How can you tell when somebody has lost the ability to understand a simple transaction? In Ashton Trust v Caraway, an Arkansas court considered an 86- year-old womans’s penmanship in in determining that she knew what she was doing in selling land, even though her son contended that she had Alzheimer’s. Who knew that penmanship could be an important part of determining whether a person has the legal ability to enter into a contract to sell real estate?
There are five million Americans over the age of 85, and they own lots of real estate and other assets. The transfer of assets from elderly people poses a difficult problem for buyers, lenders, heirs and courts, all of whom need to know that the person parting with property is doing so with understanding.
Lillian Brooks was living in California in 2007 when the phone rang. It was Kohl Caraway, and he wanted to buy 80 acres that the Ashton Trust owned in Izard County, Arkansas. Mrs. Brooks was the trustee of the Ashton Trust. According to Caraway’s trial testimony, she said she wanted a few days to think about it and asked Caraway to call her back. He called her back and she said that she would sell and asked Caraway to make an offer. He offered $1,000 an acre. Caraway testified that she told him that $1,000 an acre sounded like a fair price.
After a conference call with the Caraways and Mrs. Brooks, the Caraways’ lawyer faxed the signed contract to Mrs. Brooks who dated it, signed it, put the word “trust” under her signature, and faxed it back to the lawyer on April 10, 2007. The lawyer did not deposit the $5,000 check, but kept it in the file.
Two days later, the lawyer received a fax containing a handwritten letter from Mrs. Brooks, stating, “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.” With this letter was a letter from Mrs. Brooks’s son, stating that he held a power of attorney from her and that he was rescinding the contract. The son also accused the Caraways of taking unfair advantage of an 85-year-old incompetent and incapacitated woman, by attempting to purchase the property far below its actual value.
The Caraways filed suit against the Ashton Trust that owned the 80 acres and against Mrs. Brooks as trustee. The suit asked for specific performance, seeking a court order to require the seller to perform the contract by closing on the sale of the property. The Ashton Trust and Mrs. Brooks answered by claiming that Mrs. Brooks lacked the legal capacity to enter into the contract and was under duress and coercion.
The trial court ordered Mrs. Brooks to sign the deed and close the deal.
The court of appeals looked at the earnest money clause in the contract and found no language requiring that the earnest money check be deposited. Nor was there evidence in the trial record to suggest that the check was no good.
Next the court of appeals reviewed the testimony offered at trial concerning Mrs. Brooks’s legal competency and the trial judge’s findings. The trial judge noted that none of the three doctors testified as to Mrs. Brooks’s actual mental capacity or state of mind at the time she signed the contract. The judge went on:
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….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, that 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 $1,000.00 to $5,000.00, and she personally noted that increase in the amount of earnest money on the face of the contract.
The court of appeals deferred to the trial judge’s “superior position to determine the credibility of the witnesses and the weight to be accorded to their testimony,” also noting the lack of any evidence of duress or coercion, affirming the order of specific performance.
In reality, the trial judge’s discussion of penmanship was irrelevant musing. Mrs. Brooks and her son lost their case because they didn’t produce convincing medical testimony about her mental capacity. I’m sure all the judges would admit that many sane people have terrible handwriting, and that it’s conceivable that a calligrapher could be unable to understand a simple business transaction.