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Rausch v. Devine (12/05/2003) sp-5759
Rausch v. Devine (12/05/2003) sp-5759
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
MARK C. RAUSCH, )
) Supreme Court No. S-10660
Appellant, )
) Superior Court No.
v. ) 3AN-00-4879 CI
)
MICHELLE DEVINE, ) O P I N I O N
)
Appellee. )
[No. 5759 - December 5, 2003]
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Eric T. Sanders, Judge.
Appearances: Allison E. Mendel and Sherry
Clark, Mendel & Associates, Anchorage, for
Appellant. John R. Strachan, Law Office of
John R. Strachan, Anchorage, and James D.
Babb, Jr., Law Office of James D. Babb, Jr.,
Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Mark Rausch appeals the trial court's decision that he
validly delivered two quitclaim deeds to Michelle Devine and the
court's refusal to impose resulting or constructive trusts on the
properties in his favor. Because Rausch failed to rebut a
presumption of valid delivery by clear and convincing evidence,
and because resulting or constructive trusts are inappropriate in
cases of gratuitous transfers, we affirm the superior court's
decision.
II. FACTS AND PROCEEDINGS
A. Facts
Mark Rausch and Michelle Devine met in Iowa in 1988 and
began a romantic relationship in 1989. They discussed marriage
and in early 1990 went to Belize for a marriage ceremony that the
parties agree was not legally effective, although afterwards they
did on occasion hold themselves out as married. They lived on
Rausch's farm in Iowa from February to March 1990, and then moved
to Rausch's house in Anchorage. Their daughter Sydney was born
in April 1991. They lived together until 2000. They used a
fairly traditional living arrangement in which Devine cared for
Sydney and the house, held some minor jobs, and took care of all
household paperwork and bills. Rausch covered almost all of
their living expenses by occasionally working as a lawyer and
hunting guide, by recovering lost airplanes, by trading his
labor, and by using $140,000 in cash savings that he kept hidden
on his properties in Iowa and Alaska.
The parties agree that on May 7, 1990 Rausch drafted
and signed an unconditional quitclaim deed in favor of Devine for
his farm in South English, Iowa, and took it to a lawyer friend
to have it acknowledged. The parties stipulate that Rausch was
an attorney and was competent to draft the deed so as to include
any terms he wished. They also agree that at the very least
Rausch showed Devine the Iowa deed after she became pregnant with
Sydney, and that Devine recorded the deed in May 1991 while
visiting Iowa with Sydney after the birth. On January 13, 1993
Rausch asked different lawyer friends to draft and acknowledge
another quitclaim deed to Devine, this time for the Anchorage
property, and this deed was recorded by Rausch's friend in
February 1993. Thereafter, Devine continued to act primarily as
a homemaker and Rausch continued to pay for the mortgage and
direct the upkeep on both properties. He also began the
construction of a house on the Iowa property in 1997.
At some point in early 1993, Devine moved out of
Rausch's bedroom and their intimate relationship ceased, but in
most practical respects their relationship stayed the same,
apparently because Devine hoped the relationship would improve
and Rausch wanted access to Sydney. On a few occasions the
parties discussed the possibility that Rausch would buy back the
deeds so that Devine could buy a different house in Anchorage,
but this never materialized. The parties separated in early 2000
when Devine filed her complaint in the case below.
B. Proceedings
In February 2000 Devine filed suit in superior court in
Anchorage asking for an order that Rausch vacate the house in
Anchorage, an order distributing their property other than the
Iowa and Anchorage lands, sole legal custody of Sydney, and child
support. In June 2000, Rausch counterclaimed to quiet title to
the Iowa and Anchorage lands, or in the alternative for the
imposition of a resulting or constructive trust on the lands,
breach of contract, and joint legal custody. Trial was
bifurcated by Superior Court Judge Eric T. Sanders between
property and child custody/support issues, and trial on the
property issue was held on March 12-13 and April 4, 2001. At
trial, Devine contended that Rausch had given her both properties
and paid for their mortgages as a gift because he was generous
and because he wanted to assuage her concerns that their
unmarried status left her in a financially precarious position.
Rausch contended that he had never intended to transfer title to
the properties to Devine. Instead, he testified that he executed
the deed to the Iowa property only intending for her to take
title if he died and that he executed the deed to the Anchorage
property only as reassurance that he would not evict her from the
house until Sydney's majority.
Judge Sanders ruled that the recording of the deeds
created a presumption of valid delivery that was rebuttable by
clear and convincing evidence. He noted that Rausch's continued
payments for the properties were persuasive evidence against
delivery, but nonetheless ruled that the presumption had not been
overcome because Rausch was not a credible witness, Rausch's
explanation for why he executed the quitclaim deeds did not
correspond with what Rausch as a lawyer would understand the
purpose of a quitclaim deed to be, Rausch's financial habits were
generally "unconventional," and Rausch had taken no action for
six years upon allegedly learning that Devine was the title
holder to both properties. Judge Sanders rejected the resulting
trust argument for two reasons: first, because the Restatement
(Second) of Trusts section 4401 states that resulting trusts are
inferred when a payor furnishes a purchase price on behalf of a
third party, which had not been the case here, and second,
because comments to the Restatement section 441 also provide that
no inference of a trust arises when a transfer appears to be
intended as a gift. Judge Sanders also rejected the constructive
trust theory, noting that a constructive trust is imposed only
where the title holder has acquired the property through unjust,
unconscionable, or unlawful means and would therefore be unjustly
enriched by keeping it.2 He found that while the gift
"undoubtedly" enriched Devine, she had performed most of the
services of a spouse during the ten years of their relationship
and he implied that this did not constitute unjust,
unconscionable, or unlawful behavior that unfairly tended to
deprive Rausch of his property. Finally, Judge Sanders rejected
Rausch's express contract theory but awarded Rausch the house
that he had built on the Iowa property. Rausch appeals.
III. STANDARD OF REVIEW
The choice of the proper standard of law for resolving
property disputes is a question of law that we review de novo.3
The application of law to the facts of the case is reviewed de
novo.4 We adopt the rule of law that is most persuasive in light
of precedent, reason, and policy.5 The factual findings of the
trial court are reviewed for clear error, a standard that is met
if, after a thorough review of the record, we come to a definite
and firm conviction that a mistake has been made.6 The trial
court's findings regarding the credibility of witnesses and
weighing of the evidence may be reversed only if clearly
erroneous.7 In reviewing the trial court's factual findings, we
view the evidence in the light most favorable to the party
prevailing in the trial court.8 We may affirm the trial court's
result on any basis supported by the record.9
IV. DISCUSSION
Rausch contends that both pieces of property should be
returned to him in full under three theories: (1) that both deeds
were invalid for lack of proper delivery, because he never gave
Devine the deeds or intended that the quitclaim deeds should
transfer title; (2) that a resulting trust should be imposed
because the transactions give rise to the inference that Rausch
did not intend to benefit Devine; and (3) that a constructive
trust should be imposed because Devine will be unjustly enriched
if she is allowed to retain properties for which Rausch paid.10
All of these theories depend on acceptance of Rausch's version of
the facts and rejection of Devine's. Evaluation of the
credibility of witnesses is a matter for the trial court, and
upon review the prevailing party is entitled to have the record
viewed in the light most favorable to her. Under these
principles, we affirm the factual and legal rulings of the trial
court.
A. Rausch Did Not Present Clear and Convincing Evidence
Rebutting the Presumption that the Iowa and Alaska
Deeds Were Validly Delivered.
The heart of Rausch's case is the contention that the
recorded deeds to the Iowa and Alaska properties were invalid
because they were never properly delivered to Devine.11 We reject
that contention.
1. Both Iowa and Alaska law require
delivery of a validly executed deed, and in both
states the presumption of valid delivery that
arises upon recording can be rebutted by the party
disputing delivery through clear and convincing
evidence.
An action to invalidate a deed is an equitable one and
can therefore be brought in any court with equity power,12 but the
law of the situs of the property is applied to the validity of
the deed itself.13 In this case there are deeds concerning land
in Iowa and in Alaska, and the laws applicable to each are very
similar.
In Iowa, a deed duly executed and acknowledged is self-
proving as to its execution and delivery when produced by the
grantee.14 "Every conveyance of real estate passes all the
interest of the grantor therein, unless a contrary intent can be
reasonably inferred from the terms used."15 The proper transfer
of title under a deed must include an actual or symbolic delivery
of the deed accompanied by the intention of the grantor to
transfer title without any reservation of control.16 "The intent
of the grantor is controlling in the matter of delivery and is to
be determined by the grantor's acts or words or both."17 A duly
executed and recorded deed ordinarily raises a rebuttable
presumption of delivery with present intent of passing title and
possession, although the recording of the deed does not
necessarily constitute delivery if the facts and circumstances
indicate that the grantor's intention was otherwise.18 The burden
of proving the absence of delivery is on the party alleging the
absence of delivery, and the evidence must be clear,
satisfactory, and convincing.19 When a deed absolute on its face
is delivered to the grantee with the intention that it become
effective only upon the grantor's death, the delivery is wholly
ineffective, but if the grantor delivers the deed to a third-
party agent without reserving the right to recall it, then title
passes immediately to the grantee while reserving a life estate
to the grantor.20 The grantor's continued possession and control
of the property strongly suggest the absence of delivery,
especially where the grantee does not take possession in any way.21
These principles of Iowa law are generally consonant
with the American law of delivery of deeds,22 and Alaska case law
has implied that delivery of a deed is part of its valid
execution, relying on Powell on Real Property.23 Although there
appears to be no Alaska case specifically holding that the
recording of a deed gives rise to a presumption of valid delivery
that is rebuttable by clear and convincing evidence, Chief
Justice Rabinowitz has noted that this is hornbook law,24 and we
have previously held that the "clear and convincing" standard is
often applicable to factual questions surrounding land actions.25
We now adopt the rule that a recorded deed gives rise to a
presumption of valid delivery that may be rebutted by the party
challenging delivery by clear and convincing evidence.
2. Judge Sanders applied the proper
standards of law, and his factual findings, viewed
in the light most favorable to the prevailing
party, are not clearly erroneous.
Rausch contends that in finding that he had not shown
by clear and convincing evidence that he had not intended to
transfer the deeds to Devine, the trial court clearly erred in
its factual findings and credibility determination. Rausch also
contends that the trial court made errors of law by relying on
irrelevant facts and by failing to conclude expressly that Rausch
intended to make a present transfer. We disagree.
Rausch's strongest argument, both in case law and in
supporting documentary evidence, is that the trial court should
have inferred that Rausch did not intend to transfer title to the
properties based on his actions as the owner of the properties,
including providing the funds for the mortgage and taxes, taking
care of the upkeep, dealing with renters on the Iowa property,
and building a new house on the Iowa property. Rausch cites
Crowder v. Crowder26 and Staats v. Staats27 for the proposition
that subsequent ownership acts are strong evidence that there was
no intent to transfer title, and Giefer v. Swenton28 for the
proposition that the presumption of delivery is not as strong
when the deed is not recorded by the grantor. But all of these
cases are rich in factual detail supporting the lack of intent to
transfer, whereas Rausch's case, as will be discussed below, is
not. Indeed, in Crowder the transferee testified that the
purpose of the deed was to insulate the property from a possible
tort settlement, not to transfer title as a gift.29 In Staats,
the deed was recorded years after it was drafted, the surviving
transferor testified that the deed had been drafted out of
concern for the possible failure of a bank, the trial court found
that the recording transferee's contradicting testimony was not
credible, and the transferee had never taken possession of the
property except as a tenant.30 Likewise, in Giefer, the court
found that there was a valid delivery even where the transferees
had never taken possession of the property because the drafter of
the deeds had testified that the transferor had deeded his
property to his children during his life only in order to avoid
the expense and trouble for his children of submitting the land
and his will to probate at his death.31 On the contrary, in this
case, the only testimony that Rausch did not intend a transfer
came from Rausch himself, the trial court found that Rausch's
credibility was poor, and both parties had possession of the land
consistent with their shared household and established pattern of
dividing household duties. Although exercising the incidents of
ownership does cast doubt on whether a party has in fact intended
to transfer title in a deed, the credibility determinations and
facts in this case do not provide clear and convincing evidence
overcoming a presumption of delivery.
According to Rausch, the trial court's conclusion that
the presumption of delivery was not rebutted was based on factual
findings, especially credibility determinations, that were
clearly erroneous.32 He argues that the trial court should have
given more weight to his testimony that he wanted Devine to take
the Iowa property only if he died before their daughter turned
eighteen, and that he deeded the Anchorage property to Devine
merely as a gesture of goodwill after their relationship soured.
But we agree with the superior court that Rausch's stated
intentions are belied by his decisions to draft unqualified
quitclaim deeds. Rausch was a licensed attorney who had
experience in marital property law. Drafting an unqualified Iowa
deed with an expectation that the deed would become effective
only upon Rausch's death would have been an ineffective transfer
whether he kept the deed in his own possession or transferred it
to Devine, and therefore would not have reached the result Rausch
claims he intended.33 Moreover, any conditions on the Alaska deed
are oral and unproved, so that the Alaska transfer would also
have been ineffective to reach the results Rausch claimed he
intended.34 Not only would these deeds have been legally
ineffective to reach the results that Rausch claims he intended,
but they were also facially unrelated to those results. Devine
argues, with some justice, that Rausch's case amounts to the
proposition that ten years after the fact only Rausch's "secret,"
unstated intentions regarding the property are relevant. Indeed,
Rausch testified that he and Devine never discussed his
intentions regarding the Anchorage property because "she knew why
I did it. . . . I wanted to ameliorate [her] concern."
We also agree with the superior court that Rausch did
not present clear and convincing evidence to support his
testimony that he did not intend to deliver the deeds; rather,
his supporting evidence was contradictory and incomplete,
especially when viewed in the light most favorable to Devine, the
prevailing party. The trial court noted that while Rausch
insisted repeatedly in his testimony that he would never give
away his property, nevertheless he did not call any of the lawyer
friends who authorized or recorded the deeds for him to
corroborate his assertion that the deeds were not meant to
transfer title. Moreover, Rausch did not bolster these
assertions by explaining what steps he took, if any, to retain
control over either of the deeds. Rather, regarding the Iowa
deed, he says only that he "showed" the Iowa deed to Devine and
that she later stole it from him, without explaining what he did
with the deed after showing it to her, where he kept it, or how
he excepted this particular piece of paper from his usual
practice of depending on Devine to supervise all the paperwork
relating to their household. Iowa case law provides that the
grantor's intent regarding delivery is to be deduced from the
grantor's "acts or words or both,"35 probably as a safeguard
against the "secret intent" problem. In this case Rausch's only
relevant acts and words were those of ownership in paying the
mortgage, etc., and as the trial court correctly noted, these
acts are not inconsistent with the possibility that he intended
that title to the land be transferred to Devine because she
lacked the ability to buy her own land. Rausch's subsequent acts
of ownership do not clearly and convincingly show that Rausch
drafted, signed, and asked a friend to notarize the unconditional
Iowa quitclaim deed intending something other than a present
transfer of title to Devine, someone with whom he expected to be
living for a long time.
There is a similar lack of supporting evidence as to
Rausch's intentions regarding the Anchorage deed. Again, Rausch
claims that he used his Iowa quitclaim deed as a model and took
it to lawyers with whom he had practiced to have the deed
acknowledged, but did not testify that he explicitly instructed
them not to record the deed and to return it to his sole control.
He testified instead that he could not remember whether he
instructed his attorney to return the deed to himself or Devine,
and apparently never looked for the return of the deed or thought
about it again until 1994 when refinancing his mortgage. Yet
Rausch claims to be surprised that the Anchorage deed was
recorded, and his attorney suggested that his lawyer friends must
have "mistakenly" recorded the deed on his behalf. These facts -
that Rausch apparently placed no significance on his lack of
control of the deed, that it was recorded by his own agent, and
that he chose the form of the deed himself - all tend to raise
the inference that Rausch in fact intended the deed to do exactly
what it said it did: give title to the property to Devine.
Regarding credibility, in the absence of any testimony
from Rausch explaining how he attempted to keep control of either
deed, the trial court was left only with the nakedly conflicting
testimony of the two parties, making the whole case turn to a
substantial extent on the credibility determination. Credibility
determinations are the function of the trial court, not this
court.36 The trial court observed that while Rausch claims he
never authorized the recording of either deed, Rausch waited
until six years after he claims to have learned of the recording
of the deeds to attempt to rectify Devine's alleged theft of the
Iowa deed from him and his own attorney's purported mistake in
recording the Alaska deed. The superior court also noted that
Rausch's testimony about his financial habits was not credible,
that Rausch had deliberately misled others about his assets in
the past in order to avoid what he saw as unfair child support
obligations, and that Devine had provided a plausible narrative
regarding why Rausch had given her the properties. Devine
testified that Rausch had promised her the Anchorage house at the
time they agreed to marry and that she had repeatedly asked him
to formalize their union. In this connection, it is important to
note that there were inferences from Rausch's own testimony to
support the trial court's finding that Devine was credible:
although typically couching the issue in terms of fear for his
death in a hunting or flying accident, Rausch also acknowledged
that he knew that Devine's unmarried status and lack of resources
made Devine feel financially and legally insecure, and that he
drafted both deeds to meet her concerns. In addition, Rausch had
a history of extravagant gifts, including land: he had given at
least one piece of land to one of his children in the past, and
he had given Devine a Rolex at the time of their putative
marriage ceremony as well as a Mercedes earlier. The relevance
of the credibility determinations is clear, and the credibility
determination is a matter for the superior court.
Rausch also contends that the superior court made two
errors of law. First, Rausch contends that the trial court's
credibility determinations were based in part on facts which were
"not related" to the issue of delivery of the deeds and therefore
were not relevant. Because Rausch's primary evidence of his lack
of intent to deliver the deeds was his own testimony about his
intentions, the trial court had no choice but to discuss less
relevant material in explaining its assessment of Rausch's
overall credibility, which it properly did. Yet the trial court
substantiated its opinion regarding the delivery of the deeds
entirely with facts relating directly to the delivery of the
deeds. We hold that there was no error in the trial court's
application of the law to the facts.
Second, Rausch contends that the trial court committed
legal error by failing to conclude expressly that Rausch intended
a present transfer. However, under the rebuttable presumption of
delivery raised by the recording of each of the deeds, delivery
was already presumed. It was not the court's duty to find that
the deeds had been delivered; it was instead Rausch's duty to
present clear and convincing evidence that they had not been
delivered. There was no error of law on this point. Upon a
review of the record viewed in the light most favorable to the
prevailing party, it cannot be said that the trial court
obviously made a mistake in finding that Rausch had not submitted
evidence of a quantity or quality that would rebut the
presumption of a valid delivery of either deed under the "clear
and convincing" standard.
B. Because the Transfer of the Properties Did Not
Give Rise to an Inference that Rausch Did Not Intend
Devine To Benefit, No Resulting Trust Was Required.
Rausch also contends that the trial court erred in
refusing to impose a resulting trust on the properties. The
existence and extent of equitable interests in land are governed
by the law of the situs of the land.37 Iowa follows the
Restatement (Second) of Trusts and defines a resulting trust as
being imposed " `for the purpose of carrying out what it appears
from the circumstances under which a disposition of property is
made would probably have been the intention of the person making
the disposition.' "38 We have examined a resulting trust only
once, in Sugg v. Morris,39 but did not define it there. However,
the Restatement (Second) of Trusts has helped guide our
definition of trusts in the past.40
Rausch also relied upon the Restatement (Second) of
Trusts in the trial court. The Restatement explains that a
resulting trust arises where circumstances raise an inference
that the payor does not intend that the grantee should have the
beneficial interest in the property, the inference is not
rebutted, and the beneficial interest is not disposed of.41 The
Introductory Note to the chapter on resulting trusts explains
that such an inference may arise in three situations: (1) where
an express private or charitable trust fails in whole or in part;
(2) where a private or charitable trust is fully performed but
some of the trust estate has not yet been exhausted; or (3)
"[w]here property is purchased and the purchase price is paid by
one person and at his direction the vendor transfers the property
to another person."42 Section 405 of the Second Restatement
provides that "[w]here the owner of property transfers it without
declaring any trust, the transferee does not hold the property
upon a resulting trust although the transfer is gratuitous."
Comment a to that section explains that "[w]here a transfer of
property is made without consideration, the inference is that the
transferor intends to make a gift to the transferee, not that he
intends that the transferee should hold the property for the
benefit of the transferor." Section 440 explains that where a
transfer is made to one person and the purchase price is paid by
another, an inference of a resulting trust arises; but section
441 explains that the inference does not apply if the payor
manifests an intent that no such trust should arise. Comment a
to section 441 explains that this is the case where the payor
shows an intent to make a gift, and comment b lists factors that
may tend to show whether or not a gift was intended.43
Rausch alleges various errors by the trial court. He
first contends that the trial court misunderstands the creation
of a resulting trust, because the trial court only cited portions
of the Restatement in its opinion that state that a resulting
trust may arise where the payor directs the vendor that title
shall be taken by the transferee. Rausch argues that other
situations exist in which an inference will arise that the payor
did not intend to give the transferee the beneficial interest,
for instance where conditions impose a fiduciary duty on the
grantor or a third person. Rausch also argues that a resulting
trust is appropriately imposed where this will bring into effect
what the grantor would have chosen had he thought carefully about
the matter. Rausch's statements of law are valid44 and are
mirrored in the relevant Iowa case law.45 However, the trial
court's emphasis on third-party transfers appears to reflect only
the fact that the first two classic situations raising an
inference of a resulting trust, where there is an attempt at an
express trust or where the purposes of a trust have been fully
performed, could not possibly have been applicable in this case.
Moreover, the substantive basis for the trial court's ruling was
its factual finding that the transfers were gratuitous, as shown
by the court's citation to Restatement section 405. Comment a to
section 405 states that gratuitous transfers of previously-held
property are subject to the inference that a gift was intended,
not the inference that the payor himself expected to benefit from
the conveyance (which is defined as a resulting trust by
Restatement section 404). Therefore, the trial court was correct
in ruling that the circumstances at hand gave rise to an
inference of a gift, not a resulting trust. There was no error of
law on this point.
Next, Rausch alleges that the trial court erred in
stating that "no resulting trust would arise unless Mark could
prove by clear and convincing evidence that he did not intend to
gift the properties to Michelle." Rausch claims that it was
error to presume a gift and error to require the gift to be
rebutted through clear and convincing evidence. He claims
instead that circumstances raise an inference that he did not
intend for Devine to have the beneficial interest in the
property. But the inference of a gift arises as a matter of law
according to Restatement section 405 and as a matter of fact
flowing from the trial court's credibility determination.
Finally, Rausch attacks the trial court's factual
findings supporting the inference of a gift, which were patterned
on Restatement section 441 comment b, on the ground that Rausch
continued to make mortgage payments on the properties long after
the original gift. The equity owned by Rausch in each property
at the time the deeds were executed is already presumed to be a
gift according to section 405, which refers to property already
held by the benefactor. Therefore, the only remaining issue is
whether the subsequent mortgage payments are subject to
Restatement sections 440 and 441. Section 440 provides that a
resulting trust arises where one party pays a purchase price but
the land is transferred to another. Section 441 provides that
"[a] resulting trust does not arise where a transfer of property
is made to one person and the purchase price is paid by another,
if the person by whom the purchase price is paid manifests an
intention that no resulting trust should arise." We do not
consider each mortgage payment to constitute an individual
transfer of property to Devine; rather, each mortgage payment
simply expresses Rausch's completion of his contractual
obligations under the mortgage. Therefore we doubt that there is
any transfer of property here in the sense that would create a
resulting trust under Restatement section 440 at all. We affirm
on the ground that section 405 applied to both the initial
transfer and the later mortgage payments.
C. Because Devine Was Not Unjustly Enriched by the
Transfer of the Properties, No Constructive Trust Was
Required.
Rausch contends that the trial court erred in refusing
to impose a constructive trust on the properties. The existence
and extent of equitable interests in land are governed by the law
of the situs of the land.46 Iowa follows the definition of the
Restatement (Second) of Trusts, which states that a constructive
trust expresses a right to restitution based on unjust
enrichment.47 The Restatement of Restitution states that "one who
makes a gift or voluntarily pays money which he knows he does not
owe confers a benefit; in neither case is he entitled to
restitution."48 In the absence of a document evidencing the
intention to create a trust, Iowa will impose a constructive
trust only where (1) there is fraud, duress, or undue influence;
(2) the transferee and transferor were in a confidential
relationship; or (3) the transfer was made by the transferor in
anticipation of death.49 Likewise, in Alaska a constructive trust
is appropriate to prevent unjust enrichment, defined as the
retention of property through "unjust, unconscionable, or
unlawful means."50
The trial court responded to the constructive trust
cause of action by pointing out that during Rausch and Devine's
ten-year relationship, Rausch had benefitted greatly from
Devine's services, and concluding that her retention of both
properties could not be characterized as unjust or
unconscionable. Rausch attacks the trial court's
characterization of the facts as unsupported by detailed
evidence, and argues that there is no legal support for the
contention that Rausch deserved to be compensated for her
domestic services. Devine argues that the transfer was a gift
and was fair. As to the Iowa deed, although Rausch did allege
that Devine essentially stole the deed in order to record it,
which could be a basis for a finding of fraudulent unjust
enrichment, the trial court did not give credence to this
allegation, and there is no other applicable basis in Iowa law on
which to impose a constructive trust. Regarding the Anchorage
deed, Rausch does not allege that Devine obtained the title to
that property through any "unjust, unconscionable, or unlawful
means."51 Rather, the argument is only that it is unfair that
Devine should hold title to something that Rausch paid for.
Whatever the merits of that argument, that Devine holds title to
property that Rausch paid for does not constitute unjust
enrichment.52 We interpret the trial court's reasoning on this
issue as a rejection of the implication that receiving property
for acting as a stay-at-home parent is unjust, unconscionable, or
unlawful, and affirm its ruling denying a constructive trust.
V. CONCLUSION
Because Rausch failed to rebut the presumption of
delivery of the deeds by clear and convincing evidence, because
gratuitous transfers do not raise an inference of intent to
benefit someone other than the transferee such that a resulting
trust is appropriate, and because a freely gratuitous transfer is
not unjust enrichment justifying the imposition of a constructive
trust, we AFFIRM the superior court in all respects.
_______________________________
1 Restatement (Second) of Trusts 440 (1959).
2 State Farm Auto. Ins. Co. v. Raymer, 977 P.2d 706, 712
(Alaska 1999); McKnight v. Rice, Hoppner, Brown & Brunner, 678
P.2d 1330, 1335 (Alaska 1984) (quoting George Gleason Bogert &
George Taylor Bogert, Trusts and Trustees 471, at 3 (rev. 2d
ed. 1978)).
3 D.M. v. D.A., 885 P.2d 94, 96 n.3 (Alaska 1994).
4 Wood v. Collins, 812 P.2d 951, 955 n.4 (Alaska 1991).
5 Id. at 956 n.5; Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska
1979).
6 Klosterman v. Hickel Inv. Co., 821 P.2d 118, 121-22 (Alaska
1991).
7 Parker v. N. Mixing Co., 756 P.2d 881, 892 n.25 (Alaska
1988); Alaska R. Civ. P. 52(a).
8 Klosterman, 821 P.2d at 122.
9 In re A.B., 791 P.2d 615, 621 n.9 (Alaska 1990).
10 At oral argument, Rausch also suggested that the trial court
should simply have divided the properties in accordance with the
intention of the parties under Tolan v. Kimball, 33 P.3d 1152,
1154 (Alaska 2001); D.M. v. D.A., 885 P.2d 94, 97 (Alaska 1994);
and Wood v. Collins, 812 P.2d 951, 956-57 (Alaska 1991). While
these cases do govern property division between unmarried
domestic partners, we can find no reference to them in any trial
argument or in Rausch's appellate briefing. Accordingly, we hold
that this argument has been waived. D.H. Blattner & Sons, Inc.,
v. N.M. Rothschild & Sons, Ltd., 55 P.3d 37, 54 n.69 (Alaska
2002) (issues not raised in trial court are waived on appeal
except where plain error has occurred); Bishop v. Clark, 54 P.3d
804, 815 n.32 (Alaska 2002) (issues not adequately briefed on
appeal are waived).
11 While Devine devotes considerable attention to the issue
whether reformation was available, Rausch does not raise the
claim that the deeds should have been reformed. Instead, he has
steadfastly maintained that "the court in this case was not
called upon to interpret a document. The court was required to
determine whether the grantor intended the document to be
effective. The meaning of the document itself, if it were
delivered, was never in dispute." Accordingly, it is not
necessary for us to consider reformation.
12 George Chamberlin, Cause of Action to Invalidate Deed for
Failure of Delivery, 5 Shepard's Causes of Action (Second) 471,
539 (1994).
13 Estate of Lampert v. Estate of Lampert, 896 P.2d 214, 220
(Alaska 1995); Restatement (Second) of Conflict of Laws 223
(1971); Robert A. Leflar, American Conflicts Law 169 (3d ed.
1977).
14 Heavner v. Kading, 228 N.W. 313 (Iowa 1929).
15 Iowa Code Ann. 557.3 (West, WESTLAW through 2002 2d. Ex.
Sess.).
16 Orud v. Groth, 652 N.W.2d 447, 451 (Iowa 2002); Klosterboer
v. Engelkes, 125 N.W.2d 115, 117 (Iowa 1963).
17 Orud, 652 N.W.2d at 451; Klosterboer, 125 N.W.2d at 117.
18 Orud, 652 N.W.2d at 451; Avery v. Lillie, 148 N.W.2d 474,
477 (Iowa 1967).
19 Avery, 148 N.W.2d at 477; Klosterboer, 125 N.W.2d at 117.
20 Avery, 148 N.W.2d at 477-78.
21 Id. at 478.
22 See Richard R. Powell et al., Powell on Real Property
81A.04[2] (Matthew Bender Real Property Law CD-ROM, rel. 101,
Dec. 2002); 23 Am. Jur. 2d Deeds 102-48 (2002).
23 Bennis v. Alexander, 574 P.2d 450, 451-52 (Alaska 1978).
24 In a dissenting opinion in Lown v. Nichols Plumbing &
Heating, Inc., 634 P.2d 554, 557 & n.2 (Alaska 1981) (citing 6A
Richard Powell, The Law of Real Property 891, at 81-95 (Rohan
rev. ed. 1980)), Chief Justice Rabinowitz assumed that delivery
law applied and noted that this court had done so in Bennis, 574
P.2d 450. This assumption did not conflict with the rationale of
the majority opinion in Lown.
25 See Spenard Action Comm. v. Lot 3, Block 1, Evergreen
Subdivision, 902 P.2d 766, 775 (Alaska 1995) (statutory nuisance
abatement case, citing D.M. v. D.A., 885 P.2d 94 (Alaska 1994)
(reformation of deed) and Miscovich v. Tryck, 875 P.2d 1293
(Alaska 1994) (abandonment of mining claim)). But see Fernandes
v. Portwine, 56 P.3d 1, 5 (Alaska 2002) (clear and convincing
standard does not apply to general tort nuisance).
26 798 S.W.2d 425, 427 (Ark. 1990).
27 84 P.2d 842, 843 (Kan. 1938).
28 928 P.2d 906, 909 (Kan. App. 1997).
29 Crowder, 798 S.W.2d at 426-28.
30 Staats, 84 P.2d at 842-44.
31 Giefer, 928 P.2d at 908-10.
32 In his reply brief, Rausch argues for the first time that no
presumption of delivery should have arisen at all because the
recording was not performed by the grantor. Issues raised for
the first time in the reply brief are deemed waived. Childs v.
Tulin, 799 P.2d 1338, 1340 n.5 (Alaska 1990). However, we also
note that Rausch's argument is incorrect: Neither the Iowa cases
nor the treatises make an absolute distinction between recording
by the grantor and the grantee. See, e.g., Orud v. Groth, 652
N.W.2d 447, 451 (Iowa 2002) ("A duly executed and recorded deed
ordinarily raises a rebuttable presumption of delivery with the
present intent of passing immediate title and the right of
possession."); Powell, supra note 2 at 81A.04[2][a][iv] ("Upon
a demonstration that the deed has been recorded by the grantor or
grantee, or by their agents, a rebuttable presumption of delivery
arises." (emphasis added)); Am. Jur. 2d Deeds, supra note 22 at
141 ("The recording of a regularly executed and acknowledged deed
by either the grantor or the grantee raises a rebuttable
presumption of delivery . . . ." (emphasis added) (footnotes
omitted)).
33 If Rausch retained the Iowa deed intending for it to become
effective only at his death, and never surrendered the deed to
Devine, as Rausch alleges, then it was ineffective as a transfer
for lack of delivery under Iowa law. Klosterboer v. Engelkes,
125 N.W.2d 115, 117 (Iowa 1963). If Rausch had indeed
surrendered the Iowa deed to Devine but still intended for it to
become effective only upon his death, then the deed again would
have been ineffective for lack of delivery. Avery v. Lillie, 148
N.W.2d 474, 477 (Iowa 1967). Rausch could have achieved his
allegedly desired result by, inter alia, drafting a will, by
depositing the quitclaim deed to a third party without reserving
the right to recall it, by reserving a life estate for himself in
the deed, or by transferring the property to himself and Devine
as joint tenants with right of survivorship.
34 Under Bennis v. Alexander, 574 P.2d 450, 452 (Alaska 1978),
unproved oral conditions on a deed are ineffective, and the
resulting property transfer is both effective and unencumbered.
Rausch could have achieved his allegedly desired result of
guaranteeing Devine housing until Sydney's majority by, inter
alia, granting Devine a lease with a term of years.
35 Orud, 652 N.W.2d at 451.
36 Alaska R. Civ. P. 52(a); Parker v. Northern Mixing Co., 756
P.2d 881, 892 (Alaska 1988).
37 Restatement (Second) of Conflict of Laws 235 (1971);
Leflar, supra note 13 at 172.
38 Orud, 652 N.W.2d at 452 (quoting Restatement (Second) of
Trusts 404, Introductory Note, at 324 (1959)).
39 392 P.2d 313, 316 (Alaska 1964).
40 Alaska State Employees Ass'n v. Alaska Public Employees
Ass'n, 825 P.2d 451, 459 (Alaska 1991) (defining trusts
generally); McKnight v. Rice, Hoppner, Brown & Brunner, 687 P.2d
1330, 1335 (Alaska 1984) (defining constructive trust).
41 Restatement (Second) of Trusts 404, Introductory Note, at
322-23.
42 Id. at 323.
43 These factors include: (1) declarations made by the payor at
any time regarding the transfer; (2) the relationship between the
payor and transferee; (3) whether the transferee is an
individual, corporation, or charitable corporation; (4) the
relative financial positions of the payor and transferee; (5)
whether a gift by the payor to the transferee would be
improvident; (6) the presence or absence of any reason for taking
title in the name of the transferee other than to provide the
beneficial interest. Restatement (Second) of Trusts 441 cmt.
b.
44 Restatement (Second) of Trusts 404, Introductory Note, at
324.
45 Orud v. Groth, 652 N.W.2d 447, 452 (Iowa 2002) (inference of
resulting trust raised through letter from grantor drafted
concurrently with conveyance explaining that any proceeds from
sale of property by transferee should be distributed among all of
transferee's children).
46 Restatement (Second) of Conflict of Laws 235 (1971);
Leflar, supra note 13 at 172.
47 Orud, 652 N.W.2d at 452 n.2 (citing Restatement (Second) of
Trusts 404, Introductory Note, at 326); Restatement of
Restitution 160 cmt. b (1937).
48 Restatement of Restitution 1 cmt. c.
49 Orud, 652 N.W.2d at 452.
50 State Farm Auto. Ins. Co. v. Raymer, 977 P.2d 706, 712
(Alaska 1999) (quoting McKnight v. Rice, Hoppner, Brown &
Brunner, 678 P.2d 1330, 1335 (Alaska 1984) (quoting G. Bogert,
supra note , at 3)).
51 Raymer, 977 P.2d at 712 (quoting McKnight, 678 P.2d at 1335
(quoting G. Bogert, supra note , at 3)).
52 Restatement of Restitution 1 cmt. c.
