IN THE SUPREME COURTOF THE STATEOF MONTANA

CAROLINA GITTO, plaintiff andAppellant,-vsGUISEPPE GITTOAND KAREN GITTO, Defendantsand Respondents.

APPEAL FROM: District Court of the Fourth~udicial ~istrict, In and for the County ofMissoula, TheHonorable JamesB. wheelis,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: Sol & Wolfe; Michael Sol,Missoula,Montana

For Respondent: Tipp,Frizzell & Buley; ThomasW. ~rizzell, 

### is sou la, Montana

Submitted on ~riefs:~pril 27, 1989 Decided: August 31, 1989Mr. 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 familyhome, 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 inwhole or inpart out of funds loaned to her husband by his mother, and, if so, does equity entitle the mother to a constructive trust upon thehome? On December 2, 1972, Joe and Karen

### itt to weremarried in FloralPark,New York. In 1979,the couplemoved toMontana, where they purchased aparcel of land on a contract for deed. Shortly thereafter,Joe contacted hismother,CarolinaGitto, who lived in New York, to borrow money for the construction of a home on theMontana property. Mother consented to lend Joemoney,which he orally agreed to repay. From 1979 through 1983, Joe continued to borrow money from Mother. Theparties understood that Joewould repay the loans when he obtained steady employment. Thisunderstanding

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,shecontinued to loanhimmoney. All in all,Joeborrowed a total of $76,630. During the timehe borrowed themoney and continuing through the time of this action, Joe's employment picture remained gloomy. He
was only sporadically employed; the two heatingbusinesses he attempted to setup ended in failure. Joe's home life was not much better. The record reflects a tumultuous marital relationship. Joedisplayed a violent temper,whichhe occasionally exhibitedby destroying household furnishings. Due in part to Joe's destructive tendencies, the home in questionhad avalue 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 Joeand Karen,alleging that the loanswere due and owing and seeking to impose a trust on the family home. The ~istrict Courtgranted Mother'smotion to consolidatethe 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 mortgageindebtedness. The court ordered Joe to pay "his own debts incurred by him." A non-jury trial on Mother's complaintwas held on July 20, 1987. On March 29, 1988, the court issued its findings of fact and conclusionsof 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 ~ountainRanch, Inc. (Mont. 1981), 631P.2d 680, 684, 38 St.Rep. 992, 996. Before we begin our discussion regarding whether the ~istrictCourt 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. Petersonv. 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 followingdiscussion is thereforebased on the conclusion that the transfersbetween 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, theymay be proven by par01 evidence. The Statute of Frauds plays no part in the finding of an involuntary trust. Campanellov. Mercer (1951), 124 Mont. 528, 531, 227 P.2d 312, 314;Feeley

### v. Feeley (1924),72Mont. 84, 92, 231 P. 908, 910. within the category of involuntary trusts, two subclasses exist: resulting trusts and constructive trusts. Mother argues that the ~istrictCourt erred in failing to impose either one or the other of these trusts upon the home awarded to Karen in the dissolutiondecree. A resulting trust,also known as apurchase-money trust, arises only in certain narrowly defined circumstances, which have been codified by statuteas follows: When a transfer of real property is made to one person and the consideration thereof is paid by or for another, a trust ispresumed to result in favor of the person by or for whom such payment ismade. Section 72-24-104,MCA. A resulting trust exists only when one party provides the consideration for the transfer of property. IfA 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 forA, 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 thepurchase ofpersonal property,and B takes title to thepersonal 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 realproperty. Rather, Joeused themoney 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 theintent 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,theviolation of a trust,or other wrongful act is,unlesshe has some other or better right thereto, an involuntary trustee of the thing gained for the benefit of the person who would otherwisehave had it. Section 72-20-111,MCA. Before a court may impose a constructive trust, it must determine whether theholder of the subjectproperty 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 thinknot. 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 relationshipwith 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

orundue influence. Quite the contrary,the record indicates that Mother entered into the series of money transfers with her eyes wide open. Joerepresented only thathe would repay the loans when he obtained steady employment. Although Mother knew his employment situationwas shaky at best, she loaned him money. When he failed to honor her request to secure the loans, shecontinued to send himmoney. A constructive trust arises 

### in law to remedy awrongful act. In this case,no wrongful act occurred. We affirm the District Court.

,

We Concur:

Justices