Example Cases

Arasho Bush lived in Coffee County, Tennessee, for most of his life. He had been healthy and strong throughout his entire life. Unfortunately, on April 2, 1986, he was diagnosed with inoperable prostate and bladder cancer. His physicians told him that he did not have long to live. This was a very painful and emotional time for Mr. Bush.

His physicians recommended that he enter a nursing home to make sure he would receive necessary and appropriate care. Mr. Bush was an independent man and he wanted to live and die at home. He ultimately decided to move in with his sister and brother-in-law, Nellie Pearl and Thurston Banks, who were in turn being cared for by their daughter, Debra Smith.

By the time that Mr. Bush moved in with his sister, his condition had worsened to the point where he was unable to walk without help or to care for his own personal needs. He relied upon Mrs. Smith to prepare his meals, give him medicine, do his laundry, and care for his personal hygiene. He also relied upon them to drive him to doctor’s appointments.

Recognizing that the end was near, Mr. Bush tried to get his final affairs in order. He made final plans for his funeral. He also expressed a desire to get a power of attorney appointed and to draft a new will. Mrs. Smith found an attorney and scheduled an appointment for Mr. Bush to discuss his desired will changes. Mrs. Smith drove Mr. Bush to the meeting. After said meeting, his condition worsened even more. By the time he returned to the attorney to sign the new will on May 12, 1986, he was unable to get out of the van to go into the lawyer’s office to sign the will. He signed the new will in the van.

The new will left the vast majority of his estate to his sister, Nellie Pearl Banks, and to his niece, Debra Smith. This new will left only a $10,000 bequest to Mr. Bush’s daughter, Diana Mitchell.

Mr. Bush passed away less than a month later on June 3, 1986. Diana Mitchell, Mr. Bush’s daughter, challenged the will through a will contest. She claimed that the will was only signed because of the undue influence that was exercised over Mr. Bush by Nellie Pearl Banks and Debra Smith. The jury agreed with Diana Mitchell, and they held that the will was not valid. Nellie Pearl Banks and Debra Smith appealed the ruling of the jury. The Tennessee Court of Appeals held that the jury was correct and upheld the verdict. (779 S.W.2d 384)

The court discussed two important concepts in this case. The first was suspicious circumstances and the second was confidential relationships.

The court found that the following are the most common suspicious circumstances in an undue influence case:

1. The existence of a confidential relationship between the testator (Mr. Bush in this case) and the beneficiary (Nellie Pearl Banks and Debra Smith in this case);
2. The testator’s physical or mental deterioration; and
3. The beneficiary’s active involvement in getting a new will prepared.

The court states that these are the three most frequently used suspicious circumstances, but they provided a list of some others:

1. Secrecy about the existence of the new will;
2. The advanced age of the testator;
3. The lack of having independent advice in preparing the will;
4. The testator’s illiteracy or blindness;
5. The unjust or unnatural nature of the will’s terms;
6. The testator being emotionally troubled;
7. Differences between the will and what the testator had previously said; and
8. Fraud or duress directed toward the testator.

The court requires that more than one suspicious circumstance be present in a case in order for the case to be a possible undue influence situation.

The court next talked about confidential relationships. There are clear confidential relationships which exist, such as an attorney-client relationship. However, there are others that exist. What must be present is a relationship where confidence and trust is placed in another person. The person who is trusted (in this case, Nellie Pearl Banks and Debra Smith) is the dominant party. Because this person is trusted, they have the ability to influence and control the weaker party (in this case, Mr. Bush).

These are the things that we, at Fair Share Lawyers, are looking for to determine if there is a case for undue influence. We want to ensure that we have the sufficient facts to protect people like Mr. Bush.

Mamie Kemp Fesmire–known to her friends and family as “Aunt Mamie”–was a resident of Carroll County, Tennessee, for most of her life. Her husband passed away in May of 1996. Following his death, Mrs. Fesmire lived by herself in Atwood, Tennessee. While living alone, she fell and injured herself. Following this fall, Mrs. Fesmire was forced to live with family to help provide her care.

Her first stop was with a niece and her husband, the Aten Family. This stay was relatively short-lived though, because her niece’s home was not large enough for everyone. One interesting point about this stay was that Mrs. Fesmire did not help to pay any of the bills while there, and did not help remodel the residence to increase the size. During her stay, Mrs. Fesmire changed her power of attorney to designate Annie Jo Kemp and Marilyn Aten as her co-agents.

Mrs. Fesmire left the Aten residence and moved in with the Kemps, Annie Jo and Jerry. Upon moving in with the Kemps, Mrs. Fesmire changed her power of attorney yet again. This time, Mr. Kemp jokingly–according to him–told Mrs. Fesmire that they would serve as her power of attorney in return for $200,000. The attorney that Mrs. Fesmire met with did not feel comfortable with Mrs. Fesmire agreeing to this proposal, so it was not part of the transaction. Nonetheless, the Kemps were appointed as co-agents under her new power of attorney. That same day, Mrs. Fesmire executed an amendment to her will–called a codicil–in which she left her residence in Atwood to the Kemps at her death.

Upon living with the Kemps, Mrs. Fesmire began to change the ownership or beneficiary designation of several of her assets. She began renewing certificates of deposits in her name and that of the Kemps, with rights of survivorship or made payable upon her death. In total, she changed approximately $450,000 in accounts to benefit the Kemps upon her passing. This left approximately $290,000 of accounts to pass under the terms of her will.

Finally, Mrs. Fesmire began to pay numerous expenses for the Kemps. As discussed previously, she did not engage in such activities when she lived with the Atens. When living with the Atens, she did not pay for anything–even those expenses attributable to her. However, with the Kemps she began paying their car loan payments, car insurance premiums, utility payments, partial payment of a new roof, and several other items.

In November of 1996, she executed a new power of attorney form, again naming the Kemps as her co-agents. In January of 1997, Mrs. Fesmire executed a new will that now provided that the Kemps were to each receive a bequest of $100,000. Later, in 1999, Mrs. Fesmire executed one last will with a new attorney. This last will removed the bequests to the Kemps because she had changed so many accounts into their favor. Mrs. Fesmire passed away in 2000.

The major distinction that can be drawn from this case and the Bush case [anchor link to Bush case] is the importance of the power of attorney. As discussed in the Bush case, the court is going to look for a confidential relationship coupled with a benefit gained by the dominant party. In this case, that would mean that the court is going to look for a confidential relationship between Mrs. Fesmire and the Kemps, together with a benefit gained by the Kemps. If a party is able to establish a confidential relationship coupled with a benefit gained, then a presumption of undue influence is created.

The benefit-gained portion of the analysis is fairly easy in this case. The Kemps received substantial funds from Mrs. Fesmire both during life (paying expenses, paying off debts, etc.) and substantial funds at the passing of Mrs. Fesmire (the joint accounts with right of survivorship and payable on death). This means that the larger question for resolution in this case, as it is in most cases, is whether there was a confidential relationship between Mrs. Fesmire and the Kemps.

In this case, the question of a confidential relationship is simple to resolve. The existence of an unrestricted general power of attorney that has been exercised in some fashion (signing a check, signing a deed, signing hospital admission form, etc.) creates a confidential relationship. The key with a power of attorney is that it was exercised before the transaction that created the benefit.

One area of an undue influence analysis that causes a great deal of confusion is around family relationships as they relate to the determination of the existence of a confidential relationship. It is the general rule that a family relationship in and of itself is not sufficient to qualify as a confidential relationship for undue influence purposes–there has to be more to the relationship to elevate it to the required level. The facts necessary to do this are different for each case, but the court looks for a relationship that allows one party to exercise dominion and control over another party; it has to be a relationship of dominance.

This example case had procedural missteps that required a re-trial of the case following the Court of Appeals opinion. Therefore, we are unsure how the case was ultimately resolved on re-trial. However, this case provides us valuable insight into the areas of inquiry for the court, as it relates to an exercise power of attorney and the establishment of a confidential relationship. (Parish v. Kemp, 179 S.W.3d 524.)

Ellen Groves and her husband, R.C. Groves, worked hard their whole life and built a nice nest-egg for themselves heading into their golden years. One day, R.C. Groves fell and broke three ribs. After this fall, he became concerned about preservation of his assets if the need for medical care increased substantially. So, he concocted a scheme with his brother, Glendon Groves, to shield some of his assets for a promise to provide care for himself and Ellen for the rest of their lives. R.C. Groves agreed to transfer $100,000 to Glendon for this purpose. This transfer was done in the form of a cashier’s check from the assets of the Groves’.

Following the death of R.C. Groves, Ellen Groves (Mrs. Groves) was leading a fairly independent life. Glendon Groves (Mr. Groves) continued to have possession of nearly all of the $100,000 received from the Groves’ prior to the death of R.C. As time passed, Mrs. Groves became increasingly dependent upon Mr. Groves as her ability to care for herself diminished. This came to a dramatic conclusion when she fell and fractured her spine. Following a surgery and subsequent hospitalization, she was forced to move in with Mr. Groves for full-time assistance and care. She became entirely dependent upon Mr. Groves for her meals, lodging, and care.

Within 3 months of moving into Mr. Groves’ residence (according to Mr. Groves) Mrs. Groves decided to give him her real property. He contacted his attorney and had new deeds drafted for the transfer–deeds which Mrs. Groves signed at his residence. Around this same time, Mrs. Groves also signed a new last will and testament, leaving the bulk of her estate to Mr. Groves and his wife.

Not long after moving in with Mr. Groves, the relationship became very strained. Mrs. Groves did not trust Mr. Groves and believed that he had taken advantage of her financially. Mr. Groves arranged for her to be admitted to a nursing home for care. While at the nursing home, Mrs. Groves told other friends of her beliefs that Mr. Groves had taken advantage of her financially.

Mr. Groves filed an action for a conservatorship. In that action, he asserted that Mrs. Groves was incompetent and he requested that the court appoint him as her conservator. There was a counter-action filed by two nieces of Mrs. Groves, opposing the appointment of Mr. Groves and asking that they be appointed as her co-conservators. It was during this action that the court discovered the transfer of the property and other related assets. The court ultimately ordered Mr. Groves to return all the property received from Mrs. Groves back to her ownership and possession. Mr. Groves appealed the decision to the Tennessee Court of Appeals.

The Court of Appeals addressed many issues in this case, including the matters related to the conservatorship as a whole, including the transfer of assets by the use of undue influence. The court addressed the primary tenants of law for this issue. An action to set aside a gift may be brought by the donor during his or her lifetime or by the donor’s heirs or personal representative following the donor’s death. In the same fashion, a suit to rescind a deed may be filed by the grantor or by the grantor’s guardian or conservator if the grantor is incapacitated. Children or other members of a live grantor’s family have no standing to file suit to rescind a deed because. As expectant heirs, they have no legal or equitable interest in the grantor’s property.

To be valid, a deed must be the result of the conscious, voluntary act of a grantor who has the capacity to transact business. To have the capacity to transact business, a person need only be able to reasonably know and understand the nature, extent, character, and effect of the transaction. However, a deed to a grantee who is in a confidential relationship with the grantor can be set aside if the grantee has exerted undue influence on the grantor to procure the deed. In cases of this sort, any relationship between two persons in which one person is in a position to exercise dominion and control over the other will be considered to be a confidential relationship.

The court found that there was more than ample evidence to establish the existence of a confidential relationship between Mrs. Groves and her brother-in-law, and that Mr. Groves had dominated this relationship ever since R.C. Groves died in October 1995. By the time Mrs. Groves executed the deeds in December 1998, she was completely dependent upon Mr. Groves and his wife for her housing, sustenance, medical care, and other support. She was incapable of doing much other than basic personal hygiene without their assistance. Accordingly, the trial court concluded that Mr. Groves was the dominant party in a confidential relationship with Mrs. Groves when she signed the deeds in December 1998.

The existence of a confidential relationship between the grantor and the grantee, by itself, does not warrant rescinding a deed. Thus, persons seeking to rescind a deed must prove the existence of other suspicious circumstances that would reasonably support a conclusion that the grantor did not act freely and independently. These suspicious circumstances include, but are not limited to, the grantor’s physical and mental deterioration and the grantee’s active involvement in procuring the conveyance.

The existence of a confidential relationship combined with a transaction benefitting the dominant party gives rise to a presumption that undue influence was exercised. This presumption effectively shifts the burden to the grantee to present clear and convincing evidence that the challenged conveyance was fair.

These conveyances clearly benefitted Mr. Groves and his wife because they received real property worth between $60,000 and $65,000 for no monetary consideration. Mr. Groves actively procured these deeds, and as a result of the conveyances, Mrs. Groves–the weaker, more dependent party–was left with essentially nothing. These circumstances were sufficient to shift the burden of evidence to Mr. Groves to prove that the conveyance was fair.

The evidence Mr. Groves offered on this point was surprisingly weak. He testified that Mrs. Groves simply decided to give him her real property, and the lawyer who prepared the deeds testified that Mrs. Groves “appeared” to know what she was doing when she signed them. In this example case, this evidence fell far short of establishing clearly and convincingly that these conveyances were fair and not the products of undue influence. Accordingly, the Court of Appeals affirmed the trial court’s decision to set these conveyances aside.

Mr. James Elam executed three wills in the four months leading up to his passing. The first will named his foster son, Milton Griffin, as the sole beneficiary of his estate. A few weeks later, he signed another will naming other members of his family. His final will was signed several weeks later, dedicating the estate to Mr. Griffin’s wife and children.

These wills were all drafted following the unexpected death of Mr. Elam’s wife of 57 years. The pair never had biological children, but they had taken Mr. Griffin in as a foster child when he was 12 years old. They raised Mr. Griffin and remained exceptionally close to him throughout their life. Mr. Griffin even lived in a house two doors down from them. They had such a close relationship that Mr. Elam designated Mr. Griffin to be his power of attorney to assist with matters following his wife’s passing.

Mr. Elam struggled with a drinking problem. His drinking increased following the passing of his wife. Mr. Griffin, due to his concern about drinking and driving, sold Mr. Elam’s car without discussing this with him. This angered Mr. Elam and he revoked Mr. Griffin’s power of attorney. The two men did not talk for several weeks following this. Slowly, they began talking again, but the relationship remained strained.

Following the sale of the car, Mr. Elam’s estranged brother came to visit and stay with his brother. During this time, Mr. Elam changed his will and designated his brother as the sole beneficiary of the estate. Mr. Elam also purchased another vehicle during this period. Mr. Griffin kept his distance due to the tension in the relationship.

However, Mr. Elam contacted Mr. Griffin about an infection in his leg. He needed Mr. Griffin’s assistance to receive treatment for his medical issue. He also told Mr. Griffin that he wanted to prepare a new will. Mr. Griffin took notes regarding the terms of the new will. He suggested that attorney Bob Young, a neighbor and friend, prepare the document itself. That was agreeable to Mr. Elam. Mr. Elam, prior to his final hospitalization, insisted on going to the attorney’s office and signing this new will. He was admitted to the hospital thereafter and he died a month later.

The contest was filed by Mr. Elam’s brother, insisting that Mr. Elam lacked the required testamentary capacity to execute the final will. The court appropriately discussed the challenges that a will contest based on testamentary capacity will face.

The law requires that the testator’s mind (in this case, Mr. Elam’s) must be sufficiently sound to enable him or her to know and understand the force and consequence of the act of making the will at the time the will is executed. The testator must have an intelligent consciousness of the nature and effect of the act, a knowledge of the property possessed, and an understanding of the disposition to be made. While evidence regarding factors such as physical weakness or disease, old age, blunt perception, or failing mind and memory is admissible on the issue of testamentary capacity, it is not conclusive, and the testator is not thereby rendered incompetent if his or her mind is sufficiently sound to enable him or her to know and understand what he or she is doing.

The opinions of lay witnesses are admissible on soundness of mind if they are based on details of conversations, appearances, conduct, or other particular facts from which the testator’s state of mind may be judged. Further, in determining testamentary capacity, the mental condition of the testator at the very time of executing the will is the only point of inquiry; but evidence of mental condition both before and after making the will, if not too remote in point of time, may be received as bearing upon that question. Insofar as it has a reasonable tendency to bear upon the mental capacity of the testator when the will was executed, evidence of his physical condition–both before and after the date of the will–is also admissible. However, apart from its effect upon the mind, the physical condition of the testator has no bearing on the issue.

The challenger to the will called several witnesses to try to establish that, on the day that he signed his new will, Mr. Elam lacked the required testamentary capacity to effectively execute a new will. However, in this example case the jury ultimately disagreed with the challenger; they held that Mr. Elam had sufficient capacity.

Challenges based on lack of testamentary capacity are difficult. There is a requirement that the evidence relied upon be close in time to the date that the will was signed. The more distant in time, the less relevant the evidence becomes. Ideally, you would want evidence of some major lapse in capacity from the day that the will was signed. If that is not available, then evidence of mental failings within a few days before or after the execution of the will is preferred. In most cases, this evidence is unfortunately hard to find.

In June of 1997, 68-year-old Dewey Moore was experiencing some difficulty with gait, balance, muscle tone, and memory. He went to several doctors, one of whom diagnosed him with mild dementia and referred him to the Veterans Hospital in Nashville for neurological testing. After admission to the hospital, he was diagnosed with Alzheimer’s disease and a progressive neurological disorder. Shortly after he was released from the hospital, Mr. Moore executed a power of attorney in favor of Jeanetta “Jean” Moore – his wife of eighteen years. Dewey Moore declined rapidly thereafter, and died on December 30, 1997.

Mr. Moore had executed a last will and testament on September 13, 1996. The will devised “the real property where I reside at the time of my death” to his wife, Jean Moore. “All remaining real property, if any” was bequeathed to Phillip Martin and Blake Martin, Mr. Moore’s grandsons. Jean Moore was also granted “all vehicles, including all recreational vehicles,” and all household property. Brenda Martin, Mr. Moore’s daughter from an earlier marriage, was named as the residuary beneficiary. The will nominated Jean Moore and Brenda Martin as co-executrixes. The two women filed a petition to probate the will in the Chancery Court for Clay County and letters testamentary were issued to them.

On April 30, 1998, Brenda Martin filed a complaint against Jean Moore on behalf of the estate. She claimed that Mr. Moore was not competent when he signed the power of attorney, and that prior to Mr. Moore’s death, his wife had used the power to transfer his money and other property to herself, in violation of her fiduciary duty. For the purposes of this discussion, the most important allegation was that Jean Moore had made two withdrawals totaling $66,076 from her husband’s separately-owned checking account–thereby closing the account–and used the funds for her own benefit. The plaintiff asked the court to order the return of the assets to the estate and to tax the defendant with costs, attorney fees, and interest. In her answer, the defendant admitted that she had withdrawn the money from the account but denied that she had done anything wrong.

The trial judge agreed with the plaintiff that Jean Moore had breached her fiduciary duty by withdrawing the entire balance from her husband’s separate checking account and using it to purchase property in which Mr. Moore had no interest. The court found that the transaction was not reasonable under the circumstances and that the estate was entitled to recover the whole amount withdrawn, together with interest–at the rate of 8 percent per annum–from the date of the filing of the complaint. The court further found that the defendant had intentionally breached her fiduciary duty and that the estate was accordingly entitled to $2,500 in punitive damages.

Our courts have long held that the execution of a power of attorney establishes a confidential or fiduciary relationship between the attorney and the grantor of the power. Our Supreme Court has announced a narrow exception to this rule. The Court ruled that if the power of attorney is executed, but not exercised, a confidential relationship does not arise as a matter of law. This exception clearly does not apply in the present case.

Numerous opinions of our appellate courts have stated that the dominant party in a fiduciary relationship is obligated to deal with the property of the other party in the utmost good faith. Other cases have spoken of the duties of loyalty and honesty as also being a part of a fiduciary’s obligation.

Finally, the existence of a confidential relationship, combined with a gift or benefit to the dominant party, creates a presumption of undue influence and of the invalidity of the transaction. However, this presumption is not conclusive and may be rebutted by clear and convincing evidence of the fairness of the transaction.

Jean Moore argued that she did not breach her fiduciary duty with regard to her husband’s separate checking account. She presents two alternate theories as to why she was authorized to deal with the account in the manner she did. The first is that the account was, in fact, joint property, and thus that she could dispose of it during Mr. Moore’s lifetime as she saw fit. The second theory is that she was authorized by the terms of the power of attorney and by Tenn. Code Ann. § 34–6–110 to use the power to make gifts to herself. The court was not persuaded by either of these arguments.

She testified that her husband regularly deposited money from the sale of marital assets into the account and took money from the account to purchase other marital assets. She also notes that Mr. Moore customarily transferred money between the joint account of the parties and his own separate account. She reasons that these circumstances create an inference of joint ownership.

While this may be a permissible inference, it is not conclusive. The record shows that both parties had their own separate checking accounts and that there was a joint account as well. It is thus also logical to infer that Mr. Moore intended his separate account to be the repository of funds that he considered his separate property.

Whether the account is deemed Mr. Moore’s separate property, or jointly owned property, doesn’t have much bearing. The only way that Jean Moore could legally exercise control over the account was through her power of attorney. By assuming that power, she bound herself to deal in the utmost good faith–with honesty, and with undivided loyalty–with all the property in which Mr. Moore held an interest.

The proof showed that Jean Moore sent $47,000 to her brother, Doroteo O. Bautista, to buy a “chicken ranch” in the Philippines. The property was jointly titled in her name and that of her brother. She thus exchanged property held solely in Mr. Moore’s name for property in which he held no legal interest. There is little evidence in the record that Mr. Moore ever expressed an intention to confer such a benefit on his wife, and no evidence at all that he bore such a benevolent intention towards Mr. Bautista.

Jean Moore argued that, if her husband had lived, he could have received a benefit from the Philippine investment–just as she received benefits from oil proceeds and lease payments derived from the Kentucky land that was titled solely in his name. She claims that even though her husband’s name was not on the deed to the Philippine property, it was marital property, and that Mr. Moore could have claimed it as such if the parties had divorced or if she had died first. However, Mr. Moore would have had to depend on the good will of his wife and brother-in-law to enjoy any benefit at all, as the courts of this state would have had no power to reach the property overseas.

As for the remainder of the funds in the account, the record did not indicate any pressing need for Jean Moore to use any of those funds for either Mr. Moore’s medical expenses or for the expenses of their household, and there was no proof that they were used for either of those purposes. Since there was a balance of over $36,000 in the parties’ joint checking account in August 1997, there was apparently no reason for Jean Moore to touch any of the funds in Mr. Moore’s separate account. She nonetheless saw fit to completely empty the account.

She further argued, as an alternate legal ground for her actions, that she was authorized by the terms of the power of attorney and by Tenn.Code Ann. § 34–6–110 to make a gift of the funds to herself. She notes that the statute came into effect on June 13, 1997, some 17 days before the execution of the power of attorney. The statute authorizes an attorney to “execute or perform any act that the principal might or could do” including “the power and authority to make gifts, in any amount, of any of the principal’s property, to any individuals…” However, it adds the caveat that such gifts be “in accordance with the principal’s personal history of making or joining in the making of lifetime gifts.”

While Mr. Moore may have been a generous husband, there is no evidence in the record that he ever made joint gifts to his wife and his brother-in-law. Thus, the manner in which Jean Moore used the funds entrusted to her was not reasonable, she breached her fiduciary duty, and she should be compelled to return all of Mr. Moore’s separate funds to his estate.

In this example case, the appellate court upheld the trial court’s holding regarding the breach of fiduciary duty by Jean Moore.