Case Title: AM-TEL CORPORATION, SUCCESSOR IN INTEREST TO DENT-TEL, INC., A CORPORATION v. JAMIS M. JOHNSON AND RICHARD G. NEWTON

Citation: 

Docket Number: 88-288

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-05-11T00:00:00Z

Document:
AM-TEL CORPORATION, SUCCESSOR IN INTEREST TO DENT-TEL, INC., A CORPORATION v. JAMIS M. JOHNSON AND RICHARD G. NEWTON1989 WY 107773 P.2d 167Case Number: 88-288Decided: 05/11/1989Supreme Court of Wyoming
AM-TEL CORPORATION, 
SUCCESSOR IN INTEREST TO DENT-TEL, INC., A CORPORATION, APPELLANT 
(PLAINTIFF),

v.

JAMIS M. JOHNSON AND 
RICHARD G. NEWTON, APPELLEES (DEFENDANTS).

Appeal from the District 
Court, UintaCounty, John D. Troughton, 
J.

John A. Thomas, 
Phillips, Lancaster & Thomas, P.C., Evanston, and David Maddox, Maddox & 
Snuffer, Murray, Utah, for 
appellant.

Jamis M. Johnson 
and Richard G. Newton, pro se. 

Before THOMAS, URBIGKIT, MACY and GOLDEN, JJ., and 
BROWN, J., Retired.

THOMAS, 
Justice.

[¶1.]     This action was brought 
to quiet title to three platted lots in UintaCounty based upon a claim of a 
constructive trust imposed upon the lots. The essential question to be resolved 
is whether a mortgagee of real property can rely exclusively upon the record 
title to sustain a summary judgment in his favor or whether a genuine issue of 
material fact is presented by the presence of an affidavit in the record which 
asserts actual knowledge of the trust by the mortgagee. The district court 
granted summary judgment in favor of the mortgagee, noting in the record that it 
had specifically considered the affidavit and stating that the claim was barred 
by the statute of frauds. We conclude that a genuine issue of material fact is 
present, and we reverse the summary judgment entered by the district 
court.

[¶2.]     Am-Tel Incorporated 
(Am-Tel), in its Brief of Appellant, states the issues in this 
way:

"I. Whether the lower 
court erred in granting summary judgment to appellee in light of the fact that 
there were genuine questions of material fact existing in the case that should 
have been resolved in favor of appellant, the non-moving party, thus precluding 
summary judgment?

"II. Whether the lower 
court erred in granting summary judgment based on an application of the statute 
of frauds to a transaction revolving around a constructive 
trust?"

Jamis M. Johnson 
and Richard G. Newton (Newton), in the Brief of Appellees, set forth 
this statement:

"I. There are no genuine 
issues of fact outstanding.

"II. The statute of 
frauds is applicable. Appellant Am-Tel's claim is barred by the statute of 
frauds because appellant has no written agreement with appellee Newton to subordinate his 
lien to appellant Am-Tel's interest.

"III. Constructive trust 
doctrine is inapplicable.

"A. Appellant Am-Tel may 
not use an equitable argument to take property from appellee Newton because Am-Tel has 
unclean hands and this is apparent from the record.

"B. Constructive trust is 
inapplicable to Newton."

[¶3.]     The disposition of this 
appeal touches upon many of our rules relating to summary judgments which have 
been recited numerous times, and we direct the reader only to the summaries in 
Fiscus and Wuestenberg v. Atlantic Richfield, 773 P.2d 158 (Wyo. 1989), and 
Baldwin v. Dube, 751 P.2d 388 (Wyo. 1988). The review of summary judgment is not 
limited by our normal rules of review, and we examine the case in the same 
manner as the district court. The motion is treated as though before us 
originally, and we use the identical material and information which was 
presented in the trial court. The party who moved for, and was granted, summary 
judgment must accept the burden of demonstrating that there is no genuine issue 
of material fact, and that he is entitled to judgment as a matter of law. A fact 
is material if it has the effect of establishing or refuting one of the 
essential elements of a cause of action or a defense asserted by the parties. If 
the moving party has sustained the assigned burden by presenting affidavits or 
discovery materials that, together with the pleadings, demonstrate those facts 
upon which he relies to establish that there is no genuine issue as to any 
material fact, then the opposing party is obliged to present his documentation 
of facts which controvert the prima facie facts in the moving party's materials. 
In determining whether there is a genuine issue of any material fact, we are 
obliged to examine those factual materials from the vantage point most favorable 
to the party opposing the motion, giving to that party all the favorable 
inferences which reasonably may be drawn from the facts.

[¶4.]     In the trial court, 
Newton moved for summary judgment, and Am-Tel, a 
Utah 
corporation, opposed it. The facts disclosed by the affidavits and other 
discovery materials demonstrate that, on December 5, 1985, Daniel Southwick, an 
agent of Am-Tel, and Ronald Brown, then the president of Am-Tel, purchased three 
building lots in Uinta County, Wyoming from Hoback Ranches, Inc. The lots were 
paid for with Am-Tel stock, owned by Southwick, and transferred by him to 
Hoback. The warranty deed from Hoback named as grantees Southwick and Brown, as 
tenants in common. The record includes an undated agreement of exchange, signed 
by Southwick, that was executed, at least inferentially, prior to December 5, 
1985. It provides in paragraph three as follows:

"Mr. Brown and Mr. 
Southwick agree and covenant that the land to be received by them as described 
above shall be transferred to the ownership of Dent-Tel, Inc., a Utah 
corporation, promptly after the conclusion of this exchange, without the payment 
of compensation by the corporation, and without diluting in any way the 
percentage of stock ownership of Hoback in Dent-Tel, Inc., to be received by 
Hoback in this exchange, and they acknowledge that part of the consideration for 
this exchange is the understanding and agreement, which is hereby included in 
this document, that the corporation, Dent-Tel, Inc., shall have the ownership 
and benefit of the above described land."

[¶5.]     The record also 
includes corporate minutes of Am-Tel for a meeting held on January 26, 1986. 
Those minutes contain the following recitation and 
resolution:

"The Chairman announced 
that the first order of business was the consideration by the board of the 
issuance of 2,748,048 shares of the restricted common stock of the corporation 
to Daniel R. Southwick as a reimbursement to Mr. Southwick for his personal 
restricted shares which he used to acquire on behalf of the Corporation three 
building lots in Evanston, Wyoming, an investment from Mr. Douglas Heiner and 
real property known as the `D' Street Project. The Chairman explained that Mr. 
Southwick had acquired these assets on behalf of the Corporation by transferring 
restricted shares which were owned in Mr. Southwick's name to the individuals 
who were the former owners of these assets. After a discussion of the 
reimbursement it was upon motion duly made, seconded, 
unanimously:

"RESOLVED, that Daniel R. 
Southwick be issued 2,748,048 shares of the restricted common stock of the 
Corporation in reimbursement for his personal restricted shares, in like number, 
which he has transferred to the former owners of certain assets he has obtained 
on behalf of the Corporation. Such assets include three building lots in 
Uintah County, Wyoming, a cash investment made by Mr. Douglas 
Heiner and real property known as the `D' Street Project."

We do not know 
whether the stock actually was issued, but the favorable inference is that it 
was.

[¶6.]     This information is 
included in Am-Tel's documentation opposing Newton's motion for summary judgment and 
supporting its legal theory that the three lots were purchased on behalf of 
Am-Tel. The materials tend to demonstrate that Am-Tel reimbursed Southwick for 
the purchase price he paid Hoback, and that Southwick and Brown were under an 
obligation to transfer the property to Am-Tel immediately after it was purchased 
by them. Am-Tel contends that this obligation to transfer arose by virtue of a 
fiduciary relation between Am-Tel and Southwick and Brown and, also, by virtue 
of the express provision in the agreement of exchange providing for the 
re-transfer of the property to Am-Tel. It is clear that the lots were not 
transferred by Southwick and Brown to Am-Tel prior to Newton's 
involvement.

[¶7.]     On February 10, 1986, 
Southwick and Brown mortgaged the property to Newton as security in connection with a commercial 
transaction between Southwick and Newton. No one raises any question that 
Newton did not 
give value for the mortgage of the lots. Subsequently, Newton's mortgage was 
foreclosed, and he was the purchaser at the foreclosure sale. In his motion for 
summary judgment, Newton relied upon the fact 
that Southwick and Brown had clear record title to the property and that a title 
insurance policy had been issued for Newton's benefit that identified Southwick and 
Brown as the record owners of the three lots.

[¶8.]     Am-Tel has included in 
the materials which are offered in opposition to the motion for summary judgment 
an affidavit from Southwick which encompasses a statement that Newton took the mortgage 
with actual knowledge of Am-Tel's right to have the property transferred to it. 
Newton denies 
any knowledge of the arrangement between Southwick and Brown and 
Am-Tel.

[¶9.]     On January 9, 1987, 
Southwick and Brown did furnish a warranty deed transferring the property to 
Am-Tel, but that deed had not been recorded prior to the entry of summary 
judgment in this case. This action was instituted by Am-Tel on October 9, 1987 
based upon its claim to an interest superior to that of Newton.

[¶10.]  There indeed is some facial difficulty 
with the credibility of Am-Tel's position as demonstrated by its pleading and 
the documents submitted in opposition to Newton's motion for summary judgment. An 
examination of those facts that we have recited from the view most favorable to 
Am-Tel, and the identification of the most favorable inferences that can be 
drawn from those materials, demands that we recognize the existence of a genuine 
issue of material fact which precludes summary judgment in favor of Newton. Am-Tel's factual 
assertions fulfill the essential requirements for establishing the existence of 
a constructive or resulting trust. Thomasi v. Koch, 660 P.2d 806 (Wyo. 1983); A. Scott, The 
Law of Trusts §§ 440.2, 462.4 (3d ed. 1967).

[¶11.]  If one relies upon the agreement of 
exchange between Hoback Ranches, Inc. and Southwick and Brown, it would appear 
that Southwick and Brown received title subject to a constructive trust. In the 
alternative, if one looks to the corporate minutes of Am-Tel, the trust might be 
described as a resulting trust once Southwick was reimbursed for the 
consideration he and Brown had furnished to Hoback. The essence of Newton's contention is 
that he should be able to rely on record title without regard to the alleged 
trust. Acceptance of Newton's position as a matter of law would virtually 
eliminate reliance upon the doctrine of constructive or resulting trusts with 
respect to real property, and we decline to go that far in overruling or 
changing our prior case law. In addition, the concept that one must be a bona 
fide purchaser, i.e., without knowledge of an outstanding claim, would be 
substantially diminished if not lost.

[¶12.]  We note the reliance by the trial court 
upon the statute of frauds, but recognizing a constructive trust imposed by the 
purchase agreement between Hoback Ranches, Inc. and Southwick and Brown requires 
reliance upon a document signed by Southwick which suffices to avoid the statute 
of frauds. Furthermore, the preeminent authority on the law of trusts questions 
whether the statute of frauds is pertinent with respect to contentions of 
constructive or resulting trusts. A. Scott, The Law of Trusts §§ 406, 
482.

[¶13.]  Newton, on this record, does not oppose the 
showing by Am-Tel that would justify a conclusion as a matter of law that a 
constructive or resulting trust was present. The factual issue here is whether 
Newton can 
qualify as a bona fide purchaser because he was without knowledge of such a 
trust. We have noted that Southwick, by affidavit, says Newton knew of the rights of Am-Tel, and Newton has sworn that he 
did not.

[¶14.]  We agree with Newton's position that 
initially the trust would protect Am-Tel only with respect to Southwick and 
Brown. If, however, Newton accepted the mortgage with actual 
knowledge of the trust in favor of Am-Tel, then he took the mortgage subject to 
Am-Tel's priority status as beneficiary of the trust. A. Scott, The Law of 
Trusts §§ 476-77. This record does demonstrate a sharp factual dispute between 
Am-Tel and Newton as to knowledge, and this knowledge does 
relate to a material fact under the applicable law, which prevents summary 
judgment in the case. Newton's reliance upon the equitable doctrine 
of unclean hands in his brief may well serve as a theory of defense at trial, 
but it is not sufficient at this point to justify the entry of a summary 
judgment.

[¶15.]  With respect to Jamis M. Johnson, also a 
defendant and an appellee, we sustain the summary judgment entered by the 
district court. We can identify no material in this record which would serve to 
demonstrate that Jamis M. Johnson ever held, claimed, or, subsequent to the 
foreclosure, received any interest in the three lots. Consequently, there is no 
basis for naming him in a quiet title action, and he is entitled to summary 
judgment.

[¶16.]  The case is reversed and remanded for 
further proceedings consistent with this opinion.