Court Opinion

ID: 1072720
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:52:40.507109+00
Date Added: 2024-06-11T13:05:24.470758
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                  January 25, 2001 Session

 DONALD E. BLACKBURN, CO-EXECUTOR OF ESTATE OF GEORGE
      C. BLACKBURN, DECEASED v. BETTY BLACKBURN

                 A Direct Appeal from the Probate Court for Shelby County
                   No. B-28092     The Honorable Donn Southern, Judge

                    No. W2000-00393-COA-R3-CV - Filed March 27, 2001

        Executor of deceased’s estate appeals the probate court order closing the deceased’s
conservatorship. The final order closing the conservatorship, among other things, set aside a part
of the order appointing conservator which ordered the appointed conservator to convey to the ward
real estate owned by the ward that she had previously conveyed to herself as attorney in fact for the
ward. Executor appeals.

   Tenn.R.App.P. 3; Appeal as of Right; Judgment of the Probate Court is Vacated and
                                      Remanded

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which ALAN E. HIGHERS,
J. and HOLLY KIRBYLILLARD, J., joined.

George P. Collier, Jr., Collierville, For Appellant, Donald E. Blackburn

Jerry H. Schwartz, Memphis, For Appellee, Betty Blackburn

                                            OPINION

       Appellant, Donald E. Blackburn, Executor of the Estate of George C. Blackburn, deceased,
appeals the “Order Approving Amended Final Accounting and Discharging Conservator and Closing
Conservatorship” in the matter of Conservatorship of George C. Blackburn.

        There is no transcript of testimony in this case. The facts are basically undisputed as
reflected in the documents filed as part of what was formerly referred to as the technical record. On
September 3, 1996, petitioner, Betty Blackburn (“Appellee” or “Conservator”), filed a petition for
the appointment of conservator for respondent, George C. Blackburn, her husband. The petition
alleged that respondent, because of advanced age and mental infirmities, was unable to manage his
own affairs. The affidavit of a physician, Dr. John Harris, was filed with the petition. On September
3, 1996, the probate court appointed a guardian ad litem to represent the respondent, to investigate
and determine the facts and report the facts to the court. A hearing was scheduled for September 30,
1996 at 11:00 a.m.

        On September 16, 1996, respondent, George C. Blackburn, filed a “Response and Petition
for Relief by Respondent.” The response denies that respondent is unable to manage his own affairs
and denies that he should have a conservator appointed. Respondent avers that he is able to look
after himself and that although he had serious physical ailments, he has improved and is able to take
care of himself. Respondent further avers that he lives at 4231 Zaio, Memphis, Tennessee, owned
by both petitioner and respondent, and that the properties at 4219 and 4327 Zaio were in his name
only. He further avers that a 444-acre farm in Fayette County was in his name only, and that the
petitioner used a power of attorney to execute a quit claim deed on March 21, 1996 in which she
conveyed the property to herself.

        By counter-complaint, respondent avers that while he was seriously ill and in the hospital
with cancer on March 17, 1996, the petitioner obtained a power of attorney from him for the purpose
“to take care of business while he was sick.” He avers that there was no notary public present in the
hospital when he signed the document, that the acts on the part of petitioner constitute a fraud, and
that the document was obtained when he was incapable of protecting himself. He avers that a paper
writing between him and George D. Blackburn was recorded in the Register’s Office of Fayette
County, Tennessee, which purports to lease the 444-acre farm to George D. Blackburn for a period
of 55 years at one dollar per year. He further avers that petitioner executed a quit claim deed on
March 21, 1996, which she recorded in the Register’s Office of Fayette County, conveying
respondent’s 444-acre farm to herself. He avers that petitioner and George D. Blackburn have acted
in concert to perpetrate a fraud on the respondent. He further avers that petitioner executed a quit
claim deed for the properties at 4219 Zaio and 4237 Zaio in Memphis conveying the properties to
respondent and petitioner as tenants by the entirety. Respondent prays in the counter-complaint that
the court place the parties back in the position they held prior to the transfer of property by use of
the power of attorney.

        Although a hearing was initially set for September 30, 1996, there is no record that a hearing
took place on that date, nor is there an order in the record continuing the case. The record indicates
that on January 7, 1997, a motion was filed on behalf of petitioner to amend the petition appointing
the conservator. A copy of an amended petition is included in the record, although there is no order
allowing such an amendment. This amended petition updates some additional income and assets of
the respondent and further avers that Donald Blackburn took the respondent to James Crislip,
attorney, who prepared a revocation of power of attorney for the respondent. The petition further
avers that Paul J. Neal, Ph.D. evaluated the respondent, and that respondent was hospitalized at a
Memphis hospital after experiencing seizures. The petition alleges that respondent moved important
documents from their usual place, and that he should be enjoined from disposing of or liquidating
any of his assets. The petition again prays that the petitioner to be appointed as conservator with all
of the rights and duties thereunto belonging.

                                                 -2-
        On March 4, 1997, “Further Response to Amended Petition for Appointment of Conservator”
was filed by James A. Crislip, as a friend of the court, and in which Ronald Blackburn joined. The
response avers that the said James A. Crislip is simultaneously filing a response to the report of the
guardian ad litem and is also moving the court to issue an order requiring appointment of an attorney
ad litem to represent the interest of the respondent, George C. Blackburn. In particular, Mr. Crislip
moved the court to authorize such attorney ad litem to move to set aside the deed on the farm
transferring it from George C. Blackburn to Betty Blackburn by use of a power of attorney, and
moved that the court set aside the power of attorney. “Further, the Attorney Ad Litem should move
to set aside an alleged lease of the farm to George D. Blackburn for a period of fifty (50) years at
$1.00 per year.” The response alludes to a hearing, but there is nothing in the record to indicate a
hearing was held nor an order of court thereon. The response prays that the transfers of respondent’s
property be nullified.

        On March 4, 1997, James A. Crislip, as a friend of the court, filed a “Response to Report and
Recommendation of Guardian Ad Litem and Motion to Appoint Attorney Ad Litem.” At this point,
the record indicates that there had been no report of the guardian ad litem filed, but apparently a copy
of the report had been furnished to James Crislip. On July 16, 1997, the petitioner filed a second
amended petition for the appointment of conservator and outlined the deterioration of respondent’s
medical condition. The petition also averred the removal of funds from respondent’s savings
account which were placed in the name of Donald Blackburn. It asked for a restraining order to
prevent Donald Blackburn from disposing of any of the said funds. The petition reiterates the
request to be appointed conservator. A hearing was set for this petition on August 8, 1997.

       On August 8, 1997, the guardian ad litem, Kathleen Gomes, filed “Report and
Recommendation of Guardian Ad Litem.” We see no need to detail the statements in the report,
except to the extent that the report states that the petitioner admitted that she used the power of
attorney to make the transfers of respondent’s real property to herself. The guardian ad litem also
noted that she expressed to the petitioner that “the transfer of real property by power of attorney
appears to be inappropriate.”

        On August 8, 1997, the court held a hearing upon the petition, the first amended petition, and
the second amended petition. On August 11, 1997, the court entered an “Order Appointing
Conservator of the Person and Estate,” which appointed petitioner, Betty Blackburn, as conservator
of the estate and person of George C. Blackburn. The order recites that it is premised on the
pleadings, the report of the guardian ad litem, statements of counsel for petitioner and the guardian
ad litem, affidavits of physicians, testimony in open court of Betty Blackburn and Donald Blackburn
and the entire record in the cause. The court found that the respondent was in need of a conservator
and appointed Betty Blackburn conservator, and also specifically authorized her to pay certain debts
and to do other necessary things not material to this appeal. The order specifically stated:

                4. That any real estate transfers heretofore made by BETTY
                BLACKBURN as Power of Attorney for GEORGE C.

                                                  -3-
               BLACKBURN shall be transferred back to the original ownership of
               GEORGE C. BLACKBURN.

               5. That BETTY BLACKBURN as Conservator is to receive all assets
               owned by the Respondent including bank accounts and personal
               property and to place such funds in a Conservatorship account(s). ...

         The record indicates that by notice dated November 12, 1997, the Conservator, Betty
Blackburn, was notified to file a settlement in the case on or before December 12, 1997. The next
entry in the record is clerk’s citation issued March 1, 1999, in which the Conservator is notified to
file an accounting on or before March 31, 1999. By order entered April 5, 1999, the court granted
a continuance for the matter of filing the annual settlement until May 28, 1999.

        The next entry in the record is April 28, 1999: a filing of a “Petition to Admit to Probate the
Last Will and Testament of George C. Blackburn” in Cause No. B33191. The petition is filed by
Donald Ethridge Blackburn and Bobby Striplin, as executors of the estate of George C. Blackburn
pursuant to a will dated May 20, 1994, which petitioners allege they were recently furnished. The
petition alleges that George C. Blackburn died on August 14, 1997. The will presented to the court,
among other things, leaves the two properties in Memphis at 4219 Zaio and 4237 Zaio to Betty G.
Blackburn. The will also leaves the eastern half of the 444-acre farm to Donald Ethridge Blackburn,
and western half of the farm to George David Blackburn.

       On April 28, 1999, an order was entered in cause number B33191 and filed in this record
admitting the will to probate and appointing Donald Ethridge Blackburn and Bobby Striplin as
executors. Other pleadings filed in this record concerning the estate in Cause No. B33191 are not
material to this appeal, including Betty Blackburn’s “Petition for Elective Share, Year Support,
Exempt Property and Homestead,” and a claim filed by Betty Blackburn.

       On November 8, 1999, Betty Blackburn filed a “Petition to Approve Final Accounting in the
conservatorship proceeding.” She prayed that the accounting be approved and that she be discharged
from further fiduciary responsibilities.

        Subsequently, further pleadings were filed in this cause in connection with the estate of the
deceased, and on January 21, 2000, the court entered “Order Approving Amended Final Accounting
and Discharging Conservator and Closing Conservatorship in the conservatorship proceeding.” The
court approved the amended accounting and noted that George C. Blackburn died three days after
the opening of the conservatorship, and no assets were received by the Conservator. The order then
states:

               It further appearing to the Court that under item 4 of the Court order
               appointing the conservator that the real estate transfers heretofore
               made by Betty Blackburn as Power of Attorney for George C.
               Blackburn were ordered transferred back to the original ownership of

                                                 -4-
       George C. Blackburn and that this was not done. The Court now
       finds that it appointed a conservator based upon the expectation that
       the administration of the Ward’s affairs was needed over a reasonable
       time period and which now did not occur due to the immediate death
       of the Ward following the opening of the Conservatorship. It further
       appears that there were no assets received by the Conservator or
       expended by the Conservator for the benefit of the Ward, George C.
       Blackburn, and that for all practical purposes the conservatorship
       should be regarded as a non-existent. It further appears that there was
       no necessity for the administration of this Conservatorship for Betty
       Blackburn to transfer back to the original ownership of George C.
       Blackburn any real estate transfers heretofore made by Betty
       Blackburn as Power of Attorney for George C. Blackburn. The Court
       further finds that Betty Blackburn asserts personal ownership in the
       real estate assets and objects to the order requiring her individually to
       convey real estate transfers heretofore made by her as Power of
       Attorney for George C. Blackburn back to his original ownership, and
       it appears from statements of Counsel and from the entire record that
       proper pleadings and notice of hearing were not served upon Betty
       Blackburn, individually, regarding the issue of ownership of the real
       estate, and that she was not afforded an opportunity to have a proper
       hearing on this matter and she was not afforded due process of law.
       The Court therefore concludes that the part of this Court’s order
       compelling her to transfer the real estate is not proper under the
       circumstances and therefore should be annulled, canceled and
       vacated. It further appears that the personal representative of the
       Estate of George C. Blackburn has made an appearance in open Court
       on the hearing of the petition to approve the final accounting and
       sought of the Court to retain jurisdiction over Betty Blackburn and
       reserve for its further orders her failure to comply with the Court’s
       order to transfer the real estate and noted his exceptions, which
       exceptions are not well taken and so noted.

The order then provides:

       3. That item 4 of this Court’s Order in this Cause appointing
       Conservator of the Person and Estate, which states as follows: “That
       any real estate transfers heretofore made by BETTY BLACKBURN
       as Power of Attorney for GEORGE C. BLACKBURN shall be
       transferred back to the original ownership of GEORGE C.
       BLACKBURN,” is hereby annulled, canceled and vacated.

                                         -5-
       Donald A Blackburn, as Executor of the Estate of George C. Blackburn, deceased, appeals
and presents the issue for review whether the trial court erred in vacating its order of August 11,
1997, requiring the Conservator to reconvey property to the respondent, George C. Blackburn.

        Following the example of our Supreme Court in Grahl v. Davis, 971 S.W.2d 373 (Tenn.
1998), we deem it appropriate to present a brief review of the fiduciary duties of the conservator.
Justice Drowota, speaking for the Court in Grahl, provided us with a concise and enlightened review
of such duties, which we quote:

                                     FIDUCIARY DUTIES

                       We begin our analysis with a brief review of the fiduciary
               duties which govern the actions of a conservator. The purpose of
               appointing a conservator is “to preserve the estate of an incompetent
               or disabled person.” Tenn. Code Ann. § 34-4-202 (1991 Repl.).
               Pursuant to Tenn. Code Ann. § 34-4-207 (1991 Repl.), a conservator
               “shall have the same duties and powers as a guardian of a minor, and
               all laws related to the guardianship of a minor shall be applicable to
               a conservator.” A conservator occupies a fiduciary position of trust of
               the highest and most sacred character. See Meloy v. Nashville Trust
               Co., 177 Tenn. 340, 149 S.W.2d 73 (1941). The conservator is to
               manage the conservatee’s estate to the best advantage. See Steele v.
               Reese, 14 Tenn. (6 Yer.) 263 (1834). The conservator should
               endeavor to manage the estate so that if the incompetent person
               recovers, he or she will find the estate as nearly as possible in the
               same condition as he or she left it. Folts v. Jones, 175 Tenn. 74, 132
               S.W.2d 205, 208 (1939). A conservator should not change the
               character of the conservatee’s property interests unless the change is
               necessary to protect and promote the interests of the conservatee. Id.
               In considering a conservator’s request to cash a life insurance policy
               for the benefit of the conservatee’s estate, this Court, in Folts v.
               Jones, stated:

                      Before the character of the interest in property held by
                      a [conservatee] can be changed, it must be made
                      manifest that it is necessary to protect and promote his
                      interest. Although as a rule, the court will preserve, as
                      far as possible, the interests of the succession, this
                      rule yields to the paramount rule which makes the
                      [conservatee’s] welfare the first consideration without
                      regard to the rights of those who may have eventually
                      rights to succession.

                                                -6-
               Id.; see also Morris v. Morris, 195 Tenn. 133, 258 S.W.2d 732
               (1953).

                       A conservator is not the alter ego of the conservatee, however,
               and has no authority to exercise an elective right or power of the
               conservatee. Folts, 132 S.W.2d at 207. Therefore, a conservator has
               no authority to terminate joint accounts in which the conservatee has
               an interest or to change a beneficiary on a life insurance policy. Folts,
               132 S.W.2d at 207; see also Howard v. Imes, 90 So.2d 818 (Ala.
               1956); In Re: Estate of Wright, 424 N.W.2d 268 (Mich. 1988);
               Hendricks v. Grant County Bank, 379 P.2d 693, 697 (Okla. 1963);
               Matter of Guardianship of Rich, 520 N.W.2d 63 (S.D. 1994);
               Rozycke v. Sroka, 279 N.E.2d 155 (Ill. Ct. App. 1972); Matter of
               Estate of Briley, 825 P.2d 1181 (Kan. Ct. App. 1992); Maess v.
               Greenfield, 547 S.W.2d 777 (Ky. Ct. App. 1977); Strain v. Rossman,
               614 P.2d 102 (Or. App. 1980). Instead, the conservator must petition
               the court, and the court, on behalf of the conservatee, can exercise
               such an election if it is clearly proven to be in the best interests of the
               conservatee. Folts v. Jones, 132 S.W.2d at 207; see also Schlieper
               v. Rust, 360 N.E.2d 1192, 1197 (Ill. Ct. App. 1977); Rozycke v. Sroka,
               279 N.E.2d at 158.

                       A conservator owes the conservatee an undivided duty of
               loyalty. 18 Tenn. Juris., Mentally Ill and Other Incompetents, § 8, p.
               323 (1984). The conservator cannot be allowed by law to have any
               inducement to neglect the interests of the conservatee. Freeman v.
               Martin, 181 Tenn. 470, 181 S.W.2d 745, 746 (1944). Therefore, it is
               generally held that a conservator violates his or her fiduciary duty by
               acquiring, by purchase or otherwise, the property of the conservatee.
               Id.; see also Lanius v. Donnell, 222 Tenn. 58, 432 S.W.2d 659
               (1968).

Id. at 377-378 (footnotes omitted).

        Appellee first asserts that the appellant does not have standing to contest the trial court’s
action, because the executor of the estate has no interest in the deceased’s real estate. While we do
not dispute that real estate vests in the successor immediately upon the death of deceased, either by
will or intestate succession, this is not the issue in this case. We are dealing with the approval of a
final accounting of a conservator.

       The conservator is charged with the duty of managing the ward’s estate to the best advantage.
See Grahl, 971 S.W.2d at 377. To this end, the conservator must acquire and take charge of the
ward’s assets. It is undisputed that, prior to her appointment as conservator, Betty Blackburn,

                                                  -7-
conveyed property to herself that belonged to the ward pursuant to a power of attorney. The trial
court properly ordered her, as conservator, to convey the property back to the ward as part of the
conservatorship estate. Upon the death of the ward, the duty devolved upon the ward’s personal
representative to approve or disapprove the final accounting of the conservatorship estate. The failure
of the conservator to comply with orders of the court and preserve the ward’s assets gives the executor
standing to dispute the final accounting and to appeal the court’s approval thereof.

        The appellee next asserts that the order of August 1997, requiring the Conservator to convey
the property back to the respondent-ward, was an interlocutory order subject to a revision at any time
and, thus, the provision in the final decree vacating that order was proper. In the alternative, appellee
asserts that if the August 1997 order was a final order, the trial court acted within its prerogative
pursuant to Tenn.R.Civ.P. 60.02 in setting aside that part of the order.

        We agree with appellee that if the 1977 order is an interlocutory order1, the trial court can set
it aside at any time prior to the entry of a final order. As to the appellee’s alternative assertion that
the trial court, if dealing with a final order, was correct in setting the order aside pursuant to
Tenn.R.Civ.P. 60.02, we have reservations, since no motion was filed for such relief. However, we
do not deem it necessary to decide whether the 1977 order was final or interlocutory.

         This appeal is from the final order approving the Conservator’s accounting which shows that
the Conservator did not take any steps to gather and protect the ward’s property. Particularly, on
August 11, 1997, the court ordered the Conservator to perform her duties as conservator, and she
totally ignored the court’s order from that time to the final accounting in January 2000. The trial court
indicated in the final order that the Conservator did not have notice of the court’s action in requiring
the return of the ward’s property, but we beg to disagree. The Conservator and her counsel clearly
had notice of the 1997 order when she made the required bond. Yet, for a period of over two years,
she took no action to contest the order and deliberately failed to perform her duty as conservator as
the court ordered her to do.

       The Conservator does not dispute that she, as a fiduciary under a power of attorney, conveyed
property of the grantor of the power of attorney to herself. In William H. Inman, Gibson’s Suits in
Chancery, § 22 (7th ed. 1988), it is stated:

                 In order to avoid any possible contention, and to leave absolutely no
                 room for casuistry, Courts of Equity consistently rule, without
                 exception, that no trustee shall in any case, or under any
                 circumstances, directly or indirectly, acquire any personal interest or
                 title in or to the trust property, or its proceeds, or make any personal
                 profits out of the trust, or by means of his trust character, without the
                 full consent of the beneficiary, given under circumstances that leave

        1
          T.C.A. § 35-50-1 05 (199 6) appe ars to make the order a ppointing a conservato r a final order for appeal
purposes by the conservator.

                                                        -8-
               no room whatever to question the perfect fairness and good faith of the
               whole transaction.

The author notes that this rule applies to the entire range of fiduciaries and, thus, would apply to an
attorney in fact. See id. § 22.

       From the early days of Tennessee jurisprudence, the duty of a fiduciary has been certain. As
this Court noted in Gillespie v. Branham, 337 S.W.2d 689 (Tenn.Ct.App. 1959):

                        No statement of the general rule can excel in strength and
               clarity the statement of Judge Caruthers on our Supreme Court (1855)
               when considering the duty that a trustee owed to the beneficiaries
               when dealing with trust property. The case is Tisdale v. Tisdale, 34
               Tenn. 596, and the Court said:

                                Thus circumstances, then, could he take to
                       himself, individually, the benefits of his purchase, to
                       the exclusion of his cotenants? Surely not. Nothing is
                       better settled in equity jurisprudence. It is one of the
                       canons of a court of equity that one who undertakes to
                       act for others cannot in the same matter act for himself.
                       Where confidence is reposed, duties and obligations
                       arise which equity will enforce. A trustee cannot throw
                       off the trust at pleasure, to the injury of the cestui que
                       trust. He will not be allowed to mix up his own
                       interests and affairs with those of the beneficiary. This
                       doctrine has its foundation not so much in the
                       commission of actual fraud, but in that profound
                       knowledge of the human heart, which dictated that
                       hallowed petition, ‘lead us not into temptation, but
                       deliver us from evil,’ and that caused the
                       announcement of the infallible truth, that ‘a man
                       cannot serve two masters.’ The right to sell and to buy
                       cannot exist in the same person, because of the
                       antagonistic interest in the two positions. Hence the
                       fairness or unfairness of the transaction, and the
                       comparison of price and value, or the existence or
                       absence of actual fraud, are not permitted to enter into
                       the consideration of the court. It is enough that the
                       relation of trustee and cestui que trust existed. This
                       appearing, the investigation is at an end, and the
                       doctrine applies with all its force. It is certainly too

                                                  -9-
                       late in the day to require the citation of authorities to
                       establish this doctrine.

Id. at 691.

       In the instant case, the undisputed breach of trust by the attorney in fact cannot be allowed to
stand. The Conservator’s failure to rectify the situation as ordered by the court taints the final
accounting to the extent that it should not have been approved.

        Accordingly, the order of the probate court is vacated, and this case is remanded to the probate
court for further proceedings consistent with this opinion. Costs of this appeal are assessed against
the appellee, Betty Blackburn.

                                               __________________________________________
                                               W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.

                                                 -10-