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ROBERTSON v. ROBERTSON
Robertson v. Robertson, No. 5-1659 (Supreme Court of Arkansas, Nov. 10, 1958)
Factual and Procedural Background
M. O. Robertson and his daughter, Mary Etta, appealed from adverse rulings of the Craighead Chancery Court (Lee Ward, Chancellor). The dispute concerned forty acres owned as tenants in common by Opal Robertson (appellee and former wife of M. O. Robertson) and Mary Etta. In the original complaint Mary Etta sought an accounting for rents collected by her mother; M. O. Robertson sought to set aside his earlier conveyance to Opal of an undivided half interest in the land. The chancellor initially sustained a demurrer and dismissed the suit. On the first appeal (227 Ark. 978, 302 S.W.2d 810) the court held that Mary Etta's accounting claim stated a cause of action and that M. O. Robertson should have been given time to amend; the cause was remanded with directions to reinstate the accounting claim and permit amendment. On remand the plaintiffs filed an amended complaint adding a claim that Opal held her half interest in the land in constructive trust for Mary Etta. After a trial the chancellor required Opal to account for one half of the rents but refused to impose a constructive trust or to set aside the conveyance. The appellants appealed those latter rulings; the Supreme Court of Arkansas affirmed.
Legal Issues Presented
- Whether pleadings may be amended after an appeal that reverses only a ruling on a demurrer (i.e., whether the trial court properly permitted amendment on remand).
- Whether a constructive trust should be imposed on the deed to Opal based on an alleged oral promise that she would hold the land for the benefit of Mary Etta until the latter reached majority, given the statute of frauds.
- Whether a constructive trust may be imposed because the grantor and grantee stood in a confidential relationship (husband and wife) when the conveyance was made.
- Whether the deed should be cancelled because the husband did not learn until many years later that his first marriage to Opal was void, thereby allegedly invalidating the property settlement.
Arguments of the Parties
Appellants' Arguments
- Opal orally agreed, when the deed was executed (Sept. 3, 1917), to hold her undivided half interest for the benefit of Mary Etta until Mary Etta reached majority; this oral promise created a constructive trust enforceable despite the statute of frauds.
- M. O. Robertson sought cancellation of the deed because he later learned (in 1954) that his 1935 marriage to Opal had been void, and on that basis he argued Opal was not legally entitled to a property settlement in 1947.
Appellee's Arguments
- On remand the trial court should not have permitted plaintiffs to assert a new cause of action by amendment because that was outside the scope of the court's directions on the first appeal.
- Implicitly, Opal defended on the merits by disputing that the oral promise (if made) was knowingly fraudulent and by denying that a confidential relationship existed at the time of the conveyance; she also relied on subsequent facts (agreements and conduct) showing the transaction was made and treated in good faith.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| American Inv. Co. v. Sager, 175 Ark. 67, 299 S.W. 371 | Pleadings may be amended after an appeal that merely reverses a ruling on demurrer where there has been no hearing on the merits. | The court relied on this authority to conclude the trial court properly allowed amendment on remand. |
| Walker v. Biddle, 225 Ark. 634, 284 S.W.2d 840 | A constructive trust will be imposed where a grantee's promise was intentionally fraudulent or where grantor and grantee were in a confidential relation. | Invoked to state the conditions under which an oral promise may lead to a constructive trust; the court found neither condition satisfied by clear and convincing evidence. |
| Rest., Trusts, 13 | Restatement principle that a constructive trust may be imposed when the grantee's promise was intentionally fraudulent or when there is a confidential relationship. | Used alongside Walker v. Biddle to frame the standard for imposing a constructive trust; applied to reject appellants' claim. |
| Rest., Trusts, 11, Comment b | To create a constructive trust the oral promise must be falsely given with no intention of performance, amounting to a misrepresentation of fact. | Applied in assessing whether Mrs. Robertson had the requisite fraudulent intent; the court found insufficient evidence of such intent. |
| Armstrong v. Armstrong, 181 Ark. 597, 27 S.W.2d 88 | Supports the principle that a constructive trust requires an oral promise made with no intention of performance (a misrepresentation). | Cited in support of the rule and applied to conclude appellants failed to prove intentional fraud. |
| 227 Ark. 978, 302 S.W.2d 810 | Prior decision on the first appeal holding Mary Etta's accounting claim sufficient and directing that M. O. Robertson be allowed time to amend. | Described as the basis for remand and as the procedural posture permitting the subsequent amendment and trial on the merits. |
Court's Reasoning and Analysis
The court first addressed the procedural contention that the trial court exceeded the scope of the remand by allowing an amended complaint. Citing American Inv. Co. v. Sager, the court held that when an appeal reverses only a ruling on demurrer and there has been no hearing on the merits, pleadings may be amended on remand; thus the amendment asserting a constructive trust claim was properly permitted.
On the merits the court examined whether a constructive trust should be impressed on the deed executed September 3, 1917. The court recognized the statute of frauds makes a grantee's oral promise to hold land for a third person unenforceable, but noted a constructive trust may arise if (1) the grantee's promise was intentionally fraudulent (i.e., given with no intent to perform) or (2) the parties were in a confidential relation. The court required clear and convincing evidence to impose such equitable relief.
Applying that standard, the court found the appellants' evidence insufficient. The only direct indicium of nonperformance was that Mrs. Robertson refused to convey the land more than ten years later; all other evidence tended to rebut a finding of conscious fraud: appellants testified that Mrs. Robertson conceded for many years that the land belonged to Mary Etta, and in 1948 Mrs. Robertson signed a separation agreement reciting the land was deeded for the child's support. These facts indicated the alleged promise, if made, was likely given in good faith rather than as a deliberate misrepresentation.
Regarding the confidential-relationship theory, the court found the husband and wife were estranged and had executed a separation agreement terminating marital duties at the time of the 1917 deed. The husband alone was represented by counsel who prepared and supervised execution of the deed. The court concluded that any omission of the parties' true intention in the deed was more plausibly attributable to the husband's reliance on counsel than to a trust-based reliance on the wife.
The court also considered and rejected Robertson's alternative contention that the deed should be cancelled because his 1935 marriage to Opal was void (she had not yet obtained a final divorce from a prior husband when they married). The court gave two independent responses: first, Robertson had consistently maintained his principal motive for the deed was to provide for his daughter's support, so knowledge of the marriage's validity would not necessarily have changed his conduct; second, the parties subsequently married and divorced multiple times, with the last three marriages being valid and at least one later divorce obtained by Mrs. Robertson, and there was no proof the one-half interest exceeded what she could properly receive on dissolution of the valid marriages.
Holding and Implications
AFFIRMED.
Holding: The Supreme Court of Arkansas affirmed the chancellor's refusal to impress a constructive trust on Opal Robertson's undivided half interest and affirmed the denial of relief seeking cancellation of the deed.
Immediate implications: The conveyance to Opal stands; the court declined to set aside the deed or impose a constructive trust because appellants failed to prove, by clear and convincing evidence, either an intentionally fraudulent promise or a confidential relationship at the time of the conveyance. The chancellor's prior requirement that Opal account to Mary Etta for one half of the rents (a remedy granted on the accounting claim) was not disturbed by this ruling. The opinion applies existing equitable principles (as cited) and does not announce a new legal rule beyond the application of those precedents to the facts of this case.
1. APPEAL AND ERROR — AMENDMENT OF PLEADINGS AFTER REMAND. — Pleadings may be amended after an appeal that merely reverses a ruling on a demurrer to the pleadings, there having been no hearing on the merits. 2. TRUSTS — CONSTRUCTIVE TRUST — PAROL AGREEMENT TO HOLD LAND FOR BENEFIT OF ANOTHER. — A grantee's oral promise to hold land for a third person is unenforceable under the statute of frauds, but a constructive trust will be imposed if it is shown by clear and convincing evidence that the grantee's promise was intentionally fraudulent or that the grantor and grantee were in a confidential relation. 3. TRUSTS — CONSTRUCTIVE TRUST, PAROL AGREEMENT. — To bring about a constructive trust the oral promise must be falsely given, with no intention of performance, so that it amounts to a misrepresentation of fact. 4. TRUSTS — CONSTRUCTIVE TRUST — PAROL PROMISE FRAUDULENTLY GIVEN, WEIGHT AND SUFFICIENCY OF EVIDENCE. — Contention by appellants that appellee fraudulently promised to hold the land in question for the benefit of her daughter until she became of age, held not sustained by the required quantum of proof. 5. TRUSTS — CONSTRUCTIVE TRUST — CONFIDENTIAL RELATIONSHIP BETWEEN ESTRANGED SPOUSES. — Existence of confidential relationship between husband and wife held negatived by the fact that they were already estranged and had signed a separation agreement bringing their marital duties to an end at the time the conveyance in consideration of the parol promise was made. 6. CANCELLATION OF INSTRUMENTS — FRAUD, ESTOPPEL TO ALLEGE. — Contention of husband that conveyance to wife in divorce settlement should be cancelled because he did not then know that wife's divorce from another did not become final until three weeks after his marriage to her, held without merit in view of the fact that husband had maintained that his only purpose in making the conveyance was for the support of his daughter, and the fact that the parties have married and divorced three times subsequent to the property settlement.
GEORGE ROSE SMITH, J.
This is the second appeal in a suit by the appellants, M. O. Robertson and his daughter Mary Etta, against the appellee, Opal Robertson, who is the divorced wife of M. O. Robertson and the mother of Mary Etta. In the original complaint Mary Etta sought an accounting for rents collected by her mother upon forty acres that the mother and daughter own as tenants in common, and M. O. Robertson sought to set aside his conveyance to Opal of an undivided half interest in the land. The chancellor in effect sustained a demurrer to the original complaint and dismissed the suit. On the first appeal, 227 Ark. 978, 302 S.W.2d 810, we held that Mary Etta's complaint for an accounting stated a cause of action and that M. O. Robertson should have been given time to amend his part of the complaint. The cause was remanded with directions that the suit for an accounting be reinstated and that M. O. Robertson be given time to amend.
Upon remand the plaintiffs filed an amended complaint alleging, in addition to their original causes of action, that Opal Robertson held her undivided half interest in the forty acres upon a constructive trust for Mary Etta. After a trial on the merits the chancellor required Opal to account to her daughter for one half of the rents, but he refused to impress a trust on the land or to set aside Robertson's conveyance to his former wife. This appeal is from the latter rulings.
The appellee insists that upon remand the trial court should not have permitted the plaintiffs to assert a new cause of action by amendment, since this was outside the scope of our directions on the first appeal. The rule is, however, that the pleadings may be amended after an appeal that merely reverses a ruling on demurrer, there having been no bearing on the merits. American Inv. Co. v. Sager, 175 Ark. 67, 299 S.W. 371.
The asserted constructive trust is said to have arisen when Robertson conveyed the land to his wife and daughter on September 3, 1917. A divorce suit was then pending between Robertson and his wife, and the deed was executed pursuant to an agreement settling the couple's property rights. Although the deed was absolute in form, the appellants offered proof to show that the purpose of the conveyance was to provide a means of support for Mary Etta, whose custody was being awarded to Opal, that Opal was named as a grantee only to enable her to manage the property for the minor child, and that Opal orally agreed that the land would belong to Mary Etta when she reached her majority. Mary Etta became of full age shortly before the case was heard below.
The appellants' proof is insufficient to establish a constructive trust. A grantee's oral promise to hold the land for a third person is unenforceable under the statute of frauds, but a constructive trust will be imposed if it is shown by clear and convincing evidence that the grantee's promise was intentionally fraudulent or that the grantor and grantee were in a confidential relation Walker v. Biddle, 225 Ark. 634, 284 S.W.2d 840; Rest., Trusts, 13. In this instance neither condition is shown by the required standard of proof.
To bring about a constructive trust the oral promise must be falsely given, with no intention of performance, so that it amounts to a misrepresentation of fact. Rest., Trusts, 11, Comment b; Armstrong v. Armstrong, 181 Ark. 597, 27 S.W.2d 88. Here there is nothing to indicate this state of mind on the part of Mrs. Robertson except the bare fact that more than ten years later she refused to carry out the asserted agreement. All the rest of the evidence tends to rebut the suggestion that the promise was consciously false. Both the appellants testify that Mrs. Robertson conceded until about the time this suit was filed that the land belonged to Mary Etta. In 1948, in connection with a second divorce suit after the couple had remarried, Mrs. Robertson signed a separation agreement which recited that the land had been deeded to her and the child for the support and maintenance of the child. These matters certainly indicate that the promise, if it was made, was given in good faith. We are by no means convinced that this mother deliberately set out to defraud her eight-year-old daughter, whose custody she sought and won in the divorce suit that was pending at the time.
The proof also negatives the existence of a confidential relation between Robertson and his wife when the deed was executed. The two were already estranged and had signed a separation agreement bringing then marital duties to an end. The husband alone was represented by an attorney, who prepared the deed and supervised its execution. If the instrument did not express the true intention of the parties, the omission must be attributed to Robertson's reliance upon the advice of counsel rather than to a reliance upon the confidence that a husband reposes in his wife when the two are living together in harmony.
Robertson's alternative request for a cancellation of the deed is based upon the fact that the Robertsons were married, in 1935, about three weeks before Mrs. Robertson obtained a divorce from her first husband. Robertson says that he did not learn until 1954 that his first marriage to the appellee was void. On this basis he contends that the appellee was not legally entitled to a property settlement in 1947 and that the conveyance should therefore be canceled.
There are two answers to this reasoning. First, Robertson has insisted all along that his only purpose in executing the deed was to provide for the support of his daughter, and there is no reason to think that he would have been less generous to his child had he known that the marriage was invalid. Secondly, although the first marriage was void, the Robertsons married and divorced each other a total of four times. The last three marriages were legal, and at least one of the later divorces was obtained by Mrs. Robertson. There is no proof that this undivided half interest in forty acres of land is more than she was entitled to receive upon the dissolution of the valid marriages.
Affirmed.
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