Fisher v. Koper, 84-318

• Decision Date: 24 October 1985
• Docket Number: No. 84-318,84-318
• Citation: 499 A.2d 1001,127 N.H. 330
• Parties: Peter M. FISHER et al. v. George S. KOPER, Robert K. Reese et al.
• Court: New Hampshire Supreme Court

Page 1001

499 A.2d 1001

127 N.H. 330

Peter M. FISHER et al. v. George S. KOPER, Robert K. Reese et al.

No. 84-318.

Supreme Court of New Hampshire.

Oct. 24, 1985.

Winer, Pillsbury and Bennett, of Nashua (Peter W. Bennett and Luci S. Pillsbury on the brief and orally), for plaintiffs.

Arthur O. Gormley, Jr., of Nashua, by brief for defendant Robert K. Reese.

KING, Chief Justice.

This appeal arises from an order of the Superior Court (Dalianis, J.) setting aside a conveyance by deed from the defendants George and Sophie Koper to the defendants Robert and Candace Reese, and confirming good title to the same property in the plaintiffs. We affirm in part, reverse in part, and remand.

The relevant facts are as follows. Defendant Robert K. Reese, a real estate broker, performed accounting and other services from 1972 to 1977 for defendant George S. Koper, a severely disabled diabetic. George Koper, now deceased, his wife, now incompetent, and two others, Louis M. Janelle, Esq., and Paul Fisher, Jr., were stockholders of a land development corporation known as Indian Valley, Inc. Koper had begun taking Reese to corporate meetings sometime during 1977, at which time discussions began regarding the dissolution of the corporation; and, in January 1978, Koper indicated to his fellow stockholders that Reese had a power-of-attorney to act on his behalf.

The plans for the corporate dissolution were implemented in the spring of 1978. Under the liquidation agreement, Koper was to take as part of his share the "back land," a multi-acre swampy parcel that Indian Valley, Inc. had left unsold and undeveloped. On April 21, 1978, Koper received the property by an executed deed in accordance with the liquidation agreement. For his past and current services, Reese claimed that Koper owed him approximately $2,800.00, although he had never sent any bills and never kept any time or account records. Koper expected to receive some money in June 1978, to pay Reese, but, on April 30, 1978, he and his wife executed a deed conveying the back-land property to Reese and his wife. Reese conceded that at least through June 1978 the land was really nothing more than security for a debt, and that thereafter he simply held the deed for a "grace" period about which he never informed the Kopers, before recording it in August 1978.

Meanwhile, on May 19, 1978, the corporation executed an amended deed which corrected the original deed from the corporation to Koper. Reese, acting under his power of attorney for Koper, helped the corporation's attorney, Louis Janelle, to prepare this deed and took the deed from attorney Janelle to have it recorded. Reese never mentioned to Janelle that he also held a deed to the same property. Furthermore, Reese never obtained a correction of his own deed. Reese conceded that he had not obtained a corrected deed because, at that time, he intended to return his deed to the Kopers once he was paid the money owed.

Throughout the summer of 1978, Paul Fisher, Jr., talked with Koper about buying the back-land property. On August 21, 1978, at a corporation meeting, Fisher told Koper that his sons definitely wanted to buy the property. Both Fisher and Koper claimed that Reese was present at the meeting; however, Reese and attorney Janelle both said that he was not present. Attorney Janelle did testify that Koper had called him twice, on August 6 and 8, to say that Reese wanted to pay $2,000 for the property.

The day after this meeting, August 22, 1978, at 8:44 a.m., nearly four months after receiving it, Reese recorded his deed. On the same date, Koper fired Reese and revoked his power of attorney. Reese claims that it was entirely coincidental that he recorded his deed the day after Koper agreed to sell the property to the plaintiffs and on the same day he was fired.

Attorney Janelle, as part of the preliminary negotiation with respect to a sale by Koper to the Fisher sons, ran a title search on the property up to August 4, 1978. A search was not run for the period between August 4 and September 7, 1978, on which date Koper and his wife executed a deed conveying the property to the Fishers. The Fisher sons, the plaintiffs, paid the Kopers $2,000.00 for the property, giving a deposit on September 4, 1978, and paying in full on September 10, 1978. They recorded their deed on September 11, 1978, unaware of Reese's deed recorded on August 22.

The plaintiffs then obtained permits and town variances, began building an access road, and cleared the property in preparation for two house lots. The plaintiffs also paid the property taxes from 1978 to 1981. Reese visited the property one time during this period, but the plaintiffs did not see him. He made no improvements to the property; he never paid any real estate taxes on it; and he never gave the Kopers any written document to demonstrate that the claimed debt was cancelled. Reese also never told anyone about his deed to the property.

The plaintiffs had no actual knowledge of Reese's interest until April 1981, when a mortgagee bank financing a previously-existing house, which the plaintiffs were moving onto the property, found a duplicate deed to the property. The bank immediately notified the plaintiffs of the prior deed to Reese, and advised them to suspend their plans.

Subsequently, the plaintiffs filed a bill in equity to set aside the conveyance from the Kopers to the Reeses. George Koper died just prior to the trial. On May 16, 1984, the superior court found that Reese's deed was only intended to be security for a debt and that Reese's subsequent recordation did not change the nature of the conveyance. The court further found that Reese's act of recording and his claim of ownership constituted a constructive fraud upon the Kopers and the plaintiffs and that, because of the constructive fraud, Reese's recordation was invalid. The court ordered that the conveyance to Reese be set aside; that good title pass to the plaintiffs by their deed from the Kopers; that Reese have no interest in the property; and that the petition which the plaintiffs had filed against the Kopers be dismissed. Reese has appealed.

The issues which this court must resolve are these: whether the superior court erred in finding that Reese's deed was but a deed in mortgage and not a deed absolute; whether the nature of the conveyance subsequently changed during the period in question; and whether Reese's claim to outright ownership of the back-land property worked a constructive fraud upon the plaintiffs and the Kopers. Additionally, we are asked to resolve subsidiary questions regarding the trial court's exercise of its equitable powers in this case.

The trial court found that the deed from the Kopers to Reese, although absolute on its face, operated only as security for a debt, that is, as a mortgage. As we noted in White v. Ford, 124 N.H. 452, 455, 471 A.2d 1176, 1178 (1984):

"A deed absolute on its face may be proven by parol evidence to have been intended by the parties to operate as security for a debt.... The intentions of the parties at the time of the conveyance are determinative, ... but those intentions may be inferred from the situation of the parties and their actions after the contract was executed."

(Citations omitted.)

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