To: Theresa Wyeoft FROM: Christine Chopin DATE: March 1, 1998 FILE: Eli Gostin RE: constoucive tnt ISSUE ‘Will acosstructive rust in favor ef Eli Goshin be imposed oa te title to is home and only asset, which he deeded over to his nephew after the ater [romised to make the remaining three years of payment to prevent foreclosure ‘where Goslin made no stalemeat atthe time that would reveal his reasons for giving the deed, and where the nephew has sine then threatened to ‘throw Gosin out ofthe home? BRIEF ANSWER ‘A court is likely to impose a consiuctive trust in Goslin’s favor on the ‘nephew's ttle to the house. Goslin is able 19 prove each of the fous elements ‘Of the New York tex for a consictve ius: (1) a confidential or fduciary "clatioaship between Goslin and his nephew: (2) a presic, implied by the ‘ephew's actions (0 held tle while allowing and belping Gosin to five in the ‘house; (3) Gosla's transfer of til to the nephew in reliance on that promise; ‘and (4) unjust earichment by the nephew if the promise fs broken. New York ‘Sours have uniforny Held these clerics be aatstied where —as happeaed bhere—a peron in a vulnerabie station deeds the bulk of her or his asset {to someone Le a usted lative who pays ether nothing ofa fraction of the property's fir value, (Tis memoranda does no easier an action 0 st aside the deen the ‘sounds of fraud, uadue inlucnce, or impoired capacity —all of which have Already been researched and rejected) FACTS 8.74-year-old ante widower who has been ‘retired for nie years He hs keen married twice, aad both wives are deceased. His son fs dead, and his daughter lives in Singapore. His only income is for scisl sect ‘Uni last year, he also had income from an investmest, bot when that ‘business wea! bankrupt, he became unable 1o meet the mortgage payments ‘om his house, The hous was Gosin'soaly aset. He has lived there for 24 ‘years and when these events occured, the mongaze had only three mer= [year lo run. He hat no other place to five. ‘Afi Goslin found that he could no longer pay. the mortgage, Herbert ‘Skeffiagton, a nephew, offered to make the reining $11,500 in payments as icy became due, Within a few days aftereard, Gosia, without stating his [parpose to anyone, gave a deed tothe property to Skelfiegton and got the Dank to agree to transfer the mortgage to him. AL te time, the house was ‘woth approximately 95,000 and was unencumbered except forthe morigigeCopyrighted Material Sample Office Memorandum Appendix © tha Sheflington had offered to pay: Aside fom the premise te make mortgase payinents. Skeflington gave ne value comected to the dea ‘Goslin has told us that he made the deed for the fdlowing reso: “At the time. it seemed lke te right thing io do. He was eoing to pay the morigaze, fad after certain polnt—iaybe alter Fin gone — the place would bow hic Taide think it would end up like thi” Skellington nd not asked for 1 deed. and Gosia sraazed forthe deed belote telling the nephew abost i Govlin knew atthe time that Skefington would not need a deed to sake the _merigege payments: the haak would have been willing 10 asept Skettagton's heck if it were accompanied by Goslin's payment su, ce allematively. ‘Skeffington could simply have given the mney to Gosdi. who could in tur Ihave puid the bask. ‘AS faras Gosln knows, Skeffington bas made the payments as they have become due [At the time of the deed noter party sal anything about changing the living arrangements in the ovse. Goslincoctinued to live alone there usta few weeks ago, whea Skefingion’s rental apartment was bursed out atl he ‘moved. along wan fis wife and two ebildve, Into the house. Goslin neshes agreed to nor protested this A few days later, Skefingon ordered Goslin move out. which Goslin has refused t0 do Si top of his voice. fequectly repeated the fe ‘SKeffingioa has twiee, with the heels of his palms, sudicnly shoved Gosin in the chest and sent him staggering. Ske again and to pack wp Gostin’s belongings a leave them and Gesfin on the Sidewalk. Skellington takes the position that his farly has no othr place to ‘20, and tht the house i the oaly thing he owns. ‘Skeingtoa is 36 years old. and tvouzhcut Skeitingon's ute be and Goutin have sen each ether at least monthly at family get-togethers including each her's weddings. Seventeen years apo, Gosln contributed 3.20010 Skeftington's college tution. The avo of them have never discuscd whether tis was to be treated as a gill or a loas, and Goslin doesnot recall ‘abc he intel or even wheter He had a feta the tne. He says that he considered bath the tution menes and his nephow's fer to pay the ‘mortgage to be “the sot of thing pecole in a family do foreach otf.” tn any event, except forthe mortgage payments, the nephew has ne Gostin money direcsy of tnirecty, and he a not anwounced sn \o compensate Gealin fr the tuition money. DISCUSSION A constructive tust will be imposed where the recerd shows “(1) a cont deusial fiduciary relation, 2) a promise, 3) a teansfer ig reliance theron and (4) unjust enrichment." MoGruth v. Hiding 363 NEU 32%, WO WN Y. 1971) (tations emited). Confidential or Fiduciary Relationship Gosin's relationship with his nephew satis the fast cemera AA confidential or fiduciary reationshipexsts where one person s willing to entrust important mtiersto a second person. relationship Between an aust and {niece has heen held to bea confidential one fr the purpose ef s consractive tras wicre the aunt surped over a sulstatialauouat of er finances to the niece and velied on the riecs's care while ill, Fein v. Moldck, 1 NYS.24 “The eens we stated ln the int saree if the Bie Ans The fis sentence inthe Disctasion sates ts ealecicl foveal eonctnserily (S112) an | few msl paraded ‘phate, (Chapter 12) Hea ow where va cement Isaliscussed. Under the tse hen, the fst semtenuc States the fine ‘laments secu snow andthe secratdCovel nuthing of sbstanceoter that his han Al the ine ofthe taser he haa ben zed fr nine years and his ely Income was fom sal sv. is income ad st een ced been f the ekrpcy of sal nes da ete be aad bl acre. The hows lal wa rc appeenaey 585.000 athe time ofthe transfer and We three years of moaee pats renaiing tolled $11,500 Even Skefingte's promis to make te modaape payments cant be considered a payment to Gosin because, if Skeingion Felly sak cea te, he mongage payments woudl bene Ht and nak Ges, Un edition, seventeon Jone ope the nage had received $2210 from Grslin or solege uo, and fs not retumed any of i Allbosh te fates have never talked witheach ber about whthe he tuo money ws Tutor tan the courte are ikely to consider Label unporan sd instal focus on etal Eanly rxpoeataticn, Accrington ae ok Iiely to conelude that Gon incaded 9 make anabolic git of hs tows, Insieaf, they wil more probably bol tht Gosin sl his nephew had Sted andes that the mephies morpe payments ere to ‘rlzmoode Ono's contrition toe pte sclegs fon “Tes coir will pry so bald even thgh the repro coud Rave spade the morgage payments witout havig rected a deed ll he fees heres th most troubling iste ack of any need 0 sd the hoase ovee to te nepbew. For example the tank woul Rive accepted Ue nephew's Check along 2: wat secompaied by 6s fran Goals payment hook, Sd the sub could fave been led aut ty Gosia er his epi. Or the ‘ephew could have simply given Godin dhe mene) alt him wake the ee under the case law, the lack of a need for a transfer is irrelevant, “The farmer in Sharp. fr etampe. ses to hate given a ded fr purely settimentl reasons, but the Cour of Appeds consdered io be sbjet to 3 ‘consractive ts! anyway, Sharp ean most reasonably be interpreted tsa for the popeston eat no mater how ql avast pps may have ‘eat froin of tee ind wil be Ene here he parce ene fry or ‘ber emaonaly charged relationship and whee the property tansfered is the bulk of the tansferr’s ast, Atfough Goin du nt have the sane sctial acd tomate stoner a eco ltt han Sie he Cou St Appost id oot neat the court cles ced as eatin that decison, Transfer in Reliance on the Promise ‘The transfor itself i not i dispute eve, su for the reasons decribed above, Goslin should be able to prove that be granted he deed in reliance fom his nephew's promise. ‘Unjust Enrichment Goslin should also be able to establish the fourth element, whic has been deserited variously 29 “anzst envichment under cover ofthe relation of ‘confidence, “Sinclair, 139 NE. at 28%: nea situation where “property has heen acquired in such circumstances that the helder ofthe lepa ile may net in good Conscience retain the beneficial interest,” Sharp, 381 N.E.2d at 72: and as eircuntstances where “dscetnble promises, made ina confidential relationship, have been becken or repainted, a the trsted one wil he unjctly enriches hy reason ofthe breaches.” Tebin, 241 N.Y.S.24 at 34 4 the reader noes sn esta explana of say the ete wil fe aid th say The le plist cortors on anaes {to Sharp anal ‘Mbt tie Fn The ssa nasi weaves Sharp and Siler lugetherto show {yor wa they Have Inconna. The fa orm of Syaehosi (S155) fst proved eo the exeda- pithos of the frst tr ements “The mubsconstason forthe final clement. The ie epee throw 2 Gonsliry sath ‘ss thee le ine tecan te Ssontasony Deas 3 reader cam eaaly Seevliry rales ‘sich dspetenwith any ned eo prove fraudulent Tinent Taat gets sore aplenation throagh Sharp, ‘Tein, and Feren, ‘ule application Copyrighted Material Appendis. ‘Sample Office Memoraadum In Sharp and in Tebin, the cours held that a plait seed not prove that the pany who accepted the transfer did so with a fraudulent intent.“ ‘comnictive fst mzy be Imposed even tiosgh ihe wansfeee fully inteedod to perform his promise et the time ofthe conveyance." Ferano v. Siphanelé 15 N.Y S24 707, 7H (Ist Dep't 1959). It is enough ta show thatthe cotmsted party has breached the promise on wich the grintr relied. Here, the nepaew took a deed upen promising 0 make tee yeas of mortgage payments and withost paying anything for Gocin's sizeable ‘qnity. On these facts, the courts are ikelyto decide thatthe nephew has tried to perver into a windfal his assumption ofa femily responsibility. (The ‘epbev's offer to pay the remaining mongage could ave been seen by beth panies as rciprection for Goins help im puting dhe nephew through college, although that isnot necessary to a ming in Gostn's favor.) CONCLUSION Goslia can demonstrate al the elements of a consuctive ti. He had & telationship of confidence with Skeffingion because they are uncle and Degbiw and have acted tha! way for years. The most reasonable interpretation ff the face is that both parties understood an inphed spreemeat that Steffington would tke lide in name only and for the purpose of protecting the house foe Goslin's use. The deed was a transfer of Gosln's home and only ‘ssct and could have been miade caly in reliance on that promise. And without 2 consiuctve test, Skeffington would be unjuly enriched because he ‘would have clear tide toa $95,000 asset in exetange for $11,500 in Is. ‘mortgage payments. "All ofthe clemcets of constnctve ist ie therefore established, nd a court ie Tikely ta impose ore.