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IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE
January 9, 2002 Session OSCAR LITTLE, ET AL. v. SAMUEL WATSON, ET AL.
Appeal from the Circuit Court for Montgomery County No. C13-843 James E. Walton, Judge

No. M2001-00230-COA-R3-CV - Filed November 6, 2002

Samuel and Marguerite Watson appeal the final judgment of the trial court which found that a transaction between the Watsons and the Littles involving the purchase of a house created a resulting trust. The trial court divested out of the Watsons and vested in the Littles all interest in the house after the Littles obtained new financing for the house and paid off the previous mortgage in the Watsons' name and repaid the down payment with interest. We affirm the decision of the trial court. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and Remanded PATRICIA J. COTTRELL, J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S., and DON R. ASH , SP . J., joined. John T. Maher, Clarksville, Tennessee, for the appellants, Samuel Watson and Marguerite Watson. Edward Robertson, Clarksville, Tennessee, for the appellees, Oscar Little and Helen Little. OPINION I. Facts Oscar and Helen Little and Samuel and Marguerite Watson dispute the ownership of real property located at 312 Edmonson Ferry Road in Clarksville, Tennessee ("House"). The only testimony in the record is a Statement of the Evidence, filed by the Watsons, pursuant to Tenn. R. App. P. 24(c). According to that statement, Mrs. Little testified that her sister, Mrs. Watson, had asked the Littles to move to Clarksville so the families could be close together. Mrs. Watson testified as to other reasons for the move. Mrs. Little testified that the Littles found a house in Clarksville they wanted to purchase, the House, but could not obtain financing for it because they had recently filed for bankruptcy. She also testified that it was agreed that the Watsons would purchase the House and the Littles would live

there and make the payments on the House. The Watsons did not disagree as to their reason for purchasing the House. Mrs. Watson testified that she and her husband decided to purchase the House after the Littles decided to move to Clarksville and were unable to obtain financing for the House. She stated that she and her husband had purchased the House for her sister to use because they were trying to help out family. Mr. Watson testified that he and his wife bought the House for the Littles to live in. He also stated that he had allowed the Littles to live in the House for the cost of the mortgage and insurance because they were family. Mr. and Mrs. Watson purchased the House in September of 1989 using Mr. Watson's VA eligibility. They made the financing arrangements and paid the down payment and closing costs, totaling about $3,000. Both Watsons testified that shortly after the purchase they orally offered to let the Littles purchase the home from them by securing their own financing. Mrs. Little testified that neither she nor her husband had attempted to secure financing to purchase the home.1 The Littles paid all the mortgage payments and the insurance. Mrs. Watson testified that she had Mrs. Little pay the mortgage directly to the mortgage company by sending the statements to Mrs. Little as they came in; she also had Mrs. Little pay the insurance on the House. Mrs. Little testified that she believed she and her husband had repaid the down payment and costs to the Watsons, but had no proof documenting those payments. Mrs. Watson testified that the Littles had not repaid any of the down payment or closing costs. Mr. Watson testified that the Watsons had paid for and done the work on repairs to the House. Mrs. Little testified that the Watsons had done some repairs around the home, but that she and Mr. Little had made improvements, including a concrete patio. Approximately nine (9) years after the Littles moved in, the Watsons gave a lease to Mrs. Little to sign "to protect their interest in the House."2 Mrs. Little testified that she remembered signing the lease but that she did not remember reading it, but Mrs. Watson testified Mrs. Little read the lease. The Littles lived in the House and made the payments continuously since its purchase in 1989. They brought this suit because they thought that the Watsons had placed the House on the market for sale and indicated they were going to keep any profit from the sale. Mrs. Little testified that she and her husband were retired and would be financially unable to move out of the House. Mrs. Little estimated the value of the House at approximately $54,000, and estimated that approximately $31,000 was owed on the mortgage. Mr. Watson testified that neither he nor his wife had ever asked the Littles to leave and that the House was not on the market prior to the filing of this lawsuit.

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Mr. Little was unable to testify because of a seriou s illness.

Mrs. Watson testified they found drugs in the H ouse. Mrs. Little testified the police had been to the H ouse upon o ccasion loo king for the Littles' son, who was alleged to be involved in drugs.

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The trial judge, after hearing the testimony of the witnesses, found that the House was titled in the Watsons but that they bought the House for the benefit of the Littles and that the Littles had paid all mortgage payments on the property. Therefore, the court found, a resulting trust was created, subject however to the condition that the Littles were to refinance the property so as to release the Watsons from liability under the mortgage. Further, the court found that there was a conflict in the testimony regarding repayment of the $3,000 down payment which all parties agreed was to be paid. The court resolved that conflict in favor of the Watsons by holding that the Littles must repay that amount plus interest. The court further ordered that if the Littles obtained financing for the House and repaid the down payment with interest within ninety (90) days, "the court will find that the conditions of the resulting trust have been satisfied and the property will be decreed to be theirs." One month after the entry of the order the Littles submitted to the court proof that they had obtained new financing, paid off the mortgage that was in the Watsons' name, and paid the Watsons $4,658.25, which represented the $3,000 down payment plus interest. The court then entered a final judgment for the Littles ordering that "[a]ll right, title and interest of Samuel Watson and Wife, Marguerite Watson in the realty . . . is divested out of them and vested in Oscar Little and Wife, Helen Little, in fee simple as tenants by the entirety." The Watsons appeal that final judgment to this court. II. Resulting Trusts The issue presented in this case is whether the trial court erred in holding that the transaction between the parties herein created a resulting trust. Resulting trusts are a tool of equity available to courts to prevent a failure of justice. Estate of Wardell ex rel. Wardell v. Daily, 674 S.W.2d 293, 295 (Tenn. Ct. App. 1983) (quoting Wells v. Wells, 556 S.W.2d 769, 771 (Tenn. Ct. App. 1977)). Such trusts "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." Id. This court has often cited and applied the definition of a resulting trust found in GIBSON 'S SUITS IN CHANCERY

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