## Facts

- William Regar owned a lot in Indianapolis.
- On August 15, 1872, Regar and his wife conveyed the lot to John Stumph by an absolute deed.
- The conveyance to Stumph was without consideration and was made on an oral (parol) trust that Stumph would hold title for Regar’s benefit.
- After the 1872 deed, Regar remained in possession of the lot and paid the taxes.
- While Stumph held record title, Hays & Wiles obtained a money judgment against Stumph in the Marion Superior Court.
- In an answer later challenged by demurrer, Hays & Wiles alleged their judgment was based on a note given for goods sold to Stumph on the faith that he owned the lot.
- On February 9, 1878, at Regar’s direction, Stumph and his wife conveyed the lot to Regar’s wife, Mrs. Regar.
- The City of Indianapolis later condemned the lot for street purposes and assessed damages to Mrs. Regar in the amount of $412.50, which was paid into the city treasury.
- Hays & Wiles claimed the condemnation money from the city treasurer based on the asserted lien of their judgment while legal title had been in Stumph.
- Mrs. Regar sued the city, its treasurer, and Hays & Wiles to establish her right to the condemnation proceeds.
- No fraud was claimed in the conveyances or related transactions.

## Issues

1. Whether, after an oral trust in land has been voluntarily executed by a conveyance consistent with the trust, the trust may be alleged and proved against the trustee’s judgment creditors to show the creditor’s judgment lien did not bind the property or its condemnation award, notwithstanding the statute of frauds.

## Decision

- The Indiana Supreme Court affirmed the judgment for Mrs. Regar.
- The court held it was proper to plead and prove the existence and execution of the parol trust, not to enforce it, but to show Stumph held only the naked legal title.
- Because Stumph held no beneficial interest, Hays & Wiles’ judgment lien could not attach to the lot or to the condemnation damages paid for it.

## Legal Principles

- The statute of frauds may prevent enforcement of an oral trust in land while the trust remains unperformed, but it does not bar proof of the facts of a parol trust once the parties have voluntarily executed it.
- When a conveyance is made on an oral trust and the trustee later conveys as directed, the executed arrangement may be shown in court to establish the parties’ true interests.
- A judgment lien reaches only the judgment debtor’s actual interest; it does not extend to property where the debtor holds bare legal title for another’s benefit.
- Judgment creditors generally take subject to existing equitable ownership and cannot obtain a greater property interest than the debtor possessed, absent fraud or other recognized grounds.

## Conclusion

Because Stumph’s record ownership arose from a parol trust for Regar and the trust was fully carried out by Stumph’s conveyance to Mrs. Regar before the condemnation award was paid, Stumph had no beneficial estate to which Hays & Wiles’ judgment lien could attach, and Mrs. Regar was entitled to the condemnation proceeds.


Hays v. Regar, 1 N.E. 386 (1885)