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In re Estate of Sara E. Koch

July 13, 1998


The opinion of the court was delivered by: Justice Breslin


Appeal from the Circuit Court for the 10th Judicial Circuit Peoria County, Illinois

No. 96--P--52

Honorable Richard E. Grawey Judge, Presiding

When Sara Koch (Sally) died, she held title to some property in Florida. Her husband, Verne, filed a claim with the estate, asserting that the property was subject to a resulting trust in his favor. Sally's children, Cynthia and Jon, acting as co-executors of Sally's estate, refused to accept Verne's claim. The trial court determined that no resulting trust existed. We find that Verne overcame the presumption that the purchase of the property constituted a gift to Sally and proved by clear and convincing evidence that a resulting trust arose in his favor. Therefore, we reverse and remand.

Verne and Sally were married in 1964. At that time, Cynthia, Sally's daughter through her previous marriage, was 12 years old. Verne adopted Cynthia, but he did not think she ever accepted him as her father. Later, apparently, Jon was born to Verne and Sally.

Verne became a shareholder in Frank Heinz Construction Company, Inc., a general contractor, in 1974. Another of the shareholders was Raymond Keesecker. Raymond's wife, Barbara, and Sally had been good friends before Verne and Raymond became business associates. The couples remained quite close over the years.

In 1975, Raymond and Verne discussed purchasing some real estate in Florida upon which they could build a vacation home for their families. Verne flew to Florida, examined the site, and made a deposit on the purchase of a lot (Lot 142) for $17,500. The purchase agreement drafted thereafter contained the names of Verne and Sally Koch and Raymond and Barbara Keesecker.

During the process of purchasing the property, authorities in Florida passed a moratorium on building which covered Lot 142. Raymond became frustrated because of the expected delay in building a vacation home on Lot 142. He decided that he did not want to invest in the Florida property. Consequently, when the purchase agreement needed to be signed, Verne used a typewriter to "x" Raymond's name off the agreement. Then, thinking it would look strange for him to own property with his wife and another man's wife, Verne also "x'd" his name off the agreement. As a result, the deed to the property was issued in the names of Sally Koch and Barbara Keesecker only. Barbara later quit-claimed her interest in the property to Sally.

The purchase price on Lot 142 was paid by check from Frank Heinz Construction Company. Thereafter, Verne repaid the company through payroll deduction. The Keeseckers did not supply any of the consideration for the purchase of the land. Verne was in charge of all dealings related to Lot 142. He spoke with the contractors, lawyers and real estate people. He paid the taxes on the land.

During this period of time, Verne and Sally executed wills giving all of their property to each other, should the other survive. Sally later executed another will dividing her estate evenly among Verne, Cynthia and Jon, but Verne did not know of this will until after Sally died. When Verne learned of Sally's second will, he offered to give Cynthia and Jon trucks and cash in exchange for Lot 142. Cynthia refused and demanded that she be paid for her "share" in the land.

Before the trial court, Verne argued that he had always intended that Lot 142 be his and Sally's. He believed that all of Sally's property would be his when Sally died, so he did not think he needed to worry about the fact that Sally held title to the land in her name only. Cynthia and Jon argued that, according to black letter law on resulting trusts, no trust could have arisen because: (1) Verne did not purchase the land with money that was solely his; and (2) Verne intended Sally to have a beneficial interest in the land at the time it was purchased. The trial court agreed with Cynthia and Jon and held that no resulting trust had been established.

The sole issue on appeal is whether Verne presented clear and convincing evidence that a resulting trust in his favor should be imposed on Lot 142.

A resulting trust is an "intent enforcing" trust; it arises by operation of law and the presumed intent of the parties. In re Estate of Wilson, 81 Ill. 2d 349, 410 N.E.2d 23 (1980). Generally, a resulting trust arises when one person pays the consideration for property which is taken in the name of another. Gary-Wheaton Bank v. Meyer, 130 Ill. App. 3d 87, 473 N.E.2d 548 (1984). The resulting trust is based upon the "natural equity" that the one who pays for the property should enjoy it. Prassa v. Corcoran, 24 Ill. 2d 288, 181 N.E.2d 138 (1962). A resulting trust arises at the time of the conveyance, and the payor's intention at that time determines whether a resulting trust may be found. In re Estate of McCormick, 262 Ill. App. 3d 163, 634 N.E.2d 341 ...

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