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In re Estate of Johnson

Supreme Court of Mississippi, En Banc

December 14, 2017

IN THE MATTER OF THE ESTATE OF DOROTHY JOHNSON, DECEASED, SHEILA WEST AND JENNIFER PATZIUS, CO-EXECUTRICES: SHEILA WEST, JENNIFER PATZIUS AND JESSICA McALISTER
v.
RON JOHNSON, BRAD JOHNSON AND MELANIE FOWLER

          DATE OF JUDGMENT: 09/02/2015

         TIPPAH COUNTY CHANCERY COURT HON. GLENN ALDERSON TRIAL JUDGE

          TRIAL COURT ATTORNEYS: B. SEAN AKINS JOE M. DAVIS

          ATTORNEY FOR APPELLANT: B. SEAN AKINS

          ATTORNEY FOR APPELLEE: JOE M. DAVIS

          BEAM, JUSTICE.

         ¶1. This appeal stems from a judgment of the Tippah County Chancery Court to set aside inter vivos gifts made by Sheila West.

         ¶2. Acting through a durable power of attorney granted by her mother, Dorothy Johnson, Sheila West removed her brother's, niece's, and nephew's names from certificates of deposit (CDs) originally created by Dorothy Johnson, and replaced them with her own name and the names of her two daughters. Sheila's brother, Ron Johnson, petitioned the chancery court to set aside these amendments as an improper transfer of an inter vivos gift. Following a trial on the matter, the chancellor found that Sheila did not overcome a presumption of undue influence in making what amounted to inter vivos gifts and thereby reverted ownership of the CDs to their original form. This Court finds that, because Dorothy Johnson retained an ownership interest in all of the CDs at issue, neither the original conveyance nor Sheila's subsequent transfers can be considered inter vivos gifts. Therefore, we find that the chancellor erred in his analysis of the issue.

         ¶3. However, also at issue in this matter is whether Sheila West engaged in self-dealing under the durable power of attorney granted to her by Dorothy Johnson. While initially pleaded but not scrupulously argued by the parties, the reach of Sheila's power as Dorothy's attorney-in-fact was discussed during trial, creating a detailed record for this Court to review. Finding that Sheila failed to overcome the burden of undue influence created by the confidential relationship between herself and Dorothy, we affirm the chancellor's decision to revert the CDs to their status prior to Sheila's 2010 amendments.

         FACTS AND PROCEDURAL HISTORY

         ¶4. In February of 2005, Dorothy Johnson inherited a large sum of money following her sister's death. Dorothy used the money to make changes to her existing investments and created new certificates of deposit at the People's Bank in Ripley, Mississippi. In March 2005, Dorothy purchased a five-year CD (#092247) valued at $50, 000. In May 2005, Dorothy purchased four additional five-year CDs. One CD was valued at $57, 370.11, while the other CDs were each valued at $50, 000. All five CDs were purchased as follows:

Number

Owners

Value

#092247

in the name of "Dorothy Johnson or Jennifer Patzius or Melanie Fowler."

$50, 000

#092553

in the name of "Dorothy Johnson or Sheila West or Ronny Johnson"

$57, 370.11

#092554

in the name of "Dorothy Johnson or Brad Johnson or Jessica McAlister"

$50, 000

#092555

in the name of "Dorothy Johnson or Melanie Fowler or Jennifer Patzius"

$50, 000

#092556

in the name of "Dorothy Johnson or Brad Johnson or Jessica McAlister"

$50, 000

         ¶5. On July 13, 2005, Dorothy privately met with an attorney who prepared her last will and testament and a durable power of attorney. Within the language of both documents, Dorothy ensured her investments were protected and that they would be distributed upon her death according to her specified beneficiaries. During the meeting, Dorothy assigned the power of attorney to her daughter Sheila but did not immediately deliver it.

         ¶6. Five years later, in the spring of 2010, Dorothy's health began to decline. Although sound of mind, Dorothy became bedridden and unable to perform routine tasks. At that time, Sheila was living with her mother and had assumed most of the responsibilities around the home. When Dorothy became more dependent on her daughter, she delivered the power of attorney to Sheila, making it easier for her to manage the day-to-day caregiving.

         ¶7. That same spring, the five CDs at issue matured. On August 23, 2010, Sheila visited People's Bank and used her authority as holder of Dorothy's power of attorney to effect changes to each of the above-mentioned CDs. Sheila's changes were as follows:

2005 No.

2005 Owners

VALUE

2010

No. 2010 Owners

#092247

in the name of “Dorothy Johnson or Jennifer Patzius or Melanie Fowler”

$50, 000

#99869

in the name of “Dorothy Johnson or Sheila West or Jennifer Patzius”

#092553

in the name of “Dorothy Johnson or Sheila West or Ronny Johnson”

$57, 370.11

#99870

in the name of “Dorothy Johnson or Sheila West or Jennifer Patzius”

#092554

in the name of “Dorothy Johnson or Brad Johnson or Jessica McAlister”

$50, 000

#99867

in the name of “Dorothy Johnson or Jessica McAlister or Sheila West”

#092555

in the name of “Dorothy Johnson or Melanie Fowler or Jennifer Patzius”

$50, 000

#99868

in the name of “Dorothy Johnson or Sheila West or Jennifer Patzius”

#092556

in the name of “Dorothy Johnson or Brad Johnson or Jessica McAlister”

$50, 000

#99866

in the name of “Dorothy Johnson or Sheila West or Jessica McAlister”

         ¶8. Dorothy died on October 14, 2010, and the petition for probate of last will and testament was filed one month later. Claiming that the will did not "represent Dorothy's intentions, " Ron Johnson-Dorothy's son and Sheila's brother-filed a petition to contest the validity of the will being probated on February 22, 2011.

         ¶9. During discovery, Ron learned of the CDs and the changes Sheila had made. He also discovered that the CDs were kept in Dorothy's bank lock box, to which only Dorothy, Sheila, and Sheila's daughters-Jennifer Patzius and Jessica McAlister-had access. While Ron and his children originally were listed on them, neither Ron, Melanie Fowler (his daughter) nor Brad Johnson (his son) viewed or had access to the certificates at any point. Ron testified that, prior to his petition, he was aware of the CDs and the fact that he and his children were listed on some of them as owners, but neither he nor his children were aware of the structure, maturity rate, or amount of each certificate.

         ¶10. Ron recognized that, although they were referenced in the will, the CDs were not assets of the estate. As a result, he abandoned his petition contesting the validity of the will and instead filed a petition against Sheila and Jennifer to set aside inter vivos gifts. He later amended the petition to include Sheila's daughter, Jessica McAlister, as a respondent, and to join his children as petitioners.

         ¶11. Trial was held on June 25, 2015, during which the chancellor found that Sheila and her daughters had failed to present any evidence to overcome a presumption of undue influence. Thereafter, the chancellor set aside the changes to the CDs as improper amendments to an inter vivos gift and ordered them be returned to their original 2005 form of ownership. He then required they be distributed in equal shares pursuant to that ownership, and in accordance with Item IV of Dorothy's will, which stated:

I own six Certificates of Deposit, each of which contain my name and two other names. I desire that those Certificates of Deposit be divided equally, share and share alike, between the signatories listed on each of those Certificates of Deposit.

         Aggrieved, Sheila and her daughters filed a Rule 59 motion to amend the judgment or, in the alternative, for new trial. The court denied the motion.

         ¶12. On December 23, 2015, Sheila and her daughters timely filed a notice of appeal. On February 18, 2016, the chancellor signed an order which, once entered, provided the appellants five days to post a supersedeas bond in the amount of $160, 856.32. Understanding that, regardless of the appeal's outcome, she and her daughters would receive at least half of the recognized CD values ($128, 685.05 to be divided among the three of them), Sheila requested that their half of the CDs in dispute be used as collateral for the bond. The chancellor rejected Sheila's collateral assignment and insisted the bond be posted in cash by March 4, 2016. Sheila and her daughters failed to post the bond and the chancellor required that his original order be carried out, disbursing the CDs, as directed in their 2005 form.

         ¶13. Sheila and her daughters now petition this Court, raising issues concerning inter vivos gifts, the appropriate burden of proof, the distribution of the CDs and the supersedeas bond requirements. We find that the case hinges on the questions of (1) whether the transfers in 2005 and 2010 can be considered inter vivos gifts and (2) whether Sheila abused her authority under the power of attorney by removing Ron, Brad, and Melanie from the original CDs and replacing their names with Jennifer, Jessica, and herself. Additionally, we address the question raised by the appellants regarding whether the chancellor abused his discretion by failing to approve a supersedeas bond as requested by Sheila and her daughters, and thereafter ordering the immediate distribution of the certificates of deposit. Finding that Sheila had exceeded the scope of the power of attorney and that the chancellor properly reverted the CDs to their original form, distributing them according to Dorothy's will, we affirm the chancellor's judgment.

         STANDARD OF REVIEW

         ¶14. This Court will not disturb the findings of a chancellor when supported by substantial credible evidence unless the chancellor abused his or her discretion, was manifestly wrong, clearly erroneous, or an erroneous legal standard was applied. Sanderson v. Sanderson, 824 So.2d 623, 625-26 (Miss. 2002). Likewise, we will not reverse the chancellor's decision if his findings are considerably supported by evidence in the record. Wright v. Roberts, 797 So.2d 992, 997 (Miss. 2001). We employ the de novo standard when reviewing questions of law. Russell v. Performance Toyota, Inc., 826 So.2d 719, 721 (Miss. 2002).

         DISCUSSION

         I. Inter Vivos Gifts

         ¶15. In his chancery court petition, Ron claimed Sheila improperly used the power of attorney to withdraw the principal and interest from each of the five CDs and create new CDs naming a combination of Dorothy, Sheila, Jennifer, and Jessica as owners. Ron argues that Sheila-acting under her mother's name-created an inter vivos gift to herself and her daughters, thereby appropriating funds belonging to Ron, Brad, and Melanie. He echoes this argument in his brief before the Court, elaborating on the claim and indicating that Sheila did not carry her burden to prove that this inter vivos gift was valid. However, we need not address the validity of the gift, as we find that no gift was made under the law.

         ¶16. It is well-settled that to show that an inter vivos gift was given, a party must prove five elements by clear and convincing evidence:

(1) that the donor was competent to make a gift;
(2) that the donation was a voluntary act and the donor had donative intent;
(3) that the gift must be complete and not conditional;
(4) that delivery was made; and
(5) that the gift was irrevocable.

In re Estate of Laughter, 23 So.3d 1055, 1066 (Miss. 2009) (citing In re Estate of Ladner, 909 So.2d 1051, 1054 (Miss. 2004)). However, we also recognize that "[d]elivery and relinquishment of control are requisites of an inter vivos gift." In re Estate of Laughter, 23 So.3d at 1066. Delivery-either actual or constructive-is an essential element to an inter vivos gift's validity. Thomas v. Eubanks' Estate, 358 So.2d 709, 713 (Miss. 1978). Arguably, the foundational element of a valid inter vivos gift is its unconditional delivery, "in such manner that the donor retains no control or dominion over it." In re Estate of Laughter, 23 So.3d at 1055.

         ¶17. Chief Justice Whitfield observed in 1901 that, as it relates to inter vivos gifts, "[c]onveying all is evidence of absence of hope of recovery, but also evidence that because of it, the party means the gift to take effect at once, unconditionally and irrevocably." Wilson v. Jourdan, 29 So. 823, 824 (Miss. 1901). Eighty-five years later, we reiterated that rule, noting that an inter vivos gift cannot be revocable or conditional. See Carter v. State Mut. Fed. Sav. & Loan Ass'n, 498 So.2d 324, 327 (Miss. 1986). There must be delivery of the property and the donor must surrender all dominion over it. Id. (see also Gidden ...


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