Hammontree v. Kenworthy, 2

• Citation: 404 P.2d 816,1 Ariz.App. 472
• Decision Date: 06 August 1965
• Docket Number: No. 2,CA-CIV,2
• Parties: George HAMMONTREE, Administrator With the Will Annexed of Nola Kenworthy, deceased, Appellant, v. Chester Leroy KENWORTHY and Olive E. Kenworthy, husband and wife, Appellees. * 62.
• Court: Court of Appeals of Arizona

Page 816

404 P.2d 816

1 Ariz.App. 472

George HAMMONTREE, Administrator With the Will Annexed of Nola Kenworthy, deceased, Appellant, v. Chester Leroy KENWORTHY and Olive E. Kenworthy, husband and wife, Appellees. ^*

No. 2 CA-CIV 62.

Court of Appeals of Arizona.

Aug. 6, 1965.

Rehearing Denied Sept. 2, 1965.

Review Denied Oct. 5, 1965.

Evans, Kitchel & Jenckes, Phoenix, of counsel, Joseph S. Jenckes, Jr., and Stephen B. Rayburn, Phoenix, for appellant.

Wood & Platt, Coolidge, of counsel, George Wood, Coolidge, and Tom Fulbright, Florence, for appellees.

MOLLOY, Judge.

This is an appeal from an order granting a new trial. The litigation arises out of the transactions between two brothers, and their wives, occurring over a period of many years.

The two brothers concerned are Ray W. Kenworthy and Chester L. Kenworthy. The facts as herein stated are almost entirely as testified to by Chester and wife, Olive, because both Ray and his wife, Nola, died before the trial of this action.

The transactions go back to the year 1928. About this time, Albert Kenworthy, the father, and Ray, the older brother, had acquired certain lands in Pinal County. In this litigation, these lands have been referred to as parcels A, B, C and D. Parcels A and D consist of 480 acres and 320 acres respectively and were acquired by the father; parcels B and C consist of 270 acres and 320 acres, respectively, and were acquired by Ray.

In 1928, Chester came to Arizona from Oklahoma and began farming parcel C under an 'arrangement' with Ray. In 1930, the father died, and Ray was appointed the executor of his estate. The father's property was left in his will to his widow. In 1932, parcel D was turned over by Ray, the executor, to Chester for farming. In addition to farming these two parcels of land (C and D), Chester had an 80 acre parcel of land in his name near Coolidge, which he had purchased in 1926 before he came to Arizona. To make this purchase he had borrowed $4,000.00 from Ray, this being one-half of the purchase price. The proceeds from all of Chester's farming operations were placed in a joint bank account between Ray and Chester and the monies divided to the satisfaction of the family annually. In 1937, Chester commenced farming Ray's parcel B under the same loose arrangement.

In 1937, Chester purchased 4,865 acres of land near Blythe, California for $10.00 per acre, $1.00 per acre down and the balance at $1.00 per acre per year. In the fall of that year, Chester cleared 200 acres of this land and in the spring of 1938, he planted it to cotton. The crop grew well, but was devastated by insects at maturity, and Chester was in financial trouble.

In 1938, as the result of another oral understanding between Ray and Chester, Ray took over the Blythe, California land and Chester commenced farming, in addition to parcels B, C and D, which he was already operating, parcel A, which was still in probate in the father's estate, with Ray as executor. The joint bank account was closed and thenceforth Ray operated the Blythe property and received all of the income from it and Chester did the same for the Pinal County property. At this same time, Ray told Chester he need never repay the $4,000.00 loaned to purchase the 80 acres near Coolidge. At this time (1938), there would have been no great disparity between the value of the Blythe property and parcel C, which was later deeded to Chester by Ray. From then until 1950, Chester made substantial investments in parcel C. He substantially improved the house on the property, including air conditioning same, and the adding of four rooms thereto. During this same time, there were expended considerable amounts upon all four parcels in installing wells, pumps, barns, ditches and fences and in the leveling of the land. The amounts so expended were always less than the income from the farming and cattle raising operations conducted by Chester on these properties.

At Blythe, Ray cleared various portions of the land, from time to time, and arranged for the sale of various portions of the unimproved land. The amounts so received were alway applied to the balance of the purchase price of the total acreage. The legal documents signed in connection with the sales of these various portions of the Blythe property were signed only by Chester and his wife, in whom record title lay, with the exception of the first such sale which occurred in the fall of 1938, which instruments were signed by both Chester and wife and Ray and wife.

In the summer of 1950, Ray informed Chester that he wanted the title to the Blythe property in his name, so that he could complete a sale that he had negotiated for a portion of the property at $150.00 per acre. Thereupon, Chester and Olive executed and delivered to Ray and Nola a deed to the Blythe property, the date of the deed being July 20, 1950. There were $44.00 in revenue stamps affixed to the instrument and it was recorded. On August 12, 1950, there was executed a deed from Ray and wife to Chester and wife of parcel C. This instrument was not recorded until 1954, at which time it was necessary to record same for the reason that Chester had negotiated the sale of parcels C and D for $115,000.00. The conveyance from Ray and wife to Chester and wife of parcel C, when recorded, had $44.00 in revenue stamps affixed to it, placed there and canceled by the escrow agent handling the 1954 sale. The ownership of parcel D had meanwhile passed to Chester through the estate of his mother who had died circa 1951 (the date is not established by the evidence), and the title to parcel A had meanwhile vested in Ray in the same manner.

In December of 1957, Ray died. His estate was probated and Chester acted as one of the appraisers. Included in this estate and amongst the property appraised by Chester were parcels A and B. In November of 1958, Chester wrote a letter to an accountant in Phoenix, who was working on estate taxes in connection with the Kenworthy properties, in which letter there was reference to 'R. W. K.'s farms here,' which reference could have only been to parcels A and B.

After Ray's death, Chester attended a meeting between Nola, Ray's widow and their two children, in which it was agreed that in her will she should leave parcels A and B to the daughter and the Blythe property to the son.

At this meeting, despite admitting that the foregoing was part of what was said, Chester contended in this action that he had informed the widow that Ray had agreed many years previously to deed to him parcels A and B and that this was part of the consideration for conveying the Blythe property to Ray in 1950.

In February of 1959, Chester placed of record a 'declaration of interest in lands' in which he contended that he and his wife were the owners of parcels A and B. This was served upon Ray's widow shortly thereafter. In July of 1959, Nola served a demand upon Chester and wife that they quitclaim parcels A and B to her, tendering a quitclaim deed and $5.00 as contemplated by A.R.S. § 12-1103, subsec. B. This demand was refused by Chester and wife. Subsequently this action was filed, with Chester and wife as plaintiffs and with Nola as the defendant. The complaint asks that a constructive trust be imposed upon parcels A and B, because of an oral agreement by Ray to convey these properties entered into in the year 1954, in exchange for the conveyance of the Blythe property to Ray and Nola. Prior to filing an answer, Nola died, and her administrator was substituted as the party defendant. The answer filed contained a counterclaim asking that the title of the defendant to parcels A and B be quieted, that there be recovery for taxes paid by Nola on parcels A and B for the years 1955-1959, inclusive, for rent upon the said properties from the time of the filing of the counterclaim, for reasonable attorney's fees and for a writ of assistance to place the defendant in possession of said parcels A and B.

An amended complaint was subsequently filed, which alleged that the oral agreement occurred in the year 1952.

At the time of trial, Chester testified that the oral agreement upon which the complaint was based was made in the winter of 1951-1952. On direct examination he testified that this oral agreement took place in a tavern in Phoenix. On cross-examination he stated: 'It would have had to be Blythe in '51 or possibly in '52.' As corroboration for the oral agreement, plaintiffs produced a creditor of Ray who testified that sometime in 1952 he talked with Ray in Blythe, that there was an argument about monies owing from Ray to the witness, and that at this time Ray told this creditor there was no use asking Chester for the monies owed, for the reason that Ray had traded 'all of my Coolidge property for all of the Blythe property.' In addition, there was testimony that in 1952, the Blythe property was worth considerably more than parcel C alone, having a value at that time considerably in excess of parcels A, B and C. By 1952, Ray had cleared an additional 500 acres of the Blythe property, so that there was a total of 700 acres in cultivation, and a land boom had developed in the Blythe area.

The case was tried to a jury. On appeal, both parties accept the principle that the verdict of the jury was advisory only. At the conclusion of the trial, only two interrogatories were requested by the plaintiff, and none by the defendant. Both interrogatories requested were submitted to the jury and these, together with the answers rendered by the jury, read as follows:

'Interrogatory No. 1

'Did a relationship of trust and confidence exist between Ray and Chester at the time of the transactions in issue in this case? Answer yes or no.

'We the jury, answer Yes.

'Interrogatory No. 2

'Did Ray and Chester, on or about 1952, agree to a trade or exchange of the California property for parcels A, B and C. Answer yes or no.

'We the jury, answer Yes.'

Thereafter, the court entered a judgment in...