Title: Melloh v. Gladis
Citation: 309 N.E.2d 433
Docket Number: 474S84
State: Indiana
Issuer: Indiana Supreme Court
Date: April 16, 1974

309 N.E.2d 433 (1974)
Ardis C. MELLOH, Defendant-Appellant,
v.
Mary A. GLADIS, Plaintiff-Appellee.
No. 474S84.

Supreme Court of Indiana.
April 16, 1974.
Rehearing Denied May 21, 1974.
*434 Melville E. Watson, Greenfield, Michael B. Reddington, Indianapolis, for defendant-appellant.
Daniel J. Harrigan, Bayliff, Harrigan, Cord &amp; Maugans, Kokomo, for plaintiff-appellee.
HUNTER, Justice.
This cause arises upon petition to transfer and involves a dispute between a brother and sister as to whether they are to *435 share equally certain real property originally owned by their deceased mother. The facts are undisputed that the decedent intended that the siblings equally share her personal property. The controversy centers on a deed, absolute on its face, which was executed during deceased's lifetime, and purported to convey certain real property to the defendant. The plaintiff alleged in her complaint the following (as taken from the Court of Appeals opinion):
At the conclusion of all the evidence, the trial court rendered its findings of fact and conclusions of law, which, for the most part, corresponded to the allegations of Mary's complaint. However, although Mary alleged that she was the beneficiary of a constructive trust, the trial court found that she was the beneficiary of a resulting trust and entered judgment for her in the amount of $14,410.38.
Ardis appealed and the Court of Appeals, First District, reversed and remanded. (301 N.E.2d 659)
The Court of Appeals placed great weight on the conflicting nature of the testimony relating to a meeting between the mother, Mary, Ardis, and the family attorney. At the meeting, the mother, aware of her illness, deeded the house to Ardis and his wife for one dollar in consideration. The deed was absolute on its face. According to Ardis and the attorney, the mother never made any statement or expressed any intention that Ardis share the value of the house with Mary. Mary, however, testified that the mother stated at the meeting, as well as on prior occasions, that Mary and Ardis were to share everything including the house, equally and that the house was deeded to Ardis with the agreement that Ardis would owe Mary half the value of it. It was further agreed that Ardis would take care of the family's financial matters while Mary would live with and care for the mother until her death.
Mary has filed a petition to transfer with this Court. She first contends that the Court of Appeals erred by applying IC 1971, 30-1-9-6 through 30-1-9-8 to this case. She argues that these sections *436 do not apply to the facts of this case because their application is limited to "trusts concerning lands" whereas her interest, which allegedly is an amount equal to one-half the value of the house, is personal property. Although this contention is probably meritorious, Mary offers no argument in support thereof other than a mere assertion of the proposition. This contention, therefore, will not be treated and is deemed waived. A.P. 8.3(A)(7).
Mary further contends that the Court of Appeals contravened a ruling precedent of this Court found in Friend v. Lafayette Joint Stock Land Bank of Lafayette (1938), 213 Ind. 408, 13 N.E.2d 213, which is that if there is any evidence which fairly tends to establish the facts found, the findings will not be disturbed. Here, the Court of Appeals stated its holding as follows:
To reach this result the Court of Appeals first noted that, although parol evidence is admissible to establish a trust, it must be received with caution, and then apparently applied the following standard of proof, as stated in Costa v. Costa (1953), 124 Ind. App. 128, 115 N.E.2d 516:
The above quoted language from Costa is intended as a standard for the trier of fact, not a standard of appellate review which would allow a court on appeal to substitute its judgment for that of the trial court in regard to fact finding. This becomes evident when read in conjunction with subsequent language in Costa:
The language in the Court of Appeals holding indicates that its decision is based on the failure of Mary to prove the agreement between the parties. There, the court points to the "sharply conflicting" testimony as being the defect in Mary's case. If this is a correct interpretation of the holding, the Court of Appeals is in error under the appellate review standard set forth in Costa. Since the evidence was conflicting, it was incumbent upon the Court of Appeals to uphold the trial court's finding of an agreement, Ardis' intent to keep the property and the resulting fraud.
However, the Court of Appeals gives the appearance of upholding the trial court's findings of fact when it states:
The instructions to the trial court on remand are, therefore, not clear, and this will possibly produce an erroneous result. This is because, although the Court of Appeals is correct in holding that Mary has not proved a resulting trust, she is the beneficiary of a constructive trust as a result of the fraud which the trial court found. If the holding is viewed as negating the trial court's finding of the agreement and, hence, the fraud, the imposition of a constructive trust will be precluded.
Plaintiff contends that the Court of Appeals erred in holding that Ardis' fraud prevented a resulting trust from being imposed under the third exception contained in IC 1971, 30-1-9-8. That exception requires that the property be conveyed to the grantee "by agreement, and without any fraudulent intent... ." The Court of Appeals held that the statute must be complied with to create a resulting trust and that the fraud here precluded such compliance. Mary argues that the fraud committed by Ardis is not the same fraud that the statute is concerned with, so that, if the statute is applicable here, its requirements are met. She further asserts that Ardis should not be permitted to benefit by his own fraud and be insulated from the equitable relief fashioned by the trial court.
The Court of Appeals erred in determining that fraud, as it is involved in this case, precludes a resulting trust theory. The following three statutory sections are relevant to this inquiry:
A careful reading of these sections in pari materia reveals that their purpose is to prevent the grantor or the person beneficially interested in the real estate from defrauding third parties by hiding assets. Therefore, when "fraudulent intent" is used in the third exception contained within 30-1-9-8, it is referring back to the presumption of a fraudulent intent contained within 30-1-9-7. The statute is designed to prevent a fraud by the grantor or the beneficiary, committed individually or in collusion with the grantee. A fraud perpetrated by the grantee to the detriment of the grantor and the beneficiary, the other parties to the agreement, is simply not the concern of the statute. This is the present case, and those cases relied upon by the Court of Appeals do not hold to the contrary.
Even though the fraud present in this case should not prevent the creation of a resulting trust, Mary, under the facts of this case, is not the beneficiary of such a trust. 5 Scott on Trusts § 404.1 states:
The case at bar is clearly neither of the first two situations. The third, a "purchase money resulting trust," is that which IC 1971, 30-1-9-6 deals with. But this case does not properly fit within the purchase money resulting trust situation, because it is questionable whether there was any "purchase money" or even a "purchase." In any event, Mary did not allege, nor has she proved, a resulting trust. The cases require strict proof that the claimed beneficiary has actually furnished the purchase price for the property. See Hutton v. Cunningham (1901), 28 Ind. App. 295, 61 N.E. 1138, 62 N.E. 644. Here, Mary has not proved that the care and comfort she provided for her mother was intended by the parties as consideration for the "purchase" of the property.
In respect to constructive trusts, Scott states:
The imposition of a constructive trust is particularly appropriate to the present situation. The trial court first found a constructive trust, as Mary alleged in her complaint, and then changed its finding to read resulting trust, apparently on the basis of Ardis' motion to correct errors. In that motion Ardis claimed that the Court of Appeals had held in Hunter v. Hunter (1972), 283 N.E.2d 775, that the "Knowing intent to violate a future oral promise is not fraud nor basis for a constructive trust." (Tr. p. 5) This statement is totally erroneous, and nothing to that effect is found in Hunter, supra. Note the following annotations to IC 30-1-9-8:
The label attached to the instant trust should not be determinative. Both resulting and constructive trusts are creatures of equity, imposed to do justice. This area is too overlapping, confused and ill-defined for the Court of Appeals to rely solely on the fact that the trial court labeled the trust "resulting," and deem it to be controlled by IC 30-1-9-6 through 30-1-9-8. It would be preferable and do more justice to the law if it were merely deemed to be, and treated as, a constructive trust as alleged in Mary's complaint.
Defendant contends that Mary's testimony as to the understanding between Ardis, his mother, and Mary was inadmissible in that Mary is an incompetent witness under IC 1971, XX-X-XX-X; Ind. Ann. Stat. § 2-1716, which reads as follows:
However, the plaintiff is not claiming as an "heir" for purposes of the Dead Man's Statute. Plaintiff's claim is based on an inter vivos transaction in which she was a named donee. To such a claim as this, the statute above is simply not applicable. Snyder v. Frank (1912), 53 Ind. App. 301, 101 N.E. 684. Plaintiff is making no demand on the deceased's estate, nor is she bringing the action against defendant as an "heir." Similar facts were presented to this Court in Creamer v. Sirp (1883), 91 Ind. 366. In Creamer, plaintiff-sister sued defendant-brother on a contract made by their deceased father. Further facts are taken from the Court's opinion:
Likewise, there was no error in admitting the plaintiff's testimony in the instant case.
Defendant further contends that, even if Mary be a competent witness to testify, her parol evidence was inadmissible to contradict the express terms of the deed. This contention is patently without merit. Parol evidence has always been held admissible in an action to establish or enforce a constructive trust. Cox v. Arnsmann (1881), 76 Ind. 210. Defendant overlooks the basic rationale behind constructive trusts. Such trusts are creatures of equity and as equitable creations are not governed by the parol evidence rule, statute of frauds, or any other rules of law pertaining to express trusts. Fraud is the cornerstone of constructive trusts. Such fraud was found in the case at bar. We refuse to be persuaded, as defendant seeks to persuade us, to try this cause on the appellate level. Our function is not to sit as a trial court, but rather to review and correct errors of law and to accept the facts as they are presented so long as probative evidence supports them. We fully endorse the proposition that to establish a constructive trust the evidence must be clear and convincing and not compatible with another result. But we reiterate that this standard of proof is established to guide the trier of fact, and we would be departing afar from deeply imbedded appellate principles if we were to selectively substitute our judgment on appeal.
Transfer is hereby granted and the cause is remanded to the trial court with instructions to enter judgment for plaintiff under a constructive trust. The judgment of the trial court when so modified is affirmed.
Judgment affirmed with instructions.
ARTERBURN, C.J., and DeBRULER, GIVAN and PRENTICE, JJ., concur.