Opinion ID: 1939198
Heading Depth: 1
Heading Rank: 4

Heading: did the chancellor misapply the law of undue influence?

Text: The chancellor's final decree found as a matter of fact that Gayle Kelly was in a close, personal, and confidential relationship with his aunt, Mrs. Windham. The chancellor also found as fact that, after her husband's death, Mrs. Windham relied upon Kelly exclusively to make all her business and financial decisions and to conduct her business affairs. These findings of fact are not challenged by Kelly on appeal and are fully supported by the evidence. It is well-settled law that once the existence of a confidential relationship is proven, a presumption of undue influence arises and the burden of going forward with the proof shifts to the grantee/beneficiary to prove by clear and convincing evidence: (1) good faith on the part of the grantee/beneficiary; (2) the grantor's full knowledge and deliberation of his actions and their consequences, and (3) advice of (a) a competent person, (b) disconnected from the grantee, and (c) wholly devoted to the grantor's/testator's interests. Murray v. Laird, 446 So.2d 575, 578 (Miss. 1984); Harris v. Sellers, 446 So.2d 1012, 1014-15 (Miss. 1984). The law of undue influence as applied to the case at bar is that any transactions between Mrs. Windham and Kelly occurring after the death of Mr. Windham may be presumed to be void as the result of undue influence, unless Kelly shows by clear and convincing evidence that (a) he exercised good faith, (b) Mrs. Windham knew and deliberated her actions and their consequences, and (c) that she received competent independent advice. Murray v. Laird, supra ; Harris v. Sellers, supra .

In determining whether Kelly exercised good faith in connection with the codicils, certificates of deposit, accounts, and deeds, Murray v. Laird , requires us to consider (a) the identity of the initiating party in seeking preparation of the instrument, (b) the place of the execution of the instrument and in whose presence; (c) what consideration and fee were paid, if any, and (d) by whom paid, and (e) the secrecy or openness given the execution of the instrument. 446 So.2d at 578. The proof on the question of Kelly's good faith does not clearly and convincingly establish Kelly's good faith, rather it demonstrates its absence. Kelly was active in the procurement of the codicils naming him as the executor of Mrs. Windham's estate and giving to him the portion of her estate which an heir would forfeit if he contested the will or codicils. Kelly drove Mrs. Windham to her Laurel attorney's office on every occasion and was present in the office during the execution of the first codicil. He drove her to the chancery clerk's office each time she had the other two codicils witnessed. Kelly wrote and delivered the checks to the Laurel attorney for services rendered in preparation of the codicil. Kelly also generally concealed the codicils in his possession until Mrs. Windham's death. Kelly was likewise active in the creation of the joint accounts, certificates of deposit, and deeds. He admitted that he established joint accounts and certificates of deposit without even telling Mrs. Windham. He procured a million dollar certificate of deposit in Jackson in his own name using her funds, while she lay ill in a Hattiesburg hospital. He admitted that he typed the 1975 deed conveying Mrs. Windham's property to him, the 1976 mineral right and royalty transfer, and instituted the negotiations to have the Knight heirs' property transferred to Mrs. Windham in 1977, which she conveyed to him one month later. Kelly admitted that he did not record the 1975 and 1977 deeds until three days after Mrs. Windham's death. While Murray v. Laird notes that ... prior disclosure of a donation is not a prerequisite to its validity ..., 446 So.2d at 579, the fact that Kelly concealed from all but his immediate family the codicils, deeds, accounts, and certificates of deposit reinforces the undue influence presumption. In short, there was no affirmative or positive proof that Kelly exercised good faith in these numerous transactions.
In determining whether Mrs. Windham's actions were the product of a knowing and deliberate choice, Murray v. Laird directs us to consider (a) her awareness of her total assets and their general value, (b) whether she understood who were the natural inheritors of her bounty under a prior will, and how the proposed change legally affected that will, (c) whether non-relative beneficiaries would be excluded or included, and (d) her knowledge of who controls her finances and business and by what method, if controlled by another, and how dependent she is upon him and how susceptible to his influence. 446 So.2d at 579. For the last three years of Mrs. Windham's life, she was frequently ill, hospitalized, and dependent upon Kelly to transact all necessary business for her, including tax and accounting matters. She depended upon Kelly to drive her to her attorney's office, to the bank, and to the courthouse. Although the Laurel attorney testified that Mrs. Windham appeared to be independent and unsusceptible of external influence, he admitted that it was his impression that she relied upon Kelly generally for advice. As for the transfer of Windham account funds, Mrs. Windham, according to Kelly's own testimony, was not even aware of his dealings with her money. It was also shown that she did not understand the consequences of the 1975 deed divesting herself of title to all her real and personal property because she continued to treat the Fairchild sale proceeds as her own property on which she paid taxes. She also told members of the Windham and Kelly families that they would be taken care of. Kelly called several witnesses who stated that Mrs. Windham was independent and uninfluenceable, while the appellees testified that she was an emotional, dependent person who was especially devoted to Kelly. In reviewing all the evidence on this issue, we conclude that Kelly did not clearly and convincingly rebut the evidence that Mrs. Windham did not act independently and deliberately with respect to the challenged transactions.
Finally, in determining whether Mrs. Windham received informed independent advice from someone wholly devoted to her interests, Murray v. Laird directs our attention to whether the advisor (a) conferred with her prior to drafting the documents, (b) was given full knowledge upon which to base his suggestions, (c) was competent to advise and was wholly devoted to her interests. 446 So.2d at 579. The chancellor placed heavy emphasis on the fact that Mrs. Windham received no independent advice on any of her business or financial affairs after the death of her husband. The chancellor found as fact that she relied exclusively upon Kelly for personal and financial advice. In connection with the codicils, the Laurel attorney was unable to render meaningful advice because he did not know the extent of her assets, he never saw her tax returns, and did not question on whether the codicils were the product of a free-thinking independent mind or whether they were imposed by the dominance of an over-reaching person. Although the attorney stated that Mrs. Windham's actions were based on an independent decision, he was unaware of the antecedent circumstances leading to the drawing of the codicils and he did state that Mrs. Windham relied upon Kelly generally for advice. As to the other transactions, Mrs. Windham did not know of Kelly's dealings with her funds in many cases, so she could not have received independent advice on those matters. Kelly's own testimony was that he prepared or procured the 1975, 1976, and 1977 deed according to her directions and there was no proof of prior independent advice as to those deeds. The record reflects that Kelly did not clearly and convincingly prove that Mrs. Windham received independent competent advice on the transactions in question. Kelly asserts that the chancellor should have restricted his inquiry as to the existence of undue influence to the time when the Windhams made their offer to him in 1965. Relying solely on Deanes v. Tomlinson, 54 So.2d 474, (Miss. 1951), Kelly argues that the law of undue influence is properly applied to the time of the initial agreement. Deanes was a sick, elderly man who offered to deed his property and will his estate to his third cousin, Tomlinson, if she would take him into her home and care for him. He later filed suit to set aside the deed on the ground of fraud and insufficient mental capacity. In addressing the question of fraud, we stated: There was no confidential or trust relation existing between these parties. While Mrs. Tomlinson and appellant were third cousins, they had not visited each other within the past year or so. Mrs. Tomlinson neither sought nor solicited the agreement. She did not even accept the proposition until two or three days after it was made. Admittedly, appellant originated the idea, and, of his own free will and accord, sought its consummation. Consequently, it is obvious that there was no fraud in this case. [Citations Omitted] 54 So.2d at 475. Kelly argues that Deanes is precise authority for his situation because of three similar circumstances: 1. Kelly was a relative of the Windhams but had not visited them frequently prior to the agreement. Similarly, Mrs. Tomlinson had not visited Mr. Deanes within the past year or so prior to their agreement. 2. Kelly did not propose the agreement. The chancellor found that Kelly came to Collins at the request of the Windhams. Similarly, in Deanes Mrs. Tomlinson did not propose the agreement, but its idea was originated with Mr. Deanes. 3. Mr. and Mrs. Windham were mentally competent at the time of entering into the agreement in 1965. Likewise, Mr. Deanes was mentally competent at the time he had entered into the agreement and had satisfactorily taken care of his business prior to the agreement. Under these facts Kelly contends the chancellor should have determined that, at the time the Windhams entered into the agreement with him, the parties were dealing at arms-length and acting of their own free will and accord. Kelly's argument is without merit for two reasons. First, as noted in section III, we do not find that an oral contract to transfer to Kelly all the Windham property was entered into in 1965, so there is no factual basis for analyzing the relative position of the parties at that time. Second, even assuming arguendo that such an agreement existed, Kelly's contention asks a court to remain blind to any development of a caretaker relationship from an arms-length contract into a close, personal, and confidential relationship. Kelly asks us to ignore the fourteen-year ripening of his aunt's love for him into a condition of unqualified trust; this we will not do. Deanes v. Tomlinson, supra, does not require such a result, and Harris v. Sellers and Murray v. Laird direct us to consider the circumstances existing at the time of the transactions in question. Harris v. Sellers, 446 So.2d at 1014-15, Murray v. Laird, 446 So.2d at 578-79. In conclusion, we rule that the chancellor properly applied the law of undue influence to the facts and circumstances surrounding each of the challenged transactions.