Sunflower Farms, Inc. v. McLean

• Decision Date: 08 February 1960
• Docket Number: No. 41323,41323
• Parties: SUNFLOWER FARMS, INC., et al. v. R. D. McLEAN, Jr., et al.
• Court: Mississippi Supreme Court

Page 808

117 So.2d 808

238 Miss. 168

SUNFLOWER FARMS, INC., et al. v. R. D. McLEAN, Jr., et al.

No. 41323.

Supreme Court of Mississippi.

Feb. 8, 1960.

Forrest G. Cooper, Indianola, for appellants.

Charles C. Jacobs, Jr., Cleveland, James D. Causey, E. B. Kimpel, Jr., Memphis, Tenn., for appellees.

LEE, Justice.

This is the second appearance of this cause here. Sunflower Farms, Inc. v. McLean, 233 Miss. 72, 101 So.2d 355. The opinion in that case affirmed the decree of the lower court, which had held that the deed from Irene C. McLean and husband, R. D. McLean, to Dave Gordon, on the suggestion of William C. McLean, was without consideration, and that a constructive trust was created. The cause was therefore remanded solely for an accounting under the trust.

At the conclusion of the second trial, the court made a detailed finding. Some of the funds, by agreement, had been placed in escrow, and those funds, together with others, which were found to be due, were orderd to be paid to R. D. McLean, Jr., the complainant. Credit was given for the payment of debts and other proper expenditures. Certain allowances for damages of 5% and for interest were also made; and two deeds of trust from Irene Cox McLean and R. D. McLean to the Planters Bank & Trust Company of Ruleville, Mississippi, as therein described, were cancelled. The terms of the decree were fully complied with by the defendants' paying over and delivering the amount therein awarded to the attorney for the complainant. The defendants appealed, and the complainant prosecutes a cross-appeal.

The record on the first appeal was made a part of the record on the present appeal; and, to get a complete picture, it is necessary to review certain pertinent facts, which were developed in the former trial, along with the additional evidence in the second trial.

On May 1, 1950, R. D. McLean, being then in a financially hazardous business, for a consideration of $10 and the assumption of an indebtedness to the Federal Land Bank of New Orleans, conveyed and warranted to his wife, Irene Cox McLean, about 1,400 acres of land in Sunflower County, together with all farming implements, accounts and rents due by tenants, and all indebtedness due by J. M. Parks and wife and P. J. Townsend, as evidenced by notes and deeds of trust on lands sold to those persons, and, by said instrument, assigned those notes and deeds of trust to her. She, in turn, executed a full power of attorney to him.

On January 2, 1952, Irene Cox McLean and husband, R. D. McLean, executed to Planters Bank & Trust Company of Ruleville, Mississippi, a deed of trust on the same real estate and personal property to secure the payment of $25,000 as well as all future advances that might be made. As collateral security $25,000 in U. S. Bonds and the A. E. Staggs deed of trust was hypothecated. This action no doubt stemmed from the fact that a suit for a large sum of money was filed against R. D. McLean in the Federal Court.

Thereafter, on September 20, 1952, Mrs. Irene Cox McLean suffered a cerebral hemorrhage and was in a critical condition at a hospital at Greenville, Mississippi. At this juncture, R. D. McLean got his brother, William C. McLean, an attorney of Tampa, Florida, to come to Mississippi. After they had spent th 23rd and 24th of September in discussion of the matter, the attorney-brother returned to Florida and prepared and mailed to R. D. a deed for execution by him, individually and as attorney in fact for his wife, with William C. as the grantee. The deed was executed and acknowledged, and returned to William C. However, after receiving the deed, William C. Decided not to accept it. Subsequently, on November 4, 1952, after Mrs. McLean regained consciousness and improved to some extent, although her condition was still somewhat desperate, William C. prepared and sent to R. D. another deed to these lands for execution by himself and his life to Dave Gordon of Tampa, who was in fact unknown to Mrs. McLean. This deed, although dated September 24, was not acknowledged by the McLeans until November 6, 1952. Dave Gordon, in turn, on November 13, 1952, executed to R. D. McLean a general power of attorney; and, pursuant thereto, R. D. continued in charge of the property without any apparent change.

Two deeds for 160 and 80 acres dated November 1, 1952, were executed by Dave Gordon to Fred Staggs and A. E. Staggs, Jr., respectively. This occurred five days prior to the date of the acknowledgment of the deed from the McLeans to Dave Gordon.

R. D. McLean, apparently in good health, on August 21, 1954, executed his last will and testament, devising all of his property, real, personal and mixed to William C. as trustee for the interest of his wife, her mother, and his two grandchildren; and, only nineteen days later, he died suddenly from a heart attack.

On September 9, 1954, William C. McLean organized the Sunflower Farms, Inc., with the 50 shares of original stock issued to him, his wife, and two children; and on October 8th thereafter, Dave Gordon, admittedly a mere conduit, conveyed all of the land and property to Sunflower Farms, Inc., and, although he was not even a stockholder, he was elected president of the corporation.

Mrs. Irene C. McLean did not remember and apparently did not know, until William C. told her after the funeral of her husband, that the property had been conveyed to Dave Gordon. Shortly thereafter, she executed her last will and testament, naming as the sole beneficiary R. D. McLean, Jr., who was adopted by the McLeans in a proceeding, handled by William C., in which it was specifically provided that he should not become their heir. The testatrix died on February 23, 1955, and R. D., Jr. filed the will for probate. He then instituted this suit both in his own name and as the executor of Irene C. McLean's estate.

In the original trial, the complainant had offered evidence to the effect that bonds, cash, notes and rents in the aggregate of about $127,000 of the property of Mrs. McLean came into the hands of William C. Subsequent collections were thereafter made prior to the date of the final decree of November 14, 1958.

The burden of the appellant's complaint against the decree, as a whole, is that the deed from R. D. to his wife Irene did not convey cash and negotiable bonds owned by him; that this property was conveyed by no other bill of sale or document; that Mrs. McLean had no means of acquiring such property except through her husband, and that, since the proof did not show affirmatively that she owned such property in her lifetime, William C. McLean should not have been required to account for it, because the following sums were 'given to him by R. D. McLean', to wit: (1) $25,000, (2) $4,000, (3) $3,850.13, (4) $4,500, (5) $25,000, (6) $10,000, (7) $9,000, (8) $7,000.

In the accounting, however, William C. gave credit for items (5) and (6) which represented $35,000 of U. S. Treasury Bonds. Item (7) was accounted for as being bonds attached to a draft. Item (8) was also accounted for a U. S. Treasury Bonds.

Items 1 through 4, inclusive, were not included in the appellants' original accounting. They were not disclosed until after repeated efforts on the part of the appellee.

William C.'s explanation of how he got money to purchase the Planters Bank & Trust Company's deed of trust was that R. D. gave him $10,000 of U.S. bearer bonds; that he also told him that he could use therefor $25,000 of U. S. Bonds, put up as collateral security in that deed of trust; and that he also gave him $4,000 in Cashier's Checks. The attractive provision of this aforesaid deed of trust was that it provided for future advances. Under the course of dealing, R. D. could, and did, send money and bonds to be deposited in William C.'s bank account, and, when he needed money, as attorney for Irene C. McLean, he would draw drafts. In this way it was made to appear that there was a large indebtedness against the property. Finally, the execution of the deed from Irene C. McLean and husband to Dave Gordon was the clincher.

Large sums of money and bonds, and all of the rents on the lands, were sent to William C. McLean and Dave Gordon, respectively, and Gordon in turn delivered the rent to William C. This course of conduct continued from the Fall of 1952 until R. D.'s death.

The first question for determination is whether there was substantial evidence to prove that the money and bonds handled by R. D. were in fact the property of Irene C. McLean.

Certain developments, depicted in the record, shed considerable light on this question. For instance: (1) It was William C.'s position at first that all of the bonds, which came into his hands, belonged to R. D. But when the envelope, in which some of the bonds were shipped, was produced, together with the memorandum thereon, he admitted that those bonds in the amount of $19,000 belonged to Irene. (2) While originally William C. claimed that the land belonged to R. D., who wanted him to have it, his testimony showed that R. D. told him that the title was in Irene's name, but that he had a power of attorney and would execute a deed in her name. (3) While William C. had claimed, as a gift, the down payment of $7,500 on the lands which R. D. and Irene in January 1953 had contracted to sell to A. E. and Fred Staggs, he, as a matter of fact, wrote R. D. to file an income tax return for 1953, showing the proceeds of rent and capital gains. Pursuant thereto, R. D. and Irene filed their return in which they reported, as their income, the rents, the profits from the sale of the land to the Staggs as a long terms capital gain, and interest received. They also took depreciation on the remaining lands just as if they were the sole owners. (4) The account of Irene C. McLean with the Planters Bank & Trust Company of Ruleville, Mississippi, showed a deposit to this account on January 12, 1952, of $25,000. There is nothing in the record to show that...