Law of the Constructive Trust
August 19, 2019 § Leave a comment
In his partially concurring and partially dissenting opinion in White v. White, a COA case decided May 21, 2019, Judge McCarty spelled out the law of constructive trusts. It’s something you may be able to use in court.
¶27. “A constructive trust is a judicially imposed remedy used to prevent unjust enrichment when one party wrongfully retains title to property.” Presbytery of St. Andrew v. First Presbyterian Church PCUSA of Starkville, 240 So. 3d 399, 405 (¶27) (Miss. 2018). As the Supreme Court has held, this “is a fiction of equity created for the purpose of preventing unjust enrichment by one who holds legal title to property which, under principles of justice and fairness, rightfully belongs to another.” McNeil v. Hester, 753 So. 2d 1057, 1064 (¶23)
¶28. The remedy is broad:
A constructive trust is one that arises by operation of law against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.
Id. at (¶24).
¶29. In modern times, four elements must be met before a constructive trust will be imposed: “(1) a confidential or fiduciary relationship which must normally be shown; (2) a promise by defendant; and (3) transfer by plaintiff to defendant in reliance on defendant’s promise (4) under circumstances that constitute unjust enrichment.” James W. Shelson, Mississippi Chancery Practice, § 41:11 (2018). Without a confidential relationship, there can be no constructive trust. See Bond v. Bond, No. 2017-CA-00599-COA, 2018 WL 5603679, at *1 (¶5) (Miss. Ct. App. Oct. 30, 2018) (A claim “to a constructive trust” will be “foreclosed upon by [the] failure to show that a confidential relationship existed.”). Likewise, if there is a confidential relationship but “no abuse of confidence,” the court cannot create a trust. In re Estate of Hood, 955 So. 2d 943, 949 (¶22) (Miss. Ct. App. 2007).
¶30. “Clear and convincing proof is necessary to establish a constructive trust.” McNeil, 753 So. 2d at 1064 (¶25). It “is a question of law” whether this legal remedy should be applied “to the set of facts at hand.” Id. at (¶26). As with any case involving an allegation of a confidential relationship, this remains a fact-intensive inquiry, and can only be reached once a chancellor has taken proof on the existence of a confidential relationship. Id. at (¶27).
¶31. Many years ago the burden to create a constructive trust was stated plainly: “There must be conduct influential in producing the result, and but for which such result would not have occurred amounting, in the view of a court of equity, to fraud in order to save the case from the Statute of Frauds.” Lipe v. Souther, 224 Miss. 473, 483, 80 So. 2d 471, 475 (1955).