Baker v. Massey

• Decision Date: 27 September 1977
• Docket Number: No. 50592,50592
• Citation: 569 P.2d 987
• Parties: Dr. Loren V. BAKER and Hazell B. Baker, his wife, Petitioners, v. Viola T. MASSEY, Executrix of the Estate of J. P. Thurmond, Deceased, Respondent.
• Court: Oklahoma Supreme Court

Page 987

569 P.2d 987

Dr. Loren V. BAKER and Hazell B. Baker, his wife, Petitioners, v. Viola T. MASSEY, Executrix of the Estate of J. P. Thurmond Deceased, Respondent.

No. 50592.

Supreme Court of Oklahoma.

Sept. 27, 1977.

Interlocutory Certiorari to the District Court of Custer County; Charles M. Wilson, District Judge, Trial Judge.

Certiorari having been granted under 12 O.S.1971 Ch. 15, App. 2, Rule 1.50, we hold respondent's petition in trial court, seeking quiet title and rescission of a contract on grounds of undue influence and failure of consideration, is governed by the limitation period of 12 O.S.1971, § 95 sixth; on respondent's claim of fraud and damages the statute of limitations applicable is 12 O.S.1971, § 95 third. SUSTAINED IN PART: REVERSED IN PART AND REMANDED.

Jones & Jones, Cordell, for petitioners.

James F. Davis, Lynn O. Holloman, Andrews, Mosburg, Davis, Elam, Legg & Bixler, Inc., Oklahoma City, for respondent.

DOOLIN, Justice.

We will refer to the parties under the trial court designations plaintiff (respondent), executrix of the estate of J. P. Thurmond representing the estate and heirs and the defendants (petitioners) as grantees under the deed or deeds in question.

Pursuant to Rule 1.52, 12 O.S.1971, Ch. 15, App. 2, a petition for certiorari is presented for the purpose of reviewing a certified interlocutory order overruling demurrers to the petition in the District Court of Custer County, Oklahoma.

The trial judge prepared and filed a statement under Rule 1.52(a) which was approved by the parties litigant and no other record under Rule 1.54 is necessary. As we view the issue presented, it is: Which statute of limitation shall apply under the pleadings, ¹ (a) 12 O.S.1971, 95 third (fraud, two years limitation); (b) § 95 sixth (relief, not herein before provided, five years); or (c) 12 O.S.1971, 93 § 4 (recovery of real property not hereinbefore provided, 15 years)?

The petition prayed for judgment cancelling deeds, quieting title in the plaintiff for the use and benefits of the heirs of decedent, an accounting, exemplary damages costs including a reasonable attorney fee for the executrix's attorneys and other equitable relief.

Defendants filed their answer, denying generally all material allegations, and alleging the petition sounded in fraud and was subject to the two year statute of limitations of 12 O.S.1971, 95 third. Defendants further denied their actions were reprehensible, oppressive and malicious, or an abuse of the confidential relationship between the defendant doctor and the deceased. They also sought attorney's fees from the plaintiff for defense of the suit. ²

The trial court overruled defendant's demurrer and certified the question of the applicable statute of limitations to us. We granted certiorari having been asked to do so by both parties.

Fraud, at common law, like most if not all wrongs did not survive the death of its victim; but 12 O.S.1971 § 1051 specifically states: " * * * causes of action * * * for * * * fraud shall * * * survive." Examination of the petition ³ and conclusion to be drawn therefrom indicates the deeds in question were executed, delivered and recorded on May 12, 1971. Plaintiff filed her cause of action May 10, 1976, more than two years after the recording of the deeds but less than five years after May 12, 1971. Thus, if the two year statute § 95 third (fraud) is strictly applied, the limitation had run, but not the five year limitation of § 95 sixth (relief not hereinbefore provided for).

To be considered also is that portion of § 95 third which states: " * * * the cause of action in such case (fraud) shall not be deemed to have accrued until the discovery of the fraud". (Parenthetical word supplied).

Defendants argue the entire thrust of plaintiff's petition is based on fraud and that the allegations of undue influence and failure of consideration are, in final analysis, but a species of fraud. They suggest that it is not necessary to use the word 'fraud' in order to plead fraud. ⁴ We agree with this latter conclusion and also that fraud may be the basis of, and the rationale of certain actions to rescind or cancel deeds, but we disagree with such broad application of this rule to the facts of this case. We deal with undue influence and failure of consideration later. We think it worthwhile to note, in Warner v. Coleman, 107 Okl. 292 (1924), 231 P. 1053, 1057 in considering subdivision three of 4657 R.L.1910 (presently 12 O.S.1971, 95 third) that the two year statute may be applicable to fraud cases:

"This is a general provision of the statute, and is alike applicable to transactions and conveyances involving real estate, as well as other kinds of property. The plaintiffs not having pleaded a cause of action, the gravamen of which was at law, for the recovery of real property as defined above, but only for the determination of an adverse interest growing out of a deed which the plaintiffs seek to rescind on the ground of fraud, this provision of the statutes governs their right to maintain the suit, and limits it to two years after such discovery of fraud, of which complaint is made."

Rational persons may disagree as to whether fraud has been alleged in this case and the well written briefs by both plaintiff and defendant are but evidence of such opinions and disagreements. But the result is the same, the statute of limitations § 95 third has run on elementary fraud, that is to say, an action possessed of the elements of fraud.

We have held in In the Matter of Woodward, 549 P.2d 1207, 1209 (Okl.1976):

"Where means of discovering fraud are in hands of party defrauded and defrauding party has not covered up his fraud to extent it would be difficult or impossible to discover, party defrauded will be deemed to have had notice of fraud from date means of discovering such fraud came into his hands and fraud will be deemed to have been discovered upon that date."

Woodward indicates the means of discovering the fraud came into the hands of the defendants therein (who occupy similar position as the plaintiff herein), when the deed creating an estate in the plaintiff was filed of record. We thus conclude in suits based on fraud, the statute of limitations, § 95 third begins to run from the time of discovery of the fraud or from such time as the victim by the exercise of ordinary diligence might have discovered same. ⁵

We hold that the trial court improperly denied that portion of the defendant's demurrer based on elementary fraud. The time specified in § 95 third had run on fraud and exemplary damages. Not only was the plaintiff's case not filed until almost five years after the recording of the critical deeds but the decedent himself had taken no action against the defendants from the date of filing the deeds, May 10, 1971, until his death March 11, 1976, far longer than the two year limitation of § 95 third. ⁶

As to the defendant's argument that undue influence and failure of consideration are in reality merely a part and parcel or a species of fraud, we would disagree.

We held in Taylor v. Clark, 380 P.2d 250, 253 (Okl.1963):

"It has been held and we think correctly so that, if any limitation period can be used to defeat an equitable action to cancel deeds for failure of consideration, it is the five year period prescribed by § 95 (subdiv.) sixth of Title 12, supra, and that neither the two, three, or fifteen-year periods apply. See Pepper v. Truitt (U.S.C.A. 10th Cir.) 158 F.2d 246, followed in Lawson v. Haynes (U.S.C.A. 10th Cir.) 170 F.2d 741. . . . Therefore, since plaintiffs' alleged cause or causes of action, if any, appears to have arisen, partly at least, out of the alleged fact that no valid consideration was ever paid for the deeds sought to be cancelled, and the five-year limitation period is the one, if any, applicable to such a cause."

See Crumley v. Smith, 397 P.2d 119 (Okl.1964).

Specifically at paragraph 11 of plaintiff's petition and impliedly in other parts thereof, the plaintiff alleges an unperformed contract to provide the decedent with lifetime care. Plaintiff further alleges that under the contract defendant exerted undue influence upon deceased (paragraph 13), that there was inadequate or complete failure of consideration for the contract (paragraph 12) and a breach of the confidential relationship existing between a doctor and his patient. ⁷

15 O.S.1971 § 61 defines undue influence as "(1) * * * the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him (i. e. breach of a confidential relationship); (2) In taking an unfair advantage of another's weakness of mind; or, (3) In taking a grossly oppressive and unfair advantage of another's necessities or distress." (Parenthetical definition supplied). The statutes themselves thus authorize a separate cause of action based on undue influence.

Likewise, failure of consideration in whole or in part is grounds for rescission ⁸ and plaintiff seeks this type of relief in addition to others.

To quote Pepper v. Truitt, supra, p. 250:

"(This) * * * is an equitable action for cancellation of the deed and possession of property, based upon failure of consideration. The oral contract is surely evidence of the consideration and its alleged breach is proof of its failure."

We hold that under the circumstances of this case, the five year statute, 12 O.S.1971 § 95 sixth, applies and we sustain that part of the trial court order overruling the demurrer. ⁹

At the time we granted certiorari, we instructed the parties to brief whether any other statute of limitations would apply to the factual situation outlined by the pleadings, and the conclusions drawn therefrom. We have been referred to Ward v. Lindly 294 P.2d 296 (Okl.1955) and In the Matter of Woodward, supra. In these recent cases this court held the...