Simpson v. Dailey

• Decision Date: 15 July 1985
• Docket Number: No. 83-111-A,83-111-A
• Citation: 496 A.2d 126
• Parties: Elizabeth G. SIMPSON et al. v. Kathleen E. DAILEY. ppeal.
• Court: Rhode Island Supreme Court

Page 126

496 A.2d 126

Elizabeth G. SIMPSON et al. v. Kathleen E. DAILEY.

No. 83-111-Appeal.

Supreme Court of Rhode Island.

July 15, 1985.

James H. Reilly, Kelly Kelleher & Reilly, Providence, for plaintiff.

Richard L. Patz, Providence, for defendant.

OPINION

SHEA, Justice.

This is an equity action in which the defendant, Kathleen Dailey (Kathleen), is before us on her appeal from a judgment entered after a Superior Court jury returned a verdict in favor of the plaintiffs, Elizabeth Simpson (Elizabeth) and her four sons. In her complaint Elizabeth sought the imposition of a constructive trust upon the proceeds received by Kathleen from an annuity contract purchased by Terrence Simpson (Terrence), deceased, husband of Elizabeth and brother of Kathleen. In her appeal Kathleen claims that the trial justice erred in instructing the jury, in denying her motion for a directed verdict, and in making certain evidentiary rulings. We disagree and we affirm the judgment entered below.

The record reveals that in January 1976, Kathleen and Terrence purchased identical annuity contracts for $21,000 each. The funds used to purchase the annuities were derived from pecuniary gifts of equal amounts from their mother, Grace Simpson, who had inherited the sum of $42,000 from relatives in Ireland. At the time the annuity contracts were purchased, Kathleen was experiencing marital difficulties. To be certain that her children would be protected in the event of her death, she named Terrence, her brother, as primary beneficiary rather than her husband. At trial Kathleen testified that Terrence had agreed to turn over "every single penny" to her children if she predeceased him. She had every confidence that he would have done so.

Elizabeth's testimony was in substantial accord with Kathleen's on this point. She said that Kathleen wanted Terrence to handle "all [the] money" because of her domestic difficulties and because "she knew he would take care of the kids * * * because they were too young." She stated that Kathleen and Terrence loved, trusted, and had confidence in each other. She testified, however, that her husband decided to designate Kathleen as primary beneficiary and herself as contingent beneficiary as part of a reciprocal agreement based on the understanding that if Terrence predeceased Kathleen, the latter would apply the proceeds of Terrence's contract for the benefit of Elizabeth and her children. She explained that

"he did it because she [Kathleen] put his name on hers and so he did the same thing, that she [Kathleen] would help, that the moneys would go if he should die, would come to me and my children, his children. And he said, 'Don't worry about it, it's going to be all right.' "

But in breach thereof, Elizabeth contends, Kathleen repudiated the oral understanding and claimed the proceeds as her own.

Kathleen's testimony differed from that of her sister-in-law. She insisted that the arrangement was that if Terrence were to die first, she was to keep the proceeds of the annuity. She said that Terrence had agreed to this arrangement. Her explanation was that she had taken care of their mother during her declining years and her illness and that her mother had wanted to give her the entire $42,000 inheritance. She said that she had discussed the situation with her brother and rather than cause trouble between them, they had decided to purchase the annuity contracts as the best solution.

At the close of plaintiffs' case, Kathleen's motion for a directed verdict was denied. The motion was not renewed at the close of all the evidence.

In submitting the case to the jury, the trial justice denied Kathleen's request for instructions that no fiduciary relationship arises when a defendant has no position of superiority or dominance over the other party and that clear and unambiguous language in a contract is controlling in regard to the intent of the parties. Instead, he instructed the jury on the law of constructive or resulting trusts. In accordance with the fiduciary-relationship rule, he also instructed that a finding that a fiduciary relationship existed between Terrence and Kathleen would require a verdict for plaintiffs regardless of any evidence relating to the care and maintenance of the mother by Kathleen.

Kathleen contends, in substance, that no fiduciary relationship existed between the parties; that to prove such a relationship requires a showing of dominance of one party over the other; and that the deceased, rather than she, was the dominant party to the creation of the annuities. She buttressed this argument with evidence at trial that she totally relied on her brother's judgment in matters relating to the purchase of stocks and annuities. While recognizing that this court has not specifically addressed the "dominant party" element in previous cases, Kathleen nonetheless argues that such a view is implicitly supported in this jurisdiction. We disagree.

Equity resorts to the remedial device of a constructive trust to accomplish justice. The underlying principle of a constructive trust is the equitable prevention of unjust enrichment of one party at the expense of another in situations in which legal title to property was obtained (1) by fraud, (2) in violation of a fiduciary or confidential relationship, or (3) by testamentary devise or intestate succession in exchange for a promise to hold in trust. Desnoyers v. Metropolitan Life Insurance Co., 108 R.I. 100, 272 A.2d 683 (1971); State Lumber Co. v. Cuddigan, 51 R.I. 69, 150 A. 760 (1930). The device of a constructive trust can be employed independently of the intent of the parties. In fact, a constructive trust is a relationship imposed by operation of law as a remedy to redress a wrong or prevent an unjust enrichment. It is not a trust in which the trustee is to have duties of administration lasting for a period of time but rather a passive, temporary trust in which the trustee's sole duty is to transfer the title and possession of the property to the beneficiary. See Matarese v. Calise, 111 R.I. 551, 305 A.2d 112 (1973)....