Stauffer v. Stauffer

• Decision Date: 29 January 1976
• Citation: 465 Pa. 558,351 A.2d 236
• Parties: Donald G. STAUFFER, Appellee, v. Theresa E. STAUFFER, Appellant.
• Court: Pennsylvania Supreme Court

Page 236

351 A.2d 236

465 Pa. 558

Donald G. STAUFFER, Appellee, v. Theresa E. STAUFFER, Appellant.

Supreme Court of Pennsylvania.

Argued Oct. 23, 1975.

Decided Jan. 29, 1976.

[465 Pa. 564] Robert S. Gawthrop, III, West Chester, for appellant.

Fred T. Cadmus, III, West Chester, for appellee.

Before JONES, C.J., and EAGEN, O'BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.

OPINION

EAGEN, Justice.

On April 23, 1970, appellee Donald G. Stauffer joined with his wife, appellant Theresa E. Stauffer, in conveying to appellant alone for the stated consideration of one dollar the land and residence which both owned and had been occupying as tenants by the entireties. Subsequently, he brought this action in equity in the Court of Common Pleas of Chester County to compel a reconveyance. After a trial, the chancellor made his adjudication and entered a decree nisi in favor of Mr. Stauffer which granted the relief sought; on November 29, 1974, the court en banc dismissed the exceptions of Mrs. Stauffer and made the decree final. This direct appeal followed. ¹

The record discloses that the parties were married on October 17, 1953, and that they became the owners of the land in question by means of a gift from Mrs. Stauffer's parents on August 3, 1956; their house was subsequently built and paid for primarily, if not entirely, out of the earnings of Mr. Stauffer. Toward the end of March, 1970, Mrs. Stauffer became suspicious that her husband had become involved with another woman, and on March 26 she consulted an attorney for advice about her domestic situation. Shortly thereafter, she confronted her husband with her suspicions, and he admitted to her not only that he had been engaged in an adulterous relationship, but that the 'other woman' was Mrs. Stauffer's own sister, Victoria Gavin. Subsequently, Edward Gavin, the husband of Victoria, came to the Stauffer home, and in the presence of Mrs. Stauffer and Mr. Gavin, Mr. Stauffer wrote out a 'confession' in which he detailed his involvement with Mrs. Gavin.

The foregoing facts were essentially undisputed. Other events leading up to and following the aforementioned conveyance, however, and particularly the relationship and understanding of the parties during this period, could be determined for the most part only from the often-contradictory testimony at trial of Mr. and Mrs. Stauffer. After hearing the testimony, the chancellor made the following pertinent findings of fact:

'3. In late March or early April, 1970, Plaintiff made confession of his adulterous relationship with Defendant's sister, Victoria Gavin, which activities had ended in late March, 1970.

'4. The Defendant consulted with Lawrence Sager, Esquire, four or five times between March 26, 1970 and April 23, 1970.

'5. The Defendant had been highly emotional and distraught during the period of March 26-April 23, 1970.

'6. The Defendant related to the Plaintiff that Mr. Gavin would be down at the house 'with the law'.

'7. The Plaintiff did evidence a fear of a lawsuit by Mr. Gavin.

'8. On April 23, 1970, the Plaintiff agreed to transfer his interest in the jointly-held property after a prolonged hysterical outburst by the Defendant.

'9. On April 23, 1970, at a meeting at Mr. Sager's office, Plaintiff transferred his interest in the jointly-held property to the Defendant.

'11. The Plaintiff, at the April 23rd meeting was advised by Mr. Sager of his right to consult counsel of his choice and he elected to proceed without consulting an attorney.

'12. At all times during their marriage, the Plaintiff had made any important financial decisions, upon which the Defendant relied.

'13. At the meeting of April 23, 1970 Plaintiff expressed concern over the security of the 'homestead' for his wife and children.

'14. Until the date of transfer, the Plaintiff and Defendant had continued to live together and carry on marital relations.

'15. At the meeting of April 23, 1970 the prevailing mood was that the Plaintiff and Defendant would continue to live together.

'16. Shortly after the conveyance of the property on April 23, 1970, marital relations between the Plaintiff and Defendant totally ceased.

'17. After the conveyance of the property, the Defendant and the children evidenced a disregard for the Plaintiff.'

Drawing upon these findings, the chancellor concluded that appellant held what had been her husband's share in the property as constructive trustee for him because 'the transfer of Plaintiff's interest in real property jointly held was fraudulently induced by threats and misrepresentations of the Defendant,' and that 'Plaintiff is entitled to a reconveyance of his interest in the real property.' After the argument before the court en banc, he in another opinion further concluded that appellee was not barred from affirmative relief by the clean hands doctrine, either because of his adultery with Mrs. Gavin or his attempted fraudulent conveyance. Appellant herein contests each of these conclusions.

Initially, we note that on appeal we are bound by the chancellor's findings of fact, particularly if approved by the court en banc, to the same extent as we would be bound by the factual determinations of a jury. The test in either case is whether the findings are adequately supported by the record. The chancellor's findings are entitled to particular weight in a case in which the credibility of the witnesses must be carefully evaluated, because he has had the opportunity to hear them and to observe their demeanor on the stand. Charles v. Henry, 460 Pa. 673, 334 A.2d 289 (1975). In this case, since these findings are indeed adequately supported in the record, though largely dependent on the unsupported testimony of Mr. Stauffer and sometimes contradicted by that of Mrs. Stauffer, our task is to determine whether the factual inferences and legal conclusions derived from them are correct.

Although we have held that ordinarily, when a husband tranfers property to his wife, a presumption arises that a gift was intended--Lapayowker v. Lincoln College Preparatory School, 386 Pa. 167, 125 A.2d 451 (1956) ²--such a presumption is, of course, rebuttable, and here the chancellor found that there was sufficient credible evidence to establish a constructive trust rather than a gift. The imposition of a constructive trust, unlike the finding of an express or a resulting trust, does not require that the parties specifically intended to create a trust; it is an equitable remedy designed to prevent unjust enrichment. Buchanan v. Brentwood Fed. Sav. & Loan Ass'n, 457 Pa. 135, 320 A.2d 117 (1974); Pierro v. Pierro, 438 Pa. 119, 264 A.2d 692 (1970); Restatement of Restitution § 160 (1937); 5 A. Scott, Law of Trusts §§ 404.2, 462 (3d ed. 1967). There is thus no rigid standard for determining whether the facts of a particular case require a court of equity to impose a constructive trust; the test is whether or not unjust enrichment can thereby be avoided. This Court has repeatedly cited with approval the oft-quoted language of Justice (then Judge) Cardozo in Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378, 380--81 (1919):

'A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest equity converts him into a trustee . . .. A court of equity in decreeing a constructive trust is bound by no unyielding formula. The equity of the transaction must shape the measure of relief.'

See, e.g., Buchanan v. Brentwood Fed. Sav. & Loan Ass'n, supra at 152, 320 A.2d at 126; Shapiro v. Shapiro, 424 Pa. 120, 129, 224 A.2d 164 (1966); Chambers v. Chambers, 406 Pa. 50, 54--55, 176 A.2d 673, 675 (1962).

Appellant strenuously argues that in this case no confidential relationship existed between the parties at the time of the transaction, and that therefore there can be no constructive trust; she cites Foster v. Schmitt, 429 Pa. 102, 107, 239 A.2d 471 (1968) for the proposition that a confidential relationship requires that the transferee occupy toward the transferor 'such a position of advisor or counselor as reasonably to inspire confidence that he will act in good faith for the other's interest' and maintains that this was not the situation here. Appellant is mistaken, however, in assuming both that the chancellor found a confidential relationship in this case and that he needed to do so in order to impose a constructive trust.

The chancellor's determination was based not on the abuse of a confidential relationship, but on his conclusion that the transfer was 'fraudulently induced by threats and misrepresentations of the Defendant.' It is well-established that 'Where the owner of property transfers it, being induced by fraud, duress or undue influence of the transferee, the transferee holds the property upon a constructive trust for the transferor,' Restatement of Restitution § 166 (1937), and that where the transfer is so induced, a constructive trust will be imposed without proof of a confidential relationship. See Chambers v. Chambers, supra; Christy v. Sill, 95 Pa. 380 (1880). Whether or not a confidential relationship exists in a given case is usually a question of fact to be determined by no inflexible rule but by a weighing of the particular factors present in that case. The mere finding of such a relationship does not in itself cause a constructive trust to be imposed; its effect is simply to impose a burden upon the party benefiting from the transaction of proving that he took no unfair advantage of his relationship with the other. By the same token, absent a finding of confidential relationship, the complaining party may still prove unjust enrichment. See generally Note, Confidential Relationships in Pennsylvania Law, 97 Pa.L.Rev. 712 (1949).

But although the chancellor's conclusion in this case did not depend upon a finding of...