Favre v. Austin

361 So. 2d 109, 1978 Ala. LEXIS 1878
CourtSupreme Court of Alabama
DecidedJuly 28, 1978
Docket77-330
StatusPublished
Cited by2 cases

This text of 361 So. 2d 109 (Favre v. Austin) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Favre v. Austin, 361 So. 2d 109, 1978 Ala. LEXIS 1878 (Ala. 1978).

Opinion

JONES, Justice.

The issue is: Where one party pays the purchase price for land and takes title jointly in the name of himself and others, in the absence of evidence of an intention of payor to make a beneficial gift of an undivided interest in the property to the other persons, will the other grantees be regarded as holding their interest upon a resulting trust for the payor? Or, stated in the context of the holding below: Did the trial court err in declaring, in favor of the payor, a resulting trust in the subject property where the record is devoid of any evidence that the jpayor did not intend to make a gift to the remaining joint grantees? We hold that the trial court erred in so holding; and we reverse and remand.

The facts are without dispute. Appellee, Austin, paid the entire purchase price (down payment plus monthly installments and all the annual taxes subsequent to the purchase) and knowingly and voluntarily took title jointly in himself, his mother and his stepfather, Elmer J. Favre (Appellants are heirs at law and children of a former marriage of Mr. Favre who died intestate).

Appellee, in support of the judgment below, cites Adams v. Griffin, 253 Ala. 371, 45 So.2d 22 (1949), for the proposition that, where one buys land in the name of another and pays the consideration generally the grantee will be regarded as holding the land in trust for the person who paid the consideration. This rule of presumption, argues Appellee, casts the burden on the one who would defeat the trust to prove to the trier of facts by clear and convincing evidence that a gift was intended by the payor.

Appellants, on the other hand, counter by asserting that the facts in the instant case fall within one of the recognized exceptions to this rule, and thus the burden to refute the presumption of a gift is upon the payor, Austin. Because counsel for each party cites Hooks v. Hooks, 264 Ala. 66, 84 So.2d 354 (1955), a detailed analysis of that case is appropriate. Preliminarily, however, we set forth, to the extent here applicable, a brief historical review of the general rule and its recognized exceptions. Professor Scott’s multi-volume treatise on trusts (Scott on Trusts, Vol. V, Resulting Trusts, Topic 4, commencing at p. 3308), tracks and amplifies the Restatement, Second, of Trusts, § 440, which states the general rule thusly:

“Where a transfer of property is made to one person and the purchase price is paid by another, a resulting trust arises in favor of the person by whom the purchase price is paid, except as stated in §§ 441, 442, and 444.”

Section 441 reads:

“A resulting trust does not arise where a transfer of property is made to one person and the purchase price is paid by another, if the person by whom the purchase price is paid manifests an intention that no resulting trust arise.”

“Comment e” thereunder is paraphrased in part by Professor Scott as follows:1

[111]*111“Where one person pays the whole of the purchase price for land and has the conveyance made to himself and another person as joint tenants or tenants in common, the very fact that the title is taken in this way is an indication of an intention to make a beneficial gift of an undivided interest in the property to the other person. It is stated in the Restatement of Trusts [‘Comment e’] that the fact that the payor takes title to property in the names of himself and another jointly is an indication of an intent to make a beneficial gift of an undivided interest to the other person; and the other person does not hold his interest upon a resulting trust for the payor in the absence of evidence that a trust rather than a gift was intended. There is authority to this effect. [Footnote of authorities omitted.] But it has been held that a resulting trust arises if it appears that a gift was not intended [citing in footnote Hooks v. Hooks, 258 Ala. 427, 63 So.2d 348 (1953), an earlier appeal on the pleadings in the same Hooks’ case cited above].” Scott on Trusts, at § 441.4 (pp. 3332-3).

Unquestionably, then, while the Restatement lists the fact situation here presented as “Rebutting the Resulting Trust” and thus places the burden upon the payor to negate the intention of a gift, Professor Scott’s Comment in the first Hooks’ appeal casts Alabama among the ranks of those states holding that these facts give rise to a resulting trust if an intention to make a gift is not shown. In other words, the inference of Professor Scott’s commentary is to the effect that the general rule presuming a resulting trust is not altered by the fact that payor took title jointly in himself and another; and, consequently, an absence of evidence of gift, vel non, would resolve the ultimate issue of resulting trust in favor of the payor. However accurate Professor Scott’s conclusion may appeal from a restricted reading of “Hooks No. I” (where the issue was confined to the pleading), suffice it to say that such conclusion overlooks “Hooks No. II,” affirming the judgment imposing the trust upon the “sufficiency of the evidence” test.

Appellee acknowledges that Hooks applied the “presumption of gift” exception to the general rule, but urges this Court to restrict its application to the Hooks’ facts— purchase in the name of a relative. Otherwise stated, Appellee contends that Mrs. Hooks, the mother, was required to overcome the presumption of gift to her son solely because of their relationship, and not because the payor-mother took title jointly in both names.

The election by the Hooks’ Court to ground its presumption of gift on the “relative” exception can hardly be construed as foreclosing recognition and application to the “joint grantee” exception. Indeed, the Restatement recognizes both exceptions (as well as others); and, as Professor Scott’s treatise on resulting trusts points out, the general rule and its well-established and recognized exceptions represent the majority view of courts in this country and England.

Our holding is no blind adoption of the Restatement; rather, it is based upon our concurrence with the soundness of its propositions and its underlying rationale. Originally, the early common law indulged every presumption favoring the validity of written agreements, which, when combined with the presupposed danger of perjured testimony, compelled the development of the early rule which placed a heavy burden on a payor asserting a resulting trust to disprove his intention to make a gift to the grantee. By the middle of the 16th century, however, it had become common practice for English landowners to place legal title in others for their use. Out of this almost universal practice, the courts evolved a rule of presumption that the transferee of land conveyed without consideration held title for the use of the trans-feror.

Likewise, while the law of modern trusts in America has generally rejected the English doctrine of gratuitous conveyance (ex[112]*112cept in constructive trust situations2), where one person purchased land and took title in another, the rule emerged that the payor was presumed to have intended the grantee to hold to the use of the payor.3

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Bluebook (online)
361 So. 2d 109, 1978 Ala. LEXIS 1878, Counsel Stack Legal Research, https://law.counselstack.com/opinion/favre-v-austin-ala-1978.