# FILED September 5, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT JACKSON

______________________________________________ DOROTHY R. W. BARHAM , Plaintiff -Appella nt, Shelby Equity No. 101702-3 Vs. C.A. No. 02A01-9608-CH-00200 DIANE W. COOPER, Defendant-Appellee.

___________________________________________________ _________________________ FROM THE SHE

LBY COUNTY CHANCERY COURT THE HONORABLE D. J. ALISSANDRATOS, CHANCELLOR

Clyde W. K

eenan; K eenan, Fox & Dabbo

us of Memphis For Appellant Charles E . Hodum an d Mitzie C. Johnson of Collierville For Appellee

AFFIRMED AND R

EMANDED Opinion filed:

W. FRANK CRAWFORD,

PRESIDING J

UDGE, W.S.

CONCUR:
ALAN E. HIGH

ERS, JUDGE HOLLY KIRBY L ILLARD, JU DGE
This case involves a complaint for an accounting and injunctive re lief. Plaintiff, Dorothy R. W. Barham, appeals the order of the trial court af firming th

e repor t of the Special Mast

er in favor of defendant, Diane W. Cooper

.1 The rec ord indic ates tha t a tempor

ary res training o

rder wa s issued, but the re cord is silent as to any subsequent proceedings for injunctive relief until Barham filed a motion for an injunction on December 10, 1993. Apparently, the motion was never a cted upon. 2 Barham and Coope

r are sis ters, and Coope

r contro lled Barh am’s fina nces pur suant toa general power of attorney executed by Barham. On July 17, 1992, Barham filed a complaint against Cooper in the Chancery Court of Shelby County requesting an accounting, the appointment

of a Special Master, and an injunction preventing Cooper from disposing of any of Barham’s property. On July 28, 1992, the trial court issued a tempora ry retra ining orde

r agains t Cooper. 1 On October 30, 1992, Cooper filed an answer that denied the material allega tions of the complaint. On March 11, 1994, Barham filed an amended complaint adding the allegations of undue influence and overreaching. The am ended co mplaint alleges tha t Cooper in duced Ba

rham to enter into a fraudulent

contract for the sale of Barham’s home. The amended complaint further alleges that Coope

r willfull y and mali ciously e

xercise d control

o ver Barham’s property and converted the property to her

own us e. On June 6, 1995, Cooper once again filed an answe r denying th

e materi al allega

tions. On March 2 2, 1995, a consent order was entered appointing a Spec ial Master. Th e consent order provides that the Special Master was appointed for the following purposes : 1) to conduct an accounting of the financial transactions exec uted by C ooper on be half of Barham under the fiduciary duties cr eated b y the power of attorney executed by Barha m on July 11, 1984; 2) to rule on the admissibility of certain transactions and expenses submitted by Cooper; and 3) to dec ide the iss ues of whether Ba rham w as the victim of fraud, undue influence, or overreaching. The Special Master conducted evidentiary hearings on June 13 a nd 14, 1995. On January 2, 1996, the Special Master filed a report that made detailed f inding s of fac t including the following : Barham suffered through an abusive marriage for most of her married life. She and her hu sband divorced, and in the divorce settlem ent Barham received the marital home and $10,000.00. During he

r ma rr iage, Barham relied upon Cooper for3 help. After th

e divorc e, Barha

m began li ving wit

h her e xhusband again. On May 27, 1984, Barham shot andkilled her exhusband, and she was arrested and charged with murder. Cooper hired an d paid for

a lawye r and post ed bond f or Barha m. On June 4, 1984, Barham was released from jail and was admitted to the Memphis Mental Health Institute (MMHI) for psych iatricevaluation and treatment. She was diagnosed a s depressed and having a depe

ndent per sonality, but s he w as not diagnosed as mentally incompetent. Cooper continued t o help Barham while Barham was at MMHI. On July 11, 1984, Barham executed a general po wer of attorney appointing Cooper as her att orney. The primary reason for the power of a ttorney w as t o allow Cooper to rent Barham’s home, which re mai ned vacant while she was at MMH

I, to collect rent, and to do the necessary repair s. Coope r did much of the work herself and arrange d for the remainder of the repairs. Barh am did not have any funds of her own because she spent the divorce se ttlement money. Cooper opened a joint

bank account in both her name and Barham’s name to deposit the rent money. She used this account to pay for r

epairs a nd nece ssities fo

r Ba rham. This account remained open until December

6, 1985, at which time the balance of $1,084.42 was transferred to a new , separa

te account in Cooper’s name only. In December 19 85 , Barham received two checks from her ex-husband’s life insurance totaling $10,042.59. Cooper deposited these checks into her separate account and reimbursedherself fo r the $5,000.00 attorney’s fee and the $500.00 bond. Barham was co nfine d at MMHI until October 14, 1984 and then was releas ed to a half- way house where s he staye d until February 1986
. On Februa ry 14, 198 5, Barha

m pled guilt

y to4 voluntary manslaughter, but she received a suspended sentence. In March 1986, Barham was not taking her medicine, and sh e threatened

suicide. Cooper persuaded Barham to check in to Baptist Memorial Hospital where shestayed f or sixweeks. Upon leaving the hospital, Barham r ented a house, an d she app eared t o be much improved. On July 20, 1986, Barham and Cooper signed an agree m ent

that provided that Barham owed Cooper $29,000.00 and that she w ould quit- claim her house to Co oper for

the purpo se of selling the house. Cooper was entitled to the first $29,000.00 of the proc eeds of t

he sale, and Barh am was en title d to an y balance. B arham signed the quit-claim deed on July 20, 1986. Barham did not com

plain to Cooper about the agreement and the quit-cla imdeed until shortly before fil ing the co mplaint in t his case in July 1992. In October 1986, Cooper received $36,143.00 from the saleof Barha

m’s resid ence, a nd the pro ceeds w ere dep osited into Cooper’s bank account. In March 1987, Cooper took

$30,013.06 from the proceeds and p ur chased 2,282 shares of a Putnam Investment

Mutual Fund in her own name. It was Cooper’s intention to send Barham a monthly div idend check as long as Barham needed o ne. Between December 1986 and June 1992 when this suit wa s file d, Co oper sent Barham $11,500.00 from the dividends from the Putnam fund. Although the Putnam fund

curren tly has the same number of shares as it did in March 1987, the value of the fund

has dropped considerably and is now wor

th approximately $17,000.00. Cooper helped Barham ob tainher soci al secur ity benef its, and in the spr

ing of 1986 , Barham f

inallybegan receiving social security checks. Cooper deposited the initial lump sum check in5 the amount of

$5,372.00 in her

personal account. In September 1986, Cooper opened a personal account for Bar ham in Barham’s

name only. The account was opened so Barham could write he r
own checks, and the a

ccount w as starte d from an initial de posi t of the Augus tand September 1986 social security checks totaling $672.00. After September 1986, the social security checks were directly deposite d into Barh am’s per sonal ac count.

After examining the facts, the Special Master first found that Barham had independent advice from her mother and the opportunity for indep endent advice from her attorney. The Special Master

found that there was no misappropriation of funds, no breach of a fiduciary duty, and no undue influence or overreaching by Cooper . The Special Master found that there was an oral agreem

ent between Cooper

and Barh am for Ba

rham t o rece ive the interest or dividend proceeds from the Putnam Fund. The Special Master specifically found that Cooper was not “short-chan ging” Barham, but instead, that the Putnam fund dropped in value. Finally, the Special Master

found that Cooper was the owner of the corpus of the Putnam fund, and Barham

was entitled to interest or dividendsfrom the f

und. The Sp ecial Ma ster asse ssed cost s against Barham because Cooper was not at fault and bre ached no fiduciary duty. Barham filed exceptions to the Special Master’s report, and a hearing on the exceptions

was held on March 20, 1996. On April 17, 1996, the trial court en te red an order denying Barham’s exceptions and affirming the Special Master’s repor t. The or der recited the chancellor’s concurrence

with the Special Master’s findings of fact including the findings that Cooper did not breach her fiduciary duty, that Barham had the opportunity for inde pendent ad vice, and that Cooper did not exert undue influence. The trial court a lso concurred in the Special Master’s accounting. Barham appeals the order of

the trial court affirming the findings of the Special Master and pres ents the f

ollowing is sues for

review: 1) whether the Special Master erred by fa iling to find that the execution of a power of attorney created a fiduciary duty between Barham a nd Cooper ; 2) whether t he Special Master erred by failing to recognize the existence of a presumption of undue influence and to sh ift the6 burden to Cooper once a fid

uciary d uty was e stablishe d; 3) whether the Special Master erred by fa iling t o r ecognize that the shifted b urden of

proof is r

ais ed to the level of clear and convincing eviden

ce; 4) whether

the Sp ec ial Master erred in finding that Barham had independ ent advic e or oppo

rtunity fo r indepe ndent adv ice; 5) w hether the Special Master erred in finding that Barham wa s not subjec ted to undu e influe nce and overre aching; 6 ) whether the Special Master erred in finding a pr oper accoun ting on the

part of th e Cooper ; 7) whether

the trial court er red in re fusing to a

llow Ba rha m to p re sent additional evidence, newly discovered following the hearings before the Special Master to the cour t; and 8) whether the trial court erred in adopting the fin dings of the Special Master, which wer e co ntrary to the weight of the evidence. Concurrent

findings by the master and trial court are conclusive on appe al unless (1) the issue should not have been referred to the ma ster; (2) the findings are based on an error of law; (3) the findings involve a question of law or a mixed question of law and fact; or (4) the findings

are not supported by substantial and material evidence. Shepherd v . Griffin , 929 S.W.2d 336, 344 (Ten n. App. 19 95); see also T.C.A. § 27-1-113 (1980). Barham first argues that the Special Master erred by failing to find that the execution of

a power of attorney created a confidential relationship between Barham and Cooper. A person authorized

to act on behalf of anot her by virt ue of an u

nrestricted powe

r of attor ney has a confidential relation ship with the person who executed the power of a ttorney. Mitchell v

. Smith , 779 S.W.2d 384 , 389 (Te nn. App. 1 989). In t

his case , it is undisputed that Barham executed a power of attorn

ey in fav or of Coop er and, t h erefor e, that Barham and Cooper are in a confidential relationship. However, the Special Master d id not fail to find that the power of attorney created a fiduciary duty. Instead, the Spec ial Master found that Cooper had not breached her fiduciary duty, and nece ssary to th is holding isa finding

that a fid

uciary d uty existed in the first place. T his issue iswithout me

rit. We will consi der Barh am’s sec ond and th ird issues together. Barham argues that the Special Master erred by failing to recognize the existence of a presumption of undue influence and by failing to shift the burden to the level of clear and convincing e vidence to Cooper. The existence of a confidential relationship, followed by a transa ction where in the dominantparty receives a benefit from the other party, gives rise to a presumption of undue influence that may b e rebutt ed only by

clear a nd convin cing evid

ence of th e fairne ss of the7

transaction. Matlock v. Simpson , 902 S.W.2d 384, 386 (Tenn. 1995). Cooper argues th at a relation ship between fam ily mem bers does not always create a conf idential relationship and does notalways give rise to a presumption of undue influence. The rel ations be

tween fa mily members and relatives are not, in and of themselves, conf idential relationships. Mitchell , 779 S.W.2d at 389. However, in this case, Barham executed a power of attorney that

gave Cooper full control of Barham’s finances. As stated above, a pe rson authorized to act on behalf of another by virtue of an unrestricted power of attorney has a conf idential relationship with a person who executed thepower of attorney. Id. Because the power of attorney exec uted in favor of Cooper c

reated a confid ential re lationship and Coope

r rece iv ed a bene fit from the sale of Barham’s house, we believe that a presumption of undue influence was present

in this case, and therefore, the burd e n was on Cooper to prove the fairness of the transaction by clear and convincing evidence. Barham asserts that the Special Master’s report did not take into ac coun t the shifted burden of proof. Although the Special Master did not specifically refer to the standard of proof required to overc ome the presumption in the master’s report, we believe that the Special Master properl y considered the shifted burden. In closing remarks bef ore the Special Master, Barham’s attorne y’ s last statement was, “And once that happens [the existence of a confidential relationship] the burden shifts to the fiduciary to come forward and pr operly account for all the funds, and we would m ove the Court to grant the relief that we have reque sted.” The Special Master responded, “Okay. I thank you very much.” The Special Master found that Cooper

overca me the presumption of undue influence by proving the nonexistence of undue influence. In the order affirming the Special Master’s findings, the trial court stated that “the Special Master’s report is clear and follows the law.” The tria l court a lso stated , “The Cou

rt additio nally fi n ds that the Special Master found by clear and convincing evide nce that the burden of proof has been carried by clear

and convincing proof, and that there has been no breach of fiduciary duty by the Defendant, Diane W. Cooper.” It a ppears that the bur den of proof was prop erly shifted to Cooper in this case. Barham next argue s that th e Special Master erred in finding that she had independe nt advice from her

mother and the opportunity for independent advice from an a ttorney. One way to prove the fairness of

the tran saction isto show tha t the gra ntor had t he bene fit of com

petent,8

independent

advice on the advisability of making the gift or conv eyance. Richmond v. Christian , 555 S.W.2d 105, 107-08 (Tenn. 1977). This advice need not b e contemporaneous withor immediat ely prec eding the gift or conveyance. Brown v. Wei k , 725 S.W.2d 938, 945 (Tenn. App. 1983). In Turner v. Leathe rs , 191 Tenn. 292, 232 S.W.2d 269 (1950), the Tennessee Supreme Court discussed the content and extent of independent advice necessar y to
overcom e the pre sumption of

invalidity : Proper independent advice in this connection mean s th at the do nor had the [preliminary] benefit of confer ring fully an d privately upon the su

bject of his intended gift with a person who was not only competent to inform him correctly as to its legal effec t, but who wa s furt hermore so disassociated from the interest s of the donee a s to be in a position to advise with the donor impartially and confidently as to the consequen ce s to himself of his proposed benefactions. Id. at 297-98, 232 S.W.2d at 271 (citations omitted). The rule of independent advice means that the adviser must not only be competent but independent. Id. at 297, 232 S.W.2d at 271. We believe that

the Special Master’s finding that Barham had independent advice is not supported by substantial and material evidence

. See Shephe rd , 929 S.W.2d at 344. Barham consulted with her m

other before quit- claiming herhouse to Co oper, bu t Barham’ s mother is also Cooper’s mother. Barham testified that she wanted to sue her mot her also , but that her mother died. The attorney who prepared the quit-claim dee d was the same attorney who assisted Barham in litigatio n to reco ver her ex-husba nd’s life insuranc e proce eds. Bar ham h ad the opportuni ty to speak

with the attorney concerning the quit-claim deed, but there is no evidence that she actu ally met w ith him. Barham did not have independent advice on the advisability of making the conveyance

of her house. However, proof of independent advice is only one means of overcoming the presumption, and proof of independent advice is not necessary in all cas es. Richmond , 555 S.W.2d

at 107-08 ; Gordon v. Thornton , 58 4 S.W .2d 655, 658 (Tenn. App. 1979). Barham next argues that the Special Master erred in finding that she was not subjected to undue influence, a nd she asserts that the Special Master failed to take into account he r diminished capacity. Cooper, on the other hand, argues that there w as no proof of diminished capaci ty and tha t Barham h ad knowle dge of al l of the tr ansacti ons. Evidence of one party’s deteriorated mental or physical condition will substantiate the9

existence of a confidential relationship as well as the ability of the dominant party to influence the weaker party, and the weake r party need not be legally insane. Williamson v. Upchurch , 768 S.W.2d 265, 270 (Tenn. App. 1988). Any condition rendering the weaker party unable to guard against the domina

nt party’ s imposition

or undue influenc e is suffi cient. Id . The que stion to be answered is not whether

the weaker

party’s decision was a good one, or even whethe r the weaker partyknew what he or she was doing at the time, butinstead, the courts must determine whether the weaker party’s decision was a fr ee and independent one or whether it was induced by the dominant party. Id

. The Special Master found that Barham was diagno s ed as depressed and having a dependent

personality, but that she was not diagnosed as mentally incompetent. There is proof in the record that Barham was depressed, but the r ecord does not show that her mental condition deteriorated. She has not shown a condition that made her unable to guard agains t Cooper’s influence. We believe that the Spe cial M aster considered Barham’s mental condition and her confinement at MMHI in reaching his decision. We also believe that the Special Master correctly found that Barham was not subjected t o undue influence. Transactions between per sons in a confidential relationship are not automatic ally invalid, but the relationship of trust and confidence between persons in a fiduciary relation ship commands the close attention of the courts to the fairness of any transac tion between them. Security Fe

deral Sav. & Loan Ass’n o f Nashvill

e v. Rivier

a Ltd. , 856 S.W.2d 709, 714 (Tenn. App. 1992). The law raises a presumption that the transaction is invalid and the evidence required to overcome the presumption is determined by the circumstances of each c ase. Id

. The factors that are important in determining whether a transaction is fair include: (1) whe ther the fiduciary made a f

ull and fr ank discl osure of

all releva nt informa

tion within

his possession; (2) whether the consideration was adequate; and (3) whe ther the principal had independent advice before completing the transaction. Id. (citations omitted). Cooper testified that she did not

request the agreement evidencing the $29,0 00.00 deb t,
nor did she request the quit-cla im deed. Sh

e testifi ed that it

was what Barham wanted to do after discussing it with

their mother and that Barham decided that it should be done to repay Cooper for her help. In addition, Cooper presented a letter from Barham that showed Barham’s love and gratitude to ward Cooper. The Special Master found that the testimony was clea r that Cooper10

helped Barham in

almost eve

ry conce ivable way. Cooper handled

the rental and repairs of the property, took Barham to the store and the doctor, and “did just about everything a person c ould do for another.” Because evidence in the record

supports the concurrent finding that there was

no undue influence, this Court cannot disturb the findings on appeal. Shepherd , 929 S.W.2d at 344. Barham

next argues that the Special Master erred in finding a p roper accounting on Cooper’s part. Barham asserts that Cooper failed or refu sed to pro duce all

of the doc

uments in her possession and that she cannot account for social security checks totaling $6,500.00. Cooper

was unable to

find six months worth of bank statements, and she testified that she searched for them and asked the bank for copies of them. Cooper also testified that she deposited the social security checks. When the reso lution of th e issues in

a case depends upon the

truthfulness of wit

nesses, the trial judg e who hasthe oppor tunity to observe the witnesses in their manner and demeanor while testifyin g is in a fa

r better position tha

n this Court

to decide

those iss ues. Mays v. Brighton Ba nk , 832 S.W.2d 347, 351- 52 (Tenn . App. 199 2). The w eight, fa ith, and c redit to be given to any witness’s testimony lie in the first instance with the trier of fac t, an d the credibility accorded will be given great weight by the appe llate court. Id . at 352. The Special Master

found tha

t Cooper d

eposited the socia l securit y checks and that the bank statements show nothing unusual or improper. The Special Master stated, “It is unf ortunate that these 1986 bank statements cannot be found; however , your Mas ter findsnothing to i ndicate any wrongdoing on the part of Mrs. Cooper.” The trial court affirmed the findings of the Special Master and stated, “The Court further finds that the Defenda nt, Diane W. Cooper, is an honest person and credible and con firms the Special Master’s report that a proper a ccounting was done.” We are bound by these con current findings because t he findings are supported by substantial and material evidence. Shepherd , 929 S.W.2d at 344. After the Special Master filed his report, the tri al co urt refu sed to allo w Barham to present additional witnesses who would testify about the real estate transfer. Barham ar gues that the trial court erred in refusing the additional evidence. The Tennesse e Rules of Civil Proc edure provide that “The court after hear ing may adopt the report or may modify it or may reject i t in whole or in par t or may receive f

urther e vidence or may re commit it

withinstructions.” Tenn.11

R. Civ. P. 53.04(2). The trial court is not required to entertain additional witnesse s, but has the discretion to do so. In

this case , the tria

l court no ted that th

e co mplaint was filed in 1992 and that the hear ing was he

ld in 1995, but that the additional witnesses did not come forward until 1996 to recount

conversations with Barham in 1986, 1987, and 1988. We find that the trial court did not abuse its discretion by rejecting the additional testimony. Finally, Barham argues that the trial court erred in adopting the findings of the Special Master because she contends that the findings are contrary to the wei ght of the evidenc e. This Courtmust affirm the concurrent findings of the Special Master and the trial court if there is any material evidence to support the trial court’s concurrenc e. Archerv. Archer , 907 S.W.2d 412, 415 (Tenn. Ap p. 1995). As stated above, we find that Cooper has shown the nonexistence of undue influence, which overcomes the pre sumption, a nd that the evidenc e in the r

ecords s upports the concurrent f

indings of

the Speci al Master

and the tr

ial cour t. Accordingly, the order of the trial court affirming the Special Master ’s report is affirmed. This case is r

emanded to the tria

l court fo r such fu rther pr oceedin gs as nec essa

ry , including provisions for payment

of the interest income to Barham. Costs of appeal are assesse d against the appe llant.

_________________________________ W. FRANK CRAWFORD, PRESIDING J

UDGE, W.S. CONCUR:

____________________________________ ALAN E. HIGH

ERS, JUDGE

____________________________________ HOLLY KIRBY L ILLARD, JU DGE