Trusts & Estates – Deed Reformation – Unilateral Mistake – Intent

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Willis v. Willis. (Lawyers Weekly No. 11-07-0979, 27 pp.) (Cheri Beasley, J.) (Ann Marie Calabria, J., dissenting) Appealed from Carteret County Superior Court. (W. Allen Cobb Jr., J.) N.C. App. Click here for the full-text opinion.

Holding: A general warranty deed cannot be reformed on the basis of unilateral mistake since the plaintiff failed to prove that the deed did not represent the original intent of the parties at the time it was signed.

Background

In December 2004, Janice Willis (Mother) procured the services of attorney John Way to draft her will. At that time, Mother’s husband was deceased and she had two adult sons, Eddie and Anthony. The will signed by Mother included the following provision regarding Mother’s “home place”:

“I bequeath and devise any interest that I may own in my home place to my son, Edward Carroll Willis. If I decide to convey my home place in Beaufort, North Carolina to Edward Carroll Willis before my death, and, if he decides to sell said home, then it is my wish that he divide the proceeds after expenses with his brother, Anthony Grady Willis.”

Mother bequeathed the residue of her estate to Eddie and Anthony in equal shares. The will further provided that if one or both of her sons predeceased her, then the residue of her estate would pass to the deceased son’s “living issues per stirpes.” Mother continued to conduct meetings with Mr. Way and consulted with him about her legal options for transferring an interest in her home to Eddie immediately, rather than upon her death. It is undisputed that Mother expressed a desire to provide a place for Eddie, who was currently living with Mother in her home, to live for the remainder of his life. As a result of these meetings, Mr. Way drafted a general warranty deed in which Mother reserved a life estate in her home and transferred the remainder interest to Eddie in fee simple. The deed did not devise any interest in the home to

Anthony or contemplate a reversionary interest of any kind.

Mother executed the deed on Jan. 4, 2005. The deed stated it was “for a valuable consideration paid by the grantee, the receipt of which is hereby acknowledged.” However, the deed was filed without revenue stamps, and no money changed hands between Mother and Eddie.

In November 2007, Eddie died intestate. Shortly thereafter, Mother received a copy of the deed and realized that Eddie’s interest in her property would pass to his two children, Robin and Robert. It is undisputed that Mother expressed displeasure regarding the legal ramifications of the deed she had executed.

In February 2008, Mother sought to reform the deed on the basis of a unilateral mistake. She asserted in the complaint that she “thought that the deed only gave Eddie the right to live in her home the rest of his life.” Beginning on April 26, 2010, the case was tried by a jury. After all of the evidence was presented, defendants moved for a directed verdict, which was granted by the trial court. Mother appealed.

Discussion

Plaintiff sought reformation of the deed on the basis of a unilateral mistake. Plaintiff relies on Nelson v. Harris, 32 N.C. App. 375, 232 S.E.2d 298 (1977), for the proposition that unilateral mistake by one party, when not induced by the fraud or inequitable conduct of the other, may still support the reformation of a deed conveying property as a gift. Thus, in order for this case to proceed to the jury, Mother had to produce more than a scintilla of evidence that the deed was not supported by consideration and that the deed failed to express her actual intent in executing the deed due to her unilateral mistake. Assuming that there was sufficient evidence to establish that the deed was executed without consideration, we hold that there was not sufficient evidence to establish that a unilateral mistake occurred on the part of Mother.

There is abundant testimony in the record that Mother intended to provide a place for Eddie to live for the rest of his life; however, there was not a scintilla of evidence to establish that Mother intended to merely give Eddie a life estate as she now contends. In fact, the evidence presented to the jury tended to establish that Mother fully understood that the deed conveyed fee simple title to Eddie and a life estate to Mother. Mr. Way testified that he and Mother discussed tax consequences and Mother’s eligibility for Medicare as she contemplated the best devisal to Eddie. The discussion in reference to the impact of the conveyance to Eddie on Mother’s eligibility for Medicare tended to show that she fully understood the effect of a conveyance by life estate and by fee simple.

As demonstrated by her own deposition and Mr. Way’s testimony, Mother thoroughly considered her options, and Mr. Way complied with her requests. Moreover, it is not enough for plaintiff to assert that Mother did not read the deed and that she assumed that Mr. Way drafted the deed pursuant to her wishes-to give Eddie a life estate. Additionally, the evidence established that Mother “had no idea that Eddie was going” to die before her and that she was angry when she discovered the legal effect of the deed after Eddie’s death.

These facts do not negate the validity of the original understanding of the parties at the time that the property was devised; rather, they show only that Mother simply had not expected Eddie’s untimely death and never anticipated that his children would be entitled to inherit the property. Although Mother regretted the results of the conveyance after Eddie died, plaintiff has the burden of proving that the deed did not represent the original intent of the parties at the time the deed was signed. All of the evidence in this case showed that Mother understood the conveyance she made in the deed at the time she deliberately and intentionally signed the instrument.

While we recognize that, in a close case, it is better for the trial court to submit the case to the jury upon a motion for directed verdict, the record does not contain even a scintilla of evidence that a unilateral mistake occurred when Mother executed the deed at issue. Therefore, the trial court properly granted the defendants’ motion for directed verdict, and we affirm.

Dissent

(Calabria, J., dissenting): The majority improperly affirms the trial court’s order on a directed verdict on the basis of a ground that was not asserted in defendants’ motion to the court. Moreover, the majority incorrectly relies upon cases which do not involve the conveyance of gift deeds or the issue of unilateral mistake. Finally, the majority misapplies the standard of review for a directed verdict motion by failing to disregard conflicts in the evidence which were unfavorable to plaintiff. Since I believe Mother provided more than a scintilla of evidence that her deed to Eddie was not supported by consideration and that the deed did not express her intent due to her unilateral mistake, I respectfully dissent.