Cohen v. Estate of Cohen

491 N.E.2d 698, 23 Ohio St. 3d 90, 23 Ohio B. 218, 1986 Ohio LEXIS 611

• Court: Ohio Supreme Court
• Decided: April 11, 1986
• Docket: No. 85-1051
• Status: Published

Opinions

Locher, J.

The sole issue presented in this case is whether the doctrine of constructive fraud is applicable to antenuptial agreements. Appellant contends that the doctrine does apply. We agree and, accordingly, reverse the decision of the court of appeals.

The trial court held that the transfer of scheduled assets by decedent, which defeated the covenant to pay appellant $700 per month contained in the antenuptial agreement, constituted constructive fraud. The court of appeals reversed that judgment, relying on Perlberg v. Perlberg (1969), 18 Ohio St. 2d 55 [47 O.O.2d 167], which involved a loss of dower rights caused by a conveyance prior to marriage. The case sub judice, however, involves contractual rights actually acquired prior to the marriage, not merely rights existing from the engagement or statutory rights provided by the marriage. Thus, the court of appeals’ reliance on Perlberg is misplaced.

Constructive fraud is defined as “a breach of a legal or equitable duty, which, irrespective of moral guilt of the fraud feasor, the law declares fraudulent, because of its tendency to deceive others, to violate public or private confidence, or to injure public interests.” Stanley v. Sewell Coal Co. (W.Va. 1981), 285 S.E. 2d 679, 683. Jackson v. Julian (Tex. Civ. App. 1985), 694 S.W. 2d 434; Security Natl. Bank v. Peters, Writer & Christensen, Inc. (1977), 39 Colo. App. 344, 569 P. 2d 875. See Bank v. Board of Edn. of New York (1953), 305 N.Y. 119, 111 N.E. 2d 238; In re Arbuckle’s Estate (1950), 98 Cal. App. 2d 562, 220 P. 2d 950.

No facts in the record lead this court to believe that the decedent had any intent to defraud appellant when the conveyances to his daughter were made. However, the decedent need not have intended to defraud appellant for constructive fraud to be found here. “Constructive fraud does not require proof of fraudulent intent; the law indulges in an assumption of fraud for the protection of valuable social interests based upon an enforced concept of confidence both public and private.” Perlberg, supra, at 58.

Constructive fraud often exists where the parties to a contract have a special confidential or fiduciary relationship. In the instant action, appellant and decedent were not only parties to a contract, but were also engaged. In Gross v. Gross (1984), 11 Ohio St. 3d 99, we stated:

“At the outset it must be restated that upon a judicial review of any such agreement, it must meet the general tests of fairness as referred to previously, and must be construed within the context that by virtue of the anticipated marital status, the parties are in a fiduciary relationship to one another. The parties must act in good faith, with a high degree of fairness and disclosure of all circumstances which materially bear on the antenuptial agreement.” (Emphasis added.) Id. at 108. The fiduciary relationship and requirement of good faith and fairness which exists in the making of the antenuptial agreement does not cease to exist upon performance of that agreement.

Despite paragraph 3 of the agreement, the transfer of real property by decedent for no consideration defeated the intent of the antenuptial agreement. This was an act contrary to decedent’s legal duty under the contract and to the fiduciary relationship which existed between decedent and the appellant by virtue of their anticipated marital status. We therefore hold that the doctrine of constructive fraud is applicable to antenuptial agreements.

Accordingly, we reverse the judgment of the court of appeals and the judgment of the trial court is reinstated. •

Judgment reversed.

Sweeney, Holmes, C. Brown and Douglas, JJ., concur. Celebrezze, C.J., and Wright, J., concur in part and dissent in part.