Court Opinion

ID: 9723434
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:14:59.187364+00
Date Added: 2024-06-11T18:24:48.742633
License: Public Domain

JUSTICE STAMOS, dissenting: I believe the majority misapprehends both the object of the constructive trust sought to be raised and the proper standards for raising it. The majority states that, in amended count II of their counterclaim, the Suttles “seek to impose a constructive trust upon the 426 acres of farmland.” (126 Ill. 2d at 191.) Yet an examination of the counterclaim’s language, reproduced in the opinion (126 Ill. 2d at 191-92), discloses that the Suttles merely seek a constructive trust, without specifying that it pertain to the farmland rather than to the $600,000 by which they claim that the Vogels have been unjustly enriched (126 Ill. 2d at 191). Indeed, the gravamen of the amended count II, as reproduced in the opinion, is that retention by the Vogels of the $600,000 is the inequity in the case, not that the Vogels’ repossession of the farmland itself was inequitable. Even though the Suttles’ prayer for relief (not reproduced in the opinion) couched the request for a constructive trust in terms of the Vogels’ “property” rather than of the $600,000 specifically, this court should consider the amended count II to be seeking a constructive trust as to the $600,000, since it is at this trust object that the count is clearly aimed. Shifting the perceived focus of the Suttles’ action from the farmland to the $600,000 also helps to cast new light on the standards for imposing the trust. The majority is unable to see in the Suttles’ counterclaim any of the specific allegations of wrongdoing that it deems necessary to raise a constructive trust. (Although the majority also notes that to impose a trust the grounds therefor must be clear and convincing, that issue would be premature at this stage of the case, since at this stage the only question is whether the amended count II states a cause of action. If a cause of action is stated, it will then be up to the trial court to determine in the first instance whether the grounds for the relief sought are convincing.) Focusing on the $600,000 as the trust object, I consider that the following allegations are sufficiently specific claims of wrongfulness: (1) that the Vogels knowingly accepted the benefits of the Suttles-Dawdy contract and thereby received payments attributable to the Suttles; (2) that the Vogels knew of the “assignment” to the Suttles in arguable violation of the Vogel-Dawdy contract’s “non-assignment clause” but that the Vogels nevertheless acquiesced in the “assignment” while accepting payments made as a result of it and attributable to the Suttles; and (3) that retention of the payments attributable to the Suttles unjustly enriches the Vogels. None of these allegations, of course, contends that the Vogels are in possession of the farmland unjustly, but then it is the $600,000 and not the farmland that should be considered the object of the trust sought. The allegations certainly constitute charges of mistake, if it is assumed from the counterclaim’s language that the Suttles understood the Vogels to have acknowledged and agreed to the Dawdy-Suttles “assignment.” The allegations also constitute charges of fraud, if fraud is considered in its constructive sense rather than as intentional wrongdoing. In any event, our courts have repeatedly raised constructive trusts in circumstances falling short of actual fraud. “A court of equity will raise a constructive trust, even where there is no fraud, whenever the circumstances of the transaction are such that the person who takes the legal estate may not enjoy the beneficial interest therein, as against the other party to the transaction, without violating some established principle of equity.” (In re Estate of Ray (1972), 7 Ill. App. 3d 433, 439; accord Gluth Brothers Construction, Inc. v. Union National Bank (1988), 166 Ill. App. 3d 18, 26; County of Lake v. X-Po Security Police Service, Inc. (1975), 27 Ill. App. 3d 750, 755.) “[I]n order to establish the constructive trust *** [i]t is sufficient if, in fact, the party has received money properly belonging to another under circumstances that in equity he ought not be allowed to retain it.” County of Lake v. X-Po Security Police Service, Inc. (1975), 27 Ill. App. 3d 750, 755; accord Chicago Park District v. Kenroy, Inc. (1982), 107 Ill. App. 3d 222, 224; Selmaville Community Consolidated School District No. 10 v. Salem Elementary School District No. 111 (1981), 96 Ill. App. 3d 1062, 1066-67. "Illinois law holds that a constructive trust may be imposed when so required by equity and good conscience; the presence of fraud is not controlling,” and a constructive trust is not restricted to grounds of fraud or breach of a fiduciary relationship. (Roth v. Carlyle Real Estate Limited Partnership VII (1984), 129 Ill. App. 3d 433, 438.) In Charles Hester Enterprises, Inc. v. Illinois Founders Insurance Co. (1986), 114 Ill. 2d 278, on which the majority relies for a requirement of “wrongdoing,” this court recognized disjunctively that “[s]ome form of wrongful or unconscionable conduct” is required for imposition of a constructive trust. (Emphasis added.) (Charles Hester, 114 Ill. 2d at 293.) While judging from the complaint the Vogels may not have come into possession of the $600,000 wrongfully, their retention of it under the ensuing circumstances may be deemed unconscionable and thus enough to justify a constructive trust. In this connection, the failure of the counterclaim’s amended count II to recite the Vogels’ repossession of the farmland as part of the unjust-enrichment rationale is, as the appellate court observed (160 Ill. App. 3d at 478-79), a matter of form, not substance, and is a pleading defect easily curable. As for whether the allegations of ratification of the “assignment” constitute a claim of fiduciary duty, the majority concludes that, because of our decision in Vogel I, the Suttles cannot now allege a fiduciary duty or its breach. (126 Ill. 2d at 194.) I believe that the majority is incorrect in this conclusion, for the reasons very well set forth by the appellate court (160 Ill. App. 3d at 483). Our statement in Vogel I that “[t]he Suttles could pursue a remedy only under their contract with the Dawdys” (Vogel I, 107 Ill. 2d at 77) should be taken to mean merely that the Suttles can have no contractual action at law against the Vogels, with whom they never contracted. Our statement should not be taken to bar the present equitable action by the Suttles against the Vogels, since the action does not depend on existence of a contractual relationship but depends rather on existence of inequity, and since no such equitable action or fiduciary duty was at issue in Vogel I. Vogel I merely precluded the assertion of an “assignment” ratification as a defense to the action for forcible entry and detainer that was the subject matter there — a strictly statutory action involving possession of land and based on the parties’ contractual relationship or lack thereof. By contrast, the present action is equitable, involves a claim to money, and is based on allegedly unjust retention by the Vogels of that money. Moreover, the present action need depend not on whether ratification actually occurred (even if Vogel I were to be considered to estop the Suttles on that point) but merely on whether the Vogels’ retention of the $600,000 is unjust and wrongful because the Suttles paid it in the belief that a ratification had occurred. Had the majority accepted my view of the counterclaim’s sufficiency to state a cause of action, it would then be necessary for the court to address whether the default judgment against the Vogels represented an abuse of discretion. On this question I intimate no view, but I believe it to be the real crux of this appeal, since I agree with the majority that the doctrine of res judicata does not bar the present action (though it was unnecessary for the majority to address the latter doctrine after having concluded that no cause of action is stated), and collateral estoppel is likewise inapplicable. A word, may be in order about the supposed non-assignment clause and the “assignment” to the Suttles. Although in the course of two trips to this court the parties do not appear to have litigated the question, I doubt whether the clause in the original Vogel-Dawdy contract was actually limited to prohibiting assignments. Rather, it purported to prohibit alienation of the real estate as well as assignment of the purchase contract. (See Vogel I, 107 Ill. 2d at 71.) Furthermore, the Dawdy-Suttles contract was apparently a new contract of sale, not an assignment of the Vogel-Dawdy contract (see, e.g., Vogel I, 107 Ill. 2d at 74), even though the Dawdy-Suttles contract expressly recognized the Vogel-Dawdy contract’s existence (see Vogel I, 107 Ill. 2d at 73; Vogel I, 123 Ill. App. 3d 356, 358-59) and even though a default judgment was entered against the Dawdys on the issue of Vogel-Dawdy contract breach (see Vogel I, 107 Ill. 2d at 72). Restraints on alienation of real estate are generally disfavored (see Baker v. Loves Park Savings & Loan Association (1975), 61 Ill. 2d 119, 123-24; Gale v. York Center Community Cooperative, Inc. (1960), 21 Ill. 2d 86, 91-92), even though a restraint on alienation that is contained in a real estate sale contract may be held reasonable and hence valid (see Baker, 61 Ill. 2d at 124-25), and even though in preservation of the farmland as “an economic unit” (see Vogel I, 107 Ill. 2d at 73) might have been found an intent to protect the security interests of the Vogels and hence a reasonable restraint (see Baker, 61 Ill. 2d at 124-26). This question is now academic in light of the history of this controversy, but it is nevertheless possible that the matter might profitably have been explored more thoroughly at an earlier stage, in which case the outcome in Vogel I might conceivably have been different and the present cause never litigated. The academic existence of the “assignment” question, coupled with an assumption of the truth of the counterclaim, reinforces my belief in the injustice of permitting the Vogels both to regain the real estate and to retain all the hundreds of thousands of dollars paid toward its anticipated purchase, while leaving the Suttles to seek recovery only from their attorney or the Dawdys. Even if the Suttles were eventually to obtain a judgment against their attorney or the Dawdys, and even if such a defendant were solvent or in turn obtained a judgment against the Vogels on some theory in order to facilitate payment of a judgment debt to the Suttles, the process of litigation would be circuitous and risky. Meanwhile, according to the counterclaim, the Vogels retain a large sum of money that equitably belongs to the Sutiles, and the right to this money could be tried directly if the counterclaim were held to state a cause of action. Accordingly, I respectfully dissent.