Opinion
No. 70-056 (Supreme Court No. 22879)
Decided May 12, 1970. Rehearing denied June 9, 1970. Certiorari denied July 30, 1970.
Action to set aside various conveyances by which defendants acquired certain farms which the parents of the parties owned during their lifetime. From judgment for defendants following trial to an advisory jury, plaintiffs appealed.
Affirmed in Part, Reversed in Part.
1. TRIAL — Advisory Jury — On Review — Considered — Tried to the Court. Where a case is tried to an advisory jury, the action is considered on review as having been tried to the court.
2. Cases Triable to Court — Invoke Aid of Jury — Questions of Fact — Or — Dispense With Jury — Own Findings. In cases triable to the court, the court may invoke the aid of a jury in determining specific questions of fact or it may, before those questions are so determined, or afterwards, dispense with the jury and make its own findings of fact.
3. DEEDS — Evidence Supported — Advisory Jury Verdict — Court Finding — Undue Influence. The plaintiffs' evidence, although disputed, indicated that the contract and deed conveying the large farm to defendants was executed by their mother soon after the death of their father, that at the time she was 71 years of age and her health was failing and mental condition deteriorating, and that the sale price was grossly inadequate and the entire transaction was dominated and controlled by one of the defendants; held, this evidence is sufficient to support the verdict of the advisory jury, adopted by the court, that the transfer was the result of the undue influence and conspiracy of defendants.
4. EQUITY — Laches — Not Bar — Timely Claim Against Estate — Failure — Initiate Legal Proceedings — Mother's Lifetime. Although plaintiffs knew of the transfer of the large farm prior to their mother's death, there was no direct action by which they could seek redress until her death occurred and they had no duty to institute adjudication, guardianship, or other proceedings during their mother's lifetime, thus, their claim, timely filed against the estate, is not barred by the operation of laches because of this failure to institute legal proceedings.
5. Plaintiffs' Remedies — Not Denied — Defendants — Acquired Equities — Improvements to the Property. Plaintiffs' remedies in regard to the alleged wrongful transfer of certain property should not be denied because defendants have acquired equities in the property by expending money for improvements.
6. Defendants — Made Improvements — Encumbered Property — Rights Protected — Equitable Accounting — Deed Set Aside. Where defendants expended money in making improvements to the large farm which is the subject of the action and in so doing placed encumbrances on the property, defendants' rights can be protected by an order for an equitable accounting upon the entry of a decree setting aside the deed by which they acquired the property.
Error to the District Court of Logan County, Honorable Francis L. Shallenberger, Judge.
Edgar H. Branbenburg, for plaintiffs in error.
Sandhouse Sandhouse, for defendants in error.
This case was originally filed in the Supreme Court of the State of Colorado and was subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
The parties are here in the same order as they appeared in the trial court and will be referred to as plaintiffs and defendants or by name. The parties are all children of Adam Gertge, Sr. and Frances Gertge.
Adam Gertge, Sr. died in 1962. Frances Gertge died in May of 1963. In her will, she devised her real estate to all of her children in equal shares. After the death of their mother, the plaintiffs brought this action to set aside various conveyances by which the defendants acquired certain farms which the parents owned during their lifetime. The plaintiffs alleged that their parents were not competent to execute the deeds and contracts in issue and that the conveyances were procured by undue influence exerted by all of the defendants. The defendants denied these allegations and also affirmatively alleged that plaintiffs' claims were barred by laches.
The case, as originally filed, involved a number of parcels of land and houses. By stipulation at the pretrial conference, the action was dismissed as to all parcels except the two referred to as the "large farm" and the "small farm". The case was tried to the court with an advisory jury. At the conclusion of the jury trial, the court determined as a matter of law that the plaintiffs' evidence did not sustain the allegations of incompetence and, further, the court determined as a matter of law that the evidence did not sustain either the allegations of incompetence or undue influence concerning the disposition of the small farm. The issue, then confined by the court to the transaction relative to the large farm, was submitted to the jury on interrogatories which were returned with findings that the contract of sale and the deed were executed by Frances Gertge as a result of undue influence exerted upon her by the defendant, John A. Gertge, and that there was a conspiracy or concert of action by Adam Gertge, Jr. and John A. Gertge to exert undue influence upon the said Frances Gertge.
After the verdict was returned, the court held a further hearing on the issue of laches. By its findings and decree, the court determined that there was evidence to support the jury's finding of undue influence in the execution of the contract of sale and deed pursuant thereto relative to the large farm and the court adopted the jury's findings. The court, however, found that any relief or remedy which plaintiffs had was barred by laches, and entered judgment for the defendants.
Three issues are presented for determination by this writ of error:
I. The plaintiffs contend that the court erred in refusing to submit the issues concerning the small farm to the jury.
II. The defendants contend that the court erred in submitting the issues concerning the large farm to the jury and in approving and adopting the jury's verdict in favor of plaintiffs.
III. The plaintiffs contend that the court erred in ruling that the plaintiff's remedies were barred by laches.
I.
The plaintiffs contend that the court should have submitted the issues concerning the small farm to the jury. At the conclusion of the evidence at the trial, the court determined that the evidence did not sustain either the allegations of incompetency or of undue influence concerning the disposition of the small farm. This transaction involved deeds originally executed in 1944 from Adam Gertge and Frances Gertge to their son, John, which deeds were recorded February 13, 1962, and followed thereafter by a quit claim deed executed February 16, 1962, from Frances Gertge to John and George Gertge.
The jury in this case was an advisory jury. Such actions are considered on review as having been tried to the court. The findings are the responsibility of the court. Assurance Society v. Hemenover, 100 Colo. 231, 67 P.2d 80.
The plaintiffs contend that their evidence was sufficient to establish a prima facie case of undue influence and it was error for the court to withdraw the case from the considerations of the jury. This rule does not apply where the jury is advisory only. In cases triable to the court, the court may invoke the aid of the jury in determining specific questions of fact or it may, before those questions are so determined, or afterwards, dispense with the jury and make its own findings of fact. Selfridge v. Leonard-Heffner Machinery Co., 51 Colo. 314, 117 P. 158. See also Zelinger v. Plisek, 162 Colo. 490, 426 P.2d 957.
In the present case, it was not error for the court to make its own determination of the issues concerning the small farm and to withdraw these issues from the jury.
II.
The defendants contend that the court erred in submitting the issues concerning the large farm to the jury and in approving and adopting the jury's verdict in favor of plaintiffs.
Adam Gertge, Sr. and his wife were born in Russia and came to Colorado in 1911. They began farming in the Sterling area in 1927. They acquired the two farms in dispute during the 1930's, took title to them as joint tenants, and moved onto the large farm in 1940. The small farm was located approximately two miles southeast of the large farm. At the time the farms were acquired, most of the children were living at home. The parents were unable to read or write and relied upon their sons for help in the management of the farming operations.
Beginning in 1940, as the other children left home, John Gertge undertook the management and control of the farming operations. He obtained a power of attorney from his parents authorizing him to conduct the general farming operations, and thereafter controlled and dominated all of the financial transactions of his parents until they died.
On June 26, 1962, Frances Gertge entered into a contract to sell the large farm to Adam Gertge. The contract provided that John Gertge would receive the use of part of the water rights. The contract price was $20,000 and there was evidence that the market value was $75,000. The large farm was conveyed to Adam in accordance with this contract. The plaintiffs' evidence was that the contract and the deed were executed by Frances Gertge soon after the death of her husband; that at the time she was 71 years of age; that her health was failing; and that her mental condition was deteriorating. The contract sales price was grossly inadequate and there was evidence that the entire transaction was dominated and controlled by John Gertge. The plaintiffs' evidence, although disputed, is sufficient to support the verdict of the jury. The court approved the jury's verdict and the court's finding based thereon is supported by the evidence in the record.
III.
The plaintiffs contend that the court having found that the deed to the large farm was obtained by undue influence erred in ruling that the plaintiffs' remedies were barred by laches. This action did not accrue to plaintiffs as heirs until the death of Frances Gertge in May of 1963. This case was filed in July of 1964. The court found that the plaintiffs were fully advised of the facts and circumstances surrounding the transactions in issue here in 1962; and that their failure to exercise the remedies available to them or to their mother while she was alive and available to testify was laches and they could not in equity seek redress.
The trial court in its opinion said:
"It is not proper to speculate upon what they may or should have done, but at least two of the obvious remedies, had they been sincere and concerned, are provided in Chapter 71 C.R.S. 1963, providing for the judicial protection of a person who may be in need thereof. This they deliberately declined to do, they then being in possession of all the facts and circumstances they later presented at trial.
"The provisions of C.R.P. 27 providing for the perpetuation of testimony were not exercised by the plaintiffs."
The Colorado Supreme Court has, in a number of cases, considered the doctrine of laches and has held that equitable relief may be denied to one who has been guilty of unconscionable delay as shown by the facts and circumstances in seeking that relief. That court has never held that an action brought by an heir to annul a deed executed by a parent can be barred by laches consisting of the failure of the heir to take legal action prior to the death of the parent.
Counsel for defendants in support of their contention that laches may be a defense in such circumstances cite Anderson v. Lindgren, 113 Colo. 401, 157 P.2d 687 and Lesser v. Lesser, 128 Colo. 151, 250 P.2d 130. In both of these cases, a deed from a parent to a child was upheld when attacked on the ground of undue influence. In both cases, the court upheld the deed because the evidence did not establish the claim of undue influence. In the Lesser case, the court commented on the fact that the grantor, the father, took no action to set aside the deed during the lifetime of the grantee, his son. In the Anderson case, the court commented on the fact that the plaintiffs made no effort to remove the mother from what they asserted was the unreasonable domination and control of the son to whom she conveyed her property. These comments, however, were made by the court in discussing the issue of undue influence. Laches was not a defense in either case and was not considered.
Defendants cite the case of Denison v. McCann, 303 Ky. 195, 197 S.W.2d 248, in support of their position. This was an action by Denison against a brother and sisters seeking to set aside a deed executed by their mother to McCann, a stranger. Denison contended that the transaction was the result of the exertion of undue influence upon the mother. The deed was executed, delivered and recorded approximately eighteen months before the death of the grantor. The trial court dismissed the petition on the merits of the case, but did not pass on the plea of laches. The appellate court affirmed the trial court and by way of dicta said that Denison was guilty of laches. The court said that the failure to attempt to set aside the conveyance in the lifetime of the mother was an unreasonable delay and that McCann was placed in a prejudicial situation because he would be unable to produce evidence in defense of the suit because of the death of the principal witness.
In a later case, Morgan v. King, 312 Ky. 792, 229 S.W.2d 976, the Court of Appeals of Kentucky reviewed its decision in the Denison case. Although not specifically overruling the Denison case, it limited the dicta of the Denison case to the unusual factual situation there. The court said:
"It does appear . . . that Mrs. Denison did have a claim of interest in the father's estate, and under his will to have had some right to maintain the action and a more plausible right shown in a writing which had the effect of giving her a vested remainder interest, thus giving her a right to maintain the action."
The basis of the dicta in the Denison case, is that Denison had a cause of action which she could have asserted prior to her father's death and, under the circumstances of the case, her failure to file that cause of action during the father's lifetime was laches. The case is not authority for the contention of the defendants in this case that the plaintiffs here could be guilty of laches prior to the death of their mother because they had no cause of action prior to that time.
Other courts have held that the defense of laches is not available in the circumstances presented by this case. In the case of Hemphill v. Holford, 88 Mich. 293, 50 N.W. 300, the heirs of Hemphill sought the cancellation of a deed executed by him alleging that he lacked mental competence and was under undue influence. In ruling that the action was not barred by laches, the court said:
"It is insisted that the complainants are guilty of laches, in that they waited until after the death of Mr. Hemphill before taking steps to set aside the deed. It is insisted with much vigor by defendants' counsel that defendants were entitled to have had his competency adjudicated by a direct proceeding in the probate court, when Mr. Hemphill could have been produced for examination. I do not think this such laches as should bar the complainants' remedy now. Children might well hesitate to drag an aged parent into court under such circumstances. If they prefer, they have the right to wait till the death of the parent, and then file their bill."
The Supreme Court of Iowa in Wachsmut v. Miller, 168 N.W. 344, held that children were not barred by laches from asserting after her death that a deed executed by their mother during her lifetime was obtained by undue influence. In that case, the children knew about the deed during their mother's lifetime and it was contended that they could have had a guardian appointed and in that way had proceedings instituted during the mother's lifetime. In rejecting this contention, the court said:
"The plaintiffs might well hesitate to drag their aged mother into court under the circumstances here shown, and they have a right to wait until the death of the parent and then bring their action."
In the case now before this court, the claim did not accrue to the plaintiffs until the mother's death. There was no unreasonable delay in asserting the claim thereafter. Although plaintiffs knew of the deed soon after it was executed, there was no direct action by which they could seek redress until their mother's death. They were under no duty to institute adjudication, or guardianship, or other proceedings during the mother's lifetime and this court holds that the plaintiffs' failure to institute legal proceedings during the mother's lifetime does not bar this action which was timely filed after her death.
In holding plaintiffs guilty of laches, the trial court said that by their delay:
"They permitted the intervention of innocent third parties, more particularly the Federal Land Bank and thereafter the Kansas City Life Insurance Company. They permitted expenditure for improvements to be made on the property without objection and the wife of defendant Adam Gertge, Jr. assumed substantial obligations in connection with the notes and encumbrances thereafter executed."
[5,6] The deed of trust securing a loan in the amount of $30,700 was signed by Adam Gertge and his wife on August 15, 1962, acknowledged on August 17, 1962, and recorded January 18, 1963. The deed from Frances Gertge to Adam Gertge was dated December 31, 1962, and recorded December 31, 1962. The mother was still living when the Federal Land Bank made the loan. This loan was repaid. In July of 1964, a loan of $55,000 was obtained from the Kansas City Life Insurance Company and a deed of trust securing the loan was recorded July 22, 1964. The proceeds of this loan were received by Adam Gertge on July 30, 1964, after the service of the summons in this case on July 21, 1964. The insurance company is not a party to this action and its interest in the property under its deed of trust cannot be affected in any way by any decree in this court. The action of the defendants in encumbering the property does not, under the circumstances of the case, defeat plaintiffs' right to relief. The plaintiffs' remedies should not be denied because defendants have acquired equities in the property by expending money for improvements. The defendants' rights can be protected by an order for an equitable accounting upon the entry of a decree setting aside the deed. See 13 Am. Jr. 2d, Cancellation of Instruments, § 66, and Ardell v. Blamey, 108 Colo. 576, 121 P.2d 485.
The judgment of the trial court in favor of the defendants and against the plaintiffs as to the small farm is affirmed.
The judgment of the trial court in favor of the defendants and against the plaintiffs as to the large farm is reversed on the basis of the ruling of this court that the defense of laches was not available. Accordingly, the judgment in favor of the defendants and against the plaintiffs as to the large farm is reversed and the action remanded for further proceedings not inconsistent with the views herein expressed.
JUDGE COYTE and JUDGE DUFFORD concur.