Opinion
Galligan & Foley, Richard B. Foley, Denver, for defendants-appellees Mary Faye Neumann and Elizabeth Lou Knous.
Calkins & Tom, Bill E. Tom, Denver, for plaintiff-appellant.
No appearance for defendant-appellee Andrew Wysowatcky.
ENOCH, Judge.
James E. Austin, plaintiff-appellant, brought an action in the lower court against his father, William E. Austin, and his two sisters, Mary Faye Neumann and Elizabeth Lou Knous, to impress a constructive trust in James' favor upon certain real and personal property that belonged and had belonged to his father. The father died during the course of this litigation. Andrew Wysowatcky, appointed as special administrator of the estate, was substituted as a defendant in this action. After a trial to the court, judgment was entered in favor of defendants. We affirm.
James, his father, and his mother were equal partners in a business venture from 1947 to 1959 during which time they acquired certain assets. On March 4, 1955, the three partners executed a trust agreement for the benefit of Mary Faye and Elizabeth Lou. James was named trustee and so served until 1969. The partners agreed to fund the trust with personalty and realty owned jointly by the three. The corpus was actually transferred to the trust between June 16 and July 1, 1955.
On April 10, 1955, Mr. and Mrs. Austin and James entered into an oral agreement whereby the parents agreed to name James as the 'ultimate beneficiary' under their wills, which they would not revoke or change so as to 'affect him adversely,' in consideration of James' promise to place irrevocably in trust 'his one-third (1/3) interest in certain personalty and realty which was owned by him and us.' On July 10, 1955, this oral agreement was reduced to writing and signed by the three partners.
On June 16, 1955, Mr. and Mrs. Austin executed similar wills naming twenty-four specific legatees. In each will the surviving spouse was named as the residuary beneficiary; however, the provision was included that if the spouse predeceased the testator, then the 'rest, residue and remainder' of the estate was to go to James.
The partnership was dissolved in 1959, and a one-third interest in the partnership property was transferred to each of the partners. In 1963 Mrs. Austin conveyed to James by quitclaim deed her interest in certain real properties. The deeds were not recorded until after her death in 1966.
In his complaint, James alleges that after 1966, his father began to transfer substantial assets to his sisters, changed the beneficiaries of certain life insurance policies to his sisters, deposited monies in bank accounts which were in joint tenancy with his sisters, and executed a new will which would adversely affect James' interests. James contends that these transactions were done with the intent to defraud him under the 1955 agreement. James asked the court that a constructive trust be impressed against certain real properties in favor of James, and that his father be enjoined and restrained from transferring or disposing of any of his personal property except for those necessities required for his father's own personal health and maintenance. James also asked that his sisters be enjoined and restrained from transferring or disposing of any of the assets in which they held a joint tenancy interest with their father.
The trial court held that James failed to sustain the burden incumbent upon him in law and in fact. The record supports this conclusion.
Constructive trusts are a means of equitable relief when a court finds that property has been acquired by fraud or when, without fraud, justice demands that the property not be retained by the party who holds it. Botkin v. Pyle, 91 Colo. 221, 14 P.2d 187. Constructive trusts are remedial devices by which the party holding legal title is held to be a trustee for the benefit of another who is entitled equitably to the beneficial interest. The presence of fraud is necessary to most constructive trusts, or at least some form of unconscionable conduct or questionable means by which the person against whom the trust is sought to be imposed gains his title. Botkin v. Pyle, Supra.
The burden of establishing a constructive trust is upon the party who seeks its enforcement, and fraud is never presumed. Woodruff v. Clarke, 128 Colo. 387, 262 P.2d 737. In order to sustain the burden of proof in a constructive trust action at the time of this trial, the plaintiff must have established his case by clear and convincing evidence. Larson v. Chaussee, 168 Colo. 437, 452 P.2d 30.
It was incumbent upon James to prove that there was fraud, as he alleged, on the part of his father, or that justice requires that he be given equitable relief. Under the facts of this case, in order for James to have established his right to a constructive trust, it was first necessary, at least, for him to have shown by clear and convincing evidence that (1) there was a valid agreement which bound the parents to make their wills with James named as the 'ultimate beneficiary' and that (2) the parents bound themselves unequivocally not to transfer any substantial property during their lifetimes. There is, however, no evidence that the senior Austins ever agreed to any limitation on their right to make inter vivos transfers. Since plaintiff failed in his burden of proof, there is no basis for imposition of a constructive trust.
The question of the validity of the 1955 agreement need not be determined in the disposition of James' claim of a constructive trust. Even assuming, arguendo, that the agreement is valid, a constructive trust cannot be imposed because it is clear that the agreement does not preclude lifetime transfers, and thus, no violation of the agreement has occurred.
James also contends that it was error for the trial court to have restricted the testimony of an attorney who assisted with the Austins' estate planning in 1955. A review of the record discloses that, if the court did err, it was only harmless error since James' offer of proof did not indicate that such testimony would tend to show that there was a valid restriction of inter vivos transfers by the senior Austins.
James further contends that, since his father's most recent will excludes him as a beneficiary, a constructive trust should be impressed on the property which his father still possessed at the time of his death. This issue was not properly before the trial court, nor can it be considered on review. James did not amend his complaint after his father's death, and the only remaining claim for which any relief could be granted is the claim that James is entitled to a constructive trust on those properties transferred during his father's lifetime. The father executed three successive wills. James filed a caveat to the third will, and at the time of the trial of this case, no will had been admitted to probate. Until that matter is settled and the inventory of the estate determined, it is impossible to determine if, in fact, James has been adversely affected by any testamentary disposition of his father. See Mills v. Saunders, 30 Colo.App. 462, 494 P.2d 1309.
Judgment affirmed.
DWYER and PIERCE, JJ., concur.