COUCH (FLOYD) VS. LAYTON (JOSEPH W.)
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RENDERED: DECEMBER 3, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001915-MR
FLOYD COUCH, JR.
v.
APPELLANT
APPEAL FROM CLAY CIRCUIT COURT
HONORABLE OSCAR G. HOUSE, JUDGE
ACTION NO. 07-CI-00011
JOSEPH W. LAYTON
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: TAYLOR, CHIEF JUDGE; KELLER, JUDGE; LAMBERT, SENIOR
JUDGE.
TAYLOR, CHIEF JUDGE: Floyd Couch, Jr., brings this appeal from a September
17, 2009, judgment of the Clay Circuit Court awarding damages of $85,600 to
Joseph W. Layton for removal of timber and damage to Layton’s property. We
affirm.
On June 7, 1989, Mozelle Sandlin died testate in Clay County,
Kentucky. Pursuant to Sandlin’s Last Will and Testament, Sandlin’s property,
including a 231-acre tract of real property, was devised to her grandson, Joseph W.
Layton, in trust until he attained the age of twenty-one.1 Upon Layton reaching
twenty-one years old, the trust would dissolve and the property would pass in fee
to him. By order entered March 1, 1996, in the Clay District Court, Joseph W.
Layton’s father, James Layton, was appointed substitute trustee.
Joseph W. Layton became acquainted with Floyd Couch, Jr., when
Layton and his uncle were camping on the 231-acre property. Couch was
interested in removing timber from the property. Despite Couch’s knowledge that
the 231-acre property was held in trust for Layton, Couch entered into an oral
agreement with Layton to remove timber from the property. Under the oral
agreement, Couch would receive 75 percent of the proceeds from the timber, and
Layton would receive 25 percent. Couch proceeded to remove timber from the
property over the next several years.
On August 7, 2006, some four months prior to Layton’s twenty-first
birthday, Couch and Layton executed a written option contract whereby Couch
would purchase the 231-acre property from Layton for a total of $5,000. Pursuant
to the option contract, Couch was to pay Layton $600 upon execution of the option
and would pay the remaining $4,400 when Layton “reaches the age of 21 years
old.” Thereafter, the option contract provided that Layton would transfer the 231acre property to Couch by deed. On August 30, 2006, Layton signed a receipt
stating that he had received the final payment (a check in the amount of $300) for
1
Joseph W. Layton was born December 2, 1985, and, thus, reached the age of twenty-one on
December 2, 2006.
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the purchase of the property under the option contract. Layton, however, denies
actually receiving $300 upon execution of the option contract or the full $5,000
consideration stated in the option contract. Layton claimed that he only received a
total of $250 from Couch under the option contract. Layton did not transfer title of
the 231-acre property to Couch.
On January 11, 2007, Layton filed a complaint in the Clay Circuit
Court.2 On June 6, 2009, the matter proceeded to a bench trial. The testimony of
the parties presented at trial was diametrically opposite. Layton testified that in
exchange for the timber removed from the property he only received
approximately $200-$400 in cash and various amounts of methamphetamine from
Couch. Layton maintained that he did not receive 25 percent of the timber
proceeds. Layton further stated that he did not receive full payment under the
option contract either and only received a total of $250 from Couch. Couch, on the
other hand, testified he paid Layton the full 25 percent of the timber proceeds
under the oral agreement and the full $5,000 purchase price under the option
contract.
Following a bench trial, the circuit court made detailed findings of
fact and conclusion of law upon entering judgment in favor of Layton. The circuit
court awarded Layton $85,600 in damages - $79,000 as compensation for the
2
The complaint was originally filed by James Layton, as Trustee over certain real property
located in Clay County, Kentucky, for the benefit of Joseph W. Layton, and Joseph W. Layton,
individually. Pursuant to Floyd Couch, Jr.’s motion to dismiss, James Layton, as Trustee, was
dismissed upon Layton attaining the age of twenty-one and the trust being dissolved by its terms.
Joseph W. Layton, individually, remained as the only plaintiff, and the September 17, 2009,
judgment was entered in favor of Joseph W. Layton.
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timber removed and $8,600 as compensation for damage to the 231-acre property.
This appeal follows.
We begin our analysis by noting that the circuit court tried this action
without a jury. We review findings of fact made by the circuit court under the
clearly erroneous standard. Kentucky Rules of Civil Procedure (CR) 52.01.
Findings of fact are clearly erroneous if not supported by substantial evidence.
Moore v. Assente, 110 S.W.3d 336 (Ky. 2003). Substantial evidence is evidence
of a probative value that a reasonable person would accept to support a conclusion.
Id. And, we must also give deference to the trial court’s opportunity to judge the
credibility of witnesses. CR 52.01. We, however, review issues of law de novo.
Couch initially contends that the circuit court erred by failing to
enforce the oral agreement between Couch and Layton for removal of timber and
by awarding $85,600 in damages to Layton. Particularly, Couch argues that both
parties testified to the existence of the oral agreement to remove timber and that
under its terms, Layton was to receive 25 percent of the proceeds from the timber
removed. Also, Couch points out that he testified to paying Layton the full 25
percent of the timber proceeds and presented carbon copies of six checks from
Forest Products, Inc.,3 in the name of Layton evidencing payment for the timber
removed. Couch believed that the circuit court erred by failing to enforce the
parties’ oral agreement concerning timber removal from the 231-acre property.
We disagree.
3
The record indicates that Forest Products, Inc., purchased the timber from Couch.
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Upon review of the evidence presented at the bench trial, it was
uncontroverted that the oral agreement to remove timber was entered into by
Layton and performance occurred under the agreement before Layton attained the
age of twenty-one. Equally important was Couch’s testimony that at the time he
entered into the oral agreement, he knew that the 231-acre property was held in
trust for the benefit of Layton and that Layton’s father was the trustee.
It is well-established that legal title to real property held in trust for a
beneficiary is held by the trustee. 90 C.J.S. Trusts § 2 (2002); 76 Am. Jur. 2d
Trusts § 281 (2004). The beneficiary, on the other hand, merely holds equitable
title to the property.
In the case at hand, the trust containing the 231-acre property was set
forth in the will of Layton’s grandmother, Mozelle Sandlin, and read:
Therefore, all of my property, be it real,
personal or mixed, of whatsoever nature and
wheresoever located, including all property
which I may become entitled to or acquire
after the execution of this Will, I give,
devise, and bequeath, to my grandson,
Joseph W. Layton, to be held in trust for him
and for his benefit until he reaches the age
of twenty-one (21) years.
Such Trust shall be administered by my
brother-in-law, William Earl Isaac, as
trustee, who shall have the most unlimited
power and authority to act with such
property and holdings for the benefit of
Joseph W. Layton only.
In the event of my death prior to my
grandson reaching the age of twenty-one
(21) years and during such period of time
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following my death and prior to his twentyfirst (21st) birthday I instruct the trustee to
use his discretion to utilize the income from
this trust and the corpus thereof to see to the
health, education, and welfare of my
grandson, Joseph W. Layton.
Upon Joseph W. Layton attaining the age
of twenty-one (21) years all of my property,
both real, personal and mixed, shall go
directly to him in fee simple.
According to the trust’s plain language, the trustee possessed the sole
authority “to utilize the income for this trust and the corpus” for the benefit of
Layton. Until Layton reached the age of twenty-one, he merely held equitable title
to the 231-acre property and possessed no actual authority to permit removal of
timber from the property. Such authority was plainly held by the trustee. Also,
from Couch’s own testimony, he knew the 231-acre property was held in trust for
Layton and, therefore, reasonably knew or should have known that Layton did not
possess the actual or apparent authority to permit removal of the timber.
Therefore, the oral agreement between Layton and Couch for removal of the
timber from the property was ineffective as Layton lacked authority to permit
timber removal from the 231-acre property. As no valid oral agreement existed for
the removal of timber, the circuit court properly valued the timber removed and
awarded damages. See Allen v. Ferguson, 253 S.W.2d 8 (Ky. 1952). Thus, we
cannot say the circuit court erred by failing to enforce the oral agreement and by
awarding $85,600 in damages.
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Couch next argues that the circuit court erred by failing to enforce the
option contract executed on August 7, 2006, to purchase the 231-acre property for
$5,000 upon Layton attaining twenty-one years of age.
The option to purchase the 231-acre property executed by Layton and
Couch read as follows:
This Option between JOSEPH W.
LAYTON, party of the first and FLOYD
COUCH, party of the second part.
WITNESSETH: WHEREAS, the
party of the first part has a certain piece of
property namely, that property shown in that
will from Mozelle Sandlin, to Joseph W.
Layton as shown in Will Book 9 at page 140
for property on Crane Creek in Clay County
being about 231 acres more or less, as
shown in various deeds to Mozelle Sandlin.
WHEREAS, party of the second part
wish to purchase same, the parties do hereby
agree as follows:
(1) The purchase price shall be
$5,000.
(2) The party of the second part shall
pay $600.00 upon the signing of this Option
and agrees to pay the balance of $4,400.00
whenever Joseph W. Layton reaches the age
of 21 years old and this option shall be good
for a period of 90 days after Joseph W.
Layton reaches the age of 21 years old. In
the event Joseph W. Layton shall refuse to
convey under the terms of this option Joseph
W. Layton shall pay to the Buyer, the sum
of $5000.00 as damages.
WITNESS OUR HANDS this the 7th
day of Aug., 2006.
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It is well-settled that where no money is “paid for the option itself”
then there is no “consideration to support the option contract.” Ford v. McGregor,
314 Ky. 116, 234 S.W.2d 493, 495 (1950). Simply stated, an option contract to
purchase real property must be supported by consideration separate from the
purchase price of the real property in order to be binding upon the parties. Id.
In the case sub judice, the $600 purportedly paid when the option was
executed was clearly part of the total purchase price of the 231-acre property.
Pursuant to the terms of the option, the $600 paid by Couch upon execution
operated to reduce the total $5,000 purchase price to $4,400. By its very terms, the
option contract had no separate consideration and, thus, was not binding upon
Layton. Moreover, the circuit court found credible Layton’s testimony that he
never received the full $5,000 consideration as provided under the option contract.
In its judgment, the circuit court specifically found that “Joseph Layton was not
paid the $5,000.00 as called for in the option and any amount of money he did
receive from this transaction was negligible.” Thus, as Couch failed to pay the full
$5,000 purchase price to Layton, Couch is not entitled to conveyance of the
property per the option contract. As such, we view Couch’s contention that the
circuit court erred by failing to enforce the option contract to be without merit.
Given the above rulings, we view Couch’s remaining contentions to
be either moot or without merit and we will not address them in this opinion.
For the foregoing reasons, the judgment of the Clay Circuit Court is
affirmed.
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ALL CONCUR.
BRIEFS FOR APPELLANT:
Helena Racin Smith
Corbin, Kentucky
BRIEF AND ORAL ARGUMENT
FOR APPELLEE:
John T. Aubrey
Manchester, Kentucky
Amanda Lester Hill
Corbin, Kentucky
ORAL AGUMENT FOR
APPELLANT:
Helena Racin Smith
Corbin, Kentucky
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