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Keywords

plaintifftrustunjust enrichmentliensconstructive trust
plaintiffdefendantstatutemotiontrustparolestatute of limitationsmotion to dismissconstructive trust

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Guy v. Guy, 104 N.C.App. 753, 411 S.E.2d 403

Facts

The plaintiff, a father, acquired four lots in January 1985 but claimed he could not secure a loan due to a poor credit record. He conveyed the title of the lots to his son in April 1985 so that the son could use them as collateral for a loan, which the father would then use to improve the property. The son obtained a loan secured by the lots, which the father used to install a septic tank. The father alleged that the son agreed to reconvey the lots after the loan was repaid, but the son refused to sign an agreement to that effect and later denied the father's request to reconvey the property.

Plaintiff alleges and defendant denies that part of the loan proceeds were used to purchase a mobile home that was titled in plaintiff's name and placed on the lots.

Issue

Whether the father could establish a resulting trust, constructive trust, or equitable lien on the property conveyed to the son.

The defendant contends that plaintiff's suit is barred by the three year statute of limitations on claims of fraud.

Rule

Resulting trusts cannot be imposed in favor of a grantor who conveys title by deed in fee simple absolute, while constructive trusts can be imposed to prevent unjust enrichment when fraud is present. Equitable liens can be established when one party unjustly benefits from another's expenditures.

Resulting trusts are not imposed in favor of a grantor who conveys title by deed in fee simple absolute because to do so would violate the Parole Evidence Rule.

Analysis

The court determined that the father's allegations were sufficient to support claims for constructive trust and equitable lien, as they indicated that the son had made a promise to reconvey the property that he did not intend to fulfill. The court found that the father's payments on the loan and improvements made to the property were based on the son's promise, which constituted fraud. However, the court ruled that the resulting trust claim could not proceed because the father had conveyed the property outright, which precluded the imposition of a resulting trust.

We believe that these allegations of fraud make out the plaintiff's claim for the imposition of a constructive trust sufficient to survive a Rule 12(b)(6) motion to dismiss.

Conclusion

The court affirmed the dismissal of the resulting trust claim but reversed the dismissal of the constructive trust and equitable lien claims, allowing those claims to proceed.

Reversed as to constructive trust and equitable lien. Affirmed as to resulting trust.

Who won?

The father prevailed in part, as the court allowed his claims for constructive trust and equitable lien to proceed based on sufficient allegations of fraud.

We believe there are allegations sufficient to survive the motion to dismiss on the theories of constructive trust and equitable lien, but not on resulting trust.

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