Spears, Wanda L.

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Kentucky Law JournalVolume 37 | Issue 1 Article 121948Unjust Enrichment as the Primary Basis for Raisinga Constructive TrustWanda L. SpearsUniversity of KentuckyFollow this and additional works at: https://uknowledge.uky.edu/kljPart of the Estates and Trusts CommonsRight click to open a feedback form in a new tab to let us know how this document benefitsyou.This Note is brought to you for free and open access by the Law Journals at UKnowledge. It has been accepted for inclusion in Kentucky Law Journal byan authorized editor of UKnowledge. For more information, please contact UKnowledge@lsv.uky.edu.Recommended CitationSpears, Wanda L. (1948) "Unjust Enrichment as the Primary Basis for Raising a Constructive Trust," Kentucky Law Journal: Vol. 37 :Iss. 1 , Article 12.Available at: https://uknowledge.uky.edu/klj/vol37/iss1/12UNJUST ENRICHMENT AS THE PREIARY BASIS FOR RAISINGA CONSTRUCTIVE TRUSTIn Pope v. Garrett two of the several heirs of one Carrie Green,the deceased owner of certain realty, had forcibly prevented theexecution of her will. As a result the realty went to the eight heirsat lav instead of to the sole devisee. The court imposed a construc-tive trust in favor of the sole devisee7 on the heirs who participatedin the illegal and fraudulent acts. However, the court refused to holdthe non-participating heirs as constructive trustees for the reasonthat they had not been guilty of such misconduct, fraud, or illegalacts as to warrant the raising of a constructive trust.The court's view, that one who acquired title to land throughhis own fraud will be declared a constructive trustee of the prop-erty so acquired, is well supported. It is probably true that thedecision as to the non-participating heirs is the general rule, but dueto the paucity of cases with similar fact situations, this problem isnot necessarily well settled. Dye v. Parkere is one of the few caseswhich presents a relation of facts to law comparable to that of theprincipal case. Here the draftsman who had been directed by thetestator to insert a legacy for the plaintiff fraudulently left it out.The court refused to make the heir, wife of the draftsman, in whomthe property vested, a constructive trustee on the basis of the factthat she was ignorant of the fraud.Although not discussed by the court in this case,. it seems that itwould be possible, as an alternative remedy, for the devisee to bringan action in tort against the draftsman for destroying his expect-ancy. The devisee in the principal case might have recovered intort against the participating heirs damages based on the value ofproperty that would have passed by will except for the wrongfulact.4 However, the relief in such a case might still be financiallyinadequate so this is substantial reason to consider whether a cou2tin its equitable powers could impose a constructive trust.Although it appears to be the general rule that in order to raisea constructive trust there must exist fraud or some illegal act on thepart of the person who receives the benefit, this is not necessarilythe better view It is the purpose of this note to suggest as a betterview that unjust enrichment alone is enough to impress a construc-tive trust on the person accidentally benefited as a result of the'- Texas-, 204 S.W 2d 867 (1947).Wrlla v. Wrlla, 342 11. 31, 173 N.E. 768 (1930), Tate v.,Emery,139 Ore. 214, 9 P 2d 136 (1932)108 Kan. 304, 194 Pac. 640, rehearing denied, 195 Pac. 599(1921).' Pope v. Garrett, - Texas----, 204 S.W 2d 867, 871 (1947).IKENTUCKY LAw JOUNiLfraud of a third person. It seems only just that property should vestas the testator intended, in preference to vesting in one who receivedit by chance and who in reality has no right to it where the pro-posed! settlor has-done all hefarrly could, do to -arry out his purpose.This theory has received the supportof some of the foremost author-ities. For instance, Scott says in a discussion of the problem:"Thus if A is induced by the fraud ,of B to, makea legacy to C, C should not be permitted to'keep thelegacy* 9lthough 'he was not a party to, the fraud. Thesame is true 'where by the wrongful act of a third per-son a testator is ..induced to revoke his will or is pre-vented from revoking his will or is prevented frommaking a will."5"It seems the fact ,situation of Pope v, Garret.t should fall under thelast one of these general categories although in-that case the testatorwas merely prevented from executing her ,will and not from makingit. The intention of the testator is, of course, plainer when the willitself is in existence.Another well-known authority in discussing the companon caseof Dye v. Parker says, " there seems, to .be no adequate reason,why a .trust should not be raised to prevent the heir or legatee frombeing unjustly enriched. "' It is true the principal. case makesthe statement, not only that there ,must be fraud .or an illegal. act,,but that there is no unjust enrichment under.these facts. The reason-ing is this: "The fact that the wrongful act caused, the non-partici-pating appellants to become ves.ted with undivided interest in theland resulted from the laws of descent and distribution.. And whatthe law gives a party can never be called unjust enrichment. 7This apparently plausible statement does not seem to reach a desir-able result. It is certainly possible to arrive at the opposite conclu-sion. Unjust enrichment has been defined as "Acquisition of prop-erty under such circumstances that one is legally or equitably boundto make a return of it "' It is not conclusive that when the lawincidentally gives a benefit to a party that he is also equitably en-titled to keep it. In direct conflict with the case it.has been stated:"There is no doubt -that a person who acquiresproperty through his own wrong, or even through thewrong of a third person, is unjustly enriched if he ispermitted to keep the property If there is' never anyquestion as to the facts, there is no doubt that a con-structive trust should be imposed."'-3 SCOTT, TRUSTS (1939) sec. 489.5.'Evans, Torts to Expectancies 'in Decedents' Estates (1944) 93U. OF PA. L. REv. 187, 192.Pope v. Garrett, - Texas- , 204 S.W 2d 867, '871 (1947).8 WEBSTfR, NEW INTERNATIONAL DICTIONARY' OF THE ENGLISHLANGUAGE (2d ed. 1944) 2783.9 3 SCOTT, TRUSTS (1939) sec. 489.6.STUDENT NOTES AND C031[ ENTSIt has often been held that no one can claim an interest resultingfrom a fraud committed by-another person.'"Because cases with similar fact situations are so rare, analogiesare presented in order to give strength to the view that unjust en-richment alonn should -be enough to allow the non-participatingheirs in the principal case to be declared trustees. Scott suggeststhis example:"Where property is devised to two persons as ten-ants in common and one of them prormses to hold theproperty in trust for a third person, a constructivetrust is enforceable only against the person making thepromise; yet where a person by actual fraud procuresa devise to others, neither he nor the others Will bepermitted to retain the property.""It is important to note the similarity here to the facts in Pope v.Garrett. In each case we have property benefiting an innocent per-son as a result of the fraud of a third person-yet, in the example aconstructive trust is imposed on the innocent person.There is another analogy which supports the theory proposed,in which the owner of property is induced by the fraud of a thirdperson to transfer. property to the grantee. The transfer can be setaside as long as. the holder is, not a bona fide purchaser.'2 It isthought that the situation is similar to oe where the person whoobtained the property through fraud had made a gift to another. If.so the gratuitous transfer would not prevent raising a constructivetrust upon property when it was in the hands of one who wouldlose nothing to which he would otherwise have been entitled."Here again, the innocent grantee's situation parallels that of the in-nocent devisee, since each receives a benefit as the result of thefraud of a third person.In a third example,. although fraud does not exist there is un-just enrichment and an innocent grantee. For instance: When -theowner of property, transfers a greater interest in property than heintended, even though the transferee sells the property, the grantoris held to be entitled to the proceeds of the sale." Where the ownerof property intending to transfer it 'to one person, by mistake offact" or law'" transfers it to another, there is no doubt that thegrantee cannot keep the property if he is not ih the position of a0 O'Connor v. O'Connor, 291 Pa. 175, 139 Atl. 734 (1927), Stirk'sEstate, 232 Pa. 98, 110, 81 AtI. 187, 192 (1911)"3 SCOTT, TRUSTS (1939) sec. 489.5.12-See Ruhe v Ruhe, 113 Md. 595, 77 Atl. 797, 800 (1910) 3SCOTT, TRUSTS (1939) sec. 469."3 SCOTT, TRUSTS (1939) sec. 469.Andrews v. Andrews, 12 Ind. 348 (1859)"In re Berry, 147 Fed. 208 (C.C.A. 2d, 1906).SKnght Newspapers v. Commissioner of Internal Revenue,143 Fed. 2d, 1007, 1011 (C.C.A. 6th, 1944).IKENTUCKY LAW JOURNALbona fide purchaser.'" "The grantee having acquired the propertyby a mistake holds it upon a constructive trust."'"Although the court in the principal case requires actual fraudon the part of a constructive trustee-some courts require for thecreation of a constructive trust either actual or only what they termconsructive fraud.'9 The term constructive fraud is deceptive. It hasbeen stated that " constructive fraud has been evolved to desig-nate, what is, in its essence, nothing more than the receipt and re-tention of Unmerited benefits."'  This definition of constructivefraud seems actually to define unust, enrichment. The theory sub-mitted that unjust enrichment is enoughto raise a constructive trustdoes not seem too radical in view of the fact that the term construc-tive fraud, which has been used to declare constructive trusts, is amere fiction which is sometimes based on the receipt and retentionof unmerited benefits or in other words unjust enrichment."1 It ap-pears that the courts by using the fiction of constructive fraud havetried to disguise the fact that they have in reality created construc-tive trusts based on unjust enrichment. It would seem far morelogical where the fact situations create unjust enrichment to usethat term instead of the ambiguous one of constructive fraud. Inconclusion it seems that in the case of Pope v. Garrett not only abetter but a far more feasible result would have been reached ifthe "receipt and retention" of the property by the non-participatingheirs had been held to be such an "unjust enrichment" as to requirethe raising of a constructive trust.WANDA L. SPEARS173 SCOTT, TRUSTS (1939) sec. 467."8 See 2 BOGERT, TRUSTS AND TRUSTEES (1935) sec. 474."Kester v Amon, 81 Mont. 1, 261 Pac. 288 (1927) See Mark-worth v State Say Bank of Woden, 212 Iowa 754, 237 N.W 471, 474(1931)'See Hering v Harris, 117 N.J. Eq. 146, 175 Atl. 169, 172 (1934)(citing 2 LAWRENCE, EQUITY JURISPRUDENCE 724)-'In cases where the testator intending to devise land to A isinduced by B to devise it to B on the promise (express or implied)of B that A should either use it jointly with B or that B would de-vise it to A on B's death, courts have impressed a constructivetrust on B in favor of A on the basis of constructive fraud. Theterm constructive fraud in this situation, in reality consists only ofthe unjust enrichment of B. The promise of B is not conclusivelyfraudulent since he may have meant to carry it out at the time ofthe testator's death and for some reason later have changed hisplan. Rudd v. Gates, 191 Ky 456, 230 S.W 906 (1921), Taylor v.Fox's Ex'rs, 162 Ky. 804, 173 S.W 154 (1915), Chapman's Ex'r vChapman, 152 Ky 344, 153 S.W 434 (1913).

Unjust Enrichment as the Primary Basis for Raising a Constructive Trust

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Unjust Enrichment as the Primary Basis for Raising a Constructive Trust

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