No. 83-427 IN THE SUPREME COURT OF THE STATE OF MONTANA 1984

CURTIS R. ADU4S, as personal representative of the Estate of IDAMAY ADAMS, Deceased, Plaintiff and Respondent,

ILAALLEN, a/k/a ILAANDERSON, Defendant,Third Party Plaintiff and Appellant,

CURTIS ADAMS and JOHN FAIRBAIRN, Third Party Defendants and Respondents.

APPEAL FROM: District Court of the Nineteenth Judicial District, In and for the County of Lincoln, The Honorable RobertPI. Holter

## ,Judgepresiding.

COUNSEL OF RECORD: ForAppellant: John L. Petersen,pe is sou la, Montana For Respondents: David W. Harman, Libby,r~lontana

Submitted on Briefs: December 22, 1983 Decided: April 5, 1984

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# .. Yi2LCy; ClerkMr. Justice John C. Sheehy delivered the Opinion of the Court.

Ila Allen, a/k/a Ila Anderson appeals the judgment of the District Court for the Nineteenth Judicial District, Lincoln County, which declaredvoid a trust agreement,a deed and a power of appointment signed by Allen's friend, Ida Adams. We affirm the judgment. Ida Adams was a resident of Libby, Montana, and at her death, the owner of the Cherry Creek Trailer Court. During her lifetime she undertook various businesses and occupations. She had two natural sons and numerous foster children. Dora Fairba-irnwas a very close friend and Adamc treated her like a daughter. Fairbairn lived in Adams' trailer court and during Adams' last years, spent considerable time taking care ofAdams. On March 17, 1974, Ada.ms executed a will granting Dora Fairbairn a life estate in the trailer court, with the remainder toAdams' sons, Curtis and Robert. Adams suffered from diabetes, angina pectoris and cerebral strokes for at least the Last two years of her life. As a result of the diabetes, she lost her sight almost completely; thus, she required much assistance in getting around. Adams was hospitalized in the Libby Hospital nine times between December of 1978 and February of 1980 and her treatingphysicianwas Dr. W. D. Matthews. InMarch of 1980, Adams traveled to Spokane, Washington, with Ila Allen to attend a wedding and to undergo physical examinationsby Spokanephysicians. When not in Sacred Heart Hospital, Adams stayed with Allen. Sometime during Adams

### ' stay in Spokane, Allen telephoned Charles Cruikshank, herattorney in Great Falls, Montana. Based on the call, Cruikshank prepared a quitclaim deed and a trust agreement which would transfer the Libby trailer court to a trust, with Allen as trustee. The income from the trust was to go to Adams duringher lifetime; theproperty was tobe transferred toAllen uponAdams' death. Cruikshank drove to Spokane on March 16, 1980 and visited Adams in thehospital. While there,Cruikshank first spoke with Adams' doctors and reviewed her records. He then spent approximately one hour explaining the trust agreement to Adams. She signed the agreement, the deed and a handwritten power of appointv-ent and the deed was acknowledged by Cruikshank as a Montana notary public. Allen, who was at the hospital, signed both the agreement and the power of appointment. At the same time, Adams assigned a potential- Black Lung case to Allen, as trustee, which was then transferred to the trust. The parties also discussed a potential malpractice case a.qainst Adams

### ' Libbyphysician. On April 6, 1980, Dora Fairbairn arrived in Spokane and took Adams out of the hospital and back to Libby. Approximately nine hours later Adams died while at Fairbairn's home. Curtis Adams, as the personal representative of Ida Adams' estate, brought suit against Allen, seeking to have the trust agreement and the deed set aside. Allen counterclaimed against Adams' estate and crossclaimed against Curtis Adams and John Fairbairn (Dora's brother) seekingrent due. After a hearing held June 7, 1983, the District Court entered its findings, conclusions and order. It found that Ida Adams "evidenced a decline inmental capacity, i.ncludingincreased forgetfulness, hallucinationsand instability. She

was incapable of making major decisions because of the fluctuating condition of her mind." As to Allen's relationshipwith Adams, the court found that although Allen had been acquaintedwith Adams for a number ofyears, shehad not previously been a part of the circle of Adams' closer friends. The DistrictCourt found thatAdams did not talk to anyone but Cruikshank regarding the papers she signed while in Spokane,and that the only evidencepresented as toAdams' condition at the time of signingwas testimonyby Cruikshank and Allen. The court rejected the testimony as inconsistent with the descriptions of Adams' condition just prior to and after the date of signing. Based on the foregoing, the District Court concluded that (1) Adams' physical condition prevented her from withstanding the influence of Allen; (2) Adams' mental condition before, on, and after March 16, 1980 "afflicted" her ability to withstand Allen's influence; (3) Adams' disposition of her property by execution of the deed and trust agreementwas unnatural, as itdid not include gifts to the natural objects of her bounty, her two sons and Dora Fairbairn; and (4) the trust agreement was not based on consideration,was notproperly notarized or timely filed and

was signed by Adams as a mistake as she thought she was signing some otherpapers. The District Court declared the trust agreement, the deed and the power of appointment void. Allen appealed, raising the following issues: 1. Did the District Court properly find that Allen exerted undue influenceoverAdams so as tomake her sign the trustagreement,power of appointment,and deed?2. Did the District Court properly find the trust agreementvoid because (1)no considerationpassed fromAdams to Allen; (2) itwas improperly notarized; and (3)Adams was mistaken as towhat she signed? The standard of review in this case iswhether therewas substantial evidence to support the District Court's findings. Viewing the evidence in a lightmost favorable to the prevailing party, we are free to reverse the judgment only if there is a 1-ackof substantial evidence to support the judgment. Dybvik v. Dyhvik (Mont. 1982), 654 P.2d 989, 39 St.Rep. 2184; In reLaTray's Estate (1979),183 Mont. 141, 598 P.2d 619. The findings of fact must be clearly erroneous. Rule 52(a), M.R.Civ.P. It is well settled in Monta.na case law that undue influence must be proven by the person contesting a will or contract. Blackmer v. Blackmer (1974), 165 Mont. 69, 525 P.2d 559; In re Maricich's Estate (1965), 145 Mont. 146, 400 P.2d 873. Undue influencenegates the free consent necessary for the proper formation of a contract. Sections 28-2-301 and 28-2-401, MCA. Section 28-2-407, MCA, defines undue influence: "Undueinfluence consists in: 

### "(1) the use by one inwhom a confidence is reposed by another or who holds a real or apparent authority over him of such confidence or authority for the purpose of obtaining 

### an unfair advantage over him: 

### "(2) taking an unfair advanta-ge of another's weakness ofmind; or 

### "(3) taking a grossly oppressive and unfair advantage of another's necessities or distress."This Court, in Maricich, 145 Mont. at 161, 400 P.2d at 881,held that the following factors are to be considered in determining whether undue influence exists: 

### "(1) Confidential relationship of the person attempting to influence the testator; 

### "(2)Th.ephysical condition of the testator as it affects his ability to withstand the influence; "(3) The mental condition of the testator as it affectshis ability towithstand influence; "(4) The unnaturalness of the disposition as it relates to showing an unbalanced mind or a mind easily susceptible to undue infl-uence;and 

### "(5) The demands and importuniti.es as they may affect particular testator taking into consideration the time, the place, and all the surroundingcircumstances."

Allen concedes that a confidential relationship existed between Adams and her and that the disposition of Adams' property under the trust agreementwas unnatural. As toAdams' physical condition, therewas testimony at trial that her illness had greatly affected her ability to

move around freely. She required aid because she could not

see and because medication had to be administered regularly. The time spent in the Libby hospital and then the Spokane hospital is evidence of her serious illnesses. There was also testimony presented as to Adams' deteriorating mental condition. Her treating physician in Libby, Dr. W. D. Matthews, testified.that because her life

was becoming so inhibited by her illnesses, she was considerably unhappy. Moreover, shewas forgetful and would sometimes hallucinate. Testimony by one of the registered

nurses who cared for Adams in the Libby hospital indicated that, during the nights of her last stay in Janua-ryand February,Adamswould exhihit forgetfulnessand irritability.Other friends of Adams testified that shewas getting harder to converse with as shewas forgetfuland unable tomaintain

a train of thought. She appeared overly concerned about being taken care of by friends and family rather than being placed in a nursing home. As to the fifth factor,wemust consider the time,pla.ce and circumstances of any demands and importunities made by Allen. There was no evidencepresented at the trial of this case of specific demands or importunitj-esby Allen. But there was no testimony by anyone other than Allen and Cruikshank as to the circumstances surrounding the solicitation of Cruikshank as Adams-ttorney or the signing of the papers at the Spokane hospital. The District Court concluded that the sequence of events, starting with Adams' travel to Spokane withAllen,was evidence sufficient to find that Allen had.influenced Adams unduly to have papers drawn to transferher property toAllen. The DistrictCourtwent a step further and declared in a post-trial memorandum that the case involved a presumption that evidence 

### - not produced as to Adams1 mental capacity at the time she signed the papers was adverse to Allen's case. The court stated tha.t: 

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# . . In cases of incompetency, or suspected incompetency, the usual practice is to call upon doctors and nurses from the confining hospital to clearly show mental capacityat that time. Because Defendant [Allen], through her attorney, chose the trust dispositional device, the whole transaction becomes odious. Hence, and under these special circumstances, the failure to involve persons knowledgeable of decedent's condition at the time of signingand aswitnesses at this trial certainly raises the presumption under Section 26-1-602 (6) MCA, in spite of the fact that the burden is on the Plaintiff to show undue influence. Thus,and again in these peculiar circumstances, the lack of evidence is in itself evidence."Section 26-1-602(6), MCA, states as a disputable presumption that "[mloresatisfactory evidencewould be a.dverseif weaker and less satisfactory evidence is offered and it is within the power of the party to offer more satisfactory evidence.

### " Allen contends that the lack of evidence produced on this issue should be held against the plaintiff as a failure to sustain the burden of proof 

### of undue influence. Therefore, she argues that the Lack should not be the basis for a presumption which works against Allen. Adams argues that,although this Court has denounced such apresumption in previous cases, it would be appropriate in cases like this. It is true that in Blackmer v. Blackmer (1974), 165 M.ont. 69, 74, 525 P.2d 559, 562,this Court stated: "Argument by the parties concerns the connotation of the presumption as used by the trial court in its conclusion of lawNo. 2. Disregarding matters raised outside the recordwewill only comment that these circumstances inMontana raiseno presumption of any kind. Undue influence or incompetence is never presumed and must be proven, like any other fact. In re CocanougherlsEstate, 141 Mont. 16, 375 P.2d 1009."

This holding is consistent with previous Montana case law, including In re Cocanougher's Estate (1962), 141 Mont. 16, 375 P.2d 1009, which rejected any shifting of burdens of proof as to undue influence. The presumption noted and used by the District Court in this case regards only a presumption as to the type and lack of evidence of demands and importunities by Allen. The presumption does not effect Adams1 burden of proof of undue influence. We find no error in use of the section 26-1-602 (6)

## , MCA, presumption where it leaves undisturbed a plaintiff's burden of proof.The record provides evidence of Allen's alleged purposes for taking an interest in Ida Ad.ams. Claiming that she wanted to know what Adams' medical condition was before agreeing to take care of: her, and that Adams' preferred treatment ina Spokane clinictothat she got inLibby, Allen took her toSpokane. Astohow her attorneybecame involved, Al.len testified: "Q. You said Mr. Cruikshank represented you in a privatematter, isthat correct? A. Yes. "Q. All right. Was he representing you, at the time, February and March of 1980? A. I don't think so. "Q. How long a. period of 

## -- before that, had he represented you? A. A couple of years, I think.

"9. Now, did you callhim and

## -- inregard toIda Adams? A. Yes. I calledhim an.d asked him if he would consider representing her. "Q. And did she tell you to call him? A. Yes. "Q. Did you discuss Mr. Cruikshank with her? A. Yes. "Q. What 

## -- where did you call from? A. The first time I 

## -- I think I called from the house, here inLibby. "Q. Uh-huh. Did you describewhat was going on to him? A. I don't remember. "Q. Did he evermeet with IdaAdams beforemeeting with her in the hospital in Spoka.ne? "A. Not personal-ly. He talked toher over the telephone. "Q. And he has represented you sincethat time, as I understand it, istha.tcorrect? "A. No 

## -- other than inthiscase? No.

Mr. Cruikshank testified.regarding his visitwith Adams inthe Spokane hospital: 

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. . I did have extensive discussions with her for, approximately an hour, where I went paragraph by paragraph of the Trust Agreement and discussed it with her, read it toher, explained it toher, answered her questions, which I recall were not very much, and finally said, 'Do you want Ila totake care of you and worry about your property and get this Black Lung thing collected and manage the trailer court, and just make it so you don't have any problems a-ndyouwould never have to go in the trailer court?' And she said, 'That'sexactlywhat I want.

### ' I said, 'I am competent [sic]with you signing the Trust and Assignment.' And she did execute it at thatpoint.

"Q. Inyour estateplanning of Ikey [Ida],did you ever ask her about her Will? A. Yes, sir, Idid. 

### "Q. Did you obtain a copy of thatWill? A. No, I did not. "Q. When Ikey and you were in the day room, did she have her gl.asseson? A. I don't recall her having glasses on. 

### "Q. Did shehave amagnifying glass? A. J!Jot that Iknowof. "Q. Was she dressed in hospital garb at that time? A. Yes, sir. "Q. Did you read the Trust Agreement to her? A. Yes, sir.



### "Q. Did she read it? A. NO, sir. "Q. I believe your testimony was that you had asked Ikey if she wanted Ila to take care of her affairs and then had the Agreement signed, is that correct? A. That was at the tail end of the conversation

## -- or something to that affect,yes."
Cruikshank's testimony that Adams

## , the hospital meeting,

was lucid and acting voluntarily does not negate the fact that shewas seriously ill and incapable of even readingwhat shewas signing. The nature of undue influence is that the will of the persuading person substituted for the will the person who is unable to withstand the persuasion. When free agency and free consent are lost, the agreement in questionmust be declared void. Applying the five factors of Maricich here,

we conclude that the findings of the District Court are supported by substantial evidence and are not clearlyerroneous. Therefore, consideration of the second issue is unnecessary. Affirmed. 

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We Concur: 

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