IN THE SUPREME COURT OF THE STATE OF MONTANA 

CAROLINA GITTO, 

plaintiff and Appellant, 

-vsGUISEPPE GITTO AND KAREN GITTO, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Fourth ~udicial ~istrict, 

In and for the County of Missoula, 

The Honorable James B. wheelis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Sol & Wolfe; Michael Sol, Missoula, Montana 

For Respondent: 

Tipp, Frizzell & Buley; Thomas W. ~rizzell, is sou la, 

Montana 

Submitted on ~riefs: ~pril 27, 1989 

Decided: August 31, 1989 
Mr. Justice William E. Hunt, Sr. , delivered the Opinion of 

the Court. 

Plaintiff, ~arolina itt to (Mother), filed a complaint in 

the District Court of the Fourth ~udicial ~istrict, c is sou la 

County, seeking to impose a trust upon the home of the 

defendants, ~uiseppe (Joe) and Karen itt to. The ~istrict 

Court, after a non-jury trial, granted judgment in favor of 

Karen. Mother appeals. We affirm. 

The following issues are raised on appeal: 

1. When a mother loans money to her son for the 

construction of the son's family home, is the district court 

required to impose upon the home a resulting trust in favor 

of the mother? 

2. Is a wife unjustly enriched when, in a dissolution 

action, she is awarded the family home that was constructed 

in whole or in part out of funds loaned to her husband by his 

mother, and, if so, does equity entitle the mother to a 

constructive trust upon the home? 

On December 2, 1972, Joe and Karen itt to were married in 

Floral Park, New York. In 1979, the couple moved to Montana, 

where they purchased a parcel of land on a contract for deed. 

Shortly thereafter, Joe contacted his mother, Carolina Gitto, 

who lived in New York, to borrow money for the construction 

of a home on the Montana property. Mother consented to lend 

Joe money, which he orally agreed to repay. 

From 1979 through 1983, Joe continued to borrow money 

from Mother. The parties understood that Joe would repay the 

loans when he obtained steady employment. This understanding 

was never reduced to writing. 

Karen was not a party to the loans. Although she knew 

that Joe received money from Mother, she herself did not 
request any money, nor was she sure how Joe spent the funds 

he received from Mother. 

At one point, Mother sought to secure the loans by 

asking Joe to place her name on the title to the Montana 

property. Nothing in the record shows that Joe assented to, 

or otherwise indicated he would honor, Mother's request. 

Needless to say, he did not add her name to the deed. Even 

so, she continued to loan him money. 

All in all, Joe borrowed a total of $76,630. During the 

time he borrowed the money and continuing through the time of 

this action, Joe's employment picture remained gloomy. He 

was only sporadically employed; the two heating businesses he 

attempted to set up ended in failure. 

Joe's home life was not much better. The record 

reflects a tumultuous marital relationship. Joe displayed a 

violent temper, which he occasionally exhibited by destroying 

household furnishings. Due in part to Joe's destructive 

tendencies, the home in question had a value of only $45,000 

at the time of this action. 

Joe and Karen separated in 1981, then reconciled. In 

1985, Karen petitioned to dissolve the marriage. Slightly 

over one month later, Mother filed a complaint against both 

Joe and Karen, alleging that the loans were due and owing and 

seeking to impose a trust on the family home. The ~istrict 

Court granted Mother's motion to consolidate the two actions. 

On December 15, 1986, the dissolution trial was held. 

Only Karen appeared at the hearing. The District Court 

awarded her the custody of the couple's minor child. The 

court also granted her the family home, finding that she 

required the home as a residence for herself and the child. 

Karen was ordered to pay any debts she had incurred in the 

marriage, with the exception of any claim of debt on the 

family home, which the court found to be free of mortgage 
indebtedness. The court ordered Joe to pay "his own debts 

incurred by him." 

A non-jury trial on Mother's complaint was held on July 

20, 1987. On March 29, 1988, the court issued its findings 

of fact and conclusions of law, opinion and order. The court 

held that the $76,630 constituted loans, not gifts, from 

Mother to Joe, but that equity would not be served by 

requiring Karen to repay the loans. Consequently, the court 

refused to impose either a constructive or resulting trust on 

the property. From this order, Mother appeals. 

The remedies of constructive and resulting trusts are 

equitable in nature. The standard of review governing 

proceedings in equity is codified at S 3-2-204(5), MCA, which 

directs the appellate court to review and determine questions 

of fact as well as questions of law. Although this statute 

appears to provide this Court with broad powers of review, we 

continue to defer to the trial court's judgment in those 

cases presenting close questions of fact. We will not 

disturb the district court's factual findings unless the 

record establishes a decided preponderance of the evidence 

against them. Rase v. Castle ~ountain Ranch, Inc. (Mont. 

1981), 631 P.2d 680, 684, 38 St.Rep. 992, 996. 

Before we begin our discussion regarding whether the 

~istrict Court erred in failing to impose an involuntary 

trust on the home, we note that the present case involves a 

series of money transactions between a mother and son. 

Generally, transfers of property between close relatives are 

presumed to be gifts. Peterson v. Kabrich (1984), 213 Mont. 

401, 407, 691 P.2d 1360, 1364; Platts v. Platts (1959), 134 

Mont. 474, 480-81, 334 P.2d 722, 727. In this case, however, 

the District Court found that Mother successfully rebutted 

the gift presumption, a finding that the evidence in the 

record amply supports. The following discussion is therefore 
based on the conclusion that the transfers between Mother and 

Joe constituted loans, not gifts. 

Montana law recognizes two general categories of 

trusts: voluntary and involuntary. Voluntary trusts arise 

by express agreement of the parties. Involuntary trusts, on 

the other hand, arise independently of any express contract. 

Lynch v. ~errig (1905), 32 Mont. 267, 274, 80 P. 240, 242. 

Because involuntary trusts are not dependent upon an express 

agreement, they may be proven by par01 evidence. The Statute 

of Frauds plays no part in the finding of an involuntary 

trust. Campanello v. Mercer (1951), 124 Mont. 528, 531, 227 

P.2d 312, 314; Feeley v. Feeley (1924), 72 Mont. 84, 92, 231 

P. 908, 910. 

within the category of involuntary trusts, two 

subclasses exist: resulting trusts and constructive trusts. 

Mother argues that the ~istrict Court erred in failing to 

impose either one or the other of these trusts upon the home 

awarded to Karen in the dissolution decree. 

A resulting trust, also known as a purchase-money trust, 

arises only in certain narrowly defined circumstances, which 

have been codified by statute as follows: 

When a transfer of real property is made to one 

person and the consideration thereof is paid by or 

for another, a trust is presumed to result in favor 

of the person by or for whom such payment is made. 

Section 72-24-104, MCA. 

A resulting trust exists only when one party provides 

the consideration for the transfer of property. If A gives 

money to B for the purchase of real estate and B puts the 

title to the land in his name, presumably the parties intend 

that B will merely hold the title in trust for A, and A will 

retain the beneficial use of the property. See Meagher v. 

Harrington (1927) 78 Mont. 457, 469-70, 254 P. 432, 435-36; 
Lynch, 32 Mont. at 274, 80 P. at 242. ~ikewise, if A gives 

money to B for the purchase of personal property, and B takes 

title to the personal property in his name, B holds the title 

in trust for A. Meaqher, 78 at 469-70, 254 P. at 435. 

However, if A gives money to B for the purpose of improving 

property owned by B, a resulting trust does not arise. As 

explained by a leading authority: 

If B has contracted for the purchase of land and 

entered into possession, and A thereafter, but 

before B gets a deed, pays for the construction of 

a house on the land, A has not paid the price of 

the equitable property interest which B then owns. 

A has merely added to the value of that interest, 

and the law does not infer an intent that B is to 

have an equitable interest by way of trust. A 

fortiori, if the improvement paid for by A comex 

after B has obtained a deed, there is no resulting 

trust presumed for A. The price of the land has 

already been paid by B. A is merely adding to the 

value of realty which is owned by B in fee simple 

absolute. 

G. Bogart, S 455, at 661-62 (rev. 2d ed. 1977). 

In the present case, Joe and Karen purchased the 

underlying real property on a contract for deed from Joe's 

aunt, Sally Travanto. The funds advanced by Mother were not 

intended to be, nor were they actually, used for the purchase 

of real property. Rather, Joe used the money to construct a 

house on the land. Because the parties applied the funds 

only to improve the underlying real property, the District 

Court did not err in refusing to impose a resulting trust on 

the home. 

Unlike a resulting trust, a constructive trust may be 

imposed in a wide variety of circumstances. While a 

resulting trust is said to be "intent enforcing," a 

constructive trust is "fraud rectifying." Bogart, S 451 at 

611. A constructive trust may be imposed regardless of the 
intent of the parties. It is a remedy created by operation 

of law to prevent the unjust enrichment of one party at the 

expense of another. Rust v. Kelly (Mont. 1987), 741 P.2d 

786, 787, 44 St.Rep. 1471, 1473; Meagher, 78 Mont at 469-70, 

254 P. at 435-36. As provided by statute: 

One who gains a thing by fraud, accident, mistake, 

undue influence, the violation of a trust, or other 

wrongful act is, unless he has some other or better 

right thereto, an involuntary trustee of the thing 

gained for the benefit of the person who would 

otherwise have had it. 

Section 72-20-111, MCA. 

Before a court may impose a constructive trust, it must 

determine whether the holder of the subject property has been 

unjustly enriched. Undoubtedly, in this case, Karen was 

enriched when the court awarded her the home built with funds 

furnished by Mother. But is Karen's enrichment unjust? We 

think not. 

Injustice results from the performance of a wrongful 

act. Mother argues that the wrongful act in this case was 

Joe's breach of the trust she reposed in him. She contends 

that, by virtue of the fact that she was his mother, she 

stood in a confidential relationship with Joe, a relationship 

he violated when he failed to take steps to secure her 

interest in the property. 

Even assuming that Mother is correct in asserting that 

she maintained a confidential relationship with Joe, this 

fact in and of itself will not give rise to a constructive 

trust. Equity will not impose a constructive trust for the 

violation of a confidential relationship unless the party 

seeking to impose the trust shows by clear and convincing 

evidence the exercise of fraud or undue influence. Mahaffey 

v. DeLeeuw (1975), 168 Mont. 274, 280, 542 P.2d 103, 107. 
Here, Mother failed to introduce any evidence of fraud 

or undue influence. Quite the contrary, the record indicates 

that Mother entered into the series of money transfers with 

her eyes wide open. Joe represented only that he would repay 

the loans when he obtained steady employment. Although 

Mother knew his employment situation was shaky at best, she 

loaned him money. When he failed to honor her request to 

secure the loans, she continued to send him money. 

A constructive trust arises in law to remedy a wrongful 

act. In this case, no wrongful act occurred. 

We affirm the District Court. , 

We Concur: 

Justices