Opinion ID: 2308436
Heading Depth: 1
Heading Rank: 4

Heading: The Confidential Relationship

Text: In this action, the trial court imposed a constructive trust on the home because Judge Dwyer found that a confidential relationship existed between Ms. Figgins and Mr. Cochrane and that she did not rebut the attendant presumption of undue influence. A constructive trust is a device used by [a court] to compel one who unfairly holds a property interest to convey that interest to another to whom it justly belongs. George G. Bogert & George T. Bogert, The Law of Trusts and Trustees, Section 471 (2d. ed.1978). See also Grimes v. Grimes, 184 Md. 59, 40 A.2d 58 (1944). It is imposed on property in a number of circumstances, one being where the holder of legal title of a property, the dominant party, was in a confidential relationship with the prior owner, the trusting party. See Bogert at Section 482. If a confidential relationship is breached or abused, with the result that property was transferred from the trusting party to the dominant party, a constructive trust may be ordered. See Grimes, 184 Md. at 64, 40 A.2d at 61; Williams v. Robinson, 183 Md. 117, 119, 36 A.2d 547, 549 (1944). We have iterated that when a parent on account of old age and infirmity relies heavily upon the child for care and protection or for guidance in business affairs, then there exists a confidential relationship where the child acts as a guardian for the parent. . . . Williams, 183 Md. at 120, 36 A.2d at 549. See also Myers v. Myers, 185 Md. 210, 44 A.2d 455 (1945). In Treffinger v. Sterling, 269 Md. 356, 305 A.2d 829 (1973), we stated some of the factors that should be explored to determine whether a confidential relationship exists between a parent and a child: Among the factors to be examined in determining whether this relationship has come into being are the parent's advanced age, his physical debility, his mental feebleness, and his dependence on his child. None of these factors is necessarily conclusive and each should be given that weight which is warranted by the circumstances then present. Normally it is the minor child who relies heavily upon his parent for care and protection or for guidance in business affairs so that a confidential relationship exists between them with the duties running from the adult to the minor. It is only when, as a result of debility or feebleness, a parent becomes dependent on his child for aid and counsel, that a confidential relationship is re-established. . . . Id. at 361, 305 A.2d at 832 (citations omitted). In the case sub judice, the trial court found that a confidential relationship existed between Ms. Figgins and her father. The evidence reflected that Ms. Figgins had lived with her parents for most of her life. In 2004, Mr. Cochrane turned seventy-two years old, and was confined to a wheelchair. As a result of his physical debilitation, Mrs. Cochrane and Ms. Figgins were his primary caretakers. After Mrs. Cochrane's health began to deteriorate, Ms. Figgins assumed the primary role of Mr. Cochrane's caretaker, feeding him, taking him out for doctor's appointments, church services, lunches and rides, administering medication, doing laundry, as well as reviewing mail and paying bills. Ms. Figgins occupied this intensely intimate role for the final seven months of Mr. Cochrane's life. As a result, we conclude that the trial court's finding as to the existence of a confidential relationship was not clearly erroneous. Because a confidential relationship existed between Mr. Cochrane and Ms. Figgins, a presumption arose that the transfer of the house was the result of Ms. Figgins' undue influence on Mr. Cochrane, and the heavy burden of showing the fairness of the transaction shifted to Ms. Figgins. See Sanders v. Sanders, 261 Md. 268, 276, 274 A.2d 383, 388 (1971); Williams, 183 Md. at 120, 36 A.2d at 549. To rebut the presumption, the party receiving the benefit, Ms. Figgins, must show the fairness and reasonableness of the transaction, Sanders, 261 Md. at 276, 274 A.2d at 388, and demonstrate that the transfer was the free and uninfluenced act of the grantor, upon full knowledge of all the circumstances connected with it and of its contents. Upman v. Thomey, 145 Md. 347, 360, 125 A. 860, 865 (1924); Kerby v. Kerby, 57 Md. 345, 350 (1882). Before us, Ms. Figgins argues that she rebutted the presumption of undue influence created by her confidential relationship with her father because her father was represented by an attorney, Mr. Borison, who had been chosen by her father. She also contends that she signed the deed only after being instructed to do so by Mr. Borison, who was acting as her father's agent. In Rice v. Himmelrich, 222 Md. 234, 159 A.2d 647 (1960), we explored whether the existence of independent advice negated undue influence when a sibling transferred property to her brother prior to her death. Nephews challenged the transaction because the recipient brother had taken care of the decedent's business affairs and had lived with the decedent before her death. After determining that a confidential relationship existed between the decedent and her brother, we held that the brother had rebutted the presumption of undue influence because the transfer did not strip [the decedent] of her property, and because the decedent acted upon the advice of an attorney when she deeded the property to her brother. Id. at 240, 159 A.2d at 651. We explicated: The fact of independent advice, although not indispensable, is an important consideration. We think, however, that Mr. Williams' advice was independent, and that the aspersion is unwarranted. Id. at 240, 159 A.2d at 650-51 (citations omitted). In Belote v. Brown, 193 Md. 114, 65 A.2d 910 (1949), a mother had retained a life estate in her home but transferred the remainder to the tenants living in a basement apartment. Her daughter challenged the transaction based upon undue influence, resulting from the facts that the tenants lived with the mother and had promised to take care of her. We assumed for the purposes of discussion that a confidential relationship existed between the mother and the tenants and concluded that the tenants had rebutted the presumption of undue influence because the mother retained a life estate in the property and had the benefit of independent advice of counsel relative to the remainder. Id. at 129, 65 A.2d at 917. Also, in Colburn v. Ellers, 160 Md. 104, 153 A. 14 (1931), after a father had retained a life estate in his home, but deeded the remainder to one of his children, the other children challenged the transfer based upon undue influence, because the daughter had then cared for the father after he became paralyzed. We assumed for purposes of discussion that a confidential relationship existed between the father and the daughter and held that the daughter had rebutted the presumption of undue influence because, among other things, the deed was drafted by an attorney and was executed after independent advice: The deed was prepared by a lawyer, of the grantor's own selection, at his own direction, after he had been fully advised as to its purpose and effect, and executed in the presence of his lawyer, a notary public, his son James B. Colburn, his two daughters, Margaret and Della, William Ellers, the husband of Margaret, Walter H. Myers, a friend who had no possible interest in the controversy, and Dr. James J. Murphy, his attending physician. Id. at 113, 153 A. at 18. In the case principally relied upon by Ms. Figgins, Gaggers v. Gibson, 180 Md. 609, 26 A.2d 395 (1942), a father deeded the family home to his daughter for the amount of indebtedness on the property, less than one quarter of its value. The father's other children challenged the deed, contending that it was the result of undue influence on the part of the daughter who had assumed control of her father's affairs after he had become both physically and mentally disabled. After determining that a confidential relationship existed between the father and daughter, we concluded that the daughter had not rebutted the presumption of undue influence, in part, because the father did not receive competent and independent advice: The existence of the confidential relation creates a presumption of influence which imposes upon the one receiving the benefit the burden of proving an absence of undue influence by showing that the party acted upon competent and independent advice of another, or such facts as will satisfy the court that the dealing . . . was had in the most perfect good faith on his part and was equitable and just between the parties. It is beyond doubt that William Thomas Gibson was influenced by his daughter Emma, one of the beneficiaries of the transaction. He had no advice from any source which would enable him to understand the full force and effect of his act. The representative of the building association explained only the effect, without suggesting any one of several other arrangements whereby the old man would not lose his entire property. It is reasonable to believe that such a small loan on property worth more than four times the amount of the loan, could be transferred to a straight loan whereby the interest and taxes only would have to be paid annually, or, a part of the property, it was made up of seventeen lots, sold for enough to pay the indebtedness, leaving the home clear for the old man. Also, all of the property, it seems possible, could have been sold for far more than the indebtedness, leaving a sum of money ample for the old man. Under all the circumstances of this case, as disclosed by the evidence, and in accordance with the settled law in cases like this, we are convinced the transaction was unwarranted and unfair, and that a constructive fraud was perpetrated. Id. at 613-14, 26 A.2d at 397-98 (citations omitted). Ms. Figgins argues that because Mr. Cochrane did have independent advice from Mr. Borison, she has rebutted the presumption of undue influence that the daughter in Gaggers failed to do. Unlike in Gaggers, however, although Mr. Cochrane may have had the benefit of independent advice, he never executed the transfer. The trial court determined that the property transfer was the result of undue influence on the part of Ms. Figgins and that she had not rebutted the presumption. In those cases in which we have found that the presumption of undue influence is rebutted by the existence of independent advice, that advice has been provided to the grantor and the grantor executed the transfer. Here, however, Mr. Cochrane never signed the deed. In fact, the last instrument he signed was a codicil to his will, which the trial court found reflected his last intentions, wherein he gave Ms. Figgins the right to remain in the house and purchase it for three years after his death, as well as the right to purchase the property for 120 days immediately thereafter. We conclude, therefore, as did the Court of Special Appeals, that the trial court's finding that Ms. Figgins had not met her burden to prove the validity of the transfer, was not clearly erroneous.