### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE January 8, 2003 Se ssion IN RE: THE ESTATE OF MERLE HALL IBURTON NEAL MYERS v. FARMERS & MERCHANTS B ANK CORP., INC. BROOKSIE MY ERS, DOUGLAS MYERS, JAMES MYERS Appeal from the Chancery Court for Stewart County No. P2-158 Robert E. Burch, Judge

No. M2002-00888-COA-R3-CV

After the death of their elderly

mother, her sons discovered that thedecedent’s stepson and his wife had used a

power of attorney

to transfer the funds from the decedent’s$20,000 CD to themselves. The decedent’s son filed a petition to have the money restored to her estate. The trial court held that the CD was a valid inter vivos gift from the decedent. We reve rse, because there

is no evide

nce in the record that such a gift was eve r made. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed and Remanded
P AT RICIA J. C OTT RELL , J., delivered the opinion of the court, in which B EN H. C ANT RELL , P.J., M.S., and D ON R. A SH , S P
. J., joined.
J. Runyon, Clarksville, Tennessee, f or the app ellant In Re: The Estate of Merle Halliburton Neal Mye rs. Carrie W

. Ga sa wa y, Clarksville, Tennessee, for the appellees, Fa rmers and Merchants Bank, I nc. and Brooxie Myers, Douglas Myers and James My ers. OPINION
I

. The Facts Since this case involves a dispute between the children and stepc hildren of a decedent, we begin wi th a b ri ef

fa mi ly h is to ry. Merle Halliburton Neal and James W. Mye rs married in 1958. “Ms. Merle,” as she was sometimes known, was a widow with three sons from her earlier marria ge, Lonnie, Michael and Bob Neal. To avoid confusion, we wi ll also refer to her asMs. Merle throughout

this opinion. Mr. Myers had two sons fr om his own earlier marriage, Douglas and James Mye rs.1 M ost of the fi lings i n this case spell the fi rst name of Do uglas M yers’ wife as “Broo ksie.” But the respo ndents’ answer decl ares t

hat t he correct

spell ing i s Brooxie.
2 The proof showed t

hat t he indi vidual who n otariz ed the pow er of atto rney d id not ac tually witness M s. M erle signing it, and i n fa ct n ever met Ms. Merle. However, the tes ti mony of indiv iduals famil iar wi th her sign ature establ ished to the c ourt’s sa tisfaction th at the sign ature w as inde ed he r own . -2- The couple li ved and g

rew old to gether

in Dover, Tennessee, in a house that Mr. Myers had ownedprior to h

is marriage to Ms. Merle. Dougla s My ers and h is wife B rooxie 1 also lived in Dover, in a house next door to James W. and Ms. Merle. Lonnie and Michael Nea l lived in Clarksville, where Lonnie oper

ated a funeral home.
Mr. Myers died in J uly of 1996. He had e xecuted a will in 1963, but it was not submitted for probate prior to thefiling of the Petition from which the present case ar ose. The proof sho ws, however, that in 1994 he deeded his real property (the marital home) to his son Dou glas, a nd that at his death, there was a $40,000Certificate of Deposit at Farmers and Merchants Bank, held in the name of “James Myer s or Merle Mye rs or Douglas Myers.” Douglas Mye

rs and Ms. Merle su

bsequen tly c ashed in

the CD, and shared the proceeds eq ua ll y. Ms. Merle purchased a $20,000 CD at the same bank with her share. The CD she purchas ed state d on its fa ce that it was “POD ” (mean

ing to be paid on de ath) to he

r three sons. Ms. Merle was 87 y ears old when her husband died, and she was not in the best of health. She relied heavily on B rooxie and Douglas Mye rs for assistance with her daily needs. On January 5, 2000, she left the marital home and moved in with them. Late r that month, she had surgery . She was diagnosed w ith Hodgkins Disease, and began receiving hospice care. At the sug gestion of hospital personnel, Brooxie Mye rs had a Durable Power of Attorney prepared, wh ich Ms. Merl e signed on January 28. 2 On March 18, 2000, Ms. Merle’s son Bob Neal pass ed away . Brooxie Myers testified that withsome trep idation, s he tried to explain h

is death to Ms. Merle , but Ms. Merle apparently did not understand, or “didn’t want to hear it.” On March 20, Brooxie My ers usedthe powe

r of attor ney to cash Ms. Merle’s $20,000 CD, and put the proceeds into an ac count she held jointly with her husband. Exactly one month later, on April 20, Ms. Merle passed away . She was 91.
At Ms. Merle ’s funer

al, laten t tensions b etween

the two sid

es of the famil y came to the surface. The grandson of James W. Mye rs, also named James Myers, told Lonnie Neal that there was no money left in the estate , and that Lonni e and his b

rother w ould have

to pay the fune ral costs

. He also criticized the Neals for failing to do any

thing to help their mother during her final illness. On A pril 24, 2000, Brooxie Myers close d a checking account in AmSouth Bank with a balance of $4,000 that Ms. Merle had held jointly with Doug las Myers. Ther e werealso two CD s, POD to Ms. Merle’s sons, worth about $3,000 each in a lockbox at the bank. Douglas My ers had a key to the lockbox. He liq

uid ated the

CDs, and had checks pay able to Lonnie, William and the-3-

Estate of Bob Nea l drafte d, but aft

er he wa s served

with the Pe

tition file d by

Lonni e Neal, he decided to hold onto

the chec ks. II. Legal Proceedings On April 28, 2000, Lonnie Neal filed a Petition in the Chancer y Court of Stewa

rt C ount asking to be made the Administrator of his mother’s estate. He named as responde nts Broo xie Myers, Douglas Myers, James My ers and Farmers and Mercha nts Bank. The Petition recited the above facts as to the bank transactions, and asked for a restraining orde r to prevent

the My erses f rom “disp osing of

, encumbe

ring, tr ansfer ring, mo ving or otherwise hind ering, any and a

ll personal property

of Decedent, or of the

late James W. Myers.” I

t also asked for a restra ining or der to pr event F armers a

nd Merch ants bank from

releasing funds from the My ers’s account that would

bring th eir bala nce to le ss than $20 ,000. The trial c ourt i ssued Letters of Administration to Lonnie Neal, and gr anted the restraining orders. The Myerses filed a

n Answer and Counter-Complaint. They declared that

they were

filing the will of James W. Myers for probate, and tha t the provisions of the will only gave Ms. Merle a one-half life interest

in his money and personal pr operty, with the re

mainder bequeathed to Douglas Myers at her death. They

accordingly

asked that all such property be declared

the absol ute prope rty of Douglas My ers, and that any money in controver sy be paid into the Chance ry Court. An

Agreed Order was subsequently

filed, by which the responde nts were to pay $20,000 to

the Clerk and Master for deposit into an interest-bearing acc ount, pending the disposition of the case. The matter came to trial on March 20, 2002. Brooxie My ers testifiedas to the assistance she and her hus ban d re

nde red to M s. M erl e af

ter the dea th o f Ja me s W. My ers. Among other things, Brooxie would tak

e Ms. Mer

le to buy food, to the bank, to the doctor, to the drugstore, “any where she wanted to

go.” Af ter Ms. Me

rle move d in with Douglas a nd Brooxie

Mye rs, she needed help withbathing, dressing and feeding herself. Brooxie had the assistance of the hospice nurses, but she also had a lot to do her self. She stated tha t “I l iterally put my life on ho ld from Janu ary 5th until April the 29th to take care of that lady because I loved he

r.” Brooxie also testi fied tha

t she cas hed the $2 0,000 CD because Ms . Me rle’s care was phy sically

exhausting, and she knew that she was going to have to hire a sitter. How ever, the proof also showed that she had access to the checking account with $4,000 in it, and, a t th e time she liquidated the CD, a hospice nurse had alread y to ld her tha

t Ms. Merle

didn’t have long to live, and co ul d d ie an y da y. A hand-written letter

from Ms. Merle to her son Bob Neal was enter ed into the record. The letter is da te d W ed ne sd ay, July 1. The y ear is presumably

1999, because it states that “[b]ei ng nine ty makes me reali ze any

thing co uld happe

n to me so I

am listing

my a ssets. Ple ase kee

p this confidential.” She then p roceed ed to list the CDs discussed above, the checking account, and two insurance policies. The letter goes on to say

“[t]his is to be di vi de d e qu al ly a mo ng you th re e b oys-4-

after all expenses are paid,” and instructs Bob to make copies of the le tter for his brothers. The court later de clared

this lette r to be Ms. Merle’shologra phic will
In its final order, the trial court gave g reat wei g ht to the te stim ony of Mari e Kates , a lon gtime friend of Ms. Merle’s. Ms. Kates testified that she visited Ms. Merle during he r last months, that they frequently spoke by

telephone, and

that Ms. Merle told her “whoever took care of her, she wanted them to have her money .”
At the conclusion of the proof and after closing a rguments, the trial court ru led that t he responde nts were estop

ped f rom a sser ting the w ill of

James W. Myers, bec ause they f ailed to present the will for probate in due course, and because the parties divided the $40,000 CD without reference to the pro visions of

the will. However, relying

upon M s. Kat es’s testimony that Ms. Merle wa nted those who cared for her to have her money , the court found that the transfer of funds from the $20,000 CD and from the joint checking account were valid inte r vivos g ifts to Brooxie and Douglas Myers. The court further found that Ms. Mer le intend ed to giv e the two $ 3,000 CDs to the defe ndants, bu

t that sinc e these were not deliveredprior to her deat h, they were no t valid

inter vivo s gift s, and would pass t hrough the estate in accordance with the holog raphic will. This appeal followed. III. An Inter Vivos Gift? A. The Question of Delivery There are thr

ee esse ntial ele ments that

must be present for an inter vivos gift to be valid: an intention to make the gift o n the par t of th e donor, deli very of the gift, and its acceptance by the donee. Smith v. S

mith , 650 S.W.2d 54, 55 (Tenn. Ct. App. 1983); State ex rel. Teagu e v. Home Indem. Co. , 442 S.W.2 d 276, 280 (Tenn. Ct. App. 1967). The testimony of Ma rie Kates may

be deem ed to constitute evidence of Ms. Merle’s intention to make a gift to Doug las and Broox i e Mye rs, and there can be

no doubt that Brooxie accepted the benefit, but there is no evidence in the record from which we can infer that a delivery w as made. While there a

re many possible w ay s that deli very of perso nal prope

rty can be accomplished, all are cha racter ized by a volunta ry and abso lute surrender of dominion and control over the prope rty by the donor to the donee. In re Esta te of Nichols , 856 S.W.2d 3 97, 399 (T enn. 1993 ); Hansel v. Hansel , 939 S.W.2d 110, 112 (Tenn. Ct. App. 1996). When a general power of attorney is involved, it can be d ifficult to determine when such a surrender has take n place, for

by its nature, such a pow er gives the attorney -in-fact control over the assets of the party granting the power.
We note that

amo ng othe

r th ings the

power of attorne y si gned by

Ms. Merle

convey s to Brooxie Myers the powe

r-5- 9. To do any

thing I could do my self

with reg ard to ba

nk accounts, acc ounts at savings a nd loan institutions, credit unions and other institutions, including opening and modifying a

nd closing such accounts and signing and endor sing checks or draf ts of all kinds.

. . . . 15. To make g ifts of

my m oney

or prope rty to any person, o

r to lend my money or other pr

operty to any

person on any te

rms whatsoever. The respondents concede, however, that the e xecution of the p owe r of attorney did not constitute the making of a gift to the attorney -in-fact. The power was executed at the sugg estion of hospital personnel, and we cannot infer any donative intent from Ms. Merle’s acqu i escence and signature. The respondents suggest instead that the g iftmay have been made when thetransfer of the CD was accomplished. Not only is there no evidenc e in the record that Ms. Merle

sugge sted to Ms. Mye rs that she

cash the CD and tak

e the pro ceeds, there is a

lso no eviden

ce in the record that Ms. Merle was informed of the transfer after it occurred, or that she was ever made aware of it. It thus appears to us that the only g ift involved in this case was one from the attorney -in-fact to herself, a typ e of tra

nsfer wh ich raise s troubling

questions

. B. A Confident

ial Relat ionship Since we have

determined that there wa s no deliv er y, a nd thus no v alid inter

vivos gif t to Brooxie Myers, wha

t are we to make of Ms. Mye rs’s use of the power of attorney given her by M s. Merle? The creation

an d use of an unrestricted power of attorney establishes a confidential and fiduciary relationship as a matter

of law between the party

granting the power

and the a ttorney-in-fact. Matlock v. Simpson , 902 S.W.2d 3 84, 386 (T enn. 1995 ); Mitchell v . Smith , 77 9 S.W.2d 384, 389 (Tenn. Ct. App. 1989). The trial court in the present case cor rectly found the

re to b e such a relation ship between Ms. Mer le and B rooxie My

ers. The existence of a confidential relationship, coupled with evidence of a transaction beneficial to the dom inan t party cre ates a presumption of undue influence, and of the invalidity of the transaction, which can be overcome only by clear and convi ncing evidence of the fairness of the transaction. Matlock v. Simpson , 902 S .W. 2d 384, 386 (Ten n. 1995); Smith v. S

mith , 102 S.W.3d 648, 653 (Ten

n. Ct. App. 2002); Johnson v. Craycra ft , 914 S.W.2d 506, 510 (Tenn. Ct. App. 1995). The transfer of the funds from the CD to the a

ttorney-in-fact certainly

benefit ted Bro oxie My ers. It also had the effect of depriving Ms. Mer le of the bulk of her financial resources. A transaction that impoverishes the purported donor can not be con sidered fair. Richmond v. Christian , 555 S.W.2d 105, 107 (Tenn. 1977). The trial court found that Brooxie Mye rs did not exercise undue influence over M s. M erle, because Ms. Merle had stated that the person who cared for her would ha ve her money . It appears-6-

to us, however, that such

a finding ignores the presumption crea ted by a conf

idential relationship and benefit to the domin ant part

y, a s wellas t he l ack of f air nes s i n t he t ran sac ti on h ere . It also overlooks the duty of utmost good faith that an a ttorney-in-fa

ct owes to her principal as a fiduciary

. See Alexander

v. Inman , 974 S.W.2d 6 89, 694 (T enn. 1998 ); Estate of Doyle v. Hunt , 60 S.W.3d 838, 845 (Tenn. Ct. App. 20 01); In re Estate of Wallace , 829 S.W.2d 696, 705 (Tenn. Ct. App. 1992). A fiduciary occupies a position of trust in regard to the affai rs of her principal, and must act for the benefit of the fid uciary , rather

than for her own b enefit.
We do not believe that it is an act of good faith for a fiduci ary

to cash in a CD which is the prime financial asset of her principal without either a clea r instruction from the principal to do so, or a clear need to do so fo r the benefit of the fiduciary . Ms. Myers’s attorne y implies that she was merely complying with the wishes of Ms. Merle, but the evidence for this is far from clea r and convi ncing. While Ms. Myers testified that she needed the money from the CD to hire a sitter, the evidence indicates otherwise. It thus appea rs to us that Ms. Myers’s action constituted a breach of her fiduciary duty , the proper remedy for which is the restoration of the money to Ms. Merle’s estate. IV. The Dead Man’s Statute During the earl y part of th e Brooxie

Mye rs’s test imony , her att

orney asked he

r some questions about the circumstances surrounding the execution of the powe r of attorney , and the petitioner’s attorney objected on the basis of the Dead Man’s Statute, Tenn. Code Ann. § 24-1-203. That statute prohibits an interested party in aproceeding involving the estate of a deceased person from testifying a s to transactions or statements by the dec eased, unless the interested party was called to te st if y by t he op po si te pa rt y. The trial court

upheld the objection. Her attorney subsequently attempted

to ask Ms. Myers i f Ms. Merle wa s made aware that the CD had been ca shed. The same objection was made and upheld. Duri ng la

ter q uesti oning , the

petit ione r’s a ttorn ey aske d her “[d]oyou reca

ll my taking y

our deposition in this matter?” The trial judge was apparently startled by this question, for he a ske d , “Excuse me. Di d you say

your took her de

position?” After closing arguments and after the trial judge announced

his ruling in this case, he state d that he w ould have waived th

e Dead M an’s sta

tute if he hadearlier been made aware that the petitioner’s attorney had taken Brooxie Mye

rs’s discovery deposition. He went on to say “ [i]t is pretty well obvious what that pr oof would hav e been, but I can’t take it into account because it didn’t come in.” Both parties a ddress the questio n of the D ead Man’ s Statute in their appellate briefs. The petitioner argue s that the t

rial cou rt’s i nitial r

uling was correct, and the Dea d Man’s Statute does ap pl y, but conten ds that despite his protestations to the contrary , the judge allowed himself to be influenced

b y h is view of the testimony that Brooxie My ers would have offered if she had been permitted. The respondents argue that we should take the trial judge at his word that he did not take her pre sumed tes timony

into acc ount.-7-

The petitioner has drawn our attention to the case of Ingram v . Phill ips , 684 S.W.2d 954 (Tenn. Ct. App. 1984). In that case, this court ruled that the taking of a discover y deposition by

an opposing party does not ta

ke crea te an exce ption to the

Dead Ma n’s Statute , becau se Discove ry is allowe d in an ef

fort todo away with trial by ambush. The purpose of discovery is to bring out the facts prior to trial so the parties will be better equipped to decide w

hat is ac tually

at issu e. A litigan t would be penalized for utilizing discovery if, by the acqu isition of i nformati on under the disco very

rule, it w ould render incompet ent evide nce comp etent. Id . at 958 This is appar

ently still good law. Thus , the trial

court’s initial ruling in th

is case w as corr

ect, and evidence as to Ms. Merle’s transactions with, and statements to, Ms. M ye rs were properl y excluded. V. The Joint Checking A ccount The trial court ruled that the AmSouth checking account that Ms. Merle hel d joint ly w ith Douglas Myers was, like the $20,000 CD , a valid

in te r v iv os gi ft . W e f

in d n o e vi de nc e o f d el iv er y, and conclude that like the CD, it was not a valid inter vivos gift. However, that does not mean that it should be brought back into the estate. The question o f the pro

per owne rship of a joint acc ount where one of the account holders dies depends upon the exact designation of ownership found in the account documents. See Tenn. Code Ann. § 45-2-70 3; see also , Carmical v. Kilpatrick , No. M2 002- 00346 -COA -R3- CV, 20 02 WL 31863293 (Tenn. Ct. App. Dec. 23, 2002) (no Tenn. R. App. P. 11 application filed). The exhibit s in the record do not include the d ocum ents t hat a re ne cess ary

to mak e thisdete

rmina tion. We therefore remand this case to the trial cour t so this question can be decided. VI. Conclusion The trial cou

rt’s find in g of inter vivo s gifts f

rom Ms. Me

rle Halliburton Ne al My ers to Brooxie Myers is reve

rsed, and the proceeds from the Farmers and Merchants Ba nk Certificate of Deposit is ordered restore d t o the estate. This case is remanded to the trial court for f urther procee dings consiste

nt with this opinion, including a determination of the proper ownership of the funds formerly he

ld in the joint checking account at AmSouth Bank. Tax the costs on appeal to the appelle es, Bro oxie My ers, Dou glas My ers, and James My

ers.

___________________________________ PATRICIA J. COTTREL L, JUDGE