Opinion
Rehearing Denied Dec. 14, 1973.
Page 660
Melville E. Watson, Greenfield, Michael B. Reddington, Indianapolis, for defendant-appellant.
Daniel J. Harrigan, Bayliff, Harrigan, Cords&sMaugans, Kokomo, for plaintiff-appellee.
ROBERTSON, Presiding Judge.
This appeal arises from a dispute between a brother and sister as to whom their deceased mother intended to leave her real property. It is undisputed that the mother, who died intestate, intended that the brother and sister share equally in her personal property. The sister, Mary A. Gladis, plaintiff below, (Mary hereafter) is contending that the mother intended the children to share the real property equally, while her brother, Ardis C. Melloh, defendant below, (Ardis hereafter) is arguing that it was his mother's intention that he and his wife have all the real property.
This action was originally filed by Mary in the Marion Superior Court on October 6, 1969. Subsequent to a change of venue to the Hancock Superior Court, the complaint was dismissed and Mary appealed to this court. On appeal, Judge Sharp held that as a matter of law the complaint did not fail to state a claim for which relief may not be granted because of the Statute of Frauds, as alleged in Ardis' motion to dismiss. The decision was, therefore, reversed and remanded. See Gladis v. Melloh (1971), Ind.App., 273 N.E.2d 767.
Upon remand the cause was venued to the Shelby Superior Court where a trial was had upon the issues as formed by Mary's second amended complaint. Mary alleged in her complaint that she and Ardis were siblings and that their mother was Cecilia I. Melloh, who died on March 16, 1964. Cecilia Melloh was predeceased by her husband, the father of Mary and Ardis, who died after a protracted illness and left all of his estate to Cecilia. Prior to her death Cecilia discovered that she had terminal cancer, and fearing a period of increasing disablement concluding in death, she had the family home and a savings account put in joint name with Ardis and his wife. Mary alleged that this was done so Ardis could administer the family affairs during Cecilia's decline and that Ardis promised Cecilia that upon her death he would pay to Mary an amount equal to one-half the value of the property entrusted to his care after the expense of Cecilia's illness and burial were deducted.
Other significant allegations of Mary's second amended complaint are as follows: that Cecilia was deceived by Ardis' promise that he would pay half the value of the property to his sister when, in fact, Ardis had then formed the intent to keep all of the property for his own use and benefit; that since Cecilia's death Ardis has repeatedly acknowledged his financial obligation under the agreement with his mother to Mary; that the first time Ardis clearly repudiated his agreement with his mother was on November 26, 1969, when his deposition was taken; that the family house has been sold by Ardis for an amount unknown to Mary; that by operation of law Ardis became a trustee for the performance of his promise to his mother and Mary became the beneficiary of a constructive trust; that Mary has demanded that Ardis pay to her what is owed and said demand has been refused; and that Mary demands judgment against Ardis in the amount of $14,559.95 plus interests and costs.
At the conclusion of all the evidence, the trial court rendered its findings of fact and conclusions of law, which, for the most part, corresponded to the allegations of Mary's complaint. The court did not, however, find that Mary was the beneficiary of a constructive trust, as alleged in her complaint, but rather that she was the beneficiary of a resulting trust. The court thereafter entered judgment for Mary in the amount of $14,410.38.
The focal point of this dispute appears to revolve around a meeting on February 13, 1964, between Cecilia, Mary, Ardis, and the family attorney Michael Reddington, (who was the attorney for Ardis at trial as well as on appeal.) At that meeting, Cecilia, who was aware of her terminal illness, deeded the house to Ardis and his wife for one dollar in consideration. The warranty deed contained no exceptions or conditions. Cecilia also stated her desire that her checking account be put in the joint name of herself and Mary and that her savings account be put jointly in her name and Ardis'. It was agreed and understood that even though the savings account was put in the names of Cecilia and Ardis, that Mary and Ardis were to eventually share it equally. According to Ardis' testimony, Cecilia never made any statement nor expressed an intention that he share the value of the house with Mary. Mary, on the other hand, testified that her mother stated in the attorney's office, as well as on prior occasions, that she and Ardis were to share everything, including the house, equally. The house was deeded to Ardis, according to Mary, with the understanding that Ardis would owe her half of the value of it, as was the undisputed agreement regarding the savings account. It was further understood that Ardis was to look after the financial affairs of the family, while Mary was to live with and care for Cecilia until her death.
The family attorney, Michael Reddington, testified that Cecilia Melloh came to his office on February 13, 1964 to make a final disposition of her property in lifetime. According to Reddington, Cecilia wanted the transfer of the house to Ardis to be final and binding and that she did not make any statement as to Mary having an interest in the house nor that Ardis was to hold Mary's interest in the house in trust. Reddington further stated that Cecilia did all of the talking and that Mary did not ask to be named in the deed nor did she object to not being named in the deed. Reddington did state that Cecilia indicated that she wanted the bank accounts to be shared equally between Mary and Ardis. Another witness who was living in Cecilia's home at the time of the visit to the attorney's office testified that Cecilia indicated that Ardis was to get the house and Mary was to receive money.
In view of the result reached, it will be necessary to discuss but the one allegation of error of whether Mary was a beneficiary of a resulting trust. We are of the opinion she was not.
There is a statutory presumption against resulting trusts of real property.
'When a conveyance for a valuable consideration is made to one (1) person, and the consideration therefore paid by another, no use or trust shall result in favor of the latter, but the title shall vest in the former . . ..' IC 30-1-9-6, Ind.Ann.Stat. § 56-606 (Burns 1961)
However, IC 30-1-9-8, Ind.Ann.Stat. § 56-608 (Burns 1961) provides three instances where a resulting trust may arise as exceptions to the foregoing quoted statute. Two of the three clearly do not apply to the instant facts. The third exception is:
'. . . where it shall be made to appear that, by agreement, and without any fraudulent intent, the party to whom the conveyance was made, or in whom the title shall vest, was to hold the land or some interest therein in trust for the party paying the purchase-money or some part thereof.'
In its findings of fact the trial court specifically found that Ardis formed an intent to obtain title to the property and keep the benefits for himself and that he made a promise to Mary to pay one-half of the value of the property in order to obtain title. The trial court found that these facts, all of which occurred prior to the making of a deed, constituted fraud on the part of Ardis. Such a finding is clearly in conflict with the statutory requirement that for a resulting trust to arise the transaction must be free of fraud. See also: Bullerdick v. Miller (1926), 85 Ind.App. 369, 152 N.E. 280. The statutory requirements must be complied with for a resulting trust to exist. Hadley v. Kays (1951), 121 Ind.App. 112, 98 N.E.2d 237.
Cases dealing with the creation of a resulting trust in real property have been consistent in requiring conformity to IC 30-1-9-8, Ind.Ann.Stat. § 56-608 (Burns 1961); by holding that the agreement which purports to create the trust must be made prior to acquiring title to the property by the trustee; there must be a valuable consideration; the transaction must be free of fraud; proof of the trust must be clear and unequivocal; and, the agreement must be fair. See Hadley, supra, and Auten v. Sevier (1964), 136 Ind.App. 434, 202 N.E.2d 274, and authorities contained therein.
It should be pointed out that while parol evidence is admissible to establish a trust, Schwab v. Schwab (1959), 130 Ind.App. 108, 162 N.E.2d 329, it has been held that such evidence must be received with caution. Matthews v. Adoniram Grand Lodge, etc. (1958), 129 Ind.App. 395, 154 N.E.2d 806. Accordingly, the standard of proof, as announced in Costa et al. v. Costa et al. (1953), 124 Ind.App. 128, 115 N.E.2d 516, for a trust based on oral evidence is strict.
'Courts generally hold that to sustain a trust relation by oral evidence that the proof thereof must be clear and distinct; that it must be shown whether the trust is expressed, resulting or constructive and that the standard of evidence for such purpose is a superior measure of proof. The evidence must be higher in quality to substantiate the same--that is, in clearness, fullness and persuasiveness. (Authorities omitted).
In order to successfully prove the existence of a trust by parol evidence alone, it must appear that such evidence adduced at the trial is not compatible with any other result.' 124 Ind.App. 134, 115 N.E.2d 519.
We are of the opinion that the testimony relied upon by the trial court to find a resulting trust does not, as a matter of law, possess the qualities of clearness, fullness and persuasiveness required to substantiate Mary's claim as a beneficiary. As indicated in the summary of evidence contained herein, the testimony was sharply conflicting to a point where a resulting trust theory was not exclusively compatible with some other result.
Having held that under the facts of this case that no resulting trust exists, the cause is reversed and remanded for further action not inconsistent with this opinion.
Reversed and remanded.
LOWDERMILK and LYBROOK, JJ., concur.