Case Title: Henderson v. Henderson

Citation: 

Docket Number: 970503

State: virginia

Court: Virginia Supreme Court

Date: 1998-01-09T00:00:00Z

Document:
Present:  All the Justices 
 
TERRY HENDERSON 
 
v.  Record No. 970503 
OPINION BY JUSTICE BARBARA MILANO KEENAN 
                                     January 9, 1998 
EARL E. HENDERSON 
 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Gerald B. Lee, Judge 
 
 
In this appeal, we decide whether the trial court erred in 
rescinding a deed of gift conveying real property from a 
grandfather to his granddaughter. 
 
By deed of gift dated June 27, 1994, Earl E. Henderson 
(Henderson) conveyed to his granddaughter, Terry Henderson 
(Terry), a 1.19-acre parcel of real property in Fairfax County.  
The property included a log house built by Henderson.  At the 
time of the conveyance, Henderson was 92 years old.  
 
In June 1995, Henderson filed a bill of complaint against 
Terry seeking rescission of the deed of gift on the grounds of 
undue influence and constructive fraud.  According to the bill of 
complaint, at the time of the conveyance Henderson was in a 
weakened state of mind because his wife of 65 years had died 
about one year before the conveyance, and he had suffered several 
minor strokes.  The bill of complaint further alleged that 
Henderson's state of mind made him particularly vulnerable to 
Terry's suggestion that he sign the deed, and that Terry 
"deceptively" represented to Henderson that "there would not be 
any taxes on it." 
 
In a bench trial, Henderson gave the following testimony.  
In the late 1980s, Terry asked him for permission to live in the 
log house.  Henderson agreed, and Terry and her daughter moved 
into the house.  Henderson never discussed with Terry the 
possibility of giving her the property.  He considered selling 
the property but was informed that he would have to "pay more 
[taxes] than I received for the place."  In June 1994, the value 
of the property was about $400,000.  
 
Henderson stated that on the day he conveyed the property to 
Terry, he was living in the home of one of his daughters.  Terry 
arrived at the house with no advance notice.  That day was his 
first wedding anniversary after his wife's death.  Since his 
wife's death, Henderson was depressed, lost his appetite, lost 
weight, and "almost lost the desire to live."  
 
According to Henderson, Terry had a deed with her and said, 
"This is the deed to the log house.  Will you sign it?"  As a 
result of his depression, he "took [the deed] and looked at it 
and things kind of seemed unreal to me, you know.  So I signed 
it."  He did not feel any pressure to sign the deed, but was in 
"kind of a mental fog . . . and I just kind of, you might say, go 
[sic] along with the flow." 
 
Before signing the deed, Henderson asked Terry if there 
would be any tax consequences from the gift.  Terry said that 
"there would be a small income tax or insignificant income tax, 
and that was it."  Henderson later realized he had made a mistake 
when he learned that there would be "very big tax consequences" 
as a result of the gift, despite Terry's statement to the 
contrary.  
 
Henderson stated that, about eight months later, he wrote 
Terry a letter requesting that she transfer the property back to 
him.  This request was based on his lawyer's advice that he 
transfer property only through his will, and on his own desire 
for financial security and the restoration of harmony within the 
family. 
 
Terry testified to a very different version of events 
surrounding the execution of the deed of gift.  She stated that 
prior to the conveyance, her grandfather had told her that he 
wanted to keep the log house in the family and had discussed 
giving the property to Terry and her sisters.  In April 1994, 
Henderson told Terry that he wanted her to have the property 
because her sisters did not want it. 
 
On June 27, 1994, when Terry asked Henderson whether he 
would consider signing a deed conveying the property to her, he 
agreed.  Terry said, "Pop, I have gone and I've done the title 
search and I've had a good Virginia attorney put together a deed 
. . . . I'll give it to you.  You can just read it over and see 
what you think about it." 
 
According to Terry, Henderson then read the deed and asked 
Terry whether there "were any taxes on this."   She pointed to 
the margin of the deed and said, "No, there's no transfer taxes 
owed on the property."  Henderson then said that he wanted to 
sign the deed, and they went to his bank where he signed the deed 
before a notary public. 
 
Three physicians, including Henderson's family physician, 
testified that on the date of the conveyance, Henderson was 
incompetent, incapable of making a major financial decision, and 
vulnerable to suggestion.  At the conclusion of the evidence, the 
trial court found that Henderson had a "weakness of mind" at the 
time of the conveyance.  However, the trial court dismissed the 
claim of undue influence on the ground that Henderson did not 
prove that he and Terry had a confidential or fiduciary 
relationship. 
 
The trial court ruled that Henderson met his burden of proof 
on the constructive fraud claim and ordered Terry to convey the 
property back to Henderson.  Terry assigns error to this ruling. 
 
Terry argues that Henderson did not meet his burden of 
proving the elements of constructive fraud by clear and 
convincing evidence.  First, Terry contends that Henderson failed 
to prove the false representation asserted in his bill of 
complaint, namely, that Terry told him he would owe no tax as a 
result of the conveyance.  Instead, Terry notes, Henderson 
testified that Terry told him there would be a small amount of 
tax owed after the transfer.  Citing Massie v. Firmstone, 134 Va. 
450, 114 S.E. 652 (1922), Terry argues that Henderson is bound by 
his testimony and, thus, failed to prove the false representation 
alleged in his bill of complaint. 
 
In response, Henderson argues that credible evidence 
supports the trial court's findings.  Henderson also contends 
that since he suffered from a weakened state of mind and received 
"inadequate consideration" for the conveyance, he was entitled to 
rescission of the deed.  We disagree with Henderson.  
 
Fraud, whether actual or constructive, is never presumed and 
must be strictly proved as alleged.  See Poe v. Voss, 196 Va. 
821, 827, 86 S.E.2d 47, 50-51 (1955); Martin v. Williams, 194 Va. 
437, 445-46, 73 S.E.2d 355, 359-60 (1952).  The elements of a 
cause of action for constructive fraud must be proved by clear 
and convincing evidence.  Blair Constr. v. Weatherford, 253 Va. 
343, 346, 485 S.E.2d 137, 138 (1997); Evaluation Research Corp. 
v. Alequin, 247 Va. 143, 148, 439 S.E.2d 387, 390 (1994). 
 
A finding of constructive fraud requires proof that a false 
representation of a material fact was made, innocently or 
negligently, and that the injured party suffered damage as a 
result of his reliance on the misrepresentation.  Mortarino v. 
Consultant Eng. Services, 251 Va. 289, 295, 467 S.E.2d 778, 782 
(1996); Alequin, 247 Va. at 148, 439 S.E.2d at 390.  In addition, 
the evidence must show that the false representation was made so 
as to induce a reasonable person to believe it, with the intent 
that the person would act on this representation.  Mortarino, 251 
Va. at 295, 467 S.E.2d at 782; Alequin, 247 Va. at 148, 439 
S.E.2d at 390.   
 
Here, Henderson sought to prove that Terry falsely 
represented that there would not be any taxes due as a result of 
the conveyance.  Henderson's own testimony, however, was that 
Terry told him that "there would be a small income tax or 
insignificant income tax, and that was it."  He also stated that 
Terry told him "that there was an exclusionary clause that 
covered a small part of it."  Thus, Henderson's testimony fails 
to support the misrepresentation alleged in his amended bill of 
complaint. 
 
In Massie v. Firmstone, we stated: 
 
 
No litigant can successfully ask a court or jury 
to believe that he has not told the truth.  His 
statements of fact and the necessary inferences 
therefrom are binding upon him.  He cannot be heard to 
ask that his case be made stronger than he makes it, 
where, as here, it depends upon facts within his own 
knowledge and as to which he has testified. 
 
134 Va. at 462, 114 S.E. at 656. 
 
The Massie doctrine rests on the premise that a litigant 
should not be permitted to profit at another's expense by asking 
the trier of fact to make findings that contradict the litigant's 
own sworn statements about facts within his knowledge.  Such 
statements by a litigant, when unequivocal and against his own 
interest, have the effect of judicial admissions.  See Baines v. 
Parker, 217 Va. 100, 105, 225 S.E.2d 403, 407 (1976). 
 
The Massie doctrine must be applied in the context of the 
litigant's entire testimony.  See id.; Ford Motor Co. v. 
Bartholomew, 224 Va. 421, 431, 297 S.E.2d 675, 680 (1982).  
Therefore, an adverse statement by a litigant that stands in 
isolation from the rest of his testimony concerning the fact at 
issue will not trigger the Massie preclusion.  Id.; VEPCO v. 
Mabin, 203 Va. 490, 494, 125 S.E.2d 145, 148 (1962).  Generally, 
the trier of fact must decide whether to accept any clarification 
or explanation offered by the litigant.  Id.
 
Here, Henderson did not offer any clarification or 
explanation of his testimony that Terry said there would be a 
small amount of tax, as opposed to no tax, due as a result of the 
conveyance.  Therefore, his testimony had the effect of a 
judicial admission and Henderson failed to prove the material 
misrepresentation alleged in his amended bill of complaint. 
 
We disagree with Henderson's contention that a different 
result is required because the trial court found that he suffered 
from a weakness of mind, and because there was "inadequate 
consideration" in support of the conveyance.  Henderson's 
weakness of mind at the time of the conveyance cannot alter his 
unequivocal testimony that Terry told him that a small amount of 
tax, rather than no tax, would be due as a result of the 
conveyance.  Further, there is no issue of adequacy of 
consideration in this case, since the property was conveyed by 
deed of gift.  Therefore, Henderson's reliance on our holdings in 
Payne v. Simmons, 232 Va. 379, 350 S.E.2d 637 (1986), and Long v. 
Harrison, 134 Va. 424, 114 S.E. 656 (1922), is misplaced.  Those 
cases recognized the remedy of rescission for individuals 
suffering diminished mental capacity who receive grossly 
inadequate consideration for contracts, not deeds of gift.  
 
For these reasons, we will reverse the trial court's decree 
and enter final judgment in favor of Terry Henderson.  
 
Reversed and final judgment.