Lucas v. Frazee

• Decision Date: 11 December 1984
• Docket Number: No. 4-583A147,4-583A147
• Citation: 471 N.E.2d 1163
• Parties: Adrian LUCAS, Appellant-Plaintiff, v. Emma FRAZEE, Appellee-Defendant.
• Court: Indiana Appellate Court

Page 1163

471 N.E.2d 1163

Adrian LUCAS, Appellant-Plaintiff, v. Emma FRAZEE, Appellee-Defendant.

No. 4-583A147.

Court of Appeals of Indiana,

Fourth District.

Dec. 11, 1984.

R. Kent Witte, Witte & Monroe, Columbus, for appellant-plaintiff.

Harold V. Jones, Jr., Jones & Patterson, Columbus, for appellee-defendant.

CONOVER, Judge.

Adrian Lucas (Lucas) appeals the trial court's refusal to rescind a deed she executed and delivered to Emma Frazee (Frazee).

We affirm.

ISSUE

We restate the various contentions raised by the parties as the following single issue:

Should the deed have been rescinded because its execution and delivery were procured by constructive fraud?

FACTS

Lucas had experienced health problems for about ten years during which time Frazee, her sister, periodically cared for her. Along with other health problems, Lucas had impaired circulation which could lead to fainting spells. She underwent surgery shortly before her husband died in February, 1982.

After his death, Lucas stayed with Frazee for about three weeks. Frazee generally was in better health than Lucas and had more education. Frazee assisted Lucas with her business affairs after her husband's death. Other family members suggested Lucas leave her property to Frazee as Frazee had never had much money or possessions, Frazee often had cared for Lucas, and the sisters had enjoyed a good relationship for many years.

Accompanied by Frazee, Lucas then met with attorney Joseph Thompson (Thompson). Lucas told Thompson she wanted to convey her home to herself and Frazee as joint tenants because Frazee and her husband had agreed to move to Lucas's home and care for her. Although Thompson told Lucas there could be problems if she changed her mind later, Lucas insisted the transaction be completed because Frazee and her husband would take care of her. Frazee made no response. Lucas executed the deed and also had Thompson prepare a will leaving the rest of her property to Frazee. After the meeting Lucas stated she was very happy with the arrangements because she had settled her financial affairs.

Frazee and her husband subsequently stayed with Lucas at her home for one night, but then left for reasons which are not clear in this record. A dispute followed and Lucas requested Frazee agree to rescind the deed. When Frazee refused, this lawsuit resulted.

Following a bench trial, the court entered judgment, which stated in relevant part:

The Court now finds that judgment should be entered against the plaintiff and in favor of the defendant.

Contrary to the assertion of the plaintiff, the Court does not find that the facts give rise to a fraud cause of action, whether it is an actual fraud or constructive fraud. Rather the Court agrees with the Defendant that the transfer of the real estate by plaintiff and defendant as joint tenants was in fact a gift. The Court is further convinced that after the transfer was completed, the plaintiff had second thoughts about her actions and desired to renege on her intentions. The Court has no doubt about her intentions or her ability to form an intent to transfer at the time in question.

Lucas appealed.

DISCUSSION AND DECISION ¹

I. Standard of Review

We often begin our analysis by stating the standard of review we apply to the particular situation presented. In this case, however, the facts and procedural posture involve several interrelated principles which together govern our standard of review.

A. Parties' Contentions

At trial and in this court Lucas argues the deed should be rescinded under the doctrine of constructive fraud because it was procured through undue influence. Frazee has responded by arguing the conveyance was a gift. She contends Lucas is appealing a negative judgment which we should review accordingly.

We hold Lucas is appealing a negative judgment, that is, in the trial court she was the party bearing the burden of proof and judgment was entered adverse to her position. Judge Ratliff stated the standard of review where the case below was tried to the court in equity and it found against the party bearing the burden of proof. In Burnett v. Heckelman, (1983) Ind.App., 456 N.E.2d 1094, he said:

Our review of the trial court's determination in the present case is, nevertheless, one of limited scope. As an appellate tribunal, we may neither reweigh the evidence nor judge the credibility of witnesses.... Moreover, because the present case is one in equity, and was tried before the court and not a jury, its decision will be reversed only if clearly erroneous.... Such a finding will be made by this court when the evidence is uncontradicted and supports no reasonable inferences in favor of the decision ... or, even when there is evidence supportive of the judgment if our review of the record leaves us with a 'definite and firm conviction that a mistake has been made.' (Citations omitted.)

Id., 456 N.E.2d at 1097. See also Ind.Rules of Procedure, Trial Rule 52(A)(3).

While this standard of review applies in this case, we believe an expanded discussion of the standard of review in cases turning upon the question of whether or not a confidential relationship was established by the evidence in the court below is in order.

B. Presumption of Undue Influence

Indiana law separates confidential relationship cases where fraud is alleged on the part of the dominant party into two categories, namely (a) those in which a fiduciary relationship arises by operation of law between the litigating parties, and (b) those in which a confidential relationship in fact is shown to exist. The burdens of proof are different in each type of case.

In this State, certain legal and domestic relationships raise a presumption of trust and confidence as to the subordinate party on the one side and a corresponding influence as to the dominant party on the other. These relationships include that of attorney and client, guardian and ward, principal and agent, pastor and parishioner, husband and wife, parent and child, and there may be others. Hunter v. Milhous, (1973) 159 Ind.App. 105, 124, 305 N.E.2d 448, 460, quoting Keys v. McDowell, (1913) 54 Ind.App. 263, 269, 100 N.E. 385, 387. In such cases, if the plaintiff's evidence establishes (a) the existence of such a relationship, and (b) the questioned transaction between those parties resulted in an advantage to the dominant person in whom trust and confidence was reposed by the subordinate, the law imposes a presumption the transaction was the result of undue influence exerted by the dominant party, constructively fraudulent, and thus void. See, Blaising v. Mills, (1978) 176 Ind.App. 141, 146, 374 N.E.2d 1166, 1170, 99 A.L.R.3d 1238, 1243; Folsom v. Buttolph, (1924) 82 Ind.App. 283, 246-47, 143 N.E. 258, 262. At that point, the burden of proof shifts to the dominant party. He then must demonstrate the questioned transaction was in fact one had at arms length and thus valid. See Blaising, 176 Ind.App. at 146, 374 N.E.2d at 1170, 99 A.L.R.3d at 1243; Schrenker v. Grimshaw, (1954) 124 Ind.App. 493, 501, 119 N.E.2d 432, 436; see generally McCormick v. Malin, (1841) Ind., 5 Blackf. 509. Moreover, in such cases, the dominant party must rebut the presumption of fraud by clear and unequivocal proof. Wells v. Wells, (1925) 197 Ind. 236, 243, 150 N.E. 361, 363; Burgin v. Dries, (1960) 130 Ind.App. 249, 261, 163 N.E.2d 609, 615, overruled on another issue in Kessler v. Williams, (1964) 136 Ind.App. 110, 198 N.E.2d 22. When judgment is entered against the subordinate party in such cases, we review not only the question of whether the judgment is contrary to law, but also whether the dominant party's evidence is sufficient to sustain the judgment under the clear and unequivocal proof standard. Cf. Brock v. Walton, (1983) Ind.App., 456 N.E.2d 1087, 1091 (contributory negligence defense).

However, confidential relationships other than those mentioned above may exist, but the law in such cases does not raise a presumption of undue influence from the mere fact a relationship existed between the parties. See, e.g. Middlekamp v. Hanewich, (1970) 147 Ind.App. 561, 263 N.E.2d 189; Keys v. McDowell, supra. The subordinate party in such case not only carries the burden of establishing the existence of some relationship between the parties, but also carries the additional burden of proving the parties to the questioned transaction did not deal on terms of equality. The subordinate party must prove either the dominant party dealt with superior knowledge of the matter derived from a fiduciary relationship, or dealt from a position of overpowering influence as to the subordinate party. In the alternative, the subordinate party may prove he dealt from a position of weakness, dependence or trust justifiably reposed in the dominant party. He must also prove, in either case, the result was an unfair advantage to the dominant party. See id., 54 Ind.App. at 269-71, 100 N.E. at 387-88; McCord v. Bright, (1909) 44 Ind.App. 275, 288, 87 N.E. 654, 659. When the plaintiff establishes these additional facts the burden of proof shifts. The dominant party must then show affirmatively no deception was practiced, no undue influence was used, and all was fair, open, voluntary, and well understood. Hunter, supra, 159 Ind.App. at 123-24, 305 N.E.2d at 459-60; Schrenker, supra, 124 Ind.App. 493, 501, 119 N.E.2d 432, 436. See generally McCord, 44 Ind.App. at 288, 87 N.E. at 659; Cowee v. Cornell, (1878) 75 N.Y. 91, 99-100, 31 Am.Rep. 428, 434. Thus, the question of whether such a confidential relationship existed in those cases is a question of fact for the trier of fact. If the trial court determined the question adversely to the plaintiff, the alleged subordinate party, he then appeals from a negative judgment. When reviewing negative judgments in cases tried to the court, we can reverse only when there is no evidence supporting the trial court's judgment or, even if there is such evidence, we reach a...