Court Opinion

ID: 9574359
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:04:24.98086+00
Date Added: 2024-06-11T12:44:26.698106
License: Public Domain

HOWARD, Judge:
I concur with the majority’s opinion except as to the McNairs’ constructive trust cause of action against Ann Rains-ford. The majority affirms the special referee’s grant of summary judgment to Ann Rainsford as to the constructive trust cause of action. I respectfully dissent.
The McNairs’ failure to allege fraud on the part of Ann Rainsford does not preclude an action for constructive trust as the majority insists. The majority seems to suggest that in order to establish a constructive trust based on fraud, the defendant who currently holds the property or money sought must have himself acquired the property or money through fraud. This rationale is a far too narrow reading of South Carolina law.
The application of the equitable remedy of constructive trust is far reaching. Its limits are circumscribed only by “the inventiveness of men who find new ways to enrich themselves unjustly by grasping what should not belong to them.” Latham v. Father Divine, 299 N.Y. 22, 85 N.E.2d 168, 170 (1949). It “is the formula through which the conscience of equity finds *360expression.” Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 122 N.E. 378, 380 (1919) (Cardozo, J.). “[T]he forms and varieties of constructive trusts are practically without limit, such trusts being raised, broadly speaking, whenever necessary to prevent injustice.” Dominick v. Rhodes, 202 S.C. 139, 149, 24 S.E.2d 168, 173 (1943).
South Carolina courts often describe the law of constructive trust in vague terms because “equity is less than demanding and quite flexible in prescribing the elements essential to a constructive trust.” Whitmire v. Adams, 273 S.C. 453, 458, 257 S.E.2d 160, 163 (1979). “A constructive trust arises whenever a party has obtained money which does not equitably belong to him and which he cannot in good conscience retain or withhold from another who is beneficially entitled to it as where money has been paid by accident, mistake of fact, or fraud, or has been acquired through a breach of trust or the violation of a fiduciary duty.” SSI Medical Servs., Inc. v. Cox, 301 S.C. 493, 500, 392 S.E.2d 789, 793-94 (1990). “A constructive trust will arise whenever the circumstances under which property was acquired make it inequitable that it should be retained by the one holding the legal title.” Lollis v. Lollis, 291 S.C. 525, 529, 354 S.E.2d 559, 561 (1987). Constructive trusts are “resorted to by equity to vindicate right and justice or frustrate fraud.” Whitmire, 273 S.C. at 457, 257 S.E.2d at 163.
None of the constructive trust rules seem to prevent the use of the constructive trust remedy where the defendant obtained property through another’s fraud but did not himself commit the fraud. Instead, constructive trusts should be used, “broadly speaking, whenever necessary to prevent injustice.” Dominick, 202 S.C. at 149, 24 S.E.2d at 173. “[Ujnder the constructive trust theory, equity may collect proceeds from an innocent party in order to protect the equitable rights of those who have suffered the wrong.” 76 Am.Jur.2d Trusts § 201 (1992). At least one academic has commented, “the sweep of unjust enrichment is broad enough so that a constructive trust may also be imposed against an innocent party, provided that the innocent party would be unjustly enriched vis-a-vis the plaintiff.” Howard W. Brill, Equity and the Restitutionary Remedies: Constructive Trust, Equitable Lien, and Subrogation, 1992 Ark.L.Notes 1, 5.
*361Summary judgment is proper when “there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.” Rule 56(c), SCRCP. It “is not appropriate where further inquiry into the facts of the case is desirable to clarify the application of the law.” Tupper v. Dorchester County, 326 S.C. 318, 325, 487 S.E.2d 187, 191 (1997). Furthermore, summary judgment is a drastic remedy that should be cautiously invoked so that no person will be improperly deprived of a trial of the disputed factual issues. Baughman v. American Tel. & Tel. Co., 306 S.C. 101, 410 S.E.2d 537 (1991).
In this case, the McNairs’ failure to allege fraud on the part of Ann Rainsford is not dispositive. At the least, it is unclear how South Carolina law regarding constructive trusts would apply to the facts alleged by the McNairs. Therefore, Ann Rainsford cannot be entitled to a judgment as a matter of law. Further inquiry into the facts in this case is required to determine the application of the law.
For the foregoing reasons, I would reverse the special referee’s grant of summary judgment to Ann Rainsford as to the constructive trust cause of action.