Opinion ID: 2172436
Heading Depth: 1
Heading Rank: 1

Heading: Savings Bonds and Retirement Fund

Text: The lower court surcharged Bethel for her failure to include in decedent's estate the Series E United States Savings Bonds having a maturity value of $20,400, and the Employers' and Commonwealth's accumulated contributions to the retirement fund on the basis that a confidential relationship existed between decedent and Bethel at the time said transactions were consummated. Consequently, we must first determine whether the lower court was correct in deciding that a confidential relationship existed. The criteria giving rise to a confidential relationship were enunciated in Leedom v. Palmer, 274 Pa. 22, 25, 117 Atl. 410 (1922), wherein it was stated: . . . Confidential relation is not confined to any specific association of the parties; it is one wherein a party is bound to act for the benefit of another, and can take no advantage to himself. It appears when the circumstances make it certain the parties do not deal on equal terms, but, on the one side there is an overmastering influence, or, on the other, weakness, dependence or trust, justifiably reposed. . . . See Brooks v. Conston, 356 Pa. 69, 51 A. 2d 684 (1947); Hamberg v. Barsky, 355 Pa. 462, 50 A. 2d 345 (1947); Null's Estate, 302 Pa. 64, 153 Atl. 137 (1930). [2] The lower court in its opinion states that shortly before the period of confidential relationship began Hazel knew exactly what she was doing and fully intended to do what she did. There is little, if any, evidence on the record to indicate that during the period of confidential relationship as determined by the lower court Hazel's mental condition deteriorated to such an extent that Bethel could have exerted an overmastering influence upon her in the conduct of her business affairs. The great preponderance of the evidence indicates that although Hazel was weakening physically, she remained mentally alert until the day she died. The testimony of her fellow teachers, her minister, her housekeeper, her nurse during her last days and her niece and nephew, among others, indicates that Hazel knew what she was doing at all times. This being the case, we find that Hazel remained mentally competent until her death. Since we find that the decedent was mentally competent we must determine whether Hazel's physical deterioration was sufficient by itself to create a confidential relationship. In Snoder v. Lenhart, 363 Pa. 371, 69 A. 2d 382 (1949), the decedent, by instrument, gave a joint interest in a savings account to his brother and nephew. The decedent, who had been hospitalized for cancer, executed the instrument approximately one month before he died. The decedent's niece contended that the decedent stood in a confidential relationship with his brother and nephew, but the court rejected this contention saying that although he was suffering from cancer, there was no evidence on the record to indicate that the decedent suffered any impairment of will or mind. In Union Trust Company of New Castle v. Cwynar, 388 Pa. 644, 131 A. 2d 133 (1957), an 80 year old widower who was mentally sound but physically incapacitated made substantial gifts of real and personal property to a 25 year old woman. The court held that no confidential relationship existed between the two, but that the relationship between them was one of friendship which had its genesis in a business association. Both the Snoder and Cwynar cases are consistent with the principle that the test for determining the existence of a confidential relationship should not be based upon decedent's physical infirmities, but rather should be based upon the extent to which decedent's mental capacity has been impaired as a result of those physical infirmities. We believe that this is the proper test to be applied in the instant case. Although Hazel was weakening physically, she nevertheless remained mentally competent, and was fully aware of the consequences of her acts. Thus Hazel knew what she was doing when she signed the forms for the reissuance of the bonds and for the change of the beneficiary of her retirement fund. In view of these circumstances, we are of the opinion that Bethel was not in a position to exert such an overmastering influence upon Hazel and that Hazel was not so dependent upon Bethel so as to create a confidential relationship between the two sisters.