Jones v. Teachers Ins. and Annuity Ass'n

• Decision Date: 17 September 1996
• Docket Number: No. WD,WD
• Citation: 934 S.W.2d 307
• Parties: Jennifer Mae JONES, Personal Representative of the Estate of Dorothy Louise Jones and Individually, Respondent, v. TEACHERS INSURANCE AND ANNUITY ASSOCIATION, Appellant. 51948.
• Court: Missouri Court of Appeals

Page 307

934 S.W.2d 307

Jennifer Mae JONES, Personal Representative of the Estate of Dorothy Louise Jones and Individually, Respondent, v. TEACHERS INSURANCE AND ANNUITY ASSOCIATION, Appellant.

No. WD 51948.

Missouri Court of Appeals,

Western District.

Sept. 17, 1996.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Oct. 29, 1996.

Application to Transfer Denied

Dec. 12, 1996.

Bernard Daniel Simon, II, Columbia, for Respondent.

Thomas Blumeyer Weaver, St. Louis, for Appellant.

Before ULRICH, P.J., C.J., SPINDEN and EDWIN H. SMITH, JJ.

EDWIN H. SMITH, Judge.

This is an appeal from an order by the Honorable Ellen S. Roper, Circuit Judge, Boone County, rescinding an annuity contract between Dorothy Louise Jones, respondent's mother, and appellant, Teachers Insurance and Annuity Association. Appellant contends the trial court erred in ordering rescission based on unilateral mistake of the single life annuity contract between Mrs. Jones and appellant. We agree and reverse.

Facts

Dorothy Louise Jones, "Mrs. Jones," was a physical education and tennis instructor and director of the physical education department at Stephens College ("Stephens") in Columbia for 35 years. Respondent, Jennifer Mae Jones, is Mrs. Jones' daughter and sole heir.

In 1964, while employed at Stephens, Mrs. Jones entered into a deferred annuity contract with appellant. Appellant is a not-for-profit entity that provides retirement benefits primarily to college and university employees. Stephens paid into the plan, and the appellant invested the funds for Mrs. Jones. Mrs. Jones' plan ("the original annuity") provided that when she became eligible for retirement, she could surrender the original annuity to appellant in exchange for a new annuity providing monthly retirement benefits. It also provided that if Mrs. Jones died before this exchange, appellant would pay the cash value of the original annuity to her designated beneficiary, which was respondent.

In 1985 or 1986, at the age of 63, Mrs. Jones began to look into early retirement options. In March 1986, she requested from appellant information regarding her payment choices under her annuity. The appellant offered several options, including monthly payments during her life with all payments ceasing at her death ("single life annuity"), and several options providing lesser monthly payments but with various guarantees of a sum remaining to pass on to the beneficiary. Mrs. Jones also had the choice of retaining the original annuity, receiving no monthly benefits but with the full sum payable to respondent upon Mrs. Jones' death.

Mrs. Jones, who was regarded as a meticulous planner and very careful and conservative with her finances, talked to respondent and several friends about this choice. At that point, in April 1986, Mrs. Jones was in good health and looked forward to an active retirement of golf, tennis and traveling. Respondent meanwhile had a masters degree in hospital administration and a successful career as a vice president of a company in the health care field.

In light of her good health and in order to maximize her disposable income during retirement, on April 15, 1986, Mrs. Jones selected the single life annuity, executing an "Application for Retirement Annuity Benefits," thus surrendering the original annuity contract. Nonetheless, the payments were not to begin for several months, in September 1986. Mrs. Jones retained the power to change her selection of annuity income options before the first payment by simply calling an 800 telephone number; both the contract and accompanying literature clearly stated that once the first payment was made, Mrs. Jones would be bound by her choice.

Mrs. Jones was diagnosed with valvular heart disease June 9, 1986, and underwent surgery July 6. Unfortunately, Mrs. Jones never made the recovery from the surgery as was expected; in fact, her condition, diagnosed as congestive heart failure, constantly deteriorated until her death.

On September 5, 1986, while Mrs. Jones was in the hospital, the first payment of $1,199.69 was issued by appellant, as agreed, to Mrs. Jones' designated bank, and the new annuity contract was sent to her home. Three weeks later, on September 26, Mrs. Jones died. At this point, the accumulated cash value of the original annuity was $109,342.61. Mrs. Jones' estate under her will, all of which passed to respondent, was $208,000.

Respondent filed this cause of action against appellant claiming that had Mrs. Jones been fully aware of her right to change her choice of payment option, she would not have elected to continue with the single life annuity in late August and early September due to her severe illness. Thus, respondent prayed for rescission of the contract based on a unilateral mistake of fact on the part of respondent and Mrs. Jones in allowing the contract to become final by accepting the first payment without knowing it could still be cancelled.

The trial court held that Mrs. Jones either forgot about or was unaware of her right to change or defer the selection of the new annuity and that she would have postponed the first payment had she known or remembered, and ordered rescission in order to avoid an "unjust and oppressive" result. The court restored the original annuity and ordered appellant to pay respondent the cash value of the original annuity, less the September 5, 1986, payment of $1,199.69, plus interest of 9% from the date of death until the date of payment.

I.

In its first point, appellant contends the trial court erred in ordering rescission of the annuity contract between Mrs. Jones and appellant on the basis of unilateral mistake in that the evidence is insufficient to establish the existence of a unilateral mistake. We agree.

In an appeal of a suit in equity, the decree or judgment of the circuit court will be sustained unless there is no substantial evidence to support it, it is against the weight of the evidence, erroneously declares the law, or erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.1976); Hankins v. Hankins, 920 S.W.2d 182, 185-186 (Mo.App.1996). In conducting our review, we accept all evidence and inferences favorable to the judgment and disregard all contrary inferences. Pinnell v. Jacobs, 873 S.W.2d 925 (Mo.App.1994).

Respondent argues that because of appellant's failure to fully advise Mrs. Jones of her right under their agreement to change her choice of payment option of retirement annuity benefits, or because of her serious illness and accompanying profound mental depression, appellant made a mistake in failing to exercise her right to change her choice. It is this "mistake" that respondent contends constitutes a "unilateral mistake" warranting rescission of the single life annuity which Mrs. Jones chose in exchange for the original retirement annuity. Respondent concedes there is no direct evidence of mistake but urges that there is substantial evidence from which the trial court could infer mistake. Respondent's contention in this regard can best be captured by quoting from Respondent's brief:

Respondent submits that the uncontested evidence of Dorothy's love for her daughter, her state of mind, and her thoughts, intentions and desires; character, propensities and proclivities of Dorothy Jones as to financial planning and financial matters and her care for, concern for and pride in her daughter; and the uncontested evidence of the observations of her family and friends as to the fact that Dorothy was a meticulous financial planner and that she loved, adored, doted upon, cared about and was very close to her daughter; and the uncontested evidence that she invested with extreme conservatism [see Testimony of her CPA, Charles Murphy (Tr. 167) and the Testimony of stock broker, Thomas Baumgardner (Tr. 169-171) ], and that she never gambled or took risks (Tr. 85), all of which was received in this case, reflects upon the central issue in this cause, the thoughts of Dorothy Louise Jones about the annuity selection in August-September, 1986, or, more likely, the absence of any thoughts about such matter, which such absence of thought was caused by lack of information, severe physical illness, and profound mental depression. Such evidence permitted the trier of fact, the trial judge, to draw, by way of reasonable inference, the conclusion that Dorothy Jones made a mistake about changing her annuity options in August, September, 1986 because of lack of information about her rights and options as to the annuity, or because of her forgetfulness or inability to confront or deal with or discuss financial matters which was caused by her illness and profound depression. Moreover, such evidence permitted the trial judge to draw the reasonable conclusion that Dorothy, therefore, made a "mistake," a "mistake of fact". Such mistake was sufficient to support the Trial Court's rescission of the cancellation of the Original Annuity for the New Annuity.

Resp. Br. 42-3. The trial court found in pertinent part that

7. Either Dorothy had simply forgotten about her right to cancel, defer or change the selection of the Single Life Annuity because of her physical, mental or emotional condition or because she was not informed of such right by TIAA, or her physical, mental and emotional condition was such as to cause her to act in a manner differently than any reasonable person would have acted, and in the manner in which Dorothy would normally have acted under the circumstances. (Trial Court Finding 48, L.F. 296-297);

8. All of these results and circumstances arose from a lack of knowledge and a mistake of, or a lack of recollection or recall of Dorothy Jones as to essential facts (Trial Court Finding 49, L.F. 297); that a mistake was, therefore, made (Trial Court Conclusion 2, L.F. 298); and that the harsh results of this mistake could be reversed without substantial burden or expense of prejudice to TIAA (Trial Court Conclusion 5, L.F. 299).

Resp...