All’s Fair in Friendship and Real Estate: People v. Clark

a tiny model of a house sits on a desk next to a set of house keys
The Colorado Supreme Court’s 1979 opinion in Page v. Clark has been referenced in similar cases more than 360 times. / Photo by Tierra Mallorca on Unsplash.

Property rights disputes can be complex if oral agreements are involved. In the mid-1970s, Colorado courts encountered just such a situation and the final opinion issued by the state Supreme Court has been referenced in similar cases more than 360 times since 1979. 

Paul Page and Morton and Alice Clarks had apparently been friends, the Colorado Court of Appeals’ 1977 opinion states, and had engaged in informal business dealings for some time prior to the property transfer. In March 1975, the Clarks, encountering some poor financial circumstances, conveyed a portion of their property to Page in return for $1,000 in cash and Page’s assumption of the existing loans on the property. 

There was an oral agreement that Page would hold legal title subject to the Clarks’ right to repurchase the property by paying Page the $1,000 plus any expenditures he’d incurred on the property up to the date of repurchase. On April 3, 1975, the Clarks conveyed the remainder of the property to Page, reconfirming the previous oral agreement and entering into a new oral arrangement granting the Clarks the right to reside on the property rent-free. On June 25, 1975, the Clarks’ residence burned down, and on June 30, 1975, Page served the Clarks with a notice to quit or vacate.

According to the 1977 opinion, Paul Page brought an unlawful detainer action against his friends, Morton and Alice Clark. The Clarks counterclaimed for reconveyance of a property they conveyed a portion of to Page, alleging that Page held the title as a constructive trustee for them. 

The trial court dismissed Page’s action and the Clarks’ counterclaim. The trial court held the oral agreement wasn’t enforceable under the Statute of Frauds. But the trial court also ruled that the oral agreement allowing the Clarks to reside on the property rent-free was enforceable because it was part of the consideration for the property transfer.

The trial court gave either party the option of terminating the tenancy upon 60 days prior notice and ruled that upon termination, Page would be required to pay the Clarks for the unused portion of the tenancy. The court then determined that the difference between the property’s $23,000 market value and the amount that Page had paid for the property was the value of the tenancy to the Clarks.

The Clarks appealed on the grounds that the trial court erred in failing to impose a constructive trust and that it applied the wrong evidentiary standard by requiring that they prove their case by clear and convincing evidence rather than by a preponderance of evidence. Meanwhile, Page asserted the Court of Appeals had no jurisdiction to decide the case because the Clarks’ motion for a new trial was untimely.

Addressing the jurisdictional issue first, the Court of Appeals noted the trial court entered its original judgment on Nov. 20, 1975 and conceded the Clarks failed to make a timely motion for a new trial. But, on Nov. 28, 1975, Page filed a motion to amend the judgment and this change in the judgment, the Court of Appeals reasoned, would affect the value of the tenancy. On January 13, 1976, the trial court granted Page’s motion to amend, altering when the final judgment was entered on the case and making the Clarks’ motion timely.

The Court of Appeals also noted in the 1977 opinion that the trial court was unwilling to impose a constructive trust, because it found no evidence of fraud or violation of a fiduciary or other confidential relationship. It did note though that Page’s agreement to reconvey the property may have influenced the Clarks to sell in the first place.

Ultimately the Court of Appeals held that the Statute of Frauds wasn’t applicable because an equitable trust had arisen between the parties. The appellate court reversed the judgment and remanded the case.

The Colorado Supreme Court granted certiorari. It reversed the Court of Appeals and remanded the case to the trial court to determine whether the Clarks have proven by a preponderance of the evidence that a constructive trust on the property should be imposed on Page.

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