Opinion ID: 1059070
Heading Depth: 2
Heading Rank: 2

Heading: Mental Status and Consideration

Text: The chancellor also found that Mrs. Beckner was entitled to a presumption of undue influence because she suffered from great weakness of mind, and that the consideration she received was grossly inadequate and the transaction occurred under suspicious circumstances. Again, although the chancellor did not identify the evidence upon which he based these findings, Mrs. Beckner points to a number of factors which she asserts support the chancellor's findings. Beginning with the adequacy of the consideration, Mrs. Beckner first claims that under the original or amended lease, the base rent was significantly below prevailing market rates. Mrs. Beckner claimed that the rental value of the property had risen dramatically and, according to her expert witness, the current fair market rental value would be between approximately $5,000 and $8,000 a month. However, Mrs. Beckner's expert did not consider the impact the outstanding lease would have on the fair market rental value of the property. The chancellor, while refusing to strike the testimony of this expert, considered it weightless. We agree with the chancellor that evidence of current fair market rental value without consideration of the existence of the lease or its conditions is not probative of whether the consideration for the amendment to the lease is grossly inadequate. Next, Mrs. Beckner argues that the consideration was grossly inadequate because the increase in base rent contained in the amendment did not significantly increase the annual amount she received compared to the aggregate amount of base and percentage rent she received under the lease before the amendment. The base rent in the amended lease produced only $80 a month more than she received in 2001 from the combined base and percentage rents, thereby making the consideration received grossly inadequate, according to Mrs. Beckner. We disagree. The increase in the base rate was in an amount Mrs. Beckner specifically requested. Over the likely lifetime of the amended lease, Mrs. Beckner would receive $310,800 in base rent, $125,160 more than she would have received in base rent without the amendment. The record also shows that the percentage rent in 2001 declined from the prior year. There is no evidence in the record that the value of percentage rent would remain at 2001 levels or would increase. Although Mrs. Beckner labels as speculative the suggestion that Friendly's would or could close the retail store, thereby discontinuing the obligation to pay percentage rent, the uncontradicted evidence was that Friendly's had decided to close the store and that Mrs. Beckner was aware of that decision. Mrs. Beckner testified that she understood that, if the store closed, she would no longer receive any percentage rent. Thus, the increase in base rent was not grossly inadequate in light of the additional income it would produce and the uncertainty of the amount or continuation of revenue from the percentage rent. Mrs. Beckner next argues that the possibility that she might own a bank building valued at $800,000 at the end of the lease period should not be included as part of the consideration because it also was speculative. Here again the uncontradicted evidence was that, if the lease was amended, Riggs planned to build such a building. This potential asset was a known part of the business transaction and, in the absence of fraud, may be considered as part of the benefit Mrs. Beckner received from agreeing to the lease amendment. Finally, Mrs. Beckner asserts that the appropriate comparison of value exchanged is to compare the additional $80 per month Mrs. Beckner would receive under the amendment with the $800,000 Friendly's would receive for the assignment of the lease to Riggs. This disparity, she maintains, shows that the consideration she received was grossly inadequate. The amount Friendly's would receive from Riggs to assign the lease is irrelevant to the adequacy of the consideration Mrs. Beckner received. Mrs. Beckner could not recover any amount from Riggs because she could not assign the lease to Riggs. The lease had, at a minimum, four years remaining, with the potential to extend, if the tenant so desired, to fourteen years, and contained no provisions for termination by the landlord other than for nonpayment of rent or insolvency of the tenant. Therefore, the value of Mrs. Beckner's consideration must be measured not simply in the amount of increase in base rent but also in light of the rights that she possessed regarding the property and her options at the time of the amendment. Consideration is grossly inadequate when the `inequality [is] so strong, gross and manifest that it must be impossible to state it to a [person] of common sense without producing an exclamation at the inequality of it ....' Jackson, 193 Va. at 741, 71 S.E.2d at 185 (quoting Gwynne v. Heaton, 1 Bro. Ch. 1, 9, 28 Eng. Rep. 949 (1778)). That others could have bargained for a higher base rent or secured more favorable terms for the execution of the lease amendment does not affect the determination of grossly inadequate consideration. In this case, by executing the amendment to the lease, Mrs. Beckner received an annual increase of $8,940 in base rent regardless of whether the lease was assigned to another party and whether any business was operating on the property. She also acquired the possibility of owning the new bank building at the end of the lease. This record does not support a finding that the consideration Mrs. Beckner received was grossly inadequate. Mrs. Beckner also asserts the chancellor was justified in finding that the transaction occurred under suspicious circumstances because Hughes did not further investigate whether Mrs. Beckner was represented by counsel following Christopherson's March 8 letter and because Hughes drafted a letter for Mrs. Beckner's signature stating that Mrs. Beckner wanted to deal with Hughes directly. As noted above, the record clearly shows that Mrs. Beckner herself initiated all but two of the contacts with Hughes. Mrs. Beckner's active participation in the negotiations regarding the lease amendment belies the existence of circumstances that would give rise to a level of suspicion sufficient to support the presumption of undue influence and rescission of the amendment. We need not address the chancellor's finding that Mrs. Beckner suffered from great weakness of mind because even assuming that the finding is supported by the record, weakness of mind alone will not entitle Mrs. Beckner to rescission. McGrue, 202 Va. at 426, 117 S.E.2d at 707; Fishburne, 84 Va. at 111, 4 S.E. at 582. Because the record is insufficient to support the chancellor's findings that Mrs. Beckner had a confidential relationship with Hughes and that the consideration she received was grossly inadequate or the transaction occurred under suspicious circumstances, Mrs. Beckner was not entitled to a presumption of undue influence. Therefore, the chancellor erred in rendering judgment in favor of Mrs. Beckner on Count IV, Undue Influence.