Landmark Trust (USA), Inc. v. Goodhue

Fred Holbrook was the sole shareholder of Scott Farm, Inc., which owned and operated an apple orchard. Fred ran Scott Farm from the early 1950s through 1995 and repeatedly expressed his intent to preserve Scott Farm from development. In 1992, Fred sold a small portion of Scott Farm, containing Rudyard Kipling’s former home, Naulakha, to Landmark Trust (USA), Inc. (Landmark) (plaintiff), a land-preservation nonprofit. In early 1994, pleased with Landmark’s work on Naulakha, Fred inquired whether Landmark would be interested in operating and maintaining Scott Farm. In June 1995, Fred executed a deed of trust transferring Scott Farm to Landmark. Fred did not fund an endowment to offset the cost of operating Scott Farm, and Landmark would not financially profit from operating Scott Farm. Subsequently, Fred’s mental acuity sharply declined, and he was diagnosed with Alzheimer’s disease. Shortly after, John Goodhue (defendant), Fred’s cousin, expressed interest in acquiring Scott Farm. Goodhue petitioned for, and was appointed, Fred’s involuntary guardian. Goodhue challenged Fred’s gift of Scott Farm to Landmark, arguing it was the product of undue influence and that Fred’s mental decline after executing the deed of trust proved he lacked donative capacity. Landmark countered, arguing that contemporaneous evidence of Fred’s capacity at the time of the gift demonstrated his donative capacity. Fred’s attorneys and bank trust officer, all present for the execution of the deed of trust to Landmark, testified that Fred had the capacity to execute the deed of trust and that the gift was consistent with Fred’s wishes. The trial court upheld the gift, finding that Fred understood the nature and effect of the gift and that it was consistent with his goal to preserve Scott Farm as an apple orchard. Goodhue appealed.