Kent v. Klein
91 N.W.2d 11, 352 Mich. 652, 1958 Mich. LEXIS 487 (1958)
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Rule of Law:
A court of equity may impose a constructive trust to prevent unjust enrichment when a person holds legal title to property under circumstances where it is unconscionable for them to retain the beneficial interest, regardless of the statute of frauds or the absence of fraud, deceit, or an express promise.
Facts:
- Barbara Klein owned real estate and intended to divide it among five of her six children.
- Concerned for her son John, who had mental health issues, she decided not to vest title to his intended share directly in him.
- On the advice of other family members, Barbara Klein conveyed the parcel of land intended for John to his sister, Edith Klein.
- On the same day, Barbara conveyed a separate parcel to Edith, which was intended for Edith's own benefit.
- Edith was chosen to hold the title for John because she had no creditors.
- The deed for the property intended for John was recorded but was not delivered to Edith; it remained in the possession of another brother, Harold.
- After John's death, Harold informed Edith of the arrangement and asked her to convey the property to John's widow, but Edith refused.
Procedural Posture:
- John's widow and son (plaintiffs) filed a bill in chancery (a lawsuit in a court of equity) seeking to impose a constructive trust on the property held by Edith Klein (defendant).
- The trial chancellor found for the plaintiffs, holding that the property was intended to be held in trust for John, and decreed that Edith must convey the property to the plaintiffs.
- Edith Klein (defendant-appellant) appealed the trial chancellor's decree to the state's highest court.
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Issue:
Does a court of equity have the power to impose a constructive trust on real property conveyed to a grantee who, in violation of a family understanding, unconscionably retains the property for herself instead of for the intended beneficiary, despite the statute of frauds and the absence of an express promise by the grantee?
Opinions:
Majority - Smith, J.
Yes. A constructive trust may be imposed to prevent a person from being unjustly enriched by unconscionably withholding property that in good conscience belongs to another. The court held that a constructive trust is a remedial device, not an actual trust, and thus is not barred by the statute of frauds. It arises by operation of law to prevent injustice. The court found that Edith held the land because her mother trusted her integrity and familial duty toward her incompetent brother. Her attempt to keep the property for herself was an act of cupidity that resulted in her unjust enrichment. The court clarified that fraud, deceit, or an express promise are not prerequisites for imposing a constructive trust; it is enough that the property is unconscionably withheld.
Analysis:
This decision reinforces the broad, remedial power of a constructive trust in equity. It clarifies that the remedy's focus is on preventing unjust enrichment, not on enforcing an oral agreement that would otherwise be barred by the statute of frauds. By explicitly stating that fraud or an express promise are not required, the court lowers the bar for imposing a constructive trust in cases involving confidential or familial relationships where trust is implicit. This precedent gives courts greater flexibility to achieve equitable results in informal family property arrangements that have gone awry.
