As used in this chapter, the term:
The Attorney General has the rights of a qualified beneficiary with respect to a charitable trust as defined in Code Section 53-12-170, and a person appointed to enforce a trust created for the care of an animal under Code Section 53-12-28 also has the rights of a qualified beneficiary.
(Code 1981, §53-12-2, enacted by Ga. L. 2010, p. 579, § 1/SB 131; Ga. L. 2011, p. 551, § 6/SB 134; Ga. L. 2017, p. 193, § 28/HB 143; Ga. L. 2018, p. 1089, § 7/SB 301.)
The 2011 amendment, effective May 12, 2011, added the last paragraph in paragraph (10).
The 2017 amendment, effective June 1, 2017, substituted ", other than Georgia, and chartered or licensed under the laws of such state" for "which borders upon this state, specifically, Florida, Alabama, Tennessee, North Carolina, or South Carolina" in subparagraph (4)(B).
The 2018 amendment, effective July 1, 2018, added ", and shall include digital assets and electronic communications, as such terms are defined in Code Section 53-13-2" at the end of paragraph (9).
Law reviews.- For article on the 2018 amendment of this Code section, see 35 Ga. St. U. L. Rev. 204 (2018). For note discussing problems with profits generated by escrow account, and proposing federal legislative reform, see 10 Ga. St. B.J. 618 (1974). For comment on First Nat'l Bank & Trust Co. v. Roberts, 187 Ga. 472, 1 S.E.2d 12 (1939), see 1 Ga. B.J. 50 (1939).
JUDICIAL DECISIONSANALYSIS
General Consideration
Editor's notes.
- In light of the similarity of the statutory provisions, decisions under former Civil Code 1910, §§ 3732 and 3739, former Code 1933, §§ 108-104, 108-105, 108-106, and 108-108, former O.C.G.A. §§ 53-12-2,53-12-20, and53-12-26, and former Code Section53-12-90 of the 1991 Trust Act are included in the annotations for this Code section.
Trust is an equitable obligation, either express or implied, resting upon a person by reason of a confidence reposed in that person, to apply or deal with property for the benefit of some other person, or for the benefit of oneself and another or others, according to such confidence. Smith v. Francis, 221 Ga. 260, 144 S.E.2d 439 (1965) (decided under former O.C.G.A. § 53-12-2).
Beneficial interest, when property is held in trust, is in some other person than one holding title. Wright v. Piedmont Eng'r & Constr. Corp., 106 Ga. App. 401, 126 S.E.2d 865 (1962) (decided under former O.C.G.A. § 53-12-2).
Trust fund may exist notwithstanding that beneficiaries may not be in existence at time of its creation or be specifically named. Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 182 Ga. 348, 185 S.E. 504 (1936) (decided under former O.C.G.A. § 53-12-2).
Property that can be subject of trust.
- Every kind of valuable property, both real and personal, that can be assigned at law may be a subject matter of trust. Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 182 Ga. 348, 185 S.E. 504 (1936) (decided under former O.C.G.A. § 53-12-2).
Beneficiary was not the settlor of a trust created by one's father on the basis of one's subsequent contribution of property to the corpus of the trust. Ivey v. Ivey, 266 Ga. 143, 465 S.E.2d 434 (1996) (decided under former O.C.G.A. § 53-12-2).
Parent of trust beneficiaries has no standing as an interested person.
- Parent 1 of children who were beneficiaries of an inter vivos trust established by parent 2 that covered any part of the children's expenses not met by parent 2's support payments after the divorce of the parents had no individual standing to pursue an action for breach of the trust agreement, removal of a trustee, or appointment of a receiver under former O.C.G.A. § 53-12-176 on the ground that parent 1 routinely provided funds for the support of the children; parent 1 was not an interested person as defined in former O.C.G.A. § 53-12-2 (see O.C.G.A. § 53-12-2) because support payments belonged to the children and not to parent 1, the obligation to support the children was that of both parents and not of the trust, and parent 1's provision of funds to support the children gave parent 1 no interest in or claim against the trust. Richards v. Richards, 281 Ga. 285, 637 S.E.2d 672 (2006) (decided under former O.C.G.A. § 53-12-2).
Trust estates.
- Estates may be created not for benefit of grantee but for use of some other person; they are termed trust estates; no formal words are necessary to create such an estate and whenever a manifest intention is exhibited that another person shall have the benefit of the property the grantee shall be declared a trustee. Finch v. Miller, 178 Ga. 37, 172 S.E. 25 (1933) (decided under former O.C.G.A. § 53-12-2).
Introduction of evidence.
- Parties in an action to establish a trust are entitled to introduce, and the jury is entitled to consider, as tending to prove the intention of the parties, evidence relating to the nature and circumstances of the transactions and the conduct and declarations of the parties. Epps v. Wood, 243 Ga. 835, 257 S.E.2d 259 (1979) (decided under former O.C.G.A. § 53-12-2).
Release and indemnification agreement did not meet definition of trust instrument.
- Trial court erred in ruling that the release provisions were facially void under the limits on trust instruments imposed by former O.C.G.A. § 53-12-194 and were not subject to enforcement through a breach of contract claim because the release and indemnification agreement did not meet the definition of a trust instrument set forth in former O.C.G.A. § 53-12-2 (see O.C.G.A. § 53-12-2), and the beneficiaries and trustee executed them long after the creation of the trust and several years after the settlor's death. Heiman v. Mayfield, 300 Ga. App. 879, 686 S.E.2d 284 (2009) (decided under former O.C.G.A. § 53-12-2).
Constructive trust may only be an implied trust because all express trusts must be in writing under Georgia law. Gooden v. Buffalo Sav. Bank, 21 Bankr. 456 (Bankr. N.D. Ga. 1982) (decided under former O.C.G.A. § 53-12-2).
Insufficient proof of the existence of an implied trust.
- Because a former husband did not present proof of the existence of an implied resulting trust under former O.C.G.A. §§ 53-12-2(3),53-12-90,53-12-91, and53-12-92 (see O.C.G.A. §§ 53-12-2,53-12-130, and53-12-131), the trial court did not err when the court granted judgment notwithstanding the verdict to the executor and the beneficiaries. Burnett v. Holroyd, 278 Ga. 470, 604 S.E.2d 137 (2004) (decided under former O.C.G.A. § 53-12-2).
An express trust cannot be created by parol and engrafted on an absolute deed. An express trust may not be impressed by parol evidence upon a deed. Fowler v. Montgomery, 254 Ga. 118, 326 S.E.2d 765 (1985) (decided under former O.C.G.A. § 53-12-2).
Trusts are implied: (1) whenever the legal title is in one person, but the beneficial interest, either from the payment of the purchase money or other circumstances, is either wholly or partially in another; (2) when, from any fraud, one person obtains the title to property which rightly belongs to another; and (3) when, from the nature of the transaction, it is manifest that it was the intention of the parties that the person taking the legal title shall have no beneficial interest. Hemphill v. Hemphill, 176 Ga. 585, 168 S.E. 878 (1933) (decided under former Civil Code 1910, §§ 3732 and 3739).
Implied trusts are divided into two categories: resulting trusts and constructive trusts, and sometimes it is exceedingly difficult to differentiate between the two; but ordinarily distinctions are unnecessary since both are implied trusts and are governed by the same rules. Hancock v. Hancock, 205 Ga. 684, 54 S.E.2d 385 (1949) (decided under former Code 1933, §§ 108-104 and 108-106).
Implied trusts are either resulting or constructive, the latter arising if there is fraudulent conduct and no intent of the parties is involved. The implied resulting trust is based on the intention of the parties. Hall v. Higgison, 222 Ga. 373, 149 S.E.2d 808 (1966) (decided under former Code 1933, § 108-106).
Generally, trusts arising under the first and third classification are resulting trusts, while those arising under the second classification are constructive trusts. Not infrequently in the case of resulting trusts no fraud exists, such trusts resting primarily on an implication of law from the nature of the transaction; but generally, if not necessarily, the element of fraud is present in constructive trusts. Hancock v. Hancock, 205 Ga. 684, 54 S.E.2d 385 (1949) (decided under former Code 1933, §§ 108-104 and 108-106).
Constructive trust is an implied trust, and it has long been the rule in this state that implied trusts are not within the statute of frauds. Williams v. Whitfield, 242 Ga. 639, 250 S.E.2d 486 (1978) (decided under former Code 1933, § 108-106).
Procedure when trust fails entirely.
- When the trust fails entirely, and the properties have to be sold as all parties agree is the case, then except for the amount set aside for charitable items, the testator has died intestate as to the excess in proceeds from that sale, and these funds must be held in a resulting trust for the heirs at law of the testator only. Green v. Austin, 222 Ga. 409, 150 S.E.2d 346 (1966) (decided under former law).
Introduction of evidence concerning declarations of the parties.
- Parties in an action to establish a trust are entitled to introduce, and the jury is entitled to consider, as tending to prove the intention of the parties, evidence relating to the nature and circumstances of the transactions and the conduct and declarations of the parties. Epps v. Wood, 243 Ga. 835, 257 S.E.2d 259 (1979) (decided under former Code 1933, § 108-101 et seq.)
Under Georgia law, real property can be contributed as an asset to a partnership by oral agreement; each partner then holds an equitable interest in the assets, regardless of who holds legal title. Darby v. United States, 496 F. Supp. 943 (S.D. Ga. 1980) (decided under former Code 1933, § 108-106).
Principle of equitable division of property in a divorce action, according to the equitable interests of the parties, does not supplant the implied trust doctrine. Harrell v. Harrell, 249 Ga. 170, 290 S.E.2d 906 (1982) (decided under former Code 1933, § 108-116).
Existence of an implied trust is a question for the jury when there was considerable evidence that the brother was made the beneficiary of a policy for the benefit of the minor children and it was error to dismiss an action to establish the trust. Conner v. Conner, 250 Ga. 27, 295 S.E.2d 739 (1982) (decided under former Code 1933, §§ 108-104 and 108-106).
Payment of purchase money and transfer must be at same time.
- If the payment of the purchase money and the transfer to the record owner do not take place at or near the same time, no implied trust is created. Nelson v. United States, 821 F. Supp. 1496 (M.D. Ga. 1993) (decided under former O.C.G.A. § 53-12-26).
No constructive trust found.
- When a deceased has allowed a life insurance policy to lapse in derogation of a divorce decree and has acquired a new policy and designated a new beneficiary, this, without more, will not give rise to a constructive trust. Weiner v. Goldberg, 251 Ga. 470, 306 S.E.2d 660 (1983) (decided under former O.C.G.A. § 53-12-26).
Proceeds from sale of marital property.
- Proceeds from the sale of real property belonging to a husband and wife, ordered sold after their divorce, were subject to a trust in the hands of the husband and the mere passage of the proceeds through one year's support proceedings did not divest equity of the power to enforce the trust. The probate court was not authorized to set aside any year's support property to the deceased husband's new wife. Kelly v. Johnston, 258 Ga. 660, 373 S.E.2d 7 (1988) (decided under former O.C.G.A. § 53-12-26).
Sufficiency of evidence.
- See Lee v. Lee, 260 Ga. 356, 392 S.E.2d 870 (1990) (decided under former O.C.G.A. § 53-12-26).
Implied trust created.
- When the contract of rescission was executed, the equity in the house and lot reverted to the vendor (in an exchange of property), and it became impressed with a trust, and the vendee held the property for the benefit of the vendor as an implied trust. Eller v. McMillan, 174 Ga. 729, 163 S.E. 910 (1932) (decided under former Civil Code 1910, §§ 3732 and 3739).
Cited in Macy v. Hays, 163 Ga. 478, 136 S.E. 517 (1927); Hubbard v. Bibb Brokerage Co., 44 Ga. App. 1, 160 S.E. 639 (1931); Hibble v. Mutual Oil Co., 175 Ga. 381, 165 S.E. 219 (1932); Joseph v. Citizens & S. Nat'l Bank, 210 Ga. 111, 78 S.E.2d 193 (1953); Erskine v. Klein, 218 Ga. 112, 126 S.E.2d 755 (1962); Tyler v. Borland, 157 Ga. App. 332, 277 S.E.2d 325 (1981); Claxton v. Small Bus. Admin. of United States, 525 F. Supp. 777 (S.D. Ga. 1981); Young v. Hinton, 163 Ga. App. 692, 295 S.E.2d 150 (1982); United States v. Williams, 581 F. Supp. 756 (N.D. Ga. 1982); Palmer v. Forrest, Mackey & Assocs., 251 Ga. 304, 304 S.E.2d 704 (1983); Georgia Farm Bureau Mut. Ins. Co. v. Smith, 179 Ga. App. 399, 346 S.E.2d 848 (1986); Wasson v. Waid, 188 Ga. App. 177, 372 S.E.2d 508 (1988); Dixon v. Murphy, 259 Ga. 643, 385 S.E.2d 408 (1989); Eason v. Farmer, 261 Ga. 675, 409 S.E.2d 509 (1991); Canadyne-Georgia Corp. v. NationsBank, 183 F.3d 1269 (11th Cir. 1999); Rose v. Waldrip, 316 Ga. App. 812, 730 S.E.2d 529 (2012), cert. denied, No. S12C1888, 2012 Ga. LEXIS 981 (Ga. 2012); Ansley v. Raczka-Long, 293 Ga. 138, 744 S.E.2d 55 (2013).
Separation of Legal Title from Beneficial Interest
An implied trust may arise from the payment of a portion of the purchase money. A trust of this kind does not arise from, or depend upon, any agreement between the parties. It results from the fact that one person's money has been invested in land, and the conveyance taken in the name of another. It is a mere creature of equity. Hudson v. Evans, 198 Ga. 775, 32 S.E.2d 793 (1945) (decided under former Code 1933, §§ 108-106 and 108-108); McCollum v. McCollum, 202 Ga. 406, 43 S.E.2d 663 (1947);(decided under former Code 1933, § 108-106).
An implied trust results from the fact that one person's money has been invested in land, and the conveyance taken in the name of another. Bullard v. Bullard, 214 Ga. 122, 103 S.E.2d 570 (1958) (decided under former Code 1933, § 108-116); Wells v. Wells, 216 Ga. 384, 116 S.E.2d 586 (1960);(decided under former Code 1933, § 108-116).
Creation of purchase money resulting trust generally.
- Resulting trust which arises solely from the payment of the purchase price is not created, unless the purchase money is paid either before or at the time of the purchase. Trusts implied from the payment of the purchase money or a part thereof must result, if at all, at the time of the execution of the conveyance. Hall v. Edwards, 140 Ga. 765, 79 S.E. 852 (1913) (decided under former Civil Code 1910, § 3739); Tanner v. Hinson, 155 Ga. 838, 118 S.E. 680 (1923);(decided under former Civil Code 1910, § 3739).
Person in whose favor a trust is claimed to result must have paid the purchase money as one's own. If one merely advances the whole or a part of the purchase money as a loan, no implied trust arises. Magid v. Byrd, 164 Ga. 609, 139 S.E. 61 (1927) (decided under former Code 1910, § 3739).
When the purchase money for property is paid by one and the legal title taken in the name of another the person named in the conveyance is but a trustee of the one who paid the consideration. Hibble v. Mutual Oil Co., 175 Ga. 381, 165 S.E. 219 (1932) (decided under former Civil Code 1910, § 3739); McCollum v. McCollum, 202 Ga. 406, 43 S.E.2d 663 (1947); Lominick v. Lominick, 213 Ga. 53, 96 S.E.2d 587 (1957) (decided under former Civil Code 1910, § 3739);(decided under former Civil Code 1910, § 3739).
To set up and establish such implied trust, it is only necessary to allege and prove that one person furnished all or a portion of the purchase money of the land, and that the deed was taken in the name of the person to whom the money was so furnished. Hemphill v. Hemphill, 176 Ga. 585, 168 S.E. 878 (1933) (decided under former Civil Code 1910, § 3739).
An implied trust results from the fact that one person's money has been invested in land and conveyance taken in the name of another and such implied trust may arise from the payment of a portion of the purchase money. Hemphill v. Hemphill, 176 Ga. 585, 168 S.E. 878 (1933) (decided under former Civil Code 1910, § 3739).
Ordinarily, when the parties are not closely related and one party pays the purchase price of property and has the conveyance made to another, an inference arises, even in the absence of knowledge of the conveyance by the grantee, that the conveyance is in trust for the payor; and a resulting trust may be established, even without proof of an agreement, understanding, or obligation on the part of the grantee to hold or reconvey. Williams v. Thomas, 200 Ga. 767, 38 S.E.2d 603 (1946) (decided under former Code 1933, § 108-106).
In order to set up an implied resulting trust in favor of one paying the purchase money when the title is placed in another, it is indispensable that it be shown that the purchase price was paid by the beneficiary of the trust at or before the time the conveyance was made, or that it be shown, other than by a void parol agreement, that it was the intent and purpose of the parties. Such an intent may be established by proof of an initial payment, by the one claiming the benefit of the trust, at or before the time the title is conveyed to another. Loggins v. Daves, 201 Ga. 628, 40 S.E.2d 520 (1946) (decided under former Code 1933, §§ 108-104 through 108-106); Hall v. Higgison, 222 Ga. 373, 149 S.E.2d 808 (1966);(decided under former Code 1933, § 108-106).
Resulting trust which arises solely from the payment of the purchase price is not created, unless the purchase money is paid either before or at the time of the purchase. Trusts implied from the payment of the purchase money or a part thereof must result, if at all, at the time of the execution of the conveyance. But when a trust is created at the time of the execution of the conveyance, the recovery or decree must be in proportion to the total amount of purchase money paid by the one seeking to establish the trust. Estes v. Estes, 205 Ga. 814, 55 S.E.2d 217 (1949) (decided under former Code 1933, § 108-106).
Trusts implied from the payment of the purchase money or a part thereof must result, if at all, at the time of the execution of the conveyance, when there is, in obtaining such conveyance, no fraud or concealment to the injury of the person paying such purchase money. Johnson v. Johnson, 210 Ga. 795, 82 S.E.2d 831 (1954) (decided under former Code 1933, § 108-106).
Trust of a legal estate results to the person who advances the purchase money or on whose behalf the money is advanced; when the money is advanced by way of loan to the purchaser, and the title is taken in the name of the lender as security, a trust results to the purchaser. Lominick v. Lominick, 213 Ga. 53, 96 S.E.2d 587 (1957) (decided under former Code 1933, § 108-106).
In order to prove an implied resulting trust in favor of one paying purchase money where title is placed in another it must be shown that the purchase price was paid by the beneficiary of the trust at or before the time the conveyance was made, or it must be shown that it was the intent and purpose of the parties at the time of the conveyance that the one claiming the benefit of the trust should pay the purchase money. Georgian Villa, Inc. v. City Nat'l Bank, 10 Bankr. 79 (Bankr. N.D. Ga. 1981) (decided under former Code 1933, § 108-106).
Intention of parties is the essential element of an implied resulting trust. Georgian Villa, Inc. v. City Nat'l Bank, 10 Bankr. 79 (Bankr. N.D. Ga. 1981) (decided under former law).
Intent may be established by proof of initial payment by one claiming benefit of the trust at or before the time title is conveyed to another. Georgian Villa, Inc. v. City Nat'l Bank, 10 Bankr. 79 (Bankr. N.D. Ga. 1981) (decided under former law).
Devisee's legally protected interest in devised property, depending on context, is labeled inchoate title, equitable title, or beneficial interest. Moore v. Lindsey, 662 F.2d 354 (5th Cir. 1981) (decided under former Code 1933, § 108-106).
There are certain well-established rules of law which must be met in order to create a trust. First, it must be shown that the money was not a loan. In order for a trust to result from paying only a part of the purchase money, the actual amount must be proven. It is indispensable that the purchase money be paid before or at the time of the purchase. Reed v. Reed, 217 Ga. 303, 122 S.E.2d 253 (1961) (decided under former Code 1933, § 108-106).
"The person in whose favor a trust is claimed to result must pay the purchase money as his own; if he merely advances it as a loan, no trust will result." So, while it is true that M. did retain the physical custody of the policy, and advanced the money with which to pay the premiums, yet these premiums were charged against the insured on the insured's general account with that firm and no implied trust was created. The mere physical custody of the policy would not, of itself create a trust. Johnston v. Coney, 120 Ga. 767, 48 S.E. 373 (1904) (decided under former Code 1895, § 3159).
When a husband took the wife's distributive share and applied it to buying land from her father's estate with her full knowledge and consent, not as her agent, but for himself, borrowing the remainder of the money to finish paying for it, taking title in his own name, no implied trust as to a part of the land will be implied in favor of the wife; it will be treated as a gift. Stokes v. Clark, 131 Ga. 583, 62 S.E. 1028 (1908) (decided under former Code 1895, § 3159).
An implied trust results from the fact that one person's money has been invested in land and the conveyance taken in the name of another. Such implied trust may arise from the payment of a portion of the purchase money. Berry v. Brunson, 166 Ga. 523, 143 S.E. 761 (1928) (decided under former Civil Code 1910, § 3739).
To set up and establish an implied trust, it is necessary only to allege and prove that one person furnished all or a portion of the purchase money for the land, and that the deed was taken in the name of the person to whom the money was furnished. Barnes v. Barnes, 230 Ga. 226, 196 S.E.2d 390 (1973) (decided under former Code 1933, § 108-116).
Substitution of own funds for those received immaterial.
- When a trust would be implied from payment of the purchase price of land with money furnished by another person, a trust will be implied if, after receiving the money to buy the land, the recipient uses the money for other purposes, and, substituting one's own money for that furnished to the recipient, pays for the land, intending to make the payment for the other person. Banks v. Bradwell, 140 Ga. 640, 79 S.E. 572 (1913) (decided under former Code 1910, §§ 3739 and 3780).
Payment in services sufficient.
- When X. and Y. bought land together, X. paying X's part in certain services, but the title was taken in Y. for a special purpose, an implied trust existed in favor of X. Swift v. Nevius, 138 Ga. 229, 75 S.E. 8 (1912) (decided under former Civil Code 1910, § 3739).
Trusts are implied whenever the legal title is in one person, but the beneficial interest, either from the payment of the purchase money or other circumstances, is either wholly or partially in another. Eller v. McMillan, 174 Ga. 729, 163 S.E. 910 (1932) (decided under former Civil Code 1910, §§ 3732 and 3739).
In determining the real source of purchase money for properties courts look to the substance of the transactions in which the properties were bought rather than to their form. When one half of the purchase money is fairly attributable to one party, courts award to that party a one-half interest in the properties under the theory of a purchase money resulting trust. Crymes v. Crymes, 240 Ga. 721, 242 S.E.2d 30 (1978) (decided under former Code 1933, § 108-106).
Statute rendered inapplicable upon divestment of legal title.
- Principle that a trust is implied when the purchase price is paid by one and the legal title is placed in another does not apply when the person who paid the purchase money to acquire legal title in an undivided one-half interest in the land later divests oneself of one's legal title by a warranty deed. Murrah v. First Nat'l Bank, 225 Ga. 613, 170 S.E.2d 399 (1969) (decided under former Code 1933, § 108-106).
Issue of resulting trust in equitable property division a jury question.
- In an action for equitable property division to establish deceased wife's estate's interest in a land tract titled in her husband's name, the issue of the existence of a resulting trust is for the jury to determine. Owens v. Owens, 248 Ga. 720, 286 S.E.2d 25 (1982) (decided under former Code 1933, § 108-116).
Evidence of Intent
Practice in former marriage.
- When a husband maintained that his practice with a former wife relative to legal and beneficial ownership was understood by his present wife, and that the practice was continued with her consent, evidence of the similar arrangement in the former marriage was relevant to illuminate the nature of transactions growing out of this marriage. Harrell v. Harrell, 249 Ga. 170, 290 S.E.2d 906 (1982) (decided under former Code 1933, § 108-116).
Insufficient evidence of a resulting trust.
- To the extent that a jury could find that decedent did not intend defendant to be the beneficial as well as the legal owner of an entire certificate account, a resulting trust was not implied. Hopkins v. Moore, 207 Ga. App. 383, 427 S.E.2d 853 (1993) (decided under former O.C.G.A. § 53-12-90).
Trial court properly granted summary judgment to a parent and trustee of the parent's trust in a suit brought by a child to obtain a half interest in certain real property by the imposition of a resulting trust as there was no dispute that no consideration was paid by the child for the property when the property was acquired. Rosado v. Rosado, 291 Ga. App. 670, 662 S.E.2d 761 (2008) (decided under former O.C.G.A. § 53-12-90).
Fraud
Trust is implied, when from any fraud, one person obtains title to property which rightfully belongs to another. Jansen v. Jansen, 180 Ga. 318, 178 S.E. 654 (1935) (decided under former Civil Code 1910, § 3739).
Essential ingredient which gives rise to a constructive trust is fraud, and if the question involves a deed to land, and the legal title to the land is sought to be recovered by the enforcement of an oral agreement to reconvey the land, fraud must have existed contemporaneously with the acquisition of the land by the one who is sought to be charged as trustee ex maleficio. Bennett v. Bennett, 212 Ga. 128, 91 S.E.2d 29 (1956) (decided under former Code 1933, § 108-106).
An implied trust arises wherever a person acquires the legal title to land or other property by means of an intentionally false and fraudulent verbal promise to hold the property for a certain specified purpose; and after having thus fraudulently obtained title, one retains, uses, and claims the property absolutely as one's own, so that the whole transaction by means of which the ownership is obtained is in fact a scheme of actual deceit. Jansen v. Jansen, 180 Ga. 318, 178 S.E. 654 (1935) (decided under former Civil Code 1910, § 3739).
If by a false and fraudulent oral promise, which one intends at the time of making the promise afterwards to violate, the vendee of two contiguous parcels of land, which one has contracted for by separate and distinct contracts, induces the vendor to convey to one both parcels by one and the same absolute unconditional deed, one paying for one parcel, but not for the other, equity by reason of one's fraud will fasten upon one a constructive trust in behalf of the vendor, as to the parcel not paid for, although the two parcels are not described in the deed as several tracts, but both together are treated as one tract. Jansen v. Jansen, 180 Ga. 318, 178 S.E. 654 (1935) (decided under former Civil Code 1910, § 3739).
When a conveyance absolute in form is made to one person, but when the circumstances show that the real intention of the parties was not to make an absolute conveyance but a conveyance with restrictions or reservations, when it is alleged and appears that there was fraud on the part of the grantee to induce the execution of the deed, a court of equity will set up an implied trust in the property, by construing the conveyance so as to do full justice to the parties as their interests may appear and in such cases the courts have held that to allow an oral agreement to be set up which restricts the original instrument does not contravene the statute of frauds, since the jurisdiction of the court is predicated upon the fraud of the grantee; and the parol evidence rule does not exclude oral testimony which tends to establish the fraud and show the real intention of the parties. Jansen v. Jansen, 180 Ga. 318, 178 S.E. 654 (1935) (decided under former Civil Code 1910, § 3739).
When land is purchased by one with the money of others, under an agreement and understanding that title is to be taken in the name of all, and the one procures a deed to the land but causes the deed to be made to oneself alone, an implied trust will arise in favor of the others as to an undivided interest in the land. Chapman v. Faughnan, 183 Ga. 114, 187 S.E. 634 (1936) (decided under former Code 1933, §§ 108-106 and 108-107).
Evidence that the petitioner had an agreement with the defendant whereby they were to jointly buy the land sued for, that the petitioner delivered the petitioner's half of the purchase money to the defendant, and trusted the defendant to pay the purchase money and obtain a deed conveying the land to the defendant and the petitioner jointly, that the petitioner had received one-half of the proceeds from the sale and lease of timber on the land, that the defendant had stated to two other persons that the petitioner owned an undivided one-half interest in the land, but that the defendant, in violation of the agreement, procured a deed of conveyance of the land in which the defendant alone was named as grantee, was sufficient to show an implied trust and to authorize a verdict in favor of the petitioner for the recovery of an undivided one-half interest in the land. Crosby v. Rogers, 197 Ga. 616, 30 S.E.2d 248 (1944) (decided under former law).
Under the evidence as to the existence of a partnership between the petitioner and the defendant and their agreement to jointly purchase the land involved, and evidence that the petitioner paid one-half of the purchase money and trusted the defendant to close the deal and obtain a conveyance naming them both as grantees, the defendant could not obtain an interest in the land antagonistic to that of the petitioner; and when the defendant procured a deed, in the defendant's own name only, equity would annul the conveyance and decree title in the petitioner to the petitioner's share. Crosby v. Rogers, 197 Ga. 616, 30 S.E.2d 248 (1944) (decided under former law).
When temporary administrator brought an equitable action alleging that the administrator's intestate had purchased certain real estate and had agreed to place title jointly in the defendant's name in order to secure a debt owed defendant, and that defendant was to reconvey title to deceased and had refused to reconvey the half interest held in her name, the temporary administrator has alleged an implied trust in favor of the estate of the intestate from the facts and circumstances. Royal v. Lane, 214 Ga. 375, 104 S.E.2d 901 (1958) (decided under former Code 1933, §§ 108-104 and 108-106).
Code expressly recognizes a trust which arises ex maleficio and a trustee ex maleficio. Cordovano v. State, 61 Ga. App. 590, 7 S.E.2d 45 (1940) (decided under former Code 1933, § 108-107).
Statute expressly recognizes trusts which arise ex maleficio; such a trust occurs whenever a person acquires the legal title to land or other property by means of an intentionally false and fraudulent verbal promise to hold the property for a certain specified purpose. Smith v. Harvey-Given Co., 182 Ga. 410, 185 S.E. 793 (1936).
When defendant obtained money by fraud and trickery ("the telegram racket") in order to prevent the defendant from taking advantage of defendant's own wrong, a naked, constructive, ex maleficio trust would be imposed by operation of law upon the property thus obtained even though it was contrary to the defendant's intention and will, and the defendant became a trustee ex maleficio for such property; the defendant was trustee ex maleficio of a naked ex maleficio trust, which required no action on defendant's part beyond the turning over or returning of the money to the beneficiary, the victim. Cordovano v. State, 61 Ga. App. 590, 7 S.E.2d 45 (1940) (decided under former Code 1933, §§ 108-104 and 108-106).
When one by a trick, or a fraud, or other wrongful act, obtained money from the trustee of the victim, one was, unless one had some other or better right thereto, an involuntary trustee of the thing gained for the benefit of the person who would have otherwise had it. Cordovano v. State, 61 Ga. App. 590, 7 S.E.2d 45 (1940) (decided under former Code 1933, §§ 108-106 and 108-107).
Allegation of positive fraud required.
- Complainant who seeks relief based on the doctrine of trusts ex maleficio must allege more than the breach of a verbal promise. There must be an unequivocal allegation of positive fraud accompanying the promise, by means of which the acquisition of the legal title was consummated. General allegations as to an entire course of fraudulent conduct are not sufficient in the absence of a specific averment that the promise was made to be broken. Mays v. Perry, 196 Ga. 729, 27 S.E.2d 698 (1943) (decided under former Code 1933, § 108-107).
Must allege specific facts.
- Inasmuch as the doctrine of trusts ex maleficio with respect to land can never be applied when there is nothing more than a broken verbal promise (otherwise the statute or frauds would be virtually abrogated), and since in order for such a promise to be the basis of a constructive trust, it must have been made with the intention of being broken and for the purpose of thereby obtaining title, a person who seeks relief on account thereof must unequivocally allege the particular facts constituting the fraud relied on to vitiate the transaction. Mays v. Perry, 196 Ga. 729, 27 S.E.2d 698 (1943) (decided under former Code 1933, § 108-107).
Unaccepted offer does not give rise to implied contract.
- An unaccepted offer of compromise made by a fraud-feasor to enter into a written settlement with an insurer for an unspecified amount, without more, does not give rise to an implied trust, resulting or constructive, pending acceptance of the offer, even if the settlement is to be paid from a specified fund. Aetna Life Ins. Co. v. Weekes, 241 Ga. 169, 244 S.E.2d 46 (1978) (decided under former Code 1933, §§ 108-104 and 108-105).
Duress is a species of fraud. O'Callaghan v. Bank of Eastman, 180 Ga. 812, 180 S.E. 847 (1935) (decided under former Code 1933, § 108-117).
Statute of frauds is inoperative as a protection and support of fraud, and equity will declare a constructive trust in respect of property acquired by fraudulent oral promises of a vendee, which the vendee intends at the time of making to violate. Mays v. Perry, 196 Ga. 729, 27 S.E.2d 698 (1943) (decided under former Code 1933, §§ 108-105 and 108-107).
Nature of Transaction
When one purchasing property places title in another for one's own convenience, an implied trust exists. Belch v. Sprayberry, 97 Ga. App. 47, 101 S.E.2d 870 (1958) (decided under former Code 1933, § 108-112).
An implied trust results from the fact that one person's money has been invested in land and the conveyance taken in the name of another. Barnes v. Barnes, 230 Ga. 226, 196 S.E.2d 390 (1973) (decided under former Code 1933, § 108-116).
When the husband buys land with money which is the separate estate of his wife, and takes the title in his own name, in the absence of any evidence that the wife had given or loaned her money to him, the law raises an implied trust in favor of the wife, and makes the husband her trustee holding the property in trust for her sole use and benefit. Hemphill v. Hemphill, 176 Ga. 585, 168 S.E. 878 (1933) (decided under former Code 1910, § 3739).
When a deed to realty is executed to two grantees, one of whom pays a part of both the initial and subsequent payments to retire a loan on the property, and such payments amount to more than that one's portion of the undertaking, an implied trust upon the interest of the other grantee is established in proportion to the amount of purchase money paid thereon. Estes v. Estes, 205 Ga. 814, 55 S.E.2d 217 (1949) (decided under former Code 1933, § 108-106).
When an initial payment is made by one at the time of the execution of the conveyance taken in the name of another, this would support the establishment of a trust in the payor, and subsequent payments made by the payor should be considered to fix the extent of the trust interest. Estes v. Estes, 205 Ga. 814, 55 S.E.2d 217 (1949) (decided under former Code 1933, § 108-106).
If the plaintiff's money was used to purchase the land in question and the other was raised by loans, and the lender was secured by a mortgage or security deed, and it was the understanding that while a deed was to be taken from the vendor conveying to the defendants, the land was to be the property of the petitioner, then a resulting trust was created, and the beneficial interest in the property was in the plaintiff. Parlin v. McClure, 169 Ga. 576, 150 S.E. 835 (1929) (decided under former Civil Code 1910, § 3739).
If a mother buys lands with her own funds, and causes the title to be made to her son under an understanding and agreement that the property is to be hers, and that the son will make to her such conveyance as she may require, a trust in favor of the mother will be implied. Parlin v. McClure, 169 Ga. 576, 150 S.E. 835 (1929) (decided under former Civil Code 1910, § 3739).
When a grantee holds property impressed with a constructive trust in favor of the grantor, and conveys such property to another, who has notice and knowledge of the circumstances creating the constructive trust, the latter takes the property subject to the equities of the original grantor, and is a proper party in a suit seeking to impress the property with a constructive trust. Hancock v. Hancock, 205 Ga. 684, 54 S.E.2d 385 (1949) (decided under former Code 1933, §§ 108-104 and 108-106).
Incompletely Declared Uses
Failure of declared uses.
- When a trust was expressly created by the terms of the testator's will, the uses declared being for the use and benefit of named persons until they reached 21 years of age, but when the will became effective, these persons were already more than 21 years of age, the uses entirely failed, and a resulting trust arose for the benefit of the heirs at law of the testator. First Nat'l Bank v. Stewart, 215 Ga. 141, 109 S.E.2d 606 (1959) (decided under former Code 1933, § 108-106).
Resulting trust will be implied for the benefit of the testator, which of course means the testator's estate, rather than for the benefit of the testator's heirs or next of kin when the testator's will contains a residuary clause which disposes of all the rest or residue of the testator's estate, a trust having been created in another provision of the testator's will but no express disposition of the remainder thereafter having been made. Stephens v. Stephens, 218 Ga. 671, 130 S.E.2d 208 (1963) (decided under former Code 1933, §§ 108-112 and 108-114).
Equitable Basis of Implied Trusts
An implied trust never arises out of a contract or agreement between the parties, but arises by implication of law from their acts and conduct apart from any contract. It is only necessary to allege and prove that one person furnished the purchase money for the land in controversy, and that the deed was taken in the name of the person to whom the money was so furnished. No presumption of a gift or loan arises. Hudson v. Evans, 198 Ga. 775, 32 S.E.2d 793 (1945) (decided under former Code 1933, §§ 108-106 and 108-108); Epps v. Epps, 209 Ga. 643, 75 S.E.2d 165 (1953);(decided under former Code 1933, § 108-106).
When the principal executes, without reading them, written instruments which had been prepared by the agent in which the principal is named grantee, and the agent thereafter conveys to a third person a part of the property so conveyed to the agent, and claims the rest of the property as purchaser under the deeds executed by the principal, a court of equity will decree an implied trust upon the proceeds derived from the sale of the property to the third person and upon the property remaining in the agent, and will enforce an accounting between the parties. Smith v. Harvey-Given Co., 182 Ga. 410, 185 S.E. 793 (1936) (decided under former Code 1933, § 108-108).
An implied trust results from the fact that one person's money has been invested in land, and the conveyance taken in the name of another. It is a mere creature of equity. McCollum v. McCollum, 202 Ga. 406, 43 S.E.2d 663 (1947) (decided under former Code 1933, § 108-106).
An implied trust may arise from a payment of a portion of the purchase money. An express oral promise by the grantee to hold in trust for another will not operate to defeat a resulting trust, where, on the special equities growing out of the transaction, the law would, in the absence of such agreement, imply a trust. Wells v. Wells, 216 Ga. 384, 116 S.E.2d 586 (1960) (decided under former Code 1933, § 108-105).
If an agent places money in the hands of a bank to be delivered to the agent's principal, a trust arises in favor of the latter, and acceptance of the money with notice of its ultimate destination creates a duty on the part of the bank to devote it to the purpose intended, and equity will enforce the trust, and if those funds are mingled with its general assets, and go to swell its general estate, the trust therefor attaches to the entire estate, even though the specific funds cannot be traced. Salzburger Bank v. Standard Oil Co., 173 Ga. 722, 161 S.E. 584 (1931) (decided under former Civil Code 1910, § 3739).
Agency being established, the agent will be held to be a trustee as to any profits, advantages, rights, or privileges under any contract made and obtained within the scope and by reason of such agency; and when the agent invests such profits in property or places the property to the agent's credit in a bank, the agent will be held to hold the property as trustee for the principal, and the latter can maintain in a court of equity an action to trace such profits into such investments, and to enjoin the agent or the agent's donee from selling, disposing of, or incumbering any such profits or any property in which the property has been invested. Smith v. Harvey-Given Co., 182 Ga. 410, 185 S.E. 793 (1936) (decided under former Civil Code 1910, §§ 3739 and 3780).
Constructive trust arises not from the intent of the parties, but by equity with respect to property acquired by fraud, or although acquired without fraud, when it is against equity that the property should be retained by the one who holds the property. Aetna Life Ins. Co. v. Weekes, 241 Ga. 169, 244 S.E.2d 46 (1978) (decided under former Code 1933, §§ 108-104 and 108-105).
Constructive trusts are such as are raised by equity in respect of property which has been acquired by fraud, or where, though acquired originally without fraud, it is against equity that the property should be retained by the one who holds the property. Pittman v. Pittman, 196 Ga. 397, 26 S.E.2d 764 (1943) (decided under former Code 1933, § 108-105); Wages v. Wages, 202 Ga. 155, 42 S.E.2d 481 (1947); Bateman v. Patterson, 212 Ga. 284, 92 S.E.2d 8 (1956) (decided under former Code 1933, § 108-106); Hodges v. Hodges, 213 Ga. 689, 100 S.E.2d 888 (1957);(decided under former Code 1933, § 108-106);(decided under former Code 1933, §§ 108-104 and 108-106).
Constructive trust is not created by any words either expressly or impliedly evincing a direct intention to create a trust, but by the construction of equity in order to satisfy the demands of justice. Wages v. Wages, 202 Ga. 155, 42 S.E.2d 481 (1947) (decided under former Code 1933, § 108-106).
Assuming that the remedies at law are inadequate, if a plaintiff proves that a defendant promised to repay a loan and did so without a present intent to perform, the plaintiff can enforce either a constructive trust or an equitable lien on the fund, and, further, if a plaintiff proves that the fraudulently procured funds were used by the defendant to purchase other property, the plaintiff can reach the other property by a proceeding in equity, and can enforce a constructive trust or an equitable lien. Middlebrooks v. Lonas, 246 Ga. 720, 272 S.E.2d 687 (1980) (decided under former Code 1933, § 108-106).
Abolition of the vendor's equitable lien did not dispense with the natural equity acquired by the purchaser through payment of the purchase money, as the law recognizes that title is held in trust for the purchaser. Horner v. Savannah Valley Enters., Inc., 234 Ga. 371, 216 S.E.2d 113 (1975) (decided under former Code 1933, § 108-106).
Although there was no purchase money resulting trust created under former O.C.G.A. §§ 53-12-90 and53-12-91 (see O.C.G.A. §§ 53-12-2 and53-12-130), a decedent's mother was entitled to an equity interest in property of the deceased daughter because a constructive trust was established under former O.C.G.A. § 53-12-93 (see O.C.G.A. § 53-12-132) and there was evidence of a gift of land under O.C.G.A. § 23-2-132, as an exception to the statute of frauds, in that the mother lived on the property, made valuable improvements, and paid meritorious consideration. Oliver v. 4708 Old Highgate Entry, F. Supp. 2d (N.D. Ga. Apr. 21, 2009) (decided under former O.C.G.A. § 53-12-90).
When funds are embezzled, the victim can trace such funds into the property in which the embezzler invested the funds and obtain an equitable lien on such property. First Nat'l Bank v. Hill, 406 F. Supp. 351 (N.D. Ga. 1975), vacated on other grounds, 412 F. Supp. 422 (N.D. Ga. 1976) (decided under former Code 1933, §§ 108-106 and 108-107).
Purchaser from one whose title is subject to the equity of another, and who has notice of such equity, takes the land burdened with the equity. In the hands of any but an innocent purchaser of the property, the fiduciary character clings to the property. Parlin v. McClure, 169 Ga. 576, 150 S.E. 835 (1929) (decided under former Civil Code 1910, § 3739).
Clean hands doctrine.
- Equity may declare a trust to exist under the circumstances specified by law, but will not do so at the insistence of a party who lacks clean hands with respect to those matters concerning which the party seeks relief. Griggs v. Griggs, 242 Ga. 96, 249 S.E.2d 566 (1978) (decided under former Code 1933, § 108-106).
It is not improper for one spouse to deed property to the other spouse so as to minimize or eliminate estate tax liability, but it is improper for the parties to agree that notwithstanding such deed and claimed tax reduction the grantee holds the property in trust for the benefit of the grantor. A grantor in such a situation lacks clean hands. Griggs v. Griggs, 242 Ga. 96, 249 S.E.2d 566 (1978).
Insufficient proof of the existence of an implied trust.
- Because a former husband did not present proof of the existence of an implied resulting trust under former O.C.G.A. §§ 53-12-2(3),53-12-90,53-12-91, and53-12-92 (see O.C.G.A. § 53-12-132), the trial court did not err when the court granted judgment notwithstanding the verdict to the executor and the beneficiaries. Burnett v. Holroyd, 278 Ga. 470, 604 S.E.2d 137 (2004) (decided under former O.C.G.A. § 53-12-90).
Constructive trust not proper if payments were gifts or voluntary payments.
- Assuming that a widow's counterclaim against her late husband's two siblings for failure to continue mortgage payments on a home that the husband had bought for another sibling was for a constructive trust on the property, the widow was not entitled to summary judgment because the familial gift presumption applicable to purchase money resulting trusts could apply, or the husband's contributions toward the home could be considered gifts or voluntary payments. Roberts v. Smith, 341 Ga. App. 823, 801 S.E.2d 915 (2017).
Statute of Limitations
Suit to enforce implied trust must be brought within seven years.
- By analogy to the doctrine that an action for the recovery of land can be defeated by prescriptive title resulting from possession for seven years under color of title, an action to enforce an implied trust must generally be brought within seven years from the time the action accrues. Richards v. Richards, 209 Ga. 839, 76 S.E.2d 492 (1953) (decided under former law).
Limitation period begins to run only upon notice of adverse possession.
- As long as a person who is in possession of the property of another, using the property for the owner's benefit, recognizes the latter's ownership, no lapse of time will bar the owner from asserting the owner's title as against the person in possession. Before any lapse of time will be a bar to the owner, it must appear that the person in possession has given notice or there must be circumstances shown which would be equivalent to notice, to the owner that the person in possession claims adversely to the owner. In such a case the statute will begin to run from the date of such notice. Until the owner has such notice, the owner has the right to treat the possession of the other person as the person's own. Parlin v. McClure, 169 Ga. 576, 150 S.E. 835 (1929).
RESEARCH REFERENCES
Am. Jur. 2d.
- 76 Am. Jur. 2d, Trusts, §§ 128, 130.
C.J.S.- 90 C.J.S., Trusts, §§ 2, 12.
ALR.
- Rights and remedies of one who advances money to purchase real estate under an oral agreement by the vendee to give a mortgage thereon as security, 18 A.L.R. 1098.
Grantee's oral promise to grantor as giving rise to trust, 35 A.L.R. 280; 45 A.L.R. 851; 80 A.L.R. 195; 129 A.L.R. 689; 159 A.L.R. 997.
Rights of parties under oral agreement to buy land or bid it in at judicial sale for another, 42 A.L.R. 10; 135 A.L.R. 232; 27 A.L.R. 1285.
Remedy of one whose money is fraudulently used in the purchase or improvement of real property, 43 A.L.R. 1415; 47 A.L.R. 371; 778 A.L.R. 1269.
Person taking under probate of forged or fraudulent will as trustee ex maleficio, 52 A.L.R. 779.
Devise or legacy upon promise of devisee or legatee that another shall benefit as creating trust, 66 A.L.R. 156; 155 A.L.R. 106.
Gift or trust by deposit of funds belonging to depositor in a bank account in the name of himself and another, 66 A.L.R. 881.
May unconsummated intention to make a gift of personal property be made effective as a voluntary trust, 96 A.L.R. 383; 123 A.L.R. 1335.
Effect of deed in which the word "trustee" follows the name of grantee, but does not set out terms of trust or name the beneficiary, 137 A.L.R. 460.
Attorney as trustee for purpose of running of statute of limitations against claim for money or property received or collected by him, 151 A.L.R. 1388.
Devise or legacy upon promise of devisee or legatee that another shall benefit as creating trust, 155 A.L.R. 106.
Gift or trust by deposit in bank in another's name or in depositor's own name in trust for another, as affected by lack of knowledge on part of such other person, 157 A.L.R. 925; 168 A.L.R. 1324.
Grantee's oral promise to grantor as giving rise to trust, 159 A.L.R. 997.
Constructive trust against one holding merely bond for deed or other executory contract and not legal title, 173 A.L.R. 1275.
Doctrine of constructive trust or unjust enrichment as applicable between owner and one who fraudulently procures tax certificates, 175 A.L.R. 700.
Purported conveyance or transfer, based on consideration, which is ineffective to transfer the property, as subject of constructive trust, based on transferor's duty to complete the transfer, 12 A.L.R.2d 961.
Constructive trust with respect to partnership personal property assets knowingly received from individual partner for payment of his private debt, 45 A.L.R.2d 1211.
Imposition or declaration of constructive or resulting trust in United States saving bonds, 51 A.L.R.2d 163.
Testamentary nature of life insurance trust, 53 A.L.R.2d 1112.
Validity and effect of gift for charitable purposes which excludes otherwise qualified beneficiaries because of their race or religion, 25 A.L.R.3d 736.
Imposition of constructive trust in property bought with stolen or embezzled funds, 38 A.L.R.3d 1354.
Determination of property rights between local church and parent church body: modern view, 52 A.L.R.3d 324.
Trusts: merger of legal and equitable estates where sole trustees are sole beneficiaries, 7 A.L.R.4th 621.
Power of trustee in bankruptcy to defeat rights of beneficiary of constructive trust under § 544(a) of Bankruptcy Code (11 USCS § 544(a)), 96 A.L.R. Fed. 100.