In re Estate of Koch
Annotate this Case
No. 4--97--0990
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 1998
IN RE THE ESTATE OF SARA E. ) Appeal from the Circuit Court
KOCH, Deceased ) for the 10th Judicial Circuit
) Peoria County, Illinois
(VERNE M. KOCH, )
)
Petitioner-Appellant, )
) No. 96--P--52
v. )
)
CYNTHIA K. HADSELL and JON )
KOCH, Co-Executors, ) Honorable
) Richard E. Grawey
Respondents-Appellees). ) Judge, Presiding
_________________________________________________________________
JUSTICE BRESLIN delivered the opinion of the court:
_________________________________________________________________
When Sara Koch (Sally) died, she held title to some property
in Florida. Her husband, Verne, filed a claim with the estate,
asserting that the property was subject to a resulting trust in
his favor. Sally's children, Cynthia and Jon, acting as co-
executors of Sally's estate, refused to accept Verne's claim.
The trial court determined that no resulting trust existed. We
find that Verne overcame the presumption that the purchase of the
property constituted a gift to Sally and proved by clear and
convincing evidence that a resulting trust arose in his favor.
Therefore, we reverse and remand.
Verne and Sally were married in 1964. At that time,
Cynthia, Sally's daughter through her previous marriage, was 12
years old. Verne adopted Cynthia, but he did not think she ever
accepted him as her father. Later, apparently, Jon was born to
Verne and Sally.
Verne became a shareholder in Frank Heinz Construction
Company, Inc., a general contractor, in 1974. Another of the
shareholders was Raymond Keesecker. Raymond's wife, Barbara, and
Sally had been good friends before Verne and Raymond became
business associates. The couples remained quite close over the
years.
In 1975, Raymond and Verne discussed purchasing some real
estate in Florida upon which they could build a vacation home for
their families. Verne flew to Florida, examined the site, and
made a deposit on the purchase of a lot (Lot 142) for $17,500.
The purchase agreement drafted thereafter contained the names of
Verne and Sally Koch and Raymond and Barbara Keesecker.
During the process of purchasing the property, authorities
in Florida passed a moratorium on building which covered Lot 142.
Raymond became frustrated because of the expected delay in
building a vacation home on Lot 142. He decided that he did not
want to invest in the Florida property. Consequently, when the
purchase agreement needed to be signed, Verne used a typewriter
to "x" Raymond's name off the agreement. Then, thinking it would
look strange for him to own property with his wife and another
man's wife, Verne also "x'd" his name off the agreement. As a
result, the deed to the property was issued in the names of Sally
Koch and Barbara Keesecker only. Barbara later quit-claimed her
interest in the property to Sally.
The purchase price on Lot 142 was paid by check from Frank
Heinz Construction Company. Thereafter, Verne repaid the company
through payroll deduction. The Keeseckers did not supply any of
the consideration for the purchase of the land. Verne was in
charge of all dealings related to Lot 142. He spoke with the
contractors, lawyers and real estate people. He paid the taxes
on the land.
During this period of time, Verne and Sally executed wills
giving all of their property to each other, should the other
survive. Sally later executed another will dividing her estate
evenly among Verne, Cynthia and Jon, but Verne did not know of
this will until after Sally died. When Verne learned of Sally's
second will, he offered to give Cynthia and Jon trucks and cash
in exchange for Lot 142. Cynthia refused and demanded that she
be paid for her "share" in the land.
Before the trial court, Verne argued that he had always
intended that Lot 142 be his and Sally's. He believed that all
of Sally's property would be his when Sally died, so he did not
think he needed to worry about the fact that Sally held title to
the land in her name only. Cynthia and Jon argued that, accord-
ing to black letter law on resulting trusts, no trust could have
arisen because: (1) Verne did not purchase the land with money
that was solely his; and (2) Verne intended Sally to have a
beneficial interest in the land at the time it was purchased.
The trial court agreed with Cynthia and Jon and held that no
resulting trust had been established.
The sole issue on appeal is whether Verne presented clear
and convincing evidence that a resulting trust in his favor
should be imposed on Lot 142.
A resulting trust is an "intent enforcing" trust; it arises
by operation of law and the presumed intent of the parties. In
re Estate of Wilson, 81 Ill. 2d 349, 410 N.E.2d 23 (1980).
Generally, a resulting trust arises when one person pays the
consideration for property which is taken in the name of another.
Gary-Wheaton Bank v. Meyer, 130 Ill. App. 3d 87, 473 N.E.2d 548
(1984). The resulting trust is based upon the "natural equity"
that the one who pays for the property should enjoy it. Prassa
v. Corcoran, 24 Ill. 2d 288, 181 N.E.2d 138 (1962). A resulting
trust arises at the time of the conveyance, and the payor's
intention at that time determines whether a resulting trust may
be found. In re Estate of McCormick, 262 Ill. App. 3d 163, 634 N.E.2d 341 (1994). The party seeking to establish the existence
of a resulting trust bears the burden of proving it by clear and
convincing evidence. Zack Co. v. Sims, 108 Ill. App. 3d 16, 438 N.E.2d 663 (1982).
As a general rule, if a husband purchases property and the
title to the property is placed in the name of his wife, the law
presumes that the husband intended to make a gift to his wife and
no resulting trust arises. Wright v. Wright, 242 Ill. 71, 89 N.E. 789 (1909). The presumption of a gift from the husband to
the wife may be overcome by evidence showing, inter alia: (1)
the property constituted all or substantially all of the
husband's estate; (2) the husband made improvements to the
property; (3) the husband paid the taxes and/or the mortgage debt
on the property; (4) the husband occupied the property as his
home or place of business; and (5) the husband exercised control
over or managed the property. Scanlon v. Scanlon, 6 Ill. 2d 224,
127 N.E.2d 435 (1955).
In the instant case, Verne presented evidence showing that
he alone transacted all of the business which involved Lot 142.
He arranged for the purchase of the lot. He paid the purchase
price. He paid the taxes. He dealt with the authorities in
Florida with regard to building permits. Although he did not
live on the property and the property did not constitute all or
substantially all of his property, he managed the property and
exerted exclusive control over the property. In short, Sally was
the owner of Lot 142 in name only. Consequently, we hold that
Verne proved by clear and convincing evidence that at the time
Lot 142 was purchased he did not intend to make a gift to Sally
but rather intended a resulting trust in his favor. The circuit
court's decision to the contrary cannot stand.
The judgment of the circuit court of Peoria County is
reversed and the matter remanded with instructions to place title
to Lot 142 in Verne's name.
Reversed and remanded.
HOLDRIDGE and LYTTON, JJ., concur.
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 1998
IN RE THE ESTATE OF SARA E. ) Appeal from the Circuit Court
KOCH, Deceased ) for the 10th Judicial Circuit
) Peoria County, Illinois
(VERNE M. KOCH, )
)
Petitioner-Appellant, )
) No. 96--P--52
v. )
)
CYNTHIA K. HADSELL and JON )
KOCH, Co-Executors, ) Honorable
) Richard E. Grawey
Respondents-Appellees). ) Judge, Presiding
_________________________________________________________________
JUSTICE BRESLIN delivered the opinion of the court:
_________________________________________________________________
When Sara Koch (Sally) died, she held title to some property
in Florida. Her husband, Verne, filed a claim with the estate,
asserting that the property was subject to a resulting trust in
his favor. Sally's children, Cynthia and Jon, acting as co-
executors of Sally's estate, refused to accept Verne's claim.
The trial court determined that no resulting trust existed. We
find that Verne overcame the presumption that the purchase of the
property constituted a gift to Sally and proved by clear and
convincing evidence that a resulting trust arose in his favor.
Therefore, we reverse and remand.
Verne and Sally were married in 1964. At that time,
Cynthia, Sally's daughter through her previous marriage, was 12
years old. Verne adopted Cynthia, but he did not think she ever
accepted him as her father. Later, apparently, Jon was born to
Verne and Sally.
Verne became a shareholder in Frank Heinz Construction
Company, Inc., a general contractor, in 1974. Another of the
shareholders was Raymond Keesecker. Raymond's wife, Barbara, and
Sally had been good friends before Verne and Raymond became
business associates. The couples remained quite close over the
years.
In 1975, Raymond and Verne discussed purchasing some real
estate in Florida upon which they could build a vacation home for
their families. Verne flew to Florida, examined the site, and
made a deposit on the purchase of a lot (Lot 142) for $17,500.
The purchase agreement drafted thereafter contained the names of
Verne and Sally Koch and Raymond and Barbara Keesecker.
During the process of purchasing the property, authorities
in Florida passed a moratorium on building which covered Lot 142.
Raymond became frustrated because of the expected delay in
building a vacation home on Lot 142. He decided that he did not
want to invest in the Florida property. Consequently, when the
purchase agreement needed to be signed, Verne used a typewriter
to "x" Raymond's name off the agreement. Then, thinking it would
look strange for him to own property with his wife and another
man's wife, Verne also "x'd" his name off the agreement. As a
result, the deed to the property was issued in the names of Sally
Koch and Barbara Keesecker only. Barbara later quit-claimed her
interest in the property to Sally.
The purchase price on Lot 142 was paid by check from Frank
Heinz Construction Company. Thereafter, Verne repaid the company
through payroll deduction. The Keeseckers did not supply any of
the consideration for the purchase of the land. Verne was in
charge of all dealings related to Lot 142. He spoke with the
contractors, lawyers and real estate people. He paid the taxes
on the land.
During this period of time, Verne and Sally executed wills
giving all of their property to each other, should the other
survive. Sally later executed another will dividing her estate
evenly among Verne, Cynthia and Jon, but Verne did not know of
this will until after Sally died. When Verne learned of Sally's
second will, he offered to give Cynthia and Jon trucks and cash
in exchange for Lot 142. Cynthia refused and demanded that she
be paid for her "share" in the land.
Before the trial court, Verne argued that he had always
intended that Lot 142 be his and Sally's. He believed that all
of Sally's property would be his when Sally died, so he did not
think he needed to worry about the fact that Sally held title to
the land in her name only. Cynthia and Jon argued that, accord-
ing to black letter law on resulting trusts, no trust could have
arisen because: (1) Verne did not purchase the land with money
that was solely his; and (2) Verne intended Sally to have a
beneficial interest in the land at the time it was purchased.
The trial court agreed with Cynthia and Jon and held that no
resulting trust had been established.
The sole issue on appeal is whether Verne presented clear
and convincing evidence that a resulting trust in his favor
should be imposed on Lot 142.
A resulting trust is an "intent enforcing" trust; it arises
by operation of law and the presumed intent of the parties. In
re Estate of Wilson, 81 Ill. 2d 349, 410 N.E.2d 23 (1980).
Generally, a resulting trust arises when one person pays the
consideration for property which is taken in the name of another.
Gary-Wheaton Bank v. Meyer, 130 Ill. App. 3d 87, 473 N.E.2d 548
(1984). The resulting trust is based upon the "natural equity"
that the one who pays for the property should enjoy it. Prassa
v. Corcoran, 24 Ill. 2d 288, 181 N.E.2d 138 (1962). A resulting
trust arises at the time of the conveyance, and the payor's
intention at that time determines whether a resulting trust may
be found. In re Estate of McCormick, 262 Ill. App. 3d 163, 634 N.E.2d 341 (1994). The party seeking to establish the existence
of a resulting trust bears the burden of proving it by clear and
convincing evidence. Zack Co. v. Sims, 108 Ill. App. 3d 16, 438 N.E.2d 663 (1982).
As a general rule, if a husband purchases property and the
title to the property is placed in the name of his wife, the law
presumes that the husband intended to make a gift to his wife and
no resulting trust arises. Wright v. Wright, 242 Ill. 71, 89 N.E. 789 (1909). The presumption of a gift from the husband to
the wife may be overcome by evidence showing, inter alia: (1)
the property constituted all or substantially all of the
husband's estate; (2) the husband made improvements to the
property; (3) the husband paid the taxes and/or the mortgage debt
on the property; (4) the husband occupied the property as his
home or place of business; and (5) the husband exercised control
over or managed the property. Scanlon v. Scanlon, 6 Ill. 2d 224,
127 N.E.2d 435 (1955).
In the instant case, Verne presented evidence showing that
he alone transacted all of the business which involved Lot 142.
He arranged for the purchase of the lot. He paid the purchase
price. He paid the taxes. He dealt with the authorities in
Florida with regard to building permits. Although he did not
live on the property and the property did not constitute all or
substantially all of his property, he managed the property and
exerted exclusive control over the property. In short, Sally was
the owner of Lot 142 in name only. Consequently, we hold that
Verne proved by clear and convincing evidence that at the time
Lot 142 was purchased he did not intend to make a gift to Sally
but rather intended a resulting trust in his favor. The circuit
court's decision to the contrary cannot stand.
The judgment of the circuit court of Peoria County is
reversed and the matter remanded with instructions to place title
to Lot 142 in Verne's name.
Reversed and remanded.
HOLDRIDGE and LYTTON, JJ., concur.
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