Summary
recognizing that title to trailers may be held in the alternative
Summary of this case from Kiddie v. CopelandOpinion
No. CA10-1159
11-02-2011
MARSHA CRINER APPELLANT v. DONNA REDDELL APPELLEE
APPEAL FROM THE BOONE
COUNTY CIRCUIT COURT,
[NO. CV2009-112-4]
HONORABLE GORDON WEBB,
JUDGE
AFFIRMED ON DIRECT APPEAL;
AFFIRMED ON CROSS-APPEAL
DAVID M. GLOVER , Judge
At issue in this appeal are various items of real and personal property owned by appellee Donna B. Reddell and her deceased husband, Willard D. Reddell. Appellant Marsha Criner is one of the decedent's two surviving children and the stepdaughter of appellee. The Boone County Circuit Court set aside a deed from the decedent and appellee to appellant on the basis that appellee lacked the intent to execute a deed. Appellant appeals from this portion of the court's decision. The court also found that a horse trailer and thirteen head of cattle belonged to appellant. Appellee challenges this aspect of the court's ruling on cross-appeal. We affirm on direct appeal and on cross-appeal.
We had previously ordered the parties to submit supplemental addenda to correct deficiencies. Criner v. Reddell, 2011 Ark. App. 616.
The decedent and appellee were married on November 18, 1988. They had each been married prior to this marriage and each had children from their earlier marriages. They had no children together. At some point during their marriage, decedent and appellee purchased real property located in Boone County, Arkansas.
The decedent was diagnosed with lung cancer in December 2008 and was hospitalized with pneumonia on March 18, 2009, due to the fact that he was not responding to the chemotherapy he was receiving. On March 19, 2009, decedent was informed that the cancer had spread throughout his body and treatment was no longer an option. On March 20, 2009, decedent and appellee conveyed six tracts of real property totaling over 350 acres to appellant. The warranty deed was signed in decedent's hospital room. On March 21, 2009, the decedent endorsed the title to a horse trailer over to appellant. The title to the trailer was in the names of the decedent or appellee. The deed to the property was recorded on March 23, 2009. The decedent died on March 24, 2009.
On April 9, 2009, appellee filed her complaint to set aside the warranty deed she and the decedent had executed. The complaint alleged that the deed should be set aside on the basis of fraud, misrepresentation, duress, and lack of consideration. The complaint further alleged that appellee had not intended to convey her interest in the property. Appellant filed an answer denying the material allegations of the complaint on May 26, 2009.
On June 2, 2009, appellant filed a complaint for replevin of the trailer and thirteen head of cattle in the same case. Appellee filed an objection to issuance of an order of delivery. By agreed order, all of the calves were sold and the proceeds held in the trust account of appellant's attorney until the court could decide the matter.
Appellee amended her complaint to allege that there was an agreement between appellant and decedent whereby all of the real property belonging to appellee and decedent would be sold and their debts paid and the proceeds divided between appellee and appellant. The amended complaint also requested that, in the event the court granted appellant possession of the trailer and cattle, appellee be reimbursed for the costs of maintaining the cattle.
Following a bench trial, the circuit court took the matter under advisement and, on July 15, 2010, issued its letter opinion. On the primary issue of this case, the court found that, under the circumstances, appellee lacked the understanding and/or the intent to execute the deed. Therefore, the court set aside the deed. The court found the evidence "simply overwhelming" that the time of the presentation of the deed was on the same day as, and within hours of, appellee finding out that her husband's medical condition was terminal. The court further relied on the fact that appellee was suffering from her own physical ailments, was significantly sleep deprived, and was under the effects of medication in order to conclude that appellee was incapable, at the particular time and circumstances, to understand what she was signing and the consequences of her signature. Although the court found that appellant's actions were in many respects questionable, the court believed that it could set aside the deed without finding appellant guilty of fraud, undue influence, or coercion. The court also noted that the deed was prepared without appellee's knowledge and that it was only presented to her under the most extreme of circumstances. After reciting pertinent testimony, the court found that there was clear and convincing evidence that "it is beyond question that [appellee] was not in any position to knowingly enter into a transaction of the type that was presented to her purely and completely at the arrangement and direction of [appellant]." The court also concluded that it simply was unconscionable for the court to treat the deed as a valid conveyance of appellee's interest.
The court then found it "credible" that appellant had thirteen head of cattle on the Reddell property. Because the cattle had been sold by agreement, the court awarded appellant the proceeds of the sale. The court also awarded ownership of the horse trailer to appellant after finding that the title to the horse trailer was such that either the decedent or appellee could convey the trailer to appellant. In the court's view, the circumstances of the transfer of the horse trailer were less questionable than the conveyance of the real estate, and there was sufficient evidence for the court to find that the conveyance was valid. Appellee was directed to make the horse trailer available to appellant as soon as practicable for appellant to retrieve it. This appeal and cross-appeal followed.
Appellant first argues that the circuit court erred in setting aside the deed on the basis that appellee lacked the capacity to execute a deed and that there was a lack of consideration. Appellant spends much of her brief arguing that the circuit court erred in finding that appellee lacked capacity to execute the deed at issue. Appellant also argues that the court erred in setting aside the deed simply because appellee "wanted her land back." However, this argument is misplaced because, although the circuit court did refer to appellee's lack of capacity several times in its letter opinion, the true basis for the court setting aside the deed was unconscionability. A person may obtain rescission for unilateral mistake where 1) the mistake is so significant that to enforce the contract as it was made would be unconscionable; 2) the mistake relates to a material feature of the contract; 3) the mistake occurred notwithstanding the mistaken party's exercise of reasonable care; and 4) rescission will not cause serious prejudice to the nonmistaken party except for the loss of his or her bargain. See Mountain Home Sch. Dist. No. 9 v. T.M.J. Builders, Inc., 313 Ark. 661, 668, 858 S.W.2d 74, 78 (1993) (citing State ex rel. Ark. State Hwy. Comm'n v. Ottinger, 232 Ark. 35, 39, 334 S.W.2d 694, 696 (1960)).
The generally accepted rule is that rescission cannot be enforced or ordered on account of unilateral mistake unless some special ground for the interference of a court of equity is shown. Lowell Perkins Agency, Inc. v. Jacobs, 250 Ark. 952, 956, 469 S.W.2d 89, 91 (1971); see also Bishop v. Bishop, 60 Ark. App. 164, 961 S.W.2d 770 (1998). There can be no rescission on account of the mistake of one party only, where the other party was not guilty of any fraud, concealment, undue influence, or bad faith, and did not induce or encourage the mistake, and will not derive any unconscionable advantage from the enforcement of the contract. Id. The fact that appellee entered into an agreement which later appeared improvident is no ground for relief. Id.
But as noted above, the circuit court found that it was "unconscionable" that appellee's conveyance of her interest could be valid. A determination of unconscionability appears to be a mixed question of law and fact. Associated Press v. S. Ark. Radio Co., 34 Ark. App. 211, 809 S.W.2d 695 (1991). In reviewing a determination of unconscionability, this court will review the totality of the circumstances and will reverse the circuit court's decision only if it is clearly erroneous. Id. In determining whether a provision was unconscionable, two important considerations are whether there is a gross inequality of bargaining power between the parties to the contract and whether the aggrieved party was made aware of and comprehended the provision in question. Id. (quoting Arkansas Nat'l Life Ins. Co. v. Durbin, 3 Ark. App. 170, 623 S.W.2d 548 (1981)).
Here, there was testimony that the deed was prepared at appellant's direction; that the real property was over 350 acres and unencumbered; that the 150 acres not conveyed to appellant had a mortgage; that, although appellee was told that she was executing a deed, she may not have understood or comprehended what was being told to her; that appellee only recalled discussing having a power of attorney and living will prepared; that appellee had numerous ailments that could affect her cognitive ability; and, most importantly, that the deed was executed in a hospital room shortly after she learned that her husband's condition was terminal. Under these circumstances, we cannot say that the circuit court was clearly erroneous in finding that the transaction had aspects of a constructive fraud. In a case with somewhat similar facts, we said:
The appellants were guilty of no moral wrong, but an act done or omitted may be construed as fraud by the court because of its detrimental effect, thereby justifying the setting aside of the deed or contract, irrespective of moral guilt. Intentional deceit is not an essential element of constructive fraud. But, where an unintentional deception does in fact occur, as in the case before us, yielding a manifestly unjust result, the court of equity may step in and remedy the constructive fraud.Cuzick v. Lesly, 16 Ark. App. 237, 240, 700 S.W.2d 63, 65 (1985) (citations omitted). Appellant further argues that the circuit court erred in cancelling the deed merely because it was not supported by consideration. This contention would have merit if there were no fraud, duress, or undue influence because, under such conditions, consideration is not necessary to sustain the validity of a deed under Arkansas law. Cuzick, supra; Goodwin v. Loftin, 10 Ark. App. 205, 662 S.W.2d 215 (1984); see also Ferguson v. Haynes, 224 Ark. 342, 273 S.W.2d 23 (1954).
On cross-appeal, appellee first argues that the circuit court erred in not awarding her judgment for the expenses of maintaining the cattle. This matter was argued before the circuit court and evidence was presented as to the costs appellee incurred. However, she failed to obtain a ruling on this issue. The failure to obtain a ruling precludes appellate review because there is no order of a lower court on the issue for this court to review on appeal. Bomar v. Moser, 369 Ark. 123, 251 S.W.3d 234 (2007); Hurst v. Dixon, 357 Ark. 439, 182 S.W.3d 102 (2004).
In her second point, appellee argues that the circuit court erred in awarding the horse trailer to appellant because appellee never joined in the conveyance by signing the title document. She further argues that she and the decedent owned the horse trailer as tenants by the entirety and that the decedent lacked the power to unilaterally destroy the tenancy by the entirety. E.g., Lofton v. Lofton, 23 Ark. App. 203, 745 S.W.2d 635 (1988). However, appellee's argument fails because a tenancy by the entirety was not created when title to the horse trailer was taken in alternative names so that either the decedent or appellee could convey title to the divestment of the other. Warren v. Warren, 273 Ark. 528, 623 S.W.2d 813 (1981).
Affirmed on direct appeal; affirmed on cross-appeal.
ABRAMSON and MARTIN, JJ., agree.