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Wright v. Wright

OPINION FILED MARCH 17, 1954.

LUCINDA WRIGHT, APPELLANT,

v.

EDSEL WRIGHT, APPELLEE.



APPEAL from the Circuit Court of Champaign County; the Hon. CHARLES E. KELLER, Judge, presiding.

MR. CHIEF JUSTICE SCHAEFER DELIVERED THE OPINION OF THE COURT:

The plaintiff, Lucinda Wright, brought this action in the circuit court of Champaign County against her son, Edsel Wright, seeking a determination that he holds the legal title to an improved parcel of real estate as trustee for her, an accounting, and a decree compelling conveyance of the property to her. She appeals from a decree dismissing her complaint for want of equity. A freehold is involved.

From the pleadings and the evidence it appears that commencing in 1942, plaintiff operated a student rooming house in Urbana near the University of Illinois campus. Edsel Wright, the youngest of plaintiff's five children, was then sixteen years of age. Until 1946, plaintiff occupied the premises as tenant of the owner, William T. Hank. Defendant lived at home and was supported by his mother's earnings from operating the rooming house until March of 1944, when he entered military service, where he remained until October of 1945.

In 1946, Hank decided to sell the house and lot and offered plaintiff the first opportunity to buy for the sum of $7600. Unable to finance the transaction through a conventional loan or otherwise, plaintiff requested defendant to apply for a "G.I. loan" to assist her in raising the purchase price. Defendant expressed his willingness to use a G.I. loan for this purpose if it was permissible. Plaintiff was advised that title would have to be taken in defendant's name. Plaintiff said that she would pay the mortgage debt. There were several conversations to this general effect in the presence of members of the family. One of plaintiff's married daughters testified that she heard her mother ask defendant to help her by procuring a "G.I. loan," and that "Mother stated that she had tried to get the loan on the home but that she was unable to do so; it was suggested to mother that since my brother had been in service he could get a loan. He was then approached to get it, and he agreed to do same." Plaintiff testified that at the time of the transaction defendant said: "I don't want the property because it is in my name only and you will have to pay for it, Mother, because I don't want it."

Negotiations with Hank resulted in a contract for sale of the property, dated May 27, 1946, between Hank and defendant, who was designated as the purchaser. Plaintiff and Hank agreed upon the terms incorporated in the contract by which defendant agreed to pay $7600 in cash from a G.I. loan and to make immediate application for the loan. The contract recites that since defendant and his mother were in possession of the premises and the former contemplated asking for and procuring a G.I. loan, and because it was deemed advisable to paint the house prior to a time when the loan could be closed, defendant would cause the house to be painted; that, in the event of defendant's inability to procure the loan and pay for the purchase of the property, Hank would pay up to $200 towards the cost of the painting; that if, however, the loan was procured as anticipated, Hank would not be liable for any part of the cost of the painting, and that upon consummation of the sale defendant should pay Hank the full purchase price of $7600.

Defendant obtained a G.I. loan of $6600 through a local building and loan association in the late summer of 1946. Its secretary testified that plaintiff initiated the negotiations for the loan; that defendant told him he was willing to use his G.I. Bill of Rights to enable his mother to pay for the house, and that he agreed to hold title in his name "but that the property would be his mother's." Additional financing of $1000 was required. Both plaintiff and defendant solicited a loan of this amount from a professor at the University, who agreed to advance the money and take a second mortgage as security. With the proceeds of the two loans, payment of the contract price of $7600 was made to Hank. Although neither plaintiff nor defendant contributed any of their own funds to the purchase price, plaintiff paid $206 for painting the house out of her own bank account. No other cash payments were made by either of the parties at the time the deed was delivered. The deed was recorded on September 24, 1946.

After the transaction was completed, plaintiff continued to do the work of operating the rooming house in the same manner as in the preceding four years. She collected the rent, made repairs, paid the bills, and met the mortgage payments. According to her uncontroverted testimony, defendant did very little work around the premises during the time he lived in the house, and did not help her in any way in paying the bills or in meeting the mortgage loan installments. Defendant was in military service a second time from October, 1947, to March, 1949. Following his discharge, he lived in the rooming house until January of 1951, when he moved to another house. He was married in June of 1951. In the same month, during the absence of his mother on a visit with a daughter in Michigan, defendant and his wife moved into the house. Upon plaintiff's return in July, defendant announced: "I am going to take this property, and I am going to give you a room, and clothing and hospital bills, and going to take care of you." Shortly afterwards, a controversy arose over plaintiff's occupancy of a room. In October, defendant promised plaintiff an allowance of $30 a month. Later, he refused to give her the amount promised, saying he would give her but $15. The relationship between plaintiff and defendant deteriorated to such an extent that he started a forcible entry and detainer action against her. The present action was then brought to enjoin that suit and to establish plaintiff's interest in the premises.

Plaintiff contends that the trial court erred in not holding that a resulting trust arose for her benefit at the time the property was purchased in defendant's name, and, in the alternative, in failing to hold that a constructive trust was created for her benefit.

Applicable rules with respect to the doctrine of resulting trusts are firmly established. A resulting trust, characterized as an "intent enforcing" trust, (2A Bogert on Trusts and Trustees, sec. 451,) is created by operation of law and has its roots in the presumed intention of the parties. (Craven v. Craven, 407 Ill. 252; Tuntland v. Haugen, 399 Ill. 595; Murray v. Behrendt, 399 Ill. 22; Cook v. Blazis, 365 Ill. 625; Tritchler v. Anderson, 334 Ill. 211.) A court of equity will raise a resulting trust where land is bought with the money of one person and title is taken in the name of another. (Kane v. Johnson, 397 Ill. 112; Link v. Emrich, 346 Ill. 238.) It may be paid directly or indirectly to the grantor, and by or for the resulting trust claimant. (2A Bogert on Trusts and Trustees, sec. 455.) A resulting trust arises, if at all, at the instant legal title is taken and the title vests. (Craven v. Craven, 407 Ill. 252; Hille v. Barnes, 399 Ill. 252; Spina v. Spina, 372 Ill. 50.) Acts subsequent to the taking of title by the alleged trustee have no bearing upon the question whether a resulting trust was raised. (Craven v. Craven, 407 Ill. 252; Briscoe v. Price, 275 Ill. 63.) The burden of proof rests upon the party seeking to establish a resulting trust, and the evidence, to be effective for this purpose, must be clear, convincing and unmistakable. Paluszek v. Wohlrab, 1 Ill.2d 363; Jones v. Koepke, 387 Ill. 97.

To sustain her claim of a resulting trust, plaintiff directs attention to the facts that she furnished the only consideration required other than the proceeds of the two mortgage loans, the $206 paid for the painting, — incidentally the only out-of-pocket consideration paid by either plaintiff or defendant, — and that defendant neither intended to pay nor paid any part of the mortgage debt. Although payment for the painting did not constitute a partial payment of the purchase price named in the contract, it was nonetheless a part of the transaction. The contract provided that if the sale was not completed the owner of the property would reimburse defendant to the extent of $200. For all practical purposes, the cost of the painting was an integral part of the purchase price; it was vital to the completion of the transaction. Hank had decided to sell his house and was so insistent upon it being painted that a provision to this effect was included in the contract.

Summarized, the situation is that plaintiff desired to buy the property in order to continue operating it as a rooming house. Unable to finance its purchase, she asked her son to obtain a loan from the Veterans' Administration. He agreed upon the express understanding that while title would be taken in his name his mother would make the payments on the loan. Defendant was not interested in buying the house or in making the necessary payments on the mortgage indebtedness incurred to finance the purchase. Apart from title being taken in defendant's name the transaction differs but little, if at all from the typical situation in which one person advances the funds for the purchase of property and title is taken in another. Defendant was the purchaser in name only.

Uncontradicted evidence establishes that at no time during the negotiations incident to the sale and conveyance was there any intention manifested by either plaintiff or defendant that the latter should have any beneficial interest in the property. Indeed, defendant never challenged his mother's ownership until domestic discord developed five years later. The mother initiated the negotiations with Hank and pursued them to a conclusion. Title was taken in the son's name for the convenience of his mother and for her sole benefit. Economic necessities motivated the form of the transaction; without the G.I. loan, the property could not have been purchased. Title was taken in defendant's name and he signed the contract for sale, the mortgages and the mortgage notes as a means of extending credit to plaintiff. In form, the son was the purchaser and the mortgagor; in substance the mother was the purchaser and the mortgagor. The transaction in reality was in the nature of a loan from defendant to plaintiff of funds borrowed by defendant. The transaction fairly admits of the construction that defendant's title was necessary to accomplish his borrowing and was operative to secure him as to his loan to plaintiff.

Defendant maintains that he furnished the entire consideration for the purchase of the property. Literally, this is true; he alone signed the two notes and the mortgages securing them. An examination of the entire transaction shows, however, that the proceeds of the mortgage notes were paid to the seller for the direct benefit of plaintiff. The situation is essentially the same as if the payment to the seller was a payment by plaintiff of the funds borrowed by the mother from the son. Under such circumstances, the prerequisites to the raising of a resulting trust have been met. The evidence is clear and convincing that at no time did either plaintiff or defendant intend that he should have any beneficial interest in the property. He alone took title; he alone signed the notes and mortgages. His every act was, nevertheless, for and on behalf of plaintiff. His function in the transaction was to extend to plaintiff his credit, which he enjoyed because of his status as a veteran. Actually, his loan was of a lesser degree than ordinarily present in other cases where resulting trusts have been decreed for the reason that his loan was of his credit rather than of money which belonged to him.

It is recognized that the payment of money by a transferee may constitute a loan to another for whose benefit a resulting trust will be raised. 3 Scott on Trusts, sec. 448, says: "If a person pays the purchase price for a conveyance made to himself, it would seem at first blush as if there would be no ground for imposing a resulting trust. But suppose that the payment is made not for himself but for another. Suppose that B lends money to A in order that A may purchase land from X, but B pays the purchase money directly to X and takes title in his own name. It is true that in that case the money which was advanced by B never actually belonged either legally or equitably to A. Just before B paid it over to X, the money belonged to B; just after B paid it over to X, the money belonged to X. There were not two separate transactions in which B first lent the money to A, and A subsequently paid it over to X, in which case it would have been clearly A's money which was paid to X. The courts have rightly held, however, that it is immaterial that the loan to A and payment to X constitute a single transaction. A loan may be made in other ways than by handing the money over to the borrower. It may be made by paying it to another at the borrower's request. Hence although B pays the purchase money directly to X, yet in substance it is A's money, ...


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