Opinion ID: 1698242
Heading Depth: 2
Heading Rank: 3

Heading: absent a finding of actual undue influence or mental incompetence does a presumption of undue influence arise in the establishment of joint accounts?

Text: Justice Dan Lee wrote in Costello v. Hall , The [will] cases in which we have recognized the presumption of undue influence present factual scenarios where there was more than just a legal or domestic relationship between the testator and the beneficiary. There must also be an abuse of that relationship relating to the execution of the will. Costello v. Hall, 506 So.2d 293, 298 (Miss. 1987) (emphasis in the original). However, in Croft, the court noted the following: [T]he rule applied in the case of gifts inter vivos, as by deed, [is] that where a confidential relation exists between donor and donee, it is presumptively void and the burden rests on the donee to produce a clear and convincing evidence that the gift is free from the taint of undue influence... . Croft v. Alder, 237 Miss. 713, 726, 115 So.2d 683, 687-88 (1959). The Court went on in Croft, discussing the consequences of transactions between parties in a confidential relationship, to quote from the early case of Ham v. Ham, 146 Miss. 161, 110 So. 583 (1926): When such a relation exists, and the parties thereto  `consciously and intentionally deal and negotiate with each other, each knowingly taking a part in the transaction, and there results from their dealing some conveyance or contract or gift, ... the principle literally and directly applies. The transaction is not necessarily voidable, it may be valid, but a presumption of its invalidity arises. .. .' 2 Pomeroy Equity Jurisprudence (4th ed.), § 957. Ham, 146 Miss. at 173, 110 So. at 584. Thus, the rules of law are different regarding gifts testamentary and gifts inter vivos where a confidential relationship exists between the testator/grantor and the beneficiary/grantee. The prior holdings of this Court indicate a presumption of undue influence only arises in the context of gifts by will when there has been some abuse of the confidential relationship, such as some involvement in the preparation or execution of the will. On the other hand, with a gift inter vivos, there is an automatic presumption of undue influence even without abuse of the confidential relationship. Such gifts are presumptively invalid. Madden argues that, although this case does not involve a will, the Court should apply the law as it governs testamentary disposition. That is, without an abuse of the confidential relationship, no presumption of undue influence arises. Madden continues that since the chancellor found no abuse of the relationship, she is entitled to the contents of both the savings account and the lock box as a matter of law. Madden's argument is unpersuasive. It is true that Madden did not choose to exercise control over the assets in the Merchants Bank account and lock box until after the death of Andrew Sierra. That point, however, is irrelevant. Madden's name on the accounts gave her the legal status of co-owner of their contents in the eyes of Merchants Bank, if not of Andrew Sierra, at the time the accounts were opened or the certificates of deposit were purchased. She could have taken possession of all the assets at any time while Sierra and his wife were still living and the outcome would have been the same as if Sierra had made a strict inter vivos transfer to Madden. Had Sierra predeceased his wife, this case would involve Mrs. Sierra and Madden, instead of Rhodes and Madden. The appropriate standard, then, is that no abuse of the confidential relationship must be proved to raise the rebuttable presumption of undue influence accompanying an inter vivos transfer. Nor do we require a finding of mental incompetence on the part of the grantor to raise the presumption. When a confidential relationship exists, the presumption arises automatically, to be rebutted by clear and convincing evidence presented by the one who wishes to uphold the validity of the gift. See e.g., Hendricks v. James, 421 So.2d 1031, 1043 (Miss. 1982). While this may appear to be a harsh rule at times, it is also true that the law must protect those who cannot protect themselves. A finding there was not shown any actual undue influence tells us nothing more than there was no overt action by Madden to take possession of two-thirds of the assets of Anna and Andrew Sierra. Madden was, however, involved in the establishment of the accounts. Such involvement may be classified as implied undue influence by some. It is undue influence, nonetheless. We can never know what actually transpired between the Sierras and Madden. It is this problem our rule regarding the presumption of undue influence seeks to alleviate. No dispute over the assets arose while Anna and Andrew Sierra were still alive. Anna Sierra could not come before the chancellor to assure him she wished Madden to share their financial assets. Andrew Sierra could not come to testify he set up the accounts, perhaps, to placate his dying wife or to satisfy his fears of being unable to care for their needs at some future date. Only Madden remains to tell us what happened  Madden, the one who would benefit. This Court wrote in 1910: It follows, from the very nature of the thing, that evidence to show undue influence must be largely, in effect, circumstantial. It is an intangible thing, which only in the rarest instances is susceptible of what may be termed direct or positive proof. The difficulty is also enhanced by the fact universally recognized, that he who seeks to use undue influence does so in privacy. Jamison v. Jamison, 96 Miss. 288, 298, 51 So. 130, 131 (1910). Madden, as the beneficiary of the establishment of the joint accounts, then, must bear the burden of proving, by clear and convincing evidence, the absence of undue influence. The Special Chancellor did not err in applying the law as it governs gifts inter vivos when a confidential relationship exists.