Opinion
March 31, 1965 —
April 27, 1965.
APPEAL from a judgment of the circuit court for Milwaukee county: ROBERT W. LANDRY, Circuit Judge. Reversed.
For the appellant there was a brief and oral argument by Kenneth J. Dunlap of Milwaukee.
For the respondents there was a brief by McCormick Tessmer of Milwaukee, and oral argument by John E. McCormick and Henry A. Tessmer.
Action in equity grounded upon fraud to establish the interest of plaintiff, Steve Dombrowski, in a certain residence property in the city of Greenfield, Milwaukee county, now standing in the names of defendants Phillip F. Tomasino and Phyllis Tomasino, his wife, as joint tenants. Defendants are the son-in-law and daughter respectively of plaintiff.
The action commenced September 7, 1962, was tried to the court, and a jury was summoned to act in an advisory capacity. A summary of the material evidence adduced follows.
Plaintiff is of Polish extraction and he does not read or write, he speaks the Polish language, and has difficulty in speaking and understanding English. He and his wife gave their testimony in Polish and it was translated into English by an interpreter. He is a carpenter by occupation and in 1955 was sixty-eight years of age. Sometime early in 1955 there was some discussion between plaintiff and defendants about the building of a house to be occupied by Mr. and Mrs. Dombrowski and defendants. The testimony with respect to what was then said between the two couples is rather vague and indefinite. The most definite testimony was that of Mrs. Dombrowski and her daughter, Mrs. Brudnicki. Mrs. Dombrowski was asked this question and gave this answer:
" Q. What conversation, if any, did you have with Phyllis Tomasino as to who were to be the owners of the house? A. We all were to be. Phyllis said that we all would be bosses."
Mrs. Brudnicki's testimony is likewise best set forth by this question and answer:
" Q. Was there any conversation, if any, by the defendant Phil Tomasino about the ownership of the house at that time? A. The ownership was going to be for my mother and dad and Phil and Phyllis."
There is no testimony that either Mr. or Mrs. Dombrowski was present and heard any of the conversation between Phillip Tomasino and Mrs. Brudnicki.
Defendants selected a lot which could be purchased for $1,300. On Friday, April 28, 1955, Mr. and Mrs. Dombrowski and the defendants met at the office of a real-estate broker who was selling the lot. Plaintiff produced a $1,300 check and handed it to Phillip Tomasino who turned it over to the broker and received a deed to the lot which named Mr. and Mrs. Tomasino as joint-tenant grantees. The evidence is then in sharp dispute as to what was then said. Plaintiff testified that he objected to not having his name on the deed and "we were instructed to come Monday and the papers were then to be transferred in the Tomasinos and my name and my wife." However, defendants did not call on Monday. These questions were then asked plaintiff and he gave these answers:
" Q. Did your son [sic] and son-in-law tell you why they did not pick you up? A. They said that the papers could not be transferred in two names, only in one.
" Q. Did you believe what they told you? A. No, I did not believe.
" Q. Did you make any objection to what they told you? A. Yes, I did.
" Q. And what objection did you make? A. After I had told them that I was going to stop the procedure, they came and begged me not to do it, my daughter and my son-in-law.
" Q. Did they make any promises to you when they asked you not to change this? A. We will make the change later.
" Q. Did they ever make the change later? A. I am requesting that for the past six years that the change be made.
" Q. Did you ask the assistance of any of your other children to help you along with your problem with the Tomasinos? A. No, I did not."
Phillip Tomasino denied any promise to have plaintiff's name placed on the deed or to later change over the title to accomplish this. It was his version that the $1,300 was a loan for which plaintiff was to receive some free rent. Mrs. Tomasino testified no terms were then agreed upon with respect to the $1,300 loan; no demand was made by plaintiff with respect to placing title in his name at the broker's office; and that plaintiff did not require that he be guaranteed a life interest in the property.
Mrs. Dombrowski did not testify directly with respect to the conversation which took place at the broker's office on April 28, 1955. She did testify that plaintiff repeatedly requested Tomasino to correct "papers." On cross-examination she said the word "papers" had reference to a mortgage, "naturally we had our money invested."
Construction of the house started in May. Defendants obtained a $12,500 construction loan from a building and loan association. Plaintiff and wife also advanced a further $700 which was used in constructing the house. Plaintiff also performed carpentry work during the course of construction, but there is no evidence as to the number of hours he worked and the value of the labor contributed by him. The Dombrowskis and defendants moved into the house in April, 1956, the former occupying the downstairs apartment and the latter the upper apartment. After moving in, plaintiff bought some additional lumber which was used in doing some finishing work. Plaintiff was asked what were the conditions upon which he made all the financial contributions to the cost of the house and lot, and he replied, "That we were to live there the remainder of our life." However, he did not explain whether this conclusion was based on any conversation taking place between defendants and himself.
Defendant Phillip Tomasino testified that when the two families moved into the house in April, 1956, defendants told the Dombrowskis that the latter could live there during 1956 and 1957 rent free in payment of "the loan" and after that they should pay $50 per month rent, and that the Dombrowskis agreed to this.
This is hard to believe because plaintiff and wife had supplied approximately $2,000 according to their testimony which alone would entitle the Dombrowskis to more than three years' rent if $50 per month was a fair rental. Furthermore, such arrangement gave plaintiff no credit for his carpentry labor. Apparently defendants claim this was a gratuity because plaintiff had assisted another daughter and son-in-law in building a home.
In 1958, plaintiff paid defendants $200. Thereafter, in the ensuing years of 1959, 1960, and 1961, plaintiff paid the defendants the respective amounts of $300, $350, and $350, which were equivalent to about half of the real-estate taxes. Phillip Tomasino testified that the Dombrowskis said this was all they could afford to pay. Written receipts signed by Phillip Tomasino were received in evidence which stated "for taxes as rent." In 1962, plaintiff made five $50 payments and then stopped.
Mrs. Ruck, another daughter of plaintiff, testified: In 1959, she went to defendants' apartment and Phillip Tomasino told her that plaintiff was demanding too much from him, viz., to live in the home for the rest of his life. He also said that plaintiff would have to start paying rent and if plaintiff did not he would have to leave the premises. In August or September, 1962, she had a further conversation with Phillip Tomasino in which he told her that he wanted her to see the Dombrowskis and tell them that he "was all through" and "wanted nothing but out," that the statute of limitations had run out and that "this is it." Apparently the statute of limitations statement had reference to plaintiff's contributions of money and labor.
At the conclusion of taking testimony, defendants moved for a directed verdict. This motion was taken under advisement by the court and the following special verdict was submitted to the jury and returned by it:
" First Question: Did the defendant, Phillip Tomasino, or his wife, Phyllis Tomasino, represent to the plaintiff, Steve Dombrowski, that he would acquire a life interest or joint ownership in the real estate known as 4311 So. 46th Street? Answer: Yes.
" Second Question: If you have answered `yes' to Question No. 1, then answer this question. Otherwise you need not answer it. Did the plaintiff, Steve Dombrowski, perform labor, make payments of money and purchase materials in reliance upon these representations? Answer: Yes.
" Third Question: If you have answered `yes' to Questions 1 and 2, then do not answer this question. Did the plaintiff, Steve Dombrowski, enter into a month-to-month tenancy with the defendants, Phillip Tomasino and Phyllis Tomasino, his wife, beginning April 14, 1958, for the rental of the premises known as 4311 So. 46th Street? Answer: _______."
One juror noted his dissent to the answers "Yes" to the first two questions of the verdict.
Upon motions after verdict the trial court announced its memorandum decision from the bench. Among other things this decision stated:
"The existence of the first element, namely, a false representation, is stoutly denied by the defendants, and the exclusive support for his contention in the record is Mr. Dombrowski's own testimony on this matter that the defendants did state to him that the name on the deed executed in May [actually April 28, 1955] of 1955 would be changed. . . .
"He [plaintiff] knew at the time the deed was executed [April 28, 1955] that his name was omitted. Nevertheless he continued to pour more money and labor into the enterprise. According to his unsupported testimony, he continued to complain to the defendants for a period of five years that the alleged promise was not kept but, knowing that it was not kept, relied upon it by adding to his contribution.
"If the defendants did make a false statement and it was made to induce the plaintiff to give them money, to work on the construction of the house, and to supply materials for its completion, it would be a cruel and heartless act, hostile to the filial devotion and respect which an elderly parent is entitled to expect. But not even a parent can blind himself to continuing and acknowledged intransigence of his child and then later complain that the child's conduct misled him.
"It is, therefore, the conclusion of the court that the action for fraud must necessarily fail on the ground that the evidence fails to support the plaintiff's contention that he was entitled to rely on the representation of the defendants. Construing the evidence to the advantage of the plaintiff and in support of the verdict of the jury, it fails to meet that burden of proof required in such cases to support this element of fraud. Although less obvious, the evidence fails to meet this test with respect to the first element as well."
The court concluded that defendants' motion for a directed verdict should have been granted.
Judgment was accordingly entered November 11, 1964, which dismissed plaintiff's complaint upon the merits. Plaintiff has appealed.
It is fundamental that a jury verdict in an equitable action is merely advisory. Sager v. Hannemann (1959), 6 Wis.2d 285, 289, 94 N.W.2d 612. In the early case of Stahl v. Gotzenberger (1878), 45 Wis. 121, 123, 124, this court outlined the proper method of procedure where a jury is utilized in an equitable action as follows:
"In all equitable actions the case must be tried by the court, and, before judgment can be entered, the court must find that all the facts necessary to entitle the plaintiff to a judgment have been established by the evidence. If either party desires that any issues of fact which have been made by the pleadings should be tried by a jury, and the judge deems such issues proper ones to be submitted to a jury in order to aid him in the determination of the same, he may direct them to be so tried; or the judge may upon his own motion direct certain issues to be so tried. In every such case, the particular issues which are to be so tried should be fixed and agreed upon before the jury is called. The jury then try only the issues so submitted, and not the whole case. When the jury have given their verdict, the case is then to be taken up by the court; and if the court is satisfied with the determination of the jury upon the issues submitted to them, he adopts their findings as to such issues. If he is not satisfied with the findings of the jury, he may, either upon the application of a party or of his own motion, set aside such verdict and submit such issues to another jury; or, if he is satisfied that no aid will be obtained by such further submission, he may proceed to decide the issues without any further intervention of a jury."
See also Cram v. Bach (1957), 1 Wis.2d 378, 83 N.W.2d 877, 85 N.W.2d 673.
We deem the use of a motion for directed verdict is inappropriate where a jury is utilized in an equitable action to pass on certain fact issues. After having had the evidence presented to a jury, a party is free to move that the jury be dispensed with and that the court determine the facts without benefit of the jury's verdict. Also, after a verdict is returned, a party may also move that the court reject the verdict and find the facts differently. However, in either the situation where the court dispenses with the jury or rejects the verdict, it is incumbent upon the court to make and file findings of fact. No formal findings of fact were entered in the instant case. In the absence of formal findings of fact, statements of fact appearing in the trial court's memorandum opinion are accorded the status of findings of fact. Seelandt v. Seelandt (1964), 24 Wis.2d 73, 79, 128 N.W.2d 66, and cases cited. However, as hereinafter pointed out, we have been unable to spell out findings of fact in the memorandum decision essential to sustain the judgment.
The gist of plaintiff's cause of action is that defendants represented that plaintiff's name would be included as a grantee in the deed to the lot upon which the house was constructed or that plaintiff and his wife would be entitled to reside in the premises as long as they might live; that defendants when making such representation had no intention of performing the same; and that plaintiff poured money and labor into the project of purchasing the lot and constructing the house in reliance on these representations.
Fraud cannot be predicated on unfulfilled promises in the absence of intent not to perform present at the making of the promise. See Suskey v. Davidoff (1958), 2 Wis.2d 503, 507, 87 N.W.2d 306, and cases cited. There is no such a requirement of a present intent not to perform if the remedy sought is a constructive trust to avoid unjust enrichment.
We deem that the first issue to be determined is whether the trial court's memorandum opinion contains any express finding with respect to whether defendants made any promise to plaintiff that his name would be included in a deed to the premises or that he and his wife would be permitted to live there for the remainder of their lives. We conclude that it does not. The statement in the memorandum opinion, "Although less obvious, the evidence fails to meet this test [burden of proof in fraud cases] with respect to the first element as well," is ambiguous. Merely because plaintiff's testimony with respect to defendants' representations was uncorroborated by other direct testimony did not prevent it being clear, satisfactory, and convincing if believed by the trial court. We do not know from the quoted statement in the memorandum opinion whether the trial court did not believe plaintiff's testimony, or whether, believing such testimony, it found plaintiff had failed to establish that defendants had a present intent of not performing their promises when they made them.
The principal reason given in the memorandum opinion for directing a verdict against plaintiff was the trial court's conclusion that plaintiff was not entitled to rely on defendants' promises, if made. Therefore, the second issue to be resolved is whether this determination by the trial court precludes plaintiff from recovering a judgment. There is some authority in our past decisions that an essential element of fraud is the right to rely on the alleged false representations. Benz v. Zobel (1949), 255 Wis. 542, 39 N.W.2d 713; In re Acme Brass Metal Works (1937), 225 Wis. 74, 272 N.W. 356. We are of the opinion that this is not an essential element of constructive trust when grounded upon a confidential relationship, if there existed actual reliance by the promisee upon the promise made by the promisor. The mere relationship of son-in-law and daughter to plaintiff did not create a fiduciary relationship. 39 Am. Jur., Parent and Child, p. 743, sec. 98; Burns v. Nemo (1960), 252 Iowa 306, 105 N.W.2d 217. However, this factor of relationship coupled with plaintiff's age, lack of education, and the turning over of his savings to defendants without receiving any writing of any kind therefor, would support a finding of a confidential relationship sufficient to support a constructive trust.
For Wisconsin cases on constructive trusts, see Estate of Massouras (1962), 16 Wis.2d 304, 114 N.W.2d 449; Joerres v. Koscielniak (1961), 13 Wis.2d 242, 108 N.W.2d 569; Nehls v. Meyer (1959), 7 Wis.2d 37, 95 N.W.2d 780; Masino v. Sechrest (1954), 268 Wis. 101, 66 N.W.2d 740; Schofield v. Rideout (1940), 233 Wis. 550, 290 N.W. 155, 133 A.L.R. 834. While the cases on constructive trust are usually concerned with a situation where there is breach of duty to convey the entire interest of the defaulting promisor in a particular parcel of real estate, we can perceive of no reason why the same principle should not apply to a breach of duty to convey a partial interest such as a life estate.
Defendants rely upon plaintiff's statement in one place in his testimony that he did not believe Phillip Tomasino's promise made at the broker's office on April 28, 1955, that Phillip would have the title changed into plaintiff's name the following Monday. In this connection defendants cite our holding in Peters v. Kell (1960), 12 Wis.2d 32, 42, 106 N.W.2d 407, that representations made to one who knows them to be false cannot be relied upon by him. Here plaintiff testified to repeated promises made by defendants after April 28, 1955, to place title in his name. The issue with respect to this aspect of the case is not whether plaintiff had a right to rely on the alleged promises made by defendants, but did he rely thereon? With respect to this issue there is no express finding of fact made in the trial court's memorandum opinion.
We conclude that the case must be remanded in order for the trial court to make express findings of fact on these two issues:
(1) Did the defendants make any promises to plaintiff with respect to any of the following: (a) Placing title to the premises in his name so he would be a co-owner; (b) granting plaintiff a life estate in the premises; or (c) permitting plaintiff and his wife to occupy the downstairs premises during their lives?
(2) If any such promise was made by defendants, did plaintiff advance money and labor in reliance thereon?
If both of these issues are resolved in favor of plaintiff, the trial court can then fashion a proper remedy by way of imposing such a constructive trust on the premises as will prevent an unjust enrichment of defendants at the expense of plaintiff. It will be discretionary in the trial court whether or not to take any additional testimony or other evidence.
Our review of the evidence causes us to conclude that any finding which the trial court may make upon the present record with respect to the two issues for which the case is remanded for findings will not be against the great weight and clear preponderance of the evidence.
By the Court. — Judgment reversed, and cause remanded for further proceedings consistent with this opinion.