Roper v. Edwards

373 S.E.2d 423, 323 N.C. 461, 1988 N.C. LEXIS 619
Supreme Court of North Carolina·Decided November 3, 1988·No. 3PA88·Published·Cited by 44 cases

Opinion

WHICHARD, Justice.

The issue is whether a constructive trust should be imposed to require defendants to convey certain land to plaintiff. We hold that it should, and we accordingly reverse the Court of Appeals.

The record establishes the following undisputed facts:

Myrtle B. Edwards, plaintiffs grandmother, died on 4 September 1986. Prior to her death, the grandmother had a dispute with defendants over entitlement to a 136 acre tract of land. The parties settled civil litigation emanating from this dispute by the execution of a settlement agreement which provided, in pertinent part, as follows:

Plaintiffs grandmother would convey to defendants, “in fee simple absolute, without reserving any life estate in said tract,” the entire 136 acres. Within this 136 acres was a tract containing one acre, more or less, which was “not [to] be sold or encumbered by [defendants] at any time prior to” the grandmother’s death. Defendants were to make such conveyance of the one acre tract as the grandmother might specify in her will by express reference thereto. Absent such specification, the tract was to remain defendants’ property in fee simple absolute.

The parties executed a mutual release to implement the settlement agreement, and the civil litigation was dismissed in reliance on the agreement. Although not a party to the litigation, plaintiff joined in the execution of the agreement and the release.

Plaintiffs grandmother then executed a deed conveying the one acre tract to defendants.^The deed expressly recited that the conveyance was in consideration of the settlement agreement. Both the granting and habendum clauses provided that they were subject to the pertinent terms and conditions of the settlement agreement. The deed also expressly recited that the grantees— defendants here — were “obligated to make such conveyance of the . . . premises” as the grantor might specify in her will, and *463 that, absent such specification, the property would remain that of the grantees in fee simple absolute.

Following the grandmother’s death, her will was admitted to probate in common form. The will devised the one acre tract to plaintiff, expressly referring to the foregoing provisions of the settlement agreement with defendants. Despite plaintiffs repeated demands, however, defendants have refused to convey the one acre tract.

Consequently, plaintiff brought this action seeking a judgment “requiring defendants to execute a Deed conveying to plaintiff the real property . . . free of encumbrances or in lieu thereof that the Judgment convey said property to plaintiff free of encumbrances.” Plaintiff and defendants moved for summary judgment, contending in their respective motions that the foregoing undisputed facts entitled them to judgment as a matter of law. The trial court denied plaintiffs motion and allowed defendants’ motion.

On appeal, the Court of Appeals affirmed. Roper v. Edwards, 88 N.C. App. 149, 362 S.E. 2d 612 (1988). On 9 March 1988 we allowed plaintiffs petition for discretionary review. We now reverse.

The Court of Appeals noted that plaintiff admitted, in her brief in that court, that both the settlement agreement and deed contain a prohibited restraint on alienation, leaving her without a remedy at law. Id. at 150, 362 S.E. 2d at 613, citing Crockett v. Savings & Loan Assoc., 289 N.C. 620, 224 S.E. 2d 580 (1976). The court responded to plaintiffs argument that she was entitled to the equitable remedy of a constructive trust based on unjust enrichment by stating that plaintiff had not made the requisite showing that the unjust enrichment was “the result of fraud, a breach of duty, or some other circumstance making it inequitable for defendants to keep the property.” Id. at 151, 362 S.E. 2d at 613. It determined that defendants had “a legal right to refuse to convey the property because of the restraint on alienation and this exercise of a legal right cannot amount to fraud,” id. at 151, 362 S.E. 2d at 614, and it concluded that the record was devoid of indication “that defendants had any legal duty to convey the property to the plaintiff.” Id. at 151, 362 S.E. 2d at 613.

*464 We agree that defendants have no legal duty to convey the property to plaintiff. “Our Court has consistently held that a condition annexed to the creation of an estate in fee simple disabling the conveyee from alienating it for any period of time is void as a restraint on alienation.” Crockett v. Savings & Loan Assoc., 289 N.C. at 623, 224 S.E. 2d at 583. This does not end the inquiry, however. The question whether defendants had an equitable duty to convey the property to plaintiff remains.

Plaintiff seeks the remedy of a constructive trust.

A constructive trust is a duty, or relationship, imposed by courts of equity to prevent the unjust enrichment of the holder of title to, or of an interest in, property which such holder acquired through fraud, breach of duty or some other circumstance making it inequitable for him to retain it against the claim of the beneficiary of the constructive trust. ... [A] constructive trust is a fiction of equity, brought into operation to prevent unjust enrichment through the breach of some duty or other wrongdoing. It is an obligation or relationship imposed irrespective of the intent with which such party acquired the property, and in a well-nigh unlimited variety of situations. . . . [TJhere is a common, indispensable element in the many types of situations out of which a constructive trust is deemed to arise. This common element is some fraud, breach of duty or other wrongdoing by the holder of the property, or by one under whom hie claims

Wilson v. Development Co., 276 N.C. 198, 211-12, 171 S.E. 2d 873, 882 (1970). This equitable device belies its name, for no ongoing trust relationship is created when a court imposes a constructive trust.

[T]he constructive trust plaintiff wins an in personam order that requires the defendant to transfer specific property in some form to the plaintiff. When the court decides that the defendant is obliged to make restitution, it first declares him to be constructive trustee, and then orders him[,] as trustee, to make a transfer of the property to the beneficiary of the constructive trust, the plaintiff.

D. Dobbs, Remedies § 4.3, at 241 (1973). Thus, imposing a constructive trust here would, in effect, result in specific perform *465 anee of the settlement agreement. Defendants would be declared constructive trustees of the one acre tract and ordered to convey it to plaintiff.

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Roper v. Edwards, 373 S.E.2d 423, 323 N.C. 461, 1988 N.C. LEXIS 619 (N.C. 1988).

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