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In Re Estate of Engel





APPEAL from the Circuit Court of La Salle County; the Hon. JAMES L. WARING, Judge, presiding.


Raymond C. Engel died intestate on September 19, 1977, survived by his daughter, Raelene Maciejewski, as his only heir at law. After decedent's estate was opened, and after Raelene Maciejewski was named administrator, decedent's mother, Emily Engel, filed a claim for $17,723 against the estate. The claimant alleged that she gave $17,723 to Raymond Engel to hold in trust for her and that the money was never repaid.

At the subsequent hearing on the claim, the evidence established that Emily Engel originally had three joint tenancy savings accounts, one with each of her three sons, Raymond, Elmer, and Harold. After Harold died in 1971, she opened new joint tenancy accounts with Elmer and Raymond, each containing one-half of Harold's account. On March 28, 1977, the two accounts held jointly with Raymond were transferred into a new account in Raymond's name alone, and a short time later the savings accounts held with Elmer were also transferred into one account which Elmer held in joint tenancy with his wife and daughter.

Elmer testified that he and Raymond had a conversation with their mother when she was in the hospital on March 28, 1977, at which time Elmer explained to her that she was going to have to enter a nursing home and that Attorney Gary Gearhart, who was Raymond's personal friend, had advised them to transfer the two accounts held jointly with Raymond into Raymond's name alone. According to Elmer, Raymond told her, "Ma, I will keep this money for you for your care as long as you live." Emily Engel agreed, and later the same day the two brothers arranged the transfer of the two accounts into Raymond's name. On cross-examination, Elmer described an earlier conversation between himself, Raymond, and Raymond's friend, Attorney Gary Gearhart. The two brothers having learned that the county nursing home would not accept a patient who had money, Gearhart advised them to transfer their mother's money into accounts in their names alone.

Elmer also testified:

"It was Ma's money. Now we merely made a transaction so that we could get my mother into a nursing home * * *. This money was in trust to my mother to be used for her health until the day she dies * * *."

Elmer also testified that the account in his name is similarly to be used for the care and upkeep of his mother. He said, "[T]he purpose of this account was worked out with my mother that I — this would be a trust. This money will be hers. If I were to die, this money which is a trust to her is for her care, for her upkeep, for her health." He also explained that he had a verbal agreement with his wife and daughter that this trust money would return to his mother in the event of his death. Additionally Elmer testified to a conversation with Raelene shortly after Raymond's death when Raelene said that the money was Emily's and "don't worry about it."

Elmer Engel's wife, Mary, testified to a conversation with Raelene Maciejewski immediately after Raymond's death at which time Raelene said that she knew the money in her father's savings account belonged to Emily Engel and there would be no trouble.

Attorney Gearhart testified at length to his conversations with members of the Engels family. He described the conversation with Elmer and Raymond in March of 1977 when he advised them to transfer their mother's money into their names alone. After Raymond's death, Gearhart talked to Raelene and her husband, explaining that the $16,000 savings account was for the care of Emily Engel. At a later time Gearhart again explained the situation to Raelene, her husband, Ralph Maciejewski, Elmer Engel, and Emily Engel, and told them that the $16,000 should go to Emily and decedent's other assets would go to Raelene. Raelene's husband became upset and both Maciejewskis left the meeting.

Raelene testified in her own behalf, giving a different version of her conversations with Gearhart, Elmer Engel, and Mary Engel. She specifically denied telling anyone that Emily could have the $16,000 savings account.

Emily Engel did not testify because of illness. At the conclusion of the evidence, the trial court found that Emily had placed her money in Raymond's hands, not as a gift, but for her use and benefit during her lifetime, thereby creating a constructive trust. On May 11, 1979, an order was entered allowing Emily's claim for $19,724.64, and a short time later Emily died. Raelene then asked the court to reconsider its judgment in the light of the drastic change in circumstances. The trial court denied the request for reconsideration and stated Emily's right to the money became vested the minute the judgment order was entered. Raelene has perfected this appeal.

• 1 The crucial issue, in our view, is whether the finding of a constructive trust is contrary to the manifest weight of the evidence. Raelene Maciejewski contends that there was absolutely no evidence of fraud or of a fiduciary duty so that the imposition of a constructive trust upon the disputed savings account was legally impermissible. She insists that Illinois courts> will impose a constructive trust only where there is fraud or when advantage is taken of a fiduciary relationship. (E.g., Durkee v. Franklin Savings Association (1974), 17 Ill. App.3d 978, 309 N.E.2d 118.) However, we note that in numerous cases the courts> have refused to place such a restriction upon the equitable powers of the court and instead have recognized that, where one person has received money which belongs to another under circumstances whereby in equity and good conscience he ought not keep it, recovery will be allowed under a theory of constructive or resulting trust. (County of Lake v. X-Po Security Police Service, Inc. (1975), 27 Ill. App.3d 750, 327 N.E.2d 96; In re Estate of Ray (1972), 7 Ill. App.3d 433, 287 N.E.2d 144. See also Wright v. Wright (1954), 2 Ill.2d 246, 118 N.E.2d 280.) It has also been said that, whether a husband, who hands over money to his wife, has a resulting interest of equitable nature is purely a question of intention. (Kartun v. Kartun (1932), 347 Ill. 510, 180 N.E. 423; In re Estate of Wilson (1979), 71 Ill. App.3d 882, 389 N.E.2d 939; 35 Ill. L. & Prac. Trusts § 42, at 220 (1958).) The same rule would apply to a transaction between parent and child. Kartun.

In those cases where it has been held that either fraud or a fiduciary relationship must be present in order to impose a constructive trust, the fact that one voluntarily acts as an agent for another has been held sufficient to give rise to a fiduciary relationship as a matter of law. Ray v. Winter (1977), 67 Ill.2d 296, 367 N.E.2d 678.

Also instructive are two cases relied upon by the claimant. In Carlson v. Carlson (1979), 74 Ill. App.3d 673, 393 N.E.2d 643, the reviewing court found the evidence of a resulting trust in favor of the ex-wife to be clear and convincing where, after the divorce, the ex-wife conveyed the marital home to her former husband without receiving any consideration in order to put the property beyond the reach of a judgment creditor. The former husband had promised to reconvey the property at her request, but when she later demanded return of title to the home, he refused. The court found that a resulting trust was created by operation of law since there was no intent to confer the beneficial interest along with legal title, and the ex-husband was ordered to reconvey. Similarly, in Harnois v. Harnois (1973), 10 Ill. App.3d 1062, 295 N.E.2d 511, a resulting trust was held to have been created in favor of the husband who conveyed his interest in the marital home to his wife to avoid potential liability arising out of an ...

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