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HomeMy WebLinkAbout97-1634 Civil (2)SHIRLEY L. PETRESKY and : SAMUEL R. COMP, : Plaintiffs : : vs. : 97-1634 CIVIL : RAY K. JUMPER, : Defendant : CIVIL ACTION - EQUITY IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA IN RE: NON JURY TRIAL BEFORE HESS, J. ORDER AND NOW, this /2 ',I day of October, 1998, upon trial being held, it is hereby ordered and decreed: 1. that a constructive trust is imposed upon the assets of the defendant, Ray K. Jumper, and he is enjoined from conveying any assets owned by him, except for that necessary for his reasonable living expenses, as approved by this court, until further order of the court; 2. that no later than November 6, 1998, the defendant is to file with this court and serve the same upon the plaintiffs an accounting of all proceeds from the sale of the assets received by him from Rhoda Comp, and the defendant is further ordered to disclose the location of the remaining assets or the proceeds, therefrom; the accounting is to include an itemization of all expenses incurred in the sale of those assets, as well as, an itemization of all expenses paid from the said proceeds, by the defendant, for the care and maintenance of Rhoda Comp; and 3. that on November 30, 1998, at 9:30 a.m. in Courtroom No. 4 of the Cumberland County Courthouse a hearing is to be held to determine the amount of proceeds received by the Hubert X. Gilroy, Esquire For the Plaintiffs defendant and the nature and extent of the relief that is to be granted to the plaintiffs. BY THE COURT, Kevin P~. Hess, J. / :rim H. Anthony Adams, Esquire For the Defendant SHIRLEY L. PETRESKY and SAMUEL R. COMP, Plaintiffs VS. RAY K. JUMPER, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA 97-1634 CIVIL CIVIL ACTION - EQUITY IN RE: NONJURY TRIAl, BEFORE HESS, J. OPINION AND ORDER In this case we find the following to be the facts. The plaintiffs, Shirley L. Petresky and Samuel R. Comp, are the adopted children of Rhoda E. Comp. The defendant, Ray K. Jumper, is the brother of Rhoda Comp and came to live at her farm when he was twelve years old. Shirley, Sam, and Ray were all raised by Rhoda and her husband on their farm at 670 Mount Rock Road, Carlisle, Pennsylvania, and grew up much like brothers and sisters. Rhoda's husband died in 1991 without a will. Some time later, Samuel Comp met with attorney Marcus McKnight to discuss ways of handling Rhoda's assets and also ways of making sure "Uncle Ray" was taken care of after Rhoda died. In April of 1993, when Rhoda's health began to fail, the plaintiffs contacted Mr. McKnight again to discuss ways of handling Rhoda's estate. Since Shirley and Sam were Rhoda's only intestate heirs, and Rhoda did not have a will, they were concerned because they would inherit all of Rhoda's assets when she died and Ray Jumper would not be provided for. Around May 6, 1993, Mr. McKnight was contacted by Shirley Petresky and informed that Rhoda's health was getting worse, and that they wanted to make sure Ray was taken care of. Mr. 97-1634 CIVIL McKnight came to the family farm and discussed several ways in which Rhoda's assets, principally the farm, could be handled so Ray would be taken care of and have a place to live after Rhoda died. Mr. McKnight told Shirley and Sam that he could draft a will for Rhoda and also that Rhoda could deed the property to Ray for life, with the remainder passing to Shirley and Sam. According to Mr. McKnight, however, Shirley informed him that Rhoda wanted the property to be deeded to Ray in fee simple, and as money was needed to pay for Rhoda's health care, timber, land, and other assets from the farm would be sold to raise money. The remainder would then be split up three ways between Ray, Shirley, and Sam. Mr. McKnight was uneasy about handling the property this way and without any written agreement evidencing the parties' intentions. Shirley and Sam, however, were adamant and said that they trusted Ray, and didn't want a written agreement because they didn't want Ray to think he couldn't be trusted. The same day, Mr. McKnight met with Rhoda Comp to determine if this was in fact the way she wanted her estate to be handled. However, Rhoda was not able to speak in a comprehensible manner, but did appear to be alert and able to answer yes and no questions by nodding her head. Mr. McKnight explained to Rhoda the transaction that Shirley had outlined. He explained that Ray would be deeded the property in fee simple and that Ray, Sam, and Shirley would all share in the property equally. According to McKnight, Rhoda was adamant about deeding the property to Ray and having the parties share in her estate three ways. On the same day, Rhoda also signed a power of attorney giving Shirley and Sam the power to make decisions for her. Also, at the suggestion of Mr. McKnight, Ray signed a will that gave Shirley and Sam his entire estate. Mr. McKnight contends that this was done to protect the interests of Shirley and 2 97-1634 CIVIL Sam in case Ray died so they would not lose their share of Rhoda's estate, and that Ray executed this will for that reason. In June of 1993, the plaintiffs and defendants agreed to sell timber from the farm and Rhoda's household goods. As agreed, the funds were to be used to first pay the expenses of Rhoda's health care and then divided equally among Shirley, Sam, and Ray. To facilitate this agreement, a joint account was opened at Meridian Bank. The proceeds from the sales were turned over to the defendant, who was to manage the income for the benefit of the parties. The farm was also subdivided around this time, and from June 1994 to June 1995, the entire farm was sold in parcels to various parties. From the sale of the real estate, the defendant received the sum of $484, 203.00. He also received an undetermined amount of money from the sale and auctions of Rhoda's personal goods and two timber sales. In April of 1994, according to the plaintiffs, the defendant told Samuel Comp that he WOuld no longer divide the funds equally with the plaintiffs, since the farm was given only to him in fee simple. He stated that he wanted one-half of all the remaining funds with the other half to be split between the plaintiffs. Shortly thereafter, on or about May 16, 1994, the defendant closed the joint account at Meridian Bank without notifying the plaintiffs and placed Mrs. Comp's funds into his own account. On January 12, 1995, Mrs. Comp died. At that time the defendant had control of all her assets. The defendant did not provide the plaintiffs with an account of the funds that he had acquired from Mrs. Comp. In February of 1996, Shirley confronted the defendant regarding the payment of Mrs. Comp's expenses and a final account and distribution of the remaining funds. 3 97-1634 CIVIL The defendant contended that no accounting was necessary, since the farm was deeded to him only and that it was his to sell. The plaintiffs have asked this court to impose a constructive trust on the proceeds from the sale ofRhoda Comp's estate. Ordinarily, oral promises to hold land in trust are not valid under the Statute of Frauds. However, "it should be noted that a constructive trust for realty can be based upon oral evidence because statutory law [33 P.S. Section 2] specifically exempts trusts arising by 'implication or construction of law' from the Statue of Frauds." Friday v. Friday, 311 Pa. Super. 17, 21,457 A.2d 91, 93 (1983). 33 P.S. Section 2 of the Statute of Frauds states that: All declarations or creations of trusts or confidences of any lands.., shall be manifested by writing, signed by the party holding the title thereof.., or else to be void: Provided, That where any conveyance shall be made of any lands or tenements by which a trust or confidence shall or may arise or result by implication or construction or law, or be transferred or extinguished by act or op. eration of law, then and in every such case such trust or confidence shall be of the like force and effect as if this act had not been passed. Additionally, the Pennsylvania Supreme Court has adopted the Restatement (Second) of Trusts Section 44 (1959), which creates an exception to the rule that agreements to hold land in trust must be in writing. Section 44 provides: (1) Where the owner of an interest in land transfers it inter vivos to another in trust for the transferor, but no memorandum properly evidencing the intention to create a trust is signed, as required by the Statute of Frauds, and the transferee refuses to perform the trust, the transferee holds the interest upon a constructive trust for the transferor, if (a) the transfer was procured by fraud, duress, undue 4 97-1634 CIVIL influence or mistake, or (b) the transferee at the time of the transfer was in a confidential relation to the transferor, or (c)) the transfer was made a security for an indebtedness of the transferor. Restatement of Trusts (Second) Section 44 (1959). "In order to impose a constructive trust pursuant to Section 44, a chancellor must find 'both a confidential relationship and reliance upon a promise to reconvey induced by that relationship...'" Kadel v. McMonigle, 425 Pa. Super. 253, 258, 624 A.2d 1059, 1061 (1993) (quoting Silver v. Silver, 421 Pa. 533,537, 219 A.2d 659, 661 (1966)). Such a confidential relationship exists not only when there is a fiduciary relation such as exists between attorney and client, trustee and beneficiary, guardian and ward, and the like, but also where, because of family relationship or otherwise, the transferor is accustomed to be guided by the judgment of the transferee or is justified in placing confidence in the belief that the transferee will act in the interest of the transferor. Id__~. (quoting Metzger v. Metzger, 338 Pa. 564, 570, 14 A.2d 285, 288 (1940); Restatement of Trusts, Section 44, Comment (c)). Pennsylvania law also allows a constructive trust to be created by equity to prevent unjust enrichment or to redress a wrong. See Huber v. Wagner, 284 Pa. Super. 133, 137, 425 A.2d 456, 458 (1981). This theory was also set out in the case of Kohr v. Kohr, 271 Pa. Super. 321,413 A.2d 687 (1979), which stated that: Pennsylvania law establishes a second theory by which a constructive trust can be decreed. A constructive trust may arise "(w)here a person holding title to property is subject to an equitable duty to convey it to another on the grounds that he would be unjustly enriched if he were permitted to retain it .... " 97-1634 CIVIL Restatement of Restitution s 160 (1937). Unlike s 44 of the Restatement of Trusts, this theory does not require an express promise to hold property in trust. Rather, "(t)he imposition of a constructive trust is an equitable remedy designed to prevent unjust enrichment." .Kohr at 329, 413 A.2d at 691 (quoting Moreland v. Metrovich, 249 Pa. Super. 88, 97, 375 A.2d 772, 776 (1977); Yobe v. Yobe, 466 Pa. 405, 411,353 A.2d 417, 420-21 (1976)). There are many exceptions to the general requirement that trusts for land must be evidenced by a writing. "Nevertheless, '[o]ral trusts in real property are not favorites of the law. They must be strictly proved... Evidence to support a parol trust must be direct, positive, express, unambiguous and convincing.'" Kadel at 259, 624 A.2d at 1062 (quoting In Re Brenneman's Estate, 360 Pa. 558, 563, 63 A.2d 59, 61 (1949)). During the trial in the case sub judice, attorney McKnight confirmed that Rhoda Comp did intend to deed the farm to Ray Jumper and have Shirley, Sam, and Ray share in the assets of the farm. Q Did you then, sir, have any discussions with Shirley's mother, Rhoda? A Well, one of the things I did first with Shirley was I talked to her about other options. I said, look, you do nothing you folks will inherit this place, et cetera. But she was firm on wanting to do the transfer. So then I went out and talked to mom. And my recollection was mom was on the back porch. And mom was not - - obviously her heath had been affected. I could not understand her sentences. She seemed to respond to what I was asking her by saying -- by nodding her head or grunting or saying yes or no, but I could not understand her speech. So it wasn't that she was verbal that I could understand her, but she was very alert, very animated. And she indicated also that she was willing to sign the property over to Ray Jumper, but that at the same time, she was interested in 97-1634 CIVIL having both Shirley and Sam be her powers of attorney .... So she confirmed to me at least that all three of them, Ray, Shirley, Sam, would have a say in the operation of the farm. And that's what she wanted to do at that point, deed the property over to Ray Jumper.. N.T. at 7-8. Again, I was very concerned with what exactly was going on here, and we made it plain in my discussions with her as well as with Shirley and later even Ray Jumper, that what was going on here was that the three of them were to share an interest in this situation. And that ultimately the three of them would divide up what was left if something happened to her. She understood that and that's why she named the two of them as her powers of attorney to handle things, and that was the intention of at least mom at that point. After Mr. McKnight met with Rhoda Comp and established what her intentions were in deeding the farm to Ray Jumper, he met with Ray himself. Q Mr. McKnight, what happened after your discussion with Rhoda Comp? A Well, after I met with Rhoda -- I knew what Shirley wanted and I knew what Rhoda wanted, then it was time to meet with Ray Jumper which I did there on the farm, and we did discuss what I just related to you about the general nature of this... And Ray was -- I would describe Ray as not being extremely talkative. He was responsive. But he was extremely grateful. He was worried about what was going to happen to him. He was very grateful that this was happening, and he never indicated to me in any discussions that I had that he wasn't on board with what had been generally decided and discussed. N.T. at 9-11. Again, on re-direct examination, Mr. McKnight stated that he believed that all three parties understood and assented to sharing in the assets and management of the farm: 97-1634 CIVIL There was a clear agreement of all of the parties on that, there was no doubt that it was to be managed by the three. Uncle Ray, Sam and Shirley together providing first for mom, and when her needs were cared for, at her death or whenever they thought it appropriate they divide the proceeds between the three of them. N.T. at 26. We believe that the evidence of an agreement, assented to by Rhoda Comp, between Ray Jumper, Shirley Petresky, and Samuel Comp to jointly manage Rhoda's estate, pay for her health care, and divide up the remainder equally, does meet the standard of clear and convincing evidence to prove a parol trust. In addition to the testimony of Mr. McKnight, there is evidence that Ray Jumper substantially performed the agreement that the plaintiffs allege. It is undisputed that an account was opened in the name of Ray, Sam, and Shirley, and that some of the proceeds from the sale of Rhoda's estate were deposited in this account, which Ray later closed. Also, Ray used the proceeds from the sale of the farm to pay for Rhoda's health care. Additionally, Ray Jumper executed a will naming Shirley and Sam his sole beneficiaries on the same day that Rhoda deeded the property to him. The only part of the agreement that the plaintiff's allege that Mr. Jumper did not perform was the final split of the assets from the sale of Rhoda's estate. We hold that Ray Jumper would be unjustly enriched if allowed to retain all of the proceeds for the sale of Rhoda's estate. Therefore, we impose a constructive trust upon those proceeds under the theory of unjust enrichment as set forth in Moreland v. Metrovich and Kohr v. Kohr. AND NOW, this ordered and decreed: ORDER day of October, 1998, upon trial being held, it is hereby 97-1634 CIVIL Hubert X. Gilroy, Esquire For the Plaintiffs 1. that a constructive trust is imposed upon the assets of the defendant, Ray K. Jumper, and he is enjoined from conveying any assets owned by him, except for that necessary for his reasonable living expenses, as approved by this court, until further order of the court; 2. that no later than November 6, 1998, the defendant is to file with this court and serve the same upon the plaintiffs an accounting of all proceeds from the sale of the assets received by him from Rhoda Comp, and the defendant is further ordered to disclose the location of the remaining assets or the proceeds, therefrom; the accounting is to include an itemization of all expenses incurred in the sale of those assets, as well as, an itemization of all expenses paid from the said proceeds, by the defendant, for the care and maintenance of Rhoda Comp; and 3. that on November 30, 1998, at 9:30 a.m. in Courtroom No. 4 of the Cumberland County Courthouse a hearing is to be held to determine the amount of proceeds received by the defendant and the nature and extent of the relief that is to be granted to the plaintiffs. BY THE COURT, Kevin~?~ Hess, J. / H. Anthony Adams, Esquire For the Defendant :rim