## Facts

- A daughter alleged she loaned her parents $25,000 in reliance on their promise to repay.
- She alleged the parents made the promise without a present intent to perform and later refused repayment.
- The parents used the $25,000 to build a house on land they already owned.
- The daughter sought equitable relief, alleging the funds were held through a constructive and implied trust in her favor.
- She also alleged the parents pledged, mortgaged, and borrowed money against the land and improvements.
- The parents moved for summary judgment, arguing the complaint failed to state an equitable claim and that the fraud allegation had been “factually pierced.”
- The trial court granted summary judgment for the parents.

## Issues

1. Whether the appeal from the grant of summary judgment was premature.
2. Whether a complaint alleging a loan induced by a promise to repay made without present intent to perform, and tracing the proceeds into improvements on the defendant’s land, states a claim for equitable relief by constructive trust or equitable lien (assuming legal remedies are inadequate).

## Decision

- The motion to dismiss the appeal as premature was denied.
- The summary judgment for the parents was reversed.
- The court held that, if fraud is proven and legal remedies are inadequate, equity may impose either a constructive trust or an equitable lien on property improved with funds obtained by a fraudulent promise.
- The case was remanded for further proceedings.

## Legal Principles

- A promise made without a present intent to perform is a misrepresentation of a material fact and can support an action for fraud.
- Constructive (implied) trusts may arise where, by fraud, a person obtains property that in equity should belong to another.
- When money is obtained by fraud and is traceable into other property (including improvements to real property), equity may permit recovery through a constructive trust or an equitable lien imposed on that property.
- Summary judgment is improper where the pleadings and record, viewed in favor of the nonmovant, show a legally cognizable equitable claim dependent on proof of fraudulent inducement and tracing.

## Conclusion

The court held that allegations of a fraudulently induced loan, coupled with undisputed use of the loan proceeds to improve the defendants’ real property, can support equitable relief through a constructive trust or equitable lien if the plaintiff proves fraud and shows that legal remedies are inadequate; therefore, summary judgment for the defendants was erroneous.


Middlebrooks v. Lonas, 246 Ga. 720 (1980)