Hudson v. Vandiver

• Decision Date: 12 March 2002
• Docket Number: No. 2000-CA-01287-COA.,2000-CA-01287-COA.
• Citation: 810 So.2d 617
• Parties: Katherine HUDSON as Administratrix of the Estate of James Allen Lambert, Appellant, v. Dale VANDIVER and Barbara Vandiver, Appellees.
• Court: Mississippi Court of Appeals

810 So.2d 617

Katherine HUDSON as Administratrix of the Estate of James Allen Lambert, Appellant, v. Dale VANDIVER and Barbara Vandiver, Appellees.

No. 2000-CA-01287-COA.

Court of Appeals of Mississippi.

March 12, 2002.

Michael Dale Cooke, Iuka, for appellant.

Nicholas B. Phillips, Iuka, for appellees.

Before McMILLIN, C.J., THOMAS, and MYERS, JJ.

McMILLIN, C.J., for the court.

¶ 1. Katherine Hudson, in her capacity as the executrix of the estate of James Allen Lambert, her deceased son, has appealed from a judgment of the Chancery Court of Tishomingo County denying any relief to the estate in a suit arising out of a contract and warranty deed executed by Lambert prior to his death. The complaint was filed against Dale Vandiver and his wife, Barbara Vandiver. Both Vandivers were parties to the contract in question and Barbara Vandiver was the grantee in the warranty deed. The complaint sought rescission of both instruments on the ground that Lambert lacked the requisite mental capacity to enter into a binding contract at the time the documents were executed. After Lambert's death during the pendency of the suit, it was revived on behalf of his estate and tried on the merits. For reasons we will proceed to discuss, we conclude that it is necessary to reverse the present judgment and remand this matter for further proceedings.

I.

Facts

¶ 2. Lambert entered into a contract whereby he agreed to convey a certain tract of real property in Tishomingo County to the Vandivers. The contract gave Lambert a right to repurchase the property under certain conditions spelled out in the instrument. The contract is quite brief and its underlying purpose is not readily ascertainable from a reading of the instrument. It is possible, however, to reconstruct the objectives of the parties with some measure of certainty from other evidence in the record. The following narrative constitutes this Court's best effort to reconstruct the true nature and purpose of the transaction from all available evidence before us in the record.

¶ 3. Lambert was in the process of constructing a house for himself on the parcel of real property. However, he had run out of available funds and was unable to obtain financing from a bank or other commercial lender to finish the building project. The Vandivers, who were involved to some extent in the building business and who also considered themselves friends with Lambert, agreed that they would take title to the property, obtain the required financing to complete the project from a local bank, and complete the home. The parties understood that Lambert was to make payments to the Vandivers in an amount equal to the payments due from them to the bank and the contract provided that, upon repayment of the obligation in full, the Vandivers would reconvey title to the property to Lambert. Though the contract itself does not specify, it appears that the parties understood that Lambert would retain actual possession of the property during the loan repayment period unless he defaulted in his obligation.

¶ 4. After the house was completed, a dispute arose between Lambert and the Vandivers regarding the amount of money that Lambert would be required to repay in order to have the property reconveyed to him. The contract originally indicated that the agreed sum was $15,000. The contract reflects a pen and ink interlineation changing that figure to $30,000. That change bears the initials of both Vandivers but there is no written indication that Lambert ever approved that alteration. In fact, the validity of this purported amendment to the contract appears to have little significance since the Vandivers contend that subsequent oral agreements between them and Lambert concerning such things as (a) modifications in the specifications of the house, (b) the advancement from loan proceeds of money to pay several criminal fines owed by Lambert, and (c) the necessity to borrow additional funds to retire an existing mortgage debt against the property unknown to the Vandivers at time of contracting, had driven their financial stake in the property to a sum in excess of $43,000.

¶ 5. Lambert originally commenced the action seeking specific performance of the contract in its printed form; that is, he contended that he was entitled to a judgment directing the Vandivers to reconvey the property to him upon the tender by him of the originally stated sum of $15,000. However, after changing attorneys, Lambert obtained authority from the chancellor to file an amended complaint. That complaint stated on its face that "the Plaintiff now amends said original Contract [sic] in its entirety, deleting the prayer for specific performance, and substitutes herewith and in lieu thereof, this his Amended Complaint." That amended complaint went on to allege as Lambert's sole ground for relief the fact that he was not mentally capable of entering into a binding contract at the time of the execution of the contract and deed. On that basis, Lambert asked the chancellor to "set aside the Contract/Agreement and Warranty deed...."

¶ 6. As we have previously indicated, Lambert died before his case could be tried and the claim was revived by the official representative of his estate.

¶ 7. During the pendency of the suit, the Vandivers represented to the chancellor that the bank loan they had obtained pursuant to the contract had gone into default and that, without Lambert or his estate making the periodic payments contemplated by the contract, they did not have the financial resources to keep the loan current and avoid a foreclosure action. On that basis, the court granted to the Vandivers authority to sell the property on the condition that all proceeds in excess of the debt due to the bank would be escrowed pending the final resolution of the issues of this case. The record indicates that this sale netted in excess of $50,000 for the property.

¶ 8. At the trial of the case, Lambert's estate called Lambert's mother as the sole witness to testify live before the chancellor. She testified that Lambert had been receiving Social Security disability benefits based on "his mental problems" since approximately 1990 or 1991. She also testified he had been institutionalized at the East Mississippi State Hospital in 1990 or 1991, had been hospitalized in Corinth at some unspecified time, and had received counseling at the Timber Hills Regional Mental Health Center. She indicated that this medical treatment was due to the fact that Lambert "couldn't function with life" and "couldn't take care of himself."

¶ 9. Also, without objection, Lambert's deposition taken prior to his death was introduced as evidence on behalf of the plaintiff. Lambert testified to having bought the property in question some three and a half years earlier, and to certain transactions whereby he had sold the property to another person but then repurchased it. He testified to having borrowed money from Iuka Guaranty Bank to work on the house. He also testified to owning another house that had burned, and that he had used the insurance money from that house to pay on the construction of the house in question. He discussed to some extent his borrowing from the bank and how he had been unable to borrow additional funds because "I think I made a late payment for almost a year." Little or no evidence was developed in the course of the deposition bearing on the issue of Lambert's alleged mental incompetency.

¶ 10. The estate also sought to introduce as a part of its case in chief certain hospital records relating to Lambert's alleged mental problems. The defense objected on the ground that the records had not been properly authenticated and constituted inadmissible hearsay. The records were accepted and marked for identification only with the chancellor indicating that he would reserve a ruling on ultimate admissibility as evidence at a later time. There is no indication in the record that the chancellor ever admitted the records into evidence, and, thus, they will not be considered by this Court in deciding this appeal.

¶ 11. The chancellor held that Lambert possessed the necessary mental capacity to contract and that the contract executed between the parties was enforceable according to its terms. He further found that Lambert had defaulted under the terms of the contract prior to his death by failing to make the payments to the Vandivers as required under the contract. As a result, the chancellor held that the Vandivers had no obligation under the contract to reconvey the property to Lambert (or to his estate).

II.

Issues on Appeal

¶ 12. The estate perfected this appeal from the chancellor's decision and purports to raise the following two issues:

A. Whether the trial court erred in permitting the introduction of parole evidence to vary the terms of the written contract, and

B. Whether the chancellor was manifestly in error in permitting the Vandivers to retain any sums from the proceeds of the sale of the house beyond the $15,000 mentioned in the contract in its original form.

¶ 13. The posture of the case as it now stands poses something of a dilemma for this Court. The only issue framed by the pleadings was whether Lambert possessed the necessary mental capacity to enter into a binding contract. There was a fairly substantial body of evidence presented at trial that related to this single issue. The judgment of the chancellor contains a finding that Lambert's estate had failed in its burden to prove by clear and convincing evidence that Lambert lacked the requisite mental capacity to enter into the contract and execute the deed to the Vandivers. The estate, in this appeal, does not seek to have that...