Ayers v. Mosby

Present: All the Justices

CLAUDE A. AYERS, ET AL.
OPINION BY JUSTICE A. CHRISTIAN COMPTON
v. Record No. 972356 September 18, 1998

GARLAND E. MOSBY

FROM THE CIRCUIT COURT OF HENRICO COUNTY
George F. Tidey, Judge

In this chancery suit, there is an effort to rescind a deed

upon the grounds of mutual mistake of fact or coercion. On

appeal, we consider whether the chancellor erred in sustaining

defendant's motion to strike the evidence following presentation

of the plaintiffs' case-in-chief during an ore tenus hearing.

The facts are virtually undisputed; the controversy is over

the inferences to be drawn from the facts. The chronology is

important, as is the identity of the players in this narrative.

The ownership of residential property located in Henrico

County is at issue. Warner M. Mosby and Mary M. Mosby, his

wife, had acquired the property in 1968 and resided there.

In 1990, the Mosbys executed mutual wills. Each will

devised the property "in equal shares" to William Wray Matthews

and appellee Garland Eugeen Mosby, if they survived the

testators. Matthews is Mary Mosby's son and has suffered from

many health problems all his life. Mosby, the defendant below,

is her stepson. The wills nominated defendant as executor.
 Warner Mosby died in November 1994 and fee simple title to

the property vested in his widow. In January 1995, the widow

executed the instrument in question. By "Deed of Gift," she

conveyed the property in fee simple to defendant.

In September 1995, Mary Mosby executed another will. She

purported to devise a life estate in the property to her son, if

he survived her, with remainder to Sidney Alvis Matthews, her

brother, and his wife. She nominated her brother as executor of

this will.

In August 1996, Mary Mosby executed yet another will. She

purported to devise the property "fifty percent . . . in fee

simple absolute" to her son and "the remaining fifty percent

. . . in equal shares and in fee simple absolute" to appellants

Claude A. Ayers, Jr., and Rebecca P. Ayers. She nominated the

Ayerses, who were her neighbors, as executors of this will.

In October 1996, Mary Mosby died at age 73. The Ayerses

qualified as executors of the decedent's estate, and filed the

present suit in their representative capacity against defendant.

In a bill of complaint, the plaintiffs alleged decedent

"discovered" prior to her death "that a Deed of Gift bearing her

signature," and "ostensibly" conveying the fee simple interest

in her property to defendant, had been recorded. They asserted

that the alleged conveyance "was the result of the Defendant's

coercion" and that the deed was executed "by mistake." The

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plaintiffs sought rescission of the deed, reconveyance of the

property, attorney's fees, and costs. Answering the bill of

complaint, defendant filed a general denial that plaintiffs were

entitled to the relief sought.

Following discovery, the ore tenus hearing was held in May

1997, at which the plaintiffs' case-in-chief consisted of

testimony by an attorney who drew the decedent's second will and

by decedent's brother. The plaintiffs also presented

defendant's answers to interrogatories, defendant's responses to

requests for admissions, and excerpts from defendant's March

1997 discovery deposition.

At the conclusion of this evidence, the chancellor

sustained defendant's motion to strike. The court ruled

plaintiffs failed to establish by clear and convincing evidence

they were entitled to rescission of the deed. We awarded

plaintiffs an appeal from the August 1997 final decree

dismissing the bill of complaint.

Summarized in the light most favorable to the plaintiffs,

their evidence showed that during Warner Mosby's 1994 "final

illness," when he was hospitalized in the Richmond area, a

question arose whether he could remain in the hospital for

necessary treatment because the federal Medicare program would

no longer fund the hospitalization. "[F]earing the worst," a

hospital administrator "arranged a meeting between Mary Mosby

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and a social worker to discuss the pros and cons of [a] nursing

home alternative." The decedent asked defendant to attend the

meeting.

Upon defendant's arrival at the hospital from his Urbanna

home, decedent advised him she already had met with the social

worker. The decedent had learned, according to the evidence,

that the Medicare program would fund only a small portion of

nursing home charges and that a patient could become eligible

for substantial funding under the federal Medicaid program only

after the patient's assets had been "exhausted."

The decedent then asked defendant "to transfer the house,"

which "was her single largest asset," and a certificate of

deposit to his "name" so that defendant could "look out for her

needs in the event she should be confined to a nursing home

later in life." Defendant, a partner in a firm "which manages

medical practices," advised decedent, who was in "bad health,"

to arrange for her son, William Matthews, to "move in with her"

to reduce the living expenses of both.

The week following Warner Mosby's funeral, defendant had

the deed of gift drawn by a Saluda attorney. During the first

week of January 1995, defendant accompanied the decedent to a

Richmond-area bank. There, the certificate of deposit was

transferred to defendant and the deed that decedent had executed

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was acknowledged before a notary public. On February 7, 1995,

defendant recorded the deed.

Defendant's "understanding of the transfer that took place"

was that he "was care taker of those assets to take care [of]

Mary, and once she was gone that I would divide those equally

with Billy," decedent's son. Defendant stated he would decide

at decedent's death "what to do with the property" by referring

to the 1990 mutual will.

The decedent continued to live in the home on the property.

Her brother, a North Carolina resident, furnished her with

financial advice. Even though defendant was executor of his

father's estate, the decedent "kept herself busy attending to

the settlement of [Warner Mosby's] affairs," advising defendant

frequently "as to where things stood."

In July 1995, decedent had a "heat stroke," followed later

by "ministrokes," which caused her to be "confused" at times.

In September 1995, the brother accompanied the decedent to the

office of an attorney to draw a will that omitted defendant as a

beneficiary. When asked why she was "deleting" defendant from

her will, she told her brother that defendant "doesn't do a damn

thing for me . . . I can't get him on the phone." Other

evidence offered by the plaintiffs showed decedent told

defendant during the Fall of 1995 that "you don't have to visit

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me. You have your mother in the nursing home, you live in

Urbanna now."

Following execution of this second will, decedent asked her

brother to "look through my papers" to determine if they "are in

order." Among the documents, the brother found the deed in

question. According to the brother, "I asked her when did she

give away her house. She said, I haven't given away my house.

I said, well, this paper here says you have. I said, that would

make all these Wills void and null." The brother notified the

attorney who had drawn the second will of discovery of the deed.

In January 1996, the attorney prepared and filed a bill of

complaint styled "Mary M. Mosby vs. Garland E. Mosby" alleging

fraud, misrepresentation, failure of consideration, and unjust

enrichment. The subpoena in chancery never was served. Counsel

testified that during discussions with his client, she

"confirmed" the signature on the deed was hers, although "she

never remembered signing the deed," and told him she "never had

any intention of transferring her property."

In awarding this appeal, the Court framed the issue to be

debated. It is whether the trial court erred in finding

plaintiffs failed to present clear and convincing evidence that

decedent signed the deed as the result of mutual mistake of fact

or coercion. Arguing the affirmative, plaintiffs contend the

"heart" of their appeal is that the evidence clearly established

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decedent did not intend to transfer fee simple ownership of the

property to defendant. Plaintiffs point out that "at every

significant point in the course of this lawsuit, the Defendant

himself admits that he was not the fee simple owner of the

Property and that it was not his stepmother's intent to transfer

fee simple ownership of her home."

Elaborating, plaintiffs say their allegation of mistake was

established by the following evidence: The deed was prepared by

defendant's attorney; the decedent never had possession of the

deed until after defendant recorded it; the decedent continued

to pay the home mortgage, real estate taxes, and insurance on

the property; the decedent remained in possession of the

property; she continued to devise the property as part of her

estate planning; and decedent, upon learning of the deed's

existence, not only denied "giving" the property to defendant,

but also filed suit during her lifetime to have the deed

rescinded. This evidence, coupled with defendant's testimony

that he was only a "care taker" of the property, shows,

according to plaintiffs, there was no present intent when the

deed was executed to transfer fee simple ownership to defendant.

They say: "The deed of gift, by Defendant's own sworn

testimony, therefore, contains a mistake."

In support of their charge that defendant coerced decedent

to sign the deed, plaintiffs argue defendant acted in a

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fiduciary capacity to his stepmother. Thus, according to

plaintiffs, the very nature of the transaction furnishes the

most satisfactory proof of "fraud" and outweighs evidence to the

contrary. Plaintiffs exclaim: "It simply defies rational

explanation that the Decedent would convey her single largest

asset solely to a step-son and not provide at all for her own

natural son, especially when the decedent's estate planning

evidenced a consistent intent to provide for her natural son."

We reject plaintiffs' contentions. In order to withstand a

motion to strike, the plaintiffs had the burden of establishing

prima facie by clear and convincing evidence that the decedent

executed the deed as a result of mutual mistake of fact or

coercion. See Langman v. Alumni Ass'n of the Univ. of Virginia,

247 Va. 491, 502-04, 442 S.E.2d 669, 676-77 (1994); Carter v.

Carter, 223 Va. 505, 509, 291 S.E.2d 218, 221 (1982).

As pertinent here, the rule is that a trial court under its

equitable jurisdiction may give relief on the ground of mistake

in connection with a written instrument if "there has been an

innocent omission or insertion of a material stipulation,

contrary to the intention of both parties, and under a mutual

mistake." Wilkinson v. Dorsey, 112 Va. 859, 869, 72 S.E. 676,

680 (1911).

In the present case, there has been no mutual mistake

warranting rescission of the deed. To carry out her plan to

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dispose of her assets in order to qualify for Medicaid funding,

the decedent intentionally transferred the fee simple interest

in her real property to defendant so that he could "take care"

of her. There was no mistake on her part; she accomplished just

what she intended, that is, to liquidate her assets but have

them remain available for support during her life. The

defendant took delivery of the deed and recorded it, acting upon

his understanding that he would be "care taker" of the property.

There was no mistake on his part; he accomplished just what he

intended, that is, to hold title to the property in trust for

her life. Thus, paraphrasing Wilkinson, there was no omission

or insertion, innocent or otherwise, of a material stipulation

contrary to the intention of the parties under a mutual mistake.

Decedent's statements made months after the deed was

executed that she did not intend to transfer fee simple

ownership to defendant are belied by her execution,

acknowledgement, and delivery of the instrument. In the absence

of fraud, duress, or mutual mistake, a person having the

capacity to understand a written instrument who reads it, or

without reading it or having it read to her, signs it, is bound

by her signature. Metro Realty of Tidewater, Inc. v. Woolard,

223 Va. 92, 99, 286 S.E.2d 197, 200 (1982). See Ashby v.

Dumouchelle, 185 Va. 724, 733, 40 S.E.2d 493, 497 (1946). Thus,

her personal representatives cannot now successfully rely on her

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oral statements to nullify the deed's provisions and to support

rescission of the written instrument.

Parenthetically, we note that on brief and at the bar

during argument of the appeal, counsel for defendant stated that

while the foregoing facts "do not support voiding of the deed,"

nonetheless the facts "may" be the basis for enforcement of a

"trust created by parol" or the basis for otherwise reforming

the deed to reflect the intent expressed in the mutual will,

that is, to benefit the decedent for life, and defendant and

William Matthews thereafter. See Hanson v. Harding, 245 Va.

424, 427-28, 429 S.E.2d 20, 22 (1993); Malbon v. Davis, 185 Va.

748, 757, 40 S.E.2d 183, 188 (1946). This type of relief cannot

be accomplished in the present suit, however, because

beneficiary William Matthews is not a party.

Finally, there is not even a hint that defendant coerced

decedent into executing the deed. There is no evidence of

duress or conduct by defendant that destroyed decedent's free

agency. See Martin v. Phillips, 235 Va. 523, 527, 369 S.E.2d

397, 399 (1988). Under these facts, defendant did not stand in

a fiduciary capacity to his stepmother. See Nuckols v. Nuckols,

228 Va. 25, 36-37, 320 S.E.2d 734, 740 (1984). Indeed, she

initiated his involvement in her plan to assure eligibility for

Medicaid funding and cooperated with its fulfillment by

voluntarily accompanying him for the signing and acknowledgement

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of the deed. These events transpired when decedent had the

capacity to understand the instrument and before she began

having a series of strokes, which commenced six months after she

executed the deed, rendering her "confused" at times.

Consequently, we hold the chancellor did not err in

sustaining defendant's motion to strike the plaintiffs' evidence

and in entering summary judgment for the defendant. Thus, the

final decree dismissing the bill of complaint will be

Affirmed.

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