Wimmer v. Wimmer

Cole, J., delivered the opinion of the Court. We are asked to decide, under the circumstances of this case, whether a constructive trust may be impressed upon a one-half interest in real property which constituted the marital domicile of the parties, where the funds to purchase said property resulted solely from the husband’s labors and where the wife’s contribution to the marriage was solely that of a wife and mother. Cecil and Annie Wimmer were married in 1940 and divorced in 1977. During their marriage Cecil was the breadwinner; Annie was the homemaker.

He always worked; she never did except for a short period as a babysitter for her daughter. Cecil demonstrated unique business acumen in light of his 4th grade education; Annie, with a 7th grade education, could hardly read and write and depended upon Cecil and her children to explain simple business and financial matters. Cecil was a carpenter by trade and specialized in buying, remodeling and selling old houses. In order to obtain the necessary funds to carry out his business, Cecil would oft times find it necessary to borrow money, securing the loans by mortgage notes.

Although many of the properties were in his name only, Cecil frequently obtained his wife’s signature on these notes. ⁶⁶⁵ The marital home which is the subject of this dispute was purchased by Cecil in 1968 or 1969 and titled in his name alone. Several years after purchasing this house, Cecil borrowed $22,400.00 and secured this loan by granting a mortgage on the house. Annie did not want to sign the mortgage note but Cecil twisted her arm and struck her on the back of the neck thereby forcing her to sign same. On the trial Annie testified that during the marriage she thought the subject property had been titled in the joint names of the parties; however, the record does not reveal the basis for her conclusion.

Annie also testified that Cecil had used the proceeds of the mortgage loan to purchase houses in his name alone; Cecil contended and produced documentary evidence to establish that the funds were used toward the purchase of property titled in both their names. The parties separated in 1974. Annie, who remained in the marital home, assumed the mortgage payments but paid no rent to Cecil. The parties were divorced a vinculo matrimonii in 1977 and all questions relating to property remained unresolved.

Thereafter, Annie filed a bill of complaint in the Circuit Court for Prince George’s County against Cecil seeking to have the court impress a constructive trust on several properties titled in Cecil’s name. 1 The circuit court dismissed the actions against all properties except the marital home upon which the court impressed a constructive trust as to one-half interest. The circuit court found that a confidential relationship existed between the parties and that Cecil was the dominant party. The court further found that Cecil failed to meet the burden imposed upon the dominant party of showing the fairness and reasonableness in the questioned transactions. The court concluded that: Mrs. Wimmer had a marital interest in the property, because of many factors, some of which ⁶⁶⁶ are the fact that they had been married 37 years; that they raised a family; that her efforts had gone into maintenance of the family and education of the children, feeding, clothing and keeping the house clean, and while she worked only a minimal amount and what monies she did earn could not be traced directly to the purchase of 5007, that she, obviously, had a marital interest in it; and, consequently, the Court concludes that a constructive trust had been shown to exist, as far as that property is concerned, [emphasis added].

From this decree, Cecil appealed to the Court of Special Appeals. That court in an unreported opinion affirmed. Cecil M. Wimmer v. Annie Louise Wimmer, No. 993, September Term, 1978, filed May 10, 1979. We granted Cecil’s petition for certiorari.

Before us Cecil concedes the existence of a confidential relationship, but contends that there is no evidence of fraud, undue influence, or unfair advantage by which he profited. With respect to the purchase of the marital home, Cecil notes that the dwelling was purchased with his own funds; that Annie suffered no loss; and that he did not profit from her. Regarding the encumbrance, Cecil asserts that there is no law to support a theory that because Annie unwillingly signed the mortgage note on his property, some legal right was created in the property to her benefit. In addition Cecil declares that because the proceeds of the loan transaction were used to purchase a property titled in both their names, Annie actually benefitted.

Hence, there is no unjust enrichment. Annie maintains that there was fraud involved here in Cecil’s continuous representations over the years that he was putting all of the properties in both of their names. In addition, Annie contends that there is present in this case the potential for the unjust enrichment of Cecil and for her financial suffering. By signing the mortgage notes, she contends that she has subjected herself to the possibility of financial ruin.

Finally, Annie asserts that a constructive ⁶⁶⁷ trust may be imposed purely on the basis of equity and that the facts here warrant such imposition. Annie’s theory finds support in some states which hold that upon granting a divorce, the chancellor has the power to make an equitable distribution of property without regard to title. See Freed and Foster, Divorce in the Fifty States: An Overview as of August 1, 1978 [1978] 4 Fam. L. Rep.

(BNA) 4033 , 4037. However, this Court has repeatedly said that in the absence of statute the courts of this State are without power to transfer the property of either spouse to the other or to change the parties’ rights or estates in that property, notwithstanding a wife’s nonmonetary contributions to the marriage. Bender v. Bender, 282 Md. 525, 534 , 386 A.2d 772 (1978); 2 Gebhard v. Gebhard, 253 Md. 125 , 252 A.2d 171 (1969); Lopez v. Lopez, 206 Md. 509 , 112 A.2d 466 (1955); Dougherty v. Dougherty, 187 Md. 21 , 48 A.2d 451 (1946). Despite the lack of power to transfer the ownership of property from one spouse to the other, a court will, given the proper circumstances, impose a constructive trust thereby transferring the beneficial or equitable interest to the deserving party.

Having no claim to the legal title in the marital home, Annie has sought redress for the alleged misrepresentations of Cecil and compensation for her nonmonetary contributions to the marriage by requesting the imposition of a constructive trust in her favor. In granting Annie’s request for a constructive trust on the marital dwelling, the chancellor did not base his decision upon proof of wrongdoing by Cecil. Rather, he found that ⁶⁶⁸ Cecil had failed to meet his burden of proving fairness in the context of a confidential realtionship with respect to property in which Annie had an interest — that interest being merely what the chancellor termed a "marital interest.” It was apparently the chancellor’s view that the court could base the imposition of a constructive trust upon a spouse’s nonmonetary contributions to the marriage. In determining whether the chancellor was correct in his conclusion, we shall decide whether the facts of this case relating to a mortgage transaction warrant the imposition of a constructive trust and whether the chancellor was correct in basing his decision in part on what he termed Annie’s marital interest in Cecil’s property.

A constructive trust is the remedy employed by a court of equity to convert the holder of the legal title to property into a trustee for one who in good conscience should reap the benefits of the possession of said property. The remedy is applied by operation of law where property has been acquired by fraud, misrepresentation, or other improper method, or where the circumstances render it inequitable for the party holding the title to retain it. Bowie v. Ford, 269 Md. 111 , 304 A.2d 803 (1973); O’Connor v. Estevez, 182 Md. 541 , 35 A.2d 148 (1943); Springer v. Springer, 144 Md. 465 , 125 A. 162 (1924). The purpose of the remedy is to prevent the unjust enrichment of the holder of the property.

Siemiesz v. Amend, 237 Md. 438 , 206 A.2d 723 (1965). In the ordinary case, there must be clear and convincing evidence not only of wrongdoing, but also of the circumstances which render it inequitable for the holder of the legal title to retain the beneficial interest. Peninsula Meth. Homes v. Cropper, 256 Md. 728 , 261 A.2d 787 (1970).

However, where a confidential relationship exists, the rules are somewhat different. In the context of the law of constructive trusts, a confidential relationship "exists where one party is under the domination of another, or where, under the circumstances, such party is justified in assuming that the other will not act in a manner inconsistent with his or her welfare.” Bass v. Smith, 189 Md. 461, 469 , 56 A.2d 800 (1948). A confidential relationship will not be presumed ⁶⁶⁹ from a marital relationship, but must be established by convincing evidence. Fant v. Duffy, 232 Md. 481 , 192 A.2d 293 (1963); Bell v. Bell, 38 Md. App. 10 , 379 A.2d 419 (1977).

Once a confidential relationship is shown, a presumption arises that confidence was placed in the dominant party and that the transactioA complained of resulted from fraud or undue influence and superiority or abuse of the confidential relationship by which the dominant party profited. Wenger v. Rosinsky, 232 Md. 43 , 192 A.2d 82 (1963); 21 M.L.E. Trusts § 67 (1962). This presumption shifts the burden to the defendant to show the fairness and reasonableness of the transaction. Sanders v. Sanders, 261 Md. 268, 276 , 274 A.2d 383 (1971).

The defendant’s evidence must be clear, satisfactory, and convincing to overcome the presumption. Rice v. Rice, 184 Md. 403, 411-12 , 41 A.2d 371 (1945). In those cases in which this Court has approved the imposition of a constructive trust there has been some transaction in which the alleged wrongdoer has acquired property in violation of some agreement or in which another person had some good equitable claim of entitlement to property resulting from the expenditure of funds or other detrimental reliance resulting in unjust enrichment. For example, in Springer v. Springer, supra, a father negotiated for and purchased the property in question for the benefit of his family.

Because the father was ill, legal title was placed in the name of a son with the understanding that the son would hold it for the benefit of the family. Having obtained the legal title, the son asserted that the property was purchased for him. This Court affirmed the imposition of a constructive trust on behalf of the father holding that where one violates a parol agreement to hold property for the benefit of another and the latter was under the circumstances justified in his belief that the former would carry out the agreement, such violation may be sufficient to raise a constructive trust in favor of the promisee.