A recent Stone County, Mississippi, probate case involved allegations that the estate administrators were coerced into signing an agreed order. Eldon Ladner and his daughter served as co-administrators of the Estates of Lula Mae Davis and John Davis.  Eldon also served as conservator of the Estate of Daniel M. Thompson and Louise Thompson, deceased, and as administrator of the Estate of Daniel Thompson.

Alberta O’Neill didn’t like the way Eldon and his daughter were handling the various estates.  She filed documents asking for their removal and requesting an accounting of each estate.  The court ordered the accounting, which the administrators provided.  There seems to have been some information missing, though, due to their attorney’s closing of his law practice.

The case eventually went to trial, but the court continued the proceeding to a later date.  In the interim, the parties reached an agreed order, which was approved by the chancery court.  The administrators then changed their mind and asked the court to set aside the agreed order.  The administrators claimed that the threat of criminal charges had coerced them into signing the agreed order.

The administrators’ duress claim was somewhat novel.  They claimed that the duress was caused by their attorney when the attorney gave them advice regarding the matter.  The attorney apparently informed the administrators of the possibility of criminal action, loss of job, and doomed political aspirations.  The administrators claimed that this advice created so much fear as to overcome their free will and coerce them into signing the agreed order.

After a hearing, the Stone County Chancery Court determined that the administrators had signed the agreed order by their own free will and refused to set it aside.  On appeal, the Supreme Court had to determine whether judgment was the product of duress or whether it was executed voluntarily.

Normal stress associated with signing an agreement is not duress.  For an agreement to be set aside, the duress must have been so severe as to override the volition of the party to the agreement.  Applying this standard to the case, the Supreme Court did not find sufficient evidence that the administrators were under duress when they signed the agreement.

In re Estate of Davis v. O’Neill, 2009-CA-01025-SCT (Aug. 19, 2010).

Family Status Does Not Always Result in Confidential Relationship

Over the past few months, I have highlighted the role that confidential relationships play in undue influence cases (see here, here, here, and here, to name a few).  But does a family relationship automatically give rise to a confidential relationship?  In a recent Pearl River County probate case involving a father’s claim of undue influence by his daughter, the Mississippi Court of Appeals held that a family relationship does not necessarily equal a confidential relationship.

In 1992, Bordman Humphrey signed over two pieces of property to his daughter Jeanette Smith. His other daughter, Nadine Stevens, with whom he was living, drew up the deeds. A year later Humphrey initiated suit against Jeannette, claiming that his daughter procured the deeds to the property by fraud and undue influence. He argued that he had only intended for Jeanette to have title to the property temporarily in order to protect it from his daughter Wilda, who he believed was trying to take the property. He claimed that Jeannette was supposed to re-convey the property to him once he was mentally able to tend to his own business affairs.

The suit was drawn out for four years before Humphrey voluntarily dismissed the action against Jeannette.  But in 1999, two years after dismissing the initial suit, Humphrey was under a conservatorship and Nadine (who had originally drawn up the deeds) was the appointed conservator.  While under the conservatorship, Humphrey refiled his suit against his daughter to get his property back. By this time, Jeannette had sold the property.  Humphrey sought to recover the property both from Jeannette and the purchasers.

Because Humphrey had dismissed the suit already, the purchasers claimed that Humphrey was barred from re-instituting the lawsuit.  He claimed that the dismissal was void because he was not of sound mind when he filed it. The case was remanded to the lower court. While the case was on remand, Humphrey and Jeannette died.  Nadine continued the suit as executor of Humphrey’s estate.

The lower court held that Humphrey was not of sound mind at the time of the voluntary dismissal and set it aside.  This brought the issue of undue influence back to the forefront.  Nadine asserted that Jeannette abused their confidential relationship by exerting influence over him to coerce him into signing over the property to her. The Pearl River County probate (chancery) court disagreed, dismissing Nadine’s claims of undue influence and lack of testamentary capacity.  Nadine appealed on behalf of Humphrey’s estate.

On appeal, the issue was whether the Pearl River County chancellor erred in finding that there was no undue influence involved.  Nadine argued that the transfer was presumptively invalid because there was a confidential relationship between Humphrey and Jeannette.  But the Court of Appeals disagreed, upholding the Pearl River County chancellor’s determination that the transfer was not the product of undue influence.

The Court of Appeals  applied the well-established rule that a confidential or fiduciary relationship exists whenever there is a relationship between two people in which one person is in a position to exercise dominant influence upon the other because of the latter’s dependency on the former arising either from weakness of mind or body, or through trust.[1] But the family relationship, standing alone, does not create a confidential relationship.  While Humphrey was at times weak and dependent, he was dependent on Nadine, not Jeannette.  Although both daughters were close to their father, Nadine had the closer relationship.  And it was Nadine that had actually prepared the deeds.

Although Nadine reasserted Humphrey’s claim that the deeds were intended for safekeeping, there was nothing on the face of the deeds to support that contention.  The deeds simply contained nothing to indicate that the conveyance was anything but an outright transfer.

The Appellate court affirmed the ruling of the lower court, holding that there was no fraud or undue influence in the procurement of the deeds.

Stevens v. Smith, 2007-CA-01664-COA (March 3, 2009)

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[1] Hendrix v. James, 421 So. 2d 1031, 1041 (Miss. 1982) (overruled on other grounds).

As we discussed in What is Undue Influence?, many undue influence cases turn on whether or not there is a “confidential relationship.”  And while most of these cases involve will contests, the doctrine of undue influence can be used to set aside lifetime transfers.

A recent Forrest County probate case involved a beneficiary designation that was set aside on grounds of undue influence.  In the case, four siblings petitioned the court to return a beneficiary designation to its original state before their sister had allegedly exercised undue influence over their mother.

Helen Simpson passed away at age 86 in March of 2005. She left behind five children, Alfred, Audrey, Kathryn, Olivia, and Willie. She also left behind four accounts at her local bank that were payable on death (POD) to named beneficiaries. When the accounts were originally set up, all five children were the beneficiaries on each account. By the time of Mrs. Simpson’s death, Audrey was the only beneficiary named on the accounts.

After her mother’s death, Audrey petitioned the court to have the funds in the accounts distributed to her. This normally wouldn’t have been necessary, but Willie and Kathryn had been appointed conservators of Mrs. Simpson’s in February 2005 and had frozen her assets. The bank and the remaining children joined the action regarding the accounts in order to get a judicial determination of whether the beneficiary designation was enforceable.

As is often the case with undue influence situations, the case turned on the finding of a confidential relationship.  A presumption of undue influence will extend to any confidential relationship where one person becomes dependent on another in some capacity.  Once the presumption arises, the burden of disproving the undue influence falls upon the person allegedly benefiting from the undue influence.  In other words, once the confidential relationship is found, it is up to the alleged influencer to disprove undue influence.

The Forrest County Probate (Chancery) Court had no trouble finding a confidential relationship between Audrey and her mother at the time her mother changed the beneficiaries on the account.  Audrey had pushed her other siblings out of her mother’s life and served as her mother’s sole caregiver. Audrey visited her mother on a daily basis and drove her to doctor’s appointments. And her mother was of advanced age, being 85 when she made the beneficiary changes.

Once the confidential relationship was established, it was up to Audrey to prove that the change in beneficiary designations were not the product of undue influence.  To do this, Audrey had to prove that she had not exerted undue influence upon her mother to change the beneficiary designation. And Audrey didn’t put up much of a case, responding simply that there was no reason to discuss the issue. The only evidence supporting Audrey was her testimony that it was her mother’s idea to change the beneficiaries and that Audrey did not pressure her mother to do so. But this evidence alone did not rebut the presumption of undue influence.

The Mississippi Court of Appeals affirmed the lower court’s decision.  Because the court found the confidential relationship to exist and little to no evidence to rebut the presumption, the appellate court had no choice but to invalidate the newest beneficiary designation.  This meant that all five siblings took equally.

McGee v. Simpson, 2007-CA-02048-COA