Robert J. Milie, Waltz & Milie, Greensburg, for appellant.
Christ C. Walthour, Jr., Kunkle, Walthour & Garland, Greensburg, for appellee.
Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ.
[ 242 Pa. Super. Page 277]
This appeal is from the dismissal of an action in equity to rescind an agreement of sale. At the conclusion of appellant's case, the trial judge dismissed the complaint on the ground that appellant had failed to sustain her burden of proof on the question of fraud. Exceptions were dismissed by a court en banc with one judge dissenting. Appellant's position is that if she did not prove fraud, she did prove a breach of confidential relationship. Although we are inclined to agree with her, we cannot be
[ 242 Pa. Super. Page 278]
sure, for the trial judge failed to make findings of fact. Rather than reverse, therefore, we remand.
Our courts have long recognized the common law doctrine that an agreement may be rescinded when one party takes advantage of a confidential relationship by overreaching. When a confidential relationship exists, the presumption applicable in an arms' length transaction -- that each party is acting in his own best interests and realizes the other is too -- does not apply. Instead, the one party may trust the other to treat him fairly. This trust results in a lowering of the defenses one would normally raise when dealing with a stranger. Leedom v. Palmer, 274 Pa. 22, 117 A. 410 (1922). See also, McClatchy Estate, 433 Pa. 232, 249 A.2d 320 (1969); Drob v. Jaffe, 351 Pa. 297, 41 A.2d 407 (1945).
Whether a confidential relationship exists depends on the facts of each case; if it is shown, the burden shifts to the other party:
Confidential relation is not confined to any specific association of the parties; it is one wherein a party is bound to act for the benefit of another, and can take no advantage to himself. It appears when the circumstances make it certain the parties do not deal on equal terms, but on the one side there is an overmastering influence, or, on the other, weakness, dependence, or trust, justifiably reposed; in both an unfair advantage is possible. When these circumstances appear, the law presumes the transaction void, unless the party claiming the benefit of such transaction shows affirmatively that no deception was used and the act was the intelligent and understood act of the grantor, fair, conscientious, and beyond the reach of suspicion.
Leedom v. Palmer, supra, 274 Pa. at 25, ...