Case Name: Leslie A. BUTLER v. William L. BUTLER, Appellant
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1975-10-30
Citations: 464 Pa. 522
Docket Number: No. 278
Parties: Leslie A. BUTLER v. William L. BUTLER, Appellant.
Judges: Before JONES, C. J., and EAGEN, O’BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.
Reporter: Pennsylvania State Reports
Volume: 464
Pages: 522–534

Head Matter:
347 A.2d 477
Leslie A. BUTLER v. William L. BUTLER, Appellant.
Supreme Court of Pennsylvania.
Argued June 30, 1975.
Decided Oct. 30, 1975.
Carl A. Wiker, Wiker & Duvall, John A. Duvall, Jeffrey E. Leber, Couderport, for appellant.
John E. Rydesky, Rydesky & Malizia, Emporium, for appellee.
Before JONES, C. J., and EAGEN, O’BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.

Opinion:
OPINION OF THE COURT
JONES, Chief Justice.
In this appeal, we must decide whether the lower court's decree imposing a constructive trust upon the parties' entireties property in favor of the wife-appellee should be sustained.
Appellee, Leslie A. Butler, and appellant, William L. Butler, married on March 27, 1968. In May of the following year, the parties took title to a parcel of land as tenants by the entireties for the recited consideration of $1,600.00. Subsequently, they erected a modular home on the land, bringing their total investment to $22,000.-00, exclusive of the labor contributed by the parties. They lived in the property until their separation in March of 1971.
On April 29, 1971, appellee instituted a divorce action against appellant and in her complaint specifically requested the court to determine the property rights and interests of the parties in the jointly-held realty. Following a hearing on the complaint, the lower court reserved decision on appellee's right to a divorce until the issues of support and property rights could be resolved.
Following a hearing on March 11, 1974, a Master's Report was filed with the court wherein certain recommended findings of fact and conclusions of law were made. In relevant part, the Master found that the land and dwelling held jointly by the parties represented an investment of about $22,000.00; that $6,000.00 of this sum came from joint savings of the parties with the remaining $16,000.00 coming from a joint bank account. Significantly, the Master found that this $16,000.00 was the appellee's own money which the appellant had caused her to place in their joint account through his influence and control and because she trusted and relied upon his advice. The Master then concluded, as a matter of law, that, as a result of the actions of the appellant in taking "undue advantage" of his wife by having her transfer her assets into their names without consideration, a "constructive trust" in the amount of $16,000.00 was created in favor of appellee in the jointly-held realty.
On March 20, 1974, the lower court entered an order accepting, adopting, and approving the Master's Report and further ordered that judgment be entered in favor of appellee in the sum of $16,000.00 against the jointly-held realty. The court also directed the Master to conduct further proceedings to effectuate a partition of the realty. We granted allocatur and vacated the order of the Superior Court quashing the appeal to that Court. We now, after considering the merits, vacate the lower court's order for the reasons which follow.
Crucial to this case is appellee's assertion that the Act of May 10, 1927 P.L. 844, § 1, os amended, 68 P. S. § 501, which converts a tenancy by the entireties into a tenancy in common of equal one-half shares after a divorce and permits either party of partition the property, is inapplicable. This argument is based upon appellee's contention that the creation of the entireties property arose from appellant's exertion of undue influence on her and the family finances. We agree that, where a spouse in a confidential relationship abuses that confidence and by fraud or undue influence causes a "gift to entireties" to arise, we will look behind that transaction and, when necessary, impose the equitable remedy of a constructive trust in order to avoid unjust enrichment. See generally Restatement (Second) of Trusts, § 2 Comment (b), § 44 Comment (c); Chambers v. Chambers, 406 Pa. 50, 54, 176 A.2d 673, 675 (1962); Gray v. Leibert, 357 Pa. 130, 135,. 53 A.2d 132, 135 (1947). However, where the evidence only reveals that the consideration in creating the entireties estate was unequal, such inquiry is unnecessary. As we have stated, "[i]t is immaterial whose funds were used to create the tenancy by the entireties . ." Shapiro v. Shapiro, 424 Pa. 120, 136, 224 A. 2d 164, 172 (1966).
The Master in making his recommendation to impose a constructive trust relied upon our statement in De Bernard v. De Bernard, 384 Pa. 194, 196-97, 120 A.2d 176, 177-78 (1956), in which we said:
"[W]here a husband obtains his wife's property without adequate consideration, the law creates a rebut-table presumption that a trust is created in her favor, and if the husband claims a benefit arising from the transaction he must show affirmatively that he acted in good faith and that he took no undue advantage of his wife."
See also Clay v. Reiser, 460 Pa. 620, 334 A.2d 263, 267 (1975); Shapiro v. Shapiro, 424 Pa. 120, 129, 224 A.2d 164, 169 (1966); Darlington's Appeal, 86 Pa. 512, 518 (1878). This presumption is in sharp contrast with that applied to men in like circumstances for we have also held that where a husband purchases real or personal property with his own funds and places it in an entire-ties estate, there is a factual presumption that a gift is created which the husband can only rebut by "clear, explicit and unequivocal" evidence. Shapiro v. Shapiro, 424 Pa. 120, 129, 224 A.2d 164, 169 (1966); Lapayowker v. Lincoln College Preparatory School, 386 Pa. 167, 171-72, 125 A.2d 451, 454 (1956).
Such a one-sided presumption can no longer stand in view of the passage of the Pennsylvania Equal Rights Amendment, Pa.Const. Art. I, § 28 (adopted May 18, 1971), for "[t]he law will not impose different benefits or different burdens upon the members of a society based on the fact that they may be man or woman." Henderson v. Henderson, 458 Pa. 97, 327 A.2d 60, 62 (1974) . Accord, Hopkins v. Blanco, 457 Pa. 90, 93, 320 A.2d 139, 140 (1974); Conway v. Dana, 456 Pa. 536, 539, 318 A.2d 324, 326 (1974). As we observed in Di Florido v. Di Florido, 459 Pa. 641, 331 A.2d 174, 179 (1975) , the husband is no longer necessarily the "sole provider," and it is likely that both spouses have contributed to the goods and furnishings of the! household. Assuming then that both parties in a marriage provide for each other, anytime either a husband or wife contributes towards the purchase of entireties property their contribution is presumed to be a gift to the other.
Since we have now discarded the one-sided presumption, we must determine whether a confidential relationship exists between the parties. The Master assumed that the marital relationship is confidential as a matter of law: as our cases indicate, it is a question of fact. Stewart v. Hooks, 372 Pa. 542, 94 A.2d 756 (1953); Note, Confidential Relationships in Pennsylvania Law, 97 U.Pa.L.Rev. 712, 716-18 (1949). Here the testimony reveals that the appellee was a secretarial school graduate who had worked as a legal secretary. The appellant, on the other hand, was engaged in construction work. Appellee handled the business affairs of the marriage including the writing of all their checks and even had a separate bank account for herself. While she did contribute her separate monies toward the joint property, it appears that the appellant had urged her to take a mortgage instead of selling her stock to finance their home. Furthermore, the Master noted that appellant worked during the marriage and contributed his income toward family finances. He also helped in the building of the home. As we stated in Di Florido v. Di Florido, 459 Pa. 641, 331 A.2d 174, 179 (1975), we should "acknowledge the equally important and often substantial nonmonetary contributions made by either spouse."
This situation is in marked contrast with that in the cases relied upon by the Master. In Shapiro v. Shapiro, 424 Pa. 120, 128, 224 A.2d 164, 169 (1966), this Court noted that "[t]hat instant record portrays not simply the normal display of confidence of a wife in her husband but of a wife who trusted to the extreme her husband in handling her business affairs . . . . [T]he wife relied entirely upon the husband's advice and judgment in all business affairs relating to the properties . . . (Emphasis added). In De Bernard v. De Bernard, 384 Pa. 194, 197, 120 A.2d 176, 178 (1956), this Court found actual fraud and misrepresentation on the husband's part which vitiated the creation of the entireties estate. Finally, in Darlington's Appeal, 86 Pa. 512, 522-23 (1878), the evidence indicated that the wife was mentally weak, unacquainted with the forms of business and her rights in the property, and dominated and unfairly influenced by her husband.
Thus, we conclude that in a marital relationship a gift to entireties property is presumed for contributions made by either husband or wife. A constructive trust will be imposed only when it appears that the parties are in fact in a confidential relationship with one party enjoying an advantage over the other because of superior knowledge or influence and that this domination caused a gift to entireties property to arise. See generally Stewart v. Hooks, 372 Pa. 542, 548, 94 A.2d 756, 759 (1953). Finally, it must appear that it would be manifestly unjust to allow one party to thereby profit at the expense of the other.
In the instant case, the appellee managed the family finances and there is no evidence that she did not understand the nature of the entireties estate when she contributed her money to it. While we accept the finding of the court below that appellee trusted her husband, her reliance appears to be that found in a normal marital relationship and not of an extreme nature. Finally, since appellant contributed his salary to the marital unit and his labor in the building of the home, injustice will not result from denying the constructive trust.
Decree reversed. Each party to bear own costs.
POMEROY, J., filed a concurring opinion.
ROBERTS, J., filed a dissenting opinion.
MANDERINO, J., dissents.
. This action was taken pursuant to the provisions of the Act of May 2, 1929, P.L. 1237, § 15, as amended, 23 P.S. § 15(l)(a) (Supp. 1975).
. A final decree of divorce was entered on August 9, 1974, with the court retaining continuing jurisdiction over the property division and the constructive trust.
. On December 3, 1974, this Court by per curiam order vacated the Superior Court order and remanded with instructions to hear and determine the appeal on its merits. Thereafter, on February 10,1975, the Superior Court certified this case to our Court.