Opinion ID: 2218425
Heading Depth: 1
Heading Rank: 2

Heading: Enforceability of the family agreement.

Text: We have upheld the use of family agreements for the distribution of the property of a decedent. Miller v. Thode, 372 N.W.2d 459 (S.D.1985); Neuharth v. Brunz, 85 S.D. 267, 181 N.W.2d 92 (1970); Moncur v. Jones, 72 S.D. 202, 31 N.W.2d 759 (1948); In Re Vasgaard's Estate, 62 S.D. 421, 253 N.W. 453 (1934). Such agreements are favored where disputes arise in the settlement of a decedent's estate. Neuharth, supra ; Vasgaard, supra . As stated in Vasgaard: [I]t is held that family agreements relative to the distribution of property of a decedent among the persons thereto entitled are not contrary to public policy and if fairly made are binding and enforceable according to their terms; and indeed it is frequently said that the law looks with particular favor upon such family compromises. To that view this court is already committed and has refused to recede therefrom. Id., 253 N.W. at 456. However, family agreements are subject to the rules of contract formation and may be rescinded if consent thereto is improperly obtained. The trial court found that this family agreement was unenforceable because of a unilateral mistake of law. SDCL 53-4-10 provides in part: A mistake of law in relation to consent to contract constitutes a mistake resulting in voidable consent only when it arises from: . . . . . (2) A misapprehension of the law by one party of which the others are aware at the time of contracting, but which they do not rectify. The statute sets out two elements necessary to make a contract voidable for a unilateral mistake of law. The party seeking to rescind the contract must show 1) that the party was under a misapprehension of the law at the time of entering into the contract; and 2) the other parties were aware of this misapprehension and did not rectify it. The trial court concluded that Amanda did not know the legal effect of joint tenancy with right of survivorship. The record shows there was no discussion that the accounts were held in joint tenancy with right of survivorship during the negotiations between Amanda, Lloyd, and Lorraine. The only legal advice Amanda received prior to signing the agreement was from Attorney Hyde. Hyde, Amanda, and Merle each testified that Hyde did not advise Amanda concerning the effect of joint tenancy. The notes Hyde made during the conference support this testimony. The court found Hyde did not know that the accounts were held in joint tenancy when he spoke with Amanda and did not inform her of the effect of joint tenancy. The court also found that the first Amanda knew the jointly held property would pass outside the will was when she spoke to her sister several weeks after signing the family agreement. The trial court must be given deference to determine the credibility of the witnesses and we may not reverse findings of fact unless they are clearly erroneous. In Re Estate of Althen, 429 N.W.2d 745 (S.D.1988). These findings are supported by the evidence and the trial court properly concluded that Amanda was acting under a misapprehension of the law. The court also found that Lloyd and Lorraine were aware of Amanda's mistake. Lloyd claims that if Amanda was operating under a misapprehension of the law he was not aware of it. Lloyd testified at trial that he was unaware of Amanda's mistake at the time of making the agreement. He claims that he believed Amanda was aware of her rights because she received legal advice prior to signing the agreement. The trial court rejected Lloyd's testimony and concluded that he was aware of Amanda's mistake and did not attempt to rectify it. Lloyd was fully advised by Diemert of the limited effect the will had on jointly held property. There is no testimony that Lloyd ever discussed with Amanda her survivorship rights in the joint tenancy property. In fact, there was testimony that at one point Lorraine began to mention the joint accounts, but was quickly cut off by Lloyd. It is undisputed that Lloyd knew, absent an agreement, he could not obtain any of the joint tenancy property without lengthy litigation. Knowing this, he hurried Amanda to sign the agreement. It would seem strange that Amanda would be willing to sign an agreement giving up one-half of the joint tenancy accounts if she had any idea she was entitled to all of them. It is clear that had Amanda not operated under the mistake of law she would not have entered into the agreement. Under these circumstances, the trial court properly concluded that Lloyd was aware of the mistake and did not attempt to correct it. Accordingly, there was no meeting of the minds and the agreement was voidable under SDCL 53-4-10(2). The trial court also concluded that the agreement was voidable for mistake of fact. Having determined that the agreement is voidable for mistake of law, we deem it unnecessary to discuss whether there was an unilateral mistake of fact.