                                                                   FILED
                                                       United States Court of Appeals
                                                               Tenth Circuit

                                     PUBLISH                  May 29, 2013
                                                           Elisabeth A. Shumaker
                  UNITED STATES COURT OF APPEALS               Clerk of Court

                               TENTH CIRCUIT



 UNITED STATES OF AMERICA,

             Plaintiff - Appellee,
       v.                                            No. 12-4000
 ROBERT TINGEY, as Trustee for the
 D.E. Brown Family Trust,

             Defendant - Appellant,

 DOUGLAS BROWN; BARBARA
 BROWN; UTAH STATE TAX
 COMMISSION; GILBERT JENSEN,

              Defendants.


        APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF UTAH
                   (D.C. NO. 2:07-CV-00810-BSJ)


Russell S. Walker (Anthony M. Grover with him on the briefs), Woodbury &
Kesler, P.C., Salt Lake City, Utah, for Defendant - Appellant.

John A. Dudeck, Jr., Attorney, Tax Division, Department of Justice, (David
Barlow, United States Attorney, Kathryn Keneally, Assistant Attorney General,
Teresa E. McLaughlin, Attorney, Tax Division, Department of Justice, with him
on the brief), Washington, D.C., for Plaintiff - Appellee.


Before BRISCOE, Chief Judge, HOLLOWAY, and HARTZ, Circuit Judges.


HARTZ, Circuit Judge.
      The district court permitted the government to foreclose on federal tax liens

on a ski cabin (the Ski Cabin) titled in the name of the D.E. Brown Family Trust

(Family Trust), whose beneficiaries were Douglas Brown’s wife and children.

The taxes were owed by Douglas Brown (Brown) and his wife (together, the

Browns), not the trust, but the court found that the Browns were the beneficial

owners of the cabin because Brown had a purchase-money resulting trust (PMRT)

arising from his having purchased the cabin and then conveyed it to the Family

Trust. 1 The trustee of the Family Trust, Robert Tingey, appeals. He argues (1)

that the government waived its claim that the Browns held the beneficial interest

in the cabin, and (2) that the district court erroneously concluded that a PMRT

arose under Utah law. Exercising jurisdiction under 28 U.S.C. § 1291, we

affirm. The government did not intentionally relinquish its claim to the cabin,

and the evidence supports the district court’s determination that Brown intended

the trust to hold the cabin for his benefit.


      1
        Although the district court repeatedly states its ruling that a PMRT in the
Ski Cabin arose “in favor of Douglas Brown,” Aplt. App. at 175, 191 (Findings of
Fact & Memorandum Op. at 45, 61, United States v. Brown, Nos. 2:07-cv-00810-
BSJ & 2:07-cv-00127 BSJ (D. Utah Oct. 11, 2011) (Mem. Op.), it then, without
any further explanation or analysis, states that the Browns, both Brown and his
wife, held “the beneficial interest” in the cabin. Id. But neither Brown nor his
wife is a party to the appeal, and Tingey has not raised any issue as to whether it
is Brown alone or the Browns together who have the beneficial interest. We will
therefore proceed to address only whether a PMRT was created for Brown’s
benefit and assume that it is inconsequential whether only he, or both Browns,
held the beneficial interest in the cabin.

                                          -2-
I.    BACKGROUND

      A.     Tax Liability

      The Browns owe federal income taxes for the tax years 1993, 1994, 1995,

1996, 1999, 2001, 2002, and 2005; and Brown owes federal gift taxes for the tax

years 1994 and 1995. The district court’s March 7, 2011, order reducing the tax

assessments to judgment reflects that the Browns owed a total of $2,076,424.80 as

of December 31, 2010. The Browns do not dispute this liability. The government

filed notices of federal tax liens respecting the Browns’ income- and gift-tax

liabilities for each of these tax years.

      B.     D.E. Brown Family Trust

      On June 22, 1993, Brown created the Family Trust, an irrevocable trust

whose beneficiaries are his wife and their four children. Although the Trust

Agreement named his brother, Mark Brown, as trustor, Mark contributed no assets

to the trust; only Brown contributed assets. The agreement named Tingey, the

brother-in-law of Brown’s wife, as trustee.

      C.     Purchase and Use of the Ski Cabin

      In June 1993 the Browns negotiated the purchase of the Ski Cabin from

Gilbert Jensen. Brown paid Jensen a $5,000 earnest-money deposit. After the

parties agreed on the terms of the sale, Jensen conveyed undivided one-half

interests in the cabin to two trusts, the Gilbert Willard Jensen Trust and the

Myrna Merrill Jensen Trust (the Jensen Trusts). Each of the Jensen Trusts then

                                           -3-
conveyed its one-half interest in the cabin to Tingey, as trustee for the Family

Trust. To pay for the cabin, Brown supplied personal funds via a cashier’s check

payable to the title company to cover the down payment of approximately

$72,000. Brown also executed a $200,000 promissory note in favor of the Jensen

Trusts, on which he was the sole obligor. As security for the note, he executed a

trust deed to the cabin, naming the Jensen Trusts as beneficiaries and himself as

the trustor. The trust deed was recorded on June 23, 1993. Brown also executed

a security agreement for two pieces of collateral: (1) a Thiokol Snowcat (a snow-

plowing implement) and (2) a share of stock in the Silver Lake Company. The

share of stock represented the water rights to the cabin; Jensen had prepared a

stock certificate in Brown’s name at the time of the sale. Jensen valued the share

at $50,000, and said that lots without water rights were not marketable. Also, the

closing statements, bill of sale, and seller’s escrow instructions all reflected that

the Jensen Trusts were the sellers and Brown was the buyer of the cabin.

      Soon after the closing, a replacement promissory note bearing the date of

the closing (June 22, 1993) was executed, naming as obligors both Brown and

Tingey, in his capacity as trustee for the Family Trust. A replacement trust deed

was also executed, naming as trustors both Brown and Tingey, again in his

capacity as trustee.

      After the 1993 purchase the Browns promptly began using the Ski Cabin.

They performed maintenance work and paid the utility bills and premiums on an

                                          -4-
insurance policy for the cabin issued in Brown’s name. Tingey performed no

maintenance on the cabin. And the Browns used the cabin without Tingey’s

permission or supervision. Indeed, the district court found that “Tingey knew

little or nothing about how the Browns used the [Ski Cabin].” Aplt. App. at 149

(Findings of Fact & Mem. Op. at 19, United States v. Brown, Nos. 2:07-cv-00810-

BSJ & 2:07-cv-00127 BSJ (D. Utah Oct. 11, 2011) (Mem. Op.). In 2005 Brown

leased the cabin to his friend, Charles Jorgensen, and Brown instructed him to pay

“rent” directly to the Jensen Trusts to cover the payments on the note. Tingey

knew nothing of this transaction.

      In addition to payments from Jorgensen, payments on the note came from

various sources and in various amounts. The district court found that many

payments came from sources closely connected to Brown, including payments

directly from the Browns, 2 the Brighton Factor Dealers (Brown’s business), a law

firm representing Brown, and a company that employed Brown. Other payments

came from the Wrenhaven Trust, another trust for which Tingey served as the

trustee and to which Brown contributed the assets.

      Ultimately, Brown’s brother James purchased the Jensen Trusts’ remaining

interest in the cabin in late 2007 and foreclosed on the trust deed. The Family



      2
        Although Mr. Jensen, referring to a payment log that he prepared, testified
that some payments came from the Browns, he was not more precise about the
names on the accounts on which the payment checks were written.

                                        -5-
Trust’s interest in the foreclosure sale proceeds was $154,236.02, which has been

deposited in the district court’s registry.

      D.     Brown’s Finances in 1993

      The year 1993 was a turning point in the Browns’ financial condition. The

evidence may not have been accessible to others for a while, but it could not have

been unknown to the Browns. Although they eventually (in 1997) reported that

they owed almost $350,000 in income taxes for 1993, they did not file a timely

return. And although Brown was not sued by investors until October 1994 and

was not indicted for financial transgressions until December 1995, the claims and

charges concerned misconduct beginning in late 1990. Tingey confirmed, perhaps

inadvertently, that Brown knew he was in a precarious financial situation when he

created the trust. Tingey testified that it was his understanding that Brown

“wanted to create the trust in part to set up an entity that would hold some assets

separate and apart from him to protect his assets from creditors.” Id. at 183

(Mem. Op. at 53) (internal quotation marks omitted).



      E.     Brown’s Use of the Family Trust in Personal Business Ventures
             and Securities Fraud

      Brown retained significant control over the Family Trust’s affairs. Tingey

testified that he consulted with Brown and relied on Brown’s knowledge of the

investment industry in making decisions regarding trust assets. Brown often


                                              -6-
presented Tingey with investment opportunities for the trust. Moreover, the trust

was intimately intertwined with Brown’s business affairs. The Brighton Factor

Dealers, which Brown said “‘was really just a facilitation of the business where I

was working,’” id. at 154 (Mem. Op. at 24), was, according to Tingey, “‘a dba of

the Trust,’” id. Yet Tingey’s role in the venture was limited to establishing the

dba, signing some checks, reviewing the bank statements, and forwarding copies

of the statements to Brown.

      The Family Trust also was involved with three companies for which Brown

worked as an officer or manager: Wellshire Securities (Deutschland) GmbH,

Wellshire Services, Inc., and Wellshire Securities, Inc. (collectively, Wellshire

Securities). According to the district court, Tingey, at Brown’s direction, entered

into a series of securities transactions for the Family Trust “directly related to the

activities of the Wellshire securities entities.” Id. at 152 (Mem. Op. at 22). The

securities or the money to acquire them all originated with Brown. The district

court found:

             With the assent of the trustee, [Brown] made use of the
      [Family Trust] and its several bank and brokerage accounts to engage
      in financial transactions that were largely an extension of his own
      personal dealings and financial affairs involving the business of the
      Wellshire entities, and otherwise. Beginning in or about October
      1994, Brown conducted the business of Brighton Factor Dealers
      through the [Family Trust’s] accounts in an attempt to shelter that
      economic activity from Brown’s mounting potential personal liability
      arising out of the Wellshire entities’ business.

Id. at 157 (Mem. Op. at 27).

                                          -7-
      Brown’s activities with Wellshire Securities resulted in the above-

mentioned suits against him by investors and a criminal indictment charging him

with securities fraud. In the criminal case the Family Trust was placed under

court restrictions, which lasted until October 3, 1998, when the trust paid more

than $400,000 to the government as restitution, leaving the Ski Cabin as the

trust’s sole remaining asset.

      F.     District Court Proceedings

      In 2007 the government filed a complaint in the United States District

Court for the District of Utah to reduce the tax assessments against the Browns to

judgment and to foreclose on the tax liens on the cabin. The district court

ultimately granted the government’s motion for summary judgment on the claims

to reduce the assessments to judgment; but it refused to grant summary judgment

to foreclose on the tax liens and held a three-day bench trial in April 2011. The

government’s theories were that the Family Trust held the cabin as a nominee of

the Browns and that the transfer of the cabin to the Family Trust was fraudulent

as to creditors. The court ruled (1) that under Utah law the Browns held the

beneficial interest in the cabin because the Family Trust held legal title to the

cabin for Brown’s benefit in a PMRT, and (2) that under federal law the Family

Trust held legal title to the cabin as a nominee for the Browns. Accordingly, the

court ruled that the government could foreclose on its lien. The court did not rule

on the fraudulent-transfer theory, and it is not at issue on appeal.

                                         -8-
II.   DISCUSSION

      A.     Legal Framework for Enforcing Federal Tax Liens

      “[T]he IRS may satisfy a tax deficiency by imposing a lien on any property

or rights to property belonging to the taxpayer.” Holman v. United States, 505

F.3d 1060, 1065 (10th Cir. 2007) (internal quotation marks omitted). The

property may be “not only property and rights to property owned by the taxpayer

but also property held by a third party if it is determined that the third party is

holding the property as a nominee of the delinquent taxpayer.” Id. (ellipses and

internal quotation marks omitted). A third party holds the property as a nominee

if “the taxpayer has engaged in a legal fiction by placing legal title to property in

the hands of a third party while actually retaining some or all of the benefits of

true ownership.” Id.

      To apply the nominee theory, “[w]e look initially to state law to determine

what rights the taxpayer has in the property the Government seeks to reach.”

Drye v. United States, 528 U.S. 49, 58 (1999). Then, we “determine whether the

taxpayer’s state-delineated rights qualify as ‘property’ or ‘rights to property’”

under federal tax law. Id.

      The district court determined that the Browns had rights in the cabin under

Utah law because the Family Trust held the cabin in a PMRT for Brown’s benefit

and the Browns held the beneficial interest in the cabin. It then considered the

federal question whether a nominee lien should be enforced against the Browns’

                                          -9-
interest, concluding that it should. On appeal Tingey does not challenge the

district court’s ruling that a federal tax lien can be imposed on property in which

Brown has an interest based on a PMRT. Rather, he argues (1) that the

government waived the right to assert that the Browns held the beneficial interest

in the cabin, and (2) that the court erred in concluding that a PMRT was created

under Utah law. We review the district court’s factual findings for clear error and

review its legal conclusions de novo. See Somerlott v. Cherokee Nation Distribs.,

Inc., 686 F.3d 1144, 1148 (10th Cir. 2012).

      B.     Waiver

      “Waiver is the intentional relinquishment or abandonment of a known

right.” Creative Consumer Concepts, Inc. v. Kreisler, 563 F.3d 1070, 1077 (10th

Cir. 2009) (internal quotation marks omitted). Tingey bases his waiver argument

on a stipulated order in Brown’s criminal securities-fraud case, which required

that the proceeds of certain stock held by the Family Trust be forfeited to the

United States as restitution, but lifted any further restraint on remaining trust

property. He asserts that the government knew of the Family Trust’s claim to the

cabin at the time of the stipulation because (1) the indictment in the criminal

securities-fraud case included a forfeiture count identifying the Ski Cabin as trust

property; (2) inventories provided by Tingey to the government in connection

with the civil and criminal securities-fraud cases against Brown listed the cabin as

trust property; and (3) a memorandum by two IRS agents of their interview of

                                         -10-
Tingey noted his assertion that the Family Trust owned the cabin. Tingey

suggests that the government’s entering into the stipulation despite this

knowledge constituted a waiver of any further right to contest the cabin’s

ownership.

      We disagree. Even if the government was fully aware of the Family Trust’s

claims to the cabin, its agreement to the stipulated order did not waive its rights

to pursue a tax claim. The order said nothing about tax liability or who had

beneficial interests in the Ski Cabin. Tingey does not explain how the

government’s decision not to pursue a claim against the cabin in the securities-

fraud litigation constituted an admission, much less a waiver, that the Browns had

no property interest in the cabin that could be pursued to recover unpaid taxes.

According to the district court, the cabin had not been thought to be proceeds of

Brown’s criminal conduct.

      C.     Tingey’s Substantive Arguments Against the PMRT Ruling

      Tingey argues that even if the government did not waive its claim that

Brown held a beneficial interest in the Ski Cabin, the district court erred in

concluding that the Family Trust held the cabin in a PMRT for Brown’s benefit.

First, he argues that no PMRT could arise because the Family Trust, not Brown,

paid the purchase price for the cabin. Second, he argues that even if the district

court properly found that Brown paid the purchase price for the cabin, it

nevertheless erred in finding a PMRT because a PMRT cannot be created in

                                         -11-
property to which an express trust holds title and, in any event, the evidence did

not support recognition of a PMRT. 3 We begin our analysis by setting forth the

Utah law governing creation of a PMRT and the district court’s ruling. Then we

address Tingey’s arguments.

             1.    PMRTs Under Utah Law and District Court’s Ruling

      “[A] purchase money resulting trust is an equitable remedy designed to

implement what the law assumes to be the intentions of the putative trustor.”

Zion’s First Nat’l Bank v. Fennmore (In re Estate of Hock), 655 P.2d 1111, 1114

(Utah 1982). “‘Where a transfer of properties is made to one person and the

purchase price is paid by another, a resulting trust arises in favor of the person by

whom the purchase price is paid,’” subject to certain exceptions. Id. at 1115

(quoting Restatement (Second) of Trusts § 440 (1959)); accord Restatement

(Third) of Trusts § 9(1) (2003). Thus, a PMRT ordinarily arises when “one party

paid the purchase price for property and another party was given legal title.” In

re Estate of Hock, 655 P.2d at 1115.

      One exception to this general rule can occur “if the transfer of property is

made to one person, the purchase price is paid by another, and the transferee is a

wife, child or other natural object of bounty of the person by whom the purchase


      3
        Tingey also argues that the district court could not rule that a PMRT arose
because the government acknowledged that the Family Trust held the beneficial
interest in the cabin. But this argument simply repackages Tingey’s already
rejected waiver argument. We need not consider it further.

                                        -12-
price is paid.” Id. at 1116 (internal quotation marks omitted) (emphasis added)

(citing Restatement (Second) of Trusts §§ 442, 443). In such a case, “a purchase

money resulting trust will not arise unless the one paying the purchase price

manifests an intention that the transferee should not have the beneficial interest in

the property.” Id. (citing Restatement (Second) of Trusts §§ 442, 443); accord

Restatement (Third) of Trusts § 9(2).

      “[I]t is the intention ‘at the time of the transfer and not at some subsequent

time which determines whether a resulting trust arises.’” Taylor v. Rupp (In re

Taylor), 133 F.3d 1336, 1341 (10th Cir. 1998) (quoting Restatement (Second) of

Trusts § 443 cmt. a). But “[t]he conduct of the payor and of the transferee

subsequent to the transfer . . . may be such as to show that at the time of the

transfer the payor did not intend to make a gift to the transferee.” Restatement

(Second) of Trusts § 443 cmt. a. Evidence indicating the payor’s intent to retain

the beneficial interest includes (1) “that the circumstances are such that the payor

would have a reason for taking title in the name of another other than an intention

to give him the beneficial interest . . . ; as, for example, where the payor had

reasons for wishing that it should not be known that he was purchasing the

property;” and (2) “that the payor manages the property, collects rents, pays taxes

and insurance, pays for repairs and improvements, or otherwise asserts ownership,

and the acquiescence by the transferee in such assertion of ownership.” Id.;

accord Restatement (Third) of Trusts § 9 cmt. c.

                                         -13-
      The district court found that the evidence established the predicate for a

PMRT because Brown paid the purchase price for the cabin but had the legal title

transferred to the Family Trust. It ruled, however, that the government

nevertheless bore the burden of establishing that Brown did not intend the Family

Trust to have beneficial ownership of the cabin; although the transferee was not

Brown’s “‘wife, child or other natural object of bounty,’” it was a trust, the

named beneficiaries of which “fall precisely into that category.” Aplt. App. at

170 (Mem. Op. at 40) (quoting Restatement (Second) of Trusts § 442). Still, the

court decided that the government had discharged its burden and that the Family

Trust therefore held the cabin in a PMRT in favor of Brown.

             2.    Challenges to the Court’s Ruling

                   a.     Who Purchased the Cabin?

      A threshold requirement for a PMRT is that one person paid the purchase

price for property but had legal title transferred to another person. See In re

Estate of Hock, 655 P.2d at 1115. Here, the district court declared that “it was

plainly apparent” that although the Family Trust was given legal title, Brown had

paid the purchase price for the Ski Cabin. Aplt. App. at 169 (Mem. Op. at 39).

The court relied on evidence that the Browns initiated and negotiated the purchase

of the cabin, that Brown tendered the $5,000 earnest-money deposit using

personal funds, that Brown tendered a cashiers check drawn from personal funds

to cover the approximately $72,000 down payment on the cabin, and that Brown

                                         -14-
signed and was personally obligated on the promissory note for the balance of the

cabin’s purchase price.

      Tingey contests the district court’s finding, pointing to Brown’s testimony

that the down payment from personal funds was a gift to the Family Trust and to

evidence that “the Trust made many of the monthly loan payments to Jensen.”

Aplt. Br. at 26–27. But reviewing the finding for clear error, we see none. Even

if a reasonable factfinder could have found that the trust purchased the cabin, it

was not unreasonable for the court to find otherwise. Although Brown testified

that the down payment was intended to be a gift to the Family Trust, the court

correctly observed that the cashiers check was payable to the title company, not

the trust; Brown “failed to deliver the funds to the Trust”; and “Tingey had no

opportunity to accept the gift on behalf of the Trust.” Aplt. App. at 179 (Mem.

Op. at 49) (citing 38 Am. Jur. 2d Gifts § 14 (2010), as setting forth three

requirements for a valid gift: (1) intention to give title and dominion; (2) delivery

of the property; and (3) acceptance by donee). True, the Family Trust made many

of the payments on the note, but the evidence showed that more came from Brown

or sources closely connected to him. We further observe that the closing

statements and other documentation support the view that Brown acquired the

cabin for himself before turning it over to the trust.

                    b.     Can a PMRT Arise if an Express Trust Holds Title?




                                          -15-
      Tingey argues that the equitable remedy of a resulting trust is unavailable

when an express trust holds the legal title to the property in question. In other

words, Tingey questions whether an express trust can hold property in a resulting

trust for the property’s beneficial owner. Whether a PMRT can arise despite the

existence of an express trust is a legal question, which we review de novo. See

Somerlott, 686 F.3d at 1148.

      We see no reason why an express trust cannot hold property in a resulting

trust for its beneficial owner. Tingey correctly observes that a PMRT is an

equitable remedy designed to implement the parties’ intent. See In re Estate of

Hock, 655 P.2d at 1114. But we cannot agree with his contention that the parties

conclusively expressed their intent by creating the Family Trust and placing legal

title to the Ski Cabin in the trust, thereby obviating the need to impose an

equitable remedy to implement the parties’ intent. No rule of human nature

precludes the possibility that someone would purchase property to be held in the

name of a trust while intending that the purchaser retain the beneficial interest,

any more than it precludes a purchaser from transferring title to another person

while intending that the purchaser retain the beneficial interest. One

circumstance supporting a PMRT is that “the payor had reasons for wishing that it

should not be known that he was purchasing the property.” Restatement (Second)

of Trusts § 443 cmt. a. It could undermine the PMRT doctrine to allow a person

to evade it simply by using an express trust to conceal ownership.

                                         -16-
      Tingey relies on one case for the proposition that “if an express trust exists,

there can be no resulting trust.” Gary-Wheaton Bank v. Meyer, 473 N.E.2d 548,

552 (Ill. App. Ct. 1984). Of course, we are not bound to follow this state-court

decision. See Akin v. Ashland Chem. Co., 156 F.3d 1030, 1035 n.2 (10th Cir.

1998) (rejecting argument that “rel[ied] on non-binding case law from other

jurisdictions”). But even considering it for its persuasive value, it provides only

minimal support for Tingey’s argument. The Illinois court provided no

explanation for this proposition, and it held that there was inadequate evidence of

a resulting trust anyway. See Gary-Wheaton Bank, 473 N.E.2d at 553–54.

Moreover, the source of the proposition quoted in Gary-Wheaton Bank is the early

case of Kingsbury v. Burnside, 58 Ill. 310 (1871), which, as we understand it,

states only that once the court holds that property deeded by a grantor to a

relative was under an express trust that it be held for the grantor’s benefit, that

holding disposes of any claim that the grantee holds the property under a resulting

trust for the grantor. See Restatement (Second) of Trusts § 441 cmt. I (1959)

(“Where a transfer of property is made to one person and the purchase price is

paid by another, the fact that the payor and the transferee made an enforceable

agreement that the property transferred should be held upon an express trust for

the payor prevents a resulting trust from arising in favor of the payor, but there is

an express trust for the payor.”). The analog here would be if the Ski Cabin were




                                          -17-
held in an express trust of which Brown was a beneficiary. The rule thus stated

would not assist Tingey.

                    c.     Did the Government Prove that Brown Intended to
                           Retain the Beneficial Interest?

      Finally, Tingey challenges the district court’s ruling that the government

demonstrated by clear and convincing evidence that Brown intended to retain the

beneficial interest in the Ski Cabin. See In re Taylor, 133 F.3d at 1341 (“[T]he

proof required to impose a resulting trust [on property held in the name of the

purchaser’s spouse] must be strong, clear, and convincing, such as to leave no

doubt of the existence of the trust.”) (internal quotation marks omitted); McGavin

v. Segal (In re McGavin), 189 F.3d 1215, 1217 (10th Cir. 1999) (“[T]here must be

clear and convincing evidence of the transferor’s intent at the time of the transfer

to retain a beneficial interest in the property [transferred by the purchaser to his

spouse and to a limited partnership created for the benefit of his children].”); see

also Pate v. U.S. Dep’t of Treasury IRS, 949 F.2d 1059 (10th Cir. 1991) (applying

same evidentiary standard for PMRT under Oklahoma law). We review the

district court’s findings of fact for clear error. See In re McGavin, 189 F.3d at

1217. But the legal consequences of those facts, including whether the intent

found by the district court is the intent necessary to create a resulting trust, is a

legal question, which we review de novo. See id.; In re Taylor, 133 F.3d at 1341.




                                          -18-
      The precedent most helpful to Tingey is In re Taylor. In that case we

overturned a decision of the bankruptcy court (summarily affirmed by the district

court) to impose a PMRT, giving a husband an equitable one-half interest in the

home titled in his wife’s name. See In re Taylor, 133 F.3d at 1342. The couple

had purchased the home in 1973 and taken title in joint tenancy. See id. at 1339.

In 1985 the husband conveyed his interest to the wife. See id. The bankruptcy

court imposed a PMRT. See id. at 1339–40. It based its ruling on findings (1)

that the husband’s income was the primary source of the mortgage payments until

1985; (2) that although the husband had a much higher income than the wife until

1985, the couple treated the marriage as a financial partnership and considered

both spouses’ income as part of the joint family funds; (3) that the couple

continued living together in the home after the conveyance and shared utility and

insurance expenses, often paying expenses with checks signed by the husband;

and (4) that the couple cosigned for a line of credit secured by the home and used

at least half of the money for living expenses. See id.

      We reversed, holding that these facts failed to establish that the husband

intended to retain the beneficial interest. See id. at 1341. We pointed to findings

by the bankruptcy court (1) that the husband had not transferred the home while

insolvent or anticipating litigation; (2) that he had received consideration for the

transfer because his wife shortly thereafter paid $25,000, apparently from an

inheritance, to discharge the mortgage upon which the couple was jointly liable;

                                         -19-
and (3) that he understood real estate transactions, “including the nature of

equitable, as opposed to legal, interests in property.” Id. at 1340 (internal

quotation marks omitted). We also relied on the undisputed testimony that the

husband transferred title “‘because of estate planning and inheritance tax concerns

after [his] heart attack,’” having watched his brother’s widow experience

difficulty selling a jointly owned home after the brother’s death. Id. at 1341–42.

We rejected the per se rule apparently applied by the trial court that a PMRT

arises whenever a husband gifts his interest in a jointly owned home to his wife

while continuing to live there and share expenses related to the home. See id. at

1342. We explained that “[a]s a practical matter such a rule would prevent

transfers of title to the home between spouses to accomplish such objectives as

avoiding probate and arranging the two estates to take advantage of the estate and

inheritance tax laws exemptions.” Id.

      But with additional evidence of intent to retain a beneficial interest, we

upheld the imposition of a resulting trust in In re McGavin, 189 F.3d at 1218. A

husband had transferred his interest in the couple’s home to his wife and had

transferred personal property to a limited partnership created for the benefit of the

couple’s children. See id. at 1217–18. As to the home, we explained that “[t]he

bankruptcy court made numerous and specific findings” demonstrating that the

husband’s “use and control of the [home] went far beyond residing in the home

and paying taxes, insurance, and other household bills.” Id. Moreover, in

                                         -20-
contrast to In re Taylor, where the husband had merely cosigned for a line of

credit using the home as collateral, the husband in In re McGavin had used the

home “as collateral for various loans whose proceeds he controlled and used to

enter into personal and business transactions for his benefit.” Id. at 1217–18. As

to the personal property, we pointed to similar findings by the bankruptcy court of

the husband’s use and control of the property after he transferred it to the

partnership. See id.

      We affirm the district court’s determination that Brown had the beneficial

interest in the Ski Cabin under a resulting trust. 4 There is no serious question that

the record strongly supports the court’s findings of fact. And those findings

clearly distinguish this case from In re Taylor and provide at least as strong a

case for a resulting trust as did the facts in In re McGavin.

      In analyzing whether a resulting trust had been created, the district court

emphasized the language in comment a to Restatement § 443 that

      the fact that the payor manages the property, collect rents, pays taxes
      and insurance, pays for repairs and improvements, or otherwise
      asserts ownership, and the acquiescence by the transferee in such
      assertion of ownership, is evidence to rebut the inference of an
      intention by the payor to make a gift to the transferee.



      4
        We repeat what we said in footnote 1. For some reason the district court,
after determining that a PMRT was created in favor of Brown, then stated,
without further analysis, that he and his wife held the beneficial interest in the
cabin. Tingey, however, has not complained about the court’s determination that
Mrs. Brown had an interest, so we need not address the matter.

                                         -21-
Here, Brown, with acquiescence by the trustee, ignored the formalities of the trust

in managing the property, making note payments out of personal funds that were

not routed through the trust, taking care of maintenance, paying insurance

premiums (on a policy that was in Brown’s name), and even renting out the cabin

without the trustee’s knowledge. 5 The court could quite reasonably infer that

Brown had as much control of the property as he would have had if it had been in

his own name. And because he kept in his own name the title to the water rights

that made the property marketable, the court could find that he had a functional

veto on any sale or other transfer of the cabin.

      If the district court had found that placing the Ski Cabin in the Family

Trust served an estate-planning purpose, we would need to confront the policy

concern expressed in In re Taylor, 133 F.3d at 1342, that PMRT doctrine not be

used to undermine the probate and tax advantages of interspousal property

transfers. But there was no such finding.

      What was found by the district court was a quite different purpose for

putting assets in the Family Trust. The district court apparently agreed with the

government’s contention that Brown knew when he created the trust that he was

accruing significant tax and civil liabilities, and it credited the testimony of

Tingey (the trustee of the trust) that Brown “wanted to create the Trust in part to

      5
       Insofar as Mrs. Brown was involved in maintenance and paying bills, we
agree with the dissent that her involvement is not probative of a resulting trust,
although it is consistent with one (as the conduct of a supportive spouse).

                                         -22-
set up an entity that would hold some assets separate and apart from him to

protect his assets from creditors.” Aplt. App. at 183 (Mem. Op. at 53) (emphasis

added) (internal quotation marks omitted). If that was truly Brown’s intent in

creating the Family Trust (which was created within days of transfer of the Ski

Cabin to the trust), then he considered the trust’s assets as his own, not the

beneficiaries’. Thus, the court reasonably concluded:

      Sheltering personal assets from the lawful claims of creditors is an
      intention distinguishable in its purpose from the donative intent to
      transfer assets to trust entirely for the benefit of others; one need not
      seek to protect personal assets from creditors if one is in fact giving
      them away without retaining any beneficial interest that a creditor
      may lawfully reach.

Id. at 183–84 (Mem. Op at 53–54). And noting how Brown used the Trust to

conduct his personal business ventures, the court stated that “[t]hese activities

reflect an intention to shelter personal investment activity that is readily

distinguishable from the donative intent to ‘gift’ assets to the Trust solely for the

benefit of the beneficiaries.” Id. at 184 (Mem. Op. at 54).

      There is authoritative support for the proposition that such an intent to

shield assets from creditors can support imposition of a PMRT. Comment a to

Restatement § 443 states that “the fact that it would be improvident for the payor

to make a gift to the transferee is an indication that he did not intend to make a

gift,” and “the fact that the circumstances are such that the payor would have a

reason for taking title in the name of another other than an intention to give him


                                         -23-
the beneficial interest is an indication that he did not intend to make a gift, as, for

example, where the payor had reasons for wishing that it should not be known

that he was purchasing the property.” Case law follows the Restatement. See

Bash v. Cunningham (In re Cunningham), Bankr. No. 06-14882, 2008 WL

2746023, at *4–*5 (Bankr. N.D. Ohio July 11, 2008) (property transferred to son

to keep it from ex-wife); Nolan v. AT&T, 61 N.E.2d 876, 883 (Ill. App. Ct. 1945)

(stock put in daughter’s name to avoid creditors); Zundel v. Zundel, 278 N.W.2d

123, 128–31 (N.D. 1979) (contract for deed was in son’s name so that mother

could avoid possible liability on mortgage).

       In our view, the district court could properly find under the clear-and-

convincing-evidence standard that familial affection was not the motivation for

putting title to the cabin in the name of the trust and that the maneuver was

nothing more than an attempt to keep ill-gotten gains from those entitled to

recoup them. We may have seen the facts differently, but we are not the fact

finders. The district court’s findings were not clearly erroneous. We affirm the

decision of the district court holding that the Ski Cabin was held by the Family

Trust in a PMRT for the benefit of Brown.

III.   CONCLUSION

       We AFFIRM the judgment of the district court.




                                          -24-
12-4000, United States v. Tingey, et al.

BRISCOE, Chief Judge, dissenting:

      Although I agree with much of the majority’s carefully stated opinion, I

must respectfully dissent. In my view, the government has not met its burden to

produce “clear and convincing” evidence that Douglas Brown intended to retain a

beneficial interest in the cabin. I would reverse and remand for further

proceedings to determine if the IRS can enforce a lien under its alternate theory

of fraudulent transfer, which the district court did not address.

                                           I

      As the majority correctly notes, courts have imposed purchase money

resulting trusts (PMRT) when the party that purchased a property in the name of

relative demonstrates an intent to retain beneficial ownership. But we must

remember that a PMRT is not an equitable remedy designed to benefit creditors

(although they may, as in this case, benefit). It is an equitable remedy designed

to “giv[e] effect to what was probably the intention of the purchaser.”

Restatement (Second) of Trusts ch. 12, topic 4, intro. note. This limits our

inquiry to determining who the purchaser intended would hold the beneficial

interest in this particular property. Put another way: had Douglas Brown brought

an action in quiet title, would he have “clear and convincing” evidence that he did

not actually intend to gift the property to the trust benefitting Barbara and the

children?
       In my view, he would not. Part of the evidence that the majority cites to

rebut the presumption that Douglas intended the cabin as a gift for his wife and

the children actually supports the conclusion that the cabin was, in fact, intended

as a gift to his wife and the children. For instance, the majority considers it

significant that Douglas Brown made payments on the note on the cabin. But

paying for the property is a prerequisite of imposing a PMRT; it cannot serve as

evidence to rebut the presumption that Barbara and the children held the

beneficial interest. In fact, the trustee’s co-signing of the note actually supports

the view that the Family Trust was the beneficial owner, because it indicates that

the parties anticipated the trust would make future payments. Cf. Restatement §

443 cmt. a (“It is the intention of the payor at the time of the transfer and not at

some subsequent time which determines whether a resulting trust arises.”).

Douglas Brown would not be entitled to a PMRT for a share of the property he

did not pay for. 1


       1
          Along these lines, I also note the facts of this case make analyzing the
question of ownership in this case complex. The payments on the cabin came
from a number of sources, including Barbara. Neither the district court nor
majority opinion grapples with how this might affect who possesses an interest in
the cabin. Nor, although admittedly not raised by either party, did either the
district court or majority consider the possibility that a resulting trust might be
appropriate for only a share of the property. See Restatement (Second) of Trusts
§ 443 cmt. b. (“Where one person pays the purchase price for property which is
transferred at his direction to another who is a natural object of his bounty, and it
is shown that the payor intended to have a partial interest in the property, a
resulting trust arises in favor of the payor as to such interest but only as to such
interest.”).

                                          -2-
       Morever, Douglas Brown took few actions with respect to the cabin that

indicated an intent to remain the beneficial owner to the exclusion of his wife and

the children, the named beneficiaries. He did not exercise exclusive control of

the cabin or use it to secure personal or business loans. Cf. In re McGavin, 189

F.3d 1215, 1218 (affirming the imposition of a resulting trust when “bankruptcy

court made numerous and specific findings about Debtor’s continued control and

use of the Prospector Property as collateral for various loans whose proceeds he

controlled and used to enter into personal and business transactions for his

benefit”). At worst, Douglas disregarded the formalities of the trust when he once

rented the property to a friend without first obtaining permission from the trustee.

But, even so, the rent payments went toward the note on which the Trust was

jointly liable.

       The majority, however, emphasizes that Douglas Brown wanted to protect

his assets from creditors. Although I agree that an intent to protect assets from

creditors is a factor in determining whether we should impose a PMRT, it is not

the only one. The Restatement (Second) of Trusts refers to this an “indication

that [a purchaser] did not intend to make a gift.” § 443 cmt. a. But it does not

always follow that an intent to protect assets requires that we impose an PMRT.

Indeed, a purchaser could quite plausibly want to protect his assets and gift the

property to his relatives. Cf. Clayton v. Behle, 565 P.2d 1132, 1134 (Utah 1977)

(holding an irrevocable, as opposed to revocable, trust was created in part based

                                         -3-
on evidence that the “settlor informed his attorney that the purpose for the trust

was to protect assets from all claims by third parties and to reserve and retain the

ranch in the male family line”). I question the majority’s decision to defer to the

district court’s “finding” that Douglas Brown intended only to shield his assets, as

the district court apparently premised its conclusion on the belief that it is

somehow inconsistent to possess both an intent to protect assets and an intent to

gift them.

      Indeed, the evidence supporting a conclusion that Douglas intended to

retain a beneficial interest is far more ambiguous as to intent than the evidence in

the cases cited by the majority. In Nolan v. AT&T, 61 N.E.2d 876, 883 (Ill. App.

Ct. 1945), the court held a father did not intend to gift stock to his daughter.

While the court considered the father’s concerns about creditors as relevant, it

also noted that he had used the stock as collateral for his own purposes before the

daughter even knew the stock had been issued in her name. Moreover, he told his

attorney, banker, and sister—all non-interested parties who testified at trial—that

he intended to retain a beneficial interest. Id. at 883-884. In addition, the father

later sold the stock and kept the proceeds. Id. at 883.

      Likewise, in In re Cunningham, Bankr. No. 06-14882, 2008 WL 2746023,

at *4, Bankr. N.D. Ohio July 11, 2008), the debtor’s son, who held legal title,

never claimed the property at issue as an asset. The son also filed an affidavit

asserting that his father’s rights in the property would exist as long as the father

                                          -4-
lived. Id. at *5. The father lived in the property, leased out the property, and

paid all the taxes and insurance. Id. at *4. Not surprisingly, the court imposed a

PMRT. Id. at *7.

      Similarly, in Zundel v. Zundel, 278 N.W.2d 123 (N.D. 1979), the court

imposed a PMRT on the basis of testimony about a mother’s actual intentions for

property she had purchased in her son’s name. Four of her children testified that

the mother had purchased the property in the son’s name, as opposed to her own,

only to avoid potential liability from a prior mortgage that had been foreclosed

upon. Id. at 126. In addition, the “circumstances under which the land was

farmed, income retained, improvements made and taxes paid are consistent with

the intent to create a trust.” Id. at 131. The mother “was a business woman

raising a family without benefit of a husband and engaged in the operation of a

farm of which farmland would be a vital necessity.” Id. The court held that this

all evidenced the mother’s intention to retain the beneficial interest in the

property.

      The evidence in the case before us is much more mixed. We have no

evidence that the beneficiaries were unaware of their interest in the cabin, or that

Douglas used it for his own purposes to the exclusion of the beneficiaries. In

fact, the trustee had long considered the cabin a trust asset, and Barbara and the

children used the cabin for their own enjoyment. More important, unlike in the

three cases cited above, none of the parties with knowledge of this transaction has

                                          -5-
made an assertion explicitly contradicting the presumption that Douglas intended

the cabin as a gift for his wife and the children. While none of those cases, of

course, defines the minimum level of evidence that must be presented for the

imposition of a PMRT, the overwhelming evidence in each of them weakens their

persuasive value as applied to this case. The courts in those cases did not need to

rely as heavily as the majority does on the mere fact the purchaser wanted to

protect his assets. Those courts had other evidence that made clear the purchaser

intended to retain the beneficial interest.

                                              II

      The majority also fails to grapple with the district court’s error in treating

the Browns as a single entity. The district court concluded that Douglas Brown

purchased the cabin, yet held that the Browns were entitled to a PMRT in the

cabin. The court did explain how Barbara can retain an interest in a property she

did not purchase.

      Relatedly, the district court should not have used Barbara Brown’s actions

as evidence to support the imposition of a PMRT in favor of Douglas. Barbara

Brown’s actions seem consistent with the presumption that Douglas intended the

cabin as a gift for his wife and the children. Barbara used the cabin, helped with

maintenance, and paid expenses. 2 That she did so without the oversight of the

      2
         Although the district court found that the Browns paid the utility bills,
the testimony it pointed to suggests that only Barbara paid them. Aplee. Supp.
                                                                         (continued...)

                                          -6-
trustee does not undercut the presumption that Douglas intended her and the

children, as beneficiaries of the title-holding Family Trust, to also hold the

beneficial interest in the cabin.

      The majority seems to concede at least some err by the district court on this

point. See Majority Op. at 22 n. 4 (“For some reason the district court, after

determining that a PMRT was created in favor of Brown, then stated, without

further analysis, that he and his wife held the beneficial interest.”). But the

majority offers two rejoinders. First, it says, “Tingey, however, has not

complained about the court’s determination that Mrs. Brown had an interest, so

we need not address the matter.” Id. But Tingey did argue that “the district court

wrongly equated the Trust’s beneficiaries’ use and enjoyment of the Trust

property with evidence that Mr. Brown, the purported purchaser, never intended

for the Trust, as the purported transferee, to hold title to the cabin.” Appellant’s

Opening Br. at 31.

      Second, the majority says that “[i]nsofar as Mrs. Brown was involved with

the maintenance and paying the bills, we agree with the dissent that her

involvement is not probative of a resulting trust, although it is consistent with one

(as the conduct of the supporting spouse).” Id. at 23 n.5. But this turns on its

head the presumption that Douglas intended the cabin to be a gift. The default


      2
          (...continued)
App. at 157, 165.

                                          -7-
assumption should be that Barbara took these actions in her role as

beneficiary—not merely as “supporting spouse.” One could just as easily

conclude that much of the evidence the majority cites to support its position the

Douglas retained the beneficial interest is also “consistent” with the presumption

this was a gift: Douglas acting as the “supportive spouse” who took actions

beyond making the initial down payment to ensure that his wish to gift the cabin

was fulfilled.

                                         III

      In light of this, I cannot agree that the government has met its high

evidentiary burden to rebut the presumption that no PMRT was created in favor of

Douglas Brown. Both the majority and the district court failed to give

appropriate weight to the presumption that Douglas Brown purchased the cabin as

a gift for his wife and children. Rejecting this approach, I would instead reverse

and remand for further proceedings.




                                         -8-
