                   IN THE COURT OF APPEALS OF TENNESSEE
                        WESTERN SECTION AT JACKSON


BRANDY REBECCA THATCHER,                 )
a minor by next friend, KATHY VAN        )
STORY,                                   )
                                         )
             Plaintiffs/Appellants,      ) Haywood Chancery No. 10975
                                         )
VS.                                      ) Appeal No. 02A01-9605-CH-00114

BOBBY PHILLIP WYATT, ROBERT
PHILLIP WYATT and WILLIAM LEA,
                                         )
                                         )
                                         )
                                                                            FILED
                                         )                               May 15, 1997
             Defendants/Appellees.       )
                                                                      Cecil Crowson, Jr.
                                                                            Appellate C ourt Clerk
         APPEAL FROM THE CHANCERY COURT OF HAYWOOD COUNTY
                     AT BROWNSVILLE, TENNESSEE
             THE HONORABLE GEORGE R. ELLIS, CHANCELLOR




LEWIS L. COBB
JUSTIN S. GILBERT
SPRAGINS, BARNETT, COBB & BUTLER
Jackson, Tennessee
Attorneys for Appellants

PAT H. MANN, JR.
Brownsville, Tennessee
Attorney for Appellees




REVERSED




                                                             ALAN E. HIGHERS, J.



CONCUR:

DAVID R. FARMER, J.

HOLLY KIRBY LILLARD, J.
    In this breach of contract case, Kathy Van Story (“Plaintiff”), as the next friend of
Brandy Thatcher (“Brandy”), seeks a judgment declaring that the proceeds of Janie Perry

Thatcher Wyatt’s (“Decedent”) $100,000.00 life insurance policy be held in trust for the

benefit of Brandy. The trial court ordered that the proceeds of Decedent’s life insurance

policy be held in trust until Brandy reaches age twenty-five or until Brandy has completed

her desired college, graduate and medical school education, whichever is later, and further

ordered that any remaining monies be distributed between Brandy and Bobby Wyatt

(“Defendant”). Plaintiff appeals the judgment of the trial court arguing that the trial judge

erred in granting Defendant a one-half interest in the trust following the latter of Brandy’s

twenty-fifth birthday or desired college, graduate and medical school education asserting

that it was the Decedent’s intent that the entire trust be used for the benefit of Brandy. For

the reasons stated hereafter, we reverse the judgment of the court below.



                                           FACTS



        In 1986, Decedent married Defendant. Decedent had one child from a previous

marriage, Brandy. Defendant had two children from a previous marriage, Robert Phillip

Wyatt (“Phillip”) and Terry Ralph Wyatt (“Terry”). No children were born of the marriage

between Decedent and Defendant.



        In 1988, Decedent developed uterine cancer. After undergoing treatment for her

cancer, Decedent’s cancer remained in remission for almost five years. In October 1992,

Decedent began experiencing problems with her lungs. Upon visiting her physician,

Decedent was initially diagnosed as having pneumonia. However, in January 1993,

Decedent was correctly diagnosed as having lung cancer. On March 18, 1994, Decedent

died.



        Before her death, Decedent executed a $100,000.00 life insurance policy, naming

Defendant as the beneficiary. According to the testimony of the Plaintiff, Decedent’s sister,

in December 1993 Decedent instructed both the Plaintiff and Defendant to hold the

proceeds of Decedent’s $100,000.00 life insurance policy in trust for the education, care



                                              2
and future of Brandy. Plaintiff and Defendant were to act as co-trustees and were not to

extract money from the trust without the signatures of both parties. Plaintiff and Defendant

agreed to create a trust from the proceeds of Decedent’s life insurance policy and to act

as co-trustees of the trust for Brandy.



       Defendant, however, denied that the Decedent requested that he and Plaintiff form

a trust for the care and education of Brandy out of the proceeds of Decedent’s

$100,000.00 life insurance policy. Instead, Defendant testified that Decedent only asked

him to take care of Brandy after she died, and he agreed that he would take care of

Brandy to the best of his ability.



       Substantiating Plaintiff’s testimony that a trust was to be created for Brandy from the

proceeds of Decedent’s $100,000.00 life insurance policy, Phyllis Presley, Decedent’s

sister, testified that Decedent said on several occasions that the proceeds from her

$100,000.00 life insurance policy were to be held in trust for Brandy and that Plaintiff and

Defendant were to act as co-trustees of this money. Presley further stated that the money

was to be used by no one other than Brandy.



       Moreover, the Decedent’s aunt, Floye Cobb (“Cobb”), testified that Decedent

executed a $100,000.00 life insurance policy for the benefit of Brandy while Decedent was

married to her previous husband, Ron Thatcher. After Ron and Decedent divorced but

before Decedent married Defendant, Decedent executed another $100,000.00 life

insurance policy making Cobb the beneficiary and instructing Cobb to use the proceeds

to take care of Brandy. Following her marriage to Defendant, Decedent changed the

beneficiary on her life insurance policy from Cobb to Defendant and instructed Defendant

that he and the Plaintiff were to act as co-trustees of the proceeds of the policy which were

to be used for the care and education of Brandy. Furthermore, Cobb testified that

Decedent repeatedly stated that the proceeds from her $100,000.00 insurance policy were

to be used solely for the benefit of Brandy.




                                               3
       Decedent’s sister, Sherry Van Story (“Sherry”), testified that Decedent told her on

several occasions that Plaintiff and Defendant had agreed to act as joint trustees of the

proceeds from Decedent’s $100,000.00 life insurance policy. Sherry stated that the life

insurance proceeds were to be used to pay Decedent’s medical bills, the mortgage on

Defendant’s house if Brandy continued to live with Defendant after Decedent’s death,

Brandy’s college education and Brandy’s future living expenses.



       Kim Evans, the Decedent’s first cousin, testified that Decedent told her that the

proceeds from Decedent’s $100,000.00 life insurance policy were to be used for Brandy’s

college education and that Plaintiff and Defendant were to act as co-trustees.



       Brandy testified that her mother, the Decedent, had repeatedly stated to her that

she had the cost of Brandy’s medical school “covered.”



       Charlotte Wright, a co-worker and friend of the Decedent, testified that the proceeds

from Decedent’s $100,000.00 life insurance policy were to be used for Brandy’s college

education.



       Phillip Wyatt, his wife Stephanie Wyatt and Terry Wyatt all testified that they had

never heard the Decedent refer to a trust which was to be created for the benefit of Brandy.



       Nonetheless, in May 1994 after Decedent’s death, Defendant collected the

$100,000.00 in life insurance proceeds, purchased a $50,000.00 certificate of deposit and

placed the other $50,000.00 into an investment account. Without conferring with the

Plaintiff, Defendant placed the certificate of deposit and the investment account under the

name of the “Brandy Thatcher Trust.” However, instead of acting as the co-trustee along

with the Plaintiff, Defendant employed William Lea to act as trustee and made the trust a

revocable trust. Defendant structured the trust so that it would terminate when Brandy

reached age twenty-five. The trust was then to be distributed equally between Brandy and

Defendant’s two sons, Phillip Wyatt and Terry Wyatt.



                                             4
       In the summer of 1994, Brandy moved out of Defendant’s house and began living

with the Plaintiff. In July 1994, two days after Brandy’s move from Defendant’s house to

Plaintiff’s house, Defendant instructed William Lea to terminate the trust that he had

created for Brandy and to place the proceeds in an account under the name of his son,

Phillip Wyatt.



                                                LAW



       The sole issue before this Court is whether the trial court erred in granting the

Defendant, Defendant Wyatt, a one-half interest in the remaining proceeds of Decedent’s

$100,000.00 life insurance policy following the latter of Brandy’s twenty-fifth birthday or the

date at which Brandy completes her desired graduate school education.



       As a tool of equity, a resulting trust will be imposed when necessary to prevent a

failure of justice. Burleson v. McCrary, 753 S.W.2d 349, 352 (Tenn. 1988); Estate of

Wardell ex rel. Wardell v. Dailey, 674 S.W.2d 293, 295 (Tenn. Ct. App. 1983), quoting 76

Am.Jur.2d Trusts § 196 (1975). Such trusts are “judge-created trusts or doctrines which

enable a court, without violating all rules of logic, to reach an interest in property belonging

to one person yet titled in and held by another." Wells v. Wells, 556 S.W.2d 769, 771

(Tenn. Ct. App. 1977). A resulting trust is defined as follows:

                 [b]roadly speaking, a resulting trust arises from the nature of
                 circumstances of consideration involved in a transaction
                 whereby one person thereby becomes invested with a legal
                 title but is obligated in equity to hold his legal title for the
                 benefit of another, the intention of the former to hold in trust for
                 the latter being implied or presumed as a matter of law,
                 although no intention to create or hold in trust has been
                 manifested, expressly or by inference, and although there is an
                 absence of fraud or constructive fraud.

In Re Estate of Roark v. Bischoff, 829 S.W.2d 688, 692 (Tenn. Ct. App. 1991), quoting 76

Am.Jur.2d, Trusts, § 196, p. 429 (1975).



       The equitable power to establish a resulting trust applies with respect to both real

and personal property. In Re Estate of Roark, 829 S.W.2d at 693, citing 89 C.J.S. Trust



                                                  5
§ 98 p. 941 (1955). See also, Dailey, 674 S.W.2d at 295; 23 A.L.R. p. 1500. In either

case, "[i]t is . . . uniformly held that resulting trusts may be, and generally are, proved by

parol evidence." Chappell v. Dawson, 308 S.W.2d 420, 422 (Tenn. 1957). See also,

Butler v. Rutledge, 42 Tenn. (2 Cold.) 4 (1865); Savage, 4 Tenn. App. at 283; See

generally, 89 C.J.S. Trusts Sec. 101, 133 (1955); Gibson's Suits in Chancery, § 976, n. 2

(5th Ed.1956). In addition, it is also uniformly held that any oral statement purporting to

create a resulting trust in property must have been made prior to or contemporaneously

with the transaction. In Re Estate of Roark, 829 S.W.2d at 692.



       However, when one attempts to create a resulting trust on the basis of parol

evidence, proof of an oral trust must be established by clear, cogent and convincing

evidence. King v. Warren, 680 S.W.2d 459, 460 (Tenn. 1984); Allen v. National Bank of

Newport, 839 S.W.2d 763, 765 (Tenn. Ct. App. 1992); In Re Estate of Roark, 829 S.W.2d

at 693; Al-Haddad v. Al-Haddad, 774 S.W.2d 192 (Tenn. Ct. App. 1989).



       In addressing the requirements necessary for the creation of an oral resulting trust,

the court in King v. Warren, 680 S.W.2d 459 (Tenn. 1984), stated as follows:

              [w]e recently had occasion to discuss the law with respect to
              the establishment of an oral trust in real estate, affirming the
              requisites that the declaration must be made prior to or
              contemporaneous with a transfer of realty, must be proven by
              evidence that is clear, cogent and convincing, and that
              ordinarily, the testimony of a single, interested witness would
              not be sufficient to establish a trust by that quantum of proof.
              Tansil v. Tansil, 673 S.W.2d 131 (Tenn.1984); citing e.g.,
              Sanderson v. Milligan, 585 S.W.2d 573 (Tenn.1979) and Hunt
              v. Hunt, 169 Tenn. 1, 80 S.W.2d 666 (1935).

King, 680 S.W.2d at 461.

       Similarly, the court in Linder v. Little, 490 S.W.2d 717 (Tenn. Ct. App. 1972),

addressed the creation of an oral trust and stated that:

              the declaration of trust by the grantor must be before or
              contemporaneous with the conveyance. Adrian v. Brown, 29
              Tenn.App. 236, 196 S.W.2d 118 (1946). And, proof of a parol
              trust must be of the clearest and most convincing character.
              It must be so clear, cogent and convincing as to overcome the
              opposing evidence coupled with the presumption that obtains
              in favor of the written instrument. Hoffner v. Hoffner, 32
              Tenn.App. 98, 221 S.W.2d 907 (1949) and authorities cited
              therein.

                                              6
Linder, 490 S.W.2d at 723.



       Resulting trusts generally are imposed in accordance with the actual or assumed

intention of the parties. Burleson, 753 S.W.2d at 352-53; See generally, Gibson’s Suits in

Chancery § 382 (1982). One instance where resulting trusts are imposed occurs in a

situation when the owner of property gratuitously transfers it and properly manifests an

intention that the transferee should hold the property in trust, but the trust, for some

reason, fails. Burleson, 753 S.W.2d at 353; See, Restatement (Second) of Trusts § 411

(1959); G. Bogert Trusts and Trustees § 468 (1977).



       In discussing the varying situations in which a resulting trust may be imposed, this

Court stated in Estate of Wardell ex rel. Wardell v. Dailey, 674 S.W.2d 293, 295 (Tenn. Ct.

App. 1983), as follows:

              [t]he resulting trust may be created in a variety of situations, for
              example "[w]here a deed by father to son is shown to be for
              the benefit of the mother." Gibson's Suits in Chancery, § 976,
              n. 2 (5th Ed.1956). This court, more than fifty years ago, in
              Savage v. Savage, 4 Tenn.App. 277 (1927), confronted a
              somewhat similar situation.        There, the plaintiff, after
              purchasing a lot with a house on it, had conveyed the same to
              his father to be held in trust for the former and other third
              persons, while the former went "north, [to] work where he could
              get better wages" in order to pay off the notes on the land. Id.
              at 279. While the plaintiff/son was absent, the father remarried
              and later died, after which the widow claimed the land. In
              establishing a resulting trust in favor of the son, the court
              stated that "[w]hen property is conveyed or given by one
              person to another, to hold for the use of a third person, such
              a trust will thereby be created as will give equity jurisdiction to
              compel the application to the purposes of the trust." Id. at
              284.

       In Estate of Wardell ex rel. Wardell v. Dailey, 674 S.W.2d 293, 295 (Tenn. Ct. App.

1983), a wife requested that her name be removed from her joint checking and savings

account which she had established with her husband due to her blindness and inability to

oversee her financial affairs. Id. at 296. Upon removal of the wife’s name from her joint

checking and savings accounts, her son’s name was added instead. Husband thereafter

had the name of his son placed jointly with him on virtually all of his certificates of deposit

and money market certificates, which resulted in the son being the joint owner of most of

his parent’s estate at the time of his father’s death. Id. After the father’s death, son

                                               7
claimed to be the sole owner of the joint checking and savings accounts, certificates of

deposit and money market certificates. Id. The court, however, imposed a resulting trust

on the joint and survivorship bank accounts and certificates of deposit and required the son

to hold the money in trust for the lifetime of his mother and thereafter required the son to

divide the corpus of the trust with his sister at his mother’s death. Id. at 297.



       In Burleson v. McCrary, 753 S.W.2d 349 (Tenn. 1988), Mr. Burleson gratuitously

transferred his residence to one of his daughters and manifested an intention that the

daughter hold the property in trust for the benefit of all five children of Mr. Burleson.

Although the daughter claimed that she owned the property in fee simple absolute because

the property had been properly deeded and recorded in her name, the court held that the

daughter held the property in trust for the benefit of all five children of Mr. Burleson. Id. at

353. The court, therefore, imposed a resulting trust upon the grantee daughter and

directed her to reconvey the property to the executor of Mr. Burleson’s estate. Id.



       Moreover, in the case of Cook v. Cook, 559 S.W.2d 329, 332 (Tenn. Ct. App. 1977),

this Court was faced with a situation similar to the case at bar. In Cook, the decedent

designated his brother as the beneficiary of his life insurance policy but orally instructed

his brother to pay decedent’s debts, to set decedent’s step-son up in a farming operation

and to use the remaining proceeds for the benefit of decedent’s son. Id. In accordance

with the decedent’s intentions, this Court held that the decedent’s brother was the trustee

of the proceeds from decedent’s life insurance policy and that the proceeds of the trust

were to be used to pay decedent’s debts, to set the decedent’s step-son up in a farming

operation and to use the remaining proceeds for the benefit of decedent’s son. Id. at 333.

In holding that an oral trust had been created, this Court stated that it is important to take

note of the relationship between the parties to the trust agreement and to weigh the

reasonableness of the terms of the trust as orally related. Cook v. Cook, 559 S.W.2d 329,

332 (Tenn. Ct. App. 1977).



       The record establishes that Decedent and Brandy enjoyed a close relationship. As



                                               8
the only natural child of the Decedent, it is reasonable to believe that Decedent wanted to

ensure that Brandy was properly provided for after Decedent’s death. Thus, upon our

review of the record, the clear, cogent and convincing evidence reveals that the Decedent

named Defendant as the legal beneficiary of her $100,000.00 life insurance policy, but

Decedent impressed an oral trust upon the proceeds of her insurance policy by instructing

the Plaintiff and Defendant to create a trust for the benefit of Brandy from these proceeds

and to act as co-trustees of the trust. We, therefore, hold that the proceeds of Decedent’s

$100,000.00 life insurance policy be held in trust for the benefit of Brandy. We further hold

that the Plaintiff, Kathy Van Story, is hereby appointed as trustee of the trust.



       The judgment of the trial court is hereby reversed. Costs on appeal are taxed to the

appellees for which execution may issue if necessary.




                                                         HIGHERS, J.


CONCUR:



FARMER, J.



LILLARD, J.




                                             9
