Kloehn v. Prendiville

• Decision Date: 03 October 1957
• Docket Number: No. 17357,17357
• Citation: 154 Cal.App.2d 156,316 P.2d 17
• Court: California Court of Appeals Court of Appeals
• Parties: Charles H. KLOEHN, Plaintiff and Respondent, v. Edward PRENDIVILLE and Agnes Prendiville, Defendants and Appellants.

Page 17

316 P.2d 17

154 Cal.App.2d 156

Charles H. KLOEHN, Plaintiff and Respondent, v. Edward PRENDIVILLE and Agnes Prendiville, Defendants and Appellants.

No. 17357.

District Court of Appeal, First District, Division 1, California.

Oct. 3, 1957.

Rehearing Denied Nov. 1, 1957.

Hearing Denied Nov. 26, 1957.

James A. Himmel, San Francisco, for appellants.

J. Thaddeus Cline, San Francisco, for respondent.

FRED B. WOOD, Justice.

In this action to cancel a deed and other instruments affecting certain residential property the trial court found as follows: At all times plaintiff was the owner of the property. A confidential relation existed between plaintiff and the defendants and he reposed complete confidence in them. In 1943 he invited them to move into his home with the understanding that if they would furnish his meals and do his laundry they would have no rent, taxes, or other expenses of ownership to pay in respect to the home and that he would draw a will devising the premises to them. About September, 1943, defendants accepted this offer, moved in and continued to live there. Plaintiff faithfully kept all of his promises, and defendants furnished him his meals and laundry service. On November 20, 1945, while said confidential relation existed and while plaintiff was convalescing from an operation and was under the care of the defendants, they induced him to execute a deed conveying the property to them. He did so, subject to the condition that defendants would provide him with room and board and a home in said premises so long as he might live. They expressly agreed to said conditions and accepted the deed subject thereto. For the purpose of giving the transaction the color and appearance of a sale defendants executed a promissory note in the sum of $5,000 without interest payable to plaintiff together with a deed of trust to secure the note, which deed of trust was recorded. As a part of the transaction defendants induced plaintiff to execute an agreement under the terms of which it was provided that he would be charged $50 a month for his room and board, that said payments would be credited upon the note, but at his death any unpaid balance due under the note would be deemed fully satisfied and discharged. Plaintiff did not know or understand the nature or effect of said documents and executed the same without any independent advice and in reliance upon defendants' assurance that they would provide him a home without charge as long as he lived and, upon their assurance, that said documents were in lieu of his will and were only for the purpose of enabling defendants to get title to the premises without probate in the event of plaintiff's death. ¹ Defendants provided plaintiff with room and board until January, 1954, when they informed him that the room and board which he had theretofore received constituted full payment of the note and deed of trust and the defendants were now owners of the property and thereafter plaintiff would have to pay defendants $50 per month for his room and board if he desired to continue to live there. Plaintiff thereupon disputed defendants' title to the premises and their right to charge for room and board and promptly moved out and filed this action for equitable relief.

In addition, by finding the allegations of the complaint true, the court found that the promises defendants made as inducement for plaintiff to sign the deed and the agreement were false and untrue and were made for the purpose of deceiving plaintiff and wrongfully inducing him to sign, and that he did not, until after January 1, 1954, learn the falsity of their statements or that the deed had been recorded.

These findings are supported by the evidence. In challenging the sufficiency of the evidence defendants rely upon their own testimony, ignoring that of the plaintiff. ²

The findings, in turn, support the judgment, which cancelled the deed, the promissory note and the deed of trust and quieted plaintiff's title to the real property subject to a lien to secure payment of $3,534.50 found owing from plaintiff to defendants for certain expenditures they had made.

The defendants question the existence of the confidential relationship between the parties. Such an issue presents a question of fact. Steinberger v. Steinberger, 60 Cal.App.2d 116, 122, 140 P.2d 31. Such a relationship may arise between two persons even though they have no formal relationship such as affinity or consanguinity, or attorney and client, principal and agent, trustee and beneficiary. Scovill v. Guy, 205 Cal. 386, 388, 270 P. 934; Adams v. Talbott, 61 Cal.App.2d 315, 320, 142 P.2d 775; Bank of America v. Sanchez, 3 Cal.App.2d 238, 243, 38 P.2d 787.

Defendants have cited a number of cases in which the reviewing court affirmed, as supported by the evidence, a finding that a confidential relationship did not exist. Those cases are not authority for defendants' contention that despite the trial court's finding herein the evidence demonstrates as a matter of law that no confidential relationship existed. It is true that the mere fact that a relationship is 'friendly and intimate' does not necessarily characterize it as a 'confidential' relationship (Meyer v. Zuber, 92 Cal.App. 767, 772, 268 P. 954) but it is also true that confidential relations 'may be said to exist whenever trust and confidence is reposed by one person in the integrity and fidelity of another.' In re Estate of Cover, 188 Cal. 133, 143, 204 P. 583, 588.

The relations between the parties here were more than friendly. The parties had established a de facto family. Plaintiff testified that he had trust and confidence in the Prendivilles, and believed and relied upon their statement that they would give him a home as long as he lived, and that that was the purport of the papers he signed. Plaintiff lived in the same house, was furnished his meals and laundry, and purchased items for the common use of the home such as a dish washer and freezer, much as a member of the family would have done. He was 63 years old at the time of the transaction in 1945, had just been hospitalized for a month, and was receiving nursing care by the Prendivilles. The direct testimony of the plaintiff, and the circumstantial evidence surrounding the transaction are sufficient to support the finding that a confidential relation existed between plaintiff and defendants.

Defendants correctly state that the mere existence of a confidential relationship and the execution of a conveyance from plaintiff to them does not raise a presumption of fraud or undue influence. But when 'it also appears that the grantee exercised activity in procuring the deed, or that it was conveyed without consideration, * * * the burden is placed on the grantee to show that the deed was not obtained by fraud, or undue influence.' (Osterberg v. Osterberg, 68 Cal.App.2d 254, 260, 156 P.2d 46, 49. See also 15 Cal.Jur.2d 428-429.) The presumption may also arise when the consideration is disproportionate. See O'Neill v. Dennis, 109 Cal.App.2d 210, 212, 240 P.2d 376.

In the instant case, there is evidence of activity on the part of the defendants in procuring the deed and agreement and evidence that the defendants profited unduly in the transaction. These circumstances support a presumption that the conveyance was procured through fraud and undue influence. Rescission of the agreement may be had upon such a showing. Civil Code, § 1689(1).

Moreover, the facts of this case are markedly similar to those involved in Security-First Nat. Bank of Los Angeles v. Earp, 19 Cal.2d 774, 122 P.2d 900. There, the defendants in an action to foreclose a trust deed, were indebted to plaintiff bank. When the mortgage fell due, defendant Washburn went to the bank to arrange for a renewal. Defendants relied upon the respresentation of plaintiff's employee that they were signing an extension of the mortgage for one year, did not read the new encumbrance and were unaware that it was a trust deed containing different provisions. The court stated, 19 Cal.2d at page 777, 122 P.2d at page 901: 'It is established in California and a majority of other jurisdictions that a person who has been induced to enter into a contract by fraudulent misrepresentations as to its contents may rescind or reform the contract. [Citing cases.] His negligence in failing to read the contract does not bar his right to relief [citing cases] if he was justified in relying upon the representations.' In the instant case, the court found that defendants had made misrepresentations as to the contents of the documents, and the confidential relation would justify the plaintiff in relying upon the representations as to their contents. Therefore he can be relieved against these provisions through the use of rescission, as in the Security-First National Bank case.

Defendants contend that plaintiff was fully and accurately advised as to the content and purport of the papers he signed and therefore could not have failed to understand their meaning and effect. In this the defendants rely upon their own testimony, which the trial court rejected, and ignore plaintiff's testimony, which the trial court believed and accepted.

Defendants challenge the sufficiency of the findings for lack of evidence that plaintiff was mentally incompetent when he executed the deed and signed the agreement. There was no need for any such evidence. A person does not have to be mentally incompetent or even weak-minded to repose confidence in another when the relationship justifies it. See ...