Hood v. Hood

Court of Appeals of North Carolina

Hood v. Hood

264 S.E.2d 814, 46 N.C. App. 298, 1980 N.C. App. LEXIS 2804

CourtCourt of Appeals of North Carolina

DecidedApril 15, 1980

Docket7918SC825

StatusPublished

Cited by5 cases

This text of 264 S.E.2d 814 (Hood v. Hood) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Hood v. Hood, 264 S.E.2d 814, 46 N.C. App. 298, 1980 N.C. App. LEXIS 2804 (N.C. Ct. App. 1980).

Pincite

Opinion

WELLS, Judge.

We affirm the trial court’s granting of defendant’s motion for a directed verdict under G.S. 1A-1, Rule 50(a) on grounds that plaintiff’s unclean hands barred him from maintaining this equitable action for a resulting trust based on an alleged parol agreement. When a husband purchases realty and causes it to be conveyed to his wife, the law presumes the property is a gift to the wife, and in order to overcome this presumption and establish the existence of a resulting trust, the husband must produce clear, cogent and convincing proof. Bass v. Bass, 229 N.C. 171, 48 S.E. 2d 48 (1948). An action to establish the existence of a resulting trust is equitable in nature. Bowen v. Darden, 241 N.C. 11, 84 S.E. 2d 289 (1954).

*300 We do not reach plaintiff’s argument that his evidence was sufficient to meet this burden, since plaintiff’s complaint and testimony unquestionably show that the trust had the unlawful purpose of shielding plaintiff’s illegal income, derived from his bootlegging activities, from forfeiture to the State. “An intended trust to carry on an unlawful business, such as that of selling intoxicating liquor in violation of law ... is invalid.” RESTATEMENT (SECOND) Of Trusts § 61, Comment a (1959). In Penland v. Wells, 201 N.C. 173, 159 S.E. 423 (1931) the plaintiff had conveyed land to his daughter for the admitted purpose of defeating certain threatening litigation which he alleged was without merit. The plaintiff sought equitable relief on the theory that a trust had been created in the property in his favor. Our Supreme Court held that the doctrine of “clean hands” precluded plaintiff’s resort to equity:

In York v. Merritt, supra [77 N.C. 213, 215 (1877)], the Court said: “[WJhere both parties have united in a transaction to defraud another, or others, or the public, or the due administration of the law, or which is against public policy, or contra bonos mores, the courts will not enforce it in favor of either party.” The entire doctrine is based upon the “clean hands” concept of equity. The plaintiff alleges “that prompt action was necessary in order to defeat such litigation and thereby preserve his property for his own use and benefit.” While the plaintiff denies that there was any merit in the threatened litigation, it is quite obvious that he was attempting to get his fodder out of the field before the storm broke.

201 N.C. at 175-176, 159 S.E. at 424.

In the case at bar plaintiff’s evidence unquestionably shows that the funds used to purchase the property were derived from his sale of illegal liquor and that his purpose of shielding the property from possible seizure by the State was against the public policy on the State, and contra bonos mores. The trial court properly prohibited plaintiff from invoking the equity jurisdiction of the court to enforce the alleged resulting trust.

Affirmed.

Judges HEDRICK and Webb concur.

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WELLS, Judge.

We affirm the trial court’s granting of defendant’s motion for a directed verdict under G.S. 1A-1, Rule 50(a) on grounds that plaintiff’s unclean hands barred him from maintaining this equitable action for a resulting trust based on an alleged parol agreement. When a husband purchases realty and causes it to be conveyed to his wife, the law presumes the property is a gift to the wife, and in order to overcome this presumption and establish the existence of a resulting trust, the husband must produce clear, cogent and convincing proof. Bass v. Bass, 229 N.C. 171, 48 S.E. 2d 48 (1948). An action to establish the existence of a resulting trust is equitable in nature. Bowen v. Darden, 241 N.C. 11, 84 S.E. 2d 289 (1954).

*300 We do not reach plaintiff’s argument that his evidence was sufficient to meet this burden, since plaintiff’s complaint and testimony unquestionably show that the trust had the unlawful purpose of shielding plaintiff’s illegal income, derived from his bootlegging activities, from forfeiture to the State. “An intended trust to carry on an unlawful business, such as that of selling intoxicating liquor in violation of law ... is invalid.” RESTATEMENT (SECOND) Of Trusts § 61, Comment a (1959). In Penland v. Wells, 201 N.C. 173, 159 S.E. 423 (1931) the plaintiff had conveyed land to his daughter for the admitted purpose of defeating certain threatening litigation which he alleged was without merit. The plaintiff sought equitable relief on the theory that a trust had been created in the property in his favor. Our Supreme Court held that the doctrine of “clean hands” precluded plaintiff’s resort to equity:

In York v. Merritt, supra [77 N.C. 213, 215 (1877)], the Court said: “[WJhere both parties have united in a transaction to defraud another, or others, or the public, or the due administration of the law, or which is against public policy, or contra bonos mores, the courts will not enforce it in favor of either party.” The entire doctrine is based upon the “clean hands” concept of equity. The plaintiff alleges “that prompt action was necessary in order to defeat such litigation and thereby preserve his property for his own use and benefit.” While the plaintiff denies that there was any merit in the threatened litigation, it is quite obvious that he was attempting to get his fodder out of the field before the storm broke.

201 N.C. at 175-176, 159 S.E. at 424.

In the case at bar plaintiff’s evidence unquestionably shows that the funds used to purchase the property were derived from his sale of illegal liquor and that his purpose of shielding the property from possible seizure by the State was against the public policy on the State, and contra bonos mores. The trial court properly prohibited plaintiff from invoking the equity jurisdiction of the court to enforce the alleged resulting trust.

Affirmed.

Judges HEDRICK and Webb concur.

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Bluebook (online)

264 S.E.2d 814, 46 N.C. App. 298, 1980 N.C. App. LEXIS 2804, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hood-v-hood-ncctapp-1980.

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