### IN THE COURT OF APPEALS OF TE NNESSEE AT KNOX VILLE A ugus t 11 , 200 4 S es sio n
CHARLES SMIT H, EXECUTO R OF THE E STATE OF ETH EL ROG ERS SMITH , v. JERR Y S MITH

Direc t Appeal from the Chancer y Court for Ham blen Coun ty No. 2000-200 Hon. Thomas R. F rier son, II., Ju dge

No. E2003-02877-COA- R3-CV - F ILED OCTO BER 25, 2004

The Tr ial Court held that the co n fi d en t i al rela tionship between de fenda nt and dec ease d voids the transac tion because dece ased did not have independe nt advice. O n appea l, we re verse

.

Te nn. R . A pp. P .3 App e al a s o f Rig ht ; J udgm e nt of t he Cha nc e r y C our t R e ve r se d.

H ER SCH EL P I CKE N S F RAN KS , P.J ., delivere d the opinion of the court, in which D. M I CH A EL S WI NEY , J ., and S HAR ON G. LEE , J ., joined.

Do ug la s R. B e ie r, Mo rrist ow n, Te nn e sse e , f or Ap pe lla nt. Christopher P. Capps, Morristown, Tenne ssee, f or Appe llee.

OP IN ION

Th is c a se wa s p re vio us ly

be fo re the Cou rt

on app e a l.

I n the fi rs t app e a l, the Tr ia l Co urt f ou ndthat th e re wa s n o c on fi de nti a l r e la tio ns hip betwee n J erry and Ethel Smith, and also found that Jerry did not ex erc ise such dominion and control over Ethe l that the transac tions in di spute should be voi d ed for undue influence . On appe al, we deter mined that a conf

idential rela tionship di d exis t betwee n J erry and Ethel ba sed upon the powe r of attorne y which, even t houg h it never be came operative by its terms, was treated by

J erry and Ethel as if it wer e ef

fec tive and unrestricted. We held t hat a presumption of undue influence arose , and
rema nded the case to the Trial Court f or a de termination of whe ther Jerry had suff iciently rebutted-2-

the pre sumption byclea

r and c onvi n cing evidenc e of the fairne ss of the transa ctions cre ating the Suntrust account, “a nd for suc h further proce eding s as may

be re quired”

. After rema nd, the Trial Court enter ed an Opinion and said that since this Court had not directe d it to conduct a new trial or conside r additional evide nce, the C o u rt revie wed the evidenc e pre sented a t trial and dete rmined that Jerry had not re butted the pre su m p t i o n o f undue inf lue nc e . T he Cou rt

he ld tha t to pr ov e the fai rn e ss o f the tr a ns a c tio n, the do min a nt p art y c ou ld show that the wea

ker party rec eived independe nt a dvice be fore eng ag ing in the tr ansac tion, which would come f

rom one who w as compe tent and disassocia ted from the pa rties. The Court held that Ethel neve r had independe nt a dvice befor e investing her funds in the joint Suntrust a ccount, a nd thus J erry failed to show by

cl ear and convinc ing e vidence the fa irness of the tr ansac tions. The Court then set aside the transac tions, and held that all funds in the Suntrus t ac co u n t wo uld be part of Ethel’s estate

. J err

y then filed a

Tenn. R. Civ. P., R ule 5 9 Motion for New Trial, ar g uing tha t he should be allowed to present evide nce on the issue rema nded by this Court, because the issue was “not ce ntral to the matters previously being tried and there fore , Def endant’ s proof on this issue was not completely

pursued a nd develope d.” The Court held a hea ring on the Motion, an d no offe r of proof wa s made. The Trial Court denied the motion.

The issues on appe al ar e:
1. Did the Trial Court er r i n failing to allow a new trial and hea r evide nce on the issue of undue influe nce a fter r emand?

2. Did the Trial Court er r in finding tha t J erry

Smit h had not re butted the presumption of undue influe nce?

3. Did the Trial Court e rr in f inding that Ethel Smit h did not rece ive independe nt advice?

J err y arg ues that the Trial Court e rre d in f ailing to g rant his motion seeking a new trial so that he could pre sent additional evidenc e. As we hav e pre viouslyheld, a tria l judge has broa d discretion in g ranting or deny ing a new tria l. Tennessee Asphalt Co. v. Purcell Enterprises, Inc

. , 631 S.W .2d 439 (Tenn. Ct. App. 1982). F urt h er , t h e burde n is on the movant to show the abuse of discretion. Esstman v. Boyd , 605 S.W .2d 237 (Tenn. Ct. App. 1979). Jerry has not shown that the Trial Court abuse d its discr etion in de ny ing his motion for ne w trial, but he a rg ues the Tr ial Court sh ou ld ha ve g ra nte d the mot ion be c a us e , pr ior to ou r ru lin g in the fi rs t app e a l, he ha d n o r e a so n to be li e v e t h a tt h e p o w e r

o f a t t o r n e y w o u l d c r e a t e a

c o n f i d e n t i a l r e l a t i o n s h i p b e t w e e n t h e p ar t i e s, beca use it ha d not be come eff

ective acc ording to its terms. This arg ument ignor es the fa ct that the parties ha d acte d as thoug h the power of attorne y

was e ffe ctive, and J erry used t he power of attorney to execute documents a s Ethel’s attorne y -in-fa ct. The a rg ument al s o i g nores the f act that undue influence and a confide ntial r elationship wer e pled in the initial C omplaint, and wer e cle arly issues that wer e ra ised at t ri al. Proof wa s offe red in the f irst trial reg arding the circ umstances of the-3-

transac tions establishing the Suntrust acc ount, and whether there was undue influence e x erc ised by J erry in those transac tions. Thus, J erry has not show n that he was prejudice d in any way by the Trial Cou rt ’s fa ilu re to a llo w a

ne w t ri a l, s inc e the iss ue s w e re tr ie d in the fi rs t tr ia l. We fi nd thi s is su e to be wi tho ut m e ri t.

The Tr ial Court found t h at J erry had not suffic iently

rebutted the presumption of undue influence , primarily rely ing on a fac t that Ethel had not rec eived indepe ndent advice befor e making the transa ctions at issue. J erry arg ues that he did rebut the pr esumption of undue influenc e, based on the proof whic h showed that his mother’s me ntal condition was good, she made he r own decisions, she wa s upset with C h ar l es an d his wife and did not wa nt them to inherit, and that she
rec eive indepe ndent advice from a Mr . Brice.

As this Court has previously explained:

. . . the exis tence of a conf idential rela tionship, combined with a g ift or bene fit to the dominant party , cre ates a presumption of undue influence , and of the i nvalidity of the transac tion. This presumption is not conclusive, however , for it may be rebutted by clea r and c onvincing evidenc e of the fairne ss of the transa ction.

Ma rti n v . M

oo re , 109 S.W .3d 305, 310 (Tenn. Ct. App. 2003). Our Supreme Court has stated that the “pr esumption of invalidity , howeve r, is rebuttable and the r ule in this S tate is that clear and convincing evidenc e of f airne ss will suffice. Proof tha t the donor r ec eived indepe ndent advice respe cting the conse quence s and advisability of the g ift is one example, but not the only one, of suc h proof of fairne ss.” Richmond v. Christian , 555 S.W .2d 105, 107-108 (Te nn. 1977). That Court we nt
on to e xpla in tha t in de pe nd e nt a dv ic e is r e qu ir e d w here th e “ c ir c ums ta nc e s a resu c h th a t it

wo uld b e d i f f i c u l tt o s h o w t h e f

a i r n e s s o f t h e t r a n s a c t i o n w i t h o u tp r o o f o f i n d e p e n d e n ta d v i c e , p ar t i c u l ar l y, wher e the donor

is impoverished by

the g ift in question or the g ift seems to be unna tural under the circ umstances of

the ca se.” Id. at 108. The Court reiter ated that such proof is not necessa ry in every case to rebut the pre sumption. Id

.

I n Fell v. Rambo , 36 S.W .3d 837 (Tenn. Ct. App. 2000), w e said:
Although pr oving tha t the subser v i en t p ar ty had indepe ndent advice is one way of showing the fa irness of the tr ansaction, it i s not the only way . Courts require
e vid e nc e of

ind e pe nd e nt a dv ic e on ly wh e re it wo uld be dif fi c ult to s ho w the fa ir ne ss of the transaction wit hout it. This typically arises w hen the tra nsaction under scrutiny is a g ift from a f

eeble or incompete nt subse rvient party to the dominant party , and the g ift leave s the donor impoverished.

Id. at 848. I n Fe ll , a confidential rela tionship arose due to a powe r of a ttorney , and the tra nsaction in q ue sti on wa s th e sa le of the su bs e rv ie nt p art y ’s fa

rm , w hic h be ne fi tte d the do min a nt part y be c a us e she wa s primary

benef iciary of th e s u b servient pa

rty ’s estate , and the sa le def eate d the intere st of
re ma ind e rm e n in the pr op e rt y . We note d, ho we ve r, that the sa le didno t le a ve the su bs e rv ie nt p art y-4-

impoverished, and thus it was not nec essary to show that she re ceive d independe nt advice. Id

. We further

explained that the presumption of undue influenc e had be en re butted by clea r and c onvincing evidenc e, bec ause the proof showe d that it was the subse rvient party ’s choice to se ll the fa

rm , s he sig ne d th e c on tr a c t a ndthe de e d, the pu rc ha se pr ic e wa s w ith in a re a so na ble rang e, and she lived in a re tirement home a nd no longe r nee ded the f arm. Id . We concluded tha t the pr oo f s uf fi c ie ntl y sh ow e d th a t th e tr a ns a c tio n w a s f a ir to the subs ervie nt p art y , a ndthe fa c t th a t it was unfa ir to the rema indermen w as irre levant. Id

.

Simi larly , i n the ca se bef ore us, the undisputed pr oof showed tha t Ethel’s mental capa biliti es we re g ood, she under stood her finances and made her own decisions reg arding the same. The undisputed proof

was that she wanted to sell her home be cause she wa s living at Gr and Court and no long er n ee ded it, and ther e wa s no dispute raised that the se lling pric e wa s unfair or
unrea sonable. The proof did not show that J erry had any thing to do with the sale of the re sidence , the neg otiations reg arding the same, o r t h at he play ed any role whatsoever e x cept f or sig ning the d o cu m en t s o n E t h el ’s b eh al f a tcl o s i n g b ec au s e sh e di d n o t fe el u p t o d o i n g s o an d as k ed h i m t o go in her stea d. Moreove r, Charle s’ daug hter testified tha t she supported Ethel’ s selling the house and took no issue with that transaction.

The undisputed proof

further showed that J erry then deposit ed the pr ocee ds from the sale of the h o u s e in to a jo in t CD a t E th e l’ s r e q u e s t, a n d late r to o k E th e l to Su n tr u s t B a n k to meet with Mr. Brice to discuss how to best invest her money so that she co u l d p ay h er b i l l s with her monthlyinterest payments. T h e p ro o f was that Ethel participated a nd talked with Mr. B rice , understood wha t she was doing , and made her own decision t o open the joint account and inve st her
mon e y

. She sig ne d do c ume nts he rs e lf a nd ma de the ini tia l in ve stm e nt, a ndla te r d e po sit e d f un ds in the ac count from a

CD at Ba nkFirst that had ma tured.

The Suntrust acc ount was joint, and Ethel held title to it and control over the funds
a ndwa s n ot i mpo ve ri sh e d b y the tr a ns a c tio ns . T hu s, we c on c lud e that th e Tr ia l Co urt erredin basing its decision purely on a re quirement of inde pendent a dvice, b ec au s e such a dvice is not
nece ssarily

require d, as her etofore discussed. The pr oof showed the transac tions were f air to Ethel by clea r and convincing evidenc e, si nce it is undisputed that Ethel’s mind was g ood and she ma de he r ow n fi na nc ia l de c isi on s, pa rt ic ipate d in tr a ns a c tio ns wh ic h be ne fi tte d he r a ndwe re de sig ne d to g ive her money to pay her monthly

bills and she was not impoverished the reby

. One of Charles’ positions is the transac tions should be voided because they wer e not fair to him as a potential benef iciary , but this is not the appropriate test. See Fe ll , su pr a . Moreove r, the undisputed proof w as t hat Et hel’s int ent was to leave he r entire estate to Jerry and his wife, due to her e strang ement fr om Charles and h i s wi fe , an d that the rift had e x isted for thirty y ear s. The proof wa s also undisputed that Ethel was upset with Charle s for not c oming to se e her and told others not to call him for anything, but instead looke d to J erry for he r transportation needs and other wise. Jer ry , E dith an d Mr. B ri c e te sti fi e d tha t Ethe l mad e the de c isi on to se t up the Sun trus t a c c ou nt w ith rig hts of survivorship, and that she unde rstood the implications of doing so, i.e ., that i t wo u ld not-5-

pa ss t o Ch arl e s. We c a nn ot on thi s pr oo f inv a lid a te a de c isi on ma de by a c omp e te nt a du lt, simply beca use a pote ntial benef

iciary thinks it is unfair to him or her

. This c ase is also fac tually simil ar to the c ase of In re Estate of Maddox , 60 S.W .3d 84 (T e nn . Ct. App . 200 1) , whe re in the te stator ’s daug hte r s ou g ht t o c ha lle ng e the wi ll a nda c od ic il there to based on the g round that a g randson ha d procur ed them thro u gh undue influenc e. The te stator ha d g ive n h e r g ra nd so n p ow e r o f at torne y 5 y e ars be fo re he r de a th, a ndle ft him a size able portion of her

estate w hen she die d. The pre sumption o f u n d u e influence arose , but this C ourt aff irmed the Tr ial Court’s judgme nt that the presumption was suff iciently rebu t t ed

. The Court discussed the fac t tha t pr oof of independe nt a dvice was not a lway s require d, and stated “ the scope of the evidenc e re g arding the fa irness of a transac tion or g ift is quite broad.” Id . at 89. The Court went on to summarize:

Ba sed on our i ndepende nt revie w of the record, we have de termined that the e vidence demonstrates c lear ly

and convinc ingly

that Ms. Ma ddox ' s Fe bruary 1991 will and the 1995 codicil re flec ted her own testamenta

ry intent. The r ec ord conta ins no direct
e vid e nc e that Joe Whit a ke r u nd e rt oo k to inf lue nc e , let a lon e , und uly

inf lue nc e , M s. Maddox's dec isions reg arding the distribution o f her pr operty . The c ircumstantial evidenc e off

ere d by Ms. Wi lson to challeng e the will and the c odicil is, at be st, weak and is clea

rly and convinc ingly

rebutted by

the other e vidence in the rec ord showing that Ms . M a dd ox re ma ine d s tr on g -w ill e d to the e nda ndthat sh e a c te d in te nti on a lly
an d d el i b er at el y wi t h re gar d t o h erp er s o n al fi n an ce s as we l l as h eres t at e p l an n i n g. Acc ording ly , we a ffirm the trial court' s decision t o uphold Ms. Maddox's Fe bruary 19 91 wi ll a ndhe r Jun e 19 95 c od ic il.

Id. at 92.
We hold the presumption of undue influe nce w as suffic iently rebutted on this re cord. Se e , Ch ild re ss v . Cu rri e , 74 S.W .3d 324 (Tenn. 2002)

.

The Tr ial Co u r t e rr e d in f in d in g th a t Je rr y h a d f

a il e d to r e b u t th e p r e s u mp ti o n of undue influenc e by clea

r and convincing evidenc e, and the trial Court’s judg ment is rever sed. The transac tions are uphe ld so that the funds pass to J erry , as it was Ethel’s c lear intent.

The c ause is re manded with the c ost of the appe al assesse d to C h ar l es S mith, Ex ecutor of the Estate of Ethel Rog ers Smith.

______________________________ H ER SCH EL P I CKE N S F RAN KS , P

. J.