NIEN-HIS HSU v. JOHN-PING HSU

This case is just one of several legal disputes between members of the Hsu family concerning assets of various members of the family in Massachusetts and abroad. The present dispute, dating back to the original filing of this case in 2003, concerns property located at 20 Howard Road in Maynard (the "Maynard Property"), owned as a matter of record by Nien-Hsi Hsu ("Jesse") and his older brother Jong-Ping Hsu ("J. P.") [Note 1] as joint tenants with rights of survivorship. This case began in 2003 with the filing of a complaint by Jesse in which he alleged, on various legal theories, that J. P.'s name should be removed from the title to the Maynard Property. Alleging that J. P. had left the country and that his whereabouts were unknown, Jesse prevailed on the court to authorize service by publication. This led to the entry of a default judgment against J. P. in 2006. [Note 2]

Almost eight years later, J. P. filed a motion for relief from judgment pursuant to Mass. R. Civ. P. 60(b), which the Court did not accept as it had not been properly served on Jesse. On March 13, 2017, J. P. refiled the motion with proper service and the court held a hearing on the motion on May 16, 2017. On May 23, 2017, I allowed J. P.'s motion for relief from judgment based on my findings "that the defendant J. P. Hsu failed to defend the action because he had no notice of the action . . . ." I further found "that the action progressed despite this lack of notice due to misrepresentations to the court by the plaintiff with respect to the plaintiff's lack of any contact with J. P. over many years prior to the filing of the complaint, and the plaintiff's inability to locate J. P." I specifically found that Jesse had failed to disclose to the court J. P.'s attendance at his mother's funeral just three months before the filing of the complaint. In particular, Jesse falsely represented in his affidavit in support of his request for alternative service, "I have not known JP's whereabouts, or any current address for him, since he went into 'hiding' approximately twelve years ago." In a separate affidavit of diligent search, Jesse's attorney falsely represented to the court that all of the Hsu children except for J. P. had attended their mother's funeral. I ruled that these representations were intended to, and successfully did convince the court, that J. P. had essentially disappeared, was in hiding, and the plaintiff could not be expected to find him, while at the same time concealing the fact that Jesse was in contact with J. P. in order to notify him of their mother's death. Under these circumstances, I found that J. P. demonstrated that his failure to defend this action was due to lack of notice attributable to misrepresentations to the court by the plaintiff.

On July 6, 2018, I denied J. P.'s motion for summary judgment and denied Jesse's motion for reconsideration of the decision to vacate the judgment.

Plaintiff now seeks a declaration terminating J. P.'s status as joint tenant and declaring Jesse to be the sole owner of the Maynard Property, both legally and equitably, on theories of resulting or constructive trust, or unjust enrichment. [Note 3]

A trial was held before me on January 29 and 30, 2019, at which time three witnesses testified and twenty-eight (28) exhibits were admitted into evidence. Following the submission of post-trial briefs, proposed findings of fact and rulings of law, and closing arguments, and a hearing on Jesse's motion to supplement or replace a trial exhibit and to strike certain of J. P.'s post-trial submissions, I took this matter under advisement on June 27, 2019. For the reasons that follow, I find and rule that Jesse has carried his burden of proving that J. P. holds his record interest in the Maynard Property in a resulting trust for the benefit of Jesse.

FACTS

Based on the facts stipulated by the parties, the documentary and testimonial evidence admitted at trial, and my assessment as the trier of fact of the credibility, weight, and inferences reasonably to be drawn from the evidence admitted at trial, I make factual findings as follows: The Hsu Family.

1. Plaintiff Nien-Hsi "Jesse" Hsu emigrated from Taiwan in 1976 to study computer science at the State University of New York at Albany. He is one of five brothers. [Note 4]

2. While Jesse studied computer science, his tuition and living expenses were paid by J. P. and another brother, J.T. I do not credit Jesse's testimony that the payments made by his two brothers, although paid out of their accounts, were paid with their mother's money.

3. Defendant Jong-Ping "J. P." Hsu is the older brother of Jesse. J. P. moved to the United States in 1967 from Taiwan on a student visa in order to earn his masters and Ph.D. degrees. He moved from New York to Massachusetts in the mid-1970s to work for General Electric, and purchased a house in Winchester in 1980. In 1981 or 1982, J. P. received a real estate salesperson license and in 1983, he became a licensed real estate broker in Massachusetts. [Note 5]

4. Jesse moved to Massachusetts in 1978 and got a job with Digital Equipment Corporation, and later got a job with General Electric in 1981. [Note 6]

5. In 1978, Jesse and J. P.'s mother moved to the United States. She lived with Jesse in a one-bedroom rented apartment until the purchase of the Maynard Property. She lived at the Maynard Property with Jesse for about a year until she moved into her own apartment. [Note 7]

The Maynard Property.

6. In 1979, with J. P.'s encouragement, Jesse began looking for a house to purchase. The conversation came about, by Jesse's own recollection, after J. P. viewed Jesse "living on the living room floor in the one-bedroom apartment." J. P. advised Jesse to invest in a home sooner rather than later. [Note 8]

7. On May 26, 1979, Jesse and J. P. purchased the Maynard Property, by deed recorded May 31, 1979, in the Middlesex South District Registry of Deeds in Book 13702, Page 602. [Note 9]

8. Jesse applied for a mortgage with J. P. serving as a co-borrower, and the brothers took title as joint tenants with rights of survivorship. [Note 10] J. P. signed the mortgage application as co-borrower because J. P. advised, and Jesse agreed, that Jesse did not have good enough credit to qualify for the mortgage loan on his own. [Note 11] At the time of the purchase, Jesse had only been working full-time for about a year and had not established a credit record, and J. P. had more income and a credit history that made it likelier that they would qualify for a mortgage loan if J. P. participated as a co-borrower. I credit Jesse's testimony that J. P. was also included on the Maynard Deed for estate planning purposes to avoid passing the property through probate, if Jesse, who was single at the time, died. Jesse married at some point while the transaction was pending. [Note 12].

9. J. P. testified that he was included on the 1979 Maynard deed because the Maynard Property was an investment property for the Hsu family. I do not credit this testimony, as there was no credible corroborating evidence that the family, or J. P., contributed funds to the purchase; nor was there any credible evidence to support J. P.'s assertions that he served as, in effect, a trustee for an informal "Big Hsu Fund."

10. Further, J. P., notwithstanding his assertions that all real estate purchased by the five Hsu brothers was in effect owned by the Big Hsu Fund for the benefit of the whole family, he could not demonstrate any other property that had been subject to such an informal trust arrangement. In particular, he did not subject his own Winchester property to any such formal or informal ownership arrangements on behalf of the Hsu family.

11. Contrary to J. P.'s testimony, which I do not credit, that the purchase was intended as an investment for the Hsu family, Jesse testified that the purchase was structured so as to allow him to purchase and own his own first home, and that discussions about the extent of J. P.s help in the mortgage application process were for the purpose of facilitating Jesse's purchase for himself. I credit this testimony.

12. By 1981 or 1982, not only had Jesse's mother moved out of the Maynard Property, but Jesse also moved out, and rented the property, retaining it as an investment property. In 1986, he paid off the original mortgage used to acquire the property as well as a second mortgage, using his income from his employment, and funds he acquired from the rental of the property, as well as rental income from another investment property he had acquired in Cambridge. [Note 13]

13. In or about 1986, Jesse asked J. P. to agree to remove his name from the title of the Maynard Property. J. P., who left his Massachusetts employment and moved out of state at about this time, was not responsive to these requests. [Note 14]

14. The brothers' relationship deteriorated after this and their contacts became less frequent. [Note 15]

The Down Payment on the Maynard Property.

15. The total purchase price of the Maynard Property was $78,000. After paying $16,000 as a deposit, Jesse and J. P. received a mortgage in the amount of $62,000. [Note 16]

16. Jesse testified that of the $16,000 deposit, he provided approximately $13,000 or $14,000 from savings, including money he had saved from jobs prior to graduating from college, and also including money his mother had given him when they were still living in Taiwan as a reward for doing well in school. I credit this testimony that Jesse provided most of the deposit, and that the balance came from a loan or gift from his mother. [Note 17]

17. J. P. contends that the source of the down payment for the Maynard Property was the "Big Hsu Fund," meaning it came from family funds used generally by members of the Hsu family, but which may have been their mother's funds. [Note 18] I do not credit J. P.'s testimony about the existence of such a dedicated fund, or that the funds to purchase the Maynard Property came from such a fund or from other family members other than a loan or gift from their mother to Jesse. I find that none of the funds for the deposit were provided by J. P., nor did J. P. establish that he was a trustee for any such funds. [Note 19]

18. Other than remaining liable for the mortgage loan until the loan was paid off and the mortgage was discharged in 1986, J. P. did not contribute any funds or consideration towards the deposit or the purchase of the Maynard Property, nor did he contribute any funds for mortgage payments or other expenses of maintaining the property.

19. On October 22, 1980, J. P. purchased a home in Winchester. J. P. asked Jesse to "return[] the favor" by serving as a co-applicant for the Winchester residence, contributing Jesse's credit and earnings history for the mortgage application. [Note 20] Jesse acceded to this request, and served as a co-borrower on the mortgage loan for the Winchester property, just as J.P. had done for the purchase of the Maynard Property.

20. J. P. and his wife took title to the Winchester residence as tenants by the entirety; Jesse's name was not on the deed, despite Jesse remaining financially liable on the Winchester mortgage loan. [Note 21]

21. Jesse never made any payments on the Winchester mortgage, nor did he make any financial investment in the purchase other than to co-sign on the mortgage loan. [Note 22]

22. From the time the Maynard Property was purchased in 1979 up until the present day, Jesse has paid, without contribution from J. P., all of the real estate taxes, mortgage payments, and other expenses of owning the Maynard Property. [Note 23] He acknowledges that he has neglected the property, as the house is presently in disrepair as no repairs have been made in the last ten years. Although previously rented, the house has been vacant for the last ten years. [Note 24] J. P. does not contend that he has ever made any financial contribution to the upkeep of the property, or offered to make any investment to keep it in repair.

23. After both Jesse and his mother had moved out of the Maynard Property by 1981, Jesse rented the property to tenants for approximately $400 per month for each tenant. While the loan remained outstanding, the rental income covered the monthly mortgage payments for the first mortgage. [Note 25]

24. In 1985, Jesse took out a second mortgage in the amount of $35,000 on the Maynard Property, with J. P. co-signing the application for this loan as well. [Note 26]

25. In 1986, Jesse paid off the first and second mortgages on the Maynard Property using his income from working at General Electric, rental income from the Maynard Property, and funds from his then-wife, Bo-Yee. [Note 27]

26. After the first and second mortgages on the Maynard Property were paid off and after J.P. sold his Winchester Property, Jesse initiated several conversations with J. P. requesting that he remove his name from the deed as he claims was previously agreed, to no avail. [Note 28]

27. The Maynard Property has been vacant for approximately ten years. It has deteriorated and is presently in need of significant repairs. [Note 29]

DISCUSSION

Jesse seeks a judgment removing J. P.'s name from the deed for the Maynard property on alternative theories of resulting trust, constructive trust, and unjust enrichment. Because I find and rule that Jesse has established his claim of recovery on a theory of resulting trust, I do not reach the question whether there was a constructive trust or whether Jesse is entitled to recover on a theory of unjust enrichment.

"A resulting trust in real estate arises where one party furnishes the consideration to purchase property, not intending a gift or advancement, yet title is taken in the name of another." Fortin v. Roman Catholic Bishop of Worcester, 416 Mass. 781 , 789 (1994). "A resulting trust must arise, if at all, at the time of the execution of the deed." Id., quoting Dwyer v. Dwyer, 275 Mass. 490 , 494 (1931).

The presumption is that "he who supplies the purchase price intends that the property bought shall inure to his own benefit and not that of another, and that the conveyance is taken in the name of another for some incidental reason." Quinn v. Quinn, 260 Mass. 494 , 501 (1927). Where a transfer of property is made to one person and the purchase price is paid by another, a resulting trust may result in favor of the person who furnishes the purchase money. Collins v. Curtin, 325 Mass. 123 , 125 (1949). For a resulting trust to arise in this situation, it is necessary that, from the outset, the person supplying the purchase price intend that the property shall inure to his own benefit and not that of another. Lewis v. Mills, 32 Mass. App. Ct. 660 , 664 (1992).

In the typical resulting trust case, someone who is a stranger to the record title claims to have provided the purchase price, or a substantial part of the consideration for the purchase, and that the record title holder holds the property in a "resulting" trust for the benefit of the person who provided the consideration for the purchase. Carroll v. Markey, 321 Mass. 87 , 88-89 (1947). In other cases, more analogous to the present case, one of two or more record title holders seeks to eliminate the record title interest of a tenant in common or joint tenant on the ground that the co-owner was placed on the title as a mere convenience or accommodation and was not really intended to own the property. In such circumstances, the co-tenant is alleged to hold his or her record interest in the property in a resulting trust for the benefit of the other co-tenant. In such cases the intent of the parties at the inception of the joint record ownership is the principal determinant of whether a resulting trust was created, and evidence of consideration paid by the defendant is a relevant consideration in the court's analysis. See McPherson v. McPherson, 337 Mass. 611 , 614 (1958); see also Thomas v. Mena, Mass. Land Court, No.18 MISC 000589 (Vhay, J.) (November 8, 2019).

Behavior of the parties subsequent to the acquisition of title to the disputed property may also be indicative of their intent at the time of the transaction. See Checovich v. Checovich, 339 Mass. 71 , 74-75 (1959) (son, mother, and father all signed mortgage and mortgage note but only son and mother took title to property; court looked to parties' actions and found resulting trust for father where son contributed no funds towards mortgage, father provided down payment, and from time of conveyance father received rents from property and paid all costs for property including insurance, taxes, and repairs).

In the present case, I find and rule that the intent of the parties at the time of the 1979 purchase was that J. P.'s participation in the purchase of the Maynard Property was an accommodation to assist his younger brother to purchase his first home, and was not for the purpose of making an investment on behalf of the "Big Hsu Fund." J. P. offered no evidence of any contribution of equity by members of the family, other than funds given directly by the mother to Jesse, as testified to by Jesse, to support any claim that the purchase was an investment by the family as a whole. J. P. does not claim to have contributed any of the funds for the deposit from his own funds, nor does he dispute Jesse's testimony that Jesse has borne the expenses of the property himself. J. P.'s blanket assertion that all real estate purchases by family members were for the benefit of the "Big Hsu Fund" was utterly without any evidentiary support.

The evidence supports the conclusion, as I find, that J. P.'s participation in the purchase of the Maynard Property was purely an accommodation, which was later reciprocated when Jesse co-signed the mortgage application for J. P.'s purchase of his own home in Winchester. J. P. urged his brother to stop sleeping on the floor of the small apartment he shared with their mother and to buy a home. J. P. did not contribute any funds directly to the purchase of the Maynard Property. J. P. co-signed for the mortgage loan, but I find that he did this as an accommodation to his brother, and not as an indication that he expected to acquire an undivided one-half interest in the property. J. P. accepted no responsibility for the expenses, maintenance or management of the property, nor did Jesse expect him to do so. Jesse collected rents from roommates or tenants; J. P. evinced no interest in sharing in this income, and never sought to claim the property on his income tax returns. Jesse paid all of the expenses of maintaining the property and made all the payments on the mortgage J. P. had co-signed for, as well as the real estate taxes and other expenses of owning the property. Jesse paid off the mortgage, and a second mortgage, out of his own funds, within seven years of the acquisition of the property.

While co-signing for a mortgage loan by a co-tenant can be an indication that the two parties intended to own the property together, I do not find that to be the case here. Contrast, McPherson v. McPherson, supra, in which a wife who contributed no funds to the purchase of a home owned with her ex-husband, was found not to hold her interest in a resulting trust for her ex-husband where she co-signed for the mortgage and believed she would be responsible for its payment. The question is one of the intent of the parties, and unlike in McPherson, the intent of the two Hsu brothers was not that the property would be owned as an investment property by the Hsu family. Rather, I find that the understanding and intent was that the property would be owned by Jesse, who contributed all the funds for the down payment other than funds loaned or gifted to him by his mother, who managed the property without any help from J. P. or the rest of the family, and who paid for all the expenses of owning the property. Further evidence that this was the parties' intent was that Jesse "returned the favor" a short time after the purchase of the Maynard Property by co-signing for the mortgage on a house purchased in Winchester by J. P. and his wife, without Jesse's name being placed on the deed.

Accordingly, based on the findings described above, I rule that J. P. holds his interest in the Maynard Property in a resulting trust for the benefit of Jesse.

CONCLUSION

For the reasons stated above, the plaintiff Nien-Hsi Hsu has met his burden of proving that the defendant Jong-Ping Hsu holds his interest in the Maynard Property in a resulting trust for the benefit of Nien-Hsi Hsu.

Judgment declaring Nien-Hsi to be the sole owner of the Maynard Property will enter accordingly.