Cluff v. Cluff , 30 Utah 2d 293 ( 1973 )

ELLETT, Justice:

The plaintiff is the second wife of William Bert Cluff, deceased, and stepmother of the defendant Verne Cluff. She appeals from a judgment of no cause of action rendered against her in a suit to collect on a debt evidenced by a lost or destroyed promissory note.

Some time in 1938 Verne’s father and mother bought a service station and for reasons not revealed in the record caused title to be placed in the name of Verne, who was then 16 years of age. Verne was then a student in high school and worked with his dad in the service station. Three years later the property was leased to Milton Melville. The lease was signed by Verne and his parents and contained the following language: “That Verne Cluff is the legal owner and Bert W. Cluff and Ruby Cluff the equitable owners of the following described property . . .”

The legal description of the land followed.

On March 25, 1946, Verne Cluff by warranty deed conveyed his interest in the property to his father and mother as joint tenants. Thereafter the mother died, and the father as survivor became the sole owner of the property.

In February, 1952, the father married Nora, the plaintiff and appellant herein.

About 1959 Nora and her husband moved away and leased the service station to Verne. There was a trailer park upon the remaining land, which they operated during the summer months. This arrangement continued until October, 1962, when Nora and Bert by warranty deed conveyed most of the land, including the trailer park and service station, to Verne and his wife.

Verne signed the note in question under a later date whereby he agreed to pay $36,000 to Bert Cluff at the rate of $150 per month for 20 years without interest. Nora explained the delay in signing the note as being due to the fact that complete delivery could not be made until January 1, 1963, because a part of the property was under lease to another person.

Verne paid $150 a month beginning with January, 1963, and continuing until Bert’s death in January, 1967, a total of 49 payments amounting to $7350.

Bert reported the sale of the land to Verne as an installment sale on his income tax statements and reported a profit of 61% of the amount received each year and paid taxes thereon.

The court admitted into evidence a piece of paper containing the following wording written in the hand of Bert:

Contract $150.00 20 years start Jan 1 1963 no interest Deed from Bert Cluff Nora B. Cluff to Verne. Payment to B. C. until [sic] death and then to family until [sic] paid. 138 ft.

The account book kept by Bert was also received into evidence and shows an entry as follows:

Sold for $150.00 per month for 20 years Sale garage trailer park Fillmore

Depreciation Cost allowed

Garage service st. 7773.00 4164.28

Trailer park 3100.00 1455.98

Real Estate cost 8000.00

Verne’s brother Joe, who lived in California, testified that in 1965 he received a letter from their father in which was enclosed a sealed envelope with the notation “To Verne” written in the upper left-hand corner and that the letter directed him to keep the sealed envelope until the father’s death and then to give the sealed envelope to Verne or to destroy it. He further testified that when he learned of his father’s death, he opened the sealed envelope and discovered the note signed by Verne and written across the face of it the words “Paid in full.” He further testified that he brought the envelope and a photostatic copy of the note with him to his father’s funeral and gave them to Verne and that a few weeks later he sent the original note to Verne by registered mail.

Verne testified about the note and claimed that he destroyed it or lost it, so that it could not be placed in evidence.

The court found that the note and monthly payments were solely between Verne and his father and that the same were cancelled during the lifetime of the father. It also found that there was no consideration given for the note for the reason that Bert and Ruby Cluff held the property as trustees for Verne, and when it was deeded back to Verne, it was pursuant to an agreement made in 1946 whereby the parents only took title from Verne in order for him to avoid possible creditors. It also found that Verne signed the note to evidence a future gift to his father for the life of the father only. These findings cannot stand.

Over objection made, the court permitted Verne to testify to an agreement in 1946 with his father whereby the father agreed “. . . that he could deed it back to me.”

The father is now dead, and the transaction testified to was equally within the knowledge of the witness and the deceased under whom plaintiff claims. Death having sealed the lips of the deceased, the law seals those of the survivor who seeks to relate the facts of the transaction as he would have them to be.¹ It was error to permit the testimony to be given.

Without this testimony there is nothing upon which the court could find as it did. In fact, Verne did not know what his interest in the land was when it was put in his name nor what that of his parents was. He claims that it was his land because it was in his name. However, when asked if he considered that his parents had an interest in the land, he testified as follows:

A Well, yes, we all worked together. It was—

Q Well, answer my question, then, you didn’t feel in 1938 to 1947 that you owned the property completely?

A Yes, I figured I owned it completely.

Q All right. Did you feel they had any interest at all in the property?

A As far as the property itself, the deed, the property was mine. I always—

Q My question is, did you feel they had any interest at all in the property from—

A Yes, being my guardian and parents, yes.

Q Just as guardian and parent?

A Yes.

Q Didn’t you feel they had an equitable interest in that property ?

A Well, I knew that we were making our living off of the property.

It thus appears that the family bought the service station with money earned from operating it and that for reasons unknown had the title placed in the name of their 16-year-old son, who worked with them.

There is no competent evidence in the record to show what the consideration was for the deed from Verne to his parents. There is evidence of what the consideration was for the note from Verne to his father, to wit: The transfer of the land by the father and the surrender by the stepmother of her dower right.

If Bert mailed the note to Joe with directions to destroy the sealed enclosure or to give it to Verne upon Bert’s death, he made Joe his agent to carry out the request. He could have given other directions to Joe at any time, and Joe would have been duty bound to obey them. The fact that Verne continued to make payments of $150 per month from 1965 to the death of Bert in 1967 and the further fact that Bert received the payments as made show that there was no present intention on the part of Bert to forgive the debt during his lifetime and thus relieve Verne from paying it. It was merely an attempt to make a testamentary disposition and would be void.

There has been paid only $7350 on a $36,000 obligation. The unpaid remainder is a debt due and owing to the plaintiff as administratrix of the estate of Bert, and the trial court should have so held.

The finding of a gift by Verne for the life of his father only cannot be sustained. If it were a gift, why would Verne have signed a note, and why would the father have paid an income tax upon 61% of the amount received.

The judgment is reversed. Costs are awarded to the appellant.

C ALLIS TER, C. J„ and HENRIOD and TUCKETT, JJ., concur.

1 . Section 78-24-2, U.C.A.1953.