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March 31, 1995


Appeal from the Circuit Court of Cook County. The Honorable Everette A. Braden, Judge Presiding.

The Honorable Justice Rakowski delivered the opinion of the court: Egan and Zwick* , JJ., concur.

The opinion of the court was delivered by: Rakowski

JUSTICE RAKOWSKI delivered the opinion of the court:

This is an action for possession of a savings account under a theory of constructive trust. The appellee Frederickson (plaintiff), the administrator of the estate of Hedwig Mayer, decedent, filed the suit requesting a declaration of rights to the account against the appellant Warner Blumenthal (defendant) and Chesterfield Savings and Loan Association. The circuit court imposed a constructive trust on the account in favor of the plaintiff and granted a credit and set-off of $5147 in favor of the defendant for taxes that he paid relative to the account. On appeal, the defendant raises the following issues: (1) whether the plaintiff submitted evidence sufficient to justify the imposition of a constructive trust; and (2) whether the trial court erred in holding that the action was not barred by the statute of limitations. For the reasons which follow, we affirm.

The following facts were stipulated to at the bench trial. On February 28, 1963, Hedwig Mayer, the defendant's aunt, deposited$4362.79 of her own money in a savings account at Chesterfield Savings and Loan Association and asked the defendant to hold the money for her under his name. After Mayer deposited the money, she brought the signature card to the defendant so he could sign it. At the time, Mayer was of sound mind and body. Although the account was in the defendant's name, he was holding the money for Mayer, who always possessed the passbook from 1963 until her death in December 1988, when she was 88 years old. The defendant never made or attempted to make deposits or withdrawals. The defendant declared the interest on his taxes from 1963 until 1991. Demand was made of repayment in October 1989. The defendant refused to release the funds to the estate of Hedwig Mayer. As of November 17, 1992, the balance in the account was $19,980.98.

At the bench trial, the only witness was the defendant, who testified as an adverse witness. Between 1960 and 1963, the defendant saw Mayer about four times a month. He testified that he had a good relationship with Mayer until her death in 1988.

A constructive trust is one raised by operation of law as distinguished from a trust created by express agreement between the parties. ( Suttles v. Vogel (1988), 126 Ill. 2d 186, 193, 533 N.E.2d 901, 127 Ill. Dec. 819.) The Suttles court stated:

"A constructive trust is created when a court declares the party in possession of wrongfully acquired property as the constructive trustee of that property [citation], because it would be inequitable for that party to retain possession of the property. The sole duty of the constructive trustee is to transfer title and possession of the wrongfully acquired property to the beneficiary. [Citation.]

A constructive trust is generally imposed in two situations: first, where actual or constructive fraud is considered as equitable grounds for raising the trust and, second, where there is a fiduciary duty and a subsequent breach of that duty. [Citations.] A constructive trust may also arise when duress, coercion or mistake is present. [Citation.] Some form of wrongdoing is a prerequisite to the imposition of a constructive trust." Suttles, 126 Ill. 2d at 193.

Although there is authority to support the defendant's contention that a constructive trust will not be imposed in the absence of a fiduciary relationship, fraud, or some form of wrongdoing, other courts have broadened the circumstances where a constructive trust is an available remedy. For example, in In re Estate of Engel (1980), 87 Ill. App. 3d 273, 408 N.E.2d 1134, 42 Ill. Dec. 425, the decedent was holding his mother's money in a savings account that was held solely in his name. The evidence showed the money belonged to the mother. When the decedent's only heir, his daughter, attempted to keep the money after the decedent's death, the trial court concluded that a constructive trust was created and the mother was awarded the money. The appellate court affirmed, noting "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." Engel, 87 Ill. App. 3d at 275; see also Martin v. Heinold Commodities, Inc. (1994), 163 Ill. 2d 33, 643 N.E.2d 734, 205 Ill. Dec. 443; Chicago Park District v. Kenroy, Inc. (1982), 107 Ill. App. 3d 222, 437 N.E.2d 783, 63 Ill. Dec. 134 (the plaintiff's allegations stated an action for a constructive trust despite the failure to allege elements constituting fraud or breach of a confidential relationship).

At trial in the instant case, the following took place:

"MR. CROTTY [Plaintiff's attorney]: The stipulation would be, your Honor, that on or about February 28, 1963 that the plaintiff decedent Hedwig Mayer asked the defendant Warner Blumenthal to hold money for her under his name in the Chesterfield Savings & Loan account. And that he agreed to do that.

MR TYKSINSKI [Defendant's attorney]: That's been alleged under Paragraph 5 and 6 of the ...

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