# FILED

March 26, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT JACKSON

______________________________________________________________________________ In re ESTATE OF BESSI E B. HOLMES, Shelby Law No. B-27529 DECEASED, C.A. No. 02A01-9707-PB-00158 JAIME H. MAUPIN, Claimant/Appellan

t, Hon. Leonard D. Pierotti, Judge v. JOSEPH N. HOLMES, CO-ADMINISTRATO

R, Respondent/Appellee. LANCELOT L. MINOR, III, Bourland, Heflin, Alvarez & Minor, Memphis, Attorney for Plaintiff/Appellant CLIFFORD D. PIERCE, JR., Wyatt, Tarrant & Combs, Memphis, Attorney for Defendant/Appellee. AFFIRMED Opinion filed:

______________________________________________________________________________ TOMLIN, Sr. J. This appeal comes to this court from the Probate Court of Shelby County. Jaime H. Maupin (“claimant”) a co-administrator, filed a claim against the estate of Bessie B. Holmes (“estate”), in the amount of $7,173.43 to recover funeral expenses paid by her for the buria l of her mother, Bessie B. Holmes (“decedent”). Joseph N. Holmes (“respondent”), claimant’s brother, and also a co-administrator of the estate, filed an exception to this claim, contending that the estate was no

t indebted to claima

nt for any amount. I

n addition, respon

dent also sought to recover monies in excess of $30,000.00 which claimant had paid to herself from a joint bank account she had with decedent with right of survivorship, created at a time when decedent was mentally incapac

itated. Responden

t averred that th

e amount claimed f

or funeral expe

nses could be deducted from the survivorship account. Claimant in turn filed a response to the exception, contending that at the time the account was created, decedent possessed the required mental capacity to cre

ate the account a

nd that the funds in t

he joint account w

ith right of survivor

ship became hers upon the death of decedent. Following a bench trial, the court found that at the time the joint account was opened, decedent did not have the mental capacity to create a joint account with right of survivorship. In2

addition, the court found that decedent had been subject to undo influence by claimant and that the funds appropr

iated to her own us

e by claimant fro

m the survivorship a

ccount belonged t

o decedent’s estate. The court awarded claimant the amount of funeral expenses she expended on behalf of decedent. On appeal, the sole issue presented to this court is whether the trial court erred in finding that the funds in the joint account with right of survivorship belonged to the estate rather th

an to claimant. For

the reasons here

inafter stated, w

e find no error a

nd affirm. While there are some hotly contested issues, many of the basic facts are not in dispute. Decedent, a resident of Shelby County, died intestate on March 31, 1996. She was ninety years old at the time of her death. Claimant and respondent were appointed as co-administratrix and co-administrator

of decedent’s e

state. Deceden

t was diagnosed wit

h Alzheimer’s dis

ease in December, 1995. On July 14, 1995, claimant and decedent opened a joint account with the right of survivorship at First Tennessee Bank in Memphis. The funds deposited into this account were transferred by claimant from an existing joint checking account with a right of survivorship that had been established earlier in the names of claimant and decedent at the same bank. Present at the opening of this new account were claimant, decedent, a bank official and Ms. Margare t Kinney, a sister of claimant and respondent, who had lived in the home of decedent for many
years. At the time that this account was opened, decedent could not handle her own affairs, but was able to sign checks prepared for her by either claimant or her other daughter, Ms. Kinne y. At the time she was d

iagnosed in Dece

mber, 1995 as havi

ng Alzheimer’s de

cedent was unab

le to sign her own name. The bank’s signature card used in the opening of the 1995 disputed account contained clear

and unambiguous la

nguage to the eff

ect that the acc

ount was a joint tena

ncy with a right of survivorship. We have already stated in the preamble to this opinion the events that transpired concerning these funds following the death of decedent. We will treat the remaining relevant facts, those that are controverted and those that are not, in the opinion hereafter as we discuss the relev

ant issues. Before dealing w

ith these issues, the

court would like to c

larify what law it

considers to be applicable and what law it considers to be inapplicable. Claimant relies heavily upon some of the language of T .C.A. § 45-2-703(e )(1) (1993), whe

rein she contend

s that where ther

e is language in a joint account card designating “joint tenant with right of survivorship” or language3

similar thereto, as stated in subsection (e)(1) it “shall be conclusive evidence in any action or proceeding of the intentions of all named that title vests in the survivor.” (emphasis supplied). We are of the opinion that claimant’s reliance upon this statute is misplaced. First of all, it has been held by the eastern section of this court that T.C.A. § 45-2-703 was initially enacted for the protection of the bank, absolving a bank of liability upon its payment to either joint tenant or the survivor. See Leffew v. Mayes , 685 S.W.2d 288, 291 (Tenn. Ct. App. 1984). This code section was revisited by our supreme court in In re Estate of N ichols , 856 S.W.2d 397 (Tenn. 1993). In Nichols the court considered the ownership of seven certificates of deposit issued to joint tenants with right of survivorship. Six were issued prior to the effective date of § 45-2-703(c), a 1989 amendment, while one was issued after its effective date. In holding that the first six were to be construed in light of the law as established in Lowry v. Lowry , 541 S.W.2d 128 (Tenn. 1976), and one in accordance with the amendment to § 45-2-703, the court did not suggest that the word “conclusive” in the 1989 amendment foreclosed any and all attacks on the questions of intent and ownership. The supreme court noted that the Lowry court held that “[a]bsent clear and convincing evidence of contrary intent expressed a t the time of its execution, . . . clear and unambiguous language” on a bank’s signature card is sufficient proof of the joint account and the surviving tenant’s ownership of the proceeds. Lowry , 541 S.W.2d at 132. The Nichols ’ court further noted that Lowry also stood for the proposition that “[t]he establishment of a joint bank account creating a joint tenancy with right of survivorship in clear and unambiguous language is subject to the parol evidence rule and is generally immune from attack in the absence of fraud, misrepresentation, duress, undue influence, mutual mistake, and incapacity. Nichols , 856 S.W.2d at 400 (citing Lowry , 541 S.W.2d at 133) (emphasis supplied). The Nichols ’ court found that there was “no evidence of fraud or other circumstances that would vitiate the agreements.” Nichols , 856 S.W.2d at 400. Su ch are not the fa

cts in the case before us. In essence the Nichols ’ court found that where there is no evidence in the record addressing such c

laims as fraud, un

due influence or

lack of capacit

y, § 45-2-703(e) (1) will provide conclusive evidence of intention of the parties. Otherwise, the rules laid down in Lowry and acknowledged in Nichols remain the law, and it is that law that we shall follow here.4 Turning now to the case under consideration, we will address the issue raised by respondent by considering that issue’s component parts. In accordance with the requirements of Lowry inasmuch as the signature card contains clear and unambiguous language that the account created was a joint tenancy with right of survivorship, respondent has the burden of proving that decedent did not intend to create such an account. To that end, respondent asserts that the account is invalid because of first, incapacity and second, undue influence.

I. The Mental Incapacity Concept. Respondent initiall

y contends that de

cedent lacked th

e mental capaci

ty to participate i

n the creating of a joint bank account with claimant that granted a right of survivorship. As noted
in Lowry , joint bank accounts with a right of survivorship are analyzed under the “contract theory.” Simply put,

this means that a joi

nt account agre

ement with the righ

t of survivorship establishes a contract that transfers the proceeds at death by operation of law. The law of contractual ca

pacity controls. See Roberts v. Roberts , 827 S.W.2d 788, 791 (Tenn. Ct. App. 1991). The Roberts ’ court set forth the

following as the te

st of mental capa

city required of

the person involve

d to enter into a contract, stating it must be ascertained whether the person “possesses sufficient mind to understand, in a reasonable manner, the nature, extent, character, and eff ect of the act or transaction in which he is engaged.” Id. The issue thus becomes whether the person entering into the contract

has the mental ca

pacity to know the n

ature and terms o

f the contract. I

n order to invalidate the contract, there must be shown at the time of execution “such impairment of reasoning powers as to make the person incapable of acting rationally in the transaction involved, or such mental unsoundness as occasions an inability to comprehend the subject of the contract and its nature and probable consequences.” Id. at 792. Whether a person has contractual capacity is to be determined in the light of facts and circumstances surrounding each case. Id. It now becomes our responsibility to examine the evidence in this record, applying the “clear and convincing” standard, to ascertain whether the trial court was corre ct in ruling that decedent lacked the mental capacity at the time this transaction took place in July, 1995. Claimant testified that decedent considered and treated the account in question as hers and that5

checks on that account were usually written by claimant or her sister, Margaret Kinney. When the account was opened on July 14, 1995, claimant opened up the account and had decedent sign the signature ca

rd. Claimant furth

er testified that

while decedent w

as diagnosed with Alzheimer’s in December, 1995, she had symptoms of Alzheimer’s for some two years, and that she had good days a

nd bad days. She fu

rther testified th

at decedent was

signing her chec

ks in July, 1995, although

they (claimant an

d claimant’s siste

r) would have to si

t down and explain t

o decedent what th

ey were doing. Cla

imant said Margar

et Kinney, her sis

ter, was involved

in this account and was present when the 1995 account was opened. Respondent testified that decedent first showed signs of Alzheimer’s six or seven years ago, and after three or four years she could not remember conversations of the pre vious day. Respondent specifically related an event of July 4, 1994, when ten to fifteen members of the family came to decedent’s home for a couple of days to clean-up and fix-up. They removed the furniture, cleaned the house and painted, and decedent never knew what was going on. Jack Holmes, another brother, testified that he saw decedent about every week for over five or six years and that he mowed her lawn once a week for twenty years. In a ddition, he drove her wherever she needed to go for several years. He stated that he noted a deterioration in her mental capacity several years ago and that it got worse almost every year. This brother also testified regarding the 1994 housecleaning, which lasted a day and a half. He testified that decedent did not know who she was or who her relatives were who were there half the time. On cross examination, he conceded he was paid $10.00 to cut the grass, but this was not requested by him, but tendered to him by his sister and brother. He estimated that he saw decedent ev

ery Friday for tw

enty years. When questioned b

y the court, he sta

ted that in July, 1995

she was very for

getful, confused and in his opinion could not handle her financial or physical needs. He stated that he never knew about the 1984 joint account and did not learn of the 1995 joint account until after decedent’s dea

th. Before dece

dent died, and whil

e she was in the hos

pital, claimant ad

vised him that she was transferring funds to another bank. Mary Gilliland, de

cedent’s next do

or neighbor, state

d that she had obse

rved changes in decedent during the last two years. She said that you couldn’t depend on what she said and that she often got confused. She confirmed that during the house cleaning session in 1994, decedent6

did not know her family. Doris Whitaker another neighbor, also testified that decedent showed poor memory prior to 1994. She stated that she saw decedent about three times a week. The parties’ sister, Margaret Kinney, was called as an apparent rebuttal witness. She stated that in 1992,

decedent had tr

ied six times to sign a

check, but could n

ot remember how to sign her name. Ms. Kinney also testified that she never knew about an account that claimant and their mother had, nor did she know about the joint account created in 1984. She stated that she was present in July, 1995, when the new joint account was opened. She stated that she knew that the 1995 account was in both claimant and decedent’s names, but did not know about the survivorship. She stated that she did not know nor was it discussed that her sister was signing jointly with her mother for the right of survivorship. In addition, claimant admitted that she was the one who arranged for the establishment of the joint account which paid a higher rate of interest that was established in July, 1995. Applying the “clear and convincing” standard to the evidence in this record, we are of the opinion that the evi

dence does not pr

eponderate aga

inst the finding of th

e trial court that

on July 14, 1995, decedent did not have the mental capacity to create a joint account with right of survivorship. II. The Undue Influence Issue. In this state “[i]t is well established that when two parties enter into a confidential or fiduciary relationship and the dominant party receives a gift or other benefit from the other party, a presumption arises that some improper advantage was taken ‘either of the confidential relations existing . . . or of the weakness and frailty of the party from whom the benefit was received’ thus rendering the transaction invalid.” Richmond v. Christian , 555 S.W.2d 105, 107 (Tenn. 1997) (citing Graves v. White

, 63 Tenn. 38, 42 (1874)).
In Turner v. Leathers , 191 Tenn. 292, 232 S.W.2d 269 (1950), our supreme court defined “confidential r

elationship” as f

ollows: Whenever two persons stand in such a relation that, while it continues, confidence is necessarily reposed by one, and the influence which naturally grows out of that confidence is possessed by the other, and this confidence is abused, or the influence is exerted to obtain an advantage at the expense of the confiding party, the person so availing himself of his position will not be permitted to retain the advantage, although the transaction could not have been impeached if no confidential relation had existed. Id. at 271 (quoting 3 Pomeroy’s Equity Jurisprudence § 956, p. 792 (5th ed.) (italics in original).7

This confidential relationship is not merely a mutual relationship of confidence; rather, the relationship arises where there exists a dominant personality who exercises dominion over the weaker and dominated party. Iacometti v. Fras sinelli , 494 S.W.2d 496 (Tenn. Ct. App. 1973). First of all, the record reflects that for many years decedent always depended upon someone else to ta

ke care of her

business affair

s. Initially, it was h

er husband, prior

to his death in the 1970's. She re

lied upon her son, J

ack Holmes, to tak

e her to the groce

ry store and bea

uty parlor and on the claimant to make out her checks. Respondent described his mother as a very trusting person. Jack Holmes also testified that it had gotten to the point where she could not shop for groceries as she appeared to be lost. In addition, as we have already noted, for some period of time claimant made out decedent’s checks, for the most part told her what they were for, and it was claimant who initiated the creation of the new account in order to get a higher interest rate. In our opinion, claimant was clearly the dominant personality and decedent was clearly the weaker subservie nt personality in this relationship and her dependence upon claimant is clear. The establishment of this joint bank account with rights of survivorship was clearly a benefit to claimant, and she would receive the entire balance in the account upon decedent’s death. The trial cour t was correct in our opinion in so finding. The result of this finding is that undue influence of claimant over decedent was presumed to exist in this transaction. This presumption that claimant took improper advantage of decedent, thereby invalidating the transaction, is rebuttable and “may be rebutted only by clear and convincing evidence of the fairness of the transaction.” Matlock v. Simpson , 902 S.W.2d 384, 386 (Tenn. 1997). The burde

n of proof is place

d upon the claimant

to rebut this presu

mption of invalidity by evidence meeting the same “clear and convincing standard” as mentioned earlier. In our opinion the claimant has completely failed to do so. Rather she offered little or no evidence seeking to rebut this presumption. We find that the evidence does not preponderate against the finding of the trial court in this regard. The judgment of the trial court is affirmed in all respects. Costs in this cause on appeal are taxed to claimant, for which execution may issue if necessary.8 ________________________________________ TOMLIN, S.J., W.S.

________________________________________ FARMER, J. (CONCURS)

________________________________________ LILLARD, J. (CONCURS)