Case Title: Thomasi v. Koch

Citation: 

Docket Number: 5776

State: wyoming

Court: Wyoming Supreme Court

Date: 1983-03-24T00:00:00Z

Document:
Thomasi v. Koch1983 WY 31660 P.2d 806Case Number: 5776Case Number: 5776Decided: 03/24/1983Supreme Court of Wyoming
MARIO THOMASI AND DORIS 
THOMASI, APPELLANTS (DEFENDANTS),

v.

LINDA KOCH, 
ADMINISTRATRIX AND PERSONAL REPRESENTATIVE OF EDRA VAUGHN BAINBRICH, DECEASED, 
APPELLEE (PLAINTIFF). No. 5776

Appeal from the 
District Court, NatronaCounty, R.M. Forrister, 
J.

Neil J. Short, 
and Michael J. Krampner, Casper, for 
appellants.

C.L. Harden, and 
William W. Harden, Casper, for 
appellee.

Before 
ROONEY, C.J.,* and RAPER, THOMAS, 
ROSE,** and BROWN, JJ.

* Became Chief Justice on 
January 1, 1983.

** Chief Justice 
at time of oral argument.

THOMAS, Justice.

[¶1.]     This appeal raises the 
question of whether a constructive trust in real property can be found to exist 
under Wyoming 
law in the absence of adequate proof of a fiduciary relationship or a close 
family relationship. A secondary issue is raised with respect to the sufficiency 
of the evidence to satisfy a standard which requires clear and convincing 
evidence. The district court ruled that a constructive trust had been 
established, and awarded the property to the appellee. We shall affirm the 
district court.

[¶2.]     The property which is 
the subject matter of this case consists of a building located on all of one lot 
and a portion of another lot in the City of Casper in Natrona 
County, Wyoming. It was 
purchased by Mrs. Edra Vaughn Bainbrich, the appellee's decedent, in 1948 for an 
apparent consideration of $6,600. From that time until the death of Mrs. 
Bainbrich in 1980 the property was used as a dance school, and was known as the 
Bainbrich School of Dance. During this entire period Mrs. Bainbrich and her 
husband, Clay Bainbrich, continued to exercise total dominion over the property. 
The Bainbriches paid all utility bills; they paid all tax notices through 1979; 
and subsequent to the transfer of the property to the Thomasis they even granted 
the telephone company an easement across the property. In all respects the 
Bainbriches treated the property as their own until the death of Mrs. Edra 
Vaughn Bainbrich. 

[¶3.]     Sometime prior to the 
early months of 1968, possibly around Christmastime of 1967, the Bainbriches and 
a passenger in their automobile were involved in an automobile accident. 
According to the reports of the case in the Colorado Court of Appeals and the 
Colorado Supreme Court, the accident involved the automobile, which was driven 
by Mr. Bainbrich, skidding on the ice and colliding with a guardrail resulting 
in injuries to the passenger. Bainbrich 
v. Wells, 28 Colo. App. 432, 476 P.2d 53 
(1970), affirmed Wells v. Bainbrich, 
176 Colo. 503, 
491 P.2d 976 (1971). During the pendency of this action brought by the 
passenger, Mrs. Bainbrich sought advice of counsel with respect to divesting 
herself of the title to the property in Casper for the purpose of placing it beyond the 
reach of creditors. Wyoming counsel testified 
that the intention of Mrs. Bainbrich and her husband was to transfer the 
property until the conclusion of the legal action in Colorado, but to arrange to have the property reconveyed 
to them after the disposition of the Colorado litigation. Their Wyoming attorney refused 
to prepare the deed which was requested by the Bainbriches for this 
purpose.

[¶4.]     Subsequently, on March 
8, 1968, Mrs. Bainbrich executed a warranty deed to Mario Thomasi and Doris 
Thomasi. The deed was executed in Denver, Colorado. Mr. Bainbrich testified that prior 
to the execution of this deed he obtained $4,000 in cash from a safety deposit 
box in Casper, and that he gave this money to 
Doris Thomasi in Denver, 
Colorado, on the date of the 
conveyance. The $4,000 was deposited in the Thomasis' checking account, and a 
check for that same amount was made to Mrs. Bainbrich as consideration for the 
warranty deed. The record justifies a conclusion that Mrs. Bainbrich selected 
the Thomasis to be the grantees of this deed because of a close, warm friendship 
which she had with Doris Thomasi. Their relationship began in the mid-1950s with 
their introduction by Mrs. Bainbrich's sister, who then was married to Doris 
Thomasi's brother. The intimacy of their relationship appears from the testimony 
of Doris Thomasi describing an earlier automobile accident in which Mrs. 
Bainbrich was injured and following which she came to the Thomasis' home and was 
taken care of by Doris Thomasi while she was recuperating from her injuries. The 
Thomasis concede the existence of a close and warm relationship as friends 
between Mrs. Bainbrich and Doris Thomasi.

[¶5.]     The record discloses 
that following the transfer of the property in question to the Thomasis the deed 
was retained by the Bainbriches, and they took it to Casper, Wyoming, where they recorded it in the office 
of the county clerk. From that time until after Mrs. Bainbrich's death the 
Thomasis did nothing to exercise any dominion over the Casper property. No 
mention of that property was made in an extensive property settlement agreement 
entered into by the Thomasis immediately preceding the dissolution of their 
marriage in 1974. They did not pay taxes on the property; they did not insure 
the property; and they even forgot that they had any ownership of the property. 
They never even had a key. It was only after Mrs. Bainbrich's death that the 
Thomasis took any action concerning the property. Upon being contacted by the 
attorney for the estate who requested the return of the property, the Thomasis 
then began paying taxes on the property, and they listed it for sale at a price 
of $145,000 with a Casper real estate agency. The explanation 
offered with respect to the history of the Thomasis in ignoring their interest 
in the property was that the use of the property during the intervening years by 
the Bainbriches was permissive.

[¶6.]     Following a trial to 
the court, an opinion letter in favor of the appellee was directed to the 
parties by the district court. The Judgment of the court which was entered later 
incorporated the following pertinent findings which were consistent with the 
opinion letter:

"3. There existed on 
March 1, 1968, and for sometime prior thereto a relationship of trust and 
confidence and a pattern of content which bespeaks the intent to create a 
fiduciary relationship between Plaintiff's decedent and Defendant. 

"4. That the 
consideration recited in the warranty deed of March 1, 1968, from Plaintiff's 
decedent to Defendants was a sham and in fact there was a total failure of 
consideration for the transfer of said property to 
Defendants.

"5. That to permit 
Defendants to retain Plaintiff's decedent [sic] property would result in unjust 
enrichment to the Defendants.

"6. That the purpose of 
the transfer of Plaintiff's decedent [sic] property to the Defendants was to 
protect Plaintiff's property from creditors and the purpose of such transfer was 
understood and intended by all.

"7. That Defendant[s] do 
not now have and have never had any ownership interest in said property and hold 
bare legal title thereto, in trust for the Plaintiff's 
decedent."

The court then 
made its judgment in the following form:

"THEREFORE, IT IS 
ORDERED, ADJUDGED AND DECREED that Defendants hold the subject property at 460 
South Oak Street and more particularly described as 
follows:

"Lot 12, and the North 35 
Feet of the East 95 and 1/2 feet of Lot 11, Block 21, City of Casper, Natrona 
County, Wyoming

"together with all 
improvements thereon situate upon a constructive trust for the benefit of 
Plaintiff.

"IT IS FURTHER ORDERED, 
that by virtue of imposing a constructive trust upon Defendants and by declaring 
that Defendants are unjustly enriched and that the consideration cited was a 
sham and that the deed transferring the property into Defendants['] name is a 
nullity and is void and of no force and effect and that the title be, and hereby 
is, quieted and confirmed in the name of Plaintiff's decedent, Edra Vaughn 
Bainbrich."

It is from this 
judgment that the Thomasis have taken their appeal in this 
case.

[¶7.]     In presenting their 
appeal the Thomasis articulate the issues, the resolution of which they argue 
will result in a favorable decision for them, as follows:

"(1) Can a constructive 
trust be found to exist in the absence of either a fiduciary relationship or a 
close familial relationship between transferor and transferee at the time of the 
transfer or conveyance?

"(2) Is the contested 
parol evidence adduced by Appellee at trial sufficient to establish clear and 
convincing proof that a fiduciary relationship existed, and that a constructive 
trust was established in this case?"

[¶8.]     The appellee in her 
brief asserts a more simplistic single issue, which she states as 
follows:

"The sole issue before 
the court is whether or not the trier of facts' findings are clearly erroneous 
or so totally at odds with the evidence as to be 
irrational."

[¶9.]     We do not find a 
requirement in the jurisprudence of the State of Wyoming that a constructive trust can only be 
found if a fiduciary relationship or a close family relationship exists between 
the transferor and transferee at the time that the property is transferred. We 
reiterate the close, warm and friendly relationship between Doris Thomasi and 
Mrs. Bainbrich. It does seem that the question of the type of relationship 
required to impose a constructive trust is one of first impression with this 
court.1 In prior cases, however, this court 
has recognized that one of the primary purposes for which a constructive trust 
will be imposed is that of preventing unjust enrichment. Fuller v. Fuller, Wyo., 606 P.2d 306 (1980); Flohr v. Walker, Wyo., 520 P.2d 833 (1974); and McConnell v. Dixon, 68 Wyo. 301, 233 P.2d 877 (1951). The facts of 
this case, as found by the district court, lead ineluctably to the view that 
unjust enrichment would result should a constructive trust not be imposed by the 
law.

[¶10.]  While serving on the bench of the State 
of New York, 
Justice Cardozo tellingly stated the inherent qualities of a constructive trust 
as a remedial and flexible device:

"* * * A constructive 
trust is the formula through which the conscience of equity finds expression. 
When property has been acquired in such circumstances that the holder of legal 
title may not in good conscience retain the beneficial interest, equity converts 
him into a trustee.

* * * * * 
*

"* * * A court in equity 
in decreeing a constructive trust is bound by no unyielding formula. The equity 
of the transaction must shape the measure of relief." Beatty v. Guggenheim Exploration Co., 
225 N.Y. 380, 122 N.E. 378, 380, 381 (1919).

Similar 
expressions of the nature and quality of a constructive trust are found in many 
other opinions. See, e.g., McConnell v. 
Dixon, supra, 233 P.2d  at 887; Johnson v. American National Insurance 
Company, 126 Ariz. 219, 613 P.2d 1275 
(1980); Page v. Clark, 197 Colo. 306, 592 P.2d 792 
(1979); Kam Oi Lee v. Fong Wong, 57 
Haw. 137, 552 P.2d 635 (1976); Cacy v. 
Cacy, Okla., 
619 P.2d 200 (1980); Pantano v. Obbiso, 283 Or. 83, 580 P.2d 1026 
(1978); and Scymanski v. Dufault, 80 Wn.2d 77, 491 P.2d 1050 (1971). One of the recognized texts in this area states 
the applicable concept in this way:

"There are numerous cases 
to the effect that, where at the time of the transfer the transferee was in a 
confidential relation to the transferor, and the transferor relied upon his oral 
promise to reconvey the land, he is chargeable as constructive trustee of the 
land for the transferor. In these cases it is held that the constructive trust 
will be imposed even though at the time when he acquired the property the 
transferee intended to perform his promise and was not therefore guilty of fraud 
in acquiring it; and even though the transferee did not take improper advantage 
of the confidential relation in procuring the transfer and was not therefore 
guilty of using undue influence. The abuse of the confidential relation in these 
cases consists merely in his failure to perform his promise. A constructive 
trust is imposed even though there is no fiduciary relation such as that between 
attorney and client, principal and agent, trustee and beneficiary; it is 
sufficient that there is a family relationship or other personal relationship of such a 
character that the transferor is justified in believing that the transferee will 
act in his interest." (Footnotes omitted.) (Emphasis supplied.) 1 Scott on 
Trusts, § 44.2, pp. 337-339 (3rd ed. 1967).

[¶11.]  When other courts have been called to 
deal with the issue presented by this case they have eschewed any attempts to 
define and circumscribe the types of confidential relationships which may give 
rise to the imposition of a constructive trust in any sort of comprehensive or 
precise rules. Instead it appears that each case is to be considered in the 
light of the general requirement that the relationship be of the sort which 
would justify the transferor in placing confidence in and relying upon his 
transferee to act in his interests, and the case then resolved upon the 
application of that proposition to its particular facts. Steinberger v. Steinberger, 60 Cal. App. 2d 116, 140 P.2d 31 (1943); Jackson v. Tibbling, Mo., 
310 S.W.2d 909 (1958); Sharp v. Kosmalski, 386 N.Y.S.2d 72, 40 N.Y.2d 119, 351 N.E.2d 721 (1979); Pantano v. 
Obbiso, supra; Tuck v. Miller, 
Tex.Civ.App., 483 S.W.2d 898 (1972); and Joerres v. Koscielniak, 13 Wis.2d 242, 
108 N.W.2d 569 (1961). See also Henry v. 
Goodwin, 266 Ark. 95, 583 S.W.2d 29 (1979); 
Hanger v. Hess, 49 Idaho 325, 288 P. 160 
(1930); Catalani v. Catalani, 124 
Ind. 54, 24 N.E. 375, 19 Am.St.Rep. 73 (1890); Wildfang-Miller Motors, Inc. v. Miller, 
N.D., 186 N.W.2d 581 (1971); Restatement of Restitution, § 182, Comment (c) 
(1937); Restatement (Second), Trusts 2d, § 2, Comment (b) (1957); and Bogert, 
Trusts and Trustees, § 482 (1977). The facts encompassed in this record fit 
comfortably within the parameters of the foregoing authorities. Where actual 
confidence and trust is reposed in the transferee to act in the transferor's 
interests, as is true in this instance, a constructive trust should be and will 
be imposed if it is necessary to prevent unjust 
enrichment.

[¶12.]  The Thomasis in presenting their argument 
rely upon the following quotation from Carpenter & Carpenter v. Kingham, 56 
Wyo. 314, 349, 109 P.2d 463, 476, mod. & reh. denied 56 Wyo. 314, 110 P.2d 824 
(1941):

"Moreover, a mere 
promise, without more, to protect any interest which the plaintiff had would 
not, at least in the absence of confidential relationship, as here, be 
sufficient to make the defendant a constructive trustee. In order that the 
doctrine of trusts ex malificio with respect to land may be enforced under any 
circumstances, there must be something more than a mere verbal promise, however 
unequivocal; there must be an element of positive fraud accompanying the promise 
and by means of which the acquisition of the legal title is wrongfully 
consummated. * * *"

Within the 
language of the quoted matter there appears an exception for the instance in 
which a confidential relationship, like that present in this case, is coupled 
with a promise to reconvey or hold the property in trust for the transferor. 
Furthermore, in our judgment the facts as presented by this record are 
distinguishable from those found in Carpenter & Carpenter v. Kingham, 
supra. Even if this distinction were not present, we prefer the view of those 
cases which hold that where there is a confidential relationship and the 
transfer is made in reliance upon that relationship an express promise need not 
be proven. An example is found in Sharp 
v. Kosmalski, supra, 351 N.E.2d  at 723, in which the court 
said:

"* * * In such a 
situation, a promise may be implied or inferred from the very transaction 
itself. As Judge Cardozo so eloquently observed: `Though a promise in words was 
lacking, the whole transaction, it might be found, was "instinct with an 
obligation" imperfectly expressed [citation]' * * *."

[¶13.]  In support of their second issue the 
appellants argue that there was not sufficient evidence to establish the 
requisite elements of a constructive trust by clear and convincing proof. The 
trial court, not this court, is charged with the function of weighing 
conflicting testimony and evidence. The general rule is that so long as there is 
sufficient evidence upon which the trial court could rationally base its 
findings, such findings will not be adjusted in any way by the appellate court. 
Palmeno v. Cashen, Wyo., 627 P.2d 163 (1981); Madrid v. Norton, Wyo., 
596 P.2d 1108 (1979). This case is typical in one respect, and that is that the 
evidence is conflicting on many key issues such as the intent of the parties at 
the time of the transaction, whether there was a promise to reconvey, who 
provided the consideration for the sale, whether the continued use and 
occupation of the premises by the Bainbriches was permissive, and other 
significant matters. Yet under the view of the evidence which this court must 
take, we agree with the conclusion of the district court that the necessary 
elements of a constructive trust were established by clear and convincing 
evidence. The circumstances leading up to the decision to make the transfer are 
not the subject of any disagreement by the parties. When the transaction is 
viewed in the light of the motive the following events viewed in the light most 
favorable to the appellee become clear and 
convincing.

[¶14.]  The foregoing rules serve to remind us 
that it is the district court, not this court, which must be satisfied that 
there was clear and convincing evidence sufficient to establish a constructive 
trust. Ward v. Waterman, 85 Cal. 488, 24 P. 930 (1890). The only question we must resolve is whether the evidence viewed 
in the light most favorable to the appellee and ignoring any evidence in favor 
of the Thomasis is sufficient to make out a prima facie case. Ward v. Waterman, supra. This court 
previously has adopted language to this effect:

"* * * When the evidence 
is such that the mind readily reaches a satisfactory conclusion as to the 
existence or nonexistence of a fact in dispute, then the evidence is, of 
necessity, clear and satisfactory." Continental Sheep Co. v. Woodhouse, 71 
Wyo. 194, 202, 256 P.2d 97 (1953), quoting language found in Good Milking Mach. Co. v. Galloway, 168 
Iowa 550, 150 N.W. 710, 712 (1915).

We further have 
said that clear and convincing evidence is "that kind of proof which would 
persuade a trier of fact that the truth of the contention is highly probable." 
MacGuire v. Harriscope Broadcasting 
Co., Wyo., 
612 P.2d 830, 839 (1980). This standard accords with that which has been adopted 
in a number of other jurisdictions. E.g., People v. Taylor, Colo., 
618 P.2d 1127 (1980); Albino v. Albino, 279 Or. 537, 568 P.2d 1344 
(1977) (a constructive trust case). In this case we note that the circumstances 
leading up to the decision by Mrs. Bainbrich to make the transfer to the 
Thomasis are not the subject of any disagreement between the parties. When the 
transaction is examined in the light of Mrs. Bainbrich's motive the evidence of 
the events which followed is sufficient to persuade a trier of fact that the 
truth of the contention, i.e., the Thomasis held title in trust, is highly 
probable.

[¶15.]  The appellants have not raised any issue 
with respect to the availability of equitable relief in an instance such as 
this. However, both the district court and the appellee briefly address the 
question of whether the motivation of the Bainbriches with respect to the 
transaction should bar equitable relief. The transaction in this case was made 
with the actual intent to hinder, delay or defraud a potential judgment 
creditor, and as such was a fraudulent conveyance under the Uniform Fraudulent 
Conveyance Act adopted by this state. Sections 34-14-101 through 34-14-113, W.S. 
1977.2 Without question this statute 
represents the public policy of the State of Wyoming.

[¶16.]  Whether the equitable doctrine of clean 
hands precludes the imposition of a constructive trust in such a situation was 
the subject of a thorough analysis and discussion by this court in Wantulok v. Wantulok, 67 Wyo. 22, 214 P.2d 477 (1950), reh. denied 223 P.2d 1030 (1950), 21 A.L.R.2d 572.3 In that case, Justice Blume 
indicated that the issue is one involving the balancing of the policy against 
unjust enrichment with a policy against granting relief to a person who has 
entered into an illegal transaction. There is no question in this case that 
although the conveyance was made with the requisite unlawful purpose the claim 
which the Bainbriches hoped to protect the property from never matured. No harm 
resulted to any creditor because the Colorado judgment against Mrs. Bainbrich was 
reversed on appeal and was not enforceable against the property. Certainly it 
was not a present claim of any creditor at the time of the instant action. Under 
these circumstances the balancing process results in a recognition of the policy 
against unjust enrichment which is afforded priority and a constructive trust 
may be imposed. Restatement (Second), Trusts 2d, §§ 63, 422, and 444 (1959); 
Bogert, Trusts and Trustees, § 211 (1979); and 1 Scott on Trusts, § 63 (3rd ed. 
1967).

[¶17.]  We agree with the district court in 
recognizing a constructive trust with respect to this property in favor of the 
appellee. We affirm the judgment of the district court which imposes such a 
trust and requires that title to the property be quieted in favor of Mrs. 
Bainbrich's estate.

FOOTNOTES

1 Our disposition does not 
require that this court decide whether under these circumstances a resulting 
trust in favor of Mr. Bainbrich would arise. See McConnell v. Dixon, 68 Wyo. 301, 
233 P.2d 877 (1951); Nussbacher v. 
Manderfeld, 64 Wyo. 55, 186 P.2d 548 
(1947); Culver v. Graham, 3 
Wyo. 211, 21 P. 694 (1889); Restatement (Second), Trusts 2d, §§ 440, 444 (1959); Bogert, 
Trusts and Trustees, § 454 (1977); 5 Scott on Trusts, § 440 (3rd ed. 
1967).

2 Section 34-14-108, W.S. 
1977, provides:

"Every 
conveyance made and every obligation incurred with actual intent, as 
distinguished from intent presumed in law, to hinder, delay, or defraud either 
present or future creditors, is fraudulent as to both present and future 
creditors."

3 Noted in 37 Va.L.Rev. 
455 (1951); 5 Wyo.L.J. 152 (1951).