Case Name: William C. Oursler et al., Respondents, v. April O. Armstrong et al., Individually and as Executors of Grace Oursler, Deceased, et al., Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1959-06-04
Citations: 8 A.D.2d 194
Docket Number: 
Parties: William C. Oursler et al., Respondents, v. April O. Armstrong et al., Individually and as Executors of Grace Oursler, Deceased, et al., Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 8
Pages: 194–206

Head Matter:
William C. Oursler et al., Respondents, v. April O. Armstrong et al., Individually and as Executors of Grace Oursler, Deceased, et al., Appellants.
First Department,
June 4, 1959.
Woodson D. Scott of counsel (Edmund P. Rogers, Jr., with him on the brief; Lord, Day <& Lord, attorneys), for appellants.
Arthur N. Field of counsel (Irving Brown and Eugene L. Levy with him on the brief; H. Donald Sills and Karl S. Lowenthal, attorneys), for respondents.

Opinion:
Bergan, J.
On. March 16,1951 Fulton Oursler, a noted writer and editor, and hi© wife Grace executed wills at the same time and before the same attesting witnesses. In the testamentary dispositions with which we are concerned in this litigation, the wills were identical.
Fulton had been married previously. He had two children in his first marriage; he had two children in his marriage with Grace. His will provided that the residuary estate would go to Grace; but if he survived her it would go to the four children of both his marriages, or their children; the will of Grace provided that her residuary should go to Fulton, but if she .survived him, the property coming to her from Fulton would go to the same four children of both Fulton's marriages, or to their children.
It is clear that in making these dispositions the husband and wife were dealing with the testamentary flow of Fulton's property ; because Grace, who was also an author, made dispositions of her own property only to the two children of her marriage with Fulton. With these additional dispositions by her will we are not directly concerned.
Fulton died in 1952; Grace survived him. On January 21, 1955 she made a new will revoking her will of March 16, 1951. In the new will she left everything to her own two children by Fulton and nothing to the children of his first marriage. She died in December of 1955 and her last will was admitted to probate by the Surrogate of New York County on January 3, 1956.
This action by the children of the first marriage and their children seeks to impress a trust on the property received by Grace under Fulton's will; and the court at Special Term after a trial has granted judgment for the plaintiffs imposing a constructive trust on the property which came to Grace under Fulton's will in accordance with her will executed simultaneously with that of Fulton in 1951; and requires her executors and distributee© to act accordingly. Their appeals search the power of the Special Term to make such a judgment on this record.
It is clear that there is no remedy for plaintiffs to be laid in contract; they are unable to show either an enforcible contract by Grace to make a will to their benefit; or an enforcible contract by Grace to assume a trust in their interest.
A binding agreement to make mutual wills is not established by the fact alone that parties make reciprocal wills with cross-provisions in favor of the survivor (Edson v. Parsons, 155 N. Y. 555); and the New York Statute of Frauds, as amended in 1933, not only requires " a contract to bequeath property or make a testamentary provision " to be in writing', but imposes the same requirement for formalization in writing on " a contract to establish a trust (Personal Property Law, § 31, subds. 7, 8, as added by L. 1933, ch. 616.)
The theory of constructive trust does not depend necessarily upon proof of the actual undertaking of a trust obligation by the party charged. He may have intended to become a trustee, and the proof of his undertaking either is barred by statutory or other rules of evidence, or direct proof of intent may be absent altogether. On the other hand he may have had no intention at all of becoming a trustee.
A constructive trust is not, therefore, merely a judicial creation in substitution for proof of an express trust. Although it may embrace situations where all reasonable probabilities point to an intended trust which cannot be proved, it embraces also situations in which equity spells out a trust not at all intended by the trustee. It is the weight of judicial power that imposes the constructive trust; it is a trust fashioned by the moral mandate of equity.
It will not, of course, be enough that honor and good conscience dictate the party having legal title act justly and fairly in its disposition. Neither in law nor in equity do courts " sit to enforce mere moral obligations " (Andrews, J., in Wood v. Rabe, 96 N. Y. 414, 421). The essence of the equitable doctrine upon which rests the constructive trust is that the court will exercise " its remedial jurisdiction " to prevent the abuse of confidence 1 ' when a person through the influence of a confidential relation acquires title to property, or obtains an advantage which he cannot conscientiously retain " (p. 425).
The court was there dealing with property rights between a mother and her son, a relationship which '1 if not fiduciary in the strict sense, was nevertheless one ordinarily involving the greatest confidence on one side, and the greatest influence on the other " (p. 426).
The Statute of Frauds has often been raised as a barrier both in policy and in formal proof to the fashioning of a constructive trust. But if the considerations which equity would bring within its cognizance were clear enough, considerations such as a relationship of confidence and a strongly implied agreement to take the legal title with an obligation to use it to discharge obligations arising from that relationship, the court in equity would not permit the statute to bar its decree imposing* a trust. Such relief would be deemed admissible although the Statute of Frauds would bar the showing of a clear case on which relief on the law side of the court would be available.
' ' The court does not set aside the act of Parliament ' ', Lord Westbtjry once noted, 1 ' but it fastens upon the individual who gets the title under that act, and imposes upon him a personal obligation, because he applies the act as an instrument for accomplishing a fraud." (McCormick v. Grogan, L. R., 4 E.&I. App. 82, see, also, Bond v. Hopkins, 1 S.&L. 413). As Judge Andrews said in Wood v. Rabe (supra, p. 425), the court in equity " will not permit the statute of frauds to be used as an instrument of fraud ".
Even where the words which would make out an express trust are not found in the record, equity in a proper case " will raise out of the situation, from the grouped and aggregated facts, an implied trust to prevent and redress a fraud, and which trust will be unaffected by the Statute of Frauds and may properly be enforced." (Finch, J., Goldsmith v. Goldsmith, 145 N. Y. 313, 318.)
The conduct of one having a legal title acquired in a confidential relationship, who denies or withholds rights which should under equitable principles be recognized, itself lies within the term ' ' fraud ' ', as the courts of equity use that term in this context. (Goldsmith v. Goldsmith, supra, p. 317.) "It would be a reproach to equity if it proved unable to redress such a wrong " Judge Finch there noted in a case where one son had acquired from his mother title to real estate with an understanding that ultimately the other four children would share in it; an understanding he repudiated after his mother's death.
The ' ' secret trust ' ' of the beneficiary under a will lies within the range of this equitable principle. Such a trust rests on the promise " express or implied" that the legatee "will devote his legacy to a certain lawful purpose "; and equity will compel its application to that purpose (Vann, J., in Amherst Coll. v. Ritch, 151 N. Y. 282, 323). " The trust springs from the intention of the testator and the promise of the legatee. ' '
Thus the form of the transfer of the property to the person equitably charged as a trustee is not controlling; it may come to bim by will or by deed, grant or other form of transfer; the test of confidence and the equitable duty properly to discharge the confidence will be the ultimate guides of judicial action.
There is, of course, a line somewhat between a "mere" moral obligation which, as Judge Andrews noted in Wood v. Rabe (supra, p. 421), equity will not enforce at all; and cases where the confidential and moral obligation is so great that, in the words of Judge Finch in Goldsmith v. Goldsmith (supra, p. 317) ' ' It would be a reproach ' ' to equity if it " proved unable to redress such a wrong ".
The point at which equity will impress the trust is not readily definable in general words for out of hand application to future cases. Criteria of various kinds have been set up in the judicial opinions which have been addressed to the problem; but the relationship of confidence between the giver of the property and the receiver upon whom the trust is imposed is certainly basic. In Sinclair v. Purdy (235 N. Y. 245) Judge Caedozo regarded "a confidential relation" between a brother and sister to have been " the procuring cause of the conveyance " (p. 253).
There is, beyond this basic element of confidential relationship, a complex of other circumstances which may guide the court in the direction of determining that there is a constructive trust which equity will raise '1 from the grouped and aggregated facts " to which Judge Finch referred. (Goldsmith v. Goldsmith, supra, p. 318.) It may sometimes be " a confidence induced " by the " promise and the confidential relation conjoined " that will move the court to act (Wood v. Rabe, supra, p. 426). " The principle, that when one uses a confidential relation to acquire an advantage which he ought not in equity and good conscience to retain the court will convert him into a trustee, and compel him to restore what he seeks unjustly to retain, has frequently been applied to transactions within the statute of frauds " (p. 426).
The competence of the court in equity to grant relief in this direction in Goldsmith v. Goldsmith was seen to arise from " the whole transaction " in that case " including the confidential relation of the parties and its nature as a family arrangement " (p. 318).
These principles guide us in our review of the case now before us. In addition to the fact that the wills of Fulton and Grace Oureler, executed at the same time, made identical residual dispositions of the property coming from Fulton equally among his four children, which would suggest 'an intention between husband and wife based both on confidence between them and an intramural family understanding about testamentary benefits to be given to their children, that all four children of Fulton would share alike in his estate, there are other important criteria of intention pointing in the same direction.
In a memorandum written by Grace to the lawyer who acted for both of them in making the wills, and attached to a letter by Fulton to the lawyer stating that the unexecuted draft of his will was correct, Grace made certain suggestions for change in the unexecuted draft of her will. They were forwarded to the lawyer with Fulton's own will and Fulton necessarily knew what they were.
Those suggestions are significant on the nature of the true understanding between the husband and the wife which, in turn, is the vital point in this case. Among other things Grace stated that " Most of any estate I leave will probably be hils earnings and effects and I wish it to be disposed of through me as he would do it hims elf. ' '
She then indicated in an expression which now seems to be of prime importance, that, although she wanted her own personal estate to go to her own children of the marriage with Fulton, the estate coming from Fulton's property would in her will go to -them and to the children of Fulton's first marriage equally.
In this context her memorandum stated that if Fulton did not -survive her ' ' I would wish my estate handled as he would wish matters to be handled, except that anything of my own would go directly to my own children and grandchildren, knowing that my husband's loved ones have been, are and will be well remembered ".
Earlier in the memorandum she had stated in connection with her suggestions in the draft relating to the children of the first marriage and her own children, that this was ' ' as he [Fulton] would wish it. ' ' Of large moment, in our view of the trust growing out of the confidence between husband and wife, is the fact that in Grace's will as actually executed with Fulton's on March 16,1951, in connection with the division of the residuary among the four children, she stated that this was " as he would wish it. ' '
The evidence is very strong in the record, and uncontradicted, that Fulton treated the four children of both of his marriages with equal affection and esteem. There is proof that Fulton stated on two occasions in Grace'is1 presence, after the execution of their reciprocal wills, that they had disposed of their property in such manner that the survivor would hold certain stock, then under discussion, for the benefit of Fulton's four children and his grandchildren. After Fulton'is death there- is proof of an admission by Grace that " she was obligated to take car e of Fulton'® properties for his four children." There is other proof in the same direction.
On the whole record we are thus of opinion that Grace took the property by Fulton's will in a relationship of confidence from which Fulton believed she would dispose of the property "as he would do it himself"; and that it was the implicit understanding between them that -such a distribution was an obligation, based on confidence, which Grace undertook. The imposition, of a constructivo trust upon the estate of Grace is thus well grounded in equitable principle. We see no undue difficulty in the execution of the decree which in the final analysis is a matter of computation.
The judgment should be affirmed, with costs to respondents.