Title: Landmark Trust (USA), Inc. v. Goodhue

State: vermont

Issuer: Vermont Supreme Court

Document:

Ladmark Trust (USA), Inc. v. Goodhue (99-381); 172 Vt. 515; 782 A.2d 1219

[Filed 21-Sep-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 1999-381

Landmark Trust (USA), Inc.	                 Supreme Court
Scott Farm, Inc.
                                                 On Appeal from
     v.	                                         Windham Superior Court

John Goodhue	                                 January Term, 2001 
Mary H. Panzera
First Vermont Bank & Trust

John P. Wesley, J.

Peter W. Hall and Mary E. Grady of Reiber, Kenlan, Schwiebert, Hall & 
  Facey, P.C., Rutland, for Plaintiffs-Appellees.

James B. Anderson and John A. Serafino of Ryan Smith & Carbine, Ltd., Rutland, 
  fo Defendant-Appellant Goodhue.

Hanson S. Reynolds of Rackemann, Sawyer & Brewster, Boston, Massachusetts, and 
  Timothy W. Caldwell, Lyme, New Hampshire, for Defendant-Appellant Panzera.

PRESENT:  Dooley, Morse, Johnson and Skoglund, JJ., and Cheever, Supr. J., 
          Specially Assigned

       JOHNSON, J.   This dispute arose from the gift by Fred Holbrook, a
  noted Vermont apple  orchardist, of his farm to plaintiffs Scott Farm,
  Inc., and Landmark Trust (USA), Inc., a land  preservation organization. 
  Defendants John Goodhue, a fourth cousin and guardian for Holbrook,   and
  Mary Panzera, Holbrook's sister, sought to challenge the transfer of Scott
  Farm to plaintiffs on  the ground that Holbrook was not competent at the
  time of the transfer in June, 1995.  Plaintiffs 

 

  brought a declaratory judgment action to determine the validity of the
  transfer.  After a bench trial,  the Windham Superior Court ruled that the
  transfer was valid.  We affirm. 

       Fred Holbrook is a life long bachelor who has lived most of his life
  on Scott Farm in  Dummerston, Vermont.  Holbrook had operated Scott Farm as
  an apple orchard since the early 1950s  and continued to work on the farm
  until the fall of 1995.  Holbrook was the sole shareholder in Scott  Farm,
  Inc., and was keenly interested in preserving the farm as an apple orchard. 
  The Landmark  Trust (USA), Inc. is a non-profit organization dedicated to
  land preservation.  Its headquarters are  also located in Dummerston and
  the president of the organization is David Tansey.  Landmark is a 
  subsidiary of the Landmark Trust, an historical preservation society
  located in Great Britain. 	

       Holbrook was the majority stock holder of the farm, but shared
  ownership with his mother  Anna Holbrook, and sister, Mary Panzera.  Anna
  Holbrook died in 1993 and left the family home to  her two children, Fred
  and Mary.  Fred exchanged his half interest in the house with his sister
  Mary  for the remaining shares of stock.  The transaction made Holbrook the
  sole shareholder in August  1994.  The monetary value of the half interest
  in the house was considerably greater than the value of  the shares, but
  the consolidation of stock allowed Holbrook to carry out his intent to
  preserve the  farm.

       On June 23, 1995, Holbrook executed a deed of gift donating the stock
  of Scott Farm to  Landmark.   The value of the farm was approximately $1.4
  million and the gift to Landmark included  $120,000 operating capital in
  addition to land, buildings and equipment comprising the farm.  As  part of
  the agreement, Holbrook retained the right to use his residence for his
  lifetime, rent free, and  to claim any personal property within one year
  that was stored on the farm.  At the closing, Holbrook  received a $45,000
  dividend from the farm's cash account.

 

       In July 1995, Holbrook completed his estate plan by executing a will
  and inter vivos trust.   Included in this instrument was a $10,000 bequest
  to his sister, Mary Panzera and a residuary clause  that gave the trustees
  the right to decide which charities would receive the remainder of
  Holbrook's  estate.  Holbrook was unsatisfied with these aspects of his
  will and trust as he had repeatedly stated  that he did not want his sister
  to inherit from him.  In August 1995 Holbrook's will and trust were 
  amended to omit any bequest to his sister and redirect the residuary of
  Holbrook's estate to  Landmark.

       In the fall of 1995, Fred Holbrook's mental acuity began to
  deteriorate.  Although several of  Holbrook's advisors and associates had
  previously noticed episodes of confusion, the fall of 1995  marked a
  substantial and rapid decline in Holbrook's condition.  Holbrook began to
  have difficulty  understanding financial matters and the arrangement with
  Landmark.  He also experienced confusion  in performing errands such as
  picking up a prescription at the pharmacy.  Holbrook was unable to 
  recognize his attorney, Ken Fisher, during a chance meeting on the streets
  of Brattleboro.   Additionally, Holbrook began to lose interest in the day
  to day workings of Scott Farm, although in  the middle of harvest season.   

       At the time that Holbrook began experiencing more difficulties with
  his cognitive  functioning, John Goodhue, Holbrook's fourth cousin from
  Peducah, Kentucky arrived at the farm  and began living in Holbrook's
  house.  Goodhue, who did not yet know about the gift to Landmark, 
  expressed an interest in acquiring Scott Farm.  In December 1995, Goodhue
  and Panzera petitioned  the probate court to have Holbrook placed under
  guardianship.  Goodhue was appointed Holbrook's  involuntary guardian in
  March 1996.  Anticipating a challenge to the validity of the transfers, 

 

  Landmark filed a declaratory judgment action against Goodhue and Panzera,
  and defendants counter-claimed. 

       The trial court held a six day trial at which extensive evidence was
  heard on the issue of  Holbrook's competence at the time he executed the
  deed, the trust and will, and the trust  amendments.   The court held that
  all transfers were valid.  The court's findings of fact were  extremely
  thorough, encompassing 240 separate findings over 75 pages of text.  On
  balance, the  court found Landmark's account of the events and of
  Holbrook's mental state credible.  The court  acknowledged that at the time
  of the gifts, Holbrook was displaying some of the effects of  Alzheimer's
  disease, which might call his competence into question, but that Holbrook
  was  sufficiently cognizant to appreciate the nature and effect of his
  gifts.  The court found that giving  Scott Farm to Landmark was consistent
  with the preservation goals that Holbrook had clearly  expressed for years.
  This appeal followed.

       Defendants' principal claim on appeal is that the court erred in
  concluding that Fred Holbrook  was competent at any time relevant to the
  transfer of his interest in Scott Farm.  First, defendants  argue that the
  court applied the wrong standard for competence by which it determined that
  the  transfers were valid.  Second, defendants raise numerous challenges to
  the court's findings of fact.   Defendants allege that the court's findings
  are erroneous because of contrary or modifying evidence.   They argue that
  the court should have weighed certain evidence about Holbrook's mental
  state and  competence more heavily than other evidence on the same issue. 
  According to defendants' view of  the evidence, Holbrook was not competent
  to execute the disputed transfers.  Additionally,  defendants claim that
  the court erred in relying on medical conclusions about the stages of 
  Alzheimer's disease detailed in  O'Brien v. Belsma,