Opinion
No. 3821.
Decided April 5, 1949.
In an action by the deceased's administratrix seeking to establish a resulting trust in his favor in certain real estate the decedent's children are not entitled to have constructive trust imposed upon such property for their benefit in the absence of fraud on the part of the title holder. Nor are they entitled to enforce an express trust in their favor where there was no "instrument signed by the party creating same" (R. L., c. 259, s. 16). Where part of the purchase price of real estate was paid by the decedent and the deed taken in the name of another a trust results in favor of the decedent by operation of law in the proportion which his payments bear to the total price, in the absence of a loan agreement. In such case, unless the administratrix is entitled to maintain the action involving the decedent's real estate the decedent's wife and children may be permitted by amendment to become parties plaintiff and their interests in the intestate property fixed under the statute of descent and distribution.
BILL IN EQUITY by the administratrix of the estate of Herbert H. Cate by which she seeks to establish a trust in favor of her intestate in certain real estate in Sanbornville, standing in the name of the defendant. The premises originally belonged to the decedent, subject to a mortgage in favor of Fogg. Foreclosure proceedings were instituted, and the defendant undertook to assist the decedent. After learning that the mortgagee was unwilling to abandon the sale upon payment of interest in arrears, the defendant determined to purchase at the foreclosure sale held on May 10, 1941. Acting for the defendant, the decedent bid in the premises for $480, the amount of the mortgage debt, and a fifty dollar deposit was paid to the mortgagee's attorney by the defendant at her home immediately after the sale.
The Court found that a payment in that amount was made by the decedent to the defendant on the date of foreclosure. Subsequently the proceeds of the sale of a refrigerator, amounting to $124.50, were paid to the defendant for the decedent's account. The evidence established that these funds were applied to the purchase price. By June, 1943, a total of $280 had been paid to the mortgagee, and the defendant then gave him her note and mortgage for the balance of $200. Apparently the deed to the defendant was not delivered until that time.
After the sale the decedent and his family continued to occupy the premises during the summer months, without charge, through the summer of 1946. In October 1946 the decedent died. The following spring the defendant notified his widow, Olive F. Cate, that she proposed to sell the premises, and they were padlocked, preventing Mrs. Cate from entering. The administratrix thereafter commenced this action.
The Court found "that the title to the real estate . . . is held by [the defendant] in trust for Olive F. Cate and her children," and that the decedent "paid the 1941 taxes and plaintiff should be given credit for $50 paid [the defendant] on the date of foreclosure plus $124.50, the sum received from the sale of the refrigerator." The defendant was ordered to execute a deed to the decedent's wife and children, to be delivered to them upon payment of $157.50, plus the total of taxes and insurance paid by the defendant for the years 1942 — 1946 inclusive, and the amount due on the mortgage.
At the close of the plaintiff's evidence, the defendant's motion to dismiss was denied subject to exception. After the decree was entered, the defendant moved to set aside "the verdict" and for "judgment . . . notwithstanding the findings of the Court." This motion was likewise denied subject to exception.
Reserved and transferred by Wescott, J.
Harvey, Laddey Kalled (Mr. Kalled orally), for the plaintiff.
Eliot U. Wyman and Lyford Hutchins (Mr. Wyman orally), for the defendant.
The defendant's motion to dismiss was properly denied, since there was evidence to warrant a decree establishing a resulting trust in favor of the decedent. The decree in favor of the wife and children must be vacated for lack both of competent evidence to establish an express trust, and sufficient evidence to establish a constructive trust in their favor.
The decedent's wife is not a party, and made no claim of a trust in her favor. If the oral testimony might be considered sufficient to establish a purpose on the part of the defendant to declare an express trust in favor of the children, who likewise are not parties, such a trust would be unenforcible for want of an "instrument signed by the party creating the same." R.L., c. 259, s. 16; Hall v. Congdon, 55 N.H. 104. A trust in favor of the children could be said to arise by operation of law only in the event of a finding of such fraud on the part of the defendant as would warrant imposition of a constructive trust. Restatement, Restitution, s. 183. Cf. Prescott v. Jenness, 77 N.H. 84; White v. Poole, 74 N.H. 71. The trust found by the Court was not stated to be a constructive trust, and the evidence does not disclose circumstances which would give rise to one. See Scott, Trusts, s. 45; 3 Bogert, Trusts and Trustees, ss. 495, 496, pp. 201-216. Thus the trust found must be taken to be a resulting trust, arising by operation of law out of payment of the purchase price. Smith v. Pratt, ante, 337.
No exceptions were taken to particular findings. The finding that "the plaintiff" should be given credit for a total of $174.50 paid the defendant is inconsistent with the decree in favor of the wife and children. Since the estate was found to be entitled to credit for the payments made, the trust must necessarily be held to have resulted in favor of the decedent. The payments made by him constituted only a part of the purchase price, so that unless the defendant's purchase was understood to be a loan to the decedent, the trust resulting is of an interest equal to, but not exceeding the proportion which his payments bore to the total price. Restatement, Trusts, s. 454; 2 Bogert, supra, s. 457; Crowley v. Crowley, 72 N.H. 241; Hall v. Young, 37 N.H. 134; Tebbetts v. Tilton, 31 N.H. 273. There was no testimony that the defendant undertook to pay for the property as a loan to the decedent, and a finding that she did would not be warranted by the record. The case is to be distinguished from French v. Pearson, 94 N.H. 18, in this regard. The findings indicate that the total cost consisted of the sum of the mortgage debt, the taxes in arrears paid by the defendant, and the 1941 taxes paid by the decedent after the foreclosure sale, a total of $553.71. Of this amount payments made by the decedent aggregated $196.20. The extent of the trust in his favor to be established by the decree should therefore be 35.4 percent of the whole estate. Crowley v. Crowley, supra.
No question appears to have been raised below concerning the right of the plaintiff administratrix to maintain an action relating to real estate. A decree may properly be entered for the plaintiff if the circumstances are such that she is entitled to exercise authority over the real estate of the decedent. See R.L., c. 358; Ruel v. Hardy, 90 N.H. 240, 242. Otherwise, it is for the Trial Court to determine whether the wife and children, as the real parties in interest, should now be permitted to become parties plaintiff by amendment. Owen v. Weston, 63 N.H. 599; Smith v. Hadley, 64 N.H. 97; Judge of Probate v. Sulloway, 68 N.H. 511, 518; Edgewood Civic Club v. Blaisdell, ante, 244. If such permission is granted, the decree should fix their interests in accordance with the law relating to the descent of intestate property, since they will take not as beneficiaries of the trust, but by descent from the deceased beneficiary.
The decree of the Superior Court is set aside, and the case remanded for disposition in accordance with this opinion.
Decree set aside; remanded.
JOHNSTON, J., dissented: KENISON, J., was absent: the others concurred.
In my opinion there is evidence to sustain the Trial Judge in finding that the relationship between Mr. Cate and Mrs. Rideout was that of debtor and creditor and in ruling that there was a resulting trust in favor of the estate of Herbert H. Cate of the entire property rather than of a part only.