Court Opinion

ID: 9537397
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:17:35.534167+00
Date Added: 2024-06-11T14:56:37.014712
License: Public Domain

SUTIN, Judge (dissenting). I dissent with reference to the 1718 shares of stock in Standard Oil Company. On May 9, 1973 and December 16, 1974, Fletcher received a total of 1718 shares of stock of Standard Oil Company in his name alone. These shares were community property. On November 10, 1976, and November 22, 1976, by letter sent to transfer agents, Fletcher received the 1718 shares of stock in joint tenancy named with Neutie Fletcher, his wife. This recital on the certificates conferred a separate estate in the stock on each of them, the survivor to own all the stock. Fletcher learned that his wife had cancer in June of 1975, over a year before the transmutation occurred. On February 19, 1977, 3 months after the transmutation, Neutie executed her Will in which she bequeathed and devised to her sons by a previous marriage, the residue of her estate. Neutie died July 4, 1977. Fletcher had no knowledge of this Will until August, 1977, a month thereafter. The only testimony and evidence presented to establish the transmutation of the shares from community to joint tenancy was that of Fletcher. The record is silent as to the lawyer who prepared the Neutie Will. The contest of the ownership of the shares of stock began April 18, 1978. The silent witness, if available, would probably have knowledge of any joint tenancy plan testified to by Fletcher and whether Neutie approved the transmutation at the time of the execution of her Will or prior to her death. The record is silent as to whether Neutie believed the 1718 shares of Standard Oil were held as community property or in joint tenancy. There were extensive holdings in stocks but the Will is devoid of any mention of disposition. A reasonable inference can be drawn that Neutie believed all of the stocks were held as community property. If not, some mention would have been made of the fact that Standard Oil shares were held in joint tenancy. It is difficult for me to understand why the parties and their attorneys did not make available the knowledge of the silent witness or explain the reasons if such knowledge were unavailable. Fletcher’s testimony relative to conversations with Neutie, admitted over objection, were self-serving declarations. Regardless of its relevancy or materiality, this testimony was not competent evidence. Brown v. General Ins. Co. of America, 70 N.M. 46, 369 P.2d 968 (1962); Nichols v. Sefcik, 66 N.M. 449, 349 P.2d 678 (1960). His testimony in this respect cannot be relied upon to reach a fair result. Section 47-1-16, N.M.S.A. 1978 reads in pertinent part: An instrument . . transferring title to . personal property to two . . . persons as joint tenants shall be prima facie evidence that such property is held in joint tenancy and shall be conclusive as to purchasers or encumbrancers for value. In any litigation involving the issue of such tenancy a preponderance of the evidence shall be sufficient to establish the same. [Emphasis added.] This language means that the shares of stock received by Fletcher in joint tenancy were prima facie evidence thereof in the absence of litigation. As to purchasers or encumbrancers for value, it was conclusive that Fletcher held the shares in joint tenancy. But if the prima facie fact of joint tenancy is disputed in court, Fletcher must “establish the same” by a preponderance of the evidence. The instrument is not sufficient evidence to establish the joint tenancy absent evidence to the contrary. State v. Matamoros, 89 N.M. 125, 547 P.2d 1167 (1976) cited in the majority opinion is not applicable for the meaning of the language set forth in § 47-1-16. The question for decision is whether Fletcher established the joint tenancy by a preponderance of the evidence. The mode of acquisition of the stock in joint tenancy was by two letters signed and sent to transfer agents by Fletcher alone. Neutie never saw the letters. The stock certificates were prepared and executed in joint tenancy by Standard Oil without the knowledge or consent of Neutie. It is necessary, not merely that the certificates contain language creating such an estate. It must further appear that the certificates were accepted by Neutie whose property it was sought to bring within its terms, knowing that it contained that provision for joint tenancy. If not shown, then joint tenancy must be established by proper extrinsic evidence. To hold the mere insertion in the certificate of joint tenancy language would be binding on Neutie and deprive her and her heirs of her interest in the property would not only defeat the community property law in that instance but result in an absolute injustice to an innocent party. Fletcher had to prove that Neutie knew that the certificate so provided. Baldwin v. Baldwin, 50 Ariz. 265, 71 P.2d 791, 795 (1937), quoted In re Trimble’s Estate, 57 N.M. 51, 61, 253 P.2d 805 (1953). Our duty is to view these acts in light of § 40-2-2, N.M.S.A. 1978. It reads in pertinent part: Either husband or wife may enter into any engagement or transaction with the other . . respecting property . subject ... to the general rules of common law which control the actions of persons occupying confidential relations with each other. This statute does not state whether the engagement or transaction shall be oral or in writing. They were first empowered to make any contract they saw fit regarding their property. But, as shown ante, under § 40-3-8(A)(5), N.M.S.A. 1978, this subsequent statute provided for “a written agreement,” and we are now bound by that fact. There was no written agreement. Nevertheless, we shall point to the law that affects parties in a confidential relationship. The general rules of common law which control the actions of persons occupying confidential relations have been stated in many opinions. Beals v. Ares, 25 N.M. 459, 185 P. 780 (1919); Harrison v. Harrison, 21 N.M. 372, 155 P. 356, LRA 1916 E. 854 (1916); Trujillo v. Padilla, 79 N.M. 245, 442 P.2d 203 (1968); Iriart v. Johnson, 75 N.M. 745, 411 P.2d 226 (1965). The parties must exercise the utmost good faith. If one party secures an advantage over the other, the transaction is presumptively fraudulent, and where a fiduciary duty has been violated, the transaction is void as against public policy. The burden is on the husband in all transactions between them to show the fairness of the transaction, the adequacy of the consideration, the absence of fraud and undue influence, and that the wife had competent and independent advice in conferring benefits upon her husband. Beals, supra. A husband dealing with his wife concerning property rights is bound to absolute good faith. This means honesty of purpose and integrity of conduct with respect to this subject matter, without any culpable motive or intent. There must be an honest intention not to take any unconscionable advantage of another. Where the community status has attached to the property, it cannot be changed or affected by the act of one spouse to the prejudicé of another. “In short, a husband, by reason of the marital relation, is bound in his dealings with his wife to the highest and best of good faith, and as a consequence is obligated in such dealings not to obtain and retain any advantage over her resulting from concealment or adverse pressure, and he must, if he would avoid the presumption of undue influence emanating from the procurement of any advantage over her, make full and fair disclosure to her of all that she should know for her benefit and protection concerning the nature and effect of the transaction, or else he must deal with her at arm’s length and as he would with a stranger, all the while giving her the opportunity of independent advice as to her rights in the premises.” [Emphasis added.] In re Cover’s Estate, 188 Cal. 133, 204 P. 583, 588 (1922); Norris v. Norris, 50 Cal.App.2d 726, 123 P. 847 (1942). Under these rules, a transaction between husband and wife is watched with extreme jealousy and solicitude. If there be the slightest trace of undue influence or unfair advantage, redress will be given to the injured party. In fact, it is considered so suspicious as to cast the burden of proof upon the person who seeks to support it to show that he has taken no advantage of his influence or knowledge, and that the arrangement was fair and conscientious. Shapiro v. Shapiro, 424 Pa. 120, 224 A.2d 164 (1966); Bohn v. Bohn, 455 S.W.2d 401 (Tex.Civ.App.1970). In Bohn the court cited Beals as authority and said: Where a gift from the wife to the husband is attacked, the question of whether the wife had competent independent advice is deemed most important, and, in some jurisdictions decisive. [Authorities omitted]. These rules apply generally to cases where a confidential relationship is established by evidence. [Authorities omitted.] [Id. 406.] These rules were adopted because “[w]e recognize that the most dominant influence of all relations is that of the husband over the wife.” Griffin v. Griffin, 125 Vt. 425, 217 A.2d 400, 414 (1965). A one-half interest in community property owned by husband and wife is vested in the wife. Reed v. Nevins, 77 N.M. 587, 425 P.2d 813 (1967). Fletcher, with knowledge that his wife had cancer, transmuted her one-half interest in the Standard Oil stock from a vested community interest into joint tenancy. The only purpose reasonably deduced therefrom was to obtain full ownership of the stock to the exclusion of his wife’s sons. Fletcher had seen Neutie’s 1964 Will in which she devised and bequeathed the rest and remainder of her property of every kind and character to her sons. This bequest would have included her vested one-half interest in the Standard Oil stock. When Fletcher alone transmuted Standard Oil stock from community property to joint tenancy, he secured an advantage over Neutie who was without competent independent advice. Absent self-serving declarations, there is no competent, substantial evidence that Neutie intended to confer this benefit upon Fletcher. Fletcher’s conduct was presumptively fraudulent and was not made in good faith for the mutual benefit of both parties. This conclusion is reached from the fact that Fletcher knew that Neutie suffered with cancer and impending death. The law looks with extreme jealousy and suspicion upon a transaction between husband and wife without her free consent, affirmatively shown. Finally, we must construe § 40-3-8(A)(5) which reads: “Separate property” means: ****** • (5) property designated as separate property by a written agreement between the spouses . This provision is simple and clear. “Separate property” is a classification wherein property otherwise acquired or held can be declared to be “separate property” by written agreement of the spouses, in which agreement, the property is described and stated to be “separate property.” The purpose of this provision is to enable spouses to transmute property in writing to give it the definiteness and certainty that flows for the description and designation of the property as “separate property.” If Fletcher and Neutie had both signed the letters to the transfer agents and stated to them that the shares enclosed were held as community property, that the spouses agreed that the shares be issued to them in joint tenancy and to the survivor of them as “separate property,” the shares issued would fall within the (A)(5) classification. If the spouses agreed that one-half of the shares of stock be issued to each of them and designated thereon as “separate property,” the shares issued to each of them would fall within the (A)(5) classification. I agree with Bingaman, cited in the majority opinion, that “such agreements between the spouses must be in writing.” To hold otherwise would be to delete from (A)(5) the words “by a written agreement.” The explanation thereof in the majority opinion does not justify the deletion of those words. Section 40-2-2 and (A)(5) read together require an engagement or transaction between the spouses to be in writing and subject to the confidential relationship. Fletcher’s transmutation of the shares of stock of oil was not accomplished “by a written agreement.” This appeal should be reversed.