Breeden v. Dailey
| Decision Date | 15 September 1977 |
| Docket Number | No. 76-467,76-467 |
| Parties | Vic E. BREEDEN, Executor of the Estate of Charline H. Breeden, Plaintiff-Appellant, v. E. L. DAILEY and Jean Dailey, Defendants-Appellees. . III |
| Court | Colorado Court of Appeals |
Seawell, Cohen & Sachs, P. C., Jeffrey L. Smith, Denver, for plaintiff-appellant.
Morrato, Gueck & Colantuno, P. C., Jay L. Gueck, Denver, for defendants-appellees.
Charline H. Breeden began this action against her former financial advisor, E. L. Dailey, alleging Dailey breached his duty as a fiduciary. Mrs. Breeden's estate continued the action upon her death in 1972. Dailey counterclaimed for damages based primarily on his employment contract. The trial court directed a verdict in favor of the Estate, for $21,800, and submitted the balance of its claim to the jury. The jury returned a verdict for Dailey on the counterclaim, awarding him $391,460, and awarded no additional damages to the Estate. The Estate appeals. We reverse.
The central issue on appeal is whether, on the evidence presented, Dailey was a fiduciary as a matter of law.
Dailey served Mrs. Breeden's father, A. E. Humphreys, as a treasurer of the Humphreys companies for many years. Sometime in the late 1950's Dailey began to supervise Mrs. Breeden's financial affairs. Mrs. Breeden and her husband traveled extensively, particularly in the mid-1960's, and Dailey was given authority to sign checks on Mrs. Breeden's account, to enter her safety deposit box, to prepare her income tax returns, to arrange loans on her behalf, and generally to handle her business affairs. Dailey also became the trustee of the A. E. Humphreys-Charline H. Breeden Trust (which trust held a considerable portion of Mrs. Breeden's assets) and he was appointed guardian of the assets of Mrs. Breeden's minor children. Dailey claims he performed his advising and management duties at Mr. Humphreys' request.
Mr. Humphreys died in 1968, but Dailey's business relationship with Mrs. Breeden continued by virtue of an employment contract signed in January of 1969.
Mrs. Breeden's claim is based on five allegations of breach of fiduciary duty. She claims that Dailey 1) between 1969 and 1970 paid unauthorized sums to himself and others, including salaries, commissions and a Christmas bonus; 2) in 1966 sold to her two apartment buildings owned by him for an amount far in excess of their fair market value; 3) charged her twice for certain personal property in those two apartment buildings; 4) failed to account for business expenses he charged to her between 1969 and 1970; and 5) between 1969 and 1971, paid to himself, out of her account, a total of $165,682 without accounting for these payments.
Dailey denied the validity of these claims, and counterclaimed for the balance of his salary and the retirement benefits under his employment contract, for services performed as trustee, and for sums allegedly advanced Mrs. Breeden.
A fiduciary relationship exists when " 'there is special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to interests of one reposing the confidence.' " Circle T Corp. v. Deerfield, 166 Colo. 238, 444 P.2d 404 (1968).
While there is considerable evidence supporting the conclusion that Dailey became Mrs. Breeden's fiduciary in the early 1960's, other evidence to the effect that he was only acting at Mr. Humphreys' direction in those early years was sufficient to create a factual dispute on this point.
But the evidence of Mr. Dailey's status as a fiduciary after Mr. Humphreys' death in 1968 is conclusive and uncontroverted. Among the wealth of testimony and documents which establish this fact is the employment agreement executed on January 7, 1969, which gave Dailey the...
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