Court Opinion

ID: 7913940
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:08:43.633354+00
Date Added: 2024-06-11T16:32:42.803471
License: Public Domain

Allen, J.
(concurring specially): The daughter transferred the property to her mother upon an oral agreement to hold in trust for the daughter and to be returned to the daughter by intestate succession. It is admitted that under the great weight of authority the transferee may retain the property. The majority of the Kansas cases so hold, but we have held that the transferee holds the property upon constructive trust for the transferor. (Hunnicutt v. Oren, 84 Kan. 460, 114 Pac. 1059.) Our statute G. S. 1935, 67-210, provides that, “Declarations or creations of trusts or powers, in relation of real estate, must be executed in the same manner as deeds of conveyance; but this provision does not apply to trusts resulting from the operation or construction of law.”
Where land is conveyed on oral trust in favor of the transferor, or upon oral contract to reconvey to the transferor, and where the transferee, relying on the statute of frauds, refuses to perform the trust, the English courts raise a constructive trust in favor of the transferor. (Davies v. Otty, 35 Beav. 208.) The English court said, “It is not honest to keep the land.” (p. 213.)
New will deny that to allow the transferee to keep the land would result in the unjust enrichment of the transferee.
Where the owner of land transfers it to another as security for a debt, although the deed is absolute on its face, the statute of frauds does not prevent the showing of the oral agreement. (Glynn v. Building Association, 22 Kan. 746; LeComte v. Pennock, 61 Kan. 330, 59 Pac. 641; Hegwood v. Leeper, 100 Kan. 379, 164 Pac. 173; Brinkerhoff v. Bank, 109 Kan. 700, 205 Pac. 779.)
“There would seem to be on principle, however, just as much objection to the proof of an oral mortgage as to the proof of an oral trust. Indeed, the unjust- enrichment is greater in the case of an oral trust than in the case of an oral mortgage; for if no relief is given in the former case, the whole of the *771property is lost, while in the latter case only the value above the amount of the debt is lost.” (Scott, Conveyances upon Trusts not Properly Declared, 37 Harvard Law Review, 653, 663.)
Again, if it is shown there was a confidential relationship between the parties, as in Silvers v. Howard, 106 Kan. 762, 190 Pac. 1, the court will compel restitution by raising a constructive trust. The same is true if the transfer was secured by fraud, duress or mistake. If it is possible to show the oral agreement in such cases, no valid reason has been given why the statute of frauds should forbid showing the oral trust to prevent unjust enrichment.
If A transfers land to B upon an oral trust to hold for or to re-convey to A, or to die intestate so that A could acquire the land by intestate succession, it is clear that A cannot enforce the express trust because of the statute of frauds. But B ought not to be allowed to retain A’s land and thus by his breach of faith to enrich himself at the expense of A. If he will not perform the express trust, he should be compelled to reeonvey the land to A. (Ames, Lectures on Legal History, pp. 425, 427.) The fact that A would get the same relief by enforcing a constructive trust that he would get by enforcing the express trust is purely an accidental circumstance. There are many cases where the terms of the express trust might be different. (Thus, if A transfers land to B upon an oral agreement to convey to C, the express trust is in favor of C, but should B refuse to perform his agreement the constructive trust should be declared for A.)
In 3 Bogert on Trusts and Trustees, section 497, it is said: ■
“The party who has made a- voidable or unenforceable promise is permitted by the legislature to set up the statute and avoid performance of his promise. That is a lawful act, which of itself should not be regarded as a basis for any equitable relief. But it does not follow that, because the promisor may avoid performance of his promise by use of the statute, he may also keep what he has received on the strength of a belief that the promise will be performed. To allow him to keep such a payment or other consideration would be giving the promisor something for nothing, would be unjustly enriching him at the expense of the promisee. It would be according to the statute of frauds the unnecessarily severe meaning that the promisee not only gets no performance of the promise, but also forfeits as a kind of penalty whatever he may have advanced in order to secure the making of the oral promise.” (p. 1607.)
From the caveat to the Restatement of Restitution and Unjust Enrichment it appears the American Law Institute takes no position on the question here presented. To prevent the unjust enrich*772ment of the original grantee, and to those who take under her with notice, it would seem that a constructive trust should be declared. If the agreement relates to personal property of great value, there is no difficulty in enforcing it as an express trust. It seems strange that where twenty-two acres of land is involved, as in this case, a court of equity cannot compel restitution. We cannot enforce the express trust, but we can do justice by raising a constructive trust.
By a long line of cases it seems settled in this state that the transferee can keep the property. One reason given is that “deeds would no longer be valuable as muniments of title.” (p. 768.) (Silvers v. Howard, supra.) The reason given seems unsubstantial, for it would prevent enforcing restitution when a transfer of land was procured by fraud, misrepresentation, mistake, duress, undue influence, or where the transfer was made as a security transaction. But in any view of the question it must be conceded that the rule followed in this case is too firmly established to be departed from at this late day.