## Facts

- Russell Ellison and Frances Ellison were elderly spouses (the parents) who owned a 94.12-acre dairy farm.
- Their daughter, Rose Ellison, was an attorney and handled many of the parents’ legal and business matters; she also held Russell’s power of attorney.
- Frances suffered from dementia, and the parents’ proof at trial challenged her mental competence at the time of the challenged conveyance.
- In 1995, the parents had already transferred a home to Rose.
- In 2005, Rose drafted a warranty deed by which the parents conveyed the dairy farm to Rose while reserving a life estate for themselves.
- The deed recited consideration of $30,000, but proof showed the farm had an appraised value in the range of $300,000 to $400,000.
- Rose contended Russell agreed to sell the farm to her at a low price because of what she had done for him “over the years.”
- Rose did not pay by a single check; instead, she produced receipts she prepared reflecting alleged cash payments and bookkeeping entries giving herself credit, including for secretarial services.
- The parents sued to set aside the deed, alleging lack of mental capacity and lack of bargained-for consideration, including that the stated consideration was “sham” consideration.
- After a bench trial, the chancery court set aside the deed, stating the parents had been “overreached,” finding the consideration clearly inadequate, concluding there was insufficient proof Rose actually paid $30,000, and finding Frances not mentally competent to convey the property.
- Rose appealed.

## Issues

1. Whether the chancery court erred in setting aside the deed based on inadequate or unproven consideration where the deed recited $30,000 but the farm’s value was far higher.
2. Whether the evidence supported the finding that Frances lacked mental capacity to execute the deed.
3. Whether Rose’s role as attorney, attorney-in-fact, and primary business adviser created a confidential relationship that required close scrutiny and supported equitable relief when she received a substantial benefit.
4. Whether the chancery court improperly relied on “improper advantage”/undue influence concepts beyond the pleadings, or whether the case was tried on the fairness of the transaction.
5. Whether rescission (setting aside the deed) was an appropriate equitable remedy on this record.

## Decision

- The Tennessee Court of Appeals modified the chancery court’s judgment in part, affirmed the judgment as modified, and remanded.
- The court upheld setting aside the deed where Rose stood in a confidential relationship with the parents and obtained a major benefit from a transaction marked by a large disparity between stated price and appraised value.
- The court agreed the proof permitted the trial court to reject Rose’s claim that she paid $30,000, given the absence of a conventional payment record and the trial court’s credibility findings regarding her receipts and claimed credits.
- The court upheld the finding that Frances was not mentally competent at the time of execution.
- The court rejected the argument that relief was barred because undue influence was not expressly pleaded, treating the proof and findings about “overreaching” and “improper advantage” as part of the equitable inquiry into a transaction between parties in a confidential relationship.

## Legal Principles

- A transaction that substantially benefits the dominant party in a confidential or fiduciary relationship (including a child who is also an attorney and attorney-in-fact) is subject to close judicial scrutiny, and equity may require the benefiting party to show the transaction was fair.
- Gross inadequacy of consideration, especially when paired with a confidential relationship and proof suggesting overreaching, may support rescission of a deed even though mere inadequacy alone often does not.
- When consideration is disputed, a court may evaluate whether the stated consideration was actually paid and whether claimed payments or credits are credible and were part of a real bargain.
- Mental capacity to execute a deed depends on the grantor’s ability at the time of signing to understand the nature and effect of the transaction; dementia evidence may support a finding of incapacity.
- Even if a complaint does not label a theory “undue influence,” a trial court may grant equitable relief consistent with the proof and issues tried, including findings that the grantors were overreached within a confidential relationship.

## Conclusion

In *Ellison et al. v. Ellison*, the Tennessee Court of Appeals affirmed (as modified) the chancery court’s order setting aside elderly parents’ 2005 deed of their dairy farm to their attorney-daughter, holding that the confidential relationship, the large disparity between the farm’s value and the stated $30,000 price, the weak proof that any such price was actually paid, and the finding that the mother lacked mental competence supported rescission and return of the property.


Ellison et al. v. Ellison, 2008 WL 4415768 (2008)