Menary v. Whitney, 48116

• Decision Date: 15 December 1952
• Docket Number: No. 48116,48116
• Citation: 56 N.W.2d 70,244 Iowa 759
• Parties: MENARY et al. v. WHITNEY.
• Court: Iowa Supreme Court

Page 70

56 N.W.2d 70

244 Iowa 759

MENARY et al. v. WHITNEY.

No. 48116.

Supreme Court of Iowa.

Dec. 15, 1952.

John D. Randall, of Cedar Rapids, for appellant.

B. D. Silliman and Wm. W. Crissman, of Cedar Rapids, for appellees.

MANTZ, Justice.

The suit was in equity and was brought by A. R. Menary, guardian of Frank R. Whitney, incompetent, to cancel and set aside a certain assignment to Addie M. Whitney of a $10,000 note and mortgage dated September 7, 1949, to Frank R. Whitney by Sidney G. Blencoe and Margaret L. Blencoe, on the grounds that Frank Whitney was then mentally incompetent and that his wife, defendant herein, was a dominant personality and thereby influenced him to make such assignment and that he was then in a poor physical and mental condition; also, that said assignment was without consideration.

The defendant specifically denied that on the date claimed Frank Whitney was mentally incompetent and denied that there was any undue influence and domination by the defendant, and denied other allegations of the petition. The court found for the plaintiffs and ordered the assignment set aside and the note and mortgage declared to be the property of the plaintiffs. Defendant appeals.

The suit was begun by A. R. Menary, guardian of Frank Ray Whitney, incompetent. Upon his death in 1951, said A. R Menary and Louis F. Whitney, executors of his estate, were substituted as plaintiffs. Hereinafter we will refer to them as plaintiffs.

I. It might be stated that the trial court in effect based its holding largely upon the grounds that at the time of the transfer of the note and mortgage involved there existed between Frank R. Whitney and Addie M. Whitney, his wife, a confidential relationship; also, that said relationship, having been shown, the burden was on the defendant to rebut the presumption of undue influence and overreaching on her part and to affirmatively establish the good faith of the transaction and that she took no advantage of Mr. Whitney by reason of their relationship and that he acted voluntarily, with freedom, intelligence, and with full knowledge of the facts.

In its finding of fact, the court seems to place considerable reliance upon the testimony of Menary's adult children; also, evidence of the illness and physical condition and the opinion of Dr. Sedlacek of Cedar Rapids, who classifies himself as a psychiatrist, who first saw Whitney on October 7, 1949, the day Whitney was admitted to Mercy Hospital. The court also seems to have given consideration to the fact that if the $10,000 became the property of defendant it would result in a rather unequal distribution of his property as between defendant and his adult children.

II. To give proper consideration to the issues we go to the record to obtain the whole picture. Frank R. Whitney and Addie M. Whitney were married March 5, 1936. At that time they were the same age, approximately 54 years. Mr. Whitney had been married before. His first wife died in 1935; he had two grown children, a son, Louis F. Whitney, and a daughter, Adeline M. Kemper, both married some years before. When Frank and Addie were married the former owned an undivided one-third interest in the home he lived in, the other interests being owned by his two children. On September 14, 1925, Frank Whitney became associated with Dr. Menary, a veterinarian, in the oil and gas business known as the Home Oil & Gas Company, at Cedar Rapids, Iowa. Whitney was manager and owned a two-thirds interest, Dr. Menary owning the other third. At its inception Whitney furnished the experience and Dr. Menary the money. After its start the oil business grew and expanded but ran into financial difficulties in the early 1930's. Along about 1935 and 1936, the financial difficulties for the most part ended. Whitney was paid from the profits in the business--Dr. Menary left his profits remain in the business. On April 22, 1947, Whitney, due to ill health, sold his interest in the business to his partner, who, as a part of the same transaction sold a one-half interest therein to Sidney G. Blencoe and Margaret L. Blencoe, the former an old time employee of the firm, for $23,000 part of which was paid by giving to Whitney a note for $10,000 and a chattel mortgage on the property purchased. The $13,000 was deposited in the bank along with a further sum of $4,000 paid to Whitney out of some partnership insurance policies. The $10,000 note and chattel mortgage are the basis of this action. The $10,000 note dated April 25, 1947, drew interest at 4% and was payable on demand.

Some time in the fall of 1942, Whitney had a heart attack and was at home, with his wife nursing him. Later in March, 1943, he was taken to St. Luke's hospital. Between the time of his heart attack and the time he was taken to St. Luke's he was not well but was up and down at times. Some years before it was discovered that Whitney had diabetes. For some years his physician tried to control this condition by regulating his diet. While Whitney was in St. Luke's he was attended by Dr. Roy Keech, who had practiced his profession at Cedar Rapids for forty years. For ten years Dr. Keech had been the medical member of the Commissioners of Insanity of Linn County. He specialized on mental diseases in addition to internal diseases. No question is made as to his qualifications. When Whitney was in St. Luke's under the care of Dr. Keech, it was decided to try to control his diabetes by the insulin treatment administered hypodermically. This treatment was followed until Whitney passed away in February, 1951. It was administered at first by Dr. Keech who later instructed Mrs. Whitney how to give it. This was done by her under the direction of Dr. Keech until October, 1949, when Whitney was committed to the State Hospital for Insane at Independence, Iowa.

In the summer of 1943 Whitney was able to go back to his place of business for short intervals, first, being driven there by Mrs. Whitney, and later driving the car himself. Following his return from the hospital, Whitney had various heart attacks at various intervals--sometimes several a day and then without any for weeks. At times he was quite sick from the effects of the heart attacks and the diabetic condition. In the fall of 1946 he had a heart attack while driving his car to the office of his physician. The car stopped on one of the main streets of Cedar Rapids. During all of the period from 1942 until he was taken to the State Hospital at Independence in October, 1949, Dr. Keech attended him regularly; sometimes at the office and sometimes in the home. He visited him at his home the day the assignment of the note and mortgage involved herein was executed.

In order to make it more convenient for Mr. and Mrs. Whitney, the bed used by them was moved downstairs in the home. In connection with the insulin treatment of Whitney, a urine test was taken every morning from 1943 to September 26, 1949. This was done almost entirely by Mrs. Whitney, together with the diet foods, and regularly reported to Dr. Keech. Due to his inability to participate in the oil business, Whitney and his partner, Dr. Menary, negotiated a sale of his interest to the makers of the note and mortgage. Sidney G. Blencoe had been a long time employee of the firm and after discussion between the partners it was agreed that Blencoe could purchase the interest of Whitney and enter the firm. The negotiations covering this transaction covered some period of time and were carried on for the most part between Whitney and Blencoe at the office. Dr. Menary testified for plaintiff and speaking of the sale of Whitney's share stated: 'In these negotiations Mrs. Addie Whitney, the wife of Frank Whitney, did not have any part, that is in the negotiations, including the sale of the business. All she did was to accompany her husband to our office at the time the negotiations were entered into.'

The sale was made, various papers were prepared and signed. Whitney assigned releases and interests in various firm insurance policies; the makers of the note and mortgage paid the consideration called for and the deal was completed. Later Whitney would go down to the office and visit. His health varied, sometimes he was better, and again not so well.

On September 6, 1949, Frederick C. Fisher, Jr. a member of the law firm of Fisher and Fisher, came to the Whitney home and following some discussion prepared an assignment of the Blencoe note and mortgage. For many years the father of Frederick C. Fisher, Jr., had handled legal business for Whitney. He was the Whitney's regular attorney. The note and mortgage were turned over to Mrs. Whitney and when suit was brought they were in her possession.

After the death of Frank Whitney, A. R. Menary and Louis F. Whitney, were appointed executors of the estate. As before stated, Louis F. Whitney and Adeline Kemper were children of Frank Whitney by a former marriage. The record shows that both of these children were very active in this matter and employed counsel to prosecute the same. There was considerable litigation between the guardian and Mrs. Whitney over an automobile, bank account and partition of the homestead. In all of this Louis was quite active.

In the above we have attempted to set out rather broad outlines of the record to show the background of what followed. Later in this opinion we will set out in detail other parts of the evidence.

Briefly stated the Whitneys were married March 5, 1936 and lived together continuously until Whitney was taken to the Hospital for the Insane on October 21, 1949, a period in excess of thirteen years. They lived in the same house all of these years.

III. One of the contentions of defendant is that the court erred in finding that at the time the $10,000 note and mortgage were assigned by the holder, Frank Whitney, to his wife, Addie Whitney, there was a confidential relationship existing between them and this appearing the burden was cast...