Black, Donald F.

English

The Research Repository @ WVU (West Virginia University)

Volume 39 Issue 1 Article 7 December 1932 Purchase Money Resulting Trusts in West Virginia Donald F. Black West Virginia University College of Law Follow this and additional works at: https://researchrepository.wvu.edu/wvlr  Part of the Property Law and Real Estate Commons Recommended Citation Donald F. Black, Purchase Money Resulting Trusts in West Virginia, 39 W. Va. L. Rev. (1932). Available at: https://researchrepository.wvu.edu/wvlr/vol39/iss1/7 This Student Note is brought to you for free and open access by the WVU College of Law at The Research Repository @ WVU. It has been accepted for inclusion in West Virginia Law Review by an authorized editor of The Research Repository @ WVU. For more information, please contact ian.harmon@mail.wvu.edu. STUDENT NOTESprobably open to serious question; but be that as it may, the factremains that it is not justified by the present state of our law.Doubtless business standards can be elevated by judicial deci-sions, but the process of elevation must be well considered, grad-ual, and not too far in advance of ordinary business customs.On the other hand, it is scarcely necessary to suggest that theWilliamson case falls far short of the orthodox ethical standardfor domestic relations. Consequently, the West Virginia law oilthe subject of fiduciary or confidential relations is in a decidedlyunsatisfactory state.-GEORGE W. McQU(AN.PuRcHAsE MoNEY RESULTING TRUSTS IN WEST VIRGINIA. -Purchase money resulting trusts have been a very fertile field oflitigation in West Virginia. Due to the very considerable num-ber of cases decided, the West Virginia decisions mark out forthis jurisdiction the applicability of most of the rules developedin this branch of the law. The decisions are for the most part inconformity with the weight of American authority. The circum-stances under which this doctrine has been invoked and appliedmay be roughly divided into two classes; first, situations whereinthe purchaser and grantee are strangers, and secondly, whereinthey are related by blood or marriage.Where, upon a purchase of property, the conveyance of thelegal title is taken in the name of one person, while the considera-tion is given or paid by another, the parties being strangers toeach other, a resulting trust arises by virtue of the transaction.1The party who pays the consideration becomes in law a cestuique trust while the party receiving legal title is trustee. Thisrule is founded on the natural presumption that the person whofurnishes the purchase money intends the purchase to be for hisown benefit. This presumption is rebuttable by the grantee.The evidence must be clear and unequivocal.' Mere admissionmade by the party holding legal title that he holds the property'Pumphrey v. Brown, 5 W. Va. 107 (1872); Despard v. Despard, 53 W.Va. 443, 44 S. E. 448 (1903) ; Smith v. Patton, 12 W. Va. 541 (1878).2Pumphrey v. Brown, supra n. 1.Logan, Walton, Adm'rs. v. Pritt, 93 W. Va. 375, 116 S. E. 759 (1923).4 Cassaday v. Cassaday, 74 W. Va. 53, 81 S. E. 829 (1914).1Black: Purchase Money Resulting Trusts in West VirginiaDisseminated by The Research Repository @ WVU, 1932WEST VIRGINIA LAW QUARTERLYin trust is not enough.' The claimant by resulting trust is not acompetent witness to prove payment of the purchase money toor through a decedent who died seized of the property nor is hiswife.6The payment must have been made before or contempor-aneously with the conveyance' or the claimant become bound byvalid contract at that time to pay the price.8 The grantee mayshow that the nominal purchaser advanced the money as a loanto him and conversely a party may show that the grantee advancedthe price as a loan to him.' No agreement to pay, or actual pay-ment on, the price subsequent to the conveyance will raise thetrust.'  The payment may be made in money or money's equiva-lent, as by trading land or other valuables for the property con-veyed.'One claimant may pay only part of the price or severalparties may jointly contribute to the price, in which case a bene-ficial interest results to each proportionate to the contributionmade.' Some jurisdictions require the claimant to have paid analiquot part of the price." West Virginia requires only that theamount paid be definitely established.1 ' The interest claimed bythe cestui and the exact part of the whole price which he paidmust be clearly established.' The conveyance must not have beenmade for the purpose of defrauding creditors." *Where theclaimant has been tardy in asserting his interest and creditors ofthe grantee seek to subject the property to the grantee's debtsthe claimant is not estopped unless it was his duty to speak or'Supra n. 4.0 Hummel v. Marshall, 95 W. Va. 42, 120 S. E. 164 (1923).7 Moore v. Mustoe, 47 W. Va. 549, 35 S. E. 871 (1900).8 Moss v. Moss, 88 W. Va. 135, 106 S. E. 429 (1921) ; Cleavenger v. Felton,46 W. Va. 249, 33 S. E. 117 (1899).'Raines v. Raines, 96 W. Va. 65, 122 S. E. 437 (1924); Harris v. Elliott,45 W. Va. 245, 32 S. E. 176 (1898).Tichnell v. Tichnell, 74 W. Va. 237, 81 S. E. 978 (1914); Bright v.Knight, 35 W. Va. 41, 13 S. E. 63 (1891); Smith v. Turley, 32 W. Va. 14,9 S. E. 46 (1889).n Seiler v. Mohn, 37 W. Va. 507, 16 S. E. 496 (1892).M2 urry v. Sell, 23 W. Va. 475 (1884); Weinrich v. Wolf, 24 W. Va. 299(1884); Heiskell v. Powell, 23 W. Va. 717 (1884).Scott, Besulting Trusts Arising Upon the Purchase of Land (1927) 40HARv. L. REy. 669."Currence v. Ward, 43 W. Va. 367, 27 S. E. 329 (1897).Shaffer v. Petty, 30 W. Va. 248, 4 S. E. 278 (1887). A bill is demurrablethat does not state what part of the entire purchase money was paid by thepurchaser claiming a resulting trust. Watts Brothers & Co. v. Frith, 79 W.Va. 89, 91 S. E. 402 (1916)."McClintock v, Loisseau, 31 W. Va. 865, 8 S. E, 612 (1888).2West Virginia Law Review, Vol. 39, Iss. 1 [1932], Art. 7https://researchrepository.wvu.edu/wvlr/vol39/iss1/7STUDENT NOTESact and he has by his silence, false statement, or refusal to actintentionally misled the creditor to his detriment."'Where one person stands in such relation to another thatthere is an obligation, moral or legal, to provide for the other, apurchase or conveyance in the name of the latter party will bepresumed to be made in discharge of that duty, as for example,where the purchaser stands in loco parentis to the grantee." Agift and not a resulting trust is the presumption in such ease.Thus where the pergon to whom title is made is child or wife ofthe purchaser there is no presumption of resulting trust but to thecontrary a gift is presumed.1 This rule has been extended toinclude grandchildren where the parents are dead, the mother ofthe purchaser, nephews, nieces and adopted children.' Somecases have extended this rule to include gifts to a son or daughterover twenty-one years of age,' thus transcending the obligation tosupport as the basis for the presumption.In Boyd v. Boyd,' the most recent case in this field, title wasmade to a husband and wife by entirety. It is not clear whatamount each contributed to the price. It was shown that thewife contributed at least part of the price in money saved byher, from funds furnished her by the husband for household ex-penses. The husband later conveyed his title to his wife. Subse-quently the wife sold the property and deposited the money toher separate account in a bank. She then drew out this moneyand bought the property in controversy, taking title in her nameonly. The husband claimed a resulting trust. The court decreedan equal division of the property. The case may be correct onthe ultimate facts, but it is difficult to square the decision on thefacts contained in the opinion. The amount contributed by eachis uncertain. If they each had a half interest in the first prop-erty the conveyance by the husband to the wife would constitutea transfer of his half and leave her the full owner.As to all of the rules stated thus far, the West Virginia de-cisions, with the possible exception of Boyd v. Boyd, ' are in com-1 7 Mayer v. Johnson, 101 W. Va. 522, 133 S. E. 154 (1926).'' See collection of cases in note (1923) 26 A. L. R. 1106, 1126.19 Hamilton v. Steele, 22 W. Va. 348 (1883); Deck v. Tabler, 41 W. Va.332, 23 S. E. 721 (1895); Lockhard & Ireland v. Beckley et a., 10 W. Va.87 (1877); Ludwick v. Johnson, 69 W. Va. 499, 68 S. E. 117 (1910).2Ogupra n. 13.2 Supra n. 13.0 109 W. Va. 766, 155 S. E. 303 (1930).='$upra n. 22,3Black: Purchase Money Resulting Trusts in West VirginiaDisseminated by The Research Repository @ WVU, 1932WEST VIRGINIA LAW QUARTERLYplete conformity with the vast majority in both England and theUnited States. Variations exist, however, in the situation wherea wife pays the purchase price and title is taken in the husband'sname. That transaction is held in the majority of jurisdictionsto raise a resulting trust in favor of the wife.2' A wife is underno legal obligation to provide-for her husband and hence thatmajor reason for presuming a gift is not involved. This pre-sumption of a trust rather than a gift, moreover, is based on com-mon experience. The wife may have many reasons for causingtitle to be placed in her husband, for example, his more convenientmanagement of her separate estate. Whether in fact experienceauthorizes the presumption has not been supported by data.The cases in which the wife was purchaser and the husbandgrantee, are dealt with in chronological order to show the varyingview of the court.In McGinnis v. Curry' the wife gave the husband moneywith which the husband bought land in Missouri taking title inhimself. Later the husband sold the Missouri land and with theproceeds bought land in West Virginia, again taking title in him-self. The husband became involved and deeded this property tothe wife. In a creditor's bill to levy upon the land it was held thatthe property belonged to the husband. The court said there was apresumption of a gift from the wife to the husband. In this casethe wife with full knowledge of the facts had made no claim to theproperty before the conveyance to her.In Berry v. Weidmane the husband used the wife's money topurchase property, title to which he caused to be conveyed to him-self. The court held that unless it was shown that the wife in-tended to make a gift of the money to her husband or to lend itto him a resulting trust arose. Mere lapse of time was held notsufficient to establish the transaction as a gift. In this case the wifehad treated the property as her own and had made valuable im-provements upon it.In Skaggs v. Mane it was held, where a husband purchasedproperty with the wife's money and took title in his own name,that a resulting trust arose in her favor in the absence of a clearshowing that she intended a gift. Again in Standard MercantsleCo. v. Ellis' it was held, where the husband purchased property2Supra ni. 13.13 W. Va. 29 (1878).S40 W. Va. 36, 20 S. B. 817 (1894).46 W. Va. 209, 33 S. B. 110 (1899).S48 W, Va. 309, 37 S, E. 593 (1900).4West Virginia Law Review, Vol. 39, Iss. 1 [1932], Art. 7https://researchrepository.wvu.edu/wvlr/vol39/iss1/7STUDENT NOTESwith the wife's money and without her knowledge or consent tooktitle in his own name, that a resulting trust arose. The wife wasnot estopped from setting up such trust by permitting the legaltitle to remain in her husband's name unless credit was knowinglyextended to the husband on the strength of his apparent ownership.It would seem that the clear result of the decisions in these casesis that a prima facie presumption exists that the wife intended apurchase made -with her money to be for her benefit, and that thispresumption raises a resulting trust which can be rebutted by show-ing that the wife intended to make a gift to her husband.In Pickens v. Wood' the wife furnished part of the purchasemoney and the husband alone took title. The court held that therewas a prima facie presumption of a gift to the husband. Againin Whitten v. Whittene the holding was that money of the wifeinvested in land in the husband's name is presumptively a gift,and that in the absence of facts and circumstances rebutting thepresumption such as violation of a prior or contemporaneous agree-ment to take title in the wife's name, ignorance of its having beentaken in the husband's name, subsequent expenditure of the wife'smoney in improvements thereon, an effort on her part to obtaintitle after discovery of its condition, control of the property as herown against the husband, or the like, there is no resulting trust inher favor.In Hummel v. Marshal', although the court distinguished thatcase from Whitten v. Whitte&e, its decision shows a marked ten-dency against the presumption of a gift in such circumstances.The court said, '!we .think a rule that permits a wife to overcomethis presumption of gift with but slight evidence best comportswith justice. This conclusion is strengthened when it is consideredthat in a gr~at majority of jurisdictions in this country there is nopresumption at all of a gift where the wife's money is used by thehusband to purchase property the title to which he takes in hisown name." The presumption was rebutted in this case by show-ing that the wife did not know title had been taken in the hus-band's name and that the husband had told others that the prop-erty belonged to the wife. Subsequent to this decision the courtheld in Eagle v. McKowne that a trust resulted to the wife where57 W. Va. 480, 50 S. E. 518 (1905).70 W. Va. 422, 74 S. E. 237 (1912).- 101.W. Va. 639,,133 S. E. 361 (1926)." Supra n. 30.8 IQ5 W, V, 270, 142 S. E. 65 (1928),5Black: Purchase Money Resulting Trusts in West VirginiaDisseminated by The Research Repository @ WVU, 1932WEST VIRGINIA LAW QUARTERLYproperty was bought with her money and title was by mistakemade to her and her husband jointly, and she accepted the deedon the express agreement that the husband convey to her. Itseems that there still exists in the West Virginia decisions thetheory of a presumptive gift where the wife pays for land con-veyed to the husband, but that it is a very weak presumption, andrebuttable by the introduction of slight evidence of circumstancesshowing a contrary intent.West Virginia has held that where the price is paid by one andtitle is taken in the name of a stranger under an express parolagreement to hold in trust for the purchaser's daughter a com-plete gift is consummated and the grantee holds the property intrust for the daughter.' It is axiomatic that to effect a valid giftof personal property there must be a delivery to the donee. Inthis case the purchase money was not delivered by the father tothe daughter but to the vendor and then not in trust for thedaughter but in payment for the land. There could have been noresulting trust for the daughter but a valid express trust wasdoubtless created since the transaction was in substance the sameas if the vendor had first conveyed to the purchaser and he inturn to the trustee. This decision was prior to the Revised Codeof 1931 in which it is declared in substance that any parol trustattached to a conveyance of land is valid.' The former rulingthat parol trusts of land for the benefit of third parties but notof the grantor were valid is now supplanted by statute providingit is thought that this statute is applicable only to cases in whichthere has been an express parol trust.From the above decisions, it is apparent that the question ofintent of the parties is of controlling significance. When theparties are strangers equity is also influenced by the desire toprevent unjust enrichment or a breach of a confidential or fidu-ciary relationship. It is where the parties are related that thedominance of intent is most apparent, - the whole question verylargely is whether there was an express oral trust or a gift. Butfor the existence of the liberal statute in West Virginia as tocreation of trusts by parol, it might be difficult to square thesecases to the policy underlying statutes of frauds. '-DoNALD F. BLACK.1, Hardman v. Orr, 5 W. Va. 71 (1871).OW. VA. REV. CODE (1931) c. 36, art. 1, § 4."I ' eo Scott, op. cit. supra n. .13, at 671, 672.6West Virginia Law Review, Vol. 39, Iss. 1 [1932], Art. 7https://researchrepository.wvu.edu/wvlr/vol39/iss1/7

Purchase Money Resulting Trusts in West Virginia

https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=5136&context=wvlr

Purchase Money Resulting Trusts in West Virginia

Abstract

Similar works

Full text

Available Versions

The Research Repository @ WVU (West Virginia University)