NO. 4-96-0649
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
In the Matter of the Estate of ) Appeal from
ROSE S. DEJARNETTE, Deceased, ) Circuit Court of
DOROTHY MEIS, CATHERINE BURNS, FRANK ) Logan County
DEJARNETTE, SHIRLEY GALLOWAY, WILLIAM ) No. 93P96
STOLL, JOHN THOMAS STOLL, MERRITT STOLL,)
WILLIAM HUFF, JUDY GORDON, and NORMAN )
HUFF, )
Petitioners-Appellants, )
and )
DONALD A. BEHLE, Special Administrator )
of the Estate of Rose S. DeJarnette, )
Deceased, )
Petitioner, )
v. ) Honorable
VERA LECOURIS, ) Gerald G. Dehner,
Respondent-Appellee. ) Judge Presiding.
_________________________________________________________________
JUSTICE COOK delivered the opinion of the court:
Rose DeJarnette gave her power of attorney to her
cousin, Vera Lecouris. Thereafter, Vera arranged for Rose's
funds to be placed in joint tenancy accounts with Vera and for
Vera to be named beneficiary of a life insurance policy and a
pension fund. In this citation proceeding, the trial court
ordered Vera to reimburse Rose's estate for various amounts Vera
claimed were inter vivos gifts but allowed Vera to keep the joint
accounts and other assets. Rose's legatees appeal. We reverse
and remand in part and dismiss the appeal in part.
I
Rose was born in 1907 and died June 19, 1993. From
1977 until the time of her death, she resided at Walnut Ridge
Nursing Home (Walnut Ridge). In 1979, Rose gave her cousin,
Hester Huff, power of attorney over her affairs. When Hester's
health began to fail, in 1988, Rose executed another power of
attorney, in which Vera was also named. Vera became sole attor-
ney-in-fact upon Hester's death in August 1990.
Rose did some estate planning after her husband's death
in November 1971. In late 1971, she executed a form making
Hester the beneficiary of her life insurance policy with Equita-
ble Life Insurance. In 1972, she made Hester the designated
recipient of the death benefit of her pension with Teachers'
Retirement System (TRS). In Rose's 1972 last will and testament,
she devised Hester her grandmother's watch, a life estate in one-
half of her real property (the remainder to go to Hester's
"bodily lineal descendants") and one-quarter of her residuary
estate. Lyle Stoll, another cousin of Rose's, was devised a life
estate in the other one-half of the real property (the remainder
to Hester's bodily lineal descendants) and also was to receive
one-quarter of the residuary estate. The remaining one-half of
the residue was to be split equally among 28 named persons, Vera
among them.
Rose did not change her estate plan after Lyle died in
1986. After Hester's death, Rose's savings account and checking
account at the State Bank of Lincoln (Lincoln) were changed in
September 1990 to joint tenancy with Vera. Rose's signature
appears on signature cards authorizing these changes. Vera
testified she filled out the cards and brought them to Rose at
Walnut Ridge, Rose signed them, and Vera returned them to the
bank.
Rose also signed a Bank of Chestnut (Chestnut) signa-
ture card in September 1990, which Vera had obtained, filled out,
brought to Rose for her signature, and returned to the bank.
That document, which states on its face that it "goes with your
time certificate of deposit [(CD)][N]o. 1554," directs that the
account be made joint between Rose and Vera. However, Rose did
not have a CD No. 1554 at Chestnut. William Glaze, a loan
officer at Chestnut, testified that 1554 was Rose's customer
number, and the document had the effect of changing all of Rose's
CDs at the Chestnut to joint tenancy with Vera.
In October 1990, joint checking account No. 121-045 was
opened at Chestnut. Rose's and Vera's signatures appear on the
signature card. Again, Vera testified she filled out the card,
brought it to Rose at Walnut Ridge for her signature, and took it
to the bank. That account was funded with $12,555.03 Vera ob-
tained by using the power of attorney to cash some United States
Treasury E bonds (E bonds) held in Rose's name alone. Vera
testified she did that because Hester had allowed Rose's Medicare
supplemental insurance to lapse, and Vera felt it was important
to have cash on hand in the event of an emergency. On October 9,
the day after the account was opened, Vera wrote herself a check
on the account in the amount of $2,555.03, with the notation,
"1989 Business." On the same date, she wrote herself a check for
$2,500 from the Lincoln joint checking account, with the nota-
tion, "1990 Business Gift." Vera testified these two transfers
were at Rose's direction. They were part of the funds the trial
court ordered Vera to reimburse the estate.
In October 1990, TRS wrote Vera indicating it could not
accept a form she had sent in nominating herself as beneficiary
of Rose's TRS pension. In November, Rose signed a form, filled
out by Vera, making Vera the beneficiary of Rose's TRS pension.
In December 1990, Rose signed a form, which Vera had filled out,
making Vera the beneficiary of Rose's life insurance.
On August 15, 1991, Norman Huff, Hester's son and one
of the petitioners, went with Vera to visit Rose. He spent
between 2 and 2½ hours with her. He testified that Rose recog-
nized him, knew who he was, and seemed clearheaded and able to
communicate effectively. Norman wrote a letter in March 1994 to
Steven Miller (counsel for Vera) regarding the visit, and that
letter was introduced into evidence. The letter contained the
following paragraph:
"I told Rose that we had found Mother's
[(Hester's)] copy of Rose's will in the file
cabinet and when I read it I noticed that
Vera may have been left out. I wasn't sure!
She informed me very abruptly that if there
was anything left when she passed away,
Hester's kids would get her farm land, and
her joint accounts would go to Vera, so I did
not mention it again!"
Norman repudiated this paragraph when he testified. He reaf-
firmed that Rose seemed competent but maintained this particular
section was not true, that there had in fact been no conversation
regarding Rose's will or joint accounts. He said the paragraph
was not in his first draft of the letter, but when he showed the
letter to Vera (before he sent it to Miller) Vera said it would
not be much help. Rose told him that Miller had hoped there
would be some mention of joint accounts. Norman told Vera he
could rewrite it, and he did. He said he did so because he did
not think there could be very much money involved, and he hoped
the letter would end the litigation, which he saw as a waste of
time. Vera testified that she did not tell Norman to mention
joint accounts when he showed her the first draft of the letter,
that she merely asked him to "'[b]e specific.'" She did admit he
showed her the letter and redrafted it at her home before he sent
it to Miller.
Vera testified that on January 24, 1992, she and Rose
had a conversation in which Rose asked if Vera had been in
Hester's will. When Vera said she had not been, Rose said she
could "'take care of that. Would you, whatever it takes, I want
to change the [CDs] into your name, both at Chestnut and at
[Lincoln].'" On January 28, Rose signed the following document:
"I Rose W. DeJarnette direct [Chestnut] to
add Vera R. Lecouris on my [CDs] whose num-
bers are 23969, 23241, 25062, and 25063.
This same directive is to be followed in the
event of purchase of additional [CDs] in my
name or to changes in any of the [aforemen-
tioned] [CD] amounts which would make it
necessary to rewrite the [CD]."
Rose's signature on the document was notarized. Glaze testified
the document had no effect as far as Chestnut was concerned,
since all the CDs there were already in joint tenancy because of
the card Rose had signed in September 1990. By the end of
January 1992, Vera had changed all the certificates for the CDs,
at both banks, so that on their faces they showed both Vera and
Rose as owners.
In February 1992, Vera opened a joint mutual fund
account with Prudential Mutual Fund Services (Prudential). Rose
did not sign the application; Vera signed it for her using the
power of attorney. Vera opened the account with $30,000, $10,000
of which came from one of the Lincoln CDs, $8,000 from the
account opened with the proceeds from the E bonds, and $12,000
from the Lincoln savings account. To this initial deposit were
added $20,000 in June 1992, $10,000 in July 1992, and $32,436.26
in August 1992. Forty thousand dollars came from the remaining
CDs at Lincoln, and the other $22,436.26 came from CDs at Chest-
nut. Vera testified she signed each of the CDs. Only four of
those signatures (on four Lincoln CDs) are in the record. Two of
them Vera signed "Vera Lecouris P.O.A.," while on the other two
Vera signed Rose's name and then signed "Vera R. Lecouris P.O.A."
beneath. In September 1992, another Chestnut CD came due, which
Vera testified she endorsed and deposited into her personal
account according to Rose's direction.
There was some testimony regarding Rose's mental
condition during the times these transfers were made. The only
doctor who testified, Dr. Daniel O'Brien, was unable to state an
opinion as to Rose's competence. He read quite extensively from
the notes of Rose's previous physician, a Dr. Newell, but the
trial court sustained a hearsay objection to the notes, only
allowing them in to explain Dr. O'Brien's expert opinion (of
which there was none). Wilson v. Clark, 84 Ill. 2d 186, 417
N.E.2d 1322 (1981); see Kelly v. HCI Heinz Construction Co., 282
Ill. App. 3d 36, 42, 668 N.E.2d 596, 600 (1996) (trial court has
discretion to refuse admission of medical records, offered as
business records, despite 1992 amendment to Supreme Court Rule
236 (145 Ill. 2d R. 236)). Vera's hearsay objection to another
document, in which Dr. Newell had stated that Rose was unable to
comprehend the rights and responsibilities of a nursing home
resident, was also sustained. Doris Wilson, Rose's nurse during
the relevant period, testified Rose was able to function so long
as she was able to follow her routine, but she would go into a
"tizzy" if the routine were not followed. Wilson testified Rose
was very suggestible, that she "didn't have the mentality of an
adult," and "[i]f Rose was used to seeing you you could tell her
what to do."
II
The trial court first noted that an attorney-in-fact is
charged with a fiduciary obligation to act in his principal's
best interests, and that an attorney-in-fact has no authority to
make donations or engage in self-dealing. The trial court
accordingly voided the lifetime transfers totalling $13,173.19.
On the post-trial motion, the court ruled that the lifetime
transfers were violative of Vera's fiduciary responsibility--
"they were an example of poor judgment on her part but not to the
extent the transfers amounted to fraud."
The trial court referred to "the balancing test as sug-
gested in Murgic [v. Granite City Trust & Savings Bank, 31 Ill.
2d 587, 202 N.E.2d 470 (1964)] where conflicting presumptions are
involved." The conflicting "presumptions" in Murgic were that
(1) one claiming a gift must prove donative intent by clear and
convincing evidence, but (2) creation of a joint tenancy account
gives rise to a presumption of donative intent. Murgic held the
presumption of donative intent controlled, the person claiming
against the surviving joint tenant had the burden of disproving
intent, and to void the presumption of donative intent the proof
was required to be clear and convincing. Murgic, 31 Ill. 2d at
590-91, 202 N.E.2d at 472. The trial court found there was no
clear and convincing evidence of undue influence or that Rose was
incompetent. It seems clear the trial court saw this case as
resolved by Murgic and determined that the controlling presump-
tion of donative intent arising from the creation of the joint
tenancies had not been refuted by clear and convincing evidence.
The trial court did discuss the presumption of fraud,
stating that Vera's inexperience and poor judgment had not "been
clearly and convincingly shown to amount to fraud." That analy-
sis is backwards but, in its ruling on the post-trial motion, the
court revised its statement to say that "there is sufficient
evidence to rebut any presumption of fraud." Apparently, that
evidence is the court's finding that Vera had Rose's welfare in
mind above all others and that Rose's plan was to take care of
those who took care of her. The trial court stated that it had
ample opportunity to observe the witnesses, particularly Vera.
III
There is a presumption of donative intent where the
proof shows that the making of a deposit and the execution of the
joint tenancy account contract is in conformity with the statute.
Murgic, 31 Ill. 2d at 590, 202 N.E.2d at 472. "'Public policy
would seem to require the adoption by the courts of a more
liberal and practical view of these common transactions.'"
Murgic, 31 Ill. 2d at 590, 202 N.E.2d at 472, quoting Frey v.
Wubbena, 26 Ill. 2d 62, 66, 185 N.E.2d 850, 853 (1962). In order
to go behind the terms of the joint account agreement, the one
claiming adversely thereto has the burden of establishing by
clear and convincing evidence that a gift was not intended. This
burden does not shift to the party claiming under the agreement.
Murgic, 31 Ill. 2d at 591, 202 N.E.2d at 472.
However, there is a presumption of fraud or undue
influence where there is a fiduciary relationship between the
parties and the fiduciary has benefitted by virtue of his fidu-
ciary status. The burden of proof is on the fiduciary to rebut
the presumption by clear and convincing proof that he has exer-
cised good faith and has not betrayed the confidence reposed in
him. Significant factors in meeting that burden include a
showing that the fiduciary made a frank disclosure of the infor-
mation he had, he paid adequate consideration, and the principal
had competent and independent advice. Rizzo v. Rizzo, 3 Ill. 2d
291, 304-05, 120 N.E.2d 546, 553 (1954); see Franciscan Sisters
Health Care Corp. v. Dean, 95 Ill. 2d 452, 464, 448 N.E.2d 872,
877-78 (1983). Where a fiduciary relationship is alleged simply
on the basis of evidence showing trust and confidence have been
reposed by one person in another, the existence of the relation-
ship must be proved by clear and convincing evidence; one who
holds a power of attorney, however, is a fiduciary as a matter of
law. Pottinger v. Pottinger, 238 Ill. App. 3d 908, 917, 605
N.E.2d 1130, 1137-38 (1992).
The trial court here cited Anthony v. Anthony, 20 Ill.
2d 584, 587, 170 N.E.2d 603, 604 (1960), for the proposition that
a presumption of undue influence will not arise from the mere
fact of a fiduciary relationship but requires a showing of
"participation in procuring execution of the will." The execu-
tion of a will provides more protections, however, than do inter
vivos transfers arranged by the fiduciary, including transfers
which utilize joint tenancy accounts. The court was concerned in
Anthony that it might be impossible for an elderly parent to
leave his property to a child who took care of him if a pre-
sumption of undue influence arose from the mere fact of a confi-
dential or fiduciary relationship. Nevertheless, there are cases
that do hold the fact that a fiduciary relationship exists is not
sufficient to rebut the presumption of donative intent inherent
in joint tenancy accounts, absent evidence the fiduciary rela-
tionship was abused. See In re Estate of Foster, 104 Ill. App.
2d 447, 453-54, 244 N.E.2d 620, 623-24 (1969); In re Estate of
Copp, 132 Ill. App. 2d 974, 980, 271 N.E.2d 1, 5 (1971); In re
Estate of Wilkening, 109 Ill. App. 3d 934, 939-40, 441 N.E.2d
158, 162 (1982); cf. Lemp v. Hauptmann, 170 Ill. App. 3d 753,
758, 525 N.E.2d 203, 206 (1988) (fiduciary relationship defeats
presumption of gift from parent to child). None of these cases
involved a written power of attorney other than Lemp, which did
not involve a joint account, but they did involve actions on
behalf of another similar to actions typically taken by an
attorney-in-fact.
This court has refused to follow Foster, Copp, and
Wilkening and has held that where there were conflicting presump-
tions arising from the creation of a joint tenancy and the
existence of a fiduciary relationship, the presumptions canceled
each other, and the trial court was required to decide the case
on the evidence before it of donative intent and undue influence.
In re Estate of Harms, 236 Ill. App. 3d 630, 639-40, 603 N.E.2d
37, 44 (1992). We recently limited Harms to apply only where the
joint tenancy accounts were created prior to the fiduciary
relationship and where deposits made during the fiduciary rela-
tionship followed a procedure established prior to the relation-
ship. In re Estate of Rybolt, 258 Ill. App. 3d 886, 890, 631
N.E.2d 792, 795 (1994). Certainly, where the attorney-in-fact
actively uses his position to create the joint tenancies the
presumptions do not cancel; instead, the controlling presumption
is the presumption of fraud, which requires strong evidence to
overcome. Rybolt, 258 Ill. App. 3d at 890, 631 N.E.2d at 795.
There is no presumption of donative intent unless it is
shown that "the making of the deposit and the execution of the
contract is in conformity with the statute." Murgic, 31 Ill. 2d
at 590, 202 N.E.2d at 472. The "statute" is section 2(a) of "An
Act to revise the law in relation to joint rights and obliga-
tions." Ill. Rev. Stat. 1989, ch. 76, par. 2(a). Other statutes
apply to statutory survivorship accounts in savings and loan
institutions, and to safe deposit boxes. See Harms, 236 Ill.
App. 3d at 637, 603 N.E.2d at 42-43. The parties have not sug-
gested whether a statute applies to a joint mutual fund account
with an insurance company. The life insurance policy and the
teacher's pension do not involve joint tenancy accounts at all,
and accordingly there is no presumption of donative intent with
those holdings.
IV
It is undisputed that Rose gave Vera her power of
attorney and that Vera benefitted by virtue of that relationship.
The question in this case accordingly is whether Vera has met her
burden of rebutting the presumption of fraud by clear and con-
vincing evidence. The trial court stated that Vera had met her
burden, that the court "has had the opportunity to watch Vera
testify for hours and to weigh and evaluate her answers and
credibility." The resolution of these cases, however, should not
turn upon how good a witness the alleged donee happens to be.
The legislature enacted the Dead-Man's Act (now 735 ILCS 5/8-201
(West 1994)) because of its recognition the survivor to a trans-
action has a temptation to testify falsely. Hoem v. Zia, 159
Ill. 2d 193, 201, 636 N.E.2d 479, 483 (1994). The parties have
not indicated how Vera's testimony was affected by the Dead-Man's
Act. Even where there is no Dead-Man's Act problem, the testimo-
ny of a donee as to what was said to him by a deceased donor
should be carefully scrutinized. Hofferkamp v. Brehm, 273 Ill.
App. 3d 263, 274, 652 N.E.2d 1381, 1389 (1995). One of the Rizzo
factors is whether the principal had competent and independent
advice. Rizzo, 3 Ill. 2d at 304-05, 120 N.E.2d at 553. Along
those lines, the court in Rybolt, although generally relying on
the presumption of fraud, found donative intent as to a $20,000
CD at the First National Bank of Decatur "based upon testimony of
the bank employees." Rybolt, 258 Ill. App. 3d at 890, 631 N.E.2d
at 795.
Applying the Rizzo factors, Vera has clearly not met
her burden. Vera filled out the signature cards for the various
accounts and was the only one present when Rose signed them,
although Vera later prepared a document regarding the Chestnut
accounts that Rose signed before a notary public. Vera prepared
the forms regarding the TRS pension and the life insurance and
was the only one present when they were signed. The joint mutual
fund with Prudential did not involve Rose's signature at all;
Vera opened it using her power of attorney. Rose did not have an
established practice of using joint tenancy accounts before she
gave Vera her power of attorney. During the last years of life
Rose went from having no assets in joint tenancy to having all
her personal property in joint tenancy with Vera. Perhaps it was
Rose's plan to take care of those who took care of her, but that
does not explain why Vera was entitled to almost nothing immedi-
ately before Hester's death and almost everything very quickly
thereafter. Hester and her family were apparently natural
objects of Rose's bounty even before Hester was given power of
attorney in 1979. Was not Hester entitled to something for her
work between 1979 and 1988? Most of Rose's physical needs were
met by the nursing home. The only independent evidence regarding
Rose's competency was that she was easily led.
The trial court noted it might have been wiser if
disinterested third persons had been involved, but that ideal did
not comport with how such matters are actually handled in prac-
tice. We reject that analysis. Once the presumption of fraud is
established, the burden shifts to the fiduciary to show by clear
and convincing evidence that the transaction was fair and equita-
ble and did not result from undue influence. Deason v. Gutzler,
251 Ill. App. 3d 630, 637, 622 N.E.2d 1276, 1281-82 (1993). Vera
did not do so here.
V
Petitioners argue sanctions should be imposed on Vera.
The trial court did rule against Vera to the extent of the inter
vivos transfers. However, the trial court never ruled on the
motion for sanctions. The issue is not properly before us. See
Almgren v. Rush-Presbyterian-St. Luke's Medical Center, 162 Ill.
2d 205, 210, 642 N.E.2d 1264, 1266 (1994). That portion of the
appeal is dismissed.
For the reasons above stated, we reverse the ruling
appealed from and remand for the entry of an order in accordance
with the views set out herein. We dismiss that portion of the
appeal relating to sanctions against Vera.
Reversed and remanded in part; dismissed in part.
STEIGMANN, P.J., and McCULLOUGH, J., concur.