Rauchfuss v. Rauchfuss

Annotate this Case

234 S.E.2d 423 (1977)

33 N.C. App. 108


No. 7625DC810.

Court of Appeals of North Carolina.

May 4, 1977.

*426 West, Groome & Baumberger by Bryce O. Thomas, Jr., Lenoir, for plaintiff.

Wilson & Palmer by Bruce Lee Cannon, Lenoir, for defendant.

MARTIN, Judge.

The defendant contends the trial court erred as a matter of law in concluding that a resulting trust should be impressed upon the real property, because there was no showing by plaintiff that she contributed any of the consideration for the property.

It is one of the essentials of the peculiar estate by entirety sometimes enjoyed by husband and wife that the spouse be jointly entitled as well as jointly named in the deed. Board of Architecture v. Lee, 264 N.C. 602, 142 S.E.2d 643 (1965); Deese v. Deese, 176 N.C. 527, 97 S.E. 475 (1918); Freeman v. Belfer, 173 N.C. 581, 92 S.E. 486 (1917); Sprinkle v. Spainhour, 149 N.C. 223, 62 S.E. 910 (1908). The fact that defendant made the payments on the property held as an estate by entirety would not create an estate solely for the defendant, because the law presumes he intended it as a gift to his wife. Waddell v. Carson, 245 N.C. 669, 97 S.E.2d 222 (1957); Honeycutt v. Bank, 242 N.C. 734, 89 S.E.2d 598 (1955); Shue v. Shue, 241 N.C. 65, 84 S.E.2d 302 (1954); Sprinkle v. Spainhour, supra; Strange v. Sink, 27 N.C.App. 113, 218 S.E.2d 196 (1975).

The property in question having been purchased as an estate by the entirety with funds derived from the conveyance of two preceding estates by the entirety, is sufficient to show that consideration was furnished by the wife. Thus, payment of consideration on her part toward the house supports a resulting trust in her favor. Tire Co. v. Lester, 190 N.C. 411, 130 S.E. 45 (1925).

Defendant contends that plaintiff's evidence failed to meet the high burden of proof required to establish a constructive trust (i. e., clear, strong, cogent and convincing) because plaintiff's evidence failed to show fraud on defendant's part.

In Electric Co. v. Construction Co., 267 N.C. 714, 719, 148 S.E.2d 856, 860 (1966), the Court said:

" `A constructive trust * * * is a trust by operation of law which arises contrary to intention and in invitum, against one who * * * in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.' (Citation omitted.) In order for a constructive trust to arise it is not necessary that fraud be shown. (Citation omitted.) It is sufficient that legal title has been obtained in violation, express or implied, of some duty owed to the one who is equitably entitled. (Citation omitted.) `A constructive trust arises where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.' (Citation omitted.) Of necessity, the circumstances out of which such constructive trust arises may be shown by parol evidence."

The property was conveyed to Doll Brothers Industries, Inc. by both plaintiff and defendant to secure the loan. Simultaneously with the conveyance, Doll Brothers *427 Industries, Inc. made a contract agreeing to " . . . execute and deliver to the parties of the second part . . . a good and sufficient deed . . . for that tract of land. . . . " It was speaking of the property conveyed by the plaintiff and defendant to secure the loan. The loan was thereafter fully paid. The court found, without exception, that the "parties of the second part" referred to in said agreement dated November 29, 1965 are the plaintiff and defendant herein; that by deed dated 4 June 1969, and recorded in Deed Book 593, page 01, Cellu-Products Company reconveyed the premises to the defendant Arthur A. Rauchfuss, Jr., individually, but did not convey to the plaintiff either individually or as a a tenant by the entirety; that the conveyance to the defendant Arthur A. Rauchfuss was made without the knowledge, consent, or permission, either express or implied, of the plaintiff; and that she, the plaintiff, did not know of said conveyance until two years after date of the conveyance.

The court found that defendant knew of the conveyance, knew that plaintiff's name was left off the conveyance, accepted delivery of the deed of conveyance, and placed it on record for the purpose of defrauding plaintiff of her interest in the property. It further found as a fact that the premises reconveyed to defendant by Cellu-Products Company together with the furnishings located in the house thereon had a fair and reasonable market value of $300,000.

A confidential relationship existed between the parties, and the law presumes fraud in transactions when confidential relationships exist between the parties. Sorrell v. Sorrell, 198 N.C. 460, 152 S.E. 157 (1930). In Link v. Link, 278 N.C. 181, 192, 179 S.E.2d 697, 704 (1971), the Court said:

"Such a relationship `exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.' (Citation omitted.) Intent to deceive is not an essential element of such constructive fraud. (Citation omitted.) Any transaction between persons so situated is `watched with extreme jealousy and solicitude; and if there is found the slightest trace of undue influence or unfair advantage, redress will be given to the injured party.' " (Citation omitted.) See Eubanks v. Eubanks, 273 N.C. 189, 159 S.E.2d 562 (1968); Fulp v. Fulp, 264 N.C. 20, 140 S.E.2d 708 (1965).

More accurately considered, constructive trusts have no element of fraud in them, but the Court merely uses the machinery of a trust for the purpose of affording redress in cases of fraud and of working out the equity of the complainant. Avery v. Stewart, 136 N.C. 426, 48 S.E. 775 (1904). In the instant case the failure of the defendant to have the deed of conveyance from Cellu-Products Company made to both him and his wife was violation of a duty he owed to his wife, amounting to actual or presumptive fraud. Consequently, a constructive trust in favor of the plaintiff is impressed upon the property purely by construction of equity. While the legal estate is vested in the defendant, the equitable estate is held by the plaintiff and the defendant is deemed to hold the property in trust for her benefit.

The court's findings of fact are comparable to the verdict of a jury. They are conclusive on appeal if there is competent evidence to support them. The weight of evidence is solely the province of the fact finder. See Trust Co. v. Gill, State Treasurer, 286 N.C. 342, 211 S.E.2d 327 (1975). The judge was aware of the applicable standard for the burden of proof and his verdict is conclusive in the absence of error of law. See 1 N.C. Index 3d, Appeal and Error ยง 56. We find plaintiff's evidence sufficient to satisfy the burden of proof and to justify the verdict.

The trial court concluded that the conveyance created a resulting trust in favor of the plaintiff. The essential elements and distinguishing characteristics of resulting trusts and constructive trusts are defined in Bowen v. Darden, 241 N.C. 11, 84 S.E.2d 289 (1954), and cases therein cited. The plaintiff *428 alleged facts sufficient to constitute a constructive trust, and the evidence on which she relies to establish such trust is sufficient to support the verdict rendered.

The trial court erred in its findings that defendant must account to the plaintiff for all rents, profits, and income from the property. In estates by the entirety the husband is entitled to the rents and profits to the exclusion of the wife. Board of Architecture v. Lee, supra.

Plaintiff's cross-assignment of error is well taken. The court found no facts which support its conclusion that plaintiff had committed adultery. Therefore the case must be remanded for the findings of fact.

The trial court decreed that plaintiff is the owner of and entitled to one-half interest in the described property. We hold that plaintiff is entitled to hold the described property with her husband as tenants by the entirety. The defendant husband is entitled to the rents and profits from the subject real estate property as long as it is so held. Except as herein modified, the judgment of the trial court is affirmed.

Defendant's appealmodified and affirmed.

Plaintiff's appealremanded.

MORRIS, J., concurs in the result.

VAUGHN, J., concurs.