Oral Trusts: Oral Promise to Hold in Trust Flashcards
What is the general rule for an intervivos trust?
An oral trust of personalty is enforceable provided its terms can be established by clear and convincing evidence. However, trusts containing land (whether created by declaration of trust or by inter vivos transfer) must be evidenced by a writing that satisfies the Statute of Frauds.
S promised his widowed sister Marie that he would provide a home for her and her daughter Angie if Marie would keep house and serve as hostess in his home. Thereafter, in the presence of witnesses, S handed his brother Frank a deed naming Frank as grantee (with no mention of a trust), saying, “Hold this property in trust until Marie’s death, then convey to Angie. This is in consideration of services rendered by Marie as agreed.” Valid express trust?
NO, the subject of the trust is the home and that is land and so it violates the SOF - HOWEVER - a constructive trust may be imposed where one of the following is met:
- Fraud in inducement: If, at time land was deeded to Frank, he orally promised to serve as trustee and he had, at that time, no intention to perform his promise (difficult to prove, liar from the get go), or;
- Confidential Relationship: Grantee-trustee served in confidential relationship to the grantor-settlor. (Attorney-client; business associates; husband-wife, father- child, brother-sister.) Rationale here is that equity’s concern that one would take advantage of a confidential relationship to enrich himself outweighs Statute of Frauds. But grantee-trustee must have agreed to hold property in trust.
- If there is no constructive trust Marie may still sue in quantum meruit for the services rendered, wont get the whole but can get services rendered
T orally agreed with her valet Sydney that she would devise her home to him if he would forgo any weekly salary and remain in T’s employ as long as she lived. Sydney fulfilled his commitment, but T never inserted a provision in her will for his benefit.
- Majority rule: If a contract to devise land, is subject to the SOF and has to be in writing
- UPC: Contract to make a will, not to revoke a will, or to die intestate, can only be shown if: (i) the terms are in the will itself, (ii) the terms are in a written contract, or (iii) the will refers to the contract and extrinsic evidence proves the terms. The mere existence of joint or mutual wills does not imply a contract not to revoke.
OUR FACTS = Unenforcable (majority dealing with land) (UPC does not meet test)
-Sydney may still sue in Quantum Meruit for the amount of his services
-Suppose the agreement had been written and signed? - Yes the remedy is a constructive trust, breach of a K
What is a secret trust? - Comes from a testamentary trust
Secret Trust - Someone dies and a party is not named in the will, however there is extrinsic evidence that a 3rd party is to be a trustee to someone else - Absolute devise by will with oral promise to hold on trust
T dies leaving a will that devises Greenacre to Jones; the will makes no mention of any trust. T’s secretary now alleges that T orally told Jones that Jones was to hold the land as trustee for the secretary’s benefit, and that Jones agreed to serve as trustee. Can the secretary enforce the promise?
YES - More precisely, her testimony is admissible to show the existence of the promise. If she is able to establish Jones’ promise by clear, satisfactory and convincing evi- dence (more than a mere preponderance), a constructive trust will be implied for her benefit. Since a will and not a deed is involved, the Statute of Frauds is inapplicable. Equity’s concern that one should not be allowed to be unjustly enriched in violation of his promise outweighs the Statute of Wills (SOF not at play here) concern that the will beneficiaries should be identified by language in the will. A constructive trust is imposed to prevent unjust enrichment.
T dies leaving a will that devises Greenacre to Jones; the will makes no mention of any trust. T’s secretary now alleges that T orally told Jones that Jones was to hold the land as trustee for the secretary’s benefit, T never told Jones about any trust. Accompanying T’s will is an envelope marked “Personal,” addressed to Jones. Inside is a typewritten note, signed by T, instructing Jones to hold the land in trust for T’s secretary. Can the secretary enforce the promise?
Jones wins, only reason Jones loses is repudiates, but here he is not agreeing to anything
What is a semi-secret trust?
The will states that there is a trust, but there are no specifics in the will about the trust, just that it “exists” (we are not given the terms of the trust)
T’s will devises land “to my good friend Sam Smith, as trustee, for purposes I have already communicated to him.” Smith is willing to identify T’s purposes and intended beneficiaries and is willing to serve as trustee. T’s heirs object, saying no valid trust was created. What result?
No trust: Majority rule [leading case: Olliffe v. Wells (Mass. 1881)]: Smith holds on a resulting trust for T’s heirs. The semi-secret trust situation involves no element of wrongdoing so to impress the trust for benefit of intended beneficiaries would violate the requirement of the Statute of Wills that the beneficiaries be identifiable from language in the will. Smith may not even voluntarily comply.
