Opinion ID: 2227881
Heading Depth: 1
Heading Rank: 7

Heading: Ponec's Investment Accounts.

Text: Ponec claims that the trial court erred in imposing a constructive trust on his investment accounts at Dain Bosworth, Inc., and Wallace Weitz & Co. Ponec admitted ownership of these accounts and he testified at trial that he deposited ProData funds into his investment accounts at Dain Bosworth, Inc., and Wallace Weitz & Co. Trial exhibits 57, 59, and 65 established, and Ponec admitted, that from October 1993 through December 1995, Ponec deposited a total of $67,931.99 of ProData's funds directly into his Dain Bosworth, Inc., accounts. Exhibits 71 and 83 established, and Ponec admitted, that in 1995, he used $20,000 in ProData funds to purchase investments for his Wallace Weitz & Co. account. On appeal, Ponec nevertheless claims that a constructive trust cannot be imposed upon these investment accounts, because he established them before the funds taken from ProData were discovered. Ponec also claims that a constructive trust is improper because part of the total investments in these accounts may have been purchased with funds other than those proved to have been wrongfully taken by Ponec from ProData. We find both of these arguments unpersuasive. Ponec admitted taking the funds at issue and forwarding them to Dain Bosworth, Inc., and Wallace Weitz & Co. for investment in his personal accounts. He admitted that neither ProData nor either of its shareholders received the benefit of the ProData funds or investments purchased therewith at Ponec's direction. Trial evidence supported ProData's claim that the corporation and its officers were unaware of Ponec's misdeeds for at least 4 years preceding their discovery of Ponec's unauthorized financial transactions. We have previously stated: Where money is the asset upon which the [constructive] trust is based, it is necessary that the specific amounts be identified and located, either by tracing the money to a specific and existing account, or where the funds have been converted into another type of asset such as by the purchase of real property, the money must be traced into the item of property. Chalupa v. Chalupa, 254 Neb. 59, 62, 574 N.W.2d 509, 512 (1998). The fact that Ponec's investment accounts existed prior to the deposit of the funds he obtained from ProData is immaterial to our analysis of this case. Where money is the asset upon which a constructive trust is based, the amount of money subject to trust may be identified and located by, inter alia, tracing the money into a specific and existing account. See id. In the instant case, the money from ProData has been clearly and convincingly traced into the two investment accounts. Ponec suggests that the investment accounts should be excluded from imposition of a constructive trust, because the ProData funds as invested in Ponec's accounts may have appreciated in value. The law is clear that if the beneficiary of a constructive trust proves his or her entitlement to imposition of such a trust by clear and convincing evidence, the beneficiary's judgment interest may in appropriate cases be satisfied not only by the original value which constitutes the trust corpus, but also by the reasonable value of the appreciation of that asset. See, Mischke v. Mischke, 247 Neb. 752, 530 N.W.2d 235 (1995) (Mischke I) ; Kuhlman v. Cargile, 200 Neb. 150, 262 N.W.2d 454 (1978); Vogt v. Town and Country Realty, 194 Neb. 308, 231 N.W.2d 496 (1975). Furthermore, we have recently observed: `An agent or other fiduciary who deals with the subject-matter of the agency so as to make a profit for himself will be held to account in equity as trustee for all profits and advantages acquired by him in such dealings.. . . `  Mischke II, 253 Neb. at 447, 571 N.W.2d at 255-56. In Mischke II, this court affirmed imposition of a constructive trust upon preexisting real and personal property and funds derived therefrom that were manipulated for personal gain by an estate's personal representative. See, also, Hanigan v. Trumble, 252 Neb. 376, 562 N.W.2d 526 (1997) (affirming imposition of constructive trust on home constructed with funds obtained by financial advisor through breach of fiduciary duty to plaintiffs); Andrews v. Schram, 252 Neb. 298, 562 N.W.2d 50 (1997) (approving ex parte orders attaching bank accounts of insurance consultants who wrongly converted and withheld funds from their principal, thereby breaching their fiduciary duty). We find no error in the trial court's finding that the fact that Ponec established the accounts before his misdeeds were discovered was not determinative as to imposition of a constructive trust upon the investment funds. Ponec testified that during 1991 to 1995, he had no source of earned income other than his ProData salary and, in addition, some limited interest on investments. ProData introduced uncontroverted evidence that during that time period, at least $87,931.99 of its funds were deposited by Ponec directly into his personal investment accounts at Dain Bosworth, Inc., and Wallace Weitz & Co. ProData introduced further uncontroverted evidence that during that time, Ponec deposited more than $247,000 in checks made payable to ProData by its customers into Ponec's personal checking account for his own use. The trial evidence was also undisputed that from 1991 through 1995, Ponec issued drafts to himself for cash from ProData's accounts totaling more than $30,000, all for his personal use. At trial, Ponec testified that he might have partially funded the Dain Bosworth, Inc., and Wallace Weitz & Co. accounts with moneys other than those he took from ProData but he produced no evidence of this. In view of the undisputed evidence detailed above, Ponec's statement, without more, is insufficient to support his claim that the trial court erred in imposing a constructive trust on Ponec's Dain Bosworth, Inc., and Wallace Weitz & Co. investment accounts. Upon our do novo review, we determine that the evidence clearly and convincingly establishes that the unauthorized ProData funds found their way into Ponec's investment accounts and that the imposition of a constructive trust on the accounts was proper.