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Parties Involved:
Bobbie Ruth Buttram
Appellee
Ulrich Schroder
Appellant

Document Text:

ULRICH 

v. 

BOBBIE 

FOR THE TENTH CIRCUIT JUL O 8 1992 

ROBERT L. HOECKEE 

SCHRODER, Clerr. ) 

) 

Plaintiff-Appellant, ) 

) 

) 

) 

RUTH BUTTRAM, ) 

) 

Defendant-Appellee. ) 

ORDER AND JUDGMENT* 

No. 91-6254 

(D.C. No. CV-89-294-T) 

(W.D. Okla.) 

Before LOGAN, EBEL, and KELLY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument. 

Plaintiff Ulrich Schroder appeals from a bench decision 

rejecting his efforts to impos~ a constructive trust_ under Oklahoma law on property owned by defendant Bobbie Ruth Buttram. 

Schroder sought such equitable relief to recover a substantial 

investment he had made in an allegedly fraudulent business venture 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 91-6254 Document: 010110259112 Date Filed: 07/08/1992 Page: 1
promoted by Mrs. Buttram's late husband, Myron Buttram, involving 

an electrohydraulic mining unit that purportedly could recover 

valuable metals by precipitating them out of solution. 

The district court found that Myron Buttram had fraudulently 

induced Schroder to participate in the joint venture. The parties 

stipulated that some of Schroder's money was used for purposes 

unrelated to the joint venture, primarily the purchase of a house 

in Mrs. Buttram's 1 

name. Nevertheless, the court refused to 

impose a constructive trust for at least three reasons. First, 

Schroder's own "unclean hands 112 disinclined the court from 

invoking an equitable remedy for his benefit against Mrs. Buttram. 

Second, Schroder waived his right to an equitable remedy by 

knowingly acquiescing in the Buttrams' personal use of the funds 

and then forgoing any legal action to recover his investment 

during the nearly two years prior to Myron Buttram's death. 

Third, Myron Buttram could not rightfully be deemed a trustee 

acting on Schroder's behalf with respect to the funds because the 

1 A small fraction of the money was used by Mrs. Buttram for 

such other personal obligations as insurance payments, property 

taxes on another property, telephone bills, and general expenses. 

Schroder has failed to establish how these expenditures could give 

rise to a constructive trust on property they played no part in 

purchasing. Schroder argues that paying property taxes preserved 

the other property and that this justifies imposing a constructive 

trust. Because the only pertinent legal authorities supplied by 

Schroder are premised on the funds being used to purchase the 

alleged trust property, his objection to these expendi~ures is 

deficient and plays no further part in our review. See generally 

Philli ps v. Calhoun, 956 F.2d 949, 953-54 (10th Cir. 1992) (citing 

Pelfresne v. Village of Williams Bay, 917 F.2d 1017, 1023 (7th 

Cir. 1990)). 

2 The district court deemed Schroder culpable for his personal 

solicitation of outside investors through correspondence repeating 

Myron Buttram's misrepresentations. 

2 

Appellate Case: 91-6254 Document: 010110259112 Date Filed: 07/08/1992 Page: 2
parties' agreement did not specifically require Myron Buttram to 

spend the funds in any particular way. 

We review de novo the district court's legal conclusion that 

a constructive trust was not warranted under the circumstances. 

See United States Dep't of Energy v. Seneca Oil Co. (In re Seneca 

Oil Co.), 906 F.2d 1445, 1450 (10th Cir. 1990). We defer to the 

district court's underlying factual findings unless clearly erroneous. See, ~, Ershick v. United Mo. Bank, 948 F.2d 660, 666 

(10th Cir. 1991). Although Schroder raises eight separate issues 

for appellate review, due to the narrow ground of our disposition, 

we need only discuss his arguments relating to waiver. 

Relying on Alexander v. Phil~ips Petroleum Co., 130 F.2d 593 

(10th Cir. 1942) (expounding Oklahoma law regarding waiver of 

equitable rights through laches), the district court determined 

that Schroder had waived any right to assert a constructive trust 

against the property purchased by Mrs. Buttram. We agree. 

Schroder had knowledge of relevant facts, as to both Myron Buttram's misrepresentations and his use of invested funds for Mrs. 

Buttram's benefit, and yet took no legal action that might have 

disrupted the business venture until the question of its financial 

success was finally settled by Myron Buttram's death. Thus, 

Schroder knowingly chose to wait and see how his investment would 

ultimately fare before asserting any objection to Mrs. Buttram's 

purchase of the property in question: if the venture succeeded, 

he would share in the financial rewards; if it did not, he would 

repudiate it as a fraud and demand that Mrs. Buttram be removed 

from her home in order to return at least part of his investment. 

3 

Appellate Case: 91-6254 Document: 010110259112 Date Filed: 07/08/1992 Page: 3
Much like the plaintiffs in Alexander, he "withh[e]ld his claim 

awaiting the outcome of a doubtful enterprise •.• [,] voluntarily await[ing] the event and then decid[ing], when the danger 

(wa]s over and the risk ha[d] been that of another [here, in 

essence, Mrs. Buttram], to come in and (assert his claim.]" Alexander, 130 F.2d at 605 (rejecting plaintiffs' claims when they 

similarly withheld them until the passage of ti.me revealed the 

most advantageous course). 

In response to this analysis, Schroder argues that he never 

expressly renounced his right to pursue a constructive trust 

against Mrs . Buttram's property and that, moreover, he did not 

even know such a remedy existed. The rule applied in Alexander, 

which itself has not been challenged, does not require the kind of 

affirmative renouncement Schroder insists is absent here. On the 

contrary, in appropriate circumstances, knowing inaction may be 

deemed a tacit assent to an adverse right. See id. at 605. As 

for Schroder's unfamiliarity with the pertinent law, "where the 

facts were known to the plaintiff, ignorance of the law applicable 

thereto and the consequent ignorance of legal rights, will not 

ordinarily excuse delay in asserting the claim." Id. at 606. 

One last general point of equity should not be overlooked. 

The district court found Mrs. Buttram innocent of any wrongdoing, 

and we cannot say that finding is clearly erroneous. Accordingly, 

whatever the merits of Schroder's challenge to the district 

court's adverse finding regarding his own unclean hands, see supra 

note 2, our disposition here is consonant with the long-standing 

equitable principle that when one of two innocent persons must 

4 

Appellate Case: 91-6254 Document: 010110259112 Date Filed: 07/08/1992 Page: 4
suffer because of a third person's wrongdoing, the one who should 

suffer the resultant loss is the one whose negligence or misplaced 

confidence enabled the third person to accomplish the wrong. See 

Oklahoma Publishing Co. v. Video Indep. Theatres, Inc., 522 P.2d 

1029, 1031 (Okla. 1974); Bankers Inv. Co. v. Humphrey, 369 P.2d 

608, 609 (Okla. 1962); Joy v. Farmers' Nat'l Bank, 11 P.2d 1074, 

1078 (Okla. 1932). 

AFFIRMED. 

Entered for the Court 

James K. Logan 

Circuit Judge 

S · 

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