In re Guardianship of Spinnie
2016 IL App (5th) 150564
| Ill. App. Ct. | 2016Background
- In 2007 Agnes Spinnie executed a statutory power of attorney for property and for health care, naming Patricia Gooch as attorney-in-fact; shortly before she received a large settlement (> $400,000).
- Agnes made numerous gifts and transfers of money and purchases for family members between 2007–2013; many checks were written payable to cash.
- In 2013 Richard Ervin petitioned for guardianship and to terminate Gooch’s agency; Agnes was later adjudicated a disabled adult and Ervin was appointed guardian.
- Ervin filed citation petitions seeking recovery/explanation for about $358,939 in funds not produced; Gooch defended that transfers to her were gifts/loans and that Agnes was competent and intended the transfers.
- The trial court found a presumption of fraud from the power of attorney and entered judgment against Gooch for $31,733.19.
- The appellate court reversed, holding the presumption of fraud had been overcome by clear and convincing evidence that transfers were voluntary gifts and not the product of undue influence or fraud.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the execution of a power of attorney for property creates a presumption that later transfers to the agent are fraudulent | Ervin: Power of attorney created fiduciary duty; transfers to Gooch are presumed fraudulent | Gooch: Many transfers were gifts executed by Agnes personally, not by agent via POA, so presumption should not apply | Held: Execution of POA creates fiduciary relationship; transfers within scope give rise to presumption of fraud |
| Whether Gooch rebutted the presumption of fraud | Ervin: Presumption not overcome; no clear convincing evidence of good faith | Gooch: Presented evidence that Agnes was competent, repeatedly said she could "do what she wants" with money, and treated family broadly; many transfers were signed by Agnes herself | Held: Gooch met burden by clear and convincing evidence; presumption ceased to operate |
| Whether trial court’s award was supported by the evidence and limited by statute of limitations issues | Ervin: Judgment amount reflects transfers to Gooch | Gooch: Judgment included transfers prior to POA and was unsubstantiated; five-year limits apply | Held: Appellate court found trial court’s amount unsubstantiated and some transfers predated POA; reversed and remanded for further proceedings |
| Whether transactions were the product of undue influence or actual fraud | Ervin: Fiduciary status and circumstances allow inference of undue influence | Gooch: No evidence of coercion; gifts consistent with transfers to other relatives; Agnes acted voluntarily | Held: No evidence of undue influence or fraud; transactions entered into knowingly by Agnes and therefore valid |
Key Cases Cited
- Deason v. Gutzler, 251 Ill. App. 3d 630 (Ill. App. Ct.) (power of attorney creates fiduciary relationship)
- Clark v. Clark, 398 Ill. 592 (Ill.) (transactions benefiting an agent are presumed fraudulent absent clear showing of fairness and knowledge)
- Jones v. Washington, 412 Ill. 436 (Ill.) (presumption of fraud from fiduciary relationship rebuttable by clear and convincing evidence)
- Franciscan Sisters Health Care Corp. v. Dean, 95 Ill. 2d 452 (Ill.) (effect and operation of rebuttable presumptions)
- In re Estate of Pawlinski, 407 Ill. App. 3d 957 (Ill. App. Ct.) (amount of evidence required to overcome presumption varies with strength of supporting facts)
- Lemp v. Hauptmann, 170 Ill. App. 3d 753 (Ill. App. Ct.) (presumption of fraud overcome only by clear and convincing evidence)