ISTEL v. ISTEL (1999)

In an action, inter alia, for the imposition of a constructive trust on certain real property held in the defendant's name, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Jones, J.), dated January 29, 1998, which granted the defendant's motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, with costs.

In 1967 the plaintiff's wife, at the direction of the plaintiff, sold two acres of undeveloped land of a 24-acre tract located in Wainscott, East Hampton, to the defendant, the plaintiff's brother, for a reported price of $10,000.   The conveyance was admittedly prompted in part by the plaintiff's desire to make a wedding or birthday gift to his brother, in part because the plaintiff needed funds to build a home and reduce the mortgage on the remaining tract of land, and in part because the plaintiff wished to keep the land in the family.   Between 1965 and 1967, the plaintiff's wife sold undeveloped parcels of the tract to other buyers, the prices of which ranged from about $7,000 to $10,000 per acre.   In 1997 the defendant sought to sell the property deeded to him in 1967 at its present market value of approximately one million dollars.   The plaintiff commenced this action seeking to impose a constructive trust and an injunction, alleging that the two acres were conveyed to the defendant upon the promise that the defendant would convey the two acres to the plaintiff for its original cost plus a fair rate of interest if and when the defendant chose to dispose of the property.

 The Supreme Court was correct in granting the defendant's motion for summary judgment.   A constructive trust will be imposed when an unfulfilled promise to convey an interest in land induces another, in the context of a confidential or fiduciary relationship, to make a transfer resulting in unjust enrichment (see, McGrath v. Hilding, 41 N.Y.2d 625, 394 N.Y.S.2d 603, 363 N.E.2d 328;  Sharp v. Kosmalski, 40 N.Y.2d 119, 386 N.Y.S.2d 72, 351 N.E.2d 721).   A bona fide purchaser of property upon which a constructive trust would otherwise be imposed takes free of the constructive trust, but a gratuitous donee, however innocent, does not (Simonds v. Simonds, 45 N.Y.2d 233, 242, 408 N.Y.S.2d 359, 380 N.E.2d 189).   The defendant's submissions indicated that he was a bona fide purchaser as a matter of law, and the plaintiff failed to raise a triable issue of fact as to how, under the circumstances of the transfer and of the two parties, the defendant was unjustly enriched as the result of this transaction (see, Doria v. Masucci, 230 A.D.2d 764, 646 N.Y.S.2d 363;  Copland v. Summ, 228 A.D.2d 409, 644 N.Y.S.2d 59).

MEMORANDUM BY THE COURT.