Wood v. White

• Decision Date: 20 September 1923
• Citation: 122 A. 177
• Parties: WOOD v. WHITE.
• Court: Maine Supreme Court

122 A. 177

WOOD

v. WHITE.

Supreme Judicial Court of Maine.

Sept. 20, 1923.

Appeal from Supreme Judicial Court, Piscataquis County, in Equity.

Suit by R. Irving Wood against Arthur O. White. From a decree for plaintiff, defendant appeals. Affirmed.

Argued before CORNISH, C. J., and HANSON, PHILBROOK, MORRILL, WILSON, and DEASY, JJ.

Leon G. C. Brown, of Milo, and J. S. Williams, of Guilford, for appellant.

Hudson & Hudson, of Guilford, for appellee.

DEASY, J. In March, 1921, the defendant received a conveyance of real estate in Milo. The deed is absolute in form, but the plaintiff by his bill alleges that it is, in intent and effect, a trust deed, and that the defendant holds the title for the benefit of the plaintiff and himself jointly and equally.

The single justice who heard the case found in favor of the plaintiff, decreeing "that said respondent, Arthur O. White does hold title to one undivided half of the real estate, as described in said bill, in trust for the plaintiff, the said R. Irving Wood. Prom this decree the defendant appeals.

Unlike a motion or exceptions, an equity appeal authorizes the law court to determine facts and law and to direct a decree in accordance with such determination. But findings of fact by a single justice, unless manifestly erroneous, are sustained by the law court.

There rested upon the plaintiff the burden of proving the trust and of proving it by full, clear, and convincing evidence. The single justice found this burden sustained. He found the facts to be as claimed by the plaintiff. The finding was not manifestly wrong.

Revised Statutes, c. 78, § 17, provides that:

"There can be no trust concerning lands, except trusts arising or resulting by implication of law, unless created or declared by some writing signed by the party or his attorney."

This statute recognizes the two general classes of trusts, express and implied. Express trusts must be proved by a writing duly signed. In the instant case that element is lacking. If the trust now under consideration is to be sustained as an express trust, or not at all, it fails for want of written proof, however clearly it may be orally established. The exceptions in the statute (trusts requiring no writing) are implied trusts. These are of two fundamentally different kinds, to wit, resulting and constructive. The former carry into effect the presumed intent of the parties. The latter defeat the intent of one of the parties.

The decree in this case cannot be sustained on the ground that a resulting trust is shown. Such a trust is created when property is conveyed to one person and the whole consideration (Wentworth v. Shibles, 89 Me. 167, 36 Atl. 108), or some definite fractional part thereof (Lawry v. Spaulding, 73 Me. 32), is paid by another.

The plaintiff in this case paid $400 of a total consideration of $6,000. The defendant says that the $400 was not paid as a part of the consideration, but was a loan subsequently repaid. Accepting the plaintiff's testimony, however, and giving it its full face value, a resulting trust is shown only to the extent of one-fifteenth of the property.

Constructive trusts, the second species of implied trusts, are based upon fraud, abuse of a confidential relation, oppression, or mistake.

A constructive trust cannot be predicated alone upon a broken promise to hold land in trust, though such promise be fully proved and based upon an adequate consideration. Such a promise creates an express trust, which to be valid must be in writing. Anderson v. Gile, 107 Me. 332, 78 Atl. 370; Silvers v. Howard, 106 Kan. 762, 190 Pac. 1, Chandler v. Riley (Tex. Civ. App.) 210 S. W. 720; Down v. Down, 80 N. J. Eq. 68, 82 Atl. 325.

"The fraud upon which the court acts' in such cases must be something more than that which in a moral sense arises from a mere breach of an oral agreement." Wood v. Rabe, 96 N. Y. 426, 48 Am. Rep. 640. See 39 Cyc. 178, and cases cited.

But fraud or abuse of a confidential relation gives rise to a constructive trust, none the less because accomplished by or accompanied by a parol promise which is as such unenforceable. Bank v. Tracy, 115 Me. 439, 99 Atl. 257; McNinch v. Trust Co., 183 N. C. 33, 110 S. E. 667; Wood v. Rabe, supra; Silvers v. Howard, supra; Hillyer v. Hynes, 33 Cal. 506, 165 Pac. 718; Pavllle v. Robinson, 111 Tex. 48, 227 S. W. 938; Miller v. Miller, 266 Ill. 522, 107 N. E. 824; 39 Cyc. 178, and cases ited.

Stripped of nonessentials, the facts as testified to by the plaintiff and his witnesses, and which the justice who saw and heard them found to be true, are as follows:

The plaintiff has a store in the Parrar Block at Milo. The owner (Parrar) had an opportunity to sell the building. The plaintiff, presumably to avoid possible eviction, determined to try to buy the store occupied by himself. He procured from Farrar an oral option of purchase, covering the whole building, at the price of $11,000. He secured a purchaser (Carpenter) for a part of the building, apparently the less valuable part, for $5,000. He was unable alone to finance the purchase of the remainder. There upon he applied to the defendant, his wife's father. The latter agreed to take up the option, to provide the bulk of the necessary funds, to take title in his own name, to hold the title for the benefit of the plaintiff and himself in equal shares, to execute a declaration of trust to this end, and when the plaintiff had paid one-half the costs to convey to him one-half the property.

The seller had no dealings directly with White. In response to a telephone message he went to the office of an attorney who told him that "Mr. White was going in with Wood." Thereupon the deed running to White was drafted by the attorney and executed by Farrar. Of the consideration $5,000 was paid by Carpenter, $4,000 was secured by the defendant on mortgage of the store, $1,600 paid by the defendant, and $400 by the plaintiff. Subsequently the defendant refused to execute a declaration of trust, repudiated his trusteeship, and claimed that the $400 was not paid by Wood as a part of the consideration, but was a loan, which was afterward repaid.

Notwithstanding that the defendant denied making the alleged agreement, the justice who heard the case found the facts as claimed by the plaintiff, and summarized above, to be true. His finding was not clearly erroneous.

Whether the facts establish an enforceable trust is a question of law which the law court considers de novo. There is no presumption in favor of the correctness of such legal conclusions. O'Leary v. Menard, 118 Me. 27, 105 Atl. 399.

No enforceable express trust is proved. No resulting trust is established, or at all events none as to more than one-fifteenth of the...