Court Opinion

ID: 9744611
Source: CourtListenerOpinion
Date Created: 2023-08-26 22:10:11.118416+00
Date Added: 2024-06-11T07:24:50.480694
License: Public Domain

Mr. Justice House, dissenting: This case is a far cry from the usual constructive trust case based on a fiduciary relationship, such as where a great disparity in education, intelligence and business understanding exists between the parties or where the parties are general partners and one secretly buys for his own account to the detriment of the other. Here, the parties were each astute business men. Neither dominated the other. They were not general joint adventurers, but each went his own separate way in most business enterprises. Funderburg loaned more than $5,000,000 in risk capital to Shappert over the years, by which the latter apparently became wealthy. The loans were made upon Shappert’s word for earnings and financial condition, since he was never required to show an earning statement or balance sheet. It is my firm opinion that the holding that a fiduciary relationship existed, within the meaning of the law of constructive trusts, was against the manifest weight of the evidence. Furthermore, assuming arguendo that such a relationship existed, there was no abuse of confidence which justified the impression of a constructive trust. In any event, the doctrine of unclean hands should be applied and equitable relief in the form of a constructive trust denied because of Shappert’s conduct in the transaction. He testified that on November 30, 1957, he told Funderburg he had made up his mind the night before to purchase Mrs. Martin’s interest for $50,000. But it was during the conversation that he admittedly transferred $30,000 in government bonds from the partnership bank box to his own. It is strange indeed that he should be secreting partnership assets in fear of litigation with Mrs. Martin, a willing seller, on the very day following his decision to purchase her interest. He says that the transfer of securities was upon the advice of Funderburg. Funderburg testified that he chided Shappert for trying to take advantage of his sister-in-law and said: “Fred, you are making a mistake. No man can get so rich and so powerful that he can afford to take advantage of a woman.” When asked the meaning of the statement on cross-examination he testified: “Don’t you think if you had a friend and you saw him doing something that you thought was dishonest and dishonorable, that you would advise him not to do it? If you wouldn’t your friendship wasn’t worth very much.” Looking at the evidence of the transfer of assets in the light most favorable to Shappert, we are faced with the fact that Shappert was willing, and indeed did, make the transfer to his own box at a time when he says he had decided to buy and the danger of litigation was over. The ancient clean-hands maxim is just as potent as it ever was and should be applied here. Mr. Justice Klingbiel joins in this dissent.