Brtek v. Cihal
245 Neb. 756, 515 N.W.2d 628, 1994 Neb. LEXIS 96 (1994)
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Rule of Law:
For a deed to be valid, the grantor must intend to presently convey title and must relinquish all control over the instrument; an unrecorded deed retained by the grantor until death is an invalid testamentary transfer. A resulting trust requires clear and convincing evidence that at the time of the property's conveyance, the parties intended for the person paying the purchase price to be the true beneficial owner.
Facts:
- The Brtek family, consisting of mother Agnes and adult children Jerry, Joe, and Martha, operated a family farm where Agnes made most business decisions.
- In 1952, the family collectively contributed funds to purchase the 'Urbanek place,' but at Agnes's direction, the title was taken solely in Joe's name.
- At a later date, again at Agnes's direction, Joe executed a deed conveying the Urbanek place to himself and Martha as joint tenants.
- This deed was not given to Martha; instead, it was placed in a family dresser drawer accessible to Agnes and Joe, where it remained until Joe's death in 1974.
- In 1963, Martha and her husband, Lad Cihal, purchased the 'Pedersen place' from a third party, taking title in their own names. Jerry, Joe, and Agnes contributed funds toward this purchase.
- In 1968, the Brteks allegedly made an oral agreement to purchase the Pedersen place from the Cihals, with their prior contributions acting as a down payment.
- Between 1968 and 1974, Agnes, Joe, and Jerry made additional payments to the Cihals, which the Brteks considered installments on the purchase and the Cihals considered gifts.
- After Joe's death, Agnes gave the Urbanek deed to Martha, who recorded it. A family dispute later arose, and in 1985 Martha demanded that Jerry vacate the Urbanek place he had been farming.
Procedural Posture:
- Jaroslav and Lillian Brtek sued Martha and Lad Cihal in the District Court for Saunders County, Nebraska (trial court).
- The Brteks' petition sought to impose a constructive or resulting trust on two farms, the Urbanek place and the Pedersen place, and to cancel the deed to the Urbanek place.
- The Cihals counterclaimed to set aside a different deed, which is not at issue in this appeal.
- After a bench trial, the trial court found that the Brteks had failed to establish a trust by clear and convincing evidence and dismissed their petition.
- The trial court's judgment confirmed legal title to both the Urbanek and Pedersen places in the Cihals.
- The Brteks (appellants) appealed the dismissal of their petition to the Supreme Court of Nebraska.
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Issue:
1. Does a deed convey title where the grantor retains possession and control of the unrecorded instrument with the intent that it only become effective upon his death? 2. Do payments from family members to the legal title owners of property, made years after the initial purchase, create a resulting trust in favor of the payers?
Opinions:
Majority - Hastings, C. J.
1. No. A deed does not validly convey title if the grantor fails to deliver it with the present intent to transfer ownership. Here, Joe retained possession and control of the unrecorded deed to the Urbanek place until his death. The evidence, including Martha's own testimony that the deed was to be effective only after 'something happened' to Joe, demonstrates an intended testamentary disposition. Because Joe did not relinquish dominion over the instrument and intend for it to be 'presently operative,' there was no valid delivery. Therefore, the deed was void, title remained with Joe, and upon his death intestate, it passed to his mother Agnes, and subsequently to Jerry and Martha as tenants in common. 2. No. A resulting trust was not created for the Pedersen place because the Brteks failed to establish by clear and convincing evidence that such a trust was intended at the time of the initial conveyance in 1963. For a resulting trust to arise, the intent must exist when legal title passes. The Cihals purchased the property for themselves, and the subsequent payments and alleged oral agreement to sell occurred years later. Any claim based on a subsequent contract to sell is barred by the statute of limitations.
Analysis:
This case powerfully illustrates the critical distinction between an inter vivos conveyance (a transfer during life) and a testamentary transfer (a transfer by will). It reaffirms the strict requirement of delivery for a deed to be valid, emphasizing that a grantor's intent to make a present and unconditional transfer is paramount. The court's refusal to validate a deed used as a will substitute serves as a strong precedent against informal estate planning. Furthermore, the decision clarifies the temporal element of a resulting trust, holding that the trust-creating intention must exist at the moment of the initial conveyance, not be formed through later transactions or agreements.
