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Zundel v. Zundel

278 N.W.2d 123 (N.D. 1979)

http://www.court.state.nd.us/_court/opinions/9531.htm

Edwin Zundel [is] seeking the imposition of an implied trust over ... lands ... his brother, Joseph Zundel, has been the record title owner. Edwin contended the real estate was purchased in 1941 under a contract for deed in which Joe was named as vendee, but that the purchase price was paid by their mother, Justina, now deceased. The district court determined Joe held the realty in trust and ordered it be divided between the seven surviving Zundel brothers and sisters.

Justina, continued to own the land and operate the farm . until the mid-1930's when the Federal Land Bank acquired it following foreclosure of a mortgage. After the foreclosure sale, Justina and her family continued to reside on and operate the farm under a lease arrangement with the Federal Land Bank.

In 1941 Joe entered into a contract for deed with the Federal Land Bank for the purchase of the land. At the time Joe entered into the contract for deed in 1941, only he, his mother, and three of his brothers (August, Albert, and Edwin) remained on the farm...

The down payment for the purchase of the property was made by check written by Joe on his mother's account. Testimony was offered that money in this bank account, as well as money used later to pay for the remainder due on the contract for deed, was obtained through the farming efforts of Justina. Joe testified, however, the money in the bank account was partially his as he deposited money from his farming operations into his mother's account and did not open his own account until some time after the purchase of the land...

Four of the Zundel brothers and sisters testified that although Justina purchased the property in question, she wanted legal title placed in Joe's name to avoid payment of the prior mortgage. They testified Justina feared if the land was purchased in her name she might become liable on the approximate $12,000 mortgage that was foreclosed on in 1937. They stated that because August and Albert were planning to leave the farm at the time of, the purchase, Justina wanted the land in Joe's name as he was the eldest son remaining on the farm. They further testified the Zundel family discussed the purchase of the land and the particular purchase arrangement both before the contract was entered into and later when the children returned to the farm for visits.

Joe contended he was the sole negotiator for the purchase of the land, and although his mother approved of the purchase she did not desire to purchase the land herself because if Joe left the farm Justina feared she might lose it again without his help. Joe testified he used income not only from the land in question but also from other land he farmed to complete the purchase in a shorter time period than provided for under the contract for deed. Payment under the contract was completed and the deed was issued to Joe in 1943.

In approximately 1943, Joe was married and moved off the home farm to a house a short distance away. Justina continued to reside on the farm.

After the purchase of the land in 1941, it, along with other lands owned or leased by Justina and Joe, were farmed through the joint efforts of Joe, Justina, and Edwin.

During a part of the 1950's Joe and Edwin farmed much of their land, as well as that of their mother, in a somewhat informal partnership arrangement under which equipment, expenses, and profits were shared. In 1957 the informal partnership arrangement ended and the land in issue in this case was farmed by Edwin with him receiving three-fourths of the income and Justina receiving one-fourth. This arrangement appears to have lasted up until 1964, when Justina died. Edwin testified after his mother's death he, Joe and Albert arrived at an arrangement concerning the 440 acres where Albert would be allowed to reside on that tract of land on which the buildings were located, while Edwin and Joe would each get a quarter section of the remaining land and a cash settlement would eventually be made to the other brothers and sisters. Edwin would be allowed to farm the land and keep seven-eighths of the income, and Joe was to get the remaining one-eighth of the income. (Joe's one-eighth share was to represent a one-fourth share from the quarter of land he was eventually to receive spread over both quarters to be farmed by Edwin.) Edwin's testimony indicated neither a cash settlement to the remaining brothers and sisters nor a final settlement to divide the land was arrived at because Joe kept putting the issue aside when approached with it.

Joe testified that following his mother's death he agreed to rent the land in question to Edwin. Joe stated although he received some money from this rental arrangement, the money he received did not equal the amounts Edwin was to pay under the agreement despite repeated requests for the money by Joe. He stated it was Edwin's failure to make complete payments, along with other incidents, that eventually led to a decision by Joe to no longer allow his brother to farm the land.

Following a bench trial, the district court made, among others, the following pertinent findings of fact:

•  "That the said land was purchased in 1941 from the Federal Land Bank of St. Paul, Minnesota, in the name of Joseph M. Zundel, Defendant herein, with moneys belonging to his mother, the late Justina Zundel.

•  "That there was an understanding by and between Justina Zundel and the Defendant, Joseph M. Zundel, that he would divide the land between his brothers and sisters herein after his mother's demise.

•  "That Defendant, Joseph M. Zundel, farmed Justina's land, including the land purchased from the Federal Lana Bank and other land, he, Defendant, Joseph M. Zundel, rented from the mid 1930's until 1956, that the Plaintiff, Edwin Zundel, assisted Defendant, Joseph M. Zundel, and others in farming the land from the early 1940's onward, and that Justina Zundel got all the income from the land purchased from the Federal Land Bank and other lands she had acquired through the 1940's and 1950's.

•  "That Plaintiff, Edwin Zundel, Defendant, Joseph M. Zundel, their mother, the late Justina Zundel, and Plaintiff, Edwin Zundel, and Defendant, Joseph M. Zundel, combined paid the real estate taxes on the land over the years involved herein.

•  "That the Defendant, Joseph M. Zundel, paid the insurance premiums on the buildings but kept the moneys paid for a loss stating it was reimbursement to him for premiums paid.

•  "That the Plaintiff, Edwin Zundel, paid the Defendant, Joseph M. Zundel, approximately Five Thousand Dollars ($5,000.00) in 1975 to compensate Defendant, Joseph M. Zundel, for taxes Defendant heretofore had paid on the said land.

•  "That the Defendant, Joseph M. Zundel, made no overt attempt to exercise control over the land that evidenced his outright ownership until 1976 and after he was involved in litigation with Plaintiff on another matter.

•  "That Defendant, Joseph M. Zundel, in a conversation with Plaintiff's son, Loren, in April, 1977, stated the land should be divided between the seven (7) Zundel brothers and sisters."

The district court's conclusions of law stated in part:

•  "That the trust created is a trust supportable either as a resulting or a constructive trust and that proof of the trust is clear, specific and substantial.

•  "That Defendant, Joseph M. Zundel, repudiated the trust arrangement in 1977.

•  "That equity compels a division of the realty by and between the seven (7) Zundel brothers and sisters, each to receive a one-seventh (1/7) interest in said land.

•  "That Defendant, Joseph M. Zundel, should be reimbursed for the payment of real estate taxes on said land herein for the years 1975, 1976, and 1977 and insurance premiums paid on said land for the years 1975, 1976, and 1977 which has not already been recompensed in the sum of Two Thousand Seven Hundred Eighty-eight Dollars and Thirty-seven Cents ($2,788.37).

The trial court concluded the facts of this case supported the creation of either a constructive or a resulting trust. The classification of constructive or resulting trusts has been eliminated by statute in North Dakota as all trusts created by operation of law are termed implied trusts. Section 59-01-05, North Dakota Century Code.

Although the "constructive" and "resulting" trust labels have been eliminated by North Dakota statute, the substantive considerations that give rise to these trusts created by operation of law remain the same. Consequently, the considerations determinative in the creation of constructive and resulting trusts are important in determining the creation or existence of an implied trust under North Dakota statute. Because we determine the record supports the creation of a resulting trust, we need not examine the elements or existence of a constructive trust in this case.

Generally where a transfer of property is made to one person and the purchase price is paid by another, a resulting trust arises in favor of the person by whom the purchase price is paid...

"A 'resulting trust' exists where the acts or expressions of the parties indicate an intent that a trust relation resulted from their transaction." Scheid v. Scheid , 239 N.W.2d 833, 837 (N.D. 1976).

Thus, whether or not a resulting trust has been created is primarily a question of intention. .. This court has, however, also stated the general rule that if a father or parent pays the consideration and has the conveyance run through his child, there is a rebuttable presumption of a gift.

We also find pertinent to this case the following comment from the Restatement of Trusts 2d § 443:

"The intention of the payor not to make a gift to the transferee may be shown not only by oral declarations of his intention, but also by the circumstances under which the transfer is made.... the fact that the circumstances are such that the payor would have a reason for taking title in the name of another other than an intention to give him the beneficial interest is an indication that he did not intend to make a gift....

"It is the intention of the payor at the time of the transfer and not at some subsequent time which determine whether a resulting trust arises.... The conduct of the payor and of the transferee subsequent to the transfer, however, may be such as to show that at the time of the transfer the payor did not intend to make a gift to the transferee. Thus, the fact that the payor manages the property, collects rents, pays taxes and insurance, pays for repairs and improvements, or otherwise asserts ownership, and the acquiescence by the transferee in such assertion of ownership, is evidence to rebut the inference of an intention by the payor to make a gift to the transferee."

When a party seeks the imposition of an implied trust, he carries a heavier burden of proof than the mere preponderance of evidence standard required in most civil cases.

"The courts are reluctant to ingraft a trust by parol on the legal title to real estate, and there is perhaps no better established doctrine than the one which requires a high degree of proof in order to establish the trust by parol evidence...

. . .

The district court's findings in this case that the land in question was purchased with money belonging to Justina Zundel; and that the intent of Joe and his mother was that Joe hold the land for the benefit of his mother and divide it on her death between her surviving children, is supported by substantial and competent evidence and thus is not clearly erroneous. The check used to pay for the land was drawn upon Justina's account. The circumstances under which the land was farmed, income retained, improvements made and taxes paid are consistent with an intent to create a trust. Also, circumstances existed which rebutted any presumption that the land was meant as a gift to Joe. Justina feared if title to the land was placed in her name she might again become liable on the original $12,000.00 mortgage. The fact the land had been foreclosed on only a few years before, together with testimony of the Zundel children, indicated Justina was not extremely wealthy at the time of the purchase as to be making sizeable gifts, but rather she was a business woman raising a family without benefit of a husband and engaged in the operation of a farm of which farmland would be a vital necessity... Therefore, the trial court's determination on this issue is affirmed.

Last updated September 28, 2005

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