Friday, February 21, 2014

Maintaining property in a family for generations to come can be tricky.  As the parties in Hoefer v. Musser found out, the intention of a decedent speaks volumes and can overcome procedural deficiencies such as an improper recording of a warranty deed.  In Hoefer, the Missouri Court of Appeals (Southern Division) recently held in favor of a decedent’s wishes to keep a farm in his family for “generations and generations.”  See Hoefer v. Musser, No. SD 32576, 2013 WL 6800823 (Mo. App. S.D. Dec. 23, 2013).

In Hoefer, the decedent’s nephew (Hoefer) was appointed as successor trustee to decedent’s irrevocable trust—the “Vineyard Dwain Hoefer Trust,” created during Hoefer’s lifetime.  Musser, the decedent’s niece, was appointed as personal representative to Hoefer’s estate.  The trust’s only asset was the decedent’s farm, which he intended to keep in his family for as long as possible by granting the farm to Hoefer until his death, then to Matthew Hoefer until his death, then to Matthew Hoefer’s living children or lawful heirs.

After executing the trust documents and warranty deed transferring ownership of the farm to the trust, the decedent’s attorney gave him the original copies of the documents and instructed him to record both the trust and warranty deed.  Approximately three months after execution of the trust, Musser called Hoefer to indicate that the trust had not yet been recorded.  Hoefer recorded the trust shortly thereafter.

Following Hoefer’s recording of the trust, the farm house burned down–resulting in a total loss of the property.  Less than a year after the farm’s destruction, Hoefer, with the decedent’s permission, built a house on the farm.  Not long after Hoefer built the house on the farm, the decedent passed away.  Musser, in her capacity as personal representative of the decedent’s estate, instituted a probate action and listed the farm land as an asset of the estate.

Hoefer moved to quiet title, or in the alternative, unjust enrichment for the cost of the improvements done on the farm.  Hoefer argued that the decedent had let him build the home on the farm because it was Hoefer’s property.  Musser argued that the decedent never recorded the warranty deed, and therefore the transfer of the farm as an asset to the trust never occurred.

After a bench trial, the trial court ruled in favor of Hoefer, finding that the intentions of the decedent pointed his desire to keep the farm in his family.  Hoefer provided evidence and witness testimony regarding the decedent’s actions and intentions.  For example, witnesses testified that decedent had offered the farm to other members of his family and even Musser herself, who all declined, before the decedent granted the property to Hoefer.

Although the decedent’s intentions were a substantial focus of the trial court’s ruling, the crux of the case came down to a procedural aspect: the decedent’s failure to record the warranty deed transferring the farm to the trust.  Musser presented evidence that although she was present for the execution of the trust, she did not see the warranty deed in the papers given to the decedent for him to record.  Furthermore, the original warranty deed had been given to the decedent with instructions on how to record, and was presumed to have been lost in the fire that destroyed the farm.  The parties did not contest that the warranty deed had in fact, never been recorded.

After the trial court ruled in Hoefer’s favor, Musser appealed, arguing that the farm was never properly transferred to the trust in that the deed delivering title to the trust was not accepted by the grantee nor recorded.  The Missouri Court of appeals was bound to uphold the trial court’s ruling unless there existed no substantial evidence to support judgment, the judgment was against the weight of the evidence, or the trial court erroneously declared or applied the law.

A deed must be delivered for it to operate as a transfer of ownership of land because the delivery gives the instrument force and effect.  Rhodes v. Hunt, 913 S.W.2d 894, 900 (Mo. App. S.D. 1995).  Here, the burden of showing that the deed was not delivered was upon Musser, as the party contesting its delivery.  The Missouri Court of Appeals looked at case law precedent holding that although recording creates a presumption of delivery, it does not operate as delivery of the deed.  In fact, delivery may be made even though the grantor remained in possession of the deed.  O’Mohundro v. Mattingly, 353 S.W.2D 786, 792 (Mo. 1962).

The court also looked to precedent that held that the failure to record a deed conveying title to property to a trust does not affect the validity of the trust.  Newtom v. Winsatt, 791 S.2.2d 823, 829 (Mo.App.S.D. 1990).  Under Newton, the Court found substantial evidence for the trial court to find an effective delivery and acceptance of the warranty deed.

Finding that it was undisputed that the decedent intended to keep the farm in his family, and that he intended to convey the farm by warranty deed to the trust, the Court of Appeals upheld the trial court’s decision.  In doing so, the Court deferred to the trial court’s credibility determinations, and the weight given by the trial court to witness testimony.

Although certain technical requirements were lacking in Hoefer’s case, the overwhelming evidence of decedent’s intentions to maintain the farm in his family for “generations and generations” ultimately prevailed.

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