IN THE SUPREME COURT OF IOWA
No. 22–1905
Submitted April 11, 2024—Filed May 17, 2024
CONSERVATORSHIP OF JANICE GEERDES by LAURA JENKINS, Conservator,
Appellee,
vs.
ALBERT GOMEZ CRUZ,
Appellant.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Kossuth County, Don E. Courtney,
Judge.
A grantee seeks further review of a court of appeals decision affirming a
district court judgment setting aside a quitclaim deed based on undue influence
and the grantor’s lack of capacity. DECISION OF COURT OF APPEALS VACATED;
DISTRICT COURT JUDGMENT REVERSED AND REMANDED. Mansfield, J., delivered the opinion of the court, in which all justices joined.
Shaun A. Thompson (argued) of Newman, Thompson & Gray PC, Forest
City, for appellant.
Kevin R. Sander (argued) of Fitzgibbons Law Firm, L.L.C., Estherville, for
appellee. 2
MANSFIELD, Justice. I. Introduction.
Lady, you know no rules of charity, [w]hich renders good for bad, blessings for curses.
William Shakespeare, Richard III act 1, sc. 2, ll. 72–73. Under Iowa law,
individuals are generally allowed to dispose of their property as they see fit. But
what does the law demand when someone whose mental acuity seems to be
declining makes a substantial gift to an individual close to them?
In this case, an elderly woman and her long-time friend raised hogs in a
partnership. Initially, the woman deeded half of her interest in the land to her
friend. Over a decade later, she deeded the rest of her interest in the land to the
friend, for nothing in return. About six months later, the woman’s adult
daughters were appointed her conservator and her guardian.
The conservator challenged the validity of the quitclaim deed based on
undue influence and lack of capacity. After a bench trial, the district court set
the deed aside. It found that there was undue influence through a confidential
relationship and even if not, the woman lacked the necessary capacity to deed
her interest in the land. A divided panel of the court of appeals affirmed on the basis of lack of capacity.
We granted the friend’s application for further review to clarify the extent
to which Iowa law permits donors to make their own decisions, even when an
outsider—such as an audience member watching Richard III—may view the
appeal to their sense of charity as misplaced. Based on our examination of the
record and Iowa caselaw, we find that the conservator did not establish by clear,
convincing, and satisfactory evidence that there was undue influence or that the
woman lacked capacity at the time of the gift. In our view, the district court and the court of appeals gave too much weight to the perceived improvidence of the 3
transaction and too little weight to the testimony of the third-party accountant
who witnessed the transaction. Therefore, we vacate the decision of the court of
appeals, reverse the district court judgment, and remand for further
proceedings.
II. Facts and Procedural Background.
A. Janice Geerdes and Albert Cruz. This action is brought by Laura
Jenkins, the adult daughter and conservator of Janice Geerdes.
For years, Janice was married to Marlin Geerdes, who farmed in Kossuth
County. They had six children, including Laura. In 1999, Marlin passed away.
At the time, Janice was sixty years old. Thereafter, Janice lived on her own in
Swea City. She was supported by the rental income from two farm properties
consisting of approximately 150 and 80 acres, respectively.
The defendant, Albert Cruz, grew up in the southwestern United States.
He came to Iowa to work on a seasonal crew. He detasseled corn for a seed
company and did other fieldwork. He got to know Janice and Marlin in the early
1990s because he rented a house from them. Albert, Janice, and Marlin became
close friends. In 1995, Albert brought his family north from Texas and started
living in Iowa full time. Albert does not read or write very well. When asked at trial how well he can read, he answered, “Hardly nothing.” He was taken out of
school as a young child because he “had to work.”
After Marlin died in 1999, Albert continued to spend time with Janice and
helped her with errands. During these trips, Janice would also cover Albert’s
expenses, such as food and gas. For a couple of years, they drove a truck together
for hire. One witness said that Janice and Albert were together four days a week.
B. The Formation of Blue Acres Pork in 2004. In 2004, Janice and
Albert agreed to raise hogs in a partnership. Janice deeded 9.64 acres of her land to herself and Albert as tenants in common. They also formed a partnership 4
known as Blue Acres Pork, which took out a substantial loan. Albert did not
contribute any funds to the venture, but originally the plan was for him to
provide the labor for the hog-raising operation. After six months, plans changed,
and ever since then, Janice and Albert have contracted with a third party that is
responsible for the hog operation. After payment of debt and other expenses, the
hog site nets around $400 to $450 a month for Blue Acres Pork.
Laura lives only a few miles away from Janice, but did not learn of the hog
partnership until 2008.
Another daughter of Janice and Marlin—Joy—lives in Swea City. Joy’s
home is in close proximity to Janice’s, and she would see Janice almost every
day. She described Janice as a “sugar momma” to Albert. Janice would write
checks to him when he needed money. Albert contends, however, that often these
payments occurred because Janice received the funds from the hog partnership
and was giving him his share.1
Charles Laubenthal rented farmland from Janice, whom he described as
“[p]retty hands-on.” Janice asked him for advice when she started the hog site
in 2004.
C. Later Developments. In 2016, Janice sold her eighty-acre parcel of farmland on an installment contract because she needed more income.
Laubenthal had been renting that land and visited Janice “many times” about
that sale. Albert was sometimes part of these discussions. Laubenthal felt that
Albert didn’t want him “in the picture” because he viewed Laubenthal as a
1There was testimony that Janice bought a power washer and trailer for Albert for about
$10,000. Later, she wrote out a note that the power washer “has been paid off complete[ly]” as of September 2015. 5
“competitor.” Laubenthal, however, continues to rent the portion of the 150 acres
that is not in CRP.2
Around that time, Albert got divorced and moved into a small building on
the hog site that was formerly an office. In 2018, Albert’s teenage daughter moved
in as well. Albert had been working in trucking but at the time of trial was
unemployed.
Janice’s financial position has been precarious despite her ongoing
ownership of the remaining farmland. She owes money to the IRS.
D. Cognitive Assessments and the Accident. In April 2017, Janice
underwent an assessment of her level of cognitive function by an occupational
therapist using the Saint Louis University Mental Status Examination (SLUMS)
and the Revised Allen Cognitive Performance Test (CPT). She scored 19 out of 30
possible points on the SLUMS. According to the report, “[a] score of 1-20 denotes
dementia for a person with a high school education.” Janice also scored 33/39
on the Allen CPT. This was described as “denot[ing] mild cognitive-function
disability; with deficits in working memory. Problems may be observed with
recent memory, judgment, reasoning, and planning ahead.”
In October of that year, Albert was driving Janice when he had a car accident. Janice was injured and hospitalized for a period of time. During that
time, Albert was seen taking her checks to sign that were made out to him as
payee. Upon Janice’s release from the hospital, she went through rehabilitation
at a nursing home for several months before returning home.
2“CRP is a land conservation program administered by the Farm Service Agency (FSA). In
exchange for a yearly rental payment, farmers enrolled in the program agree to remove environmentally sensitive land from agricultural production and plant species that will improve environmental health and quality.” Conservation Reserve Program, Farm Serv. Agency, U.S. Dep’t of Agric. https://www.fsa.usda.gov/programs-and-services/conservation-programs/conservation-reserve- program/index#:~:text=CRP%20is%20a%20land%20conservation,improve%20environmental%20health%2 0and%20quality [https://perma.cc/ZX2Y-W6QH]. 6
In January 2018, Janice (now seventy-eight years old) again underwent
an assessment for cognitive deficits with an occupational therapist. According to
the report, she scored 19 out of 30 points again on the SLUMS. She scored
34.5/39 on the Allen CPT, which “denotes mild cognitive-function disability; with
deficits in working memory.” In summary, the assessment concluded,
Patient’s performance on the SLUMS indicates dementia and the need for further assessment. Patient’s performance on the Allen CPT denotes that this woman needs frequent check-in support and assistance with instrumental activities of daily living. She should receive assistance with bill paying, managing finances, setting up her medications, and making appointments in which her family currently acknowledges and completes.
E. The Quitclaim Deed. In January 2019, Janice executed a quitclaim
deed transferring her interest in the 9.64-acre hog site to Albert for no
consideration. Laura did not become aware of the transaction until a month or
two later when she was helping Janice with her finances. According to Laura,
she told Janice that she had “signed the second half of the land over to Albert,”
and Janice responded, “[N]o, that’s not what I wanted.” Laura claims that Janice
did not recall the transaction.
Gayle Lemmon is an accountant in Humboldt. For years, she had done the
taxes for Janice, Albert, and Blue Acres Pork and, more recently, certain financial
recordkeeping for Blue Acres Pork. According to Lemmon, Janice and Albert
came into her office in January to discuss the preparation of a quitclaim deed to
transfer the property to Albert. Janice did most of the talking during the meeting
and seemed to be driving the decision. Lemmon recalled that Janice was able to
draw out the boundaries of the hog site on an aerial photograph. Lemmon wasn’t
comfortable preparing a deed and sent them to an attorney for that task. After
Janice and Albert returned from the attorney with a deed, Lemmon witnessed 7
and notarized Janice’s signature. Lemmon recalled Janice saying that “she
wanted to make sure that Albert had gotten his share of the property.”
Lemmon also recalled that Janice’s children did not get along with Albert.
She said that Janice had explained they did not like him. And she reported that
Janice had given her a copy of a handwritten note that said, “[W]hat I help Albert
Cruz is nobody[’s] concern. Janice Geerdes.”3
In July 2019, Laura filed a petition and was appointed conservator for
Janice. The following month, Janice moved to Kansas where she began to live
with another daughter, Peggy Redmon, who was appointed guardian. According
to Peggy, when Janice arrived in Kansas, she could not use a calculator to add
numbers and was not interested in bathing herself. By the time of trial Janice
was having hallucinations—i.e., seeing things that weren’t there. Peggy testified
that Janice had told her years ago that “it’s a lot easier to do what Albert tells
her to do than to have him get mad.”
F. This Action. In May 2020, Laura brought suit in the Kossuth County
District Court to set aside the January 2019 quitclaim deed. She alleged both
undue influence and lack of capacity. Following a bench trial, the district court
ruled for Laura on both grounds. It found that a confidential relationship between Albert and Laura existed, raising a presumption of undue influence. The
district court went on to conclude that Albert had not negated the presumption
by clear, satisfactory, and convincing evidence. Alternatively, the district court
found that Janice lacked the requisite mental capacity in January 2019 to
quitclaim her interest in the property to Albert.
3Lemmon testified that her impression of the note was as follows: “I would say that she
gave it to me mainly because she wanted me to have proof of everything in case there was a problem between Albert and her children.” 8
Albert appealed, and we transferred the case to the court of appeals. A
divided panel of the court of appeals affirmed on the basis of lack of capacity. We
granted Albert’s application for further review.
III. Standard of Review.
The parties agree that this case was tried in equity and is subject to de
novo review. See Jackson v. Schrader, 676 N.W.2d 599, 603 (Iowa 2003). In
equity cases, especially considering the credibility of witnesses, we give weight
to the fact-findings of the district court but are not bound by them. Iowa R. App.
P. 6.904(3)(g); see also Jackson, 676 N.W.2d at 603.
“Proof of undue influence must be by evidence that is clear, convincing,
and satisfactory. Evidence is clear, convincing, and satisfactory when there is no
serious or substantial uncertainty about the conclusion to be drawn from it.”
Mendenhall v. Judy, 671 N.W.2d 452, 454 (Iowa 2003) (citation omitted).
IV. Legal Analysis.
On further review, we have the blessing—or burden—of two sharply
divergent opinions from the court of appeals. Both are well-written and
insightful, but they differ in their analysis and conclusions. We agree with the
court of appeals majority that this is a “close case.” We also agree with the court of appeals dissent that this case has a “thin record.”4 We will first turn to undue
influence and then to the question of mental capacity.
A. Undue Influence. We have said that “[f]our elements are necessary to
establish undue influence.” Id. They are:
(1) The [grantor] must be susceptible to undue influence, (2) opportunity [on the part of the grantee] to exercise such influence and effect the wrongful purpose must exist, (3) a disposition [on the
4For example, although Laura had access to Janice’s financial records, she presented no
documentary evidence of Janice’s cash flow and spending, what happened to the proceeds from the 2016 sale of eighty acres of farmland, and what Albert received from Janice. 9
part of the grantee] to influence unduly for the purpose of procuring an improper favor must be present, and (4) the result must clearly appear to be the effect of undue influence.
Id. (alterations in original) (quoting Helgeson v. Henderson (In re Est. of Herm),
284 N.W.2d 191, 201 (Iowa 1979)). “Weakened mental condition of the grantor,
relationship of the grantor and the grantee, inequality of distribution, and
activity of the grantee are all factors that bear on the question of undue
influence.” Id.
1. The record here does not establish a confidential relationship or undue
influence. The district court held that Janice and Albert stood in a “confidential
relationship.” If a confidential or fiduciary relationship exists between the
grantee and the grantor, “the burden of proof shifts to the grantee to negate a
presumption of undue influence by clear, convincing, and satisfactory evidence.”
Id. at 454–55. A confidential relationship “embraces those multiform positions
in life wherein one comes to rely on and trust another in his important affairs.”
Id. at 455 (quoting Helgeson, 284 N.W.2d at 199). It “arises whenever a
continuous trust is reposed by one person in the skill and integrity of another.”
Id. (quoting Helgeson, 284 N.W.2d at 199).5
To rebut the presumption of undue influence arising from a confidential relationship, the grantee needs to “prove by clear, satisfactory, and convincing
evidence that the grantee acted in good faith throughout the transaction and the
grantor acted freely, intelligently, and voluntarily.” Jackson, 676 N.W.2d at 605.
The district court found that a confidential relationship existed between
Albert and Janice based on the following facts:
Albert had a friendly relationship with Janice and her husband since sometime in the 1990’s. When her husband died
5Albert does not argue for any change in our existing legal standards. See Est. of Workman
v. Workman, 903 N.W.2d 170, 172 (Iowa 2017) (declining to consider a change to the undue influence standard when the appellant had failed to preserve error). 10
Albert and Janice were around each other often. He was always around and they would often go places and drove a semi-truck together for a while. They were in business together and entered into a partnership agreement establishing Blue Acres Pork becoming equal partners in raising hogs. She transferred a tract of land to both of them as tenants in common. Her medical records prior to the automobile accident in January, 2017 exhibited mild cognitive impairment with deficits in working memory. Problems were observed with memory, judgment, reasoning, and planning. Her record indicates underlying dementia. Likewise, her medical records reflect dementia after the accident, all before execution of the Quit Claim Deed dated January 9, 2019. Laura observed that Janice was paying for things for Albert including food and gas. She also wrote a check to Menards at Albert’s instruction and for Albert’s benefit that came back with non-sufficient funds. Laura arranged to have some of the merchandise returned and paid restitution on the remainder of the funds due. Janice trusted what Albert told her to do as he instructed her to write some checks while she was in the hospital.
We accept these findings except for the conclusion that “Janice trusted
what Albert told her to do.” On our review, we disagree because it is clear that
Janice took advice from several quarters—from her daughters, from Albert, and
from Laubenthal. Janice was generous to Albert over the years; an outsider
might say generous to a fault. But the record indicates that Janice wanted to be
generous to Albert. As she put in writing, “[W]hat I help Albert Cruz is nobody[’s]
concern.” Janice understood that the checks she wrote him were for his benefit,
not hers. The remaining facts cited by the district court cover a variety of time
periods and in our view are insufficient to establish a confidential relationship.
Some other points should be noted. Albert had no formal education and could
not read or write well. Albert wasn’t a family member, and he lived apart from
Janice, together with his teenage daughter. He didn’t handle Janice’s finances;
either Janice or Laura did. He didn’t do the books for the partnership; either
Janice or Lemmon did. Thus, taken as a whole the proof presented at trial falls
short of demonstrating by clear and convincing evidence that Janice continuously relied on and trusted Albert. See Mendenhall, 671 N.W.2d at 454. 11
Setting aside the question of whether there was a confidential relationship,
the record does not demonstrate by clear and convincing evidence that Albert
procured the gift by undue influence. The direct evidence from Lemmon indicates
that Albert did the driving but Janice did the talking in January 2019. According
to Lemmon, Janice appeared to be the person mainly behind the decision to do
the quitclaim deed. She drew out the boundaries of the hog site herself on an
aerial photograph. The gift was part of a pattern of previous gifts to Albert. We
cannot say that the result “clearly appear[s] to be the effect of undue influence.”
Id. (quoting Helgeson, 284 N.W.2d at 201); see also id. (“Undue influence must
be present at the very time the transfer is made.”).
2. In analogous cases, we have found no confidential relationship or undue
influence. Prior undue influence cases involving inter vivos gifts provide guidance
here. Some time ago, we emphasized that the confidential relationship “should
be clearly established”—rather than inferred or presumed. Stephenson v.
Stephenson, 74 N.W.2d 679, 684 (Iowa 1956). “Otherwise it might become a
weapon to thwart the will of the one whose interest it is designed to protect.” Id.
In Stephenson v. Stephenson, we reiterated a longstanding rule that “[m]ere blood
relationship does not of itself create the legal trust or confidential relationship and change the burden of proof which rests upon the parties asserting such
undue influence.” Id. (collecting earlier cases). We declined there to find a
confidential relationship between two children and their terminally ill father:
We have said many times that transactions between an aged and infirm parent who has reposed confidence and trust in the child will be closely scanned by the court, and when those facts appear the burden is on the grantee to show the bona fides thereof. In the case at bar the defendants did the household chores, cared for their father in his sick bed and ran errands, but there is nothing which even hints that by performing these menial tasks they gained any dominance or control over their father. 12
Id. at 685 (citations omitted).
Likewise, in Groves v. Groves, we found that a confidential relationship did
not exist between a son and his eighty-six-year-old mother such as to warrant
setting aside her gift of farmland to him. 82 N.W.2d 124, 126, 131 (Iowa 1957).
We cataloged facts that were not sufficient to establish such a relationship: “a
close family relationship,” the fact that the son was “almost a daily visitor in
plaintiff’s home and did many errands for her,” and testimony that the son “was
plaintiff’s adviser is of little weight in the absence of evidence of facts bearing out
these assertions.” Id. at 131. We observed that a confidential relationship exists
“when one person has gained the confidence of another and purports to act or
advise with the other’s interest in mind.” Id.
In sum, Iowa decisions have repeatedly emphasized that family and
personal ties are not enough to create a confidential relationship in this context;
one person must have trusted the other to handle their affairs. See Else v.
Fremont Methodist Church, 73 N.W.2d 50, 57–58 (Iowa 1955) (reversing the
district court because it inferred a confidential relationship from “the religious
nature of the relationship” even though the defendants had “handled no
business matters” for the plaintiff’s wards and there was no showing that the wards had “reposed any special faith and confidence” in the defendants); Menary
v. Whitney, 56 N.W.2d 70, 76 (Iowa 1952) (holding that the district court erred
in finding a confidential relationship between wife and husband so as to shift the
burden of proving undue influence); Wilson v. Wilson, 34 N.W.2d 911, 915 (Iowa
1948) (“It is true defendant’s father was associated with decedent in the
insurance business but there is no such showing as to establish the existence
of confidential relationship, or of such dependence of decedent upon his son and
grandson as to cast on them the burden of disproving undue influence.”); Hindman v. Hindman, 988 N.W.2d 420, 430 (Iowa Ct. App. 2022) (finding no 13
confidential relationship between a husband and a wife in light of the fact that
“no one at the closing testified there was any indication that [the wife] was
unaware or incapable of understanding the details of the transfer”); Clark v.
Swope (In re Est. of Clark), 357 N.W.2d 34, 37–38 (Iowa Ct. App. 1984) (holding
that a son was not in a confidential relationship with his father and noting that
“[t]he purpose of the doctrine is to defeat and correct betrayals of trust and
abuses of confidence”).
As we summed up in a case where we declined to find a confidential
relationship between a wife and her husband, “There is no showing that anyone
had taken over [the husband’s] affairs in such a sense as to constitute a
confidential relationship.” Klein v. Klein, 29 N.W.2d 163, 169 (Iowa 1947)
(quoting Arndt v. Lapel, 243 N.W. 605, 609 (Iowa 1932)). Applying that standard
here, Albert didn’t take over Janice’s affairs. The record indicates that she made
gifts to him because she wanted to reward him not because she placed her trust
and confidence in him.
3. Cases finding a confidential relationship or undue influence are
distinguishable. In Mendenhall v. Judy, we upheld a district court’s order setting
aside a mother’s gratuitous transfer of stock in a family corporation to one daughter. 671 N.W.2d at 454. The mother’s will would have left that property to
her daughter and her two sons. Id. at 456. Additionally, she had previously made
known her desire for an equal division. Id. But the daughter lived in the same
town as the mother, called on her five or six times a day, and had a power of
attorney from the mother. Id. The daughter “either personally took care of or saw
that [the mother’s] daily physical needs were met.” Id. at 460. A “very close,
loving” relationship emerged. Id. Then, the daughter hired an attorney to arrange
for the gift of the stock to her. Id. at 457. The sons were informed after the gift document had been executed. Id. Further, the mother “had the notion that if she 14
transferred the stock to [the daughter], [the daughter] would keep her out of a
nursing home. [The daughter] knew this, and we are satisfied she used this
knowledge to her advantage to convince [the mother] to transfer the stock to her.”
Id. at 463. We approved the finding of a confidential relationship, while also
sustaining the district court’s separate finding that undue influence had
occurred even without the benefit of a presumption based on the presence of a
confidential relationship. Id. at 460.
Here, by contrast, Albert wasn’t a family member and, although he ran
errands and spent a lot of time with Janice, he wasn’t a daily caretaker for her.
He didn’t occupy a fiduciary position. Although Lemmon testified that Albert took
care of things for Janice and that she came to view him “kind of like a son,” there
was a limit to his role. And there is nothing in the record indicating that Albert
made representations or commitments to her to induce the transfer of her
interest in the hog site to him. There is also no evidence that Janice had another
plan for the hog site that Albert caused her to alter. For example, none of the
daughters testified that Janice had promised them her interest in the hog site.
We acknowledge that “[d]irect proof of undue influence is not required. In fact,
undue influence may be and usually is proven by circumstantial evidence.” Id. at 454. But where the direct evidence from the accountant Lemmon tended to
negate the existence of undue influence, more was needed, and the trial record
doesn’t provide it.
Generally, we have found a confidential relationship in an action to set
aside an inter vivos gift on the basis of undue influence when the donee managed
the donor’s affairs and the donor believed the donee was acting in the donor’s
interest—not their own. Thus, in Palmer v. James (In re Estate of Baessler), a
father-daughter confidential relationship was established where the daughter “decided to move her father in with her rather than placing him in a nursing 15
home” and “was involved in the daily conduct of [the father’s] life and financial
affairs.” 561 N.W.2d 88, 91 (Iowa Ct. App. 1997), abrogated on other grounds by
Jackson, 676 N.W.2d 599.
And in Helgeson v. Henderson (In re Estate of Herm), we found that the
confidential relationship existed “at least on and following the date of execution
of the power of attorney” in favor of the decedent’s nephew. 284 N.W.2d at 200.
The nephew had arranged for the signing when his aunt was “helpless,
bedridden, incontinent with respect to her kidneys and bowels, unable to walk,
falling asleep almost involuntarily, and ‘[h]er level of conscious awareness was
almost zero.’ ” Id. at 194 (alteration in original). Following the signing, the
nephew arranged various transfers of assets in his favor. Id. at 195. The
witnesses to the signing “were never called to testify in [the] litigation.” Id.
Similarly, in First National Bank in Sioux City v. Curran, we upheld the
district court’s finding of a confidential relationship in another situation where
the donee had taken over the donor’s affairs. 206 N.W.2d 317, 319, 322 (Iowa
1973) (en banc). The donee had become acquainted with the donor when the
donor was already ninety years old and in a geriatric ward. Id. at 319. The donee
handled the donor’s financial affairs completely and “even had possession at her home of [the donor’s] financial records.” Id. at 320. The transfers were signed
when the donor was ninety-six or ninety-seven years at the geriatric ward in the
presence of the recipient and her husband. Id.
In Jeager v. Elliott, we concluded that a confidential relationship existed
between a niece and her husband and an aunt in her mid-eighties who “was
failing mentally as well as physically” given that the niece and her husband “took
care of [the aunt’s] business.” 134 N.W.2d 560, 563–65 (Iowa 1965). The aunt
“had no independent advice.” Id. at 566. In Luse v. Grenko, the mother moved in 16
with the daughter who handled her financial transactions. 100 N.W.2d 170, 173
(Iowa 1959). As we put it:
It seems quite clear decedent because of her inability to read, write or speak the English language, her age and failing health was unable to transact business for herself. Naturally she turned to defendant and depended upon her to do it for her. Defendant had gained her mother’s confidence and purported to act with the latter’s interest in mind.
Id. at 174; see also Woolwine v. Bryant, 54 N.W.2d 759, 760 (Iowa 1952) (finding
a confidential relationship where the donee handled the donor’s finances and
“[s]he was the only one [he] had to depend on”); Lundvall v. Charbonneau (In re
Lundvall’s Est.), 46 N.W.2d 535, 537 (Iowa 1951) (deciding that a married couple
were in a confidential relationship where the husband “suffered a head injury
. . . [making him] less able to look after his business affairs,” and the wife
changed the information on his bank accounts and made his bonds payable to
herself upon his death); Curtis v. Armagast, 138 N.W. 873, 880 (Iowa 1912)
(finding a confidential relationship where the grantee was the grantor’s son and
“[h]e was her agent, and for nearly [twenty] years had been intrusted by her with
the management of the[] lands comprising practically all her worldly estate”
whereas she “put implicit trust and confidence in his ability and his purpose to do whatever was right with respect to her property and property interests”).
Again, none of those cases, each of which involves a donee who had taken
over the donor’s business or financial affairs, describes the present situation.
The record does not establish by clear, convincing, and satisfactory evidence that
there was a confidential relationship. Notably, under our caselaw, proof of a
confidential relationship often seems to involve proof that the donee was “the
dominant person” and the donor was “the subservient one.” Luse, 100 N.W.2d
at 172. Otherwise stated, to prove a confidential relationship in order to shift the burden for undue influence purposes, one has to prove that the grantee was 17
already a dominating influence on the grantor. In a sense, we have folded the
undue-influence inquiry into the confidential-relationship inquiry. See, e.g.,
Peoples Bank & Tr. Co. of Cedar Rapids v. Lala, 392 N.W.2d 179, 185–86 (Iowa
Ct. App. 1986) (“The gist of the doctrine of confidential relationship, therefore, is
the presence of a dominant influence under which the act is presumed to have
been done.”).
Cases where our courts have found undue influence without a confidential
relationship are also distinguishable. For example, in Fisher v. Estate of Welch
(In re Estate of Welch), the court of appeals passed over the issue of confidential
relationship and found that the wife had unduly influenced her husband. 534
N.W.2d 109, 112 (Iowa Ct. App. 1995) (en banc). There, a man had suffered a
“crippling heart attack,” could not drive and “could not live alone,” “suffered from
severe depression and was suicidal,” and “was also an alcoholic.” Id. He relied
on his wife (whom he had just married) “for transportation, to remind him to
take his medicine, for care when he had angina attacks, and for emotional
support.” Id. He “became isolated from his family and medical assistance.” Id.
During the brief eight-month marriage before the husband died, he transferred
“over $330,000 of assets, annuities, and insurance” to his wife. Id. at 111. Those aren’t the facts here. Albert was neither a newcomer in Janice’s life
nor was he her only link to the outside world. Rather, he simply maintained the
close friendship with Janice that he had always had. Janice did the talking at
the key 2019 meeting with Lemmon.
Admittedly, some aspects of the present case are troubling. Because of her
weakened physical and mental condition, Janice was susceptible to improper
influence. Albert had urged Janice to sell the eighty acres in 2016, which she
did, although Janice also received advice from Laubenthal on that transaction. Also, the typical pattern is for the surviving spouse of a couple that had farmed 18
to favor family members in disposing of any farm-related real estate. But Janice
and Albert had been involved in the hog site together for the last fifteen years,
and she had previously donated his original half-share to him. The conveyance
of the remaining half still left Janice with 150 acres of farmland. Notably, none
of her children farmed. While the record displays a pattern of Albert asking for
money and Janice responding by giving him money, the record also indicates
that it was Janice’s choice to engage in this ongoing practice. See Jackson, 676
N.W.2d at 605 (placing weight on the donor’s past donative practices in finding
no undue influence as to certain transactions).
For the foregoing reasons, we find that the record fails to establish a
confidential relationship by clear, convincing, and satisfactory evidence and fails
to establish that Albert exercised undue influence with respect to the execution
of the January 2019 deed.
B. Mental Capacity. “A party alleging a grantor’s insufficiency of mental
capacity to execute a deed carries the burden of proving by clear, convincing,
and satisfactory evidence that the grantor failed to ‘possess “sufficient
consciousness or mentality . . . to understand the import of her acts” when the
deed was executed.’ ” Todd v. Todd (In re Est. of Todd), 585 N.W.2d 273, 276 (Iowa 1998) (omission in original) (quoting Daughton v. Parson, 423 N.W.2d 894,
896 (Iowa Ct. App. 1988)). We have said,
[T]he burden is upon the plaintiffs to establish by clear, satisfactory and convincing testimony that the grantor, at the time he executed it, did not understand in any reasonable manner the nature of the particular transaction in which he was engaged and the consequences and effects upon his rights and interests.
Stephenson, 74 N.W.2d at 681. “The courts have uniformly upheld the right of
every person to dispose of his property freely and in accordance with his wishes, and have refused to permit such right to be disturbed without strong proof.” Id. 19
The district court reasoned that
[Janice’s] medical records indicated as early as 2017 that she had dementia. The dementia in combination with her age and physical health, the lack of consideration, and the improvident nature of the transaction given that she retained the debt on the property convinces this court that from the entire record there is clear, convincing, and satisfactory evidence that the grantor, Janice, did not possess sufficient consciousness or mentality to understand the import of her acts when the deed was executed.
In short, the district court zeroed in on Janice’s cognitive assessments and “the
improvident nature of the transaction.” As before, we accept the district court’s
findings on these particular points, but as applied to this case they do not
establish a lack of mental capacity by clear, convincing, and satisfactory
evidence as of the time Janice executed the deed.
The ultimate question is what Janice understood when she signed the
deed. See Todd, 585 N.W.2d at 276. Lemmon’s testimony, taken as a whole,
indicates that Janice was aware of what she was doing. According to Lemmon:
Q. And what was it exactly that Janice was asking you to do?
A. She wanted me to do a quit claim deed for her to transfer the property over to Albert.
Lemmon added that Janice “even drew out the description of it and where she wanted the lines to go on an aerial photograph.” Lemmon further testified that
Janice understood she had children and that they would be the people who
would naturally inherit her estate. Lemmon also testified that Janice appeared
“to be in a similar mindset” in regard to her decision-making capability as she
had possessed in prior encounters. See Oehler v. Hoffman, 113 N.W.2d 254, 260
(Iowa 1962) (upholding a deed executed four days before the grantor’s death,
despite a lack of capacity challenge, where the attorney who prepared the deed
testified that the grantor “told him she wanted the property to go to the [grantees]”). 20
The district court didn’t discuss Lemmon’s testimony in its conclusions of
law. Nor did it question her credibility. Lemmon may not have been totally
disinterested: anyone would have a natural tendency not to admit they facilitated
a transaction where someone was taken advantage of. Still, Lemmon was less
interested than the daughters and Albert. And their testimony was generally
rather vague, especially as to time.
The district court seemingly concluded that the assessments and the folly
of giving away this property outweighed other factors, principally Lemmon’s
testimony. Significantly for our review purposes, neither of the two matters the
district court cited—the assessments and the terms of the transaction—involved
witness credibility. The assessments were introduced only as documentary
evidence, and the terms of the transaction were not disputed.
On our review, the assessments certainly raise a question about Janice’s
mental capacity, but they do not foreclose the possibility that she understood
what she was doing at Lemmon’s office in January 2019. As we have said,
Mere mental weakness in a grantor will not invalidate a deed. To have that effect, the mental powers must be so far deteriorated or destroyed that the grantor is incapable of understanding in a reasonable degree the nature and consequences of the instrument he executes.
Else, 73 N.W.2d at 61–62 (quoting Nowlen v. Nowlen, 98 N.W. 383, 384 (Iowa
1904)).
Laura didn’t develop the record in this area further, for example, by
offering expert testimony that the assessments meant that Janice could not have
comprehended what the deed meant or testimony from a treating physician that
Janice was by then no longer competent in business matters. Cf. Costello v.
Costello, 186 N.W.2d 651, 655 (Iowa 1971) (“[A]ttending physician, with prior experience in the field of psychiatry, voiced the factually substantiated expert 21
opinion, decedent was utterly incompetent and incapable of any understanding
as to what she was signing or the nature of the controverted instruments
executed by her.”); Charlson v. Brunsvold, 89 N.W.2d 344, 348 (Iowa 1958)
(finding a fact issue on mental capacity in light of, inter alia, attending
physician’s testimony that the donor “had no memory and was not capable of
performing business or financial transactions”); Daughton, 423 N.W.2d at 897
(reversing a district court finding that the grantor had sufficient mental capacity
to transfer her farmland by deed when, among other things, her attending
physician “testified that her state of mind was such that she would not have had
a reasonable perception of the nature and terms of the contract”).
Our caselaw has instances where we found a donor with strong signs of
dementia nonetheless possessed the mental capacity to make a gift. For example,
in Wilson v. Wilson, the donor was described as dressing unusually, “using
various parts of the house as a toilet, turning on gas jets, . . . getting lost in the
neighborhood,” failing to recognize people, being careless in handling money,
and engaging in “peculiar conduct in many other ways.” 34 N.W.2d at 912. His
attending physician said that he “was becoming senile.” Id. at 913. Yet the
physician “freely admitted the possibility of subsequent sane or lucid intervals, though not of any permanent recovery.” Id. at 914. And we noted, “The
transaction itself is neither so incredible nor so unusual as to arouse wonder or
suspicion.” Id. In the end, we deferred to the findings of the district court, which
had deferred to the testimony of those who were direct witnesses to the
transaction. Id. at 914–15. They reported that the donor understood what he was
doing that day. Id.
Likewise, in Stephenson, we determined that the testimony of the
witnesses to the actual transaction—which the grantor approved with a nod of his head—was “almost conclusive” despite evidence that the grantor didn’t 22
recognize people, a doctor found the grantor in a coma three days afterward, and
another doctor who had examined the grantor five days beforehand noted that
the grantor “[d]oes not seem to understand what is happening.” 74 N.W.2d at
681–83. As we put it, “The crux of this case and the principal question for the
court to decide was whether at the time of the execution of the deed grantor was
shown to lack sufficient consciousness or mentality to understand the import of
his acts.” Id. at 681.
In Wilcox v. Hamborg, we upheld a deed executed by an eighty-one-year-
old despite the testimony of several witnesses that her mental faculties had been
declining. 46 N.W.2d 530, 530, 532–34 (Iowa 1951). In particular, the testimony
of a businessperson who “knew [the grantor] well” and “talked with and observed
[her] when she signed and acknowledged the execution of the deed, convinced
this court that the record below amply sustains the findings and judgment of the
trial court.” Id. at 534.
As for the improvidence of the transaction, that is certainly a relevant
consideration. See Palmer, 561 N.W.2d at 92 (“The Court is entitled to take into
consideration [on the issue of mental capacity] . . . whether or not the conveyance
was improvident . . . .” (alteration in original) (quoting Daughton, 423 N.W.2d at 896)). But we make a couple of observations. First, the improvidence can be
overstated. Although Janice remained liable for the mortgage debt on the
property (along with Albert), the record indicates that the hog site had been cash-
flowing and netted a positive, if modest, sum while the mortgage was being paid
down. Laura put on evidence to the general effect that Janice was in a tight
financial position, but there were few specifics. Second, while the transaction
may have been “unreasonable,” that doesn’t mean it was “unnatural.” Charlson,
89 N.W.2d at 348 (“An unnatural and unreasonable disposition of property may be shown as bearing on the issue of mental condition.” (quoting Richmond v. First 23
Nat’l Bank of Pleasantville, 179 N.W. 59, 61 (Iowa 1920))). Janice had a history
of bestowing charity on Albert. Albert lived on the hog site, and Janice may have
wanted him to continue to have that home after she were to pass on.
Again, this is a close case and there are facts weighing in favor of Laura
and against Albert. According to Laura, Janice did not recall signing over the
property to Albert when Laura confronted her mother just two months later. But
this does not necessarily mean she lacked an understanding of the deed when
she executed it. See, e.g., Wilcox, 46 N.W.2d at 534 (“The record shows that even
in the later years when [the grantor] was failing physically and mentally, there
were many times when her mind was clear . . . .”).
We hold that the record fails to show by clear, convincing, and satisfactory
evidence that Janice lacked the mental capacity to convey her interest in the hog
site to Albert.
V. Conclusion.
For the foregoing reasons, we reverse the judgment concluding that the
deed of January 9, 2019, should be set aside based on undue influence and lack
of mental capacity, and we vacate the decision of the court of appeals. We remand
to the district court for entry of judgment in favor of Albert and further proceedings consistent with this opinion.
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT REVERSED AND REMANDED.