# FILED
February 23, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk 

### IN THE SUPREME COURT OF T ENNESSEE

AT KNOXVILLE

GENEVA GRAHL, ) FOR PUBLICA TION ) Filed: February 23, 1998 Appellant, ) ) Blount Circuit v. ) ) Hon. W. Da le Young, LILLIE DAVIS, ) Judge ) GREGORY SCOTT JUDKINS and ) JEFFREY TODD JUDKIN S, ) Appeal No. ) 03S01-9701-CV-00011 Appellees. ) )

For Appellant : For Appellees David R. Duggan Norman H. Newton DUGGAN & ANDERSON CRAWFORD, CRAWFORD & NEWTON Maryville, Tenness

ee Maryville, Tenness ee J. Michael Garner Duncan V. Crawford NICHOLSON & GARNER CRAWFORD, CRAWFORD, & NEWTON Maryville, Tenness

ee Maryville, Tenness ee John A. Walker, Jr. WALKER & W ALKER, P.C. Knoxville, Tennessee



## O P I N I O N-2-

COURT OF APPEALS AFFIRMED. DROWOTA, J.-3- The primary issue in thi s appeal is whether the c onservator, Geneva Gra hl, breached her fiduciary duty to the deceased conservatee, Lil lie Davis, by al lowing the conservatee’s husband, Omer Davis, to transact four certificates of dep osit in which the conservatee had an interest and reinvest the funds in t o certificates of deposit held either solely in the name of Omer Davis or jointly in the name of Omer Davis and Geneva Grahl. After carefully consideri ng the controll ing autho rity, we have determined that Grahl breachedher fiduciary duty by allowing Omer Davis to transact the accounts without first s eeking court ap proval, a nd by dealing with the conservatee’s property s o as to even tually att ain a pers onal ben efit. Ac cordingly, we affirm the judgment of the Court of Appeals r eversing the judgment of the trial court, and remand this case for further pr oceedings consistent w ith this opinion.

FACTUAL BA

CKGROUND This case arises from the acti on of the trial court in approv ing a final accounting by Geneva Grahl in her capacity as conser vator of the estate and person of Lillie Davis, w

ho is now deceased. There ar e no material facts in dispute.

In May of 1989, Geneva Grahl, the daug hter of Lillie Davis and Omer

Davis, filed a complaint in the Circuit Court of Blount County asking the court to approve the sale of land owned by her parent s as tenantsby the ent irety. Grahl alleged that her mother was confined to

a nursing home and incompetent. Grahl also alleged that her father was in a nursing home,but that he could competently manage his own affairs. In June of 1989, Grahl amended her complaint to seek appointment as conservator
over th e person and estate of her mother, Lillie Davis. Notice of the amended complaintwas served upon the defendants, Gregory Scott Judki ns and Jeffrey Todd-4-

Judkins, grandsons of Lillie Dav is, the conservatee, and th e onl ychildr en of a deceased daughter of the conservatee. The defendants thereafter filed an answer.

A hearing was held on J une 19, 1989, at which both Geneva Grahl and Omer Davis t esti fied that the cash assets of Lilli e Davis consisted of four cer tificates of deposit and a joi nt check ing acc ount for a total b

alance o f $ 197,512.0 0. The ne xt day, June 20, 1989, the trial court entered an order finding Lillie Davis incompetent and appointing Geneva Grahl conservator of both her per son and estate. This order directed Grahl, as conservator, to file an inventory and bond in the amount of $135,000.00. By a separa te order, the Court approved the sale o f the joi ntly h el d property for $68,000.00 and directed that the pr oceeds be divided $34,000

. 00 to Omer Davis and $34,000.00, less expenses, to the conservatee, Lillie Davis.

On March 8, 1990, the conserv ato rfiled an inventory w hich showed the conservateehad total assets in financial institutions in the

amount of $197,512.00, which consisted of a joint checking account, and four certificates of deposit. Three certificateswere ownedby “Omer Davis or Lil lie Davis” and one cer tificate was owned by “Mr. Omer Dav

is, Trustee for Mrs. Omer Davis.”

On June 1 9, 199 0, the conservator filed the first annual accounting which covered the period June 19, 1989, the date of her appointment, through June 19, 1990. This ac

countin g reflects ite mized e xpenditures of $24,034.9 4 and indicates total assets in the conservat orship estate in the amount of $16,659.92.The conservatee’s share of the proceeds from the cour t-approved sale of property are included in this figure.-5- The second page of this first accounting is the conservator’s ha nd-written explanation o f the disposition of the four certific ates of deposit and the checking accountshown on the conservat or’s original inv

entory. In summary, the conservator reported that Omer Davis had redeemed the certificates of deposit he had held jointly with or in trust for the

conservatee and had used the proceeds to purchase four new certificatesof deposi

t, two o f which he held i n the name

of Omer Davis alo ne, and two of which he held jointly with the conservator. With respect to the joint checking account, the conservator expl ained tha t Omer Davis had utili zed the remaining $1,167.71 in the account after a separate c onservat or ship account had been established.

Omer Davis died testate in Blount County on Decem b er 20, 1989, predeceasing his wife, the conservatee, Lillie Davis. His wi ll providedin pertinent part, as follows: I hereby give, devise and bequeath to my da ugh te r, GENEVA GRAHL, all my property, of w hatever nature, or wh e reve r located or situated, in Trust, for the use and benefit of my dear wife, Lillie Davis. The entire property is t o be used for the b est int erest of my wife, and as far as possible in the same way and manner that I would do were I living. The trust shall continue for, and during the natural life of my dear wife, Lill ie Davis, or as long as there are any assets left in the Trust. The Trust shall terminate upon the happening of the first ofthe events mentioned above. In the event

that there is [sic] any

assets left in the

Trust after it is terminated a

s provided

above, I g ive, beque

ath the same to

my daughter, GENEVA GRAHL, in its entirety, abso lutel y and in fee simple, without condition or l imitation, it being her sole discre tion to retain all of the assets or funds as hers, or t o make any gifts of them which she may choose. I make this provision having great confidence that she will care formy dear wife in the same w ay and manner I would do were I living.1 Though none of these documents bear a stamp from the clerk’s of fice, r eflecti ng the preci se date of fil ing, t he parties agree that the documents were fil ed with t he clerk. However , no court action was tak en on the m. -6- Followingthe death of Omer Davis, the conserv ator became

the owner o f two of the successor certificates of deposit by right of survivorsh ip. With reg ard to the other two c ertificate s of deposit held in the sole name of Omer Davis, the conservator, in accordance with her father’s will, changed both into trust accounts in the name of “Lillie Davis, Geneva Grahl, Trustee.” Theinterest earned o n these t wo certificateswas deposited into the conservatorship acc ount and used on behalf of the conservatee. Grahl transferred funds betw een these accounts to obtain the best rate of interest, but the

sum of th e princip al of the two accounts remained the same. The
conservator

did not use any of the principal from these two trust accounts for th e conservatee’s care. The conservator fil ed a second annual accounting on June 26, 1991, whic h reflect ed the interest from these two accounts as income. This accounting showed that the conservatorship estate had total assets in the amount of $3,871.11. 1

Lillie Davis died intestate on October 5, 1991. Grahl w as appointed and qualified as administratr ix ofher estate. Sometime in Nov ember of 1991, Grahl, in her capacity as conserv

ator, filed a motion to approve a final accounting and transfer the remaining assets in the conservatorship estate t o the administratrix. The final
accou ntin g indicated total assets in the conservatorship esta te in the amount of $1,937.17.-7- On November 20, 1991, the tri al court approved the final a ccounting and termination of the conservatorship. The defendants received no notice of the hearing
or order approving the fina l accounting. On December 17, 1991, the defendants filed
a motion to amend, alter, or modify the order, or in the alter native to grant a new

trial
on the motion to approve the final accounting. The trial court denied themotion, but the Court of Appeals reversed the denial and remanded the case for further proceedings, finding that the defendants “are enti tled to be heard on the matter of the final accounting and settlement o f the conservatorship.”

The trial following remand focuse d on w hether Grahl, as conserv ator, had breached her fiduciary duty by allowing Omer Dav

is to transact the certificates of deposit and purchase other certificat es which did not reflect the conse rvatee’s ownership interest. The conservator testified that

Omer Davis had been diag nosed with cancer in November of 1988 and that he had be en told b y phys i cians that the
cancer would likely be fatal

within two years. Because of his deteriorating physi cal health, Omer Davis moved out of his home and into the same nursing home where Lillie Davis was already residing. This move culminated in the petitio n to sell the jointly owned prope rty which was converted to a conservatorship proceeding.

Grahl testified that at the time of the conservatorship proceeding, and later, when the inventory wa s filed, the decea s ed conservatee and her husband, Omer Davis, held three certificates of deposi ts in the name of “Omer or Lill ie Davis” anda fourth certifi cate of de posit i n the name of “Omer

Davis , Trustee fo r Mrs. Ome r Davis.”-8- Consistent

with the summary attached to the first annual acco untin g, Grahl testified that, after her appointment as conservator, Omer Davis, on June 22, 1989, redeemed First Tennessee Bank certificate of deposit number 219244, whic h was owned by “Omer Davis or Lillie Davis.” He combined the pr oceeds from the certificate, $69,485.35, with additional funds and purchased another First Tennessee Bank certificate of deposit in the amount of $100,000.00, in the name of “Omer Davis or Geneva Grahl,” as j oint tenants with the ri ght of survivorshi p.

On June 28, 1989, Omer Davis r edeemed First A merican National Bank certificateof deposit number 0096463, which was held in the name of “Omer Davis
or Lillie Davis.”

He receiveda cashier’s check payable to “Omer Davis or Lillie Davis” in the amount of $28,530

. 72. He negotiated the cashier ’s check at First Feder al Savings and Lo an Association of Maryv ille, combined it with other funds he had at that institution, andpurchased a First Federal certificate of deposit in the amount of $90,983.90, in the name of “Omer Davis or Gen eva Grahl,” as joint tenants with right of survivorship.

On August 17, 1989, Omer Davis transfer red the entire balance in the amount of $84,816.87 from th e First Federal Savings and Loan Association of Maryville certificateof deposit number 1207825, which w as held in the name of “Mr. Omer Davis, Trustee for Mrs. Omer Dav is,” to a new

First Federal certi

ficate of deposit held solely in the name of “Omer Davis.”
Finally, on August 17, 1989, Omer Dav is redeemed First Tenn essee Bank certificateof deposit numb er 0109679, w

hich was h eld in the nam e of “Omer Davis-9-

orLi llie Davis.” He deposited the proceeds in the amount of $13,723 .59 in to a n existingjoint savings account at First Tennessee Bank in the names of “Omer Davis
or Geneva Grahl.” These proceeds remained ondeposit for less than a month, until Geneva Grahl withdrew the proceeds, and ad ditional funds from the account, and purchased a new certificate of deposit at First T ennessee in the amount of $15,000.00, which was hel d in the sole name of “Omer Dav is.”

Grahl testified that she drove her father to the financial institutions and accompanied him when he accomplished these tra ns actions. It is undisputed that Omer and Lillie Davis w

ere married at the time these t ransactionswere effec ted. Grahl testified that she had realiz ed Omer Davis was t r ansa cting certificates of deposit which reflected the conser vatee’s ownership i nterest and transf erring the funds to certificates of deposit w hich did not reflect the conser vatee’s ow nersh ip interest. Grahl tes tified that she had taken no action t o stop Omer Davis from completing these transactions. When asked why she had not taken any action, Grahl replied that her father had known the consequences of his actions and could not be easily dissuaded after he had decided on a course. Grahl also said th at sh e ha d been unaware th at she was s upposed to do anything t o stop him. G rahl had beco me the owner of two of the

successor certificates of deposit by right of surviv

orship upon the death of her father, and she had become t he owner of the two successor trust accounts after the death of the conservat ee, her mother, under the terms of her father’s will.

With r esp ect to the joint checking account listed on the inv entory of the conservatorship assets , Grahl testified that it had been utilized by her father for his-10-

personal purposes, and she had opened a separa te conservatorship acc

ount. After her appointment asconservat or, Grahl’ s name had been added to the joint account
so that she could write checks on it if needed. Following the death of Omer Davis in 1989, the conservator expended several hundre d dollars from the joint account on behalf of the conservatee. Thereafter, she transferred the remaining bala nce in the amount of $396.17, from the joint account to th e conservatorship account.

The d efenda nts also t estifie d at the h earing an d said tha t they h ad n o knowledge of undue influence or fraud on the part of theconservator in relation to the transactions

involving the c

ertificatesof deposit. The defendants testified that they had seldom seen their grandpar ents in the years precedi ng their death.

Based upon thi s proof, the trial court again granted Grahl’s motion and entered
an order approving the fina l accounting and transfer of the funds to the administratrix of the probate estate of Lillie Davis

. In so holding, the trial court stated that the conservator

had committed no fraud or undue influence and that Omer Davis had the unquestioned authority to engage in the transactions involving the accounts in this
case. The Court of Appeals revers ed the trial court’s jud gment, finding that three of the certificates of deposit purchas ed by Omer Davis w

ith fund s from the joint accounts ofOmer and Lillie Davi s remained property ow ned by them astenants by the entirety, even though the conservatee’s name did not appear on thesuccessor instruments. As to the funds in the fourth trust certificate which had been transferred to Omer Davis, the intermediate court held that the conservator had a duty to act to protect the interest of the conservatee.Thereafter, we granted permi ssion to appeal to determine whether the conser vator violated her fiduciary

duty to the conservatee.2 W e are aware that Tenn. Code Ann. §§ 34-4-101 thr ough 34-4-310 have beenrepealed and replaced with Tenn. Code A nn. §§ 34-11-101 through 34 -13-109, which becam e effective January 1, 1993. However, thi s circumstance was not raised by the parties in the Court of Appea ls or in this Co urt. Therefore, statutor

y cit ations are to the C ode prov isions in effect prior to January 1, 1993. However, in our view, t he ne w law wou ld not chan ge th e out com e of th is app eal. -11- On the separate grounds stated below, we affirm the judgment of the Court of Appeals.

FIDUCIARY DUTIES We begin our analysis with a brief review of the fiduciary duties which govern the actions of a conservator. The purpose of appointing a conserva tor is “to p reserve the estate of an incompetent or disabled person .” Tenn. Code Ann. § 34-4-202 (1991 Repl.). 2 Pursuant to Tenn. Code Ann. § 34-4- 207 (1991 Repl.), a

conservator

“shall have the same duti es an d powers as a guardian of a minor, and all laws r elated to the guardian ship of a minor sha ll be appl icable to a conserva to r.” A conservator occupies a fiduciary position of tr ust of the highest and most sacr ed character. See Meloy v. Nashville Trus

t Co. , 1 77 T enn. 340, 149 S.W.2d 73 (1941). The
c onservator

is to manage the conserv atee’s estate to the best advantage. Se e Steele v. Reese , 14 Tenn. (6 Yer.) 263 (1834) . The conservator should end eavor to manage the estate so that if the incompetent person recovers, he or she will findthe estate as nearly as possibl e in the same condition as he or she left it. Folts v. Jones , 175 Tenn. 74, 132 S.W.2d 204, 208 (1939). A conservato r should not change t he character

of the conservatee’s proper ty interests

unless the change is neces sary to prote ct and promote the interests of the cons ervatee. Id . In considering a c onserv ator’s request to cash a life ins urance policy for the benefit of the conservatee’s estate, thi s Court, in Folts v. Jones , stated:-12- Before the character of the interest in property held by a [conservatee] can be change d, it must be made manifest that it is necessary to protect and promote his interest. Although as a ru le, the co urt will preserve, as far as possible, the inter ests of the succession, this rule yieldsto the paramount rule which makes the [conservatee’s] welfare the first consideration without regard to the rig ht s of those who may have eventually r

ights to succession.
Id .; see also Morris v. Morris , 195 Tenn. 133, 258 S.W .2d 732 (1953).

A con servator is not the alter ego of the conservatee, however, and has n o authority to exercise an electiv

e right or power of the conservatee. Folts , 132 S.W.2d at 207. Therefore, a conservator has no authority to terminate joint accounts in which the conservatee has an intere st or to change a

beneficiary on a life insurance policy. Folts , 132 S.W.2d at 207; see also Howard v. Imes , 90 So.2d 818 (Ala. 1956); In Re: Estate of Wright , 424 N.W.2d 268 (Mich. 1988); Hendricks v. Grant C ounty Bank , 379 P.2d 693, 697 (Okla. 1963); Matter of Guardianship of Rich , 52 0 N .W.2d 63 (S.D. 1994); Rozycke v. Sroka , 279 N.E.2d 155 (Ill. Ct.App. 1972); Matter of Estate of Briley , 825 P.2d 1181 (Kan. Ct. App. 1992); Maess v. Greenfield , 547 S.W.2d 777 (Ky. Ct. App. 1977); Strain v. Rossman , 614 P.2d 102 (Or. App. 1980). Instead, the conservator

must petition the court, and the court, on behalf of the conservatee, can exercise such an election if it is c learly proven to be in the best interes ts of the conservatee. Folts v. Jones , 132 S.W.2d at 207; see also Schlieper v. Rust , 360 N.E.2d 1192, 1197 (Ill. Ct. App. 1977); Rozycke v. Sroka , 279 N.E.2d at 158.

A conservator owes the conservatee an undivi ded duty of loyalty. 18 Tenn

. Jur is., Mentally Ill and Other Incompetents , § 8, p. 323 (1984). The con servato r cannot be all ow ed by law to have any inducement to neglect the inte rests of the-13-

conservatee. Freeman v. Martin , 181 Tenn. 470, 181 S.W.2d 7 45, 746 (1944). Therefore, it is generally held that a conservator violat es his or her fiduciary

duty by acquiring, by pur

chase or otherwise, the property of the conserv atee. Id .; see also Lanius v. Donnell , 222 Tenn. 158, 432 S.W .2d 659 (1968).
Having generally

described thefiduciary obligations of a conservator toward the prop erty and estate of the conserv atee, we must next consi der whether th e conservateehad a proprietary interest in the certificates of deposit and the joint bank account. To that end, we begin with the well-settled proposition that tenancy by the entirety is a form of property ownership which is unique to married persons. Griffin
v. Prince , 632 S.W.2d 532, 534 ( Tenn. 19 82). The essenti al char

acteri stic of a tenancy by the entirety is that “each spouse is seiz ed of the whole or

the entirety and not of a share, moiety, or divisible part.” Sloan v. Jones , 192 Tenn. 400, 241 S.W.2d 506, 507 (1951). Upon the death of one spous e, ow ne rship of tenancy by the entirety proper ty immediat ely vests in the sur vivor, and the law

s of descent and distribution do not apply. Id . at 50 9. It is well-settled in this state that pers onal property as well as realty

may be owned by spouses by the entirety. Griffin , 632 S.W.2d at 535. It

has also been expressly held that a tenancy by th e entirety with the right of survivorship may exist in certificates of deposit and bank accounts. Whit e v. Watson , 571 S.W.2d 493, 495 (Tenn. App. 1978); Smith v. Hair e , 133 Tenn. 343, 181 S. W. 161 (1915) (certificates of depos it); Sloan , supra , and Griffin , supra , (bank accounts). In fact, th ere is clear authority in this state that a bank ac count or negot ia ble instrument in the name of “husband or wife” will be deemed to create a tenancy by the entirety with right of survivorship, in the abse nce of pr oof to the contrary. Griffin , 532 S.W.2d at 536.-14- Applying these longstanding principles to the facts in this case, it is clear that when the conservator filed the i nventory, three of the certificates of

deposit and the joint ban k account were held by Lillie Davis and Omer Davis as tenants by

the entirety, with right of survivorship. There is no proof to the contrary in this record. The fourth certificate of deposit was held by Omer Dav is, as trustee for the conservatee, Lillie Davis. Therefore, the conservatee had a proprietary interest in the certificates of deposit and in the joint checking account. Further, that interest was li sted as an assetof the conservatorship esta te on the initial inventor y. From the very beginning, therefore, the conservator had a duty to preserve the conserv atee’s property

interest in those assets. We must next determine if the conservator breached her fiduciary duty when she allowed and assisted Omer Davis to transact the certificates of deposit and utilize the joint c

hecking account.
Relyingupon a decision of the Court of Appeals, Mays v. Bright on Bank , 832 S.W.2d 347 (Tenn. App. 1992), perm. app. denied , the conser vato r argues that Omer Davis, as one of the entirety tenants, had the right to redeem the certi ficates of deposit, reduce the entire amount to his separat e possession, and reinves t the proceeds. According to the conser vator, under such cir

cumstan ces, the divested spouse can recover the funds only if fraud is alleg ed and proven. She asserts that the defendants have neither alleged nor proven fraud in this case,and therefore are not entitled to recover the funds.
Relyingupon this Court ’s d ecisions in Griffin and Sloan , the defendants respond that the conservatee’s interest was not def eated be cause mo ney withdra wn from a tenancy by the entir ety account is impressed with the entirety prov ision. The3 W e note that in Sloan this Court , in consi dering wheth er an account payabl e to “husband or wife” created atena ncy by t he en tirety, q uote d with appr oval th e follo wing pass age from a Pe nns ylvania case,”W here a deposit i s made payable t o either spouse, agency or

authorit y exist s by impli cation, and t he husb and or th e wife m ay, from that autho rity, withdraw the entire acc ount, but the money t hus withdr awn is impre ssed w ith the entirety pro vision that it is the property of both, andany one deal ing with such spec ific pro perty a s se vera lty, kno wing it belongs to both, must submit to t he consequences. ” Sloan , 241 S.W.2d at 508- 509 (em pha sis added and internal quotations omitt ed), quoti ng Madden v. Gos ztonyi Sav. & Trust Co. , 200 A. 624, 630 (Pa.1938). This passage was again q uoted and reaff irmed in the more recent case of Griffinv. Prin ce , 632 S.W.2d at 536. The intermediat

e court in Mays characteri zed t he l egal statu s of prop erty purch ased w ith tenancy by the ent irety

funds as a questi on of first impression. That

precise question was not at issue in Sloan and Griff in , so technica lly, the charac terization is co rrect. Th e interm ediate court deci ded the issue by rejecting the decisi on of the Pennsylvania Supreme Court, quoted wi th approvalin Sloan and Griff in , and by adopti ng instead t he positi on of the Ark ansas courts that funds wi thdrawn by o ne spouse from a ten anc y by the entir ety account are not i mpressed with the entirety provisi on and can not be recovered by the ot her spous e abse nt a show ing of frau d. Mays appears to be incon siste nt with this Cou rt’s pr ior de cisio ns. H owe ver, w e nee d not reac h this issue to res olve th is app eal. -15- defendants also claim that the con servator’s relianc e upon Mays is misplaced because Mays is factually dis tin guishable and inconsistent with this Court’s decisions in Griffin and Sloan

. 3

The conservator fails to r ecognize that

this case does not involve a dispute between two competent persons ov er funds withdrawn from a tenanc y by theentirety account. In our view, res olution of this appe al does no t depend upon the rights of Omer Davis. Instead, resol ut ion of t his appeal depends upon whether the conservator

violated her fidu ciary duties by al lowing and assisti ng Omer Davis to transact and utilize accounts i n which the conservat ee had an interest. Evalua ting the conservator’s acti ons and inaction in light of the fiduciary obligations previously delineated, we clearly

must answer that questi on in the affirmative.

Whatever the rights of Omer Davis, Grahl had a fiduciary obligation to protect and conserve the assets of the c onservatee. Grahl ow

ed a duty of undividedloyalty to the conservatee. Moreover, Grahl had no authority to change the character of the
cons ervatee’s property interests unl ess the change had been necessar y to protec t4 See Tenn. Code Ann. 34-11-11 5(c) (1997 Repl. ), which speci ficall y requi res a cons ervator to seek court ap proval be fore cha nging the nature o f a cons ervatee ’s investm ent.

5 Seeking guidance from the t rial co urt was part icularl y important

in thi s cas e because, on January 10, 1 989 , Om er Da vis had exe cuted a power of at torney app ointi ng Geneva Grahl att orney in fact. The dual

capacity

in which Grahl

was func tio ning, at torney- in-fact

for Omer Davis and conservator

for Lilli e Davis inherently, posed a conflict of i nt erest wit h respect to the assets in whi ch they bot h held int

erests. -16- and promote the interests of the conservatee. The proof in this record established that the principal amount of the certificates of deposit wer e never utilized to meet the needs of the conservatee. Even if a conservator deems it nec essary to change the character

of property to meet the needs of the c onservatee, the appropriate course of action is to seek court approval. Folts , 132 S.W.2d at 207. 4 If a conservator has
no authority to change the nature of the conservatee’s interes t for the benefit of the
con servatorshi p estate, certainly a conservator has no authority to act or fail to act so that the conservatee’s interest is completely extingu ished, with no benefit to the
conserva torship estate. The refore, when Omer Davis expressed his desire to transact the certificates

of deposit, as conservator,Grahl was obligate d to seek guidance from the trial c ou rt. This proposition appli es with equal force to bo th the certificates of deposit held jointly by Omer and Lillie Davis and to the certificate held by Omer Davis
as Trustee for Mrs. Omer Davis. Accordingly, Gr ahl had no authority

to consent to the withdrawal of the

funds on behalf of the conservatee, and v iolated her

fiduciary duty by failing to petition the trial court for guidance. 5

Moreover, in this case, Grahl personal ly benefited by allow ing Omer Davis to transact the certificates of deposit. Grahl was named as the joint tenant with ri ght of survivorship on two of

the successor certificate s of deposit. The refore, Grah l became the owner of those funds immediately upon the death of Omer Davis. By virtue of the fact that Omer Davis chang ed the other two successor certi

ficates ofdeposit into his6 In so holding,we do not by any m eans im ply that Grah l acted in ba d faith or fra udulently. In fact the proof i n t his cas e, including the testim ony of the d efenda nts, indicate s that she did not. However, when she w as appointed conse rvator, she was then bound to act in accor

dance with t he duties imposed by law uponall f iduciar ies. The good faith of a conservator does not just ify a breach of those strict l egal requi rements. -17- na me al one, they passed through hi s will to Grahl to be held in trust for the conservatee, Lil lie Davis. Upon the death of the c onservatee, Grahl became the
owner of these funds. By allowi ng Omer Davis to tr ansact the certificates of deposit , Grahl eventually acquired legal ownership of the funds which otherwise would have passed to the conservatorship estate, by right of surv ivorship, upon the deat h of Omer Davis. Therefor e, Grahl violated her fiduciary dut y by acqu iring the property of the conservatee. 6

Moreover, contraryto the conservator’s as sertion, damages arose as a result of the breach of her duties. Though the proof is undisputed that the pers onal needs of the conservatee

were fully satisfied,the proof also clearly de monstrates that the assets in the estate of the conservat ee substantially decreas ed as a result of the action and inaction of

the conservator. Sinc

e Grahl was functioning as conservator of the person and estate of Lillie Davis, she

was duty bound to carefully manage the estate in addition to prov iding for the personal needs o f the conservatee.

CONCLUSION Having determined, for

the reasons previously explained, that the conservator breached her fiduciary duties by allowing Omer Dav

is to redeem the certificates of deposit without first seeking court a pprov al, and by dealing with the conservatee’s property so as toeventually attain a personal benefit, we affirm the judgment of the-18-

Court of Appeals reversing the judgment of the tria l court approving the final accounting of the conservator. This ca use is remanded to t he trial court for a new and correct final accounting under which the conserv ator shall be required to

restore to the conservatorship est ate of Lillie Davis the total amount of the four certificates of deposit when redeemed in 1989 and interest earnedon that sum from the dates of redemption to the date of restorati on to the conservatorship est ate. The conservator

shall also be required to acc ount for the amount of funds held in the joint checking account at the time of the ini tial accountin g, $1,167.71, and restore to the conservatorship estate any portion of that amount for

which a proper accounting is not provided. The trial court shall allow a set off for the interest that was deposited to the con servatorship estate after the date of redemptio n of the certificates o f deposit.

_____________________________________ FRANK F. DROWOTA, III, JUSTICE
Concur: Anderson, C. J. Reid, Birch, Holder, JJ.