Outlaw v. Finney

Hart, C. J., (after stating the facts). Counsel for the defendants seeks to uphold the decree under the decision of Martin v. Martin, 98 Ark. 93,135 S. W. 348, to the effect that family settlements are encouraged, and will not be disturbed unless strong reasons exist to warrant interference on the part of a court of equity. On the other.hand, counsel for the plaintiff seeks to reverse the decree upon the authority of Caldcleugh v. Caldcleugh, 158 Ark. 224, 250 S. W. 324; where it was held that, in determining whether undue influence had been exerted upon a person, all the surrounding circumstances which might make the person susceptible and yielding are to He considered, as undue influence reaches every case where influence is acquired and abused or where confidence is reposed and betrayed. In the Martin case it was said that courts of equity have uniformly upheld and sustained family arrangements in reference to property where no fraud or imposition was practiced. Equity is anxious to encourage and enforce these settlements, in order to preserve the peace and harmony of families. This doctrine is recognized in the Caldcleugh case, but it was also recognized that, where fraud or undue influence is practiced, the family settlement will be set aside. This is in application of the well-established rule that, where there is a confidential relation between relatives dealing in respect to an inheritance or distributive shares of an estate, equity will readily relieve the party who has yielded to the coercive influence of the other. In such cases, the parties are required to deal with the utmost good faith towards each other, and equity will readily seize upon any fraud or unconscionable practice by one towards the other to induce the settlement. In the present case it is.a significant fact that Mrs. Finney, the sister, and the attorney employed by the brother and sister to draw up the deed and mortgage, were not called as witnesses in the case. No reason is given for the failure to introduce them as witnesses. The plaintiff testified in her own behalf, and, in the course of her testimony, stated that she desired to tell the matter just as it happened. She testified that the home place, which consisted of 4 15/16 acres, was not worth more than $1,200. She is corroborated in this statement by the fact that her husband purchased the property for that sum a short time before his death, and paid for it partly in cash and partly on credit. The plaintiff said that the town property which she deeded to the defendants was worth $1,900. She is corroborated in this statement by the fact that her husband had obtained a mortgage from a building and loan company in the sum of $1,000 on the property, a*ud $800 of this amount was due and unpaid. As we have already seen, no attempt whatever was made by the defendants to dispute as to the relative values of these two pieces of property. It is true that the husband liad a small stock of goods, which be had purchased in the fall before his death, but the plaintiff testifies that he had sold nearly all the goods at retail, on credit, and that she had not been able to collect anything on the accounts. It is also true that she received $1,000- life insurance on her husband’s life. She was the beneficiary named in the policy, and might have kept the whole of it, but the record shows that she paid out $679 of this amount on the funeral expenses and debts of her deceased husband. According to her own testimony, she was an ignorant woman, and could scarcely read and write. No attempt was made to dispute her testimony on this point. It is true that she waited nearly a year before she attempted to rescind the settlement, but she explains this by saying that she did not [mow that she had given a mortgage to the defendants until she sought to have an abstract of title made on her place. She supposed that she had only executed a deed to the defendants to the town property, and that they had executed a deed to her to the home place. It will be remembered that she was an ignorant woman, and unaccustomed to signing deeds or to executing any kind of papers. She is corroborated, to some extent, on thiisi point by the fact that no attempt had been made by the defendants to collect the mortgage debt. The note first stated that it was payable on demand. Then there was written in it a clause to the effect that it was payable monthly at the rate of $20 per month, beginning on June 1, 1925, and that the failure to make three payments made the whole note due. Notwithstanding the clause and the failure to make payments, no attempt had been made by the defendants to collect any interest on the note, even though it purported to draw interest at five per cent, per annum from date until paid. The surrounding circumstances all corroborate the testimony of the plaintiff, and, as we have already seen, no attempt whatever was made by the defendants to contradict the testimony of the plaintiff. Therefore we are of the opinion that the testimony brings the case squarely within the principles of law announced in the Oaldcleugh case. The plaintiff was air ignorant woman, and considered, when the defendant, Mrs. Finney, told her that it was best for all parties to have a family settlement instead of resorting to legal procedure, that they were threatening her with legal action unless she yielded to their demands. In this connection it may he stated that T. R. Snow .died without children, and his widow was entitled to one-half of his real estate. If the settlement as made should he allowed to stand, the result would bo that the plaintiff would not receive anything whatever; for the $800 mortgage would absorb all her equity in the home place, and she has conveyed to the defendants her interest in the town property. Nothing would be left her except some worthless notes, and she would, by the terms of the settlement, have given to the defendants, under the guise of a family settlement, all her interest as widow in her deceased husband’s estate. It will be remembered that, in addition to her dower interest, she would be entitled to the homestead for her life. We are of the opinion that the chancellor should have set aside the family settlement as a legal fraud upon the rights of the plaintiff, or as having been procured by coercion or undue influence, in view of the fiduciary relation between the parties, and the decree will be reversed, and the cause remanded, with directions to the chancery court to set aside the family settlement and to allow to the plaintiff her rights of dower and of homestead under our statute. It. is so ordered.