Loucks v. McCormick

• Citation: 424 P.2d 555,198 Kan. 351
• Decision Date: 04 March 1967
• Docket Number: No. 44646,44646
• Parties: Rhoda D. LOUCKS, Appellant, v. Ethel K. McCORMICK, and P. S. McCormick, Appellees.
• Court: United States State Supreme Court of Kansas

Page 555

424 P.2d 555

198 Kan. 351

Rhoda D. LOUCKS, Appellant, v. Ethel K. McCORMICK, and P. S. McCormick, Appellees.

No. 44646.

Supreme Court of Kansas.

March 4, 1967.

Rehearing Denied March 31, 1967.

Syllabus by the Court

1. Actual fraud is an intentional fraud and the intent to deceive is an essential element thereof. Constructive fraud is a breach of a legal or equitable duty which, irrespective of the moral guilt, the law declares fraudulent because of its tendency to deceive others or violate a confidence and neither actual dishonesty of purpose nor intent to deceive is necessary.

2. Where a substantial gift is made by a person of weak or infirm mind to a person in a confidential relationship, undue influence amounting to constructive fraud will be presumed and the donee can only be freed of the presumption by satisfactory proof that the donor had independent advice.

3. Although undue influence is sometimes regarded as species of fraud, it must be treated for pleading purposes as undue influence and a plea of fraud will not ordinarily raise the issue of undue influence.

4. An appellate court is not concerned with the credibility of witnesses or the weight of their testimony, and the trier of facts, not the court of appellate review, has the responsibility of determining what testimony should be believed.

5. The record in an action to cancel a quitclaim deed on the ground of fraud is examined and no error is disclosed requiring the granting of a new trial.

Dale E. Saffels, Garden City, argued the cause, and A. M. Fleming, Lloyd H. Haag and Clifford R. Hope, Jr., Garden City, were with him on the briefs, for appellant.

Logan N. Green, Garden City, argued the cause, and Ray H. Calihan, Ray H. Calihan, Jr., and Daniel J. High, Garden City, were with him on the briefs, for appellees.

HATCHER, Commissioner:

This was an action to cancel a quitclaim deed alleged to have been obtained by fraud.

The facts leading up to the execution of the deed are not in dispute. Although P. S. McCormick, the divorced husband of Ethel, is named as defendant, he did not participate in the transaction in controversy or the trial of the case, therefore we will refer to Ethel K. McCormick as the defendant and appellee. In 1938 Charles A. Loucks employed the defendant, Ethel K. McCormick, in his abstract business at Lakin, Kansas. The next year a partnership was formed to operate the abstract business and an insurance agency was also included. Charles A. Loucks owned a one-half interest in the partnership and Ethel K. McCormick and P. S. McCormick, her husband, each owned a one-fourth interest. The business was carried on by the McCormicks, Mr. Loucks acting only in an advisory capacity.

The partnership arrangement continued until Mr. Loucks' death December 28, 1960. He died testate naming his wife, Rhoda D. Locks, as executrix. The will devised the property where the partnership office was located to the defendant and provided for division of the remaining partnership real estate as follows:

'It is my will and I direct that an inventory of all of such property be made and furnished to the Executor of my estate by my said surviving partners, and that all of such property be in lawful and orderly fashion converted into the form of cash, or by division in kind to my general estate for administration by my Executor and disposition under the terms and provisions of this will.' (The property covered by the deed in dispute.)

Letters testamentary were issued to plaintiff on January 19, 1961, and on the same day the plaintiff gave the defendant a power of attorney. Under the power the defendant managed the business affairs of the estate which was of the approximate value of $1,000,000. She collected monies, paid bills, both business and personal, and took care of the plaintiff's business affairs generally. The power of attorney did not extend to the sale and transfer of property. The plaintiff gave the power of attorney to the defendant because her husband, Charles A. Loucks, had said she was capable and because the defendant had transacted Mr. Loucks' business for many years. Neither the plaintiff nor her husband, Charles A. Loucks, had any known relatives.

On November 16, 1961, the plaintiff executed two deeds to the defendant, one covering the business building which was devised to defendant by the will, and one covering a small parcel of land immediately west of the business property which defendant purchased from the estate. The plaintiff read the deeds conveying the above mentioned property, signed them and acknowledged them before a notary public. These conveyances are not in dispute.

On December 1, 1961, the plaintiff executed a quitclaim deed conveying to the defendant and her ex-husband, P. S. McCormick-the parties having been divorced-plaintiff's one-half interest in the partnership property. The record does not disclose the value of the one-half interest but plaintiff alleged it to be in excess of $75,000. At the time the quitclaim deed was executed the plaintiff's eyesight was impaired and she was in the habit of signing instruments brought to her by the defendant without reading them. She could, however, ascertain the general tenor and import of a document if she made an effort to do so. The plaintiff was 88 years of age but of sound mind.

Although the quitclaim deed showed an acknowledgment and was duly recorded, the plaintiff did not appear before the notary acknowledging the instrument or have contact with the notary in any way.

The friendly relationship between the plaintiff and defendant continued until the latter part of the year 1964, when an old friend of the Loucks family began to cast aspersions on defendant's financial integrity. In the early part of 1965 the power of attorney given defendant was cancelled and a similar one given to the family friend. The petition was filed to cancel the quitclaim deed March 17, 1965.

The petition, after setting forth the formal allegations, stated the quitclaim deed was obtained from the plaintiff by fraud while the defendant was in a confidential relationship. The plaintiff had no knowledge of the execution of the deed until February 8, 1965. It was the habit of plaintiff to sign such instruments as defendant brought to her without question because of her trust and confidence. The petition concluded:

'That the plaintiff did not know of the existence of said deed and the perpetration of said fraud until on or about the 8th day of February, 1965, whereupon plaintiff immediately consulted her attorney; that subsequent to said February 8, 1965, plaintiff demanded that said property be deeded back to plaintiff, which defendants refused to do and still so refuse.

'That said property is of the reasonable value in excess of $75,000.00 and said instrument is void for the further reason that it is without consideration.

'That by reason of the fraud of defendants, plaintiff has been deprived of her title to said property, and will be wholly deprived of the use, possession and title thereof unless said deed is cancelled.'

The prayer was for cancellation of the instrument.

It will be noted that at no place in the petition is there a suggestion of undue influence or persuasion.

The answer denied that the deed was signed by plaintiff without her knowledge and consent and stated:

'* * * Further said defendants allege and state that on or about the 1st day of December, 1961, the defendant, Ethel K. McCormick approached the plaintiff with the intention of dividing the property described in plaintiff's petition in accordance with the expressed wishes of the decedent, Charles A. Loucks, as expressed in his Last Will and testament. She conferred with said plaintiff in this regard and during said conversation the plaintiff stated to her that she had greatly assisted in the acquisition of said property; that she, the plaintiff, had no heirs to whom to leave said real property and that she desired to make a gift of her share of said real property to the defendant, Ethel K. McCormick and further suggested that she give the same jointly to the said Ethel K. McCormick and P. S. McCormick, her former husband, who plaintiff voluntarily and entirely at her her husband throughout the years and in pursuance of such conversation the plaintiff voluntarily and entirely at her own suggestion executed the deed mentioned in plaintiff's petition; that thereafter the defendant, Ethel K. McCormick paid the gift tax due upon said transaction and placed said deed of record.'

In addition to the undisputed facts heretofore stated the plaintiff testified:

'Q. Did you ever intend to convey this partnership land to Ethel and Pete McCormick?

'A. No, indeed.

'Q. And if your signature does appear on here, which it does, what is your testimony as to what your intent was as to this deed?

'A. If I signed that, it wasn't to my knowledge.

'Q. You did not intend to convey this?

'A. I did not.'

The trial court saw fit to believe the defendant, who testified:

'Q. How about the balance of the partnership property; what was your conversation about that?

'A. She wanted Pete and I to have it, and I drew up a quitclaim deed covering it.

'Q. You talked about it and she said she wanted you to have it and then you went back and prepared a deed, is that correct?

'A. Yes, it took me considerable time to prepare it.

'Q. That deed is dated December 1, 1961; did you take that to Mrs. Loucks' house to get her signature on it?

'A. Yes, sir.

'Q. Was anyone there beside you and Mrs. Loucks?

'A. No, sir, Mrs. Loucks never wanted anyone there. She didn't want to discuss business if anyone else was there.

'Q. When you went in what was said between you, if you remember?

'A. Well, I went up there about 1:00 o'clock and it was almost 3:00 before I left, and she read that over very carefully and we discussed the location of where it was. * * *

'Q. You say you handed her the deed and she read it through?

'A. Yes, sir.

'Q. Did you...