We believe the court will uphold the equitable duty to transfer it to another, to whom it rightfully
belongs, on the basis that the acquisition or retention of it is wrongful and
would unjustly enrich the person if he or she were allowed to retain it. Constructive trust does not arise because of the expressed intent of a sponsor who establishes a trust. It is created by a court whenever title to property is held by a person who, in fairness, should not be permitted to retain it. It is
A constructive trust is frequently based on disloyalty or other
breach of trust by an express trustee (the person appointed or required by law
to execute a trust), and it is also created where no express trust is created
but property is obtained or retained by other wrongful conduct.
The
court shall hear th emotion for constructive trust as a remedial device to compel the
defendant to convey title to the property to the plaintiff. It treats the defendant
as if he or she had been an express trustee from the date of the unlawful
holding of the property in question. Herein the objective is to examine the claims of the trustee and any duties of
administration enduring for a substantial period of time, but rather it is a
passive, temporary arrangement, in which the trustee's sole duty is to transfer
the title and possession to the beneficiary.
Such
situations might involve an affirmative assertion of the truth of a material
fact or concealment of the existence of a material fact when there was a duty
to speak. The state of the defendant's mind is a material fact and might be a
basis for a constructive trust—such as when the defendant promises to use the
property for certain purposes beneficial to the plaintiff but intends at the
time of the transfer to retain it for himself or herself. The defrauded party
can also proceed on the theory of setting aside the transfer, which is
substantially equivalent to obtaining a constructive trust, or the defrauded
party can sue for damages.
The right to a constructive trust is generally an
alternative remedy. The aggrieved party can choose between a trust and other
relief at law, such as recovery of money wrongfully taken, but cannot obtain
both types of relief.
A constructive trust, as with an express trust, must
cover specific property. It cannot be predicated on mere possession of property
or on a breach of contract where no ownership of property is involved.
The court decides what acts are required of the plaintiff
as conditions precedent to the securing of a decree (a court order that
determines the rights of all the parties to the suit). When a
defendant has acquired title to property of the plaintiff by means of fraud, the plaintiff will
be required to return any consideration (inducement to enter into a contract)
received from the defendant. In addition, if the defendant has, during his or
her period of wrongful retention of the property, spent money for the
preservation or protection of the property, such as by paying taxes or the
principal or interest on a mortgage, reimbursement might be required of the
plaintiff.
If the defendant has made improvements or performed services in
managing the property, some courts require the plaintiff to compensate the
defendant to the extent of the benefits inuring to the plaintiff through the
imposition of a constructive trust, particularly in cases in which the
defendant was not an intentional wrongdoer, but rather acted under mistake or
ignorance.
The decree establishing the constructive trust requires
the defendant to deliver possession and convey title to the property and to pay
to the plaintiff profits received or rental value during the period of wrongful
holding and otherwise to adjust the equities of the parties after taking an
accounting.
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