980 N.W.2d 662
S.D.2022Background
- Susan Markve (née Johnson) and Kenneth Markve married in 2013 and had a prenuptial agreement preserving each spouse’s separate property; Susan held a Hot Springs house in a revocable living trust.
- In March 2014, while undergoing treatment for glioblastoma, Susan executed (1) a quitclaim deed adding Ken as joint tenant with right of survivorship for the Hot Springs home and (2) a general power of attorney naming Ken as her agent; both documents were prepared by attorney Brian Hagg.
- Medical records from February–April 2014 show episodes of delirium, memory loss, somnolence, and disorientation; a psychiatrist retained by the Estate opined Susan likely lacked decision-making ability in March 2014.
- The Estate alleged Susan lacked capacity and that Ken unduly influenced her and misused her funds (forensic accountant Braun concluded roughly $415,679 of Susan’s funds were unaccounted for); Ken moved for summary judgment and relied in part on Hagg’s affidavit that Susan was competent when she signed.
- The circuit court granted summary judgment for Ken on all claims; the South Dakota Supreme Court affirmed in part, reversed in part, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Estate) | Defendant's Argument (Ken) | Held |
|---|---|---|---|
| Capacity to execute deed and POA | Susan lacked contractual and testamentary capacity in March 2014 due to delirium and cognitive impairment | Hagg’s affidavit and lay-witness statements show Susan was competent and knew her intentions | Genuine dispute of material fact exists; summary judgment improper as to capacity — reversed in part and remanded |
| Undue influence | Ken, as spouse and confidant who arranged counsel and benefited, exerted undue influence over a susceptible Susan | No evidence of wrongful persuasion; spouse’s presence and intent to provide for Ken show no undue influence | Material factual disputes (confidential relation, opportunity, susceptibility, result) preclude summary judgment — reversed in part and remanded |
| Statutory fraud (trust statutes) | Ken’s conduct with trust assets amounted to statutory fraud under SDCL chapter 55-2 | Chapter 55-2 applies only to trustees; Ken was not a trustee | Summary judgment for Ken affirmed (statutory scheme inapplicable) |
| Common-law fraud | Ken concealed and misrepresented financial matters to induce transfers | No specific false statement, intent to deceive, or proven reliance by Susan | Summary judgment for Ken affirmed (fraud elements not pleaded/supported) |
| Conversion of funds / breach of fiduciary duty | Forensic accounting shows substantial unexplained transfers and cash withdrawals; Ken breached fiduciary duty as agent and converted assets | Ken accounted for expenditures and turned over property/accounts; explanations defeat conversion claim | Disputed facts about depletion, transfers, and self-dealing preclude summary judgment on conversion-of-funds and fiduciary-duty claims; summary judgment affirmed for household goods and coin-collection claims where Estate failed to raise material factual dispute |
| Implied/constructive trust | Constructive trust appropriate if deed/POA invalid or assets obtained by undue influence/fraud | No wrongful act; title proper | Remedy depends on resolution of capacity/undue influence/fiduciary/conversion issues; cannot decide on summary judgment — remanded |
Key Cases Cited
- Stockwell v. Stockwell, 790 N.W.2d 52 (S.D. 2010) (lifetime real-estate transfers may be testamentary in nature and evaluated under testamentary-capacity rules)
- In re Estate of Pringle, 751 N.W.2d 277 (S.D. 2008) (confidential-relationship/undue-influence principles and presumptions)
- First State Bank of Sinai v. Hyland, 399 N.W.2d 894 (S.D. 1987) (capacity-to-contract standard: must understand nature/ultimate effect of transaction)
- In re Estate of Tank, 938 N.W.2d 449 (S.D. 2020) (undue-influence contests are fact-intensive and unsuitable for summary judgment where disputes exist)
- Bienash v. Moller, 721 N.W.2d 431 (S.D. 2006) (powers of attorney construed strictly; self-dealing not allowed absent clear authorization)
- Chem-Age Indus. v. Glover, 652 N.W.2d 756 (S.D. 2002) (fraud pleading particularity and conversion elements)
- In re Estate of Perry, 582 N.W.2d 29 (S.D. 1998) (invalid transfers for lack of capacity are void; constructive trust principles)
- Estate of Lien v. Pete Lien & Sons, Inc., 740 N.W.2d 115 (S.D. 2007) (summary judgment standard)