Marilyn Powell v. Brenda Moore

• Court: Court of Appeals of Tennessee
• Decided: February 17, 2000
• Docket: W1998-00001-COA-R3-CV
• Status: Published

Opinion

IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON

MARILYN C. POWELL, Executrix of the Estate of ALBERT B. COX, Deceased; and NORMA C. COOK, ) ) ) FILED both Individually and as next ) February 17, 2000 friend and for the benefit of Albert ) B. Cox, Jr., ) Cecil Crowson, Jr. ) Appellate Court Clerk ) Plaintiffs/Appellees, ) Shelby Chancery No. 100766-3 R.D. ) VS. ) Appeal No. W1998-00001-COA-R3-CV ) BRENDA C. MOORE, ) ) ) Defendant/Appellant. )

APPEAL FROM THE CHANCERY COURT OF SHELBY COUNTY AT MEMPHIS, TENNESSEE THE HONORABLE D. J. ALISSANDRATOS, CHANCELLOR

TIMOTHY A. RYAN, III Memphis, Tennessee Attorney for Appellant

ALLAN B. THORP THORP AND FONES, PLC Memphis, Tennessee Attorneys for Appellees

AFFIRMED

ALAN E. HIGHERS, J.

CONCUR:

DAVID R. FARMER, J. HOLLY KIRBY LILLARD, J. Brenda Moore has appealed the trial court’s finding that she used undue influence and breached a fiduciary duty owed to her father, now deceased. For the following

reasons, the judgment of the trial court is affirmed.

Facts and Procedural History

1 This appeal arises from a suit filed by Marilyn Powell, as executrix of the deceased’s

estate, to recover money allegedly misappropriated by Brenda Moore. Powell alleged that

Moore had breached a fiduciary duty and exerted undue influence on the deceased, Albert Cox, Sr. (Cox), and obtained funds that were intended to be used for the care of the

deceased’s son, Albert Cox, Jr. (“Buddy”). The trial court found for Powell, creating a

resulting trust in favor of Buddy. Moore appeals.

Cox executed a will on March 16, 1988, providing that upon his death, all the assets

in his estate were to be put in a trust for the care of Buddy. Buddy suffers from Down’s Syndrome and is incapable of handling his own financial affairs. Brenda Moore was

designated as the trustee of the trust. Upon Buddy’s death, any assets were to be divided

equally between Cox’s remaining children: Powell, Moore, and Norma Cook.1 At this time, Cox also signed a general and durable power of attorney in favor of Moore.

Cox died on August 24, 1991. The behavior of Moore prior to and immediately following Cox’s death forms the basis for this appeal. During this period, Cox was in failing

health and hospitalized several times. In May 1991, Moore took Cox to the First

Tennessee Bank (FTB) to open a joint safe deposit box. Subsequently, Cox’s financial

papers were stored in the safe deposit box. In July 1991, Cox was sent a check in the

amount of ninety-six thousand dollars from the estate of his sister. Cox was hospitalized at this time and sent Powell to retrieve the check, with the intent that it be deposited in an

account at National Bank of Commerce (NBC). Cox was too weak to sign the signature

cards required to open an account at NBC. Instead, Powell wrote the account number of Cox’s First Tennessee Bank (FTB) account on the back of the check. ( Powell then turned

the check over to Moore.

Moore deposited the check into Cox’s FTB account. Shortly thereafter, Moore

withdrew ninety-thousand dollars from the FTB account. Moore used these funds to

purchase a certificate of deposit at NBC. The certificate of deposit was noted as a joint

account with right of survivorship, in the names of Cox and Moore. The effect of this transaction was to prevent the money from becoming part of Cox’s estate upon his death.

Instead, the money passed directly to Moore pursuant to the right of survivorship and did

not become subject to the testamentary trust.

1 Norma Cook was later added as an additional party plaintiff in the suit below. Cook serves as non- cus todia l co-g uard ian of Bud dy.

2 In addition to the NBC certificate of deposit, several other savings accounts were

opened at FTB in the joint names of Cox and Moore, with a right of survivorship. The

record is unclear as to whether these accounts were set up by Moore using her power of attorney, or by Cox under the advisement of Moore. Four of these accounts, totaling over

seventy-two thousand dollars, were paid out directly to Moore upon Cox’s death.

Following Cox’s death, Moore withdrew the funds from both FTB and NBC, and

refused to turn them over to the estate. Moore claimed that Cox had intended for her to

receive the funds and that he did not intend for the money to be part of his estate. Thereafter, Powell, as executrix of Cox’s estate, filed suit in the Shelby County Chancery

Court, alleging that Moore exerted undue influence and violated her fiduciary duty to Cox.

A hearing on the matter was held on August 3, 1998.

At the hearing, several witnesses testified that Cox had intended for all his assets

to be used for Buddy’s care. In addition, Powell testified that she had witnessed Moore berating Cox and threatening to put him in a nursing home if he disagreed with the way his

finances were handled. According to Powell, Cox expressly stated that he did not want to

invest in any more certificates of deposit.

Moore testified that she was Buddy’s custodial co-guardian and looked after his personal and financial needs. Moore also testified that she handled Cox’s financial matters

under his direction. Moore claimed that Cox had instructed her to deposit the inheritance

check into the FTB account and to purchase the certificate of deposit at NBC. In addition, Moore claimed that the joint savings accounts with right of survivorship at FTB were set up

pursuant to Cox’s wishes.

The court found that Moore had been in a position of power with Cox and that she

had used that power to unduly influence him. The court further found that a resulting trust

in favor of Buddy was created because Moore had breached her fiduciary duty. The

resulting trust contained the funds from both the NBC certificate of deposit and the FTB accounts. Moore was appointed as trustee of the resulting trust. Moore appeals.

On appeal, Moore asserts that the trial court erred in holding that the joint accounts with right of survivorship at FTB should be part of the resulting trust. Moore does not

dispute the resulting trust as it pertains to the NBC certificate of deposit.

3 Analysis

The standard of review for a non-jury case is de novo upon the record. Wright v. City

of Knoxville, 898 S.W.2d 177, 181 (Tenn. 1995). There is a presumption of correctness as to the trial court’s factual findings, unless the “preponderance of the evidence is

otherwise.” TENN . R. APP . P. Rule 13(d). For issues of law, the standard of review is de

novo, with no presumption of correctness. Ridings v. Ralph M. Parsons Co., 914 S.W.2d

79, 80 (Tenn. 1996).

The sole issue on appeal is whether or not the trial court erred by including the FTB joint accounts with right of survivorship in the resulting trust. Moore argues that the

accounts became her sole property upon Cox’s death, and therefore should be subject to

neither the terms of Cox’s will nor the resulting trust set up by the trial court. We do not agree. The decision of the trial court is affirmed for the following reasons.

Moore relies on statutory and case law to support her position that the joint accounts are her sole property. In particular, Moore cites the following section of Tennessee Code

Annotated:

“(1) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP. Such designation shall mean that the deposit account or certificate of deposit shall become the property of each owner as joint tenants, and that the survivor is entitled to all moneys in the account or represented by the certificate even if the first person to die had a will specifically directing disposition to someone else. The bank may release all moneys in the account or represented by the certificate to, or honor checks or orders drawn by, or withdrawal requests from, the survivor upon the death of any joint tenant...” Tenn. Code. Ann. § 45-2-703(c)-(f)(1) (emphasis added)

While this statute clearly supports Moore’s position, she fails to address several important

caveats that affect its application.

The Tennessee Supreme Court addressed the effect of joint accounts in Lowry v.

Lowry. Lowry v, Lowry, 541 S.W.2d 128 (Tenn. 1976). Although Lowry was decided prior to the enactment of Tenn. Code Ann. § 45-2-703, this court has found that the principles

of Lowry are still applicable in certain situations. See In Re Estate of Holmes, No. 02A01-

9707-PB-00158H, 1998 WL 134333 at *2 (Tenn. Ct. App. March 26, 1998); see also In re

Estate of Nichols, 856 S.W.2d 397 at 400 (Tenn. 1993); see also Pawlakos v. Pawlakos, No. 01A01-9708-CH-00443, 1998 WL 83029 at *3 (Tenn. Ct. App. Dec. 2, 1998) (in order

to attack validity of joint account with right of survivorship, challenging party must show

fraud, undue influence, or lack of capacity pursuant to Tenn. Code Ann. § 45-2-703).

4 Moore relies on the following language in Lowry, “Absent clear and convincing

evidence of contrary intent expressed at the time of its execution, we hold that a bank

signature card containing an agreement in clear and unambiguous language that a joint account with rights of survivorship is intended, creates a joint tenancy enforceable

according to its terms; and upon the death of one of the joint tenants, the proceeds pass

to the survivor.” Lowry at 132. This language was basically codified with the passage of

Tenn. Code Ann. § 45-2-703.2 Under the statute, the signature card provides conclusive evidence of the parties’ intent.

However, Moore fails to address additional language providing that joint accounts

are “...generally immune from attack in the absence of fraud, misrepresentation, duress,

undue influence, mutual mistake, and incapacity.” Lowry at 133. (emphasis added)

Therefore, while under the general rule as presented in Lowry and Tenn. Code Ann. § 45-

2-703, Moore would be entitled to the accounts, the circumstances of this case take her

outside the general rule. Where there is some evidence of fraud or undue influence, as shown in this case, there is no conclusive evidence as to the validity of the joint account

and a party can challenge the validity of the transfer. In order to prevail, the challenging

party must show fraud, undue influence, or lack of capacity rendering the transaction

invalid. Pawlakos v. Pawlakos, No. 01A01-9708-CH-00443, 1998 WL 83029 (Tenn. Ct.

App. Dec. 2, 1998) Accordingly, we now address the trial court’s finding that Moore exerted undue influence on Cox.

Undue Influence

In the proceedings below, the court found that Moore breached a fiduciary duty and

exerted undue influence on Cox, and that Cox did not intend to create the accounts for

Moore’s benefit. In support of its finding, the court pointed to specific facts regarding Moore’s behavior. In particular, the court found that Moore had entered into a fiduciary

relationship with Cox when she assumed his power of attorney. The court further stated

that Moore had breached the fiduciary duty by overreaching and exerting undue influence

by withholding information from Cox and threatening him with confinement in a nursing home.

A fiduciary or confidential relationship is one where there is both a dominant party

2 In pertinent part, § 45-2-702(e)1 provides: “(1) A designation of "joint tenan ts with rig ht of s urvivo rship ," or su bsta ntially s imila r lang uag e, sh all be conclusive evidence in any action or proceeding of the intentions of all named that title vests in the survivor” (emphasis added)

5 and a weaker party and the dominant party exercises some control over the weaker party.

Iacometti v. Frassinelli, 494 S.W.2d 496 (Tenn. Ct. App. 1973). A presumption of undue

influence arises when the dominant party in a fiduciary relationship receives a gift or some other benefit from the other party. Richmond v. Christian, 555 S.W.2d 105, 107 (Tenn.

1997). The presumption of undue influence renders the transaction invalid unless there

is clear and convincing evidence of the fairness of the transaction. Matlock v. Simpson, 902 S.W.2d 384, 386 (Tenn. 1997).

Moore’s actions trigger the undue influence presumption. She was the dominant party in a fiduciary relationship with Cox as signified by her assumption of his power of

attorney. The creation of the joint accounts with right of survivorship bestowed a gift or

benefit upon Moore, the dominant party. Once the presumption of undue influence was triggered, the burden shifted to Moore to rebut the presumption. Moore failed to meet this

burden regarding the creation of the joint accounts with right of survivorship at FTB. Moore

offered only her own testimony that Cox wanted her instead of Buddy to receive the money. Indeed, all other testimony indicated that Cox wished all his assets to go to Buddy

upon his death. The trial court did not err in finding that Moore exerted undue influence

upon Cox. Accordingly, the FTB joint accounts are invalid and the funds are subject to the

resulting trust created by the court below.

Conclusion

Based upon the foregoing, the judgment of the trial court is affirmed. Costs of the appeal are assessed to the Appellant, Brenda Moore, for which execution may

issue if necessary.

HIGHERS, J.

6 CONCUR:

FARMER, J.

LILLARD, J.