McCollum v. Watts

• Decision Date: 09 April 1928
• Docket Number: No. 26659.,26659.
• Citation: 5 S.W.2d 420
• Parties: JOHN L. McCOLLUM and GEORGE M. McCOLLUM, Appellants, v. EVA WATTS and OTIS WATTS.
• Court: Missouri Supreme Court

5 S.W.2d 420

JOHN L. McCOLLUM and GEORGE M. McCOLLUM, Appellants, v. EVA WATTS and OTIS WATTS.

No. 26659.

Supreme Court of Missouri, Division Two.

April 9, 1928.

Appeal from Macon Circuit Court. — Hon. Vernon L. Drain, Judge.

AFFIRMED.

Roger Miller and Scott J. Miller for appellant.

(1) William McCollum was over-reached in his contract with his daughter and her husband, and this fact from the testimony in the record is very clear. (2) The contract was the final result of a number of years of persistent undue influence over the mind of William McCollum, at the age of seventy-nine, afflicted with disease. This is quite clear from the contract itself. The contract shows that while his one foot was in the grave, he gave to them 120 acres of land of the value of at least $12,000 and in return therefor he got his board and $75 twice a year, plus the advancement of $500 early in the game. This contract was so inequitable that a chancellor should, upon its face, set it aside. (3) The evidence falls far short of showing that William McCollum had a mental acumen to meet the mind of younger persons in the making of a contract by which he divested himself of all that he possessed. The rule by which mental capacity is measured when it comes to deeds or contracts, is entirely different from the rule which prevails as to wills. Martin v. Baker, 150 Mo. 503; Ennis v. Burnham, 159 Mo. 578; Watts v. Loving, 240 S.W. 122. (4) That consideration for the deed was grossly inadequate and the bargain a hard and unconscionable one is beyond question. That the grantor did not comprehend and that the unfairness of the bargain must have been palpable to the healthful, discerning eyes of the grantees, cannot be doubted. That he was in a condition to be easily influenced and the grantee in a position to exercise such an influence is beyond question, and that the deed was the product of such influence exercised by them is the one rational explanation of the facts and circumstances of the case. Ennis v. Burnham, 159 Mo. 518; Jones, Exr., v. Belshe, 238 Mo. 641. (5) A fiduciary relation existed in this case. (a) The principle has been generalized by saying that a fiduciary relation is any relation existing between parties to a transaction whereby one of them is in duty bound to act with the utmost good faith for the benefit of the other or a person is said to stand in a fiduciary relation to another when he has rights and power which he is bound to exercise for the benefit of that other person. 1 Black on Rescission and Cancellation, sec. 41; Ryan v. Ryan, 174 Mo. 279; Jones, Exr., v. Belshe, 238 Mo. 539; 2 Words and Phrases, p. 528. (b) Where a fiduciary relation exists the trusted party is required to act with the utmost good faith. The trusting party does not have to be on the alert, and under these circumstances when an advantage is obtained at the expense of the confiding party a court of equity will set the transaction aside. 1 Black on Rescission and Cancellation, sec. 40; Cadwallader v. West, 48 Mo. 483; Martin v. Baker, 135 Mo. 495; Youtsey v. Hollingsworth, 178 S.W. 105: Heate v. Longbran, 49 Mo. 594; Armstrong v. Logan, 115 Mo. 465: Capsari v. Church, 88 Mo. 649; Bradshaw v. Tystia, 67 Mo. 338. (c) When the evidence shows the existence of a fiduciary relation between the parties, then the burden of proof shifts and it is on the party gaining the advantage to affirmatively prove that the transaction between them was entered into freely, openly, voluntarily, and with full understanding of the facts. Dingman v. Romain, 141 Mo. 466; Street v. Goss, 63 Mo. 226; McClure v. Lewis, 72 Mo. 314. (d) There is a special rule that when the contracting parties do not deal on terms of equality, but there is a fiduciary or confidential relation between them, such that the one justifiably depends upon the other or reposes trust and confidence in him and hence an unfair advantage to the dominant party would be the probable result of any dealing between them as to property or money, then the transaction is presumed to be fraudulent or at least inequitable, and the burden is on the dominant party to show that the transaction was in all respects fair, completely understood, and free from any deception or improper influence. 3 Black on Rescission of Contract, p. 677. (e) It is said that, where a confidential relation exists between the parties a presumption of fraud arises more readily in the case of a gift than in the case of a contract. Shooklette v. Goodall, 151 Ky. 20, 151 S.W. 23. (6) Even where the relation of parent and child exists, and it is shown that it was the custom for the parent to rely upon the child for advice and that the parent was in feeble health and his mental faculties impaired, as in this case, and if he was deprived of the independent advice or excluded from the society of those who might have warned him in time, and was surrounded by agents of the defendants, and that the grant was without consideration, it will be set aside. 1 Black on Cancellation of Contracts, 667.

H.R. West and Thomas P. Burns for respondents.

(1) The finding on the question of competency and undue influence is one of fact, and the finding of the chancellor will not be disturbed if supported by strong evidence. Boggess v. Boggess. 127 Mo. 327; Cutler v. Zollinger, 117 Mo. 92; Saettle v. Perle, 281 S.W. 437; Jones v. Jones, 260 S.W. 793; Gibony v. Foster, 230 Mo. 130. (2) The appellant has been guilty of such laches as to prevent recovery. Kroenung v. Goehri, 112 Mo. 648.

HIGBEE, C.

This is an action to cancel a deed executed by William M. McCollum on August 26, 1919, and filed for record in the office of the Recorder of Deeds of Linn County on May 26, 1920. It was tried in the Circuit Court of Macon County, and judgment was rendered for the defendants on September 29, 1924. The judgment recites that "this is an action instituted in Linn County, Missouri, and brought to this court on a change of venue from said Linn County Circuit Court. The court finds the issue for the defendants and that plaintiff ought not to recover herein." Judgment was rendered accordingly and on the same day plaintiff, William M. McCollum, was granted an appeal to this court. The plaintiff died in October, 1925, survived by his two sons, John L. and George M. McCollum, and his daughter, Eva Watts, wife of Otis Watts, the defendants. On January 24, 1928, the two sons entered their appearance and the cause was revised in their names as appellants. The abstract of the record does not show the date of the filing of the petition, but it may be assumed that it was filed during the year 1923. It is very long but may be summarized as follows:

Plaintiff, William McCollum, states that on August 26, 1919, he was the owner of 120 acres of land, describing it, in Linn County, Missouri; that on May 26, 1920, a deed purporting to have been executed by him on August 26, 1919, was filed for record in the office of the Recorder of Deeds in said county, for the expressed consideration of $14,040, and that on May 26, 1920, there was also filed for record in said recorder's office a deed of trust purporting to have been executed by the defendants to Walter McCollum as trustee for William McCollum, plaintiff, to secure the payment of a note purporting to have been executed by defendants, dated August 20, 1919, by which they agreed to pay to plaintiff $9600, with interest at three per cent to be compounded annually; that on March 11, 1922, there was also filed for record in said recorder's office a purported contract of that date by and between plaintiff as first party and the defendants as second parties, reciting that whereas said parties have heretofore made a contract by which parties of the second part agreed to board and care for first party during his natural life, in consideration whereof first party agreed to release and cancel the aforesaid note and deed of trust for $9600, or to bequeath the same to the second parties by his last will: Now, to make the matter definite and certain, first party agrees to assign said note and deed of trust to second parties and that the same may be cancelled of record and second parties agree to provide a suitable home and care for and administer to the wants of the first party, and pay first party $75 on June 1, 1922, and $75 on January 1, 1923, and like sums semi-annually thereafter during the life of first party, and to provide and furnish medicine and doctors, if necessary, and a suitable burial on the death of first party, and that the obligation of said contract shall be a special lien on the said 120 acres of land (describing it), which contract was duly executed, acknowledged and certified and filed for record on March 13, 1922, and said deed of trust was released and said note cancelled on the margin of the record of said deed of trust.

It was further averred that plaintiff's wife died on January 17, 1916; that plaintiff was seventy-six years of age at the time of her death; that her sudden death and his advanced age caused a mental decay and a breaking down of his health in general, and he was unable to understand sufficiently to transact the ordinary affairs of life in business transactions; that Eva Watts is plaintiff's daughter and Otis Watts is her husband; that after his wife's death plaintiff lived with one of his other children until the spring of 1917, when a feeling of extreme loneliness induced him to return to the old homestead where he took the defendants to keep house and care for him; that they at once began by all the arts, wiles and scheming designs to defraud him of all of his property; they threatened that unless he deeded them all his land they would go away to a distant state and leave him and never let him see them again; that he withstood these importunities until August 26, 1919; that shortly before that date and while he was affected with old age, arteriosclerosis and ill-health, they persuaded him against his...