Grimes v. Grimes

Delaplaine, J., delivered the opinion of the Court. This appeal is from a decree adjudging that Charles H. Grimes, appellant, holds a lot of ground, improved by two houses, at Light Street and Elkins Lane in Baltimore, in trust for his mother, Rose Grimes, appellee. The lot was purchased in 1924 by appellant’s father, John C. Grimes, now deceased, who had married appellee in 1905, but had left her and was living with a woman named Minnie Otto; and although the deed conveyed the lot to “John C. Grimes and Minnie M. Grimes, his wife,” he had never been divorced. On January 27, 1931, Grimes and his paramour conveyed the lot to Wilbur Otto, the paramour’s son; and on September 7, 1931, Otto, upon request of Grimes, conveyed it to appellant.

While the title stood in Otto’s name for nearly a year, and in appellant’s name for more than ten years, Grimes continued to collect the rents and pay the taxes on the property until his last illness near the end of 1941. His wife then took him back to live with her; and following his death in February, 1942, she received the rents and paid the taxes on the property. In December, 1942, appellant notified the tenants that he was the owner, of the ⁶¹ property and they should thereafter pay the rent to him. His mother thereupon instituted this suit to have the property impressed with a trust for her benefit.

Section 7 of the Statute of Frauds provides that no declaration of trust in land shall be valid unless it is “manifested and proved by some writing signed by the party who is by law enabled to declare such trust.” Section 8, however, provides that the statute does not apply to any conveyance by which a trust may arise “by the implication or construction of law.” 29 Charles II, ch. 3; 2 Alexander’s British Statutes, Coe’s Edition, 690; O’Connor v. Estevez, 182 Md. 541 , 35 A. 2d 148 . In this case there is no express declaration of trust. The question for us to decide is whether a constructive trust should’ be imposed on the land. It is unquestionably true that a trust in real estate cannot be created by oral contract.

But a constructive trust is not based upon agreement, but is raised by construction of law, regardless of the intention of the parties, when land or other property is acquired by fraud, misrepresentation, imposition, or concealment, or under any other circumstances which render it inequitable for the holder of the legal title to retain it. Clark v. Clark, 139 Md. 38 , 114 A. 722 ; Springer v. Springer, 144 Md. 465 , 125 A. 162 ; Jasinski v. Stankowski, 145 Md. 58 , 125 A. 684 , 35 A. L. R. 275; Lipp v. Lipp, 158 Md. 207, 214 , 148 A. 531 ; Weir v. Union Trust Co., 188 Mich. 452 , 154 N. W. 357 . The courts raise constructive trusts by parol evidence on the ground of public policy under the doctrine of equity that the Statute of Frauds, which was enacted for the purpose of preventing fraud, should not operate as a shield for the perpetration of fraud. Soehnlein v. Pumphrey, 183 Md. 334 , 37 A. 2d 483 .

Justice Cardoza said: “A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.” Beatty v. Guggenheim Exploration Co., 225 N. Y. 380 , 122 N. E. 378, 380 . ⁶² Usually the constructive trusts which have been imposed have been those where the conveyances were induced by fraud. Jacobs v. Schwartz, 179 Md. 605 , 20 A. 2d 489 . The law has always condemned any plan for the disposition of property which necessarily accomplishes a fraudulent result.

Ordinarily a grantee will not be considered a trustee ex maleficio merely because he fails to carry out an agreement. Where there is no actual or constructive fraud at the time of the conveyance, and no undue influence, the mere fact that the grantee agreed to hold the land in trust for a specified purpose, or to reconvey it to the grantor or a designated person, will not remove the case from the operation of Section 7 of the Statute of Frauds. For otherwise this section would be meaningless. Where, however, the owner conveys property without valuable consideration upon an oral promise of the grantee to hold it for him or to reconvey it to him, and the grantee at the time of the conveyance stands in a confidential relation to the grantor, a court of equity will not permit the grantee to