Daily Development for Friday, September 2, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

DEEDS; RESCISSION; SUPPORT AS CONSIDERATION:  Seller who transfers deed in exchange for promise of lifetime support  may not rescind the deed, even where the buyers admit they breached the promise,  where seller cannot  establish that the deed contained any condition subsequent that was violated by the buyer or  that any actual or constructive fraud had been committed. 

Fischer-Marsh v. Fischer, 822 N.E.2d 1055 (Ind. App. 2005)

In April 1996, plaintiff Roberta Fischer-Marsh ("Marsh") sold her farm and farmhouse to Scott and Rebecca Fischer ("Fischer"), her son and daughter-in-law.  In a letter to her other children, Marsh wrote that she would be able to remain in the farmhouse for the rest of her life, and that all utilities and medical and burial expenses would be paid by Fischer.  When Marsh wanted to have her boyfriend move into the farmhouse, Fischer objected and would not allow him to live there.  Marsh then stopped sleeping at the farmhouse, but still went there daily. 

Marsh then sued Fischer, claiming that Fischer violated the terms of the sale of the farm and farmhouse; Marsh sought rescission of the deed and ownership of the farm machinery and equipment.  Following a bench trial - during which an injunction was issued allowing Marsh to remain in the farmhouse and granting Fischer possession and control over the machinery and the farming operations - the trial court issued a judgment in Fischer's favor on the rescission question, but also making the injunction permanent in the interest of justice and of preserving the family relationship. 

Marsh's primary argument was that her lifetime residency of the farmhouse, the lifetime medical care, and the payment of other expenses were "conditions subsequent" to the sale contract which, when violated, defeat the contract.  The court, however, found that in most cases whereby the grantee of a deed is to care for and look after the grantor, the terms of that care are spelled out in the deed itself.  By explicitly including provisions for such care in a deed, there is more clearly a meeting of the minds between the parties, and the grantee takes the deed knowing full well what obligations are being assumed.  In this case, the deed from Marsh to Fischer contained no such express language; thus, Marsh had to demonstrate that there was some oral or other agreement sufficient to establish that there was a meeting of the minds. 

Although the Fischers admitted that they had agreed to provide Marsh with lifetime residency and to pay all of her expenses, the trial court found that Marsh failed to meet her burden of proof that a condition existed, and the appeals court agreed.

Because the Fischers did not "know full well" that they were taking the deed subject to certain conditions subsequent (which they were not), the trial court found that no violation had occurred.  Because the appeals court was not permitted to review the sufficiency of the evidence presented to the trial court, but rather could only pass muster on the legality of the trial court's decision, the appeals court held that the trial court's judgment contained supporting evidence and inferences in the record and thus had to be upheld.

Comment: In fact, there were two separate claims and separate treatments dancing around in the opinion, and it is difficult to pin either down independently, but the editor will try.

First, there is the claim, discussed above, that the Fishers agreed that the care promise would be a condition to their continued ownership of the farm.  Clearly the court rejected that claim.

But there is a second, more subtle issue - whether the acknowledged promise to care for Mrs. Marsh was in fact consideration for the deed to the farm, even if it was not labeled as a condition.  The court pointed out that the farm was worth $467,000 and the cash consideration that Fishers paid to Marsh was only $100,000.  It also pointed out that the support promise was made at the same time as the transfer.  Even though the Fishers denied that there was a quid pro quo - that the support promise was part of the consideration for the farm - it is a difficult conclusion to avoid.

But the trial court nevertheless did avoid the conclusion, and credited the Fishers’ claim that the support promise was not given in exchange for the farm.  The appellate court noted that, even if there had been no express condition, if the support promise was consideration for the farm transfer, the failure to provide such support would have been a “major breach” and the remedy of rescission of the original transaction, with an accounting for the farm profits during the period of occupancy, would have been appropriate.  Instead, the court, with some apparent reluctance, affirmed the trial court’s conclusion on summary judgment that Marsh had not established that the promise was in exchange for the farm.  

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