Case Name: Commonwealth of Pennsylvania, by Robert P. Kane, Attorney General, Plaintiff v. Frank C. Hilton, Defendant
Court: Commonwealth Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1976-04-07
Citations: 24 Pa. Commw. 285
Docket Number: No. 1363 C.D. 1975
Parties: Commonwealth of Pennsylvania, by Robert P. Kane, Attorney General, Plaintiff v. Frank C. Hilton, Defendant.
Judges: before President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt.
Reporter: Pennsylvania Commonwealth Court Reports
Volume: 24
Pages: 285–292

Head Matter:
Commonwealth of Pennsylvania, by Robert P. Kane, Attorney General, Plaintiff v. Frank C. Hilton, Defendant.
Argued February 4, 1976,
before President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt.
J. Justin Blewitt, Jr., Deputy Attorney General, with him Howard M. Levinson, Deputy Attorney General, Lawrence Silver, Deputy Attorney General, and Robert P. Kane, Attorney General, for plaintiff.
Harold Gondelman, with him Baskin, Boreman, Wilner, Sachs, Gondelman & Craig, for defendant.
April 7, 1976:

Opinion:
Opinion by
Judge Rogers,
The Commonwealth of Pennsylvania by its Attorney General has filed in this Court its complaint in equity alleging that the defendant, Frank C. Hilton, while holding the position of Secretary of the Commonwealth's Department of Property and Supplies caused the Commonwealth to place insurance through brokers who, in conspiracy with the defendant, paid the defendant kickbacks of premiums in amounts exceeding $177,000, for which activities defendant was indicted, tried, convicted and sentenced in Pennsylvania Federal District Courts. The complaint seeks our order that the defendant pay the plaintiff the amount of money unlawfully obtained by the means described in the complaint, that we impress a trust on property of the defendant, that we declare that the defendant holds title to such property as constructive trustee as to the amount unlawfully received, that the defendant be enjoined from transferring or otherwise disposing of property until the plaintiff's claim is satisfied and general relief.
The defendant has filed preliminary objections to the Complaint now before us for disposition, reading in full as follows:
"1. The plaintiff has a full, complete and adequate non-statutory remedy at law.
"2. The complaint fails to set forth a claim upon which relief can be granted.
"3. The complaint as filed attempts to deprive the defendant of his rights to a trial by jury."
The preliminary objections are without merit and must be overruled.
The facts alleged in the complaint present a classic case for the imposition of a constructive trust on the kick-backs assertedly received by the defendant.
"Unless otherwise agreed, an agent who makes a profit in connection with transactions conducted by him on behalf of the principal is under a duty to give such profit to the principal." RESTATEMENT (SECOND) OF AGENCY, §388 (1958).
"Where a fiduciary in violation of his duty to the beneficiary receives or retains a bonus or commission or other profit, he holds what he receives upon a constructive trust for the beneficiary." RESTATEMENT OF RESTITUTION §197 (1937).
"Thus, if a trustee, a corporate officer, or an agent entrusted with the management of property insures the property in a company of which he is an agent, and he receives from the company a commission for placing the insurance, he is accountable for the commission so received and holds it upon a constructive trust for his beneficiary." RESTATEMENT OF RESTITUTION §197, comment (a) (1937).
"When a person holding title to property is subject to an equitable duty to convey it to another on the ground that he will be unjustly enriched if he were permitted to retain it, a constructive trust arises." RESTATEMENT OF RESTITUTION §160.
"A person entitled to restitution is entitled, in an appropriate case, to a remedy by a proceeding in equity, and not merely to a remedy by a proceeding at law." RESTATEMENT OF RESTITUTION, Chapter 9, Introductory Note (1937).
"The imposition of a constructive trust, unlike the finding of an express or a resulting trust, does not require that the parties specifically intended to create a trust; it is an equitable remedy designed to prevent unjust enrichment. Buchanon v. Brentwood Fed. Sav. & Loan Ass'n, 457 Pa. 135, 320 A.2d 117 (1974) ; Piero v Piero, 438 Pa. 119, 264 A.2d 692 (1970) ; RESTATEMENT OF RESTITUTION §160 (1937) ; 5 A. Scott, LAW OF TRUSTS § 404.2, 462 (3d ed. 1967). There is thus no rigid standard for determining whether the facts of a particular case require a court of equity to impose a constructive trust; the test is whether or not unjust enrichment can thereby be avoided. This Court has repeatedly cited with approval the off-quoted language of Justice (then Judge) Cardozo in Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378, 380-81 (1919):
'A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest equity converts him into a trustee. . A court of equity in decreeing a constructive trust is bound by no unyielding formula. The equity of the transaction must shape the measure of relief.'
See, e.g., Buchanon v. Brentwood Fed. Sav. & Loan Ass'n, supra at 152, 320 A.2d at 127; Shapiro v. Shapiro, 424 Pa. 120, 129, 224 A.2d 164 (1966); Chambers v. Chambers, 406 Pa. 50, 54-55, 176 A.2d 673, 675 (1962)." Stauffer v. Stauffer, Pa. , 351 A.2d 236 (1976).
The Commonwealth's claim as pleaded being cognizable in equity, the defendant's further objection based on his asserted right to a jury trial provided by Article 1, Section 6 of the Pennsylvania Constitution also fails.
"It is insisted that this act is repugnant to that clause of the constitution which guarantees 'that trial by-jury shall be as heretofore, and the right thereof remain inviolate'. . . The founders of this state brought with them to their new abode the usages to which they had been accustomed. . . . Among them was trial by jury. . . . But never in England was there any usage, and consequently never was there any right in the subject, that every litigated question of fact should be submitted to a jury. In all that large class of cases which are cognizable in courts of equity, there never was any right of trial by jury. . . ." Byers and Davis v. Commonwealth, 42 Pa. 89, 94 (1862).
Order
And now, this 7th day of April, 1976, it is ordered that the defendant's preliminary objections be and they are hereby overruled, with leave to the defendant to file an Answer within twenty days after notice of this order.
. The complaint reveals that the judgments of sentence have been appealed.