Walter E. Wilhite Revocable Living Trust v. Northwest Yearly Meeting Pension Fund

916 P.2d 1264, 128 Idaho 539, 1996 Ida. LEXIS 38
CourtIdaho Supreme Court
DecidedApril 10, 1996
Docket21005
StatusPublished
Cited by17 cases

This text of 916 P.2d 1264 (Walter E. Wilhite Revocable Living Trust v. Northwest Yearly Meeting Pension Fund) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Walter E. Wilhite Revocable Living Trust v. Northwest Yearly Meeting Pension Fund, 916 P.2d 1264, 128 Idaho 539, 1996 Ida. LEXIS 38 (Idaho 1996).

Opinion

SILAK, Justice.

The plaintiff, the Walter E. Wilhite Revocable Living Trust (Trust), brought this action seeking to rescind a deed of land to the defendant, the Northwest Yearly Meeting Pension Fund (Pension Fund). The deed was given to the Pension Fund allegedly to satisfy a pre-existing debt. The Pension Fund counterclaimed praying that if the deed were rescinded, the debt and security therefor should be reinstated. The district court voided the deed, but refused to reinstate the debt. The Pension Fund appealed. The Trust cross-appealed the district court’s refusal to instruct the jury as to its claim for trespass and punitive damages.

I.

FACTS AND PROCEDURAL BACKGROUND

In August of 1979, Sunny Ridge Manor (Sunny Ridge) approached the Pension Fund for a loan to finance the construction and operation of a retirement home near Nampa, Idaho. At the time, Walter Wilhite was both treasurer for Sunny Ridge and a member of the Pension Fund’s Investment Committee. The Pension Fund’s Investment Committee approved a $100,000 loan to Sunny Ridge.

*543 From the outset, Sunny Ridge experienced financial difficulties. In order to alleviate these financial woes, Walter Wilhite assigned some personal commercial options to Sunny Ridge to aid in its acquisition of some logging property near Riggins. In exchange, Sunny Ridge executed a promissory note to Walter and Kathleen Wilhite in the amount of $340,-000. To secure the note, the Wilhites took a second mortgage on the property. This mortgage was not recorded. The contract between the original buyer and seller held the first position (Overlander contract).

On June 1,1981, Sunny Ridge renegotiated the $100,000 loan with the Pension Fund and executed a new note in the amount of $109,-600. Later that year, Sunny Ridge borrowed an additional $100,000 and executed another promissory note in favor of the Pension Fund. A protection warranty deed covering the Riggins property was executed to secure this note.

In 1982, another attempt was made to resolve Sunny Ridge’s financial plight. The Wilhites proposed that they, Sunny Ridge, and the Pension Fund enter into an escrow agreement (first escrow) to transfer title to the Wilhites. In the first escrow, the parties placed (1) a corporate warranty deed executed by Sunny Ridge transferring the Riggins property to the Wilhites; (2) a promissory note executed by the Wilhites payable to the Pension Fund in the amount of $214,120 and due on January 15,1984 (January note); and (3) a protection warranty deed from the Wil-hites pledging the Riggins property as security for the note.

Later that year, Walter Wilhite found a purchaser, Moría Corporation (Moría), for the Riggins property. Sunny Ridge, the Wil-hites, and Moría entered into an escrow agreement (second escrow). The Pension Fund was not a party to the second escrow. According to the second escrow, Moría agreed to pay off the Overlander contract, execute a promissory note in favor of the Wilhites for $50,000, and assume the payments on a second promissory note (September note) executed by the Wilhites in favor of the Pension Fund. The September note was to be due January 15, 1994 (ten years after the January note was due), and was executed in the amount of $231,342.14. The protection warranty deed from the first escrow was placed in the second escrow, but the earlier January note remained in the then closed first escrow.

In 1983, Walter Wilhite created the Trust. He appointed himself and his son, Larry Wilhite, as co-trustees of the Trust. A year later, the Wilhites assigned their interests in the Riggins property to the Trust. This assignment was recorded.

In the meantime, Moría experienced financial difficulties. When Moría failed to keep the Overlander contract current, Walter Wil-hite borrowed $45,000 from U.S. National Bank of Oregon to pay off the Overlander contract. He then asked the Pension Fund to assume the payments on the note to U.S. National Bank of Oregon. The Pension Fund agreed and eventually paid the balance of the note ($51,753.52).

Moría defaulted on July 23,1985. In 1986, Walter Wilhite requested the Pension Fund to make a $5,000 payment to Moría to facilitate a settlement agreement whereby Moría would deed the Riggins property to the Wil-hites. The Pension Fund agreed and paid Moría $5,000. Title to the Riggins property was quieted and returned to the Wilhites. As a result, the escrow holder returned the 1982 protection warranty deed which had been placed in the first escrow and the September note to the Wilhites’ Idaho attorney.

In May of 1986, Walter Wilhite was diagnosed with a brain tumor and surgery was set to determine the nature and extent of the tumor. Walter Wilhite met then with the Pension Fund’s secretary-treasurer, Beatrice Goldsmith, to discuss revisions to a “land for debt” contract. The original draft of the contract was prepared by David Whitney, who at the time appears to have been representing both the Pension Fund and the Wil-hites. In it, title to the Riggins property *544 would be transferred to the Pension Fund in exchange for a cancellation of any debt Walter Wilhite owed to the Pension Fund.

On June 11, 1986, Walter Wilhite underwent surgery to remove the tumor. The surgery confirmed both the cancer diagnosis and that Walter Wilhite was terminally ill. He was subsequently transferred to Friends-view Manor retirement, home.

Mrs. Goldsmith prepared the “land for debt” contract from Mr. Whitney’s drafts, made the changes Walter Wilhite requested, and delivered them to him at Friendsview Manor on December 5, 1986. On that same date, Walter Wilhite, as trustee for the Trust, signed the contract and a warranty deed conveying the Riggins property to the Pension Fund. Three days later, the Pension Fund recorded the warranty deed. However, neither the contract nor the warranty deed directed the other trustee, Larry Wilhite, to remove the Riggins property from the Trust as required by Article II of the Trust. In addition, no writing evidencing Walter Wilhite’s intention to revoke or amend the Trust was delivered to Larry Wilhite during Walter Wilhite’s lifetime pursuant to Article VI of the Trust. On December 24,1986, Walter Wilhite died.

Sometime later, the Pension Fund determined that a logging agreement for the Rig-gins property entered into by Larry Wilhite, acting as trustee, with Gene Swift, (Swift Contract) was economically disadvantageous. As a result, the Pension Fund negotiated a cancellation of the Swift Contract for $35,000. Subsequently, Larry Wilhite entered into another logging contract and sold the timber at a price higher than that in the Swift Contract.

Larry Wilhite, as surviving trustee of the Trust, filed suit seeking rescission of the December 1986 deed executed by Walter Wilhite. The Pension Fund counterclaimed and filed a third-party complaint against the estate of Walter Wilhite to recover on the 1982 promissory note and protection warranty deed executed by Walter Wilhite.

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Bluebook (online)
916 P.2d 1264, 128 Idaho 539, 1996 Ida. LEXIS 38, Counsel Stack Legal Research, https://law.counselstack.com/opinion/walter-e-wilhite-revocable-living-trust-v-northwest-yearly-meeting-idaho-1996.