For purposes of evaluating a claim of undue influence, the existence of a confidential relation requires the dominant party to exercise the utmost good faith and to refrain from obtaining any advantage at the expense of the confiding party. While the "burden of proof" never shifts from the one who undertakes to set aside a deed on the ground of undue influence, there is a burden that does transfer over to the other side when evidence offered shows a relationship of trust and confidence. The latter type burden this court has called the burden of going forward with the evidence. The burden then rests on the dominant parties to show that they took no unfair advantage of their dominant position.
Before her death, the decedent, an elderly widow, became friends with the buyers. She conveyed her home to them at a low price, with payments to be made at an interest rate of one percent. The sale pushed through despite contrary advice from the widow’s attorney. After her death, the administrator filed an action alleging that the deed, and other cash transfers to the buyers, had been obtained through undue influence. The trial court entered judgment for the buyers.
Where there is a confidential relationship between home buyers and a widow, does that automatically give rise to a a finding of undue influence?
No, the buyers discharged their burden that the sale was free from undue influence.
On appeal, the court affirmed. The court held that a confidential relationship existed between the parties due to the contacts between the parties and the buyers' promise to take care of the decedent and thus that the buyers had a duty to refrain from taking advantage of their dominant position. The court further held, however, that the buyers met their burden to go forward with evidence that the sale of the home had been free from undue influence. The court noted that the decedent had been healthy and mentally alert, that she had lived in the home rent-free for over a year, that the buyers had undertaken some financial responsibility for the decedent after she entered a nursing home, and that the decedent had received independent legal advice before entering into the transaction.