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HENDERSON v. HENDERSON (59958)


HENDERSON v. HENDERSON


January 9, 1998
Record No. 970503

TERRY HENDERSON

v.

EARL E. HENDERSON

OPINION BY JUSTICE BARBARA MILANO KEENAN
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY

Gerald B. Lee, Judge
Present: All the Justices


In this appeal, we decide whether the trial court erred in
rescinding a deed of gift conveying real property from a
grandfather to his granddaughter.

By deed of gift dated June 27, 1994, Earl E. Henderson
(Henderson) conveyed to his granddaughter, Terry Henderson
(Terry), a 1.19-acre parcel of real property in Fairfax County.
The property included a log house built by Henderson. At the time
of the conveyance, Henderson was 92 years old.

In June 1995, Henderson filed a bill of complaint against
Terry seeking rescission of the deed of gift on the grounds of
undue influence and constructive fraud. According to the bill of
complaint, at the time of the conveyance Henderson was in a
weakened state of mind because his wife of 65 years had died
about one year before the conveyance, and he had suffered several
minor strokes. The bill of complaint further alleged that
Henderson’s state of mind made him particularly vulnerable to
Terry’s suggestion that he sign the deed, and that Terry
"deceptively" represented to Henderson that "there
would not be any taxes on it."

In a bench trial, Henderson gave the following testimony. In
the late 1980s, Terry asked him for permission to live in the log
house. Henderson agreed, and Terry and her daughter moved into
the house. Henderson never discussed with Terry the possibility
of giving her the property. He considered selling the property
but was informed that he would have to "pay more [taxes] than I received for the place." In June 1994, the value of
the property was about $400,000.

Henderson stated that on the day he conveyed the property to
Terry, he was living in the home of one of his daughters. Terry
arrived at the house with no advance notice. That day was his
first wedding anniversary after his wife’s death. Since his
wife’s death, Henderson was depressed, lost his appetite, lost
weight, and "almost lost the desire to live."

According to Henderson, Terry had a deed with her and said,
"This is the deed to the log house. Will you sign it?"
As a result of his depression, he "took [the deed] and
looked at it and things kind of seemed unreal to me, you know. So
I signed it." He did not feel any pressure to sign the deed,
but was in "kind of a mental fog . . . and I just
kind of, you might say, go [sic] along with the flow."

Before signing the deed, Henderson asked Terry if there would
be any tax consequences from the gift. Terry said that
"there would be a small income tax or insignificant income
tax, and that was it." Henderson later realized he had made
a mistake when he learned that there would be "very big tax
consequences" as a result of the gift, despite Terry’s
statement to the contrary.

Henderson stated that, about eight months later, he wrote
Terry a letter requesting that she transfer the property back to
him. This request was based on his lawyer’s advice that he
transfer property only through his will, and on his own desire
for financial security and the restoration of harmony within the
family.

Terry testified to a very different version of events
surrounding the execution of the deed of gift. She stated that
prior to the conveyance, her grandfather had told her that he
wanted to keep the log house in the family and had discussed
giving the property to Terry and her sisters. In April 1994,
Henderson told Terry that he wanted her to have the property
because her sisters did not want it.

On June 27, 1994, when Terry asked Henderson whether he would
consider signing a deed conveying the property to her, he agreed.
Terry said, "Pop, I have gone and I’ve done the title search
and I’ve had a good Virginia attorney put together a deed
. . . . I’ll give it to you. You can just read it
over and see what you think about it."

According to Terry, Henderson then read the deed and asked
Terry whether there "were any taxes on this." She
pointed to the margin of the deed and said, "No, there’s no
transfer taxes owed on the property." Henderson then said
that he wanted to sign the deed, and they went to his bank where
he signed the deed before a notary public.

Three physicians, including Henderson’s family physician,
testified that on the date of the conveyance, Henderson was
incompetent, incapable of making a major financial decision, and
vulnerable to suggestion. At the conclusion of the evidence, the
trial court found that Henderson had a "weakness of
mind" at the time of the conveyance. However, the trial
court dismissed the claim of undue influence on the ground that
Henderson did not prove that he and Terry had a confidential or
fiduciary relationship.

The trial court ruled that Henderson met his burden of proof
on the constructive fraud claim and ordered Terry to convey the
property back to Henderson. Terry assigns error to this ruling.

Terry argues that Henderson did not meet his burden of proving
the elements of constructive fraud by clear and convincing
evidence. First, Terry contends that Henderson failed to prove
the false representation asserted in his bill of complaint,
namely, that Terry told him he would owe no tax as a result of
the conveyance. Instead, Terry notes, Henderson testified that
Terry told him there would be a small amount of tax owed after
the transfer. Citing Massie v. Firmstone, 134 Va. 450, 114
S.E. 652 (1922), Terry argues that Henderson is bound by his
testimony and, thus, failed to prove the false representation
alleged in his bill of complaint.

In response, Henderson argues that credible evidence supports
the trial court’s findings. Henderson also contends that since he
suffered from a weakened state of mind and received
"inadequate consideration" for the conveyance, he was
entitled to rescission of the deed. We disagree with Henderson.

Fraud, whether actual or constructive, is never presumed and
must be strictly proved as alleged. See Poe v. Voss,
196 Va. 821, 827, 86 S.E.2d 47, 50-51 (1955); Martin v.
Williams
, 194 Va. 437, 445-46, 73 S.E.2d 355, 359-60 (1952).
The elements of a cause of action for constructive fraud must be
proved by clear and convincing evidence. Blair Constr. v.
Weatherford
, 253 Va. 343, 346, 485 S.E.2d 137, 138 (1997); Evaluation
Research Corp. v. Alequin
, 247 Va. 143, 148, 439 S.E.2d 387,
390 (1994).

A finding of constructive fraud requires proof that a false
representation of a material fact was made, innocently or
negligently, and that the injured party suffered damage as a
result of his reliance on the misrepresentation. Mortarino v.
Consultant Eng. Services
, 251 Va. 289, 295, 467 S.E.2d 778,
782 (1996); Alequin, 247 Va. at 148, 439 S.E.2d at 390. In
addition, the evidence must show that the false representation
was made so as to induce a reasonable person to believe it, with
the intent that the person would act on this representation. Mortarino,
251 Va. at 295, 467 S.E.2d at 782; Alequin, 247 Va. at
148, 439 S.E.2d at 390.

Here, Henderson sought to prove that Terry falsely represented
that there would not be any taxes due as a result of the
conveyance. Henderson’s own testimony, however, was that Terry
told him that "there would be a small income tax or
insignificant income tax, and that was it." He also stated
that Terry told him "that there was an exclusionary clause
that covered a small part of it." Thus, Henderson’s
testimony fails to support the misrepresentation alleged in his
amended bill of complaint.

In Massie v. Firmstone, we stated:

No litigant can successfully ask a court or jury to
believe that he has not told the truth. His statements of
fact and the necessary inferences therefrom are binding upon
him. He cannot be heard to ask that his case be made stronger
than he makes it, where, as here, it depends upon facts
within his own knowledge and as to which he has testified.

134 Va. at 462, 114 S.E. at 656.

The Massie doctrine rests on the premise that a
litigant should not be permitted to profit at another’s expense
by asking the trier of fact to make findings that contradict the
litigant’s own sworn statements about facts within his knowledge.
Such statements by a litigant, when unequivocal and against his
own interest, have the effect of judicial admissions. See Baines
v. Parker
, 217 Va. 100, 105, 225 S.E.2d 403, 407 (1976).

The Massie doctrine must be applied in the context of
the litigant’s entire testimony. See id.; Ford
Motor Co. v. Bartholomew
, 224 Va. 421, 431, 297 S.E.2d 675,
680 (1982). Therefore, an adverse statement by a litigant that
stands in isolation from the rest of his testimony concerning the
fact at issue will not trigger the Massie preclusion. Id.;
VEPCO v. Mabin, 203 Va. 490, 494, 125 S.E.2d 145, 148
(1962). Generally, the trier of fact must decide whether to
accept any clarification or explanation offered by the litigant. Id.

Here, Henderson did not offer any clarification or explanation
of his testimony that Terry said there would be a small amount of
tax, as opposed to no tax, due as a result of the conveyance.
Therefore, his testimony had the effect of a judicial admission
and Henderson failed to prove the material misrepresentation
alleged in his amended bill of complaint.

We disagree with Henderson’s contention that a different
result is required because the trial court found that he suffered
from a weakness of mind, and because there was "inadequate
consideration" in support of the conveyance. Henderson’s
weakness of mind at the time of the conveyance cannot alter his
unequivocal testimony that Terry told him that a small amount of
tax, rather than no tax, would be due as a result of the
conveyance. Further, there is no issue of adequacy of
consideration in this case, since the property was conveyed by
deed of gift. Therefore, Henderson’s reliance on our holdings in Payne
v. Simmons
, 232 Va. 379, 350 S.E.2d 637 (1986), and Long
v. Harrison
, 134 Va. 424, 114 S.E. 656 (1922), is misplaced.
Those cases recognized the remedy of rescission for individuals
suffering diminished mental capacity who receive grossly
inadequate consideration for contracts, not deeds of gift.

For these reasons, we will reverse the trial court’s decree
and enter final judgment in favor of Terry Henderson.

Reversed and final judgment.

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