Lillian H. Ashton Trust v. Caraway
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Cite as 2009 Ark. App. 806
ARKANSAS COURT OF APPEALS
DIVISION IV
No. CA09-601
LILLIAN H. ASHTON TRUST AND
LILLIAN H. BROOKS (f/k/a ASHTON),
IN HER CAPACITY AS TRUSTEE OF
THE LILLIAN H. ASHTON TRUST
APPELLANTS
Opinion Delivered DECEMBER
V.
HONORABLE TIM WEAVER,
JUDGE
KENNY CARAWAY AND
COHL CARAWAY
AFFIRMED
2, 2009
APPEAL FROM THE IZARD
COUNTY CIRCUIT COURT,
[NO. CV2007-45-4]
APPELLEES
RITA W. GRUBER, Judge
Appellants in this case are the Lillian H. Ashton Trust and Lillian H. Ashton Brooks,
in her capacity as trustee for the Trust. They appeal from a decree of the Izard County
Circuit Court ordering Mrs. Brooks to specifically perform the contract entered into on April
7, 2007, by her as trustee and appellees, Kenny and Cohl Caraway.1 Pursuant to the contract,
appellant accepted appellees’ offer to purchase certain property owned by the trust in Izard
Throughout this opinion we refer to one of the appellees as “Cohl” Caraway because
the complaint filed by Mr. Caraway’s attorney to begin this action refers to “Cohl,” the style
used in the circuit court (except for the final order) refers to “Cohl,” the style in the notice
of appeal and briefs filed with this court refer to “Cohl,” and appellees’ references in their
brief are to “Cohl.” However, we note that the contract used the name “Kohl” Caraway,
Mr. Caraway’s signature on the contract is “Kohl,” the transcript of testimony from the trial
refers to “Kohl,” and the circuit court’s decree that was appealed to this court refers to
“Kohl.”
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County for $80,000, which was to be due and payable at closing. On appeal, appellant
contends that the circuit court erred in ordering specific performance of the contract for three
reasons: there was a failure of consideration and Mrs. Brooks revoked acceptance of appellees’
offer; Mrs. Brooks was not competent to enter into the contract in April 2007; and there was
undue influence. We find no error and affirm the circuit court’s order.
This case began in early April 2007 when Cohl Caraway called Mrs. Brooks, who was
at that time eighty-six years old and living in Downey, California. He asked her if she was
interested in selling eighty acres that she owned in Izard County. According to Mr.
Caraway’s testimony, after discussing the property for several minutes, Mrs. Brooks told Mr.
Caraway that she needed time to consider the offer and to call her back in a few days. Mr.
Caraway called her back on April 2nd or 3rd at about 8:00 a.m. Pacific Time. Mr. Caraway
testified at trial that Mrs. Brooks said she was interested in selling the property; that she
indicated she had spoken with “some people” in the area; and to make her an offer. Mr.
Caraway offered $1000 an acre, which she indicated sounded fair. He told his father, Kenny
Caraway, about the verbal agreement and asked him to call Mrs. Brooks. Several days later
Kenny Caraway called Mrs. Brooks and spoke with her about the land, which he said Mrs.
Brooks was able to describe in detail. He explained that $500 or $1000 was the customary
earnest money.
The Caraways then went to the office of Eric Bray, an attorney and licensed abstractor
who owned Izard County Abstract, to fill out the Offer and Acceptance. Mr. Bray sent the
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contract to Mrs. Brooks. The Offer and Acceptance described the property, stated the price
for sale was $80,000, and indicated that the earnest money to be paid by the Caraways was
$1,000. Several days later, on April 10, 2007, the Caraways and Dennis Wilson, their partner
in purchasing the property, went to Mr. Bray’s office and called Mrs. Brooks. According to
the testimony of the Caraways and Mr. Bray, while on the speaker phone, the Caraways, Mr.
Wilson, Mr. Bray, Mrs. Brooks, and appellant’s husband, Mr. Brooks, discussed the
transaction. According to the testimony of the Caraways and Mr. Bray, Mrs. Brooks
requested that the earnest money be changed from $1000 to $5000. Mr. Wilson wrote an
earnest-money check for $5000 payable to the order of Izard County Abstract, dated April
10, and the amended Offer and Acceptance was faxed to Mrs. Brooks. She inserted the date
April 4, 2007, as the date she accepted the offer; signed it as Lillian Brooks, Lillian Ashton
Trust; and added in her handwriting the word “Trust” after the typewritten name Lillian
Brooks under her signature. The contract was faxed back to Mr. Bray on April 10, 2007.
Mr. Bray did not deposit the check into his escrow account, but merely held it pending
closing or default. He testified that this was how he customarily handled such transactions.
On April 12, 2007, Mr. Bray received by fax from Stephen Drilling, Mrs. Brooks’s
son, a handwritten letter signed by Mrs. Brooks stating as follows: “I hereby rescind the offer
and acceptance signed by me for the sale of the Arkansas property dated by me, Lillian A.
Brooks, April 11, 2007.” Included in the fax was also a letter from Mr. Drilling providing
that he had the power of attorney to act in his mother’s behalf and that he was hereby
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rescinding the “Offer and Acceptance” agreement signed by her, effective immediately. He
stated further that, should the Caraways decide to contest the matter, he was prepared to
litigate. He added, “Your clients’ took unfair advantage of an 85 year old woman, who is
incompetent and incompacitated [sic], in attempting to purchase this tract of property at far
below its actual value.”
The Caraways filed a complaint for specific performance against the Trust and Mrs.
Brooks in her capacity as trustee on April 13, 2007. Appellants raised the affirmative defenses
of duress and coercion along with incompetence or incapacity of Mrs. Brooks to enter into
a contract. They also moved for a directed verdict at trial, contending that there was no
consideration for the contract because the $5000 earnest-money check was never deposited
or negotiated and Mrs. Brooks rescinded her acceptance.
The trial court entered an order on February 23, 2009, ordering Mrs. Brooks, on
behalf of the trust, to specifically perform the contract, finding there was valid consideration
for the contract and that Mrs. Brooks failed to meet her burden to prove that she lacked the
mental capacity to enter into the contract. Appellants filed this appeal.
This is an equity case, which we review de novo on appeal. MDH Builders, Inc. v.
Nabholz Constr. Corp., 70 Ark. App. 284, 288, 17 S.W.3d 97, 100 (2000). However, we will
not reverse the circuit court’s findings of fact unless they are clearly erroneous. Id. A finding
is clearly erroneous when, although there is evidence to support it, the reviewing court on
the entire evidence is left with the definite and firm conviction that a mistake has been
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committed. Id. In reviewing a trial court’s findings of fact, we give due deference to the trial
judge’s superior position to determine the credibility of witnesses and the weight to be
accorded to their testimony. Holaday v. Fraker, 323 Ark. 522, 920 S.W.2d 4 (1996).
I. Consideration
For their first point on appeal, appellants contend that the circuit court erred in
ordering specific performance of the contract because there was a failure of consideration
when the earnest-money check was not deposited before Mrs. Brooks revoked her acceptance
of appellees’ offer. The essential elements of a contract are competent parties, subject matter,
legal consideration, mutual agreement, and mutual obligations. Stewart v. Combs, 368 Ark.
121, 126, 243 S.W.3d 294, 298 (2006). While appellants cite both Arkansas cases and cases
from other jurisdictions in support of their argument, none of those cases concerned signed
written contracts; rather, the cases concerned oral contracts, or unexecuted written contracts.
Payment was necessary in those cases to show part performance in order to take the contracts
out of the operation of the statute of frauds. See, e.g., Sossamon v. Davis, 271 Ark. 156, 607
S.W.2d 405 (1980); Rolfe v. Johnson, 217 Ark. 14, 228 S.W.2d 482 (1950); Santi v. Denver &
Rio Grande Western R.R. Co., 442 P.2d 921 (Utah 1968); and Cooper v. Pederson, 173 N.E.2d
549 (Ill. App. Ct. 1961). Those cases are not relevant to this case.
In this case, the parties entered into a written contract, signed by both parties, pursuant
to which appellees offered to purchase and appellant accepted and agreed to sell her property
for $80,000. The Offer and Acceptance contract included an earnest-money clause that
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provided as follows:
Buyer herewith tenders $5000 [$1,000 has been marked through and $5000
handwritten above it] as earnest money, to become part of purchase price upon
acceptance. This sum shall be held by Agent and if offer is not accepted or if title
requirements are not fulfilled, it shall be promptly returned to Buyer. If, after
acceptance, Buyer fails to fulfill his obligations, the earnest money may become
liquidated damages, which fact shall not preclude Seller or Agent from asserting other
legal rights which they may have because of such breach.
This clause does not require the escrow agent to deposit or negotiate the buyer’s tendered
earnest money. Further, appellants have cited no authority for their contention that the
escrow agent’s failure to deposit the check into his escrow account constituted failure of
consideration. Finally, as specifically noted by the trial court, there was no testimony
presented that the check tendered by appellees to Izard County Abstract was insufficient or
would not have been honored if presented. Indeed, Mr. Bray testified that he knew Mr.
Wilson and that Mr. Wilson had never given him a check that was not good. We hold that
the circuit court did not clearly err on this point.
II. Competence
For their second point on appeal, appellants contend that the circuit court erred in
ordering specific performance of the contract because she was not competent to enter into
a contract in April 2007 and one of the required elements for a valid contract is competent
parties. See Hunt v. McIlroy Bank & Trust, 2 Ark. App. 87, 90, 616 S.W.2d 759, 761 (1981).
Specifically, they point to the testimony at trial indicating that Mrs. Brooks was eighty-six
years old when she signed the contract, suffered from Alzheimer’s disease, and was taking pain
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medication. There is a presumption of law that every person is sane, fully competent, and
capable of understanding the nature and effect of her contracts. Union Nat’l Bank of Little Rock
v. Smith, 240 Ark. 354, 356, 400 S.W.2d 652, 653 (1966). The burden of proving
incompetency rested with appellant. Id.
In spite of the testimony offered by Mrs. Brooks’s three doctors, husband, and son
concerning her lack of capacity, the circuit court determined that appellants failed to meet
their burden to prove Mrs. Brooks was not competent to enter into the contract in April
2007. The circuit court stated that none of appellant’s doctors gave real testimony as to
appellant’s exact mental capacity or state of mind at the time she signed the contract. The
court further explained its finding as follows:
My ruling and findings are substantially influenced by particular and specific conduct
on Mrs. Brook’s part that occurred contemporaneously with the date of the contract.
First, Mrs. Brooks drafted and caused to be faxed to Izard County Abstract Company
a well written, and in beautiful handwriting, letter purporting to “rescind” the subject
contract. Secondly, Mrs. Brooks drafted, again in beautiful handwriting, a power of
attorney for her son. The testimony at trial was that Mrs. Brooks was the author, and
drafter, of these document. I find that in order to be able to even contemplate
documents of this nature, her mental abilities had to be such that she was aware of the
contract, that she had signed said contract, and that she owned land in Arkansas that
the contract purported to sell. In addition, Mrs. Brooks insisted upon an increase in
the amount of earnest money from $1000.00 to $5000.00, and she personally noted
that increase in the amount of earnest money on the face of the contract.
Giving due deference to the trial judge’s superior position to determine the credibility of
witnesses and the weight to be accorded to their testimony, we hold the circuit court did not
clearly err in finding that appellants failed to prove Mrs. Brooks was unable, because she
lacked the mental capacity, to enter into a valid and enforceable contract at the time she
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signed the Offer and Acceptance.
III. Undue Influence
Finally, appellants contend that Mrs. Brooks was an elderly woman suffering from
Alzheimer’s disease and there was undue influence by appellees in convincing her to sell her
property below its fair market value. The circuit court found that the contract was negotiated
over the telephone and that neither appellant nor her witnesses articulated what conduct on
the part of appellees rose to the level of duress or coercion. Appellants point to no specific
testimony demonstrating undue influence on the part of appellees. We note that Cohl
Caraway testified that he did not know Mrs. Brooks’s age or physical condition when he
spoke with her and that she appeared to know the property well. Kenny Caraway testified
that there was nothing in his conversation with Mrs. Brooks that led him to conclude she did
not know the value or extent of her land or that she suffered from any cognitive or mental
deficiency. We find no clear error on the part of the circuit court on this point.
Affirmed.
MARSHALL and HENRY, JJ., agree.
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