## Facts

- The Corporation of the President of the Church of Jesus Christ of Latter-Day Saints (the Church) employed LaMar Kay as an accountant.
- During 1967 and 1968, Kay carried out an embezzlement scheme using fictitious firm names and pretend claim payments, causing Church funds to be diverted through a bank account set up in a fictitious name.
- In April 1968, Kay drew a check on a fictitious account in the name “Barker and Clayton” at Murray State Bank for $4,305.57, payable to Peck and Shaw (auto dealers), and used it to pay $4,224.62 for a new 1968 Pontiac Firebird.
- In August 1968, Kay drew another check on the same fictitious account for $3,000, used it to buy a cashier’s check payable to Capital Chevrolet, and tendered that cashier’s check as part payment for a new 1968 Chevrolet Corvette with a total purchase price of $5,008.87.
- The remaining Corvette balance was paid in cash: $50 on August 26, 1968, and $1,958.87 on August 30, 1968; those two cash payments were not directly traced through the “Barker and Clayton” account.
- Evidence showed that a few days before the cash payments on the Corvette, Kay withdrew $2,700 in cash from that same fictitious account funded by embezzled money.
- Vickie C. Jolley accompanied Kay to the dealership for the Corvette purchase.
- After the purchases, Kay transferred title to both the Firebird and the Corvette to Jolley.
- There was no evidence or claim that Jolley gave any legal consideration for either automobile.
- After discovering the embezzlement, the Church sued Jolley in district court seeking to impress a constructive trust on both automobiles; the district court entered judgment for the Church, and Jolley appealed.

## Issues

1. Can a court impose a constructive trust on property held by a third party who is not in a fiduciary or confidential relationship with the injured party, when the third party received the property as a gratuitous transferee from an embezzler?
2. If a constructive trust is proper, must it be limited to the amount of misappropriated funds directly traced into the property, or may it extend to the entire property where the circumstances support an inference that the whole purchase was funded by the embezzlement?

## Decision

- The Utah Supreme Court affirmed the district court’s judgment impressing a constructive trust on both automobiles in Jolley’s hands.
- The court rejected Jolley’s argument that a constructive trust is limited to cases involving fiduciaries or confidants, holding that the remedy may reach a third-party recipient when retention of the property would be unjust.
- The court upheld the decree covering both cars as complete vehicles (not merely a partial interest tied to directly traced dollars), including the Corvette despite the fact that certain cash payments were not traced step-by-step through the fictitious account.
- Applying the appellate standard that disputed evidence is viewed in the light favorable to the trial court’s findings, the court accepted the trial court’s determination that the vehicles were properly treated as acquired with embezzled funds and transferred without consideration.

## Legal Principles

- A constructive trust is an equitable remedy imposed by operation of law to prevent unjust enrichment when someone holds title to property under circumstances making it unfair for that person to keep the beneficial interest.
- The remedy is not confined to disputes involving a fiduciary or confidential relationship; it can be imposed on a third party when the facts show that holding the property for oneself would be unjust.
- A victim of embezzlement may trace misappropriated funds into identifiable substitute property purchased with those funds and seek a constructive trust on that substitute.
- A bona fide purchaser for value may have defenses unavailable to a donee; a person who receives property without consideration stands in a weaker position in equity when the property derives from wrongdoing.
- Tracing need not always be a rigid, dollar-for-dollar accounting if the evidence supports a reasonable inference that the property as acquired was funded by the wrongful taking; equity may award the claimant the whole asset when warranted by the circumstances.
- On appeal, when evidence is disputed, the reviewing court gives deference to the trial court’s findings and views the evidence in the manner most favorable to those findings.

## Conclusion

The Utah Supreme Court affirmed a decree imposing a constructive trust in favor of the Church on a 1968 Pontiac Firebird and a 1968 Chevrolet Corvette purchased through an employee’s embezzlement scheme and transferred to Vickie C. Jolley without consideration, holding that the remedy can reach a non-fiduciary donee and can extend to the full automobiles where the record supports the trial court’s conclusion that the purchases were funded by the misappropriated money.


Corp. of the President of the Church of Jesus Christ of Latter-Day Saints v. Jolley, 467 P.2d 984 (Utah 1970).