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Ferguson v. Ferguson

Filed: January 5, 1982.

ELSIE NORTON FERGUSON
v.
MORRIS S. FERGUSON AND WIFE, PATRICIA A. FERGUSON



Appeal by defendants from Peele, Judge. Judgment entered 27 October 1980 in District Court, Orange County. Heard in the Court of Appeals 11 November 1981.

Becton, Judge. Chief Judge Morris and Judge Arnold concur.

Becton

Defendants argue (1) that their motion for summary judgment should have been granted because no evidence of actual or constructive fraud was presented to support a constructive trust; (2) that the court erred in admitting testimony that plaintiff sought to get her three daughters to hold the land for the benefit of all the children; and (3) that their motions for a directed verdict and a new trial should have been granted because plaintiff failed to carry her burden of proof. We reject defendants' arguments.

I

Summary Judgment

Because this case involves a dispute over the existence and contents of an agreement to hold real property for the benefit of others, summary judgment was properly denied for the reasons that follow.

A. Plaintiff first argues that "[a] parol trust may be engrafted onto a deed valid on its face, even in the absence of fraud." Although this is a correct statement of the law relating to express trusts, it forms no basis for our holding since plaintiff in her complaint merely prayed for a constructive trust. Plaintiff incorrectly uses the terms "parol trust" and "constructive trust" interchangeably in her brief. An express trust arises by agreement of the parties. Constructive trusts "exist purely by construction of law, without reference to any actual or supposed intention to create a trust, for the purpose of asserting rights of parties or of frustrating fraud. . . ." Avery v. Stewart, 136 N.C. 426, 435, 48 S.E. 775, 778 (1904). It should be noted that a parol agreement may form the basis for an express trust or a constructive trust.

"North Carolina is one of a minority of states that has never adopted the Seventh Section of the English Statute of Frauds which requires all trusts in land to be manifested in writing." Bryant v. Kelly, 279 N.C. 123, 129, 181 S.E.2d 438, 441 (1971). Indeed, our courts have "always upheld parol trusts in land in the 'A to B to hold in trust for C' situation" even when there is no consideration to support the transfer. Id. at 129-130, 181 S.E.2d at 442. In this context, however, an express trust, not a constructive trust, is created. An express trust thus created may be proved by "parol evidence, which is clear, strong and convincing." Electric Co. v. Construction Co., 267 N.C. 714, 719, 148 S.E.2d 856, 859-60 (1966).

In the case sub judice, the evidence of an express trust seems clearly sufficient to submit the case to the jury. However, because parol trusts and constructive trusts are not synonomous and because plaintiff never advanced an express thrust theory in her pleadings or at trial, the denial of defendants' summary judgment motion will not be upheld on an express trust theory.

[2] B. Summary judgment was properly denied since, as plaintiff next argues, "[a] parol trust may be engrafted onto a deed valid on its face if the elements of fraud exist." In this context, we speak of a constructive trust.

The principle in its direct application to our case has been thus stated: "Where a party acquires property by conveyance or devise secured to himself under assurances that he will transfer the property to, or hold and appropriate it for, the use and benefit of another, a trust for the benefit of such other person is charged upon the property, not by reason merely of the oral promise, but ...


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