Court Opinion

ID: 9791690
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:16:04.485885+00
Date Added: 2024-06-11T07:37:38.019373
License: Public Domain

MOSK, Acting C. J.
I dissent.
The majority search for a resulting trust and fail to find the parties “consciously and intentionally” entered into a trust relationship. What they *487overlook is that under these circumstances, an intention is presumed by operation of law. Since 1872, Civil Code section 853 has provided “When a transfer of real property is made to one person, and the consideration therefor is paid by or for another, a trust is presumed to result in favor of the person by or for whom such payment is made.”
This is precisely the kind of case in which such presumption should be invoked in order to avoid a gross miscarriage of justice. The “transfer of real property” referred to in section 853 was initially made to Waugh, but “the consideration therefor,” also as provided in that section, was paid entirely by the plaintiff. No funds other than those of the plaintiff were deposited in the single escrow used in this transaction.
The plaintiff paid $12,500 into escrow, presumably to the property owners, the Cuslidges. He was unaware that Waugh intended to, or did, acquire any interest in the property. At no time did he consent to Waugh acquiring any interest in the property. To now saddle plaintiff with liens for some $50,000 worth of Waugh’s indebtedness—approximately four times the value of the property—merely because Waugh acquired a theoretical transitory title is the ultimate in exalting form over substance.
Conceivably we could find a constructive trust here. However, these facts more properly qualify as a textbook illustration of a resulting trust. By definition a resulting trust arises from a transfer of property under circumstances indicating that the parties did not intend the transferee to take a beneficial interest. (Rest., Trusts, §§ 404, 440, 456.) It cannot be denied that no one intended Waugh to acquire any interest in the property. Witkin points out that a resulting trust has been termed “an intention-enforcing” trust to distinguish it from a constructive or “fraud-rectifying” trust. (4 Witkin, p. 2964.) The resulting trust, differing from both the express trust and the constructive trust, arises by operation of law. And, as indicated above, Civil Code section 853 is the law pursuant to which this trust arises.
To find a constructive trust, we would be required to impute fraud to one of the parties, presumably Waugh. Yet the evidence establishes no fraud, undue influence or wrongful act. Waugh perpetrated no deliberate deception and the evidence indicates no awareness by him or any of the parties that his participation in the transaction would benefit his creditors. Indeed, his intention was to transfer unencumbered title; thus arises what Witkin describes as an “intention-enforcing” trust.
Murphy v. Clayton (1896) 113 Cal. 153 [45 P. 267] is remarkably comparable to the instant case. There plaintiff put up half the purchase price, the deceased the other half, and title was taken only in the name of the deceased. Upon his death, creditors of the deceased sought to assert claims *488against the whole of the property, insisting they were entitled to priority over the secret equity of the plaintiff. The court found “no act, conduct, or admission upon the part of respondent by which the creditors were induced to give credit” and none of the creditors “knew that the title to the property stood in his name.” There was no estoppel, and thus the court imposed a resulting trust, noting that there “is nothing illegal or against public policy in the mere fact that a party equitably entitled to real property permits the legal title to remain in another; resulting trusts are fully recognized by our law; . . .”
The majority of the court improvidently granted a hearing in this case. The Court of Appeal properly decided the matter. I therefore adopt in dissent the opinion of Presiding Justice Shoemaker, concurred in by Justices Agee and Taylor (Cal.App.; 76 Cal.Rptr. 214). Their opinion, in relevant part, follows:
The sole issue presented by this appeal is one of law which, under the settled rule followed in this state, must be resolved favorably to plaintiffs. The rule, as stated in Ogden’s California Real Property Law (1956) section 15.13(4), page 562, is that “The lien of a judgment does not attach to the naked legal title to real property held by the judgment debtor in trust, as where the debtor takes legal title as a mere agent or conduit in effecting a transfer from the seller to a purchaser, or where the mere legal title is held by the debtor as trustee under an express trust or under a resulting trust in favor of a third party who paid the purchase price of the property.”
In Zenda Mining & Milling Co. v. Tiffin (1909) 11 Cal.App. 62, 65 [104 P. 10], the court stated, “ ‘the doctrine is well established that where land is purchased in the name of one person, and the consideration is paid by another, the land will be held by the grantee in trust for the person furnishing the consideration.’ (Riley v. Martinelli, 97 Cal. 575 [33 Am.St. Rep. 209, 32 Pac. 579]; Currey v. Allen, 34 Cal. 254; Civ. Code, sec. 853.) ‘Whenever one is a mere conduit, as where he purchases property in his name as the agent of another, with the latter’s funds, and subsequently conveys to him, there is no interest to which a judgment lien can attach.’ (Freeman on Judgments, § 373.)” (To the same effect, see Riverdale Mining Co. v. Wicks (1910) 14 Cal.App. 526, 534-537 [112 P. 896]; Iknoian v. Winter (1928) 94 Cal.App. 223, 225-226 [270 P. 999]; Spear v. Farwell (1935) 5 Cal.App.2d 111, 114 [42 P.2d 391]; Schriber v. Alameda etc. Title Ins. Co. (1958) 156 Cal.App.2d 700, 707 [320 P.2d 82].)
Defendant lienors contend that the rule above set forth should be deemed inapplicable because the Waughs purchased the property from the Cuslidges for “a valuable consideration” of $11,000 and because there was no express agreement between the plaintiffs and the Waughs to the effect that *489the Waughs were acting solely as agents of plaintiffs. We do not agree. The undisputed evidence established and the trial court found that all of the funds deposited into the escrow were furnished by plaintiffs. A portion of these funds, $11,000, was paid to the Cuslidges for the property. The Waughs never paid any funds of their own for the property and were never in a position to claim any interest in it. Their absolute duty was to convey the property to plaintiffs. In a case such as this, the Waughs served as a “mere conduit” and their interest was not one to which the outstanding judgment liens could attach. Defendants’ reliance upon the absence of any express agreement of agency between plaintiffs and the Waughs is misplaced. The Waughs did not acquire a greater interest in the property because their role in the transaction was a surreptitious one and returned a profit to them by the use of plaintiffs’ money, without their knowledge or consent.
I would reverse the judgment.