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Constructive Trusts and the “Elastic” Power of Equity
Law without principle is not law; law without justice is of limited value. Since
adherence to principles of “law” does not invariably produce justice, equity is
necessary.
- Aristotle, Nicomachean Ethics
By Gary E. Bashian*
Perhaps because of their equitable, ancient, and amorphous nature, Constructive
Trusts are often misunderstood by both advocates and, on occasion, the judiciary
itself. Nevertheless, though rooted in age old equitable principles, Constructive
Trusts have many applications; are not to be underestimated or overlooked; and
can prove invaluable tools for Trusts and Estates litigators when and where they are
properly used.
Preliminarily, it must be noted that the very purpose of a Constructive Trust as a
remedy is often misconstrued. Constructive Trusts may be able to do many things,
but the doctrine is limited insofar as it is not an “intent enforcing” mechanism, but
rather a “fraud rectifying” device
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. Advocates sometimes overlook this important
distinction and seek the imposition of a Constructive Trust to enforce the stated, or
presumed, intentions of an individual or entity, only to be met with dismissal either
pre-answer or upon Summary Judgment as it is simply not within the power of a
Constructive Trust to force a Defendant’s compliance with an unfulfilled promise.
Indeed, it is sometimes helpful to think of Constructive Trusts as a Cause of Action
sounding in Fraud, but one that is subject to equitable review because some
essential element necessary to sustain a Cause of Action for Fraud is not present.
As Constructive Trusts are often used as Fraud rectifying devices, it should come as
no surprise that the applicable Statute of Limitations is six years, with a discovery
rule based on the wrongful/proper “taking” analysis used in a conversion action
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