Denzil Russ Partin initiated a lawsuit against Mary Ava Partin and Hazel Walden concerning two real property transfers. He sought a declaratory judgment asserting that properties transferred by Wife to her mother, Mrs. Walden, were held in trust for the family. The Trial Court ruled that title was validly held by Mrs. Walden, found no resulting trust, and determined that the statute of limitations barred Husband’s claim. On appeal, the Court of Appeals of Tennessee acknowledged an error in the Trial Court's statute of limitations ruling but upheld the decision against imposing a resulting trust.
The background indicates that Husband and Wife were married and purchased a property known as Lilac, which Wife retained after their divorce in the 1990s. Following their reconciliation and subsequent remarriage, Wife transferred another property, Stinking Creek, to Mrs. Walden. This transaction occurred after Husband faced legal issues leading to his incarceration, during which he granted Wife a Power of Attorney. Under this authority, Wife transferred both properties to Mrs. Walden, purportedly to raise funds for legal representation for their son, Courtney Partin. The appeal confirms the Trial Court's judgment as modified, maintaining that the properties were not held in trust for the family.
Husband alleged that Wife transferred ownership of the properties Stinking Creek and Lilac to shield them from the marital estate. During a March 16, 2010, Chancery Court hearing, both parties and Mrs. Walden provided testimony regarding the ownership of Stinking Creek. Evidence included tax receipts, insurance payments, and mortgage checks all in Mrs. Walden's name. Although Wife admitted to making a $2,000 payment on the Stinking Creek loan, she claimed that Mrs. Walden made all subsequent payments and that the transfer was made without expectation of reclaiming the property.
The couple contested the circumstances surrounding the Power of Attorney. Husband asserted that he instructed Wife to raise funds for his attorney and, if possible, for their son Courtney Partin's attorney. In contrast, Wife contended that Husband only directed her to raise money for Courtney's legal representation. Letters from Husband to Courtney while incarcerated were introduced, revealing discussions about selling property to secure legal assistance.
Regarding Lilac, Wife presented a divorce judgment from 1990 granting her sole ownership, while Husband claimed a verbal interest based on Wife’s statements. Wife indicated she received $8,000 from Mrs. Walden for Lilac, which was used to hire an attorney for both of them. Husband denied representation by the attorney but introduced a letter that referenced ongoing legal issues related to the property.
On June 21, 2010, the Trial Court issued an order concluding that the statute of limitations had expired on any claims by Husband and that the property dispute should have been addressed during the divorce proceedings. The Court noted that Wife, under the Power of Attorney, had the authority to manage the Stinking Creek property, and she conveyed it for $25,000, which was utilized for Husband’s legal fees.
Mr. Partin has no legal interest in the Lilac property, and any equitable interest he may have had is extinguished by an unpaid $8,000 loan. Ms. Walden has invested approximately $32,000 to $33,000 in the property, with no evidence of repayment from Mr. Partin over eight years. The trial court ruled that the property belongs to Ms. Walden, conveyed to her to secure the loans she made, while Mr. Partin's appeal raises two issues: 1) whether the trial court erred in stating the statute of limitations had expired on his action, and 2) whether it was correct in ruling that the property is owned by Mrs. Walden without establishing a resulting trust. The appellate review is de novo, presuming the trial court's factual findings are correct unless the evidence suggests otherwise.
The appellate court found that the statute of limitations defense was waived because neither Ms. Walden nor her attorney raised it at trial, leading to the error in the trial court's opinion. Consequently, this portion of the judgment was vacated. Regarding the second issue, the appellate court referenced the doctrine of resulting trust, which serves to prevent unjust enrichment and is established by the circumstances of a transaction. The appeal's outcome hinges on these points, particularly concerning ownership and the equitable obligations arising from the financial contributions made by Ms. Walden.
The document outlines the legal principles surrounding resulting trusts, emphasizing that such trusts may arise even without explicit intent to create one, particularly to prevent unjust enrichment. Resulting trusts typically occur in two scenarios: failure of an express trust or when one person conveys property to another with consideration from a different party. Courts may impose resulting trusts to ensure justice, though the specifics can vary by jurisdiction. The underlying principle is that the person providing the consideration should retain ownership of the property.
To establish a resulting trust, the evidence must be clear, cogent, and convincing, surpassing a mere preponderance of the evidence, and typically cannot rely solely on the testimony of a single interested witness. In the case at hand, the parties agreed that the Wife was awarded a property called Lilac during their divorce and did not formally transfer any interest to the Husband. The Wife testified to transferring Lilac to Mrs. Walden for $8,000, intended to cover legal fees. The Husband contended he retained an interest in Lilac and claimed the transfer to Mrs. Walden constituted a resulting trust. The Trial Court, however, sided with the Wife's account, assessing witness credibility based on direct observation, and concluded that the Husband had no legal interest in the property and effectively used any equitable interest for a loan that remains unpaid. The court determined it would be unjust to deprive Mrs. Walden of her interest in Lilac after her payment, which had not been recouped.
A resulting trust is an equitable remedy that should not lead to inequitable outcomes. The evidence supports the Trial Court's findings, concluding that the Husband did not establish any interest in the property Lilac at the time of its sale to Mrs. Walden, nor prove that a resulting trust existed. Consequently, the Trial Court’s judgment regarding Lilac is affirmed.
Regarding Stinking Creek, the Husband claims Mrs. Walden was unjustly enriched due to her purchasing the property for significantly less than its actual value. He valued Stinking Creek at $150,000, while tax assessments from 2004 and from 2005 to 2009 listed it at $48,900 and $58,900, respectively. However, the property was transferred to Mrs. Walden by the Wife in 2002, prior to these later assessments, and property tax valuations are not definitive indicators of real estate value.
The evidence indicates that the family was in urgent need of funds for legal representation, and while the Husband’s valuation exceeds Mrs. Walden's purchase price, it does not outweigh the Trial Court’s findings that he failed to prove the elements of a resulting trust. The Husband also contends that Mrs. Walden was merely a figurehead in the transaction and that the Wife made payments on the Stinking Creek loan. Though the Wife admitted to making a $2,000 payment, she stated that Mrs. Walden made the majority of the payments. The Trial Court accepted this narrative, concluding that Mrs. Walden funded the purchase and made most payments.
The Trial Court deemed it inequitable for Mrs. Walden to lose her interest in Stinking Creek based solely on the Wife's minor payment. The Husband also argues that the Wife overstepped her authority under the Power of Attorney regarding Stinking Creek. While he claimed she was instructed to prioritize raising funds for his attorney, the Wife testified that she was directed to raise money for Courtney Partin first, a claim the Trial Court found credible. Evidence, including the Husband's prison letters, supported the Wife's account. The Husband stated that legal expenses for himself and Courtney Partin amounted to $42,000 and contended that the funds raised from Stinking Creek were insufficient to cover these costs, claiming they were not used to secure legal representation for himself.
The Trial Court upheld the Wife's assertion that the Husband intended for her to raise funds to hire an attorney for Courtney Partin. It was determined that funds received from Mrs. Walden for Stinking Creek were allocated to cover Mr. Partin’s legal fees. The Trial Court found sufficient evidence to support that the Wife sold Stinking Creek per the Husband's instructions to secure this funding. Although the Husband had an interest in Stinking Creek at the time of the sale, he did not meet the rigorous evidentiary standard needed to establish a resulting trust. The Wife testified that she acted on the Husband's direction, which was corroborated by his prison correspondence indicating he supported actions to fund an attorney for his son, including selling property. Resulting trusts are based on the intentions of the involved parties. The Trial Court assessed the credibility of the evidence and accepted the Wife's account, concluding that the evidence did not contradict its findings. Consequently, the judgment not to impose a resulting trust on Stinking Creek was affirmed. The part of the judgment regarding the statute of limitations was vacated, and the overall judgment was affirmed as modified. The case is remanded for cost collection, with appellate costs assigned to Denzil Russ Partin and his surety, if applicable.
