Court Opinion

ID: 5151687
Source: CourtListenerOpinion
Date Created: 2022-01-02 01:58:32.338605+00
Date Added: 2024-06-11T08:25:05.424511
License: Public Domain

SIMMS, Justice
(dissenting):
Brown, grantor in the deed sought to be cancelled, created a revocable trust. Lambdin was trustee. While acting in the capacity of trustee and apparently at the request of Brown, Lambdin discussed Brown’s estate tax situation with a tax accountant and attorney. Lambdin then recommended to Brown the trust be revoked and 400 acres of valuable Oklahoma land be deeded to Lambdin and Lambdin’s sister.
It is undisputed that at the time of the revocation of the trust and the execution of the purported deed, Brown was nearly deaf; had a “history of bilateral cataracts with removal, and extremely thick lenses to aid in his vision”; had been the ward of Lambdin for approximately five years; and, Brown was 88 years, 5 months, 1 week, of age.
The existence of a fiduciary relationship between H. Leslie Brown, grantor in the general warranty deed in question, and Eugene Lambdin, one of two grantees, is admitted.
It is further admitted that grantees paid no monies in consideration for the deed.
While the trial judge, and the majority of this Court, have attempted to examine the entire transaction “with suspicion and severe scrutiny”, I cannot agree with the conclusion reached by the majority. I feel that while the law requires careful scrutiny of such a transaction, because of the age, physical condition, and fiduciary relationship existing in this case, we must undertake a microscopic scrutiny under the guidelines hereinafter set forth.
The majority cites 90 C.J.S. Trusts § 250, which states:
“On the other hand, while the law exacts the utmost good faith and fair dealing, *1393* * *, the mere suggestion of the fiduciary relationship does not, of itself, invalidate the transaction and the beneficiary is not entitled to rescind the transaction in the absence of unfairness or fraud. * * *” (E.A.)
I have no quarrel with the generalization taken from Corpus Juris Secundum, however, legal inquiry into transactions arising between persons holding a fiduciary relationship is more exacting by reason of case law.
In 1926, this Court in Kernel v. Murrell, 122 Okl. 22, 250 P. 420, held:
“The law looks with suspicion upon transactions between trustees and beneficiaries, and, when the cestui que trust sells trust property to the trustee, the burden is placed upon the grantee or trustee to whom such transfer is made to show that the grantor or cestue que trust was in possession of full information and acted upon her own volition or independent advice, and free from all influence of the grantee or trustee to whom such transfer is made.” (E.A.)
In its examination of a transaction involving fiduciaries, it is not necessary for the Court to search for affirmative evidence of fraud or undue influence. Pome-roy on Equity Jurisprudence (5th Ed.) § 955, says:
“Nor does undue influence form a necessary part of the circumstances, except so far as undue influence, or rather the ability to exercise undue influence is implied in the very conception of a fiduciary relation, in the position of superiority occupied by one of the parties over the other, contained in the very definition of that relation. This is a most important statement, not a mere verbal criticism. Nothing can tend more to produce confusion and inaccuracy in the discussion of the subject than the treatment of actual undue influence and fiduciary relations as though they constituted one and the same doctrine.”
The Pomeroy rationale was followed in Blanton v. Blanton, 276 Ala. 681, 166 So.2d 409 (1964):
“This court has further held that the dominant party in a confidential relationship has a duty to protect the interest of the other party and the burden of proving that he had in good faith exercised that duty is on the dominant party. This view was initially expressed in Bancroft v. Otis, 91 Ala. 279, 8 So. 286 * * *. The rule there stated was to the effect that undue influence with respect to transactions inter vivos may exist without either coercion or fraud. It may result entirely from the confidential relationship, without activity in the direction of either coercion or fraud on the part of the beneficiary occupying the position of dominant influence. It is upon him not only to abstain from deceit and duress, but to affirmatively guard the interest of the weaker party, so that their dealings may be at arm’s length. To presume undue influence in such a case is not to presume fraud or coercion, or any act which is malicious in se, but simply the continuance of the influence which naturally inheres in and attaches to the relation itself.”
“ * * * It remains but for us to consider whether or not the weaker party had such disinterested, independent and competent advice as to rebut the presumption that the transaction was the result of undue influence on the part of the appellant.”
It is, therefore, established that a rebut-table presumption of undue influence arises by a grantor transferring property to a grantee, without consideration, if the grantee holds a fiduciary relationship with the grantor. We turn our attention to the necessity of the grantor actively obtaining “independent advice”, as opposed to the grantor’s “opportunity for independent advice”, in order for the fiduciary-grantee to ■overcome the rebuttable presumption.
*1394We believe the better rule to be set forth in McFail v. Braden, 19 Ill.2d 108, 166 N.E.2d 46 (1960):
“As pointed out in the case last cited, important factors in determining whether a transaction is fair include a showing by the fiduciary (1) that he made a full and frank disclosure of all the relevant information that he had; (2) that the consideration was adequate; and (3) that the principle had independent advice before completing the transaction.”
McFail, supra, involved an attorney purchasing real éstate from an 83 year old client, for what was alleged to be insufficient consideration. Quoting further from McFail:
“The evidence shows, too, without contradiction, that Ida Chandler was completely without independent counsel during the transaction with her attorney. Considering her age, her physical condition and the relative experience and education of the parties, the transaction could well be said to be unfair and presumptively fraudulent on this basis alone.”
The Supreme Court of South Dakota in Hyde v. Hyde, 78 S.D. 176, 99 N.W.2d 788, 794, recognized that in some jurisdictions proof of independent advice is needed to • overcome the presumption of undue influence where a transaction involving a gift by a principal to a trustee is involved:
“It may be noted that in some jurisdictions it is an established principle that persons standing in a confidential relation toward others cannot entitle themselves to hold benefits unless they show to the satisfaction of the court that the persons conferring the benefits had competent and independent advice.”
The scope, type, and necessity for independent advice, in transactions involving a fiduciary relationship, was clearly spelled out in Mahunda v. Thomas, 55 Tenn.App. 470, 402 S.W.2d 485 :
“The rule as to independent advice, as stated by Felts, J., speaking for this Court, Middle Section, in Roberts v. Chase [25 Tenn.App. 636, 166 S.W.2d 641], is as follows:
‘The circumstances of some transactions are such that the only way in which the fiduciary can rebut the presumption of invalidity is by showing that his principle had the benefit of independent advice, (citing cases)’
“In Turner v. Leathers, the rule is stated as follows:
‘The rule of independent advice means that the advisor must not only be competent but independent.
‘Proper independent advice in this connection means that the donor had the (preliminary) benefit of conferring fully and privately upon the subject of his intended gift with a person who was not only competent to inform him correctly as to its legal effect, but who was furthermore so disassociated from the interest of the donee as to be in a position to advise with the donor impartially and confidentially as to the consequences to himself of his proposed benefactions.’ ” Turner v. Leathers, 191 Tenn. 292, 297-298, 232 S.W.2d 269, 271.
Necessity of “independent advice” as that term has been used by appellate courts in other jurisdictions, was developed by this Court in White v. Palmer, Okl., 498 P.2d 1401 (1971) wherein it was held:
“When the legal presumption of undue influence has arisen by showing confidential relations, whether iw disposition of property inter vivos or by will, the burden of proof is upon the party seeking to take the benefit of such disposition to rebut the -resumption attaching thereto by showing either a severance of the confidential relations, or that the party making the disposition had competent and independent advice in regard thereto. Hunter v. Battiest, supra [79 Okl. 248, 192 P. 575], Independent advice has been held to mean the testator had the benefit of conferring fully and privately about the conseq%t.ences of his intended will with a person who was not *1395only competent on such matters, but who was so disassociated from the interest of the beneficiary named there as to be in a position to advise with the testator impartially and confidentially. Anderson v. Davis, 208 Okl. 477, 256 P.2d 1099.”
The only testimony offered to show the grantor received the essential independent advice necessary to sustain the validity of the deed was that of Mr. Donald Eugene Lambdin, an attorney of Wichita, Kansas, who is distantly related to both Brown and the Lambdins. Attorney Lambdin testified on direct examination at trial as follows:
“Q. In connection with those deeds, prior to the execution, did you ever consult with H. Leslie Brown regarding the effect of those deeds?
A. No, I did not. He was in my office with Mr. Lambdin, but I had no consultation with him concerning the effect of signing the deeds and gave him no advice.
Q. From whom did you get the information which led to the drawing of the amendment and the deeds ?
A. From Mr. Gene Lambdin, it was at his request.
Q. I will ask you whether or not he was present with Mr. Brown at all times during the preparation, if he actually came, if Mr. Brown actually came, or at the time of the signing?
A. They were both present at the time of the signing and I think there was one previous time that they may have been in the office together, but they were together.”
On cross-examination, Attorney Lambdin testified as follows:
“Q. Well, you did, at the time of this meeting when the documents were signed, you did ask some general questions for the purpose of determining whether he knew what he • was doing and whether it was all-right with him? Isn't that right?
A. Yes, whether he knew what he was signing.
Q. Let’s see if you can just answer my questions. Confine yourself, please, to answering my questions. At the time these documents were executed in your office with Mr. Brown present, you did ask him some general questions of determining whether he knew what he was doing and whether it was allright with him to execute them? Is that true or false?
A. That is correct.
Q. That was the purpose you had in mind for doing it ? Right ?
A. That is true.
Q. That was not the first time you had acted as a lawyer for the execution of documents of the transaction of business affairs under circumstances where you felt it was necessary or appropriate to make such general inquiries ?
A. That’s right. That is true.”
I would submit that the propounding of general questions by the then present attorney for the obvious purpose of ascertaining the mental capacity of the grantor to execute the questioned deed falls far short of the required independent advice which is enunciated in White, supra.
Because of Brown’s advanced age, his physical infirmities, and because of the lengthy fiduciary relationship enjoyed by Lambdin with Brown, in “scrutinizing” the transaction wherein Brown conveyed property to Lambdin and Lambdin’s sister, I would legally presume undue influence by reason of the confidential relationship, and require the grantee to produce evidence of “independent advice” to rebut this presumption. Absent evidence of “independent advice”, I would invalidate the deed in question.
I, therefore, respectfully dissent to the majority opinion in this case.
I have been authorized to state that Justice BERRY joins in this dissent.