never having received a legal interest in Hilding's home, brought this action.

Obviously, the whole story leading to Hilding's failure to convey a half interest in his home to plaintiff has never been told and is therefore not reflected in the record. A number of times Hilding tried, without success, to introduce evidence of plaintiff's conduct. For example, Hilding was precluded from showing that plaintiff arranged to purchase a house with her former husband, McGrath. In fact, in the contract of sale, dated February 3, 1972, while married to and still living with Hilding, plaintiff was described as the wife of McGrath. So, too, when defendant's lawyer tried to discover what the Hilding-McGrath couple had discussed before plaintiff went alone to Florida, or whether plaintiff went back to live with McGrath after she left Hilding and before the Dominican divorce, the trial court stopped the inquiry as bearing only on a collateral matter. It is unfortunate but evident that the trial court was of the view that beyond the paltry facts surrounding the agreed-upon extension, the marital relationship of the parties was not relevant to whether plaintiff was entitled to equitable relief.

The applicable law is clear. The Statute of Frauds will ordinarily prevent enforcement of an oral agreement to convey an interest in land (General Obligations Law, § 5-703). A constructive trust will be impressed, however, when an unfulfilled promise to convey an interest in land induces another, in the context of a confidential or fiduciary relationship, to make a transfer resulting in unjust enrichment (Foreman v Foreman, 251 N.Y. 237, 240, 167 N.E. 428 (Cardozo, Ch. J.)). As restated plainly by this court just recently, there must be "(1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment" (Sharp v. Kosmalski, 40 N.Y.2d 119, 121, 386 N.Y.S.2d 72, 75, 351 N.E.2d 721, 723; accord Vassel v. Vassel, 40 A.D.2d 713, 336 N.Y.S.2d 887, affd., 33 N.Y.2d 533, 347 N.Y.S.2d 434, 301 N.E.2d 422; Sinclair v. Purdy, 235 N.Y. 245, 252-253, 139 N.E. 255, 258).

The principles are not disputed by the parties. In fact, the trial court purportedly applied them. The problem lies instead in the apparent misunderstanding of the term "unjust enrichment".

A variety of circumstances may be posited in which, through an unfulfilled promise and abuse of a confidential relationship, one party induces another to make a transfer resulting in the first party's enrichment. But the law is adamant. Enrichment alone will not suffice to invoke the remedial powers of a court of equity. Critical is that under the circumstances and as between the two parties to the transaction the enrichment be unjust. (Restatement, Restitution, § 1, Comments a, c ; see, generally, 5 Scott, Trusts (3d ed.), § 462.2.) Hence, whether there is unjust enrichment may not be determined from a limited inquiry confined to an isolated transaction. It must be a realistic determination based on a broad view of the human setting involved (cf. Sinclair v. Purdy, 235 N.Y. 245, 254, 139 N.E. 255, 258, supra; Janke v. Janke, 47 A.D.2d 445, 448, 366 N.Y.S.2d 910, 914, affd., 39 N.Y.2d 786, 385 N.Y.S.2d 286, 350 N.E.2d 617).

On the above analysis, the infirmity in a contrary approach is the narrow view taken of the events culminating in Hilding's failure to convey an undivided half interest in his home. With self-imposed restrictions, the trial court repeatedly excluded from consideration evidence bearing upon plaintiff's conduct in a relationship based supposedly on mutual trust and fidelity. And yet, without regard to plaintiff's conduct it cannot be determined whether Hilding's enrichment, if that it be, was in fact unjust.

There is an analogue in other branches of the law, especially in the field of contracts. A promisee may not recover for a broken promise unless he has performed his obligations, usually categorized as a condition precedent (see 5 Williston, Contracts (3d ed.), § 676). Certainly, the promisee seeking to establish a constructive trust must show that he has not been guilty of an equivalent breach of the trust and fidelity upon which the constructive trust is to be based (see 20 N.Y.Jur., Equity, §§ 106-107).

Giving Hilding the benefit, as one must, of the inferences to be drawn from the excluded evidence, plaintiff herself may have breached the relationship, supposedly based on mutual trust and fidelity, upon which she relies. Illustrative is the offer of proof that plaintiff, while married to and, more important, still living with defendant, signed a contract to purchase a house with her former husband and was described in that contract as the wife of McGrath.

Involved here is more than a technical question of evidence. In excluding proof of plaintiff's possibly grievous fault in the reciprocal relation between husband and wife, the trial court lapsed. In the hectic abbreviated period of this so-called marriage, punctuated perhaps with grievous breaches of the relationship by the wife, none would, let alone a court of equity, expect the hapless husband to deed half his home to the wife.

In the discussion, thus far, it has been assumed that Hilding was indeed enriched. Actually, the home ...