Kramer v. Leinbaugh

• Decision Date: 12 February 1935
• Docket Number: 42594.
• Parties: KRAMER v. LEINBAUGH et al.
• Court: Iowa Supreme Court

259 N.W. 20

219 Iowa 604

KRAMER v. LEINBAUGH et al.

No. 42594.

Supreme Court of Iowa.

February 12, 1935

Appeal from District Court, Clinton County; D. V. Jackson, Judge.

This is an action in equity to set aside a warranty deed executed by Adam A. Leinbaugh to Walter J. Leinbaugh and Clarence E Leinbaugh, his sons, on the alleged grounds of mental incompetency, fraud, and undue influence. A decree was entered in favor of the defendants. Plaintiff appeals.

Affirmed.

M. L Sutton, of Clinton, and H. J. Ferguson, of Tama, for appellant.

Cook & Balluff, of Davenport, and E. L. Miller, of Clinton, for appellees.

KINTZINGER, Justice.

On September 9, 1931, Adam A. Leinbaugh executed a warranty deed conveying about 400 acres of land to his two sons, Walter J Leinbaugh and Clarence E. Leinbaugh, for an alleged valuable consideration. The grantor was about 75 years old, had been married since he was 23, and raised a family of nine children. For some years prior to the execution of the deed he and his wife had serious domestic difficulties, which culminated in divorce proceedings, resulting in a decree of divorce and alimony, on July 14, 1931, in favor of the wife. The record shows that in July, 1929, and prior to the decree of divorce, voluntary guardianship proceedings in behalf of Mr. Leinbaugh were commenced, and Walter J. and Arthur Leinbaugh were appointed guardians. Prior thereto he was greatly troubled as a result of his domestic difficulties, superinduced by his advanced age. There was, however, no adjudication of his mental incompetency at that time, and the guardians were appointed with his knowledge and consent, as a result of an agreement between himself, his wife, and some members of his family.

Prior to January 14, 1931, Adam A. Leinbaugh filed an application in the district court of Clinton county, Iowa, to terminate said guardianship, and for a removal of the guardians. This application was resisted, and on a hearing thereon, the court, on a finding that Mr. Leinbaugh was mentally competent to transact his own business, entered a decree on January 14, 1931, terminating the guardianship.

The divorce proceedings referred to were commenced thereafter, and the decree entered on July 14, 1931, awarding his wife the homestead and a judgment for $5,500 as permanent alimony. In the divorce proceedings Mr. Leinbaugh was represented by Attorney E. L. Miller of Clinton, Iowa.

After the decree of divorce was entered Mr. Leinbaugh made unsuccessful efforts, through banks and insurance companies, to raise money to pay the alimony. Thereupon he entered into negotiations with his sons, Walter and Clarence, for this purpose, resulting in an agreement between them that, in consideration for a deed to the land, the two sons were to furnish $5,500 to pay the alimony, execute their note of $6,000 to his son Lafe Leinbaugh, cancel a note of $3,500 held by his son Clarence against him, and pay $200 which he owed to his attorney, Miller, for legal services. The land was to be conveyed subject to a mortgage of $15,000. This agreement was entered into and the deed in question was executed and delivered September 9, 1931; the consideration being as follows:

Cash paid for the alimony judgment $5,500

Note surrendered to Adam Leinbaugh by Clarence Leinbaugh 3,500

Note executed by grantees to Lafe Leinbaugh 6,000

Cash paid Attorney E. L. Miller 200

Farm mortgages assumed 15,000

$30,200

About a year after the execution of the deed, the plaintiff was appointed guardian of the property of Adam Leinbaugh, and commenced this action to cancel the deed on the grounds of mental incompetency, fraud, and undue influence. The ward died after the commencement of this action and the administrator of his estate was substituted as party plaintiff.

I. The reasons given for a reversal of the decree below are that the court erred in failing to set aside the deed because Adam A. Leinbaugh at the time of the execution thereof was incompetent and of unsound mind, and because the deed was procured through fraud and undue influence.

The questions presented are purely of fact. The record shows a disputed question of fact relating to the mental capacity of an aged person to conduct his ordinary business and look after his own interests in connection with a transfer of his property. There was evidence that he was afflicted with senile dementia at the time of making the deed in question. There was also evidence to show that he had sufficient mental capacity to understand the nature of the transactions in question, at that time. Witnesses were produced on one side tending to show that mental incompetency existed; likewise there was much evidence upon the other side to show that mental incompetency had not been established.

The rules of law in this class of cases have been well settled by the decisions of this court. The general rule is that the burden is upon plaintiff to establish the grantor's mental incompetency by a clear preponderance of the evidence. The same rule applies with reference to the question of fraud and undue influence. State v. Geddis, 42 Iowa, 264; Leonard et al. v. Shane et al., 182 Iowa, 1134, 166 N.W. 373; Sutherland State Bank v. Furgason et al., 192 Iowa, 1295, 186 N.W. 200; In re Estate of Paczoch, 202 Iowa, 849, 211 N.W. 500; Crawford et al. v. Raible, Adm'r et al., 206 Iowa, 732, 221 N.W. 474; O'Neil v. Morrison et al., 211 Iowa, 416, 233 N.W. 708; Grunewald v. Estes et al. (Iowa) 173 N.W. 935; Bishop v. Leighty et ux. (Iowa) 237 N.W. 251.

There is some dispute, however, between the parties as to the burden of proof in this action. It is contended by appellant that a confidential and fiduciary relationship existed between the parent and sons, and that the burden of proof is therefore upon the defendant to establish the grantor's mental competency, and lack of fraud and undue influence. It is the settled rule of law in this state that where a confidential or fiduciary relationship exists between the grantor and grantee the presumption will obtain that the transaction was fraudulent and voidable. 2 Pomeroy (3d Ed.) § 956; Fitch v. Reiser, 79 Iowa, 34, 44 N.W. 214; Lampman v. Lampman, 118 Iowa, 140, 91 N.W. 1042; Reese v. Shutte, 133 Iowa, 681, 108 N.W. 525; Curtis v. Armagast et al., 158 Iowa,...