Opinion ID: 1148875
Heading Depth: 1
Heading Rank: 8

Heading: The Constructive Trust

Text: ¶ 33. The chancellor found as a fact that (1) Lots 250 and 251 are in the name of Ronnie Mizell only, with Lot 252 and the adjoining acreage in both names; (2) Linda has Lot 253 (the marital home) solely in her name and has exclusive use and possession of Lot 252 by the order of divorce; (3) both Ronnie and Linda have made payments as well as paid taxes on Lots 250 and 251; and (4) Linda incurred joint liability on a purchase money note by executing a Deed of Trust with Ronnie in favor of Singing River Credit Union. Subsequent to the filing of the suit before this Court, Ronnie and Linda entered into an agreement and resolved their dispute as to Lot 252. ¶ 34. Concluding that payment and/or title to these lots should be dealt with equitably, the chancellor found that Linda was entitled to a lien on Lots 250 and 251 in the amount of $4,650 plus interest, the amount she had paid to Ronnie. The chancellor also recognized a constructive trust in favor of Linda, whereby Ronnie held legal title to Lots 250 and 251 in trust for the use and benefit of Linda and Ronnie as joint tenants. ¶ 35. Linda claims that based upon the misrepresentations of Ronnie, the chancellor should have awarded her a one-half interest in Lots 250 and 251 instead of impressing a lien. Linda reasons that the two lots, which were purchased for $6,000 each, continue to increase in value and that Ronnie, upon the sale of these lots contiguous with the marital home, will enjoy a windfall. Linda says Ronnie can pay off the $4,650 lien, sell the lots for $20,000, and pocket the difference. This would produce a profit of $8,000 going solely to Ronnie. ¶ 36. The law of constructive trusts is set forth in Planters Bank & Trust Company v. Sklar, 555 So.2d 1024, 1034-35 (Miss. 1990), Allgood v. Allgood, 473 So.2d 416, 421 (Miss. 1985), and Sojourner v. Sojourner, 247 Miss. 342, 153 So.2d 803, 807 (1963). We pointed out in Planters Bank & Trust that a constructive trust is raised by equity to satisfy the demands of justice. We also said that [a]ny transaction may provide an appropriate setting for creating a constructive trust where for any reason, one party holds funds `which in equity and good conscience should be possessed by' another party. Their forms and varieties `are practically without limit.' Planters Bank & Trust Company v. Sklar, 555 So.2d at 1034. Clear and convincing proof is necessary to establish a constructive trust. Id. at 1034. ¶ 37. In Sojourner v. Sojourner, supra, we stated: A constructive trust is one that arises by operation of law against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. ¶ 38. Although the chancellor stated in his ruling that he had a serious question as to whether it can take the name of one person and put it on the title to another, the question of divestiture of title in a divorce case was settled in Draper v. Draper, 627 So.2d 302 (Miss. 1993), in which this Court abandoned the title theory of property. We explicitly stated that the chancellor in a divorce case now has the authority to divest title from one spouse, and vest it in the other spouse, when equitably dividing the marital assets. Id. at 305. ¶ 39. There can be no doubt that Linda made a material and direct contribution to the purchase of Lots 250 and 251. Some of the contributions were made during the marriage in the form of payments from a joint account while the $4,650 was paid to Ronnie from Linda's account following the divorce. Thus, Lots 250 and 251 can be characterized as jointly accumulated mixed property but not jointly accumulated marital property. Linda signed the note on June 23, 1983, and payments were made from a joint account until the divorce was granted on July 18, 1984. Linda paid $4,650 to Ronnie from October of 1984 until April of 1987. ¶ 40. Divestiture of title is one means now available to a chancellor dividing property pursuant to equitable principles. However, it is not the only means by which to perform an equitable division of property, and the chancellor in this case did not believe it was available to him at the time of judgment, as his comments reveal. The chancellor instead used a lien and a constructive trust, to divide the property. We must remember that the lots were purchased during the marriage and were intended to be jointly owned property, thus both Linda and Ronnie were to enjoy or suffer the increase or decrease in value of the lots. The chancellor's order does not entitle Linda to enjoy any of the increased value (over the purchase price) of the lots. The chancellor's order only grants Linda a lien upon the lots in an amount representing her actual payments made toward the purchase of the lots. Where both parties financially contributed to acquisition of property, the chancellor may order and require both parties to receive an undivided one-half interest in that property. Brendel v. Brendel, 566 So.2d 1269, 1273 (Miss. 1990). See also, Hemsley v. Hemsley, 639 So.2d 909 (Miss. 1994), Ferguson v. Ferguson, 639 So.2d 921 (Miss. 1994). We find an abuse of discretion, and reverse and remand this issue. Linda's name shall be added to the deed of these lots as joint owner with Ronnie, so that each party will equally share in the increase in value of the lots.