create an oral express trust existed, Illinois courts look to the conduct of the parties to see if they treated the property as if it were the subject of a trust. Zukerman, 578 N.E.2d at 252. In the context of a forfeiture case, where a preexisting trust is asserted to avoid forfeiture of property, the proximity in time between government efforts to prosecute a defendant and the emergence of evidence proving the existence of the trust becomes especially relevant. United States v. 10652 South Laramie, 779 F. Supp. 952, 955 (N.D. Ill. 1991). Scrutiny of such timing is necessary to prevent "sham transfers" of property to third parties by defendants facing forfeiture. Id.
In addition, Illinois' Statute of Frauds requires that express trusts in land be in writing. 740 ILCS 80/9 (ILL ANN. STAT. 1993). This writing requirement applies to the transfer of a beneficial interest in an Illinois land trust. IMM Acceptance Corp. v. First Nat. Bank and Trust Co., 148 Ill. App. 3d 949, 499 N.E.2d 1012, 1016, 102 Ill. Dec. 232 (Ill. App. Ct. 1986). The written manifestation of the express trust, however, need not be a formal trust agreement, nor need it be executed contemporaneously with the declaration of trust. E.g., Kellogg v. Peddicord, 181 Ill. 22, 54 N.E. 623, 626 (Ill. 1899) (later deposition was satisfactory); First Nat. Bank of Ottawa v. Weise, 333 Ill. App. 1, 76 N.E.2d 538, 542 (Ill. App. Ct. 1948) (various letters and correspondence sufficed).
The Statute of Frauds is an affirmative defense and use of it to undermine an oral trust agreement is limited to the parties to the purported trust and their privies. Pasquay v. Pasquay, 235 Ill. 48, 85 N.E. 316, 320 (Ill. 1908); Whildin v. Kovacs, 93 Ill. App. 3d 582, 417 N.E.2d 736, 737, 49 Ill. Dec. 46 (Ill. App. Ct. 1981). Strangers to the trust agreement are thus unable to invoke it. Haas v. Cravatta, 71 Ill. App. 3d 325, 389 N.E.2d 226, 228-29, 27 Ill. Dec. 414 (Ill. App. Ct. 1979) (trial court could not raise it sua sponte). In other words, "an oral trust in violation of the Statute of Frauds is voidable at the election of the trustee, but not void" per se. In Re German, 193 F. Supp. 948, 952 (S.D. Ill. 1961) (citing Klass v. Hallas, 16 Ill. 2d 161, 157 N.E.2d 261, 265 (Ill. 1959)).
In addition, the Statute of Frauds cannot be invoked to avoid a trust that has been fully performed. David v. Schiltz, 415 Ill. 545, 114 N.E.2d 691, 697 (Ill. 1953); In Re Naramore, 3 Bankr. 709, 714 (N.D. N.Y. 1980) (applying New York law). But this full performance must be done solely on account of the oral agreement, and not, for example, to carry out a subsequent need to keep property out of the reach of creditors. Murray v. Behrendt, 399 Ill. 22, 76 N.E.2d 431, 433 (Ill. 1947); In Re Fill, 82 Bankr. 200, 222-23 (Bankr. S.D.N.Y 1987).
Regardless of whether the Statute of Frauds applies to an express trust, parol evidence offered to prove the existence of an express trust must be clear, unambiguous and unequivocal: "if the evidence is doubtful or capable of reasonable explanation upon theories other than the existence of a trust, it is not sufficient." Carrillo v. O'Hara, 400 Ill. 518, 81 N.E.2d 513, 520 (Ill. 1948); In Re Wilkening, 441 N.E.2d at 163.
Resulting Trusts. If all the requisite elements of an express trust do not exist, two classes of implied trusts can arise outside of the Statute of Frauds by operation of law: resulting trusts and constructive trusts. Murray, 76 N.E.2d at 434. A resulting trust arises by law when one party receives title to property, but under circumstances which raise an inference that -- despite having failed to express an intent to do so -- the parties intended the title holder to hold the property in name only for the benefit of another. Id. ; Janes v. First Fed. Savings and Loan Ass'n, 11 Ill. App. 3d 631, 297 N.E.2d 255, 261 (Ill. App. Ct. 1973). Typically, a resulting trust arises "when land is purchased with the money of one party and title is taken by another and hence it is presumed that title is held in trust for the purchaser." Suwalski v. Suwalski, 40 Ill. 2d 492, 240 N.E.2d 677, 680 (Ill. 1968). Because a resulting trust arises to effectuate the intent of the parties, it is essential that those seeking to assert a resulting trust establish that such intent actually existed and was evidenced in the parties' conduct. Wilkening, 441 N.E.2d at 164; Suwalski, 240 N.E.2d at 680. Such evidence "must be clear, unequivocal, and unmistakable, and, if it is doubtful or is capable of reasonable explanation upon any theory other than the existence of a trust, it is not sufficient." Link v. Emrich, 346 Ill. 238, 178 N.E. 480, 482 (Ill. 1931).
Constructive Trusts. By contrast, a constructive trust does not depend on intent, but arises by law when a party obtains title to property through fraud, breach of fiduciary relationship or other wrongful conduct and thus has an equitable duty to convey it to another to prevent unjust enrichment. Janes, 297 N.E.2d at 261; Murray, 76 N.E.2d at 434.
B. 411 Lauder Lane, Inverness, Illinois
In November 1977, Victoria and Jerry DeLaurentis, the parents of defendant Salvatore V. DeLaurentis, purchased property at 3017 Eastway Lane in Island Park, Illinois.
(Omnibus Factual Stipulations P 5). Victoria and Jerry financed the acquisition with a $ 70,000 mortgage, payable in one year. (Id.) They placed the property in a trust in the McHenry State Bank. (Id. P 4.) In September 1978, after selling another residence, Victoria and Jerry paid off approximately one half of the mortgage on the Island Lake property. (Id. P 8.) At the same time, they assigned the beneficial interest in the McHenry State Bank trust to their son, Salvatore. (Id. P 9.) In October 1978, Salvatore secured a loan and paid off the balance of the mortgage on the property. (Id. PP 10-11.) In August 1979, Salvatore executed an amendment to the McHenry State Bank trust, altering the beneficial interest in the trust to read as follows:
SALVATORE V. DELAURENTIS, the entire beneficial interest hereunder, with full power to assign or deal with all of the rights and interests of the beneficial interest. Upon the death of said Salvatore V. DeLaurentis during the existence of this trust, and provided that the beneficial interest or any part or right thereunder, shall not have been previously assigned or otherwise disposed, then the entire beneficial interest hereunder shall vest in the surviving children of Salvatore V. DeLaurentis in equal shares.
(Id. P 14.)
In May 1986, Salvatore sold the Island Lake property and used the proceeds, along with a new loan and mortgage, to buy property at 411 Lauder Lane, Inverness, Illinois as joint tenant with his wife, Donna M. DeLaurentis. (Joint Group Ex. No. 26.) Salvatore and Donna placed this property in a trust with the Cole Taylor Bank, and thereby transferred the corpus of the McHenry State Bank trust that served the Island Lake property to this new trust. (Id.) On July 15, 1987, Salvatore and Donna set up a new Cole Taylor Bank Trust, transferring title in 411 Lauder Lane to this trust subject to its terms, which read, in part:
The following named persons shall be entitled to the earnings, avails and proceeds of said real estate as set forth, to wit: