Daily Development for Tuesday, September 21,
Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
TRUSTS; RESULTING TRUSTS: Court will not
award a resulting trust to a party who participated in the transfer of title to
a third party in pursuit of an unethical or illegal scheme to disguise ownership
Simmons v. Simmons, 724 So.2d 1054 (Miss.App.
In a divorce action, wife sought to impose a
constructive trust on a parcel of real estate titled in the name of her
husband's mother and on a Harley Davidson motorcycle titled in the name of her
As to the real estate, the court upheld the
Chancellor's ruling that no implied trust arose, although it chose to
characterize the claim as one for a resulting trust, rather than a constructive
trust. The property had been titled in the husband's mother prior to the
husband's marriage to this wife. The mother testified that she had invested
funds in paying down the note
and in carrying insurance on the property,
and that she had a business use for the property. Although her son had paid the
down payment, title went directly to the mother and she testified that she later
repaid her son.
Wife argued that, after her marriage to
husband, she had moved into the property with her husband and that they had
expended substantial funds and effort in improving the place. The court held
that, at best, this would only give her a claim to share in her husband's
constructive trust interest as beneficiary, or possibly a lien against that
interest. But since the Chancellor had held that there had been no trust in
favor of husband to begin with, wife's and husband's subsequent efforts in
contributing to the improvements to the property could not establish
independently an implied trust.
As to the HarleyDavidson motorcycle, the
court noted that the wife testified that she and her husband decided when they
bought the motorcycle that they would title it in the husband's mother's name to
disguise their ownership from the IRS, as they then were undergoing a tax audit.
(They ran a small business together.)
The court held that the Chancellor was
incorrect in concluding that the evidence did not support the establishment of a
resulting trust in the couple, since the mother testified that she didn't even
know the motorcycle was titled to her until much later. Her explanation that
this was in satisfaction of prior loans to husband did appear logical under the
circumstances. Nevertheless, the court held that no constructive trust
benefiting wife should be ordered, because she was guilty of "unclean
hands" in participating with her husband in a scheme to defraud the IRS.
The court noted that there might be a
resulting trust found in favor of innocent creditors of the husband and wife
(such as, presumably, the IRS), but that wife's own testimony indicated that she
was not entitled to equitable relief.
Comment: The case contains a useful
discussion of the distinction between two types of implied trusts constructive
trusts and resulting trusts. Constructive trusts are recognized in order to
avoid inequitable injury, and usually run counter to the desires and
expectations of the parties. Resulting trusts, on the other hand, are recognized
to fulfill the parties' probable expectations at the time the trust arose, even
though there is no formal documentation of those expectations. The trusts in
this case would have been resulting trusts.
in the Daily Development section generally are extracted from the Quarterly
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