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Mims v. Mims

Filed: January 27, 1982.

ALLEN L. MIMS, JR.
v.
MARSHA P. MIMS



Defendant's motion for summary judgment was granted by Judge James H. Pou Bailey at the 19 March 1979 Civil Session of Wake Superior Court. The Court of Appeals affirmed.*fn1 The Supreme Court allowed discretionary review on 4 November 1980. The case was argued as No. 10, Spring Term 1981.

Exum, Justice.

Exum

Plaintiff seeks by this action to be declared the sole beneficial owner of certain residential real estate. The deed to the realty was made to both parties as husband and wife, but it is undisputed that plaintiff furnished the entire purchase price from his separate estate. The principal question presented is whether the evidentiary showing before Judge Bailey entitles defendant to summary judgment. Judge Bailey believed it did and the Court of Appeals agreed. We disagree and reverse. We also carefully reconsider our old rules relating to presumptions of gift and resulting trust in transactions of this kind and determine that the presumptive gift rule should apply in all such cases not governed by the new Equitable Distribution Act.*fn2

These parties were married on 19 May 1973, separated on 5 June 1977, and divorced on 28 July 1978. On 3 December 1974 plaintiff purchased the real estate in question, which apparently was a residential house and lot purchased as a marital home. He filed this action on 19 August 1977, shortly after the parties' separation. Plaintiff sought equitable relief, praying for reformation of the deed on the ground of mutual mistake and a declaratory judgment that he is the sole owner of the property.

Defendant answered and counterclaimed denying most of plaintiff's material allegations and asserting laches as a defense to plaintiff's action. She moved for summary judgment, offering the pre-trial depositions of the parties and a copy of an "Offer to Purchase," which bears the purported signatures of both parties and contains a provision directing that the deed be made to both parties as husband and wife.

According to plaintiff's deposition, he did sign the "Offer to Purchase" which was executed on 16 November 1974. However, he testified, "I did talk with the realtor about it at the time we made the Offer. I asked him why it had to be titled in both people's names, and he said in the State of North Carolina that it had to be. I am talking about Jim Stevenson and Richard Smith. Richard Smith is the one that made that comment." After the offer

was accepted, plaintiff began to consider how he would finance the purchase. He "decided that I would pay cash for it with money that I have received from my grandfather and my father and that is the way I handled paying for it. I am sure I told her that, I didn't really talk too much of the business. You see, as far as I was concerned I was buying the house. It was my house. Her salary or anything, nothing of her stuff was going to be applied against the purchase price of the house and so I don't believe I did too much commenting at all on how it was. . . . I don't believe I talked to her too much about how the title was written." Plaintiff did pay, he said, $69,000.00 cash for the property at the closing after having paid the $1,000.00 earnest money which accompanied the offer. He said, "[t]he closing was in December of 1974. The deed was from Louis E. Poole & Associates to Allen L. Mims, Jr., and wife, Marsha P. Mims. I saw the deed at the time of the closing and since I had been informed by the realtor finding a house for us that in North Carolina there wasn't any alternative, I asked at the time you know, can it be in my name, I mean this is my personal check and Richard said that is the way it's got to be in both names in North Carolina. . . . Marsha and I discussed the fact that I told her I was putting up the money and that as far as I was concerned, it was my money because it was my money beforehand, and it was going into this thing and it was my house. And at the time she said 'I know it.' That was at the closing. I took my realtor's word, I figured he was in real estate and sold houses and stuff and he ought to know. Most of that came up when we signed the Offer. I can't be certain that Mrs. Mims was present at the closing."

According to defendant's deposition, she did not attend the closing and she did not discuss the purchase of the house "in detail prior to the closing." She said the plaintiff told her "he was paying for it but it was for us." Defendant testified that plaintiff did not claim sole ownership of the house until after the closing. "[W]henever we would get into an argument," she said, "he would make the statement that this is his house; that he paid for it. He repeatedly told me afterwards that it was his house." Defendant recalled no "conversation between my husband and the real estate agent at the time the offer to purchase was signed. I don't recall hearing the real estate agent tell him that it had to be put in both names even though he wanted it in his name. I don't know

that it wasn't said, but I could have been reading something. I don't recall that. I do not recall any question my husband might have raised to the real estate agent or anybody else before the house is purchased about the way it was to be titled. I am saying that I do not recall now whether anything like that was discussed. He paid the total purchase price for the house."

In opposition to defendant's motion for summary judgment, plaintiff relied on so much of the deposition testimony as was favorable to him. He also relied on his affidavit which was submitted to and considered by Judge Bailey. He swore in this affidavit, among other things, that the defendant's name "was included as a grantee pursuant to specific instructions from the realtors involved and/or by a mistake of the draftsman. . . . The name of my wife was therefore included on the deed by mutual mistake insofar as my wife and I were concerned. . . . Prior to this closing, at the closing, and at all times since that closing, I told the defendant . . . that since I was paying for this real estate, that it was mine and mine alone. Prior to this closing, at the closing, and at all times since that closing, the defendant . . . agreed with me that this real estate was mine and mine alone. . . . At no time did I intend to make a gift of this realty or any part thereof to the defendant . . . nor have I ever made such a gift to the defendant."

After the hearing, Judge Bailey allowed summary judgment for defendant on the ground that there is "no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law."

The Court of Appeals concluded that plaintiff had alleged a claim for reformation of a deed on the ground of mutual mistake and that the evidence made before Judge Bailey demonstrates as a matter of law that plaintiff will not be able to make out such a claim at trial. The Court of Appeals rejected plaintiff's argument that he may be able to sustain his claim for a resulting trust because plaintiff has "neither alleged nor proved any type of trust."

We agree with the Court of Appeals, for reasons set forth infra, that the evidentiary showing on the summary judgment motion demonstrates as a matter of law that plaintiff will not be able to make out at trial a claim for mutual mistake. We believe,

however, that the Court of Appeals erred in limiting plaintiff to this theory of recovery. Both the pleadings and the evidentiary showing on the motion for summary judgment indicate plaintiff may be able to obtain the relief he seeks at trial by proving the facts necessary to give rise to a resulting trust in his favor.

We will discuss, first, some principles pertaining to resulting trusts, their current viability, and their applicability to the instant case. Then we will demonstrate why the pleadings and evidentiary showing proffered by plaintiff entitle him to trial on the issue of whether defendant holds her interest in the contested property on resulting trust for him. Finally, we will explain why plaintiff's claim of mutual mistake and defendant's claim of laches are not germane to this action.

I

A resulting trust arises "when a person becomes invested with the title to real property under circumstances which in equity obligate him to hold the title and to exercise his ownership for the benefit of another. . . . A trust of this sort does not arise from or depend on any agreement between the parties. It results from the fact that one man's money has been invested in land and the conveyance taken in the name of another." Teachey v. Gurley, 214 N.C. 288, 292, 199 S.E. 83, 86-87 (1938).*fn3 The trust is created in order to effectuate what the law presumes to have been the intention of the parties in these circumstances -- that the person to whom the land was conveyed hold it as trustee for the person who supplied the purchase money. Waddell v. Carson, 245 N.C. 669, 97 S.E.2d 222 (1957); Bowen v. Darden, 241 N.C. 11, 84 S.E.2d 289 (1954); Avery v. Stewart, 136 N.C. 426, 48 S.E. 775 (1904); Bogert, The Law of Trusts and Trustees, § 454 (2d ed. rev. 1977) (hereinafter "Bogert"). "The classic example of a resulting trust is the purchase-money resulting trust. In such a situation, when one person furnishes the consideration to pay for land, title to which

is taken in the name of another, a resulting trust commensurate with his interest arises in favor of the one furnishing the consideration. The general rule is that the trust is created, if at all, in the same transaction in which the legal title passes, and by virtue of the consideration advanced before or at the time the legal title passes." Cline v. Cline, 297 N.C. 336, 344, 255 S.E.2d 399, 404-05 (1979).

Under the common law a notable exception to this rule developed. "The rule that a resulting trust is raised in favor of the person who pays the purchase-money for land, though the title may be made to another, is subject to the qualification that where the person who pays the price is under a legal, or even, in some instances, a moral obligation to maintain the person in whose name the purchase is made, there is a presumption in equity that the purchase is intended as an advance or gift to the recipient." Thurber v. LaRoque, 105 N.C. 301, 306-07, 11 S.E. 460, 462 (1890). Thus, where the husband provides the entire purchase price for realty but causes the title to be placed in both his name and his wife's "a resulting trust does not arise in favor of the husband. . . . Instead there is the presumption of a gift to the wife of an entirety interest in the property." Tarkington v. Tarkington, 301 N.C. 502, 506, 272 S.E.2d 99, 101 (1980). No such exception has developed, however, when it is the wife who furnishes the purchase price yet causes title to be placed in the name of her husband. Tarkington v. Tarkington, supra; Bowling v. Bowling, 252 N.C. 527, 114 S.E.2d 228 (1960); Deese v. Deese, 176 N.C. 527, 97 S.E. 475 (1918). Thus, the rule has developed in this state "that a gift is presumed where a husband takes title in the name of his wife, but that a resulting trust and not a gift is presumed where a wife purchases land in the name of her husband." 2 Lee, North Carolina Family Law, § 113, n. 43 (4th ed. 1980) (hereinafter "Lee").

II

Plaintiff challenges the fairness of these rules governing conveyances to spouses and contends that they unconstitutionally discriminate on the basis of sex. He contends that if a resulting trust is presumed in favor of the wife when she buys property but has it titled in her husband's name, the same rule must be applied in favor of the husband who acts similarly. Thus, plaintiff

argues, he is entitled in this case to the benefit of a presumptive resulting trust in his favor.

Clearly, neither the United States Constitution nor the North Carolina Constitution require courts to employ presumptions of gift or trust in settling property disputes. These presumptions are not constitutional concepts, rather they are equitable tools developed long ago by courts attempting to give effect to the probable intention underlying property transactions. Thus, we need not resort to constitutional analysis in order to correct disparities caused by rules that grew out of a society and a legal system which generally treated men and women differently. If these ancient rules no longer serve the purpose for which they were developed -- the effectuation of the intention of the parties in the majority of cases -- then this Court has the power, although a power not to be used casually, to make necessary modification of the rules. We think there are compelling reasons, and both parties seem to agree,*fn4 for modifying our rules so the same presumption applies whether the husband or the wife receives title to the property.

One reason for changing our rules so the same presumption applies to husbands as to wives is that the original rationale for employing different presumptions is no longer viable. As Professor Scott has noted, these rules evolved out of a society in which the husband "controlled the family wealth" and the wife and children depended upon him in all instances for support. 5 Scott on Trusts, § 442 at 3340 (3d ed. 1967) (hereinafter "Scott"). "It was natural for him to make gifts to his wife and children, but quite unnatural to expect that they should make gifts to him. The wife, indeed, could not make gifts until the court invented the idea of a married woman's separate estate." Id. Wives were generally ...


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