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Mock v. Neumeister

Supreme Court of Nebraska

April 14, 2017

Clarence E. Mock III, Special Administrator of the Estate of Carl Landgraf, deceased. appellant and cross-appellee,
v.
Gail L. Neumeister and Marlene Neumeister, appellees and cross-appellants.

         1. Property: Undue Influence: Equity: Appeal and Error. An action to set aside inter vivos transfers of property on the basis that they were made as the result of undue influence is one in equity and, as such, is reviewed by an appellate court de novo on the record.

         2. Judgments: Evidence: Appeal and Error. Despite de novo review, when credible evidence is in conflict on material issues of fact, the appellate court will consider and may give weight to the fact that the trial court observed the witnesses and accepted one version of the facts over another.

         3. Costs: Appeal and Error. The decision of a trial court regarding taxing of costs is reviewed for an abuse of discretion.

         4. Undue Influence: Property: Proof. The elements which must be proved in order to vitiate a transfer of property on the ground of undue influence are that (1) the transferor was subject to undue influence, (2) there was an opportunity to exercise such influence, (3) there was a disposition to exercise such influence, and (4) the transfer was clearly made as the result of such influence.

         5. Undue Influence: Deeds: Words and Phrases. The undue influence which will void a deed is an unlawful or fraudulent influence which controls the will of the grantor.

         6. Deeds: Conveyances: Undue Influence. A court, in examining the matter of whether a deed was procured by undue influence, is not concerned with the Tightness of the conveyance but only with whether it was the voluntary act of the grantor.

         [296 Neb. 377] 7. Deeds: Undue Influence: Proof. The burden is on the party alleging the execution of a deed was the result of undue influence to prove such undue influence by clear and convincing evidence.

         8. Evidence: Words and Phrases. Clear and convincing evidence is evidence which produces in the trier of fact a firm belief or conviction about the existence of the fact to be proved.

         9. Undue Influence. Mere suspicion, surmise, or conjecture does not warrant a finding of undue influence; instead, there must be a solid foundation of established facts on which to rest the inference of its existence.

         10. Appeal and Error. To be considered by an appellate court, an error must be both specifically assigned and specifically argued in the brief of the party asserting the error.

         11. Undue Influence: Proof. Undue influence is usually difficult to prove by direct evidence, and it rests largely on inferences drawn from facts and circumstances surrounding the testator's life, character, and mental condition.

         12. __:__. It is not necessary for a court in evaluating the evidence of undue influence to separate each fact supported by the evidence and pigeonhole it under one or more of the four essential elements. The trier of fact should view the entire evidence and decide whether the evidence as a whole proves each element of undue influence.

         13. Equity: Costs. The taxation of costs in equitable actions is governed by Neb. Rev. Stat. § 25-1711 (Reissue 2016).

         14. Costs: Statutes. Unlike Neb. Rev. Stat. §§ 25-1708 and 25-1710 (Reissue 2016), which provide that costs shall be allowed of course to the successful party, Neb. Rev. Stat. § 25-1711 (Reissue 2016) gives the court discretion to tax costs and to apportion such costs between the parties.

         Appeal from the District Court for Otoe County: David K. Arterburn, Judge. Affirmed.

          Thomas M. Locher and Joseph J. Kehm, of Locher, Pavelka, Dostal, Braddy & Hammes, L.L.C., and William R. Reinsch, of Reinsch, Slattery, Bear & Minahan, PC, L.L.O.. for appellant.

          Jeanette Stull and Justin J. Knight, of Perry, Guthery, Haase & Gessford, PC, L.L.O., for appellees.

          Heavican, C.J., Wright, Miller-Lerman, Cassel, and Stacy, JJ.

         [296 Neb. 378] CASSEL, J.

         I. INTRODUCTION

         This is an appeal from a decree refusing to set aside lifetime transfers of real estate claimed to be the result of undue influence. The ultimate issue before the district court and now before this court is whether the appellant proved by clear and convincing evidence that the deeds were the result of undue influence. Upon our de novo review, we conclude that the appellant failed to meet his burden of persuasion. And because we find no abuse of discretion by the district court in declining to tax costs of depositions, we affirm the district court's decree.

         II. BACKGROUND

         This is a fact-intensive case. The district court heard testimony from 33 live witnesses and received over 200 exhibits during an 8-day trial. After briefly summarizing the contested transactions and the proceeding challenging them, we will set forth the evidence from the trial at considerable length.

         1. Transactions Attacked

         On June 11, 2011, a couple of weeks prior to Carl Landgraf's 87th birthday, he executed two joint tenancy warranty deeds conveying approximately 1, 000 acres of his farmland to Gail L. Neumeister and Marlene Neumeister. In July 2012, Landgraf executed deeds to fix an error in the earlier deeds. The total recited consideration for the four deeds was $4.

         2. Proceeding Attacking Transactions

         After Landgraf's death, the probate court appointed Clarence E. Mock III as special administrator of Landgraf's estate. Mock sued the Neumeisters, alleging that the deeds were the product of undue influence by the Neumeisters and should be set aside.

         The Neumeisters denied that the deeds were the product of undue influence. But in the event that the district court set [296 Neb. 379] aside the transfers, they filed a counterclaim requesting to be compensated for improvements made upon the land following the transfer.

         3. Facts Developed at Trial

         (a) Before Transaction

         (i) Landgraf's Family

         Landgraf was born in 1924, the youngest of three sons. Neither Landgraf nor his brothers married or had children. Landgraf and his brother, Jerome Landgraf (Jerome), were preceded in death by their parents and brother. They lived nearly their entire lives on the property originally owned by their parents. Between the two brothers, Jerome was the spokesperson and decisionmaker. Their house lacked modern amenities. It had limited electricity. It lacked plumbing and a working furnace or stove. Because there was no bathroom, Landgraf often used a bucket for a toilet.

         The Catholic faith was important to Landgraf's family. Landgraf attended Mass. and holy days regularly. Items signaling faith and devotion decorated Landgraf's house. According to a relative's testimony, there was a desire to "pay back" the Catholic church because the church helped Landgraf's grandparents when they immigrated to the United States due to religious persecution.

         In 1995, Jerome began living in a nursing home. He died on August 25, 2000. Landgraf inherited Jerome's interest or was a joint owner with right of survivorship with Jerome for Jerome's interest in personal and real property.

         (ii) Landgraf's Land

         Landgraf owned several tracts of farmland in Otoe County, Nebraska. His home was located on a farm near Dunbar, Nebraska, which consisted of approximately 1, 000 acres of land. When Landgraf's father was in charge, the family farmed most of the land. After Landgraf's father died, Landgraf and Jerome "kept putting more and more to grass." They farmed [296 Neb. 380] some of the land, but primarily used it for livestock. After Jerome entered the nursing home, this land was farmed by Gail for approximately 10 years. Landgraf also owned farms some distance from his home. These farms were composed of approximately 80 acres and 160 acres and were farmed by Robert and Jacqueline Knake and Robert Witte, respectively.

         (iii) Relationship With Farmers

         a. Neumeisters

         In 1978, Gail began helping his brother perform haying work for Landgraf and Jerome. When Gail's brother moved in 1983, Gail took over the haying work. In 1995, after Jerome entered the nursing home, Gail stopped haying and began farming Landgraf's land. He had a 60-40 lease arrangement with Landgraf in which Landgraf received 40 percent of the income and paid 40 percent of expenses.

         In 2004, Gail told Landgraf that he did not want to farm the land anymore and Landgraf became very upset. According to Gail, Landgraf offered to cosign on a $67, 000 note if Gail continued to farm the land. The lender subsequently sued the Neumeisters for failure to pay the loan. In May 2006, the day before Gail's equipment and other collateral were to be taken by the lender, Gail wrote a check for $75, 000 payable to himself that Landgraf signed.

         Landgraf's attorney, Richard Hoch, tried to work with the Neumeisters to document some obligation to repay Landgraf, but he was unsuccessful because the Neumeisters never returned the instruments that Hoch prepared for their signatures. According to Gail, the arrangement to repay Landgraf was for Gail "to keep farming or be around" and to "work it off." But by the time the loan was paid off, Gail had ceased farming. Gail stopped farming Landgraf's land in 2005, because "the input costs were higher than the output costs." Gail testified that he worked off the debt by controlling weeds, cleaning a road ditch, cutting trees, fixing a roof, and various other things.

         [296 Neb. 381] Gail also claimed that he worked off the debt by performing work for Landgraf under the Environmental Quality Incentives Program (EQIP). This was a "cost share" program with the government concerning conservation work. Landgraf had three 10-year EQIP contracts. Gail was the "operator" on the contracts and also acted as the contractor doing the conservation work. He was to perform the work without being compensated by Landgraf.

         Yearly status reviews were performed on EQIP contracts to check progress. Because costs increased every year, there was an incentive to complete the work under the contracts sooner rather than later. Gail failed to perform the work in a timely manner. In 2007, with essentially only 2 years left on the contracts, only 30 percent of the work had been completed. If the contracts were not completed as required, the landowner-i.e., Landgraf-was subject to liquidated damages.

         A resource conservationist with the Natural Resources Conservation Service testified that Landgraf had "a hard time understanding what was going on" and expressed fear about the potential penalties. The conservationist communicated with Hoch about drafting a letter on Landgraf's behalf to request that the contracts be canceled. The conservationist felt that Landgraf's "lack of understanding, his state of mind, [and] his anxiety were circumstances that would warrant" the waiver of penalties upon cancellation. Hoch testified that Landgraf was upset that the work under the contracts was not getting accomplished, and Hoch assisted Landgraf in obtaining cancellation without penalties. The conservationist later met with Landgraf and Gail, and he testified that Gail was very angry about the cancellation of the contracts and that Landgraf was very nervous and uncomfortable. At trial, Gail explained that he was "a little hurt because the amount of work that I put into it, I never got paid for."

         Landgraf was concerned about Gail's not farming the land. Gail continued to store his equipment on Landgraf's land after he stopped farming for Landgraf. There was also evidence [296 Neb. 382] that Gail ran a cow/calf operation and kept the livestock on Landgraf s pasture without compensating Landgraf. Hoch suggested that Landgraf find another tenant, but Landgraf was reluctant to terminate Gail's lease. Gail was unsure whether he continued to have a lease with Landgraf after he stopped farming the land, but he testified that he did not pay anything on any such lease from and after 2005. Gail knew that others were interested in farming Landgraf's land. He testified that he suggested Landgraf should rent the land to someone else and that he brought someone to try to rent pasture from Landgraf but Landgraf refused. The Knakes offered to farm the land, but Landgraf declined the offer due to uncertainty about Gail's reaction. Robert testified that Landgraf complained about not getting enough money off the land to pay the taxes, but that Landgraf feared Gail would never repay him for the loan if Landgraf leased the land to someone else. Hoch obtained a proposal from an individual concerning a 5-year lease, but Landgraf similarly did not accept it.

         In 2005, Gail had a discussion with Landgraf about a sale and gift of approximately 10 acres of Landgraf's land. The land included a residence across the road from Landgraf's home. After completion of a survey, Landgraf told Hoch that he did not want to sell all that land. The transaction did not occur. According to Gail, he declined the gift because it would cost too much money to rehabilitate the house on the property. Hoch testified that "major work" needed to be done to restore the house, but he had the impression that the transaction did not occur because Landgraf disagreed with where the stakes were laid out by the survey and did not want to convey that much property.

         There is no dispute that the Neumeister family helped Landgraf. If Landgraf or Jerome needed something, they called the Neumeisters for help. Marlene testified that she visited Landgraf two to three times a week after Jerome died. An individual who farmed across the road from Landgraf observed Gail help Landgraf but never saw anyone else help [296 Neb. 383] him. Another witness observed Gail helping Landgraf "[a] lot." Gail considered himself to be Landgraf s primary caregiver after Jerome died. Marlene testified about how Gail missed time with his family in order to help Landgraf. Even after Gail ceased farming Landgraf's land in 2005, he continued to help Landgraf with whatever Landgraf needed or wanted and visited Landgraf "probably every other day or every three days." Gail helped Landgraf because they were "pretty close friends."

         b. Knakes

         The Knakes had long farmed the 80-acre parcel owned by Landgraf. Robert farmed it for 61 years, and Jacqueline helped farm the land since 1973. They-like Gail-had a 40-60 crop share arrangement with Landgraf.

         (iv) Earlier Estate Planning

         a. 1999 Estate Planning Documents

         In 1999, Hoch prepared a will and a charitable trust for Landgraf. Landgraf's will named Gail as the personal representative and bequeathed all farm equipment to him. It gave various sums of money to a number of recipients, including Gail, and gave the remainder of the estate to the charitable trust. The charitable trust specified that upon Landgraf's death, all non-real-estate assets would be held in trust for 25 years and all net income would be divided in one-fourth interests and paid on an annual basis to St. Mary's Catholic Church of Nebraska City, Nebraska; St. Benedict's Catholic Church of Nebraska City; St. Paulinus Catholic Church of Syracuse, Nebraska; and Lourdes Central Catholic School of Nebraska City. The charitable trust directed that the real estate be held for 50 years after Landgraf's death and then sold, with the proceeds divided equally between the same four charitable beneficiaries.

         Gail drove Landgraf to the law office and watched Landgraf sign the documents. Gail testified that during the meeting, [296 Neb. 384] Landgraf whispered to him that "this isn't the way I really want it." Gail told Landgraf that he could either sign the documents or ask Hoch to change them.

         Hoch testified that Landgraf spent a lot of time thinking about his estate planning, and Hoch could not imagine that the documents did not reflect Landgraf's wishes. According to Hoch, Landgraf knew what he wanted in terms of estate planning: He wanted to have a trust, to have his farmland not sold, and to have the Catholic church as the final recipient. Hoch also testified that Landgraf "was not a sophisticated client" and that he needed somebody to help him with legal and financial matters.

         b. Relationship With Hoch After 1999

         Hoch continued to represent Landgraf after preparing the 1999 estate planning documents. Hoch assisted with Jerome's estate by closing the guardianship and conservatorship matter and opening an intestate estate. As noted, Hoch helped Landgraf with regard to the loan that Landgraf cosigned and the EQIP contracts. But Hoch did not recall performing any legal work for Landgraf after 2007.

         A witness recalled an event at a bank in 2006 in which Landgraf approached Hoch and "was venting some of his anger" and was "evidently and apparently, very . . . troubled with a previous discussion; perhaps, an argument." Gail testified that in 2007, Landgraf told him that he had been "bullied" by Hoch but that Landgraf would not say what Hoch had done.

         Hoch described his last memory of seeing Landgraf, which occurred in 2007. He saw Landgraf crying and shaking on a street in Nebraska City, and Landgraf said that he needed Hoch's help. Landgraf told Hoch that "they're trying to take my land" and that "[t]hey're trying to make a new will." Landgraf told Hoch that Gail and John Horan, an attorney, were trying to make Landgraf "change things and take his land." Hoch felt [296 Neb. 385] that Landgraf exhibited diminished capacity at that time. He discouraged Landgraf from continuing a business relationship with Gail, but Landgraf did not heed Hoch's advice. Hoch called Horan and relayed what had happened. Horan recalled that Hoch told him Landgraf was mad at Hoch because Hoch told Landgraf that Landgraf was "probably going to have to go in a nursing home."

         c. 2007 Meeting With Horan

         In June 2007, Gail called Horan and said that he wanted Horan to speak with Landgraf about estate planning. Horan and two other attorneys had represented Gail in 2002 or 2003 in connection with an automobile accident. According to Gail, Landgraf selected Horan and Gail speculated that it could have been because Horan provided services for Gail's father-in-law, with whom Landgraf spoke. According to Jacqueline, Landgraf said that Gail talked him into going to see Gail's attorney rather than Hoch and that Landgraf did not want to do so.

         Before Horan met with Landgraf, he received a call from Hoch expressing concern that Landgraf may not be doing what Landgraf wanted to do. When Horan met with Gail and Landgraf about changing Landgraf's will, Landgraf stated, upon Horan's inquiry, that he wanted Gail to be present during the consultation. Landgraf told Horan that he was thinking about "gifting or selling" 240 acres to the Neumeisters. Landgraf expressed concern about having to pay capital gains taxes if he sold the land, and Horan explained that a gift would not involve any out-of-pocket expense to Landgraf in taxes. The topic never went beyond dealing with the 240 acres of land. The meeting concluded by Horan's telling Landgraf to let Horan know whether Landgraf wanted to ...


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