Workman v. Workman

• Decision Date: 14 December 1962
• Docket Number: No. 35148,35148
• Citation: 174 Neb. 471,118 N.W.2d 764
• Court: Nebraska Supreme Court
• Parties: Dolores Lucille WORKMAN and Dolores Lucille Workman, Guardian of Joseph Workman, Robert Workman, and Francine Workman, Minors, and Joseph Workman, Robert Workman and Francine Workman, Minors by Dolores Lucille Workman, mother and next friend, Dellouise Workman Carroll, Appellants-Cross-Appellees, v. Clara D. WORKMAN, Executrix of the Estate of Lewis M. Workman, deceased; Clara D. Workman, Apartment Supply House, a co-partnership consisting of Clara D. Workman, surviving partner and formerly, Lewis M. Workman, now deceased, Frank M. Workman, Apartments, Inc., a corporation, Capitol Enterprises, Inc., a corporation and Joseph Workman, Appellants-Cross-Appellees, Impleaded with First Continental National Bank & Trust Company (successor to Continental National Bank) as co-trustee of the Workman Trust, Frederick J. Patz, as co- trustee of the Workman Trust, Capitol Investment Co., a corporation, Capitol Land & Investment Co., a corporation, Appellees-Cross-Appellant.

Page 764

118 N.W.2d 764

174 Neb. 471

Dolores Lucille WORKMAN and Dolores Lucille Workman, Guardian of Joseph Workman, Robert Workman, and Francine Workman, Minors, and Joseph Workman, Robert Workman and Francine Workman, Minors by Dolores Lucille Workman, mother and next friend, Dellouise Workman Carroll, Appellants-Cross-Appellees, v. Clara D. WORKMAN, Executrix of the Estate of Lewis M. Workman, deceased; Clara D. Workman, Apartment Supply House, a co-partnership consisting of Clara D. Workman, surviving partner and formerly, Lewis M. Workman, now deceased, Frank M. Workman, Apartments, Inc., a corporation, Capitol Enterprises, Inc., a corporation and Joseph Workman, Appellants-Cross-Appellees, Impleaded with First Continental National Bank & Trust Company (successor to Continental National Bank) as co-trustee of the Workman Trust, Frederick J. Patz, as co- trustee of the Workman Trust, Capitol Investment Co., a corporation, Capitol Land & Investment Co., a corporation, Appellees-Cross-Appellant.

No. 35148.

Supreme Court of Nebraska.

Dec. 14, 1962.

Syllabus by the Court

1. A motion for new trial which has been duly and timely filed may be heard at a subsequent term and the court may then pass upon the motion and enter its judgment on the motion for new trial.

2. A suit for the establishment or enforcement of a constructive trust may be maintained by the person prejudiced or deprived of a benefit by the fraud, actual or constructive, which gives rise to the trust, or by the successors in interest of such person.

3. All persons may join in a suit to establish and enforce a trust who have similar interests, arising out of the same trust, and who are seeking the same relief, although their interests are not joint.

4. A person who has an interest in the matter in litigation and in the success of either party to an action has a right to intervene in the litigation either before or after the issue has been joined and before the trial begins.

5. Before an error requires a reversal it must be determined that it was prejudicial to the rights of the party against whom it was made.

6. A civil conspiracy is a combination of two or more persons to accomplish by concerted action an unlawful or oppressive object or a lawful object by unlawful or oppressive means.

7. The principal element of conspiracy is an agreement or understanding between two or more persons to inflict a wrong against or injury upon another. It involves some mutual mental action coupled with an intent to commit the act which results in injury.

8. Fraud cannot be presumed or inferred without proof in a court of equity any more than in a court of law. However, courts of equity do not restrict themselves by the same rigid rules as courts of law in the investigation of fraud and in the evidence and proofs required to establish it. However, the proof must be sufficient to satisfy the conscience of the court that fraud is really existent, and to do this, it must be sufficient to overcome the natural presumption, which is always of considerable force, that men are honest and act from correct motives.

9. To prove fraud direct evidence is not always essential. Inferences or presumptions of fraud may be drawn from facts and circumstances. However, such inferences or presumptions must not be guess work or conjecture but must be rational and logical deductions from the facts and circumstances from which they are inferred.

10. What constitutes fraud is a matter of fact in each case. Deception finds expression in such a variety of ways that courts have studiously avoided reducing its elements to positive definitions. Courts content themselves with determining from the facts in each case whether fraud does or does not exist, for whatever satisfies the mind and conscience that fraud has or has not been practiced is sufficient.

11. In an action in which relief is sought on account of alleged fraud, the existence of a confidential or fiduciary relationship, or status of unequal footing, when shown, does not shift the position of the burden of proving all elements of the fraud alleged, but nevertheless may be sufficient to allow fraud to be found to have existed when in the absence of such a status it could not be so found, and thus to have the effect of placing the burden of going forward with the evidence upon the party charged with fraud.

12. An officer or director of a corporation occupies a fiduciary relation to the corporation and to stockholders. He is treated by courts of equity as a trustee, and as such is ordinarily personally liable to beneficiaries of a fund for any misapplication of the fund to other beneficiaries not entitled thereto.

13. Value of property is always a matter of judgment, and a contract based upon inadequate consideration will not be set aside for that reason alone, unless, as the rule is generally stated, the inadequacy is so great as to furnish of itself convincing evidence of fraud.

14. Where money or property belonging to another was not paid or turned over to the person entitled to receive it at the time when it should have been paid or turned over, interest is generally allowed.

15. A court of equity will not permit mere corporate forms to serve as a cloak and a shield to the perpetration of a fraud, but will examine the whole transaction, looking through corporate forms to the substance of things, to protect the rights of innocent parties, or to circumvent fraud.

Crosby, Pansing, Guenzel & Binning, Perry & Perry, Lincoln, for appellant Dolores Lucille Workman.

Herman Ginsburg, Lincoln, for appellant Clara D. Workman, Ex'x.

Max Kier, Lincoln, for appellants Frank M. Workman and others.

Ralph H. Gillan, Lincoln, for appellee Frederick J. Patz.

Mason, Knudsen, Dickeson & Berkheimer, Woods, Aitken & Aitken, Lincoln, for appellee First Continental National Bank & Trust Co.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, BOSLAUGH and BROWER, JJ.

BROWER, Justice.

This is an appeal from the judgment of the district court for Lancaster County, Nebraska, in an equitable action based on alleged fraud after trial to the court on the merits.

It is the second appearance of the case before this court. Our previous opinion is reported as Workman v. Workman, 167 Neb. 857, 95 N.W.2d 186. We there reviewed the previous decision in which the trial court had entered a judgment of dismissal on a motion for summary judgment made by some of the defendants, and for judgment on the pleadings by the others. That decision reversed the judgment of dismissal and further directed the trial court to permit the minor defendants to appear and plead by their mother and next friend.

The action when formerly before us was pending on the third and supplemental petition filed by Dolores Lucille Workman, individually and as guardian of Joseph Workman, Robert Workman, and Francine Workman, minors, as plaintiffs. After the cause was remanded another petition was filed by these same minors by Dolores Lucille Workman as their mother and next friend. It adopted and ratified the allegations of the third amended and supplemental petition and made further allegations by way of elaboration and clarification, but the two petitions substantially stated the same cause of action. Dellouise Workman Carroll, a married sister of the minors, had previously to our former opinion filed an answer which likewise adopted the allegations of the third amended and supplemental petition as her own. The action proceeded to trial on these two petitions, one of Dolores Lucille Workman, individually and as guardian, the allegations of which were adopted by Dellouise Workman Carroll, and the petition of the minors by their next friend.

Each of these petitions alleges that plaintiff Dolores Lucille Workman and defendant Frank M. Workman were formerly wife and husband. While the marriage relation existed Frank M. Workman fraudulently represented to the plaintiff Dolores Lucille Workman that it was desirable to convey real estate, then owned by them jointly and operated as partners, to corporations as a planned disposition of their estates and to save income and federal estate taxes, stating the income would still be available to the grantors in their lifetime and their children would be benefited by any surplus of income not used by them. Relying on these representations plaintiff joined with her husband in conveying all their real estate, consisting largely of apartment houses in Lincoln, Nebraska, to four corporations organized at that time. Two of these corporations were the defendants Capitol Investment Company and Capitol Land and Investment Company, each of which received such conveyances. The stock of both these corporations was transferred to the 'Workman Trust' of which their children, the said minors, Joseph, Robert, and Francine Workman, and their sister Dellouise Workman Carroll, were beneficiaries, except 1 share in each, which was retained by Frank M. Workman. It alleged Frank M. Workman and his parents, Lewis M. Workman, since decreased, and Clara D. Workman, had entered into a conspiracy and fraudulent scheme and device both to defraud the plaintiff Dolores Lucille Workman of her interest in the marital estate and also to render the gifts to said children and the Workman Trust wholly or partially ineffective. To accomplish this Frank M. Workman, as president of each of these corporations whose stock had been so assigned to the Workman Trust, made separate leases to his parents, either individually or as partners, or to corporations ostensibly owned by them, but really owned and controlled by Frank M. Workman; and that said leases were both for long terms of 10 years and for improvident rents to enable rentals of great value to be diverted and siphoned off before reaching the corporations or the trust in which the children were beneficiaries. As a result Frank M. Workman retained the use and ownership of the property whether title was...