Appendix — Phoenix Title & Trust Co. v. Markel

9 Big tases : ae

APPENDIX, A

| srg — Ariz. —

dese . 442 P.2d 97°

“Edna (Van-Y) MARKEL, Appellani;’

- PHOENIX TITLE & TRUSS COMPANY, \ . — :

' Trustee, and Virginia R. Van-Y and the No. zane PR.

Estate of Earl Van-Y, Deceased, O. W.\ >

Helsel, and Helsel and Helsel, Appellees.’

, Supreme Court of Arizona.

» . a In Banc.

| Jane 5, 1968.

Allen Philip ‘Bayham, Raymond Holistctet, , Phoenix, for

appellant.

Divelbiss & .Gage, by 6. David Gage, Phoenix, fot snpellees

_ McFARLAND, Chief Justice.

This casé is before us an a petition for review ‘ol the decision

of the Court of Appeals, 6 Ariz.App. 585, 435 P.2d:714, affirm-*

_ ing the judgment of the trial court. Decision of the Court of ©

Appeals vacated.

In December 1939 plaincif Edna Markel obtained a divorce

| from Earl E. Van-Y, hereinafter called Earl, in Sedgwick County,

_ Kansas, where they were both living. The divorce decree approved

"a written property settlement in lieu of alimony, by which Earl

agreed to give plaintiff “one-half interest in any funds that- may —

be obtained through” the sale of.a parcel’ of real estate located

in Arizona. Subsequently Ear. married defendant Virginia Van-Y,

hereinafter referred to as Virginia. The Arizona property, passed, 3

through several Parties, to Virginia.

_. In 1957 she sold the property for $25,000, describing it as

her sole and’ separate property. Transamerica Title and Trust .

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_- Company (then called Phoenix Title and Trust Co.) was made

“escrowee and trustee. The transfer of the property to Transamerica,

as trustee, was to expedite the deeding of part of the property

each time a payment was made—an arrangement commonly |

_.known as a subdivision trust. Knowledge of this sale came to

_the notice of plaintiff, ‘and, on April 30, 1959, she brought an

y action against Virginia and Transamerica, asking the court to.

hold that Transamerica hold the reversionary interest sg the realty

"jt trust for plaintiff; that Transamerica should hold $13,037.50 -

/and interest for plaintiff's use and. benefit, and in :d

should distribute same to plaintiff; that Virginia be ordered to

pay plaintiff $11,865 wrongfully paid to her by Transamerica;

and that each defendant be restrained from making any disposi- -

tion of. Virginia’s reversionary interest in ews property, or the

proceeds of the trust, pendente lite.

Transamerica, though served, failed to appear, and a tempo- .

rary injunction was granted by the court on May 18, 1959, . ..

_ Osdering Transamerica not. to pay out any money from the . -

trust until further order of. the court. dorcel cn vices ;

hundred-dollar bond.

On June 18, 1959, the court Lineal a : seeanindii injunction -

which enjoined Transamerica from making any disposition of

Virginia’s reversionary interest, or her interest in the proceeds, —

‘until it paid her the sum of $13, 037. 50 and interest. The $500 -

On Teens 22, 1960, ‘the. ie _ judgment against Trans-

america was set aside and the, injunction necessarily fell with

_ the judgment. Transamerica then made two payments to Virginia

“$4,402 on February 17, 1960, and $4, 214. 57 on December 30,

1960.

! Slit aah tani <parptilica “Snide tad, ‘@ tadaciegg on tsk

" merits\of the case took place, resulting in a judgment for defend-

ants at ‘the close of plaintiff's case. Ani appeal was taken, and,

on February 2, 1966, -we reversed and remanded the case for

trial, holding that plaintiff had made out a prima facie case for

9

ise joienhion bb denemetion ‘ilee! erable tik decid

v. Phoenix Title & Trust,Co., 100 Ariz. 55, 410 P.2g 662: ie

In 1962, 1963, and 1964, while the appeal was pending, «

Transamerica received payments due, from the sale of the real —

estate, totalling over $8,000 including interest. On April 7,

1966, after our decision, plaintiff filed a second amended comi-

plaint, setting forth the facts ‘alleged ‘in’ the original complaint

which we ‘held in Markel v. Phoenix Title, supra, had been:

suifficiently proven to constitute a prima facie case for thie imipo-

‘sition of a constructive trust. The amendéd complaint set out a

copy of Edna's written property agreement with ‘Earl, ‘and

alleged that it had been approved by ‘her divorce: decree; that

Virginia had entered into an escrow and a secret trust agreement ae

. with Transamerica bearing number 2197; .that thereafter Trans-

america “received and wrongfully made disbursements to Virginia

ie Van-Y in the aforesaid trust after this action was commenced,

“for the sum of $13,037.50”; that defendants. “have fraudulently

caused said funds to be ttansmitted to Virginie Van-Y * * * to.

deprive plaintiff of her rights to oné-half th- * * * and

that defendants’ aforesaid wrongful transfer’ was in breach of |

defendants’ obligations, after being fully placed. on notice of

plaintiff’s rights and was in direct breach of its duty to plaintiff.

POI ai pad asl cr hg apd Lagat

$13,037.50 and interest, and for. gapk shes, gad Sass, spree

as to the court may seem meet and proper.” ?

The issues as stated in the first complaint. were clear and

would have permitted recovery. The second complaint, after

setting forth the facts alleged in the first complaint in regard to

the written property settlement in the divorce decree, the sale

and the payments thereunder to Transamerica as trustee, further

alleged the subsequent wrongful disbursements. As it is, the

‘second amended complaint may be described by the words used _

in Barnes v. Eastern and Western Lumber Company, 205 Or. —

553, 287 P.2d 929, in which the Supreme Court of Oregon said:

_ “# © * The facts stated in the complaint would have per-

mitted recovery, as we have indicated, on several theories.

A ee

SS SS Seen, ye ae

.

ie money had and received, ial lien dancin ts

_ Constructive relief, ‘Ot any other theory ‘within the scope of

, sari prt pe eg pr Sea

are sufficient to permit plaintiff to prove her original contention

that defendants were, and still are, constructive trustees of the

"proceeds of the sale of the property. The new material is also

sufficient to permit plaintiff to prove the elements of a conversion

of those proceeds, as she alleges a wrongful transfer of the money F

‘by Transamerica after knowledge by it of ae claim of the «|:

right to possession of the funds. 7

If defendants had any doubis of what: was meant by'the alle

gations of the second amended complaint, they could have moved

for a more specific statement. Long v. Arizona Portland*Cement

- Company, 89 Ariz 366, 362 P.2d 741; Davidson v. All State

Materials Company, “101 Ariz. 375, 419 P.2d 732. Rule of

Civil Procedure No. 8 (16 A.R.S.) states that the complaint need

contain only a “short andl plain statement of tlie claim showing

that the pleader is entitled to relief” and “[a} demand for judg-

ment for the relief to which he deems himself entitled. Relief .

een recor pe desided ;

See Lun v. Matiaffey, 94 Or. 292, 185 P. 746.

Transamerica filed a new answer, admitting—with the follow- ©

' ing exceptions—all of thé allegations of the complaint: (1) Ie

‘denied (on information and belief) that the property settlement.

agreement existed; (2) Ie denied that the trust agreement between.

Bie Se matinee (3) It denied ‘that the, $13,037.50 ~

received by it and disbursed to Virginia was disbursed wrongfully;

and (4)°It denied (on information and belief) that it fraudulently .

transmitted funds from the trust to Virginia, and alleged that -

‘it had no information of afiy fraud or wrongdoing. The answer .

? -also alleged that it was not under ‘any oo when it dis-. ~

bursed! the funds. inom aes

“Denial (1), ar a aes Gl” Beet

interrogatdties, admitted the existence of, and her. knowledge

_ of the contents of, the property agreement. Denial (2) is com-

“5.

- if Ad

ce ss 0 ° : . Stig

|

11

i immaterial. Denial (3) is isearly a‘legal issue, rather

.than a fact quéstion; it must be fesolved by the application of

| legal principles, not by the introduction of evidence. Denial. (4)

must be'construed to mean that Transamerica had no knowledge

’ of any fraud or wrongdoing oni the, part of Virginia at the time —

it accepted the trust, since there-can be no. doubt that it had

knowledge of her. wrongdoing after thit case, was tried the first _

y° time. It was a party to the. first appeal, ie Ee

counsel throughout that appeal. |

fe ts theceloce ‘clend think dhe teal’ fgeinie "in ile cone wees 1.

‘Was Transamerica’s action in. disbursing funds to Virginia, after

knowledge that plaintiff claimed them to be encumbered with

"a constructive trust in her favor, wrongful or fraudulent? and 2.

Was Transamerica excused from the consequences of its disburse-

thents because of the trial court’s judgment and plaintiff's failure’

to try to get a stay, order? These issues present. questions of law,

‘not fact; a ae ee ae

judgment.

Sects mioticiy“wab' Sith. by “Teesdale: "Ga ‘ie. glosall

that, there was no material issue of fact. In support thereof, it

attached an affidavit setting out the dates and amounts. it had

paid Virginia from money received under the trust. "The affidavit

_. ‘contained nothing else! In reply to the motion, plaintiff filed only — ;

_ @ memorandum of suthorties and did not controvert the affideie. Hi

Transamerica also filed memorandum. of: authorities.

On October 14, 1966, the trial court applied Rule 56(e), ;

Rules of Civil Procedure (16. A.RS.), and granted summary

_ judgment to Transamerica, stating as its reasons (1) ‘that plaintiff

failedto respond with specific facts and affidavits, and (2) that

E: there was ‘no genuine issue of fact raised by the pleadings.

The first reason represents an incorrect application of Rule —

56(e). That rule states that‘ if plaintiff does not respond with

specific facts, summary judgment “if appropriate” shall be entered

against her. This is but another way of saying what is said in Rule

_56(c)—namely, that judgment shall-be entered if it appears

‘thee thett is oc guasine jome of fect aud chic “the moving pty :

¢

12 |

is entitled to a judgment as a matter of law.” The rule contem-.

plates that where the moving party is specific, the documents

-_ controverting his pleading must be specific. But, as we said in, .

Carpenter v. Supérior Court etc., 101 Ariz. 565, 422 P.2d 129;

in quoting from a previous case, Lujan v. Machienntie, FS Aah,

273, 383 P.2d 187:

AF Wh sts ol tab ati Laie Gath 06 ile chit hp |

is entitled to’ judgment as a, matter of law, the opposing party

> need not file an opposing affidavit. * * *”

But one cannot deny or controvert a true statement, and

certainly ought not even to try to do so. Transamerica’s motion

is supported by an affidavit containing only true statements, viz:

the dates and amounts of money distributed: to Virginia. Rather

than tending to prove that Transamerica is entitled to judgment,

the affidavit shows that plamsiff’s allegations are true. To enter

judgment against plaintiff for failure to deny what both parties

allege to be true is not.a proper interpretation of Rule 56(e). If

A sues B; alleging an assault and battery, and B. defends by a

motion for summary judgment, to which is attached an affidavit —

that B did in fact on a certain date commit the assult and battery, —

- mo one would argue that B was entitled to judgment because :

of A’s nS Sree ieee: Seting es. Reet be e0-A -

has alleged in his complaint! a

__ The second reason given by the trial court for entering a

“summary judgment was that. there was no genuine issue of .

material fact. We agree with the truth of this statement, and

with the corollary that summary judgment must therefore be

granted—but, in this case, to plaintiff rather than to defendant.

It has been determined in other jurisdictions that @ judgment

on a motion for summary judgment may be either for or against

the moving party, even’ though’ the opposing party has not filed

_ such a motion. American Auto Insurance Co. v. Indemnity Insur-

ance Co. of ‘North America, 108 F.Supp. 221 (Aff: 3 Cir., 228

F.2d 622), min tae eal seenan ees ee eciaiey by Sovowing

i wihoes, comment ja Carpenses'V . Superior Court, supra.

Since, therefore, the pleadings in this case indicate that there

°

Wy 13

is no material dispute over the facts, and that the issues are all

ZA _ legal ‘rather than factual, judgment must be for plaintiff at this _ :

| FOE i rn ee Ore ee ee .

favor.

As previously indicated, the first of the two legal issues to be

decided is whether it was wrongful or fraudulent for Trans-

america to disburse the money to Virginia with full knowledge -

' that plaintiff claimed it to be subject to a constructive trust. We,

can, at the outset, disregard any claims of fraud on the part of

Transamerica. The worst that we can say about it is that it per-

mitted Virginia's lawyer also to handle its interests, in a situation»

where they were not identical with hers, and, as a result, all of

Transamerica’s moves were directed toward helping her i

of toward helping Transamerica by merely remaining neutral.

We therefore limit this discussion to the question of whether

the disbursements to Virginia were wrongful. In the context of

the instant case, “wrongful” refers to-an act by Transamerica

which is a*breach of its duty to plaintiff. In the former appeal of

this case (100 Ariz. 53, 410 P.2d 662), we held that plaintiff

had proved a prima. facie case for imposing a constructive trust, -

| based on fraud by Virginia, as to one-half of the proceeds of the ;

- | sale of the property. We ‘carefully refrained from mentioning. ,

Transamerica because there was no evidence of any fraud on its

part. But, if the proceeds are encumbered by @ constructive trust,

© the person holding them, with knowledge of the facts, must of

. . mecessity be a constructive trustee. As we said in the prior appeal,

| “‘@ © © where actual froud does. st: exist in the acquisition

of property, a constructive trust will arise whenever the cir-

cumstances make it inequitable that the property should be

: retained by the one ‘who holds the legal title. * * *’ Linder

ee ee ee 85 Ariz. 118,* * *

333 P.2d 286 * * * >

~- -—- Oo -

sion iat sng he rr of Cardozo,

Cc.

Beatty v. Guggenheim 225 N.Y. 380

122 NE. 378, * * *” Cialis a do e

| | s

One from whom money has been obtained by fraud does‘not _

lose title thereto as against a wrongdoer, merely because the -

latter transfers the money to @ third party. In Re Accles’, 153 Misc.

421, 275 N.Y.S. 430, where’ money was fraudulently obtained

from plaintiff and deposited in a bank, after which the wrong-

doer digdtind the deposir was claimed by his enecutrix, the court

_ held: :

“The money, Sen epentsh8 Nip ten: diceiaen in des Potrero

Bank, was still the money of the Philippine Bank {plaintiff}.

*-* * The Fleetwood Bank was a mere depository. ***

* * _* * a *

“® ® ® the law makes the Fleetwood Bank constructive trustee

eee ee ey oe Senay o Seliaee in dhe do.

cedent’s account. * * *”

In Eckere~v. Miller, 57 Ariz. 94, 111 P.2d 60, we approved

- the following language from Pomeroy, in his work on Equity

Jurisprudence, 3d Ed., Volume 3, Section 1053, as follows:

“‘In general, whenever the legal title to property, real or

personal, has been obtained through © @ © of

under any other similar circumstances ‘render it uncon-

scientious for the holder of the legal title to retain and enjoy

the beneficial interest, equity impresses a constructive trust —

on the property thus acquired in favor of the one who is truly

and equitably entitled to the same, although he may never

perhaps have had any legal estate therein; and a court of equity |

has jurisdiction to reach the property either in the hands of

the original wrongdoer, or in the hands of any subsequent

holder, until a purchaser of it in good faith and without notice

;, aagaiens © Migher sight, and sles che peoperty splipved fopm

the trust. © * °°”

‘ This view is also supported by IV Scott on-Trusts 2nd Edition,

» Section 462.4. In the same section, Scott states that when a

constructive trust is imposed, .it arises immediately upon the acqui- .

sition of the property subject to the trust. The author concludes

by saying: are

“It would seem that there is no foundation whatever for the

notion that a constructive trust does not arise until it is de-

creed by a court.” |

-15

We hold, therefore, that in the instant case Transamerica was

a constructive trustee from the time that it was served with notice

of this action; that, though innocent of any fraud, its duty-as

_ constructive trustee was to hold all money that came into its -

hands under trust No. 2197 until the final disposition of this

case; and that the turning over of the money to Virginia was

_ a breach of its duty to plaintiff, and was therefore wrongful.

To interpret our decision.in the first appeal as meaning that

Virginia was a constructive trustee but Transamerica was not, is

completely untenable. This is evident when one considers the .

situation that would have existed if Transamerica had retained

the money until the conclusion of the first appeal. In such. case

we would have a situation where plaintiff had successfully: es-

tablished a constructive trust on money in.the hands of a com- .

pany which ‘was not a trustee, and, therefore, might transfer the. -

money to Virginia, or any one else, at any time. Even Trans- ~

america could hardly conterid that it could rid itself of the

money, without penalty, after the decision on the first appeal.

The same result may be reached by analysis of cases on the

subject of conversion. They hold that plaintiff need show only

right to possession, not title (Triggs v. Zicovich, 117 Cal.App.2d

768, 257 P.2d 60); that money.may be converted (Seekamp v.

Small, 39 Wash.2d 578, 237 P.2d 489); that the property need:

not have come into defendant's possession unlawfully in order

for. defendant's acts to constitute a conversion (Byer v. Canadian

Bank of Commerce, 8 Cal.2d 297, 65 P.2d 67, and Stockmen’s

State Bank v. Merchants’ and. Stockgrowers’ Bank, 22 Ariz. 354,

197 P. 888); that in a case of conversion, neither good nor bad :

faith, neither. care nor negligence, neither knowledge nor ig-.

norance, are of the gist of the action (Byer v. Canadian Batik of —

Commerce, supra); that an executor. may be guilty of conversion

_even though the property came to him as a part of decedent's

estate (Stockmen’s State Bank v. Merchants’ and Stockgrowers’

hak ath that a bailee with notice of the claim of the true :

_ owner may not deliver it to the bailor, whereby it is lost to the

. owner, without rendering himself liable to the owner as for a

16

‘conversion (Investment Service Co. v. O'Brien, 190 Or. 394, 223

P.2d ‘163, 170).

"It is, of course, true that a trustee (as in the instant case) has

both title and possession, while a bailee has possession but not

title. Since, however, the wrong of convefsion is-an interference

with plaintiff's possession, it would seem that a trustee is in the |

same position as a bailee—that is, the effect of the act would be.a

conversion (interference with the other party’s right to posses-

sion) tegardless‘of whether the actor is a bailee or a trustee. It

has-been so held in White v. Sherman, 168 Il. 589, 48 N. E, 128,

131:

“# * * the weight of authority tis) that, where he i invests trust

money in his individual name, he commits a breach of trust

which subjects him to the same liability as if there had been.a

willful conversion to his own use. * *.*”

Also, in Pacific Indemnity Co. v: Grand Avenue ville Bank of

Dallas, ‘Texas, 223 F.2d 513 (513 Cir. 1955): ;

“# * *‘the check, when received and deposited, was impressed

with a constructive trust in favor of appellant. * * * As: be-

tween Sharrock [the depositor} and appellant, this [construc-

tive} trust or equitable claim was enforceable against the pro-

ceeds of the check even though it had been deposited, While

thee nedeetyrad per Prd dogo oa A . thar een

check was deposited * * * the Bank’s know was ient

"to put it upon inquiry * * © ingileigould have revealed the,

existence of the equitable trust with which the proceeds of the .

check were impressed. Notwithstanding this knowledge * * *

the Bank paid itself out of funds of which it knew or should

have known that Sharrock was not the uitable owner.”

We hold, therefore, that the disburseme of the proceeds of

the sale of the property by Transamerica to V even though

made in the utmost good faith, and pursuant to 4 written agree-

ment, was—after it had knowledge of plaintiff's claim of a con;

structive ertifr-both a breach of its duty as trustee, and a con-

version of such funds. .

ah a ae Reg nee Oe Ce Mea

Asbursement of the money to Virginia was excited or justified

0)

by the erroneous judgment for defendant, coupled with plaintiff's

failure to'try to obtain a stay order. Transamerica argues shat the

decree was valid until revetsed; that all acts done pursuant’ to

judgment are protected dy it from later becoming tortious;

- upon a reversal of a j ent a defendant need return only the a

._benefits-which it still has in its possession, and since Transamerica .

paid out all of the money to Virginia, it need return nothing; that

plaintiff, by failing to try<to,effect a stay, is responsible for the

disbursement and cannot now be heard to complain. Trans-

america extensively argues: these pape and cites cases

supporting them.

Transamerica quotes 5 ‘Amn Jur. 2d 424 to the effect that a

judgment is “sufficient justification for all acts done in its enforce-

ment before it is reversed.” {Italics ours.] Transamerica calls that

‘statement the “universal rule,” and states that virtually all deci-

sions to that effect flow from Bridges v. McAlister, 106 Ky. 791,

51 S.W. 603 (1899), and Porter v. Small, 62 Or. 574, 120 P.

_ 393 (1912).

In Bridges, supra, a decree ditected sielbiie to fill up a : ditch,

This was done, causing~flgoding of appellee's land. When the

decree was reversed, appellee sued for damages. The court held

that, since the judgment, was valid until reversed, appellant bad

to obey the order to fill the ditch, and therefore could not later be

held in tort for damages. The court said that the judgment,

though later revetsed, was sufficient justification for “all acts done

by plaintiff in enforcing it.” {Italics ours.)

In Porter, supra, the decree awarded defendant Small certain

tights to irrigation water, which, he then took each year during

the pendency of the appeal, which later reversed the decree. The _

suit was for damages for the taking of the water before the -

~ reversal of the decree. These cases have no bearing on the instant

case. The Bridges case, supra, involves rights in regard to flood

water. The Porter case, supra, involves the rights in regard to

irrigation water. They are in tort for damages, and involve alto-

gether different questions than chose in the instant case :

In the original Markel case, supra, we held that there was

prima facie evidence of a constructive trust. A constructive trust

codates back to the date that the money was: received. It was not

necessary for plaintiff to secure a restraining order against Trans-

_ america, as it was made a party to the suit and had full notice of

the contract and of the pleadings’ in which it was alleged that.

there was a constructive trust on the funds paid under the sale.

" Under. these circumstances if Transamerica wrongfully trans-

ferred these funds after this notice, well knowing the case was on

appeal, it would be liable for payment of the trust funds.

If a plaintiff were afraid a trustee would not be financially able

to pay the amount of the funds in the event the court held a

constructive trust existed, he could—if he were financially able—

protect himself by asking for a restraining order, but-if he knew |

fe ws solvent and « jgment would be good ei this

would not be necessary.

7 ib teaching it ths conte wi tha fates et the instant case

is due to the fact that the usual situation is one where piaintiff

: _ preyails in the lower court, and comes into possession of de-

_ fendant’s property by the use of process—such as an execution—

directly arising from the judgment. In such cases, restitution is a

proper remedy, since such a plaintiff still has the property wrong:

fully taken, or has sold it and has the proceeds: of the. sale. In

either event, retention would constitute unjust enrichment: In the

instant case, however, Transamerica did not take the property or

"money directly from the possession of plaintiff. The money was.

received by Transamerica from the buyer of the property, and

was turned over to Virginia without any consideration. This

makes the doctrine of restitution inapplicable, because of the lack

of any unjust earichment by Transamerica. ;

- In any event, we do not accept the contention of Transamerica

Get abenedle inlich; shit judgnness, in. Sones. of deksivtocns hus

been reversed, should be limited to money still in the ‘hands of a

defendant who has intentionally parted with the money with full

knowledge of the pending appeal. Such a doctrine would leave a

19 | : |

plaintiff helpless. Upon announcement of the reversal—if we |

accept this argument—Virginia could have asked Transamerica

to send the money to her sister in another state. Transamerica |

could then disclaim all liability. |

The general rule is that a teversal of a judgment restores the

ies to the same position as if the action had never been tried.

eople v. Lagiss, 223 Cal. 2d 23, 35 Cal.Rper. 554, 567. As early ©

-as 1852, the Supreme Court of Alabama held that the fact that an

administrator had collected money. by execution issued on a judg-

ment that was later reversed, and had paid out the money to the

lees wa ea So es aaien Sane Sev ery NRE

Williams v. Simmons, 22 Ala. 425.

~ However, thé general theory of the early cases was that there _

‘could be no successful claim sownding in tort for an act required

by a judgment of a court of competent jurisdiction. This is as it

should be. No one ought to be placed in a position where.he

must-risk a suit for damages if he obeys, or contempt of court if

he fails to obey, a lawful order of a court. However, this prin-

ciple does not apply here. The instant, law suit does not sound in

- tort. It is, rather, like the case of Tucker v. Brown, 20 Wash.2d

740, 150 P.2d 604, wherein the Supreme Court of Washington

quoted with favor from the trial judge when he stated: :

“‘# * * There is no question, in my opinion, of any tort at all.

The substantiation of a trust is purely one of contract; * * *

and whatever means or whatever allegations somebody employs

to impress trust propetty and to recover trust property still has

its basis in contract, * * *’”

ie iciehd 4oé ieee that thie diebeapehaniic' eb Musaalh weniinn

done by command of the court. Transamerica was in no dilemma

_ by which paying would result in a claim by plaintiff, and failure

_ to pay would result in its being in contempt of court. The court

did not order it to pay Virginia. Transamerica, first, could have

paid the money into court under interpleader proceedings. Second,

it could have held the money, explaining to Virginia that the

matter was still subject to reversal on appeal. And, third, it. could

20

tell Virginia ine it would not pay her- the money pending the

appeal unless she gave. ptoper indemnification.

Transamerica next contends that plaintiff ‘should have pro-

axed herself by a‘supersedeas bond or a stay order. Assuming for

: the sake of argument that she could have done this, why should _

she have done ‘so? ‘She knew that Transamerica was financially

- _- responsible. She had. no ‘fear that if the money were wrongfully

paid out, Transamerica would be unable to pay her.

», "In addition.to the fact that general legal principles require the

+ .conclusion that the reversed judgment of the superior court did

“not excuse or protect Transamerica; there is direct authority. on

the subject..In Mann v. Thompson, 118 So.2d 112 er

1960), the’ court said: |

“@ @ 2: if en appellant determines to peat without posting a.

supersedeas borid, it is his privilege to do so. An appellant's

election not to take the steps necessary to supersede or stay the

judgment or decree pending appeal does not as a matter of law —

bar his entitlement to restitution upon reversal by the cs SS .

court.”

In Lytle v. PajekbiOkegat Slope Irr. Dist., 175 Or. 276, 152°

P.2d 934, the Oregon Supreme Court’ had before it a case where

.the defendant argued that the plaintiff might have saved himself

from the loss of the use of his property. by giving a ee

’ bond. The court said: *

“* # * To refuse him wich compensation, merely because -

. was unwilling or unable to give a stay bond, would bé mani-

festly unjust, and, we think, would be a desiial of complete

‘restitution. * *.*”

In Lytle, supra, the Oregon Supreme Court also stele’ to

langgage from an older Oregon case: |

eee Thus, in Siverson v. Clanton, 88 Or. 261, 170 P. 933, -

171 P. 1051, 1052, the complaint was: construed to state a

cause ofaction for the recovery of money paid under compul-

sion or duress of personal property, notwithstanding that it

alleged that the defendants ‘took, converted, and appropriated

said’ personal propefty ‘to their own use’, and thus might have

been construed as in trover. * * *”"_ 7 \ |

\

— .

’

so

” In Ure v. Ure, 223 Ill. 454, 79 NE. 153, 156, the’ court's

Opinion states:

te # A pany 4 wide pected te kanesel ok Ok es

in the record, and such party cannot acquire any rights or

interests based on. such erroneous decree’ that. will not be.

“abrogated by a subsequent reversal thereof. If such party has

received benefits from the erroneous decree or judgment; he

must, after reversal, make restitution, and, if he has sold

property erroneously adjudged to belong to him, he must

account to the true owner for the value. * * *”

. The judgments of the Court of Appeals and of the » Supe ior ©

Court | -ate vacated. The dates and amounts of T: ica’s

_ disbursements to Virginia were as follows: - 7 I.

February 17, 1960 +. $4,402.00

December 30,1960 — 4,214.57

eee - January 17,1962 = ®:-:-3,994.93

Zr, hapa 10, 1963": 426.00

$13,037.50 ~~

The case is , semanded-t to the Superior Court with directions to

enter judgment for plaintiff for $13, 037.50 with i st on each

of the above disbursements from its date. \ |

UDALL, V. C. J, STRUCKMEYER, BER , and

LOCKWOOD, JJ., concur. ae

ie

ee | APPENDIX B |

a.

_ SUPREME COURT, STATE OF ARIZONA

PHOENIX

e “July 10, 1968

EDNA (VAN-Y) ‘MARKEL,

Appellant,

. Vv.

PHOENIX TITLE & TRUST COMPANY,

now known as Transamerica Title Ins. Co.,

_ Trustee; and VIRGINIA R. VAN-Y and

‘THE ESTATE OF EARL VAN-Y, deceased;

/ ©. W. HELSEL, and HELSEL AND HEL-

os: &

> No. 9210-PR

” i 3 Arpeles. J

= Gig tal cea Gea pak addin op is Secseruie Goves-olighe .

mc a pn a ce Aa 1968, in régard to the above-entitled

“ORDERED: Appellees’ motion for rehearing = DENIED.”

‘SYLVIA HAWKINSON,

Clerk

By Lucile Brooks,

Assistant

=~

" APPENDIX Big".

| SUPREME COURT, STATE OF ARIZONA

| \PHOENIX. |

pate 18, 1968.

-EDNA vant -Y) “a

Appellant,

v..

PHOENIX TITLE & TRUST COMPANY,

now known as Transamerica Title Ins. Co., {| |

Trustee;:and VIRGINIA R. VAN-Y. and { No. 921078

THE ESTATE OF EARL VAN-Y, deceased;

O. W. HELSEL, and HEBEL AND HEL. |

SEL, a 2

” F3 .

“rt . es Appellees. |

Ta lial iad Ul AGP Malad Cua *

State of Arizona on Tuesday, September 17, 1968, ia regeed oon

the a above-entitled cause:

“ORDER: _— $ motion for amendment of mandate — |

| DENIED.” ba oe

é : i aa SYLVIA HAWKINSON,

| WR By Lacile Brooks,

Re

| 24 ¢

APPENDIX -C } |

' IN THE SUPREME COURT OF THE STATE OF ARIZONA

» EDNA (VAN-Y) MARKEL,

: . Appellant, /

} vs. 2 Ta NO. 9210-PR

PHOENIX TITLE & TRUST COMPANY,(- MANDATE

TRUSTEE, etc., et al,

Appellees.

To the Honorable the Superior Court of the State of Arizona

in and for the County of Maricopa.

*. GREETING: ;

WHEREAS, lately in the Superior Court of the State of Ari-~

zona in and for the County of Maricopa, before you in a cause

between EDNA (VAN-Y) MARKEL, Plaintiff, v. PHOENIX

TITLE & TRUST COMPANY, Trustee, and VIRGINIA R.

VAN-Y and the Estate of EARL VAN-Y, Deceased, O. W.

HELSEL, and HELSEL -AND HELSEL, Defendants, Cause No.

107182, said Superior Court entered its judgment on October 14,

1966, in favor of The- Transamerica Title Insurance Company,

and against Edna (Van-y) Markel, as by, the inspection of the

record of the said Superior Court, which was brought irito the

Coutt of Appeals, Division One, of the State of Arizona by virtue

of an appeal by plaintiff agreeably to.the law in such case made

and provided fully and at large appears. '

AND WHEREAS, in November, in the year of our Lord one

thousand nine hundred and sixty-seven, the said cause came on to

be heard before the said Court of Appeals, Division One, and

was submitted for decision after argument of counsel.

'” ON CONSIDERATION WHEREOF, it was on the fifth day

of January in the year fo our Lord one thousand nine hundred

Sep Perens tenet hy 0d Ce as tho fodgrees of fn:

| -

said Superior Court in cis cause, appealed from be, and the same

is hereby affirmed.

Whereupon, on January 30, 1968, saitliens Mako tation

for Review by the Supreme Court, on consideration of which the:

said Supreme Court™on February 27, 1968, ordered that the

Petition for Review be granted. On Consideration Whereof, it

was on the 5th day of June, 1968, ordered that the j of

the Court of Appeals and of the Superior Court are

ans 208 geunealy of Teeapees Sones ae

were as follows:

February 17, 1960 $ 4,402.00

‘December 30,1960 - 4,214.57

Pa January 17,1962 3,994.93

April 10, 1963 426.00

: ~ $13,037.50

the exe b veniadlt ws Hau Ca ewe

enter judgment for plaintiff for $13,037.50 with interest on each

_ of the above disbursements from its date.

You therefore are hereby commanded that such proceedings be

had in said cause, as according to the decision and order of this

Const, andes eccoading 00 tight sind jistice, and to low, ought ‘0

be had.

WITNESS, the Honorable Emest W. ‘McFarland, Chief Jie

"

tice of the Supreme Court of the State of Arizona, the fifteenth

day of July, in the year of our Lord one thousand nine hundred

<r |

/s/ Sylvia Hawkinson,

Clerk of the Supreme Court

of the State of Arizona -

D

( a

| | APPENDIX D

IN THE SUPREME COURT OF THE STATE OF ARIZONA

EDNA (VAN-Y) -MARKEL, :

| Te NO. 9210-PR. ;

PHOENIX TITLE & TRUST COMPANY, | REHEARING ~.

now known as Transamerica Title Insur- | OF APPELLEE :

. ance Company, Trustee, and VIRGINIA R. { | TRANS-

VAN-Y and The Estate of EARL VAN-Y, AMERICA —

Deceased; O. W. HELSEL, and HELSEL TITLE | O

AND HELSEL, INSURANCE

Appellees. |. 0.

J

: Comes now appellee Transamerica Title Insurance Company,

seal eninaiaiaein axieae the Cite Yon.0, divensinn, sxreusidanuion,

and/or modification of its Opinion in this cause. Submitted here-

with is our Memorandum, indexed as follows:

I. SINCE NO TRIAL OR HEARING HAS YET BEEN

HELD ON: THE QUESTION OF FOUNDATION

. LIABILITY AS BETWEEN MRS. MARKEL AND

MRS. VAN-Y, THIS CAUSE SHOULD BE RE-

MANDED FOR FURTHER PROCEEDINGS NOT

INCONSISTENT WITH THE OPINION; THE

GRANTING OF JUDGMENT WITH INSTRUC-

TIONS AGAINST TRANSAMERICA ON APPEAL

DEPRIVES TRANSAMERICA OF ITS PROPERTY

WITHOUT DUE PROCESS OF LAW .......................... 1

. . * * . * . . ke

Procedural Posture: ‘The first opinion on appeal, -Markel v.

Phoenix Title & Trust Co., 100 Ariz. 53, 410 P.2d 662 (1966),

“held that a prima facie case of constructive fraud was estab- ;

lished, and that since defendant's motion for judgment at the

close of plaintiff's case prevented defendant from presenting her

¥ -

i, Gere Ae

_ Gaas, the action ‘one contented Son's aye) sete cnisianen sicictiep

decision.

Tithe ‘ide’ sist tel) wa ln’ bain ‘ils

the pretrial order [A.R- 105], which identifies the limited ques-

tion now before the Supreme Court as a “special issue of law”

{A.R. 106-107], plaintiff Markel filed her second amended

complaint [A.R. 89}, which alleged [A.R. 92] that she had

“rights to.one-half the proceeds of the first beneficiary's interest”

under the subdivision trust [photocopied beginning at seventh

unnumbered’ page after A.R. 32). This allegation of foundation

liability was denied by defendant Van-Y (represented by Lewis,

Roca, Beauchamp:& Linton) at A.R. 110, and said foundation

liability was denied by Transamerica as by Divelbiss &

Gage) at A.R. 99-100. ' e.

The motion for summary judgment involved in this appeal

{A.R. 112] was then filed before trial date [A.R. 107}.

As is usual in ones involving multiple parties, Transamerica’s

motion fot summary judgment was directed to issues which it

- contended established its non-liability notwithstanding the out-

come of the trial:to determine whether there was any primary

liability of defendant Van-Y to plaintiff Markel. This Court has

held that although there may be some issues and facts in dispute, °

a motion for summary judgment may be filed which>addresses

itself to an issue which may conclude the action as to a party

notwithstanding the ultimate outcome of the disputed issues and

facts. Northen v. Elledge, 72 Ariz. 166, 232 P.2d 111, 114

(1951). The Transamerica motion for summary judgment was

then set for hearing, argued, ‘and granted [A.R. 219-222], all

before the continued date set for the trial of the case [A.R. 219].

On the date which had been set for ‘trial, préliminary matters.

were disposed of, and the court then recessed ‘the trial pending a

ruling upon the admission of the original transcript of testimony

in the previous trial [A-R. 222-225}. During the period of the.

recess of the trial, Judge Cordova signed the formal: written

judgment [A.R. 225}, after which Judge Hays ruled jthat the

eS

28

ciginl transcript would not be adie a evidene [AR. 225-

Ce: :

_* Upon stipulation of counsel for plaintiff Markel (Mr. Allen P.

_ Bayham) and the attorneys for defendant Van-Y (Lewis, Roca, -

Beauchamp & Linton), Judge Hays then ordered that the trial be

recessed for three months, subject to further notification of coun-

sel, with the trial to remain in’a recessed status “until a decision

has -been received from the Appellate Courts on the related

matters,” ‘the “related matters” being the appeal avlative to

Transamerica. See A.R. 226-227.

ATTACHED HERETO, AND MADE A PART HEREOF

BY REFERENCE, IS THE CERTIFICATION OF THE CLERK

OF THE SUPERIOR COURT (Reproduced at end of this Ap-

pendix D). TO THE EFFECT THAT AS OF THIS DATE -

SAID TRIAL IS STILL IN A RECESSED STATUS, AFTER

MANY SUBSEQUENT CONTINUANCES DURING THE

_ PERIOD OF THE PENDENCY OF THIS APPEAL.

’ Jt is to be noted that the judgment in favor of Transamerica is

a Rule 54(b) judgment, in that the case involves multiple claims

and multiple parties. Judge Cordova expressly determined [A.R.

167) that there was “no just reason for any delay in entering

pene in favor of Transamerica.” meee Rule 54(b), as

amended 1961. ~ :

Effect of Latest Decision: By rendering judgment against -

’ Transamerica on appeal, the Supreme Court is allowing plaintiff

> ‘to collect every cent she claims—without ever establish-

g that she is entitled to any proceeds as between herself and Mrs. .

' Van-Y. Should the trial as between Mrs. Markel and Mrs. Van-Y

, establish that Mrs. Van-Y was actually entitled to the proceeds,

Transamerica’s payments to Mrs, Van-Y would not have been

subject to any claim by Mrs. Markel.:We respectfully submit that

Transamerica cannot be deprived of its property until this founda-

tion liability is established by Mrs. Markel. . |

If the latest reversal with instructions is allowed to stand, this

Court will have created a situation Mrs. Van-Y could actually be

entitled to all the proceeds paid to her—with no opportunity on

ee |

the part of Transamerica to establish this point as between Mrs.

Van-Y and Mrs. Markel. How, ¢onsistent with justice and due :

* process, can the Supreme Court say that Mrs. Markel is entitled

to an outright judgment in her favor against Transamerica when

there has never been a trial or hearing to determine whether Mrs.

‘Markel is even entitled to one-half of the proceeds involved?

NOTE: At this point in the Motion for Rehearing, our ,argu-

‘ ment and authority relative to the due process question —

* commences. This argument and authority is not re-

produced in this Appendix pursuant to Rule 23(3)

; ee Court Rules. ~

CERTIFICATION

STATE OF ARIZONA |

. ss.

COUNTY OF MARICOPA

THIS IS TO CERTIFY that the record in: that’ certain action

‘on file in the Superior Court, Maricopa County, Arizona, entitled

* Markel v. Transamerica Title, et al, No. 107182, reflects that —

after a portion of the record was forwarded to the Court of

Appeals, four (4) minute orders were entered by Judge Hays,

Division 10, each of which continued the date set for trial”be-

_ tween plaintiff Markel and defendant Van-Y as follows:

(1). Minute order of January 30, 1967, setting said trial for

May 1, 1967; (2) minute order of April 21, 1967, continuing

said trial to June 29, 1967; (3) minute order of June 28, 1967, -

continuing said trial to September 29, 1967; and (4) minute

order of October 5, 1967, continuing said trial to April 8, 1968.

THIS IS TO FURTHER CERTIFY that said record shows.

that said action is still pending and that no trial between plaintiff

Markel and defendant Van-Y has been held through and in-

. Cluding this date.

e

30 | |

|. WITNESS. MY. HAND AND THE SEAL OF THE SU-

PERIOR COURT OF MARICOPA COUNTY, ARIZONA,.on

this the 17th day of June, 1968. | bade |

: a WILSON D. PALMER, Clerk

eit By /a/ Rileen Hicks,

: Deputy Clerk and Appeals

ge : Clk > \'..

_ (SEAL) aie

: oe.

APPENDIX E

435,P.2d 714 :

6 Ariz.App.. 5@::

Edna (Van ¥) (Stanley) MARKEL, }

eg.

ee / . |

TRANSAMERICA TITLE INSURANCE \ No, 1 CA-CIV

COMPANY, formerly known as Phoenix{ = -_—- 5538

Title and Trust Company, Trustee, and

- Virginia R. Van-Y, a

| * Appellees,

5 COURT OF APPEALS OF ARIZONA Dee

Ee | ,

- Rehearing Denied Jan. 25, 1968

Review Granted Feb. 27, 1968

Alan Philip Beytiam and Raymond Huffsteter, race for

appellant. :

- Divelbiss & Gabe: " G. David Gigli sill Carl W. Divelbiss,

Phoenix, for appellees, Transamerica. Title Ins. i."

CAMERON, Chief Judge..

__ This is an appeal from an order of the ele Court granting

‘| * -~ . the motion of the defendant, Transamerica Title Insurance Com- -

"pany, previously Phoenix Title and Trust Company, for summary

| judgment. We are called upon to answer the following questions:

1 Is a judgment of a trial court, which is not stayed pending .

appeal, valid and .enforceable until such. time as it is re-

versed on appeal? -

2. Could the appellant have enjoined or Saiestere the trustee,

Transamerica ‘Title, from disbursing funds in the trust

pending determination of.the matter on appeal? ©

3. Under, the facts in this case was the appellee, Transamerica

32

Tide, a constructive trustee for the benefit of the appellant?

4. Was summary judgment properly granted?

The facts necessary for a determination of this matter on appeal

ace ta! fellows: The plaintiff-appellant, Edna Markel, was pre

viously married to one Earl Van-Y, and the parties were divorced

in December 1939 in: Wichita, Kansas, In the property settlement

agreement approved by the court in the Kansas divorce the hus-

band agreed to give the plaintiff one-half interest in any. funds

that he might obtain through resale or disposal of some twenty

See a

_ mame of the husband.

The defendant, Virginia Van-Y, was married to > Earl BE. Van. x

from February 1941 untij the time of his death in Wichita in

April of 1959: Before Mr. Van-Y’s death, and after conveyances —

na ae

fendant, the defendant éntered into escrow instructions for the -

sale of the 20 acres wherein she was described as the “wife of

Earl Van-Y dealing with her sole and separate property.” A trust

agreement was also signed which provided that Virginia R. Van-Y

- . ‘was to be the first beneficiary and Phoenix Title the trustee. The

_ sale of the property was for the amount of $25,000,

Qn 30 April 1959 plaintiff, Edna Markel, filed a complaint to

impose « constructive trust on one-half of the proceeds of the sale

of the property. At that time a temporary: injunction ‘was entered

against Phoenix Title restraining it from paying any monies to

Virginia R. Van-Y until such time as Phoenix Title had turned

over to plaintiff approximately one-half of the sale price of the

property plus interest. The defendant Virginia Van-Y answered

and Phoenix Title and Trust Company was defaulted. Judgment

was entered in favor of the defendant, Virginia Van-Y, on 11

October 1961 from which order the plaintiff; Edna Markel, ap-

pealed to the Supreme Court of the State of Arizona. The contest “hk

in the Supreme Court of Arizona was between Edna Markel and

Virginia R. Van-Y, with Phoenix Title at most a nominal party.

ee ee Ae net Henna ee te

33 S

Markel v. Phoenix Title and Trust Company, 100 Ariz: 53, 410 - -

- P.2d 662 (1966), reversed and remanded the cause for new

trial stating: |

: “We believe the facts in this case brought out at trial create 2

prima facie case of constructive fraud. (citations omitted) . . .

‘ “A constructive trust expresses the ides that 2 defendant’ is

\under an equitable duty to give the complainant the benefit of

property held. A. wrongful holding begs relief whether the type

Of 4 Dual SBE SSR SR eae

“i eli ‘eject a ladihe ile 0 ve

“new trial consistent with this decision.” 100 Ariz. 37, 58,410 —

P.2d 665. °°

Although a temporary injunction had bie previously cite

restraining Phoenix Title from disbursing the funds under the-

trust agreement, the judgment of the trial court quashed all ;

restraining orders and injunctions. After notice of appeal by the

plaintiff, no supersedeas bond or injunctive relief was requested

by the plaintiff pending the ‘appeal. We are concerned in this

matter of what liability, if any, Phoenix Title, now Transamerica

Title, has incurred because of the disbursal of all the funds out of

the trust during the time the matter was on appeal, from 13 No-

vember 1961 when the notice of appeal was filed and the opinion

of the Supreme Court on 2 February 1966.

; Although the first trial was between Edna Markel and Virginia

Van-Y. with Phoenix Title at most a stakeholder, the trial upon

remand was between Edna Markel, trying to impress a construc-

tive trust upon Phoenix Title as constructive ‘trustee, with Vir-

ginia Van-Y not participating, she having received all the money

due as first beneficiary under the trust. Summary judgment was’

ee

‘judgment the plaintiff again appeals. . : ;

“WAS THE JUDGMENT OF THE LOWER couRT oe

VALID PENDING APPEAL? ~~

Counsel have cited no‘ Arizona cas exactly in poin regarding ,

: 54

the effect of the judgment from which an appeal is taken without

'.- gupersedeas, although the two cases of Stuart v. Winslow Ele-

. mentary School District #1, 100 Ariz. 375, 414 P.2d 976 ~

‘ (1966) and School District #1 of Navajo County v. Snowflake -

Union High School District, 100 Ariz. 389, 414 P.2d 985

* (1966), as well as the U. S. District Court case of Zannaras v.

Bagdad Copper Corp., 260 F.2d 575° (1958), would ‘indicate

. that. in Arizona persons or parties not restrained or enjoined by

supersedeas or by way of other orders of the court may rely upon

a judgment of a court-until reversed by an appellate court.

. The cases from other jurisdictions are in conflict as to whether

"the pendency of an appeal affects the operation of a judgment as

“tes judicata, See Annotation 9 A.L.R.2d 984 and 2 A.L.R.3rd

12M, Se. betiere froma the, cenloate of Arizone, cease: (op. cit.) -

Re that the rule in Arizona is:

“A judgment rendered by a court having jurisdiction of the

- parties and the subject ‘matter protects the parties acting under

it before reversal or stay, and constitutes a sufficient justification

Sect Gees cuk-da tes adoocusaiae Dotocs ir i tevecnbd or eet

aside by competent authority. Acts done under such a judgment

cannot be made the besis of an action for damages for tort.

However, all proceedings taken under the judgment are de- | -

J ws teas gry Ryponapagrogs cer rg

Although the defendant, Virginia sie ST eee wo

‘the plaintiff for the money she has received (the benefit of the.

ae judgment), we do not believe that the appellee, : Transamerica

"-- "Title, is liable for the disbursements made in reliance ‘upon the :

judgment granted in favor of Virginia Van-Y in the-lower court: ie

“The reversal of judgment does not make yoid what has been -

done under it. (citations omitted) A’ judgment, even though

later reversed, protects one who acts under it. What is lawful

wien done des ot become unl! by reson of subrqun

. “@ De

‘} plete justification: os

eee aban ae agin

Lumber Co. v. St. Louis, I. M. & S. Ry. Co., 80 F

102, A.L.R. 688 (Court of Appeals 8th, Mo. 1935, cert. denied

297 US. 715, 56 S.Ct. $91, 80 L.Ed. 1001). See also

v. 960) Realty Corp., 62 N.J Super. 103, ican ed gall

(1 i

We sivetoce betievé ta dbieeabh of such sciton't) sie glided

court which would clearly direct the appellee, Transamerica, t

refrain from paying these funds that Transamerica not’ only

could legally disburse them, but, indeed, was under an obligation ©.

00 G0 20 bey ‘vicsun: of 0: S206. SEENON: RR Re

collecting funds from the ‘purchaser.

COULD. AN INJUNCTION OR STAY

HAVE BEEN OBTAINED?) .

Appellant contends that she could have obtained no taeintiies

relief ‘pending the appeal, and therefore it would be unjust to -

hold that her failure to seek and obtain injunctive relief pending

‘appeal excused Transamerica-Title in disbursing the funds under .

their trust. With this we do not agree. The rules and stacuses of

our State are more than adequate to protect an appellant in this —

type of situation upon proper application. § 12-1801 ARS. Rule .

62(d), (e), and -(h), Ralse of, Saye Prenton, I ARS Bae

= 62¢h) pl jap

239,

sre neemeemeeeeaememaememmmeemmmammnaaneeaimaemmmmmacamaamemmammmmmaammmmnmaa aaa ae

? 6.9 ° 36 ;

WAS TRANSAMERICA TITLE A

' CONSTRUCTIVE TRUSTEE?

It is contended by the appellant char the appellee, Transamerica

Title, is liable for wrongly disbursing the proceeds to Mrs. Van-Y .

because it was a constructive trustee for the benefit of the appel-

lant. The Supreme Court im Markel v. Phoenix Title and Trust

Company, supra, 100 Ariz. at page 58, 410 P.2d at page 665, -

Sern nore or A Sratecmns wae men Roget Os Frans, .

§ 471, page 8:

[Atanas nn Scaae Geme th tn on

@ constructed trust is bound by no unyielding formula. The

ee ee,

ayehaoertey- oto \

whenever the S eiledslaaiy wale 3 that the

ee aciia' ti initieal be the Gar who beh be title

Linder v. Lewis, Roca, Scoville & 85 Ariz. 118,

Title acted in such manner that the “conscience of equity” would

impose a constructive trust upon it. It knew of the judgment of

. . the Superior Court and had every right to rely upon said judgment

~ until the judgment was reversed or it was enjoined. Nothing in :

the opinion of our Supreme Court in Markel v. Phoenix Title and |

Trust Company, supra, indicates that Phoénix Title was a con-

structive trustee. On the contrary, a careful reading of that opinion

indicates that the Supreme Court concerned itself-only with the

question of whether the defendant, Virginia Van-Y, was a con-

- structive trustee of the proceeds of the trust wherein she was the

' fiest beneficiary and Phoenix Title the trustee. Nothing was said

to indicate that Phoenix Title was a constructive trustee. The

37 ; :

appellant is limited to a claim against Mrs. Van-Y and not from

Transamerica Title. We. find no error in the trial court's, deter-

mination that Transamerica was not a constructive trustee. ©

WAS THE DEFENDANT'S MOTION .

FOR SUMMARY JUDGMENT —

PROPERLY GRANTED?

The final point raised by the appellant is the granting of the

motion for summary judgment. Rule 56(e) of the Rules of Civil

Procedure states: ;

tions or denials of his p but his response, by affidavits

or as otherwise provided in this rule, must set forth specific

facts showing that there is a genuine issue for trial. If he does

by “Reply to Motion” which contained memorandum of au-

The court in the judgment recited as follows:

“It appearing and the Court. finding that the plaintiff did not

respond to the Motion for Summary Judgment other than by

her Memorandum filed herein, as aforesaid, and

“It further appearing and the Court finding that the pleadings,

depositions, and admissions on file, together with the affidavit

filed on behalf of Transamerica Title Insurance Company

that there is no genuine issue as to any material fact as

the plaintiff and Transamerica Title Insurance ~

ry;

NAN SAN SRA RECN AR SRR, I Reba min

38

Appellant contends in its brief that “there was nothing to contro-

vert, and therefore, no controverting affidavit was necessary.”

Although our Supreme Court has stated that the 1963 amend-

ment to Rule 56(¢) did not change the meaning of the rule but

merely. clarified what had always been their purpose, Wakeham.v.

Omega Construction Company, 96 Ariz. 336, 395 P.2d 613

(1964), we feel that by adding the words “if appropriate” in the

last line of Rule 56(¢) makes it clear that where a party fails to

controvert an affidavit in support of a motion for summary judg-

ment, ‘the court may grant the motion for summary judgment

only when it finds from the recotd: thet the granting of the

motion is appropriate.

In the instant case construing the record in a light most favor-

. able to the party opposing the motion, Madsen v. Fisk, 5° Ariz.

App. 65, 423 P.2d 141 (1967), we feel the court was correct jn

eet

Judgment affirmed.

DONOFRIO, J, and WILLIAM H. GOODING, Superior

Court Judge, concur.

NOTE: Judge HENRY S. STEVENS having ‘requested that

he be relieved from consideration of this matter Judge WILLIAM

oa

drueminstion of this decision. \

wi

}

W fee

Aote i

\

Q@

ie)

39

_ APPENDIX F

410 P.2d 662

100 Ariz. 53.

Edna (Van-Y.) MARKEL,

-Appellant, :

v. he

PHOENIX TITLE & TRUST CO,; Trustee, p No. 7525

and Virginia R. Van-Y,,

, oe ie

4

SUPREME COURT OF ARIZONA

. . IN DIVISION

° Feb. 2, 1966

Alan Philip Bayham, Phoenix, for appellant.

Carl W. Divelbiss, Phoenix, for appellees.

BERNSTEIN, Vice Chief Justice.

Plaintiff, Edna Markel, appeals from the judgment. of the

Superior Court of Maricopa County, GRANTING DEFEN-

DANT’S MOTION .FOR JUDGMENT AT THE CLOSE OF

PLAINTIFF'S CASE. Plaintiff was divorced from Earl E. Van-y

in December of 1939 in Wichita, Kansas. Defendant, Virginia

Van-y, was married to Earl E. Van-y from February 1941, to the

- time of his death, in Wichita, in April, 1959. Before her hus-

?

band’s death defendant sold a parcel of land situate in Arizona

previously held in his name. It is this sale which gave rise to the

present cause of action. Simply stated, plaintiff seeks to impose a |

constructive trust on one-half of the $25,000 realized from the

sale of this realty in Maricopa County, Arizona.

On December 13, 1939, the District Court of Sedgwick

County, Kansas, entered the following judgment in the divorce

proceedings:

“The Court further finds that a property settlement has been

entered into in lieu of alimony, which is satisfactory to the

parties, snd the some is heen conned an sabcieal, Bais 4,

. . . - . .

| . ee bee

‘and made a part hereof just as fully and completely as if herein

eet out.” / Pree ee ee |

cha . * . ®

“Ie is further CONSIDERED, ORDERED, ADJUDGED and

DECREED thex the ey settlement between the plaintiff

and defendant, in lieu of alimony, be and the same. is hereby

The following is Exhibit A, part of the property settlement ap-

proved by the Kansas court: | :

“NOW, THEREFORE, In consideration of the covenant: and

en See ee oe ene sey (Barl BE.

any) agrees to give to first party (plaintiff) one-half interest

in any funds that may be obtained through lease sale or dis-

nde way of a certain twenty (20) acres, covering the

described property, to-wit: ”

Defendant contends this Kansas settlemient was in lieu of ali-

mony in that it was not for a definite and fixed sum and it was

void. However, Feldmann v. Feldmann, 166 Kan. 699, 204 P.2d

_ 742 holds that property settlements, as distinguished from ali-

mony, need not be for a fixed sum. The following quote from the

“@ © © The trouble with appellant's position is that the deci-

sions on which he relies are not in point and that he entirely

overlooks another line of cases, applicable to the facts and

circumstances here involved, bolding there is a distinct differ-

ence between what the court bas authority to do under the

statute with respect t6 alimony in a divorce case and what the

‘parties may agree upon, We are not disposed to labor those

decisions. It will suffice to say they-hold, see Hyde v. Hyde,

_ 143 Kan. 660, 56 P.2d 437, Petty v. Petty, 147 Kan. 342,

76 P.2d 850, and cases therein cited, a husband and wife may

enter into a marriage settlement whereby they agree upon

a division of property as between themselves and payments to

be made by the husband to the wife for the care and support

\ of their children, including maintenance of the wife ss well -

j and custody, and that such

agreement, where it has been freely and fairly made, may ~

. j in a divorce action and that

the judgment thereby entered as to payments to be so made

f

E

:

k

41

so den ile weld isin itech es diel edie

_ments is neither itemized ag to purpose nor definitely fixed as

to amount, * * *” (Emphasis in ofiginal.). -

Further, defendant is attempting to collaterally attack a sister -

state judgment without first showing there was a lack of juris-.

' diction over the parties or of the subject matter. In Durfee v.

Duke, 375 U.S. 106, 84 S.Ct, 242, 11 L.Ed.2d 186, the Supreme

Court said: :

“However, while it is established that a court in one Scie,

when asked to give-effect to the judgment of # court in an-

other State, may constitutionally inquire into the foreign

court's jurisdiction to render that judgment, the moles a de-

cisions of this Court have carefully delineated the permissible

scope of. such an inquiry. From these decisions there emerges

, the general rule chat a judgment is entitled to full faith and

credit—even as to questions of jurisdiction—when the second

| court’s inquiry discloses that those questions have been fully

and fairly litigated and finally decided: in the court which

— the original judgment." ” 375 US. at 111, 84 S.C. at

¥

Defendant further contends the judgment of the Kansas court

attempted to transfer title to land situated in Arizona and this

is in violation of the principle enunciated in Fall v. Eastin, 215

US. 1, 30 S.Ct. 3, 54 L.Ed. 65 which prohibits one jurisdiction

from directly affecting title to land in another jurisdiction. The

Kansas court expressly left title in the name of Earl E. Van-y and

gave plaintiff a “one-half interest in any funds * * * obtained

through lease or sale” (emphasis added) of the property. We

believe MacNonald:v. Dexter, 234 Ill. 517, 85 NLE. 209, is quice

similar to the case before us. There, a Missouri court denied a

party an interest in the proceeds of land situated in Illinois. All

parties in interest were before the Missouri court. Illinois held

.that an adjudication as to an interest to proceeds in land situated

in Illinois was not an adjudication directly as to the title of the

land itself. The court explained its holding as follows:

“* * * This contract Obviously was not intended to give —

. appellant any right to have a portion of the land in question _

conveyed to him or to > give him -. interest « any kind in the

420

land itself, but only an interest in the ‘net profits that might

arise from its sale, w right or claim appellant might

have as to the profits “mot require the court to deal

directly with the land S74 and-would not, therefore, affect

‘the real estate; hence it affords no objections to the jurisdiction

of the Missouri court, which had all the parties in interest be-

fore it, even though the land out of which the profits were to

arise was without the jurisdiction of the court. ©-8 © 234 Mil.

at. 524, 85 N.E. at 212. ;

_.. Defendant contends there is a lack of privity between her and

her deceased husband so that she takes his land free of the con-

structive trust plaintiff asserts exists in her favor. We and the

. » law is against defendant on this issue‘ for,

‘“# # * A privy is one who, after rendition of the Seliaaites,

has acquired an interest in the subject matter. affected by the .

judgment through or under one of the parties, as by inheri-

tance, succession, or purchase.”’ In re Hanson’s Estate, 126

Cal.App.2d 71, 77, 271 P.2d 563, 567. Cited with approval

in National Public Service Insurance Co. v. Welch, 81 Ariz.

156, 302 P.2d 926.

OO OE EE ne ae Oe

detail all of the various encumbrances and conveyances prior to:

| the date defendant obtained her warranty deed to ‘the land in-

- issue. Suffice it to say that on February 12, 1957 Earl E. Van-Y

transferred a warranty deed to’ his attorney O. W. Helsel; that

on May 5, 1957, O. W. Helsel transferred a quit claim deed to

Galen Childers (defendant’s brother-in-law); that on May 17,

_ 1957 Galen Childers transferred a warranty deed to defendant

and on September 6, 1957, Earl E. Van-y’ gave defendant a dis-

claimer deed. Defendant admitted, at trial, she was at all times

aware of plaintiff's property settlement of 1939. Further, the .

consideration in the final conveyance to her was $500 and the

land shortly thereafter sold for $25,000. .

a ie ee a ie ae coe ok

his case, the appellate tribunal must consider the evidence and

inferences to be*drawn therefrom in a light most favorable to

plaintiff. We believe the facts in this case brought out at trial

-

43

create a a prima facie case of constructive fraud. See Joseph v. Tib-

shetany, 88 Ariz. 205, 354 P.2d 254.

A constructive trust expresses the idea that a defendant is under

an equitable duty to give the complainant the benefit of property

held. A wrongful holding begs relief whether the type of. in-

justice is old or new regardless of whether actual fraud exists. — -

“# * * where ‘actual fraud does not exist in the acquisition of

property, a constructive trust will arise whenever the circum-

stances make it inequitable that the property should be re-

tained by the one who holds ‘the legal title. * * The forms —

and varieties of these trusts are practically without limit and

the principle is applied wherever it is necessary for the ob-

taining of complete justice.” Linder v. Lewis, Roca, Scoville

and Beauchamp, 85 Ariz. 118, 123, 124, 333 P.2d 286, 290.

See Bogert on Trusts, § 471, Second edition.

“* * * A constructive trust is the formula through which the -

conscience of equity finds expression. When property has been

acquired in such circumstances that the holder of the legal title

may not in good conscience retain the beneficial interest, equity

converts him into a trustee. * * * A’ court of equity in decreeing

a constructive trust is bound by no unyielding formula. The

equity of the transaction must shape the measure of relief.”

Cardozo, C. J., in Beatty v. Guggenheim Exploration Co., 225

_ N.Y. 380, 386, 389, 122 N.E. 378, 380, 381. © <>

Finally,. appellee contends that appellant’s first assignment of

error does not specify with particularity the error relied upon.

_ However, Rule 5(c), 17 A.R.S. having been deleted by this

court there is no merit m this argument. Nor do we believe that —

the defense of laches is here applicable. It was not n@Gessary

for appellant to enforce her tight to an interest in one-half of

the funds from the sale of the twenty acres until there was a

bona-fide sale.

IN THAT DEFENDANT NEVER PRESENTED HER CASE .

THERE MUST BE A NEW TRIAL CONSISTENT WITH

THIS DECISION. The judgment of the trial court is reversed.

STRUCKMEYER, C. J., and UDALL, J., concurring.