Arnold v. Anders

Citations: 240 Ark. 1; 397 S.W.2d 798; 1966 Ark. LEXIS 1239Docket: 5-3693

Court: Supreme Court of Arkansas; January 10, 1966; Arkansas; State Supreme Court

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Clarice Shetter Arnold died testate on November 25, 1963, leaving a husband, George A. Arnold, and two sons, Tom Anders and Bryant H. Anders. George was appointed executor of her estate, which included the Park Hill property located at 407 West “J” and the 23rd Street property at 111 East 23rd Street. The Park Hill property was held as an estate by the entirety, meaning title vested in George Arnold despite its mention in Clarice's will. Bryant Anders, a son from Clarice's former marriage, conveyed property on Lake Conway to George for $10, claiming he gave his interest for free, while George stated he paid $2,000.

On February 5, 1964, George conveyed the Park Hill property to Bryant, who then executed a quitclaim deed for the 23rd Street property to George, which was not recorded. Subsequently, Bryant offered the 23rd Street property for sale to C. F. Henderson under an option agreement, agreeing to provide a marketable title. On February 28, George filed a lawsuit against Bryant, alleging fraud in the conveyance of the Park Hill property and claiming that Bryant had no interest in the Faulkner County property. George sought to cancel the deed for the Park Hill property and recover the $2,000 paid for the Faulkner County property.

Appellee was accused of exploiting appellant's poor health, inexperience in business, and their close familial ties. Following a denial of fraud, the case went to trial, resulting in the court's decree that Arnold executed the deed for the Park Hill property without undue influence or misrepresentation, in exchange for a deed from Anders for the 23rd Street property. However, the court found that Anders improperly obtained $2,000 from Arnold by executing a deed for Faulkner County property, which Anders had no title to. Consequently, the court ordered a $2,000 judgment against Anders and granted Arnold a lien on the Park Hill property to secure this amount. Anders, despite being married, was mandated to transfer the 23rd Street property free of his wife's dower and homestead rights. Appellant appealed, arguing that the transactions were fraudulent, stemming from the trust he had in Anders. Testimony revealed that Anders had no interest in the Faulkner County property, which was actually devised to Mrs. Arnold's grandchildren, and that Arnold mistakenly believed he held a joint interest in it. Anders claimed ignorance of his lack of interest when he executed the deed and did not use a quitclaim deed, despite knowing the difference. Arnold testified to paying Anders $2,000 for the deed, while Anders acknowledged receiving $2,000 from Arnold shortly after the transaction. Their close relationship was highlighted, with Anders referring to Arnold as 'Papa Dear' and assisting him as executor of the estate. Additionally, Anders had collected rental income from property owned by Mrs. Arnold, which he initially deposited into his personal account, but later arranged to have the funds directed to the estate after Arnold's role as administrator was taken over by Cole.

Anders withdrew funds to pay for a funeral, which he claimed would be deposited in a separate account by Arnold. Anders testified he received $100 from this amount and used the remainder for living expenses. Their close relationship was established, as Arnold had given Anders power of attorney and trusted him to manage his affairs. The exchange of properties involved the Park Hill property, appraised at $14,750 by FHA and $11,500 by a real estate agent, and the 23rd Street property, appraised at $7,500. There was a significant discrepancy in the values of the two properties. Arnold alleged that Anders was to invest money into fixing up a lake property, a claim Anders denied but acknowledged Arnold's inquiry about it. Disputes arose regarding possession of the deeds; Arnold claimed he never saw the deed to the 23rd Street property, while Anders stated both deeds were in Arnold's possession for a week after the transaction. The Park Hill deed was recorded a day after execution, but the deed for the 23rd Street property was not recorded, and Anders only executed a quitclaim deed for it. Anders later offered the 23rd Street property for sale. The court determined that Anders had wrongfully obtained $2,000 from Arnold, indicating that Arnold had paid for the Faulkner County property. While the court found no evidence of Arnold's mental incompetence, it acknowledged the close relationship between him and Anders, suggesting a potential for undue influence. Ultimately, the evidence indicated that Anders was the party benefiting from the transactions.

The deed to the lake property was effectively void as the grantor had no ownership to convey, despite receiving $2,000. In a separate transaction involving Park Hill—23rd Street, the grantor acquired property significantly more valuable than what he conveyed, yet the deed failed to release his wife's dower rights. The court referenced the Norton case, placing the burden of proof on the recipient of benefits to demonstrate that deeds were executed freely. The court emphasized principles from Gillespie v. Holland, asserting that contracts between parties in a confidential relationship are scrutinized closely, especially when trust and dependence are involved. Evidence indicated that Arnold had high trust in his stepson, who dominated the transactions, thus justifying relief for Arnold due to his age and lack of legal knowledge. The court ordered the restoration of Lot 3, Block 53, to Arnold and the cancellation of the deed from Arnold to Anders, while restoring Lot 12, Block 4, to Anders and canceling the deed from Anders to Arnold. The judgment for $2,000 in favor of Arnold against Anders was affirmed, and the case was remanded for further proceedings. Arnold had resigned as administrator due to complications in managing bonds and acknowledged a failed business venture with Anders, who was involved in pending litigation concerning a payment related to the 23rd Street property.