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Upchurch v. Upchurch

February 03, 1998

ELIZABETH ELSIE UPCHURCH, PLAINTIFF,
v.
JAMES ELMON UPCHURCH AND JAMES E. UPCHURCH, JR., DEFENDANTS.



Appeal by defendants James Elmon Upchurch and James E. Upchurch, Jr. from order entered 4 December 1996 by Judge Richard G. Chaney in Durham County District Court. Heard in the Court of Appeals 9 October 1997.

Judges Martin, John C., and McGEE concur.

The opinion of the court was delivered by: Lewis, Judge.

Plaintiff and defendant James Elmon Upchurch ("Upchurch Sr.") were married in 1947 and separated on 4 February 1988. A judgment for absolute divorce was entered 13 November 1989 and plaintiff thereafter sued for equitable distribution of marital assets. Defendant James E. Upchurch, Jr. ("Upchurch Jr.") was made party to the suit because he possessed property that was allegedly "marital property." On 7 February 1995, the trial Judge entered an equitable distribution order which imposed a constructive trust on certain assets held by Upchurch Jr. The trial Judge included the impressed assets of Upchurch Jr. in the distribution of marital property. Defendants appealed to this Court. Upchurch v. Upchurch, 122 N.C. App. 172, 468 S.E.2d 61, disc. review denied, 343 N.C. 517, 472 S.E.2d 26 (1996) (Upchurch I).

In Upchurch I, we held that both legal and equitable interests are subject to distribution as marital property. Id. at 175, 468 S.E.2d at 63; see N.C. Gen. Stat. § 50-20 (1995). We noted that in the course of an equitable distribution proceeding, equitable interests may be recognized and wrested from the hands of the legal titleholder by the imposition of a constructive trust. Id. We also noted that the facts supporting a constructive trust must be established by clear and convincing evidence. Id. at 176, 468 S.E.2d at 64. In this case, because the first equitable distribution order did not indicate whether the constructive trusts imposed by the trial Judge were established by clear and convincing evidence, we remanded the case for the Judge to reconsider the evidence based on that standard of proof. Id.

Following remand, the trial Judge entered an amended equitable distribution order on 4 December 1996. The order reaffirmed his previous Conclusions that certain items were marital property, and the amended order expressly stated that these Conclusions were supported by clear and convincing evidence. Defendants appeal from the amended order. We affirm.

First, we summarily dispose of three assignments of error raised by Upchurch Sr. Two of these assignments pertain to the alleged fraudulent concealment of assets by plaintiff. These issues were raised and resolved in defendants' prior appeal, Upchurch I, 112 N.C. App. at 177, 468 S.E.2d at 64, and they may not be resurrected now. In addition, Upchurch Sr. cites as error the trial Judge's refusal to recuse himself from the case at defendants' request on 21 August 1996. The record shows no basis for defendants' motion and it was correctly denied.

Defendants' next assignments of error pertain to the trial Judge's findings that several assets held by Upchurch Jr. should be subjected to a constructive trust. In an action for equitable distribution, if a party acquired an equitable interest in property during marriage and before the date of separation (DOS), the trial Judge may impose a constructive trust on the property to the extent of the equitable interest. See Weatherford v. Keenan, ___ N.C. App. ___, ___ S.E.2d ___ (1997). The person holding legal title to the property is thereby deemed to be constructive trustee of it for the benefit of the equitable titleholder. Roper v. Edwards, 323 N.C. 461, 464, 373 S.E.2d 423, 425 (1988). In a case such as this, where the trial Judge simultaneously creates a constructive trust and determines that the trust property is "marital," we have described the constructive trustee as holding the property for the benefit of the marital estate. Upchurch I, 112 N.C. App. at 176, 468 S.E.2d at 64. When the trial Judge distributes the equitable interest, the constructive trustee must convey the legal interest to the party receiving the equitable interest in the distribution.

As we noted in Upchurch I, It is not necessary to show fraud in order to establish a constructive trust. . . . Such a trust will arise by operation of law against one who "in any way against equity and good conscience" holds legal title to property which he should not.

112 N.C. App. at 177, 468 S.E.2d at 64 (quoting Roper, 323 N.C. at 465, 373 S.E.2d at 425). The facts giving rise to a constructive trust must be established by evidence that is clear and convincing. Upchurch I, 112 N.C. App. at 177, 468 S.E.2d at 64.

It is for the trier of fact to resolve issues of credibility and to determine the relative strength of competing evidence. Lawing v. Lawing, 81 N.C. App. 159, 177, 344 S.E.2d 100, 112 (1986). Therefore, if the fact finder determines that facts giving rise to a constructive trust have been established by clear and convincing evidence, we will not disturb those findings if they are supported by competent evidence. Compare id. at 177-78, 344 S.E.2d at 112-13 (upholding a finding that certain property acquired during marriage was separate property, where such a finding had to be proved by clear and convincing evidence, even though evidence on the issue was equivocal).

Defendants challenge the trial Judge's lengthy Findings of Fact 14, 15, 17, and 18, reproduced below. All of the findings contained therein, except for one detail which we discuss below, were supported by competent evidence in the record.

14. Defendant Upchurch, Jr. and Defendant Upchurch, Sr. purchased a lot and building located on Hillsborough Road in Durham, North Carolina in 1984. Plaintiff gave Defendant Upchurch, Sr. "thousands" of dollars which she had earned to put into the acquisition of the property. This property was sold by the Defendants in 1986 and Defendant Upchurch, Sr. received $54,194.50 as a result of that sale, which represented one-half of the net sales proceeds.

Defendant Upchurch, Sr. invested the $54,194.50 in a venture with Defendant Upchurch, Jr. to purchase property from Mickey Ellis for a purchase price of $133,500.00; this property was sold back to Ellis on October 27, 1986 for a price of $140,000.00. Of this amount, $118,831.67 was deposited into an account with Wheat, First Securities ("WFS") in the name of Upchurch, Sr. and Upchurch, Jr. The balance of $21,168.33 was deposited into a WFS account in the names of Upchurch, Sr. and Jack Upchurch. [Jack Upchurch is another son of Upchurch Sr. and is not a party to this suit.]

Defendant Upchurch, Sr.'s participation in the purchase price of $133,500.00 (for the Ellis property) was at least $54,194.50, or 41% of the purchase price. Therefore, Defendant Upchurch, Sr.'s proportionate share of the sales proceeds (when the Ellis property was sold) was 41% of $140,000.00 or $57,400.00. The Court finds that this $57,400.00 was deposited into the WFS account held by Upchurch, Sr. and Upchurch, Jr. An additional $10,333.00 was deposited into this account by two checks from Upchurch, Sr. Upchurch, Sr. therefore invested a total of $67,733.00 into this account. The bonds were issued in the name of Upchurch, Sr. and Upchurch, Jr., and subsequently title was ...


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