BEFORE ROY NOBLE LEE, HAWKINS AND ANDERSON
HAWKINS, JUSTICE, FOR THE COURT:
Earl L. and Warrie L. Neyland have appealed from a final decree of the chancery court of Amite County dismissing their action to impress a trust on funds loaned their son and Priscilla B. Neyland, his wife, and to hold that there was an equitable lien on a house constructed with funds loaned the son and Priscilla.
Persuaded this is a case for impressing an equitable lien, we reverse.
James M. Neyland (Jimmy) and Priscilla B. Neyland (Olivia), a young married couple, were desirious of building their own home. After purchasing a lot, they approached Jimmy's parents, Earl L. and Warrie L. Neyland (Mr. and Mrs. Neyland) about a loan to construct the house. When first approached, Mr. and Mrs. Neyland did not have the money readily available, but agreed to make the loan if and when they could liquify some assets. Over a period of six months, there were frequent discussions between Jimmy and Olivia and Mrs. Neyland requesting Mrs. Neyland to persuade Mr. Neyland to get them some money. Mr. Neyland was finally able to scrape up the money by selling off some timber and entering into some oil leases.
On May 26, 1981, Mrs. Neyland made out and signed a check for $21,000, payable to the order of James Neyland. In the space on the front of the check for designating the purpose of the check, the words" House Loan "appeared.
This loan was for the purpose of building a home for the couple. No time or schedule was set for repayment since it appeared it would be some time in the future before the repayments could begin. Mr. Neyland was contemplating retirement in a few years and it was agreed between him, Jimmy and Olivia that the loan would be repaid whenever Mr. and Mrs. Neyland needed it or as Jimmy and Olivia could afford to repay it, whichever came first. The Neylands were anxious to give their children a head start and did not want to burden them with the repayments until they could afford it, unless, of course, they really needed the money paid back sooner.
At the time they received the money, Jimmy and Olivia were not yet ready to build, so they deposited the check in a savings account while the house plans were prepared.
Prior to expenditure of the funds, the account earned $764.39 interest. The $21,764.39, was eventually placed in a special joint checking account set by up Jimmy and Olivia to finance construction of the house. The entire amount was spent in constructing the house.
In December 28, 1981, the Neylands loaned Jimmy and Olivia an additional $1,000 to enable them to go on and move into the house. This check was also made out to Jimmy, but was endorsed by Olivia.
In April of 1984, it became apparent to Mr. and Mrs. Neyland that Jimmy and Olivia were divorcing, and realizing that the loan was in jeopardy, they filed this action seeking a lien upon the house constructed by Jimmy and Olivia, and requesting the court to order the property sold and to pay Mr. and Mrs. Neyland $22,000 plus interest at the legal rate and to pay all costs of court out of the proceeds of the sale.
Jimmy confessed that he and Olivia owed his parents the money, but Olivia denied the complaint and defended by stating that the action was barred by the statute of frauds.
The chancellor, finding that the action was barred by the statute of frauds and further that no constructive trust existed, granted Olivia a directed verdict. The Neylands proceeded to ...