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Trusts and Estates Helen M Marquette Law Review Volume 59 Article 14 Issue 2 1976 (Number 2) Trusts and Estates Helen M. Zolnowski Follow this and additional works at: http://scholarship.law.marquette.edu/mulr Part of the Law Commons Repository Citation Helen M. Zolnowski, Trusts and Estates, 59 Marq. L. Rev. 447 (1976). Available at: http://scholarship.law.marquette.edu/mulr/vol59/iss2/14 This Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion in Marquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contact [email protected]. tions purported to resolve the entire question of compensatory damages despite the fact that neither stated specific items of damages. The compensations given were held to have already included a consideration of prejudgment interest. Wyandotte clarified two important matters. First, it em- phasized that the granting of prejudgment interest was not solely based on the question of whether the amount of damages was determinable. The court stressed that the granting of pre- judgment interest was determined by a balancing of the injured party's right to be fully compensated against the right of the withholding party to be free from a claim for prejudgment in- terest when his refusal to pay the claia was legally justified. Second, Wyandotte made clear that a stipulation which pur- ports to resolve the entire damage question will preclude a claim for prejudgment interest unless the stipulation makes clear that such a claim is expressly reserved. JoHN L. SCHLIESMANN TRUSTS AND ESTATES I. CONSTRUcTIVE TRUSTS Ordinarily the breach of an oral promise to devise realty by will is not grounds for imposing a constructive trust against a promisor or his successor.' Such a decree would generally con- stitute a violation of Wisconsin Statute section 853.06 which requires a written instrument, signed by the testator and exe- cuted in the presence of witnesses, to effectuate a transfer of a decedent's property. 2 However, when the breach by a promisor of an oral promise to devise results in unjust enrichment of the actual devisee, the court may exercise its equitable authority to impose a constructive trust in favor of the promisee. Utiliz- ing this doctrine in Meyer v. Ludwig,3 the court unanimously affirmed a trial court order imposing a constructive trust in favor of the defendant-daughter on land willed to the plaintiff by his deceased wife. The land had been orally promised to the defendant over twenty years prior to this action. In reliance on this promise, the defendant and her husband had significantly 1. BOGERT, TRUSTS §§ 83, 85 (5th ed. 1973). 2. Wis. STAT. § 853.03 (1973). 3. 65 Wis. 2d 280, 222 N.W.2d 679 (1974). MARQUETTE LAW REVIEW [Vol. 59 improved the property.' The mother's will, however, was never amended to reflect this promise to convey. When the will was probated, the plaintiff received the promised parcel of land by devise. Plaintiff-father contested the trial court's imposition of a constructive trust on the devised land asserting that his wife's promise was not binding on him. Furthermore, it was urged that the trial court's action constituted a belated amendment of the decedent's will, recognizably an action beyond judicial authority. If neither argument sufficed, the plaintiff alleged that the statute of limitations effectively barred this action commenced seven years after the decedent's death. All of these arguments failed. In Wisconsin, constructive trusts have traditionally been recognized as: " '. a device in a court of equity to prevent unjust enrichment which arises from fraud or abuse of confi- dential relationship and is implied to accomplish justice.' "" By judicial interpretation, this rule has been held to extend be- yond the Restatement Rule,' casually referred to as an "unjust enrichment only" test, by requiring an additional element of proof: " '. duress, abuse of confidence, mistake, commission of a wrong, or by any form of unconscionable conduct, [against one who] has either obtained or holds the legal title to property which he ought not in equity and in good conscience benefi- cially enjoy.' ",7 The court relied on evidence of defendant's substantial in- vestments and justifiable reliance on the decedent's assertions as sufficient proof of the first requirement for imposing a con- structive trust - unjust enrichment. The court found the sec- ond element fulfilled, reasoning that a confidential relationship 4. Id. at 282, 222 N.W.2d 680. The court reported evidence that defendant and her husband had made considerable improvements to the property between 1945 and 1968, including the installation of running water, electricity, new floors, insulation, kitchen facilities, garage, driveway, bathroom, front porch, new roof and landscaping. 5. 65 Wis. 2d at 285, 222 N.W.2d at 682, quoting Estate of Massouras, 16 Wis. 2d 304, 312, 114 N.W.2d 449, 453 (1962); see also Masino v. Sechrest, 268 Wis. 101, 66 N.W.2d 740 (1954); Nehls v. Meyer, 7 Wis. 2d 37, 95 N.W.2d 780 (1959); Estate of Schmalz, 58 Wis. 2d 220, 206 N.W.2d 141 (1973). 6. RESTATEMENT OF RESTITUTION § 160 (1937): Where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it, a constructive trust arises. 7. 65 Wis. 2d at 286, 222 N.W.2d at 682, quoting Estate of Massouras, 16 Wis. 2d 304, 312, 114 N.W.2d 449, 453 (1962). 1976] TERM OF THE COURT between the defendant and plaintiff arose from their filial rela- tionship and proven mutual assistance and inter-family coop- eration. The plaintiff-father unsuccessfully contested any abuse of a confidential relationship insisting that since he had not made the promise to convey he had no duty to fulfill it. The court acknowledged the fact that actual abuse of a confidential rela- tionship occurred when the mother failed to will or convey the land to her daughter. However, the court pointed out that the plaintiff, as father, "stood in the same confidential relationship to their daughter as did his deceased wife," 8 having knowledge of the promise and benefiting from subsequent inter-family cooperation. The decedent's "abuse of a confidential relation- ship" was thus imputed to the plaintiff-father and constituted the final element to justify imposition of the constructive trust. The court added that even if the plaintiff had been "a stranger to the promise made, the relationship existing, and the benefits derived," 9 his status as transferee rather than promisor would not prevent imposition of a constructive trust. The court quoted with approval the rule that "'[w]here a person holding property transfers it to another in violation of his duty to a third person, the third person can reach the prop- erty in the hands of the transferee [by means of a constructive trust] unless the transferee is a bona fide purchaser.' "10 The court's indulgence in this dicta was purportedly to "nail shut" the "escape hatch" which the plaintiff-father had attempted to utilize to preclude his liability under the testa- trix's promise. The court's attempt, however, appears less than conclusive and the court's propensity to impose constructive trusts, less than settled. An innocent donee, ignorant of a prior promise or breach, who has neither been associated with nor benefited from the relationship in issue, is arguably the ulti- mate "stranger" to an alleged inequitable transfer. As pre- viously noted, however, constructive trusts are imposed to reach transfers deemed secured by a recipient's unconscionable conduct." A transfer to an innocent donee would thus seem- ingly not warrant utilization of this equitable remedy by the 8. 65 Wis. 2d at 289, 222 N.W.2d at 683. 9. Id. 10. Id. quoting Richards v. Richards, 58 Wis. 2d 290, 206 N.W.2d 134, 138 (1973) which cited and adopted the rule as stated in 5 Scorr, TRUSTS § 470 (3d ed. 1967). 11. See generally BOGERT, TRUSTS, §§ 83-85 (5th ed. 1973). MARQUETTE LAW REVIEW [Vol. 59 court. Imposition of a constructive trust in such a circumstance would, however, be within the scope of the Wisconsin court's dicta. The court also' rejected the plaintiff-father's second argu- ment that the imposition of the constructive trust constituted a belated amendment of the final probate judgment of the decedent's will and noted that the plaintiff had misconceived the legal rights involved in the imposition of a constructive trust on property. The court clarified the distinction: The heirs or legatees do not receive, under a final judgment in the probate of an estate, any more title than the testator had to give. If, in an appropriate subsequent proceeding, there is an impressing of a constructive trust upon the inter- est of the testator in a piece of property, the constructive trust follows the property to the legatee or heir who receives title from the testator. The challenge is not to the fact of transfer but to what is in fact transferred under the will." Defendant-daughter's title thus arose from the constructive trust created, not from a change in the probate judgment. The statute of limitations argument was also rejected by the court. The plaintiff-father had argued that the applicable sta- tutory provisions were either of two six year statutes of limita- 3 tions, one dealing with claims against a decedent or his estate, the other pertaining to fraud actions.'" Citing prior authority,'" the court noted that since no fraud was asserted, the ten year limitation period under Wisconsin Statute section 893.18(4) was applicable.
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