Utterback v. Hollingsworth
| Decision Date | 14 May 1929 |
| Docket Number | 39635 |
| Citation | 225 N.W. 419,208 Iowa 300 |
| Parties | JOE S. UTTERBACK et al., Appellants, v. H. M. HOLLINGSWORTH et al., Appellees |
| Court | Iowa Supreme Court |
Appeal from Keokuk District Court.--J. G. PATTERSON, Judge.
Suit to cancel deed made by Henry Fritzler, now deceased, to defendants, H. M. and Alma Hollingsworth. After the execution of the deed, Joe S. Utterback was appointed guardian for the grantor, without contest, and, under authority of the court commenced this suit. Later, Henry Fritzler died. Utterback was appointed administrator with the will annexed, and he and the residuary legatees, namely, three brothers and a sister of deceased's were substituted as plaintiffs. Decree for defendants. Plaintiffs appeal.
Affirmed.
Hamilton & Updegraff, for appellants.
Willcockson & Willcockson and F. M. Beatty, for appellees.
WAGNER, J., not participating.
Plaintiffs found their suit upon alleged mental incapacity of and undue influence and fraud practiced on decedent, Henry Fritzler.
I. Decedent, Henry Fritzler, acquired the farm in controversy about the time of the Civil War, was married in 1868, the next spring moved on the land, and lived there until his death. No child was born to him. The wife appears to have largely looked after their business affairs until her death, in 1922. The wife's death was a great shock to decedent. Shortly after that event, he leased the farm to defendants, who thereupon moved upon it, and took up their home with him. Defendants, who, for convenience, will be called "Hobart" and "Alma," were married in March, 1922. Alma is the granddaughter of one of decedent's brothers. Decedent, prior to February, 1926, had arteriosclerosis, and resultantly, in February, 1926, suffered a severe attack of cardiac deficiency, for which he had the medical attendance of Dr. Maxwell for about a month. On August 2, 1926, decedent made to defendants the deed now under attack. The consideration was $ 125 per acre,--$ 15,000. Defendants gave back to decedent a purchase-money mortgage for the entire price, $ 15,000, due in 10 years, with interest at 5 per cent per annum. The same date, Hobart and decedent went to the county seat and had the papers recorded. On August 9, 1926, decedent had a stroke of paralysis. On October 28, 1926, two of decedent's brothers made application for the appointment of a guardian, the application being grounded on incompetency. The application was not contested, and was granted. On September 19, 1927, petition in this suit was filed. On December 10, 1927, decedent died.
Plaintiffs take their main position on the proposition that defendants sustained to decedent a confidential relationship, such as to shift to them the burden of proof. It is not claimed, of course, that the relationship was fiduciary, as matter of law, but that it existed in fact, within the doctrine of Curtis v. Armagast, 158 Iowa 507, 138 N.W. 873; Pruitt v. Gause, 193 Iowa 1354, 188 N.W. 798; 2 Pomeroy's Equity Jurisprudence (4th Ed.), Section 956. This doctrine, for the purpose of the matter now under discussion, may be stated to be that one who in fact stands in a confidential relationship to another may not retain advantage of a transaction with the cestui que trust which may reasonably be the result of the confidence reposed, unless he shows that the cestui acted with freedom, intelligence, and full knowledge of all the facts. The purpose of the doctrine is to defeat and correct betrayals of trust and abuses of confidence. It is a prerequisite to the application of the doctrine that faith and confidence be reposed; that the repository shall be thereby in a position of superiority or dominance, while the cestui is in a corresponding position of inferiority or subservience. Proof of active exercise of undue influence in fact, or the existence of mental weakness or incompetency on the part of the cestui, is not essential to the application of the doctrine. 2 Pomeroy's Equity Jurisprudence (4th Ed.), Section 955 et seq. Undue influence, for the purpose of the point now under consideration, is a phase of actual fraud, and its existence, or the existence of mental incapacity, is sufficient, of itself, to invalidate the transaction; but, in the case of dealings between the trustee and the cestui que trust in which the trustee obtains an advantage or benefit, though the cestui acts in his own behalf, the transaction is, in equity, presumptively the result of overreaching or of fraud, and its validity must be affirmatively established by the trustee. Before the doctrine can be applied, however, the existence of the confidential relationship or the facts giving rise to it must be proved. The relationship must be such as to enable the one charged with having abused it to have exercised it to his advantage. It must appear expressly or by implication that trust or confidence was reposed. The supposed trustee must be shown to have been in a position of advantage or superiority such as to imply a dominating influence over the cestui. Albaugh v. Shrope, 197 Iowa 844, 196 N.W. 743; Bradley v. Bradley, 185 Iowa 1272, 1279, 171 N.W. 729; Nixon v. Klise, 160 Iowa 238, 244, 141 N.W. 322; Krcmar v. Krcmar, 202 Iowa 1166, 1171; Shaffer v. Zubrod, 202 Iowa 1062; McNeer v. Beck, 205 Iowa 196, 217 N.W. 825.
To avoid repetition, some of the evidence more particularly bearing on other branches of the case will be referred to in this connection.
The more prominent fact upon which plaintiffs apparently rely is that appearing from the testimony of Schott, cashier of the bank, that decedent had a number of certificates of deposit, aggregating some $ 14,000, and that, as they respectively matured, decedent would go into the bank and obtain renewals, and Hobart would indorse decedent's name upon the certificates, in surrendering them for renewal. The testimony, however, of Schott and of Mitchell, the president of the bank, and of Mrs. McNary, the bookkeeper, is that any directions that were given concerning the renewals or decedent's business in the bank were given by decedent. Mitchell says:
"Fritzler was always there for the purpose of renewing his certificates and Mr. Fritzler talked to me about what he wanted done in the way of renewing."
On July 29, 1926, a few days before the deed was made, decedent left in the bank $ 300 on certificates, to be applied on a note that decedent's church was owing the bank, but with directions given by himself that the certificate was not to be cashed until the entire amount of the church's note had been received. Decedent's assessment roll, made out in February, 1926, was signed by defendant. There is no evidence that defendants had charge of the bank account or of the certificates of deposit or of any of the other business of decedent. Decedent was an old man, doubtless with the consequent physical infirmities of age. He had been ill. With few exceptions, he seems to have been dependent on defendants to take him to town. Hobart accompanied him to the barber shop and to other places, but there is no evidence that decedent was not transacting and directing his own business, or that defendants had charge of it, or were transacting it for him. The lease to defendants is not in evidence. One of plaintiffs' witnesses says that the arrangement for it was that the farm should be leased to defendants on shares, and that decedent was to pay around $ 5.00 a week for board. Defendants were married in the spring of 1922. Alma was the granddaughter of one of decedent's brothers. Hobart had no previous acquaintance with him. In November, 1922, defendants moved into decedent's home. It is not shown that defendants and decedent were previously on terms of intimacy. It is not disputed that defendants provided decedent with good home and care. In July, 1925, a daughter was born to defendants. This child won decedent's affection. On November 21, 1925, decedent made a will, by which he bequeathed to the little girl $ 500, and to defendants $ 3,000 and some furniture. By the will decedent requested that, at the expiration of the then lease, a new lease be made with Hobart for another period of five years, at the existing rental, and that the farm be not sold until the expiration of the new lease. The will nominated Hobart executor, without bond. Some of decedent's brothers and sisters had died, leaving descendants, for whom no provision in the will was made, except a leather davenport to a niece. A gift of $ 1,000 to the church was made, and a bequest of the residue to decedent's sister and three brothers. The will was drawn by the witness Roland, who was a notary public, and in the real estate, loan, and insurance business. Roland testifies that decedent told him that he wanted to make a will, would call him up; and that he (Roland) later went out to decedent's home and drew the will; that decedent was in the room alone, and told Roland what he wanted put in the will; that Alma was about the house. Alma witnessed the will. Decedent declared to different witnesses that defendants had been good to him, and he wanted to be good to them.
The deed under consideration was also drawn by Roland, and was witnessed by Dr. Maxwell, who was the physician of decedent and defendants, and by Mitchell, who was president of the bank. On August 2, 1926, according to Mitchell's testimony, decedent hailed Mitchell on the street. Mitchell and decedent had a chat, and decedent asked Mitchell to go to Roland's office, which Mitchell afterwards did. Dr. Maxwell was asked by Hobart to go to the office.
Roland testified that defendants came with decedent to his office. Decedent said he wanted to make a deed and mortgage, and told Roland...
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