Russo v. Miller

559 A.2d 354 (1989)

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Nature of the Case

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Facts

In 1958 or 1959, P's parents purchased property consisting of approximately 12 acres of land. P acquired title to the property over ten years ago. A structure, consisting of two rooms and a bath is situated on the property and has served as a residence either for P's parents or for P since the property was purchased. P has a long history of psychiatric illness. She was first hospitalized in the early 1960s for post-partum depression. Between 1971 and 1988, she was hospitalized seven or eight times for depression, suicide attempts, drug overdoses, and alcohol abuse. P has suffered from fear and depression for at least twenty years and has manifested suicidal tendencies for at least ten years. In 1987, P was diagnosed with a manic-depressive personality. P's psychiatrist testified that her personality structure and coping skills might render her particularly susceptible to D's desires. P was admitted on September 26, 1985, after she had intentionally taken an overdose of Valium and an anti-anxiety medication. P was discharged on October 9, 1985, and returned home. P was visited four or five times by Marlis Goldschmidt, a neighbor and acquaintance who was fully aware of P's psychiatric problems. Marlis mentioned that she desperately needed to purchase a piece of land. P ultimately agreed to sell Marlis two and one half acres of her property for $5000. Marlis's husband, Donald, worked with D one of the buyers, in the painting business. In the fall of 1985, James and Daniel Miller (Ds) formed a real estate partnership known as Jaydan Associates. James Miller discussed his interest in purchasing real estate with Donald and also mentioned the possibility of paying a finder's fee to individuals who suggested land that buyers might purchase. Marlis suggested to P that she sell the remaining land to make a 'good life' for herself. Marlis told P that her remaining land was worth approximately $25,000 to $30,000. James Miller (D) knew that P had problems and that she had been hospitalized. P and Ds signed a handwritten contract drafted by Daniel Miller (D) the very day they met. The purchase price was $ 25,000, with $1000 payable upon the signing of the contract and $9,000 payable at closing which was to occur on or before December 1, 1985. The balance was payable in monthly installments of $ 300. P was to remain on the property until May 1986. On November 9, the parties executed a typewritten contract and closed the transaction on November 15, 1985. After receiving the $10,000 payment, the seller gave Salaman $3200 which he told her he needed to make a down payment on the horse farm upstate. With the balance of the money, she paid off a bank loan, and 'blew' the rest. The record does not reflect that Salaman ever acquired a horse farm. In her last hospitalization, P and Salaman dreamed about ending all their troubles by moving upstate and purchasing a horse farm to raise horses. P did not consult an attorney, a real estate broker, or an appraiser. Ds were represented by counsel. Counsel for Ds testified that he did not feel that the deal was outrageous. He had no indication from P's demeanor, speech, and general appearance that the seller was suffering from any disability. When asked, the seller told counsel she was signing the deed of her own free will. After the transaction was concluded, Ds paid the Goldschmidts a finder's fee of $ 500. Ds then acquired from the Goldschmidts the 2 1/2 acre parcel that the Goldschmidts had purchased from P at the end of October. Ds paid the Goldschmidts $20,000 for that parcel. That parcel had the road frontage and site distance necessary 'to do anything with the land' that they had already purchased. Ds sold two acres of the two-and-one-half-acre parcel acquired from the Goldschmidts for $34,000 within eight months after they had purchased it. At the end of 1986, they sold the remaining eight acres for $58,000 or $59,000. That deal fell through when the prospective purchasers broke the contract. Ds have received a more recent offer of $40,000 for the eight-acre lot. P sued Ds for rescission claiming undue influence. Ds responded with a forcible entry and detainer action. The District Court appointed a guardian ad litem for P. Ds removed the action to the Superior Court. The court set aside the conveyance on the grounds of undue influence and remanded the forcible entry and detainer action to the District Court for entry of judgment in favor of P. The trial justice found that the conveyance of the eight-acre parcel from seller to buyer resulted from undue influence. The Superior Court set aside the conveyance on the condition that the seller pay to buyer $12,000, the value of what the court found the seller received from the transaction. Ds appealed.