Smith v. Ellison

• Decision Date: 06 December 2000
• Citation: 171 Or. App. 289,15 P.3d 67
• Parties: Evelyn E. SMITH, Appellant, v. Caryl Jayne ELLISON, Respondent.
• Court: Oregon Court of Appeals

15 P.3d 67

171 Or. App. 289

Evelyn E. SMITH, Appellant, v. Caryl Jayne ELLISON, Respondent.

(16-98-01055; CA A105661)

Court of Appeals of Oregon.

Argued and Submitted January 27, 2000.

Decided December 6, 2000.

G. David Jewett, Springfield, argued the cause for appellant. With him on the brief was Thorp, Purdy, Jewett, Urness & Wilkinson.

No appearance for respondent.

Before EDMONDS, Presiding Judge, and ARMSTRONG and KISTLER, Judges.

ARMSTRONG, J.

Plaintiff appeals the trial court's judgment refusing to cancel two deeds by which she conveyed interests in a parcel of real property to defendant, her daughter. We review de novo and affirm in part and reverse in part.

The facts are in dispute, and we therefore state them as we find them on de novo review. See Hill v. Oland, 61 Or.App. 85, 87, 655 P.2d 1088 (1982)

. Although we ordinarily defer to the trial court's determinations as to credibility, see Rea v. Paulson, 131 Or.App. 743, 745, 887 P.2d 355 (1994), in this case, the trial court did not indicate which witnesses it found credible, and the phrasing of its decision on the merits suggests that it concluded that plaintiff could not prevail under either her own or defendant's version of the facts. Accordingly, where necessary, we make our own determinations as to credibility. We conclude that plaintiff's first transfer of a one-third property interest to defendant was not procured by undue influence. However, we conclude that the transfer of plaintiff's remaining two-thirds interest in the property was the product of undue influence and, accordingly, set it aside. We therefore affirm in part and reverse in part.

Before July 1995, plaintiff and her late husband lived in California. In December 1994, plaintiff was in Eugene, Oregon, visiting some of her children, including defendant. Plaintiff was 75 years old at that time. During that visit, she mentioned to defendant and another of her daughters, June, that her husband had Alzheimer's disease and Parkinson's disease and that she needed someone to help her take care of him. The two daughters suggested that plaintiff move to Oregon so that her children would be able to help her care for her husband. Plaintiff agreed and asked defendant to look for a duplex for plaintiff to purchase that would be close to a grocery store.¹

Defendant was apparently unable to find a duplex. However, she did find a two-bedroom house that she thought would suit plaintiff's needs. Without having seen the house, plaintiff instructed defendant to buy it in plaintiff's name. Defendant bought the house as instructed. Over the Fourth of July, plaintiff and her husband moved from California to the house in Eugene. When they arrived, they discovered that defendant and five of her family members were already living in it.² They nonetheless moved into one of the bedrooms in the house, and the two people who had been staying in that bedroom moved out into a bus on the property.

While plaintiff lived in the house, she bought some or all of the groceries and cooked dinner for all of the residents. Defendant paid the monthly mortgage payment and half or all of the utility bills. After she had been living there for several months, plaintiff decided to move out because of disagreements with defendant and her children. Plaintiff and her husband then moved in with her daughter June and June's spouse.

After plaintiff and her husband had lived with June for a few weeks, the husband suffered a stroke and had to be hospitalized and then placed in a convalescent home. Plaintiff came down with pneumonia and began to worry about who would take care of her husband if she died. She asked defendant if she would do so, and defendant replied that she would but requested that her name be put on the deed to the Eugene house. In January 1996, plaintiff put defendant's name on the deed, giving her a one-third interest in the property. It does not appear that defendant participated in the preparation of the first deed. At the time of the conveyance, defendant agreed to pay the mortgage payments and the property taxes.

She has since fallen behind on both obligations.

In September 1996, plaintiff's husband died. Shortly before plaintiff was to go to California to have a memorial service for him, plaintiff signed a deed conveying her remaining two-thirds interest in the property to defendant. The parties do not dispute that defendant prepared the second deed. Defendant claims that she did so at plaintiff's direction. Plaintiff claims that defendant tricked her into signing the second deed and that she did not know what she was signing. At any rate, soon after signing the deed, plaintiff returned to California and ended up remaining there for several months before returning to Oregon.

Plaintiff alleges that she did not learn that she had conveyed her entire interest in the property to defendant until the summer of 1997, when she returned to Oregon and got into an argument with defendant regarding whether one of defendant's daughters, Carolyn, could live in the house. After that argument, which, according to plaintiff, involved physical contact with Carolyn as well as with her fiance, plaintiff sought to have both conveyances set aside. The trial court held that plaintiff had not met her burden of proof and refused to set the conveyances aside.

Plaintiff assigns error to the trial court's refusal to cancel the deeds. She argues that the trial court failed to recognize that, because she and defendant were in a confidential relationship and because plaintiff was particularly vulnerable at the times of the conveyances, defendant had the burden of proving that she had not exerted undue influence. Defendant makes no response. Although it is a close issue, we agree with the trial court's conclusion that the first deed was a valid conveyance and was not tainted by undue influence. However, we disagree with its conclusion that the second deed was valid. We therefore affirm as to the first deed and reverse as to the second.

"Undue influence" has been defined as "unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare." Restatement (Second) of Contracts § 177(1) (1981). See also Egr v. Egr et al., 170 Or. 1, 7, 131 P.2d 198 (1942) (quoting substantially similar passage from Restatement of Contracts § 497). When undue influence is exerted by one party to a contract on the other party and that influence induces assent, the contract is voidable by the victim of the influence. Restatement (Second) of Contracts § 177(2). Moreover, when there is a confidential relationship between the parties, only slight evidence is necessary to establish undue influence. Penn v. Barrett, 273 Or. 471, 475, 541 P.2d 1282 (1975). Finally, when there is a confidential relationship coupled with suspicious circumstances, an inference of undue influence arises. That inference may be sufficient to establish undue influence. Rea v. Paulson, 131 Or.App. 743, 747, 887 P.2d 355 (1994).

The Supreme Court has identified several "suspicious circumstances" that bear on the existence of undue influence, including: (1) whether the recipient of the gift participated in arranging or executing the deeds, (2) whether the alleged victim of the influence received independent advice, (3) whether the conveyances were conducted in secrecy and with haste, (4) whether there was a change in the donor's attitude toward others, (5) whether the conveyance deviated from the donor's previous plans for disposing of the property, (6) whether the gift is unnatural and unjust, and finally (7) whether the donor is susceptible to influence. Penn, 273 Or. at 476-80, 541 P.2d 1282. As the court has pointed out, the emphasis in undue influence cases should be on "the unfairness of the advantage which is reaped as a result of wrongful conduct. * * * Equity acts because there is a want of conscience on the part of the donee, not want of consent on the part of the donor." Id. at 474-75, 541 P.2d 1282 (citations and internal quotation marks omitted).

In this case, we conclude that a confidential relationship existed between the parties. "A confidential relationship exists between two persons when one has gained the confidence of the other and purports to act or advise with the other's interests in mind." Knight v. Woolley Logging Co., 278 Or. 691, 696, 565 P.2d 748 (1977) (citations and internal quotation marks omitted); see also In re Reddaway's Estate, 214 Or. 410, 329 P.2d 886 (1958)

(describing a confidential relationship as a "relationship * * * such as to indicate a position of dominance by the one in whom confidence is reposed over the other") (citations and internal quotation marks omitted); Kugel v. Pletz, 22 Or.App. 248, 252-53, 538 P.2d 962 (1975) ("A confidential relationship * * * means a fiduciary relationship, either legal or technical, wherein there is a confidence reposed on one side with a resulting superiority and influence on the other.") (citations, emphasis, and internal quotation marks omitted). Although the relationship between a parent and child is often confidential, whether a confidential relationship exists in a given case is a question of fact. Restatement (Second) of Contracts § 177, comment a; see also Egr, 170 Or. at 7, 131 P.2d 198.

The evidence establishes that defendant and plaintiff shared a joint bank account and that, although the account apparently contained plaintiff's money, both parties withdrew from it. They continued to share the joint account even after plaintiff left Oregon for California after her husband's death. Plaintiff's decision to share a bank account with defendant indicates that she reposed trust and confidence in defendant. Moreover, defendant testified repeatedly that plaintiff asked her for help in taking care of her husband because def...