Fields v. BrackneyFields v. Brackney
Rendered on the 11th day of March, 2011.
LEE C. FALKE, Atty. Reg. No. 0003922 and ADAM R. WEBBER, Atty. Reg. No. 0080900, 30 Wyoming Street, Dayton, Ohio 45409 Attorneys for Plaintiffs-Appellees Shirley Fields, Melva Burdge, Jean Richards
DAVID C. GREER, Atty. Reg. No. 0009090 and GRETCHEN M. TREHERNE, Atty. Reg. No. 0074376, 400 National City Center, 6 N. Main Street, Dayton, Ohio 45402 Attorneys for Defendant-Appellant George L. Brackney
FROELICH, J.
{¶ 1} George L. Brackney appeals from a judgment of the Montgomery County Court of Common Pleas, Probate Division, which held that certain assets held in a joint and survivorship account with his father at his father‘s death would be included in the father‘s
I
{¶ 2} George W. Brackney (“George W.“) and his wife, Charlotte, had five children: Jean, Robert, Shirley, George L., and Melva.
{¶ 3} In 1992, George W. and Charlotte executed wills naming each other as primary beneficiaries and, in the event that either was not survived by his or her spouse, naming each of their children as equal beneficiaries. They also executed a durable power of attorney naming their son, George L. Brackney (“George L.“), as their attorney-in-fact.
{¶ 4} In 2001, George L. started to assist his parents with managing their bank accounts and investments. In 2002, George W. and Charlotte held a joint and survivorship account at Lebanon Citizen‘s National Bank (“LCNB“), valued at approximately $110,000; in April 2002, they added George L. to this joint and survivorship account. The power of attorney was not used to effectuate this change in the account.
{¶ 5} Over the next few years, acting pursuant to the power of attorney, George L. liquidated his parents other assets, which consisted primarily of their home, certificates of deposit, and bonds; he deposited these funds into the joint and survivorship account at LCNB. The LCNB account grew to approximately $550,000.
{¶ 6} Charlotte died in April 2005 at the age of ninety-eight. In August 2005, George L. closed the LCNB account and transferred those funds into a joint and survivorship account in his and his father‘s names at KeyBank.
{¶ 7} After Charlotte died, George W. changed his will. Under the new will, George W. bequested “three percent (3%), up to a maximum of Twelve Thousand Dollars
{¶ 8} In 2006 and 2007, George L. made two sets of gifts of his father‘s assets, under the power of attorney, to himself, his wife, and his two children; each set of gifts totalled $48,000. None of George W.‘s other children or grandchildren received gifts during this period.
{¶ 9} George W. died in December 2007 at the age of ninety-nine. On May 1, 2008, George L. presented his father‘s will in the probate court and was appointed as executor. George L. took a $50,000 “advance” from the estate, from which he paid $48,000 ($12,000 per sibling) to his three surviving siblings and to Robert‘s children. He filed an inventory of the estate totaling $475,303.69 in intangible personal property. The siblings filed exceptions to the inventory and requested an accounting, claiming that the inventory did not include all of George W.‘s assets and that George L. had improperly transferred assets using his power of attorney.
{¶ 10} On September 23, 2008, George L. filed an Amended Inventory and Appraisal, which indicated that there were no assets in the probate estate. The probate court “inadvertently” approved this inventory on October 27, 2008, but subsequently withdrew its approval.1 On July 23, 2009, a hearing was held before the magistrate on the exceptions to
{¶ 11} On October 6, 2009, the magistrate filed a decision holding that the siblings’ exceptions were overruled and that the Amended Inventory and Appraisal was approved. Specifically, the magistrate found that George L. had liquidated assets and deposited those funds into the joint and survivorship account “at his father‘s direction” and that survivorship rights are presumed to have been intended when a joint and survivorship account is created. The magistrate also concluded that George W. had been “fully aware of the actions of his son regarding the funds transferred from [LCNB] to KeyBank.” The magistrate did not expressly address the issue of undue influence.
{¶ 12} The siblings filed objections to the magistrate‘s decision, claiming that it ignored the “realities of ownership” regarding the estate‘s assets and incorrectly applied the law.
{¶ 13} The probate court filed an Entry Rejecting the Magistrate‘s Decision. Although the probate court agreed with the magistrate that the use of a joint and survivorship account is typically presumptive evidence of the depositor‘s intention to transfer the funds in the account to the survivor at death, it limited the application of that principle to funds the decedent knew to be in the account. In other words, the probate court concluded that, where additional funds had been transferred to the joint and survivorship account by the beneficiary using a power of attorney, “there is a suspicion that the transactions were a result of undue
{¶ 14} On February 3, 2010, George L. filed a “Fiduciary/Estate‘s Notice of Appeal,” which was signed by his attorney as “Attorney for Defendants, George L. Brackney As Executor and George L. Brackney, Individually.” However, on August 5, 2010, George L. moved to voluntarily dismiss his appeal as executor of the estate and to proceed only in his individual capacity. We sustained this motion on August 16, 2010. Thereafter, George L. filed two briefs. In a brief styled “Brief of the Appellant George L. Brackney,” he raises four assignments of error in his individual capacity as a beneficiary of the estate; in a brief styled “Brief of the Appellee, George Brackney, As Executor of the Estate,” he purports to respond to the assignments raised in his other brief by asserting that the probate court‘s ruling had “no bearing on the executor‘s ability to act in accordance with the law of Ohio,” that the “size of the estate ha[d] no bearing on the duty of the executor,” and that he “will perform his duties based on the rulings of this Court and as required by law.” The siblings‘/ appellees’ brief primarily addresses the arguments that George L. raises in his individual capacity, although it
II
{¶ 15} The first two assignments of error raised in George L.‘s brief relate to the appropriate burden of proof, and we will address them together.
{¶ 16} “THE PROBATE COURT ERRED WHEN IT APPLIED AN INCORRECT STANDARD TO THE CHALLENGE TO THE INVENTORY OF THE ESTATE OF GEORGE W. BRACKNEY.”
{¶ 17} “THE PROBATE COURT ERRED IN FINDING THAT THE FUNDS IN A JOINT AND SURVIVORSHIP ACCOUNT SHOULD BE CONSIDERED PROBATE ESTATE ASSETS.”
{¶ 18} George L. claims that the siblings should have had the burden to prove undue influence by clear and convincing evidence when they challenged his inventory of the estate in the probate court. George L. also argues that, even if he had the burden to prove the absence of undue influence in his handling of his father‘s assets, he did establish that he had acted at the direction and with the knowledge of George W. in transferring George W.‘s assets into the joint account. The siblings contend that the probate court properly placed the burden of proof on George L. to show that he had not exerted undue influence, because of his fiduciary relationship with George W., and that he failed to show that the transfers in question were not the product of undue influence.
{¶ 19} The Supreme Court has held that “the opening of a joint and survivorship account in the absence of fraud, duress, undue influence or lack of capacity on the part of the decedent is conclusive evidence of his or her intention to transfer to the surviving party or
{¶ 20} The dispute in this case centers around the use of the power of attorney executed by George W. and Charlotte Brackney in favor of their son, George L. “The holder of a power of attorney has a fiduciary relationship with his or her principal.” In re Scott (1996), 111 Ohio App.3d 273, 276. “A ‘fiduciary relationship’ is one in which special confidence and trust is reposed in the integrity and fidelity of another and there is a resulting position of superiority or influence, acquired by virtue of this special trust.” Stone v. Davis (1981), 66 Ohio St.2d 74, 78, quoting In re Termination of Employment (1974), 40 Ohio St.2d 107, 115. A fiduciary owes the utmost loyalty and honesty to his principal. Testa v. Roberts (1988), 44 Ohio App.3d 161, 165. The law is zealous in guarding against abuse of such a relationship. In re Termination of Employment, 40 Ohio St.2d at 115.
{¶ 21} Any transfer of property from a principal to his attorney-in-fact is viewed with some suspicion. Studniewski v. Krzyzanowski (1989), 65 Ohio App.3d 628, 632. Self-dealing transactions by a fiduciary are presumptively invalid. In re Estate of Cunningham (Oct. 25, 1989), Knox App. No. 89-CA-10. In such a case, the attorney-in-fact is obligated to demonstrate the fairness of his conduct. In re Scott, 111 Ohio App.3d at 276. See, also Hoopes v. Hoopes (April 9, 2007), Stark App. No. 2006 CA 220, ¶38-39.
{¶ 23} Case required us to weigh the rebuttable presumption of survivorship rights in a joint and survivorship account against the suspicion with which we must view transfers of money under a power of attorney for the attorney-in-fact‘s benefit. We acknowledged the Wright presumption in favor of survivorship rights, but we further stated:
{¶ 24} “[W]here additional funds were transferred into the [survivorship] accounts under a power of attorney, we hold that the Wright presumption applies only to those funds that Case [the decedent] knew to be in the survivorship accounts. The presumption does not apply to additional funds that [the niece], as an attorney-in-fact who was also the beneficiary of the survivorship accounts, transferred into the survivorship accounts, unless the propriety of such transfers can withstand exacting scrutiny.
{¶ 25} “***
{¶ 26} “In a fiduciary relationship, the person who holds the power bears the burden of proof on the fairness of a transaction between the agent and the principal. *** In
{¶ 27} At the hearing before the magistrate, George L. admitted that he had not had an ownership interest in his parents’ home, the certificates of deposits, or the bonds that he had liquidated and transferred into the joint and survivorship accounts at LCNB and, subsequently, at KeyBank. He claimed that he made these transfers under his father‘s
{¶ 28} George L. also testified about two “gift letters,” dated June 2006 and June 2007 respectively and signed by his father, that instructed George L. to transfer $12,000 each to himself, his wife, and his two daughters. George L. effectuated these gifts; none of siblings or George W.‘s other grandchildren received such gifts. George L.‘s sister, Jean, testified that her father had been very “tight” with his money and that neither his children nor his grandchildren had ever received birthday gifts of more than a dollar or two. Jean testified that her father would never have given such substantial gifts. She also testified that, in her opinion, George W. would not have singled out some members of the family for such gifts; he would have treated all equally.
{¶ 29} George L. suggests that the probate court erred in ignoring the magistrate‘s findings about the credibility of the evidence because the magistrate personally observed
{¶ 30} Although magistrates “truly do the ‘heavy lifting,‘” Quick v. Kwiatkowski, Montgomery App. No. 18620, 2001-Ohio-1498, “magistrates are neither constitutional nor statutory courts. Magistrates and their powers are wholly creatures of rules of practice and procedure promulgated by the Supreme Court. Therefore, magistrates do not constitute a judicial tribunal independent of the court that appoints them. Instead, they are adjuncts of their appointing courts, which remain responsible to critically review and verify the work of the magistrates they appoint. ***
{¶ 31} The probate court concluded that George L. “did not present sufficient evidence to rebut the presumptions of undue influence in transferring funds into the [LCNB] account, or in opening and funding the KeyBank account,” noting that “the only evidence presented by George L. that specifically addressed the issues was his own self-serving
{¶ 32} The first and second assignments of error are overruled.
III
{¶ 33} George L.‘s third assignment of error states:
{¶ 34} “THE PROBATE COURT ERRED IN FAILING TO FIND THAT THE ACCEPTORS WAIVED AND RELINQUISHED THEIR RIGHTS TO OBJECT TO THE INVENTORY BY ACCEPTING SETTLEMENT FUNDS.”
{¶ 35} George L. contends that he paid each of his siblings $12,000 from the joint and survivorship account pursuant to his father‘s wishes, as expressed in his Will, even
{¶ 36} The checks that George L. wrote to his siblings, niece, and nephew included the notation “Will payment settlement,” but the checks were written before the estate was opened and before George L. was appointed to serve as executor. Although a memo line on a check may serve as evidence of an enforceable agreement, see, e.g., Mantia v. House, 178 Ohio App.3d 763, 2008-Ohio-5374, a court is not required to conclude that such a memo establishes an enforceable agreement between the parties. Moreover, the probate court‘s judgment from which George L. appeals did not address the validity of the Will and, according to the siblings, proceedings on this issue are pending in the probate court. For all of these reasons, the trial court could have reasonably rejected George L.‘s argument that the siblings waived any claim against the estate or any challenge to his actions as attorney-in-fact by accepting these checks.
{¶ 37} The third assignment of error is overruled.
IV
{¶ 38} George L.‘s fourth assignment of error states:
{¶ 39} “THE PROBATE COURT LACKED JURISDICTION TO DECIDE ISSUES CONCERNING A JOINT AND SURVIVORSHIP ACCOUNT.”
{¶ 40} George L. argues that the probate court “lacked jurisdiction” over the joint and
{¶ 41} In our view, there is no question that the probate court has jurisdiction to hear and determine an action that involves a power of attorney and to determine whether an attorney-in-fact properly placed a decedent‘s assets in a joint account.
{¶ 42} The fourth assignment of error is overruled.
V
{¶ 43} The siblings raise one additional issue in their brief. They contend2 that George L. “cannot appeal in his capacity as an individual beneficiary because he is also the Executor of the Estate.” The siblings assert that George L. cannot sue the estate in his individual capacity because he is “effectively su[ing] himself;” they claim that, as the
{¶ 44} Although we agree with the Eighth District that an executor should not be permitted to sue the estate in his capacity as a beneficiary because of the inherent conflict of interest, we are also cognizant of the fact that the legislature has set forth a procedure for the removal of executors in the probate court.
{¶ 45} The siblings did not ask the probate court to remove George L. as the executor, but they now seek to have his appeal dismissed because George L., ”the individual, is without standing to bring this appeal.” (Emphasis in original.) Although there are procedural anomalies in this case – such as George L.‘s failure to pursue his interest
VI
{¶ 46} The assignments of error are overruled.
{¶ 47} The judgment of the probate court will be affirmed.
GRADY, P.J. and FAIN, J., concur.
Copies mailed to:
Lee C. Falke
Adam R. Webber
David C. Greer
Gretchen M. Treherne
Hon. Alice O. McCollum