Sharp v. Kosmalski

• Decision Date: 15 June 1976
• Citation: 40 N.Y.2d 119,386 N.Y.S.2d 72,351 N.E.2d 721
• Parties: , 351 N.E.2d 721 J. Rodney SHARP, Appellant, v. Jean C. KOSMALSKI, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 72

386 N.Y.S.2d 72

40 N.Y.2d 119, 351 N.E.2d 721

J. Rodney SHARP, Appellant, v. Jean C. KOSMALSKI, Respondent.

Court of Appeals of New York.

June 15, 1976.

John L. Goodell, Jamestown, for appellant.

Howard F. Crossley, Jamestown, for respondent.

GABRIELLI, Judge.

Plaintiff commenced this action to impose a constructive trust upon property transferred to defendant on the ground that the retention of the property and the subsequent ejection of the plaintiff therefrom was in violation of a relationship of trust and confidence and constituted unjust enrichment. The Trial Judge dismissed plaintiff's complaint and his decision was affirmed without opinion by the Appellate Division.

Upon the death of his wife of 32 years, plaintiff, a 56-year-old dairy farmer whose education did not go beyond the eighth grade, developed a very close relationship with defendant, a school teacher and a woman 16 years his junior. Defendant assisted plaintiff in disposing of his wife's belongings, performed certain domestic tasks for him such as ironing his shirts and was a frequent companion of the plaintiff. Plaintiff came to depend upon defendant's companionship and, eventually, declared his love for her, proposing marriage to her. Notwithstanding her refusal of his proposal of marriage, defendant continued her association with plaintiff and permitted him to shower her with many gifts, fanning his hope that he could induce defendant to alter her decision concerning his marriage proposal. Defendant was given access to plaintiff's bank account, from which it is not denied that she withdrew substantial amounts of money. Eventually, plaintiff made a will naming defendant as his sole beneficiary and executed a deed naming her a joint owner of his farm. The record reveals that numerous alterations in the way of modernization were made to plaintiff's farmhouse in alleged furtherance of 'domestic plans' made by plaintiff and defendant.

In September, 1971, while the renovations were still in progress, plaintiff transferred his remaining joint interest to defendant. At the time of the conveyance, a farm liability policy was issued to plaintiff naming defendant and her daughter as additional insureds. Furthermore, the insurance agent was requested by plaintiff, in the presence of defendant, to change the policy to read 'J. Rodney Sharp, life tenant. Jean C. Kosmalski, owner.' In February, 1973, the liaison between the parties was abruptly severed as defendant ordered plaintiff to move out of his home and vacate the farm. Defendant took possession of the home, the farm and all the equipment thereon, leaving plaintiff with assets of $300.

Generally, a constructive trust may be imposed '(w)hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest' (Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378, 380; 1 Scott, Trusts (3d ed.), § 44.2, p. 337; 4 Pomeroy's Equity Jurisprudence (5th ed.), § 1053, p. 119). In the development of the doctrine of constructive trust as a remedy available to courts of equity, the following four requirements were posited: (1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment (see Janke v. Janke, 47 A.D.2d 445, 366 N.Y.S.2d 910, affd. 39 N.Y.2d 786, 385 N.Y.S.2d 286, 350 N.E.2d 617; 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; Foreman v. Foreman, 251 N.Y. 237, 167 N.E. 428; Sinclair v. Purdy, 235 N.Y. 245, 139 N.E. 255; Ahrens v. Jones, 169 N.Y. 555, 62 N.E. 666; Matter of O'Hara, 95 N.Y. 403).

Most frequently, it is the existence of a confidential relationship which triggers the equitable considerations leading to the imposition of a constructive trust (see Bogert, Trusts and Trustees (2d ed.), § 482, p. 132; 61 N.Y.Jur., Trusts, § 146, pp. 303--304). Although no marital or other family relationship is present in this case, such is not essential for the existence of a confidential relation (see Muller v. Sobol, 277 App.Div. 884, 97 N.Y.S.2d 905 (meretricious relationship); Bogert, Op. cit., § 482, pp. 136--147; 1 Scott, Op. cit., p. 339). The record in this case clearly indicates that a relationship of trust and confidence did exist between the parties and, hence, the defendant must be charged with an obligation not to abuse the trust and confidence placed in her by the plaintiff. The disparity in education between the plaintiff and defendant highlights the degree of dependence of the plaintiff upon the trust and honor of the defendant (see Bogert, Op. cit., § 482, p. 144, n. 20).

Unquestionably, there is a transfer of property here, but the Trial Judge found that the transfer was made 'without a promise or understanding of any kind.' Even without an express promise, however, courts of equity have imposed a constructive trust upon property transferred in reliance upon a confidential relationship. In such a situation, a promise may be implied or inferred from the very transaction itself. As Judge Cardozo so eloquently observed: 'Though a promise in words was lacking, the whole transaction, it might be found, was 'instinct with an obligation' imperfectly expressed (Wood v. Duff-Gordon, 222 N.Y. 88, 91, 118 N.E. 214)' (Sinclair v. Purdy, 235 N.Y. 245, 254, 139 N.E. 255, 258, Supra; see, also, Janke v. Janke, 47 A.D.2d 445, 448--449, 366 N.Y.S.2d 910, 914--915, affd. 39 N.Y.2d 786, 385 N.Y.S.2d 286, 350 N.E.2d 617, Supra; Farano v. Stephanelli, 7 A.D.2d 420, 183 N.Y.S.2d 707). In deciding that a formal writing or express promise was not essential to the application of the doctrine of constructive trust, Judge Cardozo further observed in language that is most fitting in the instant case:

'Here was a man transferring to his sister the only property he had in the world * * * He was doing this, as she admits, in reliance upon her...