Hamilton v. Caplan

• Decision Date: 01 September 1986
• Docket Number: No. 378,378
• Citation: 518 A.2d 1087,69 Md.App. 566
• Parties: Ida HAMILTON v. Donald M. CAPLAN, Personal Representative of the Estate of Joseph C. Gilbert, et al. ,
• Court: Court of Special Appeals of Maryland

Page 566

69 Md.App. 566

518 A.2d 1087

Ida HAMILTON v. Donald M. CAPLAN, Personal Representative of the Estate of Joseph C. Gilbert, et al.

No. 378, Sept. Term, 1986.

Court of Special Appeals of Maryland.

Jan. 7, 1987.

Edgar B. May (Mark J. Diskin on the brief), Washington, D.C., for appellant.

Steven R. Buckner of Bethesda, for appellee, Donald M. Caplan.

Bruce Marcus of Beltsville, for appellee, Bebe Gilbert.

Submitted to MOYLAN, ALPERT and POLLITT, JJ.

ALPERT, Judge.

This case involves a dispute between appellant, Ida Hamilton (sister of the late Joseph C. Gilbert), Donald Caplan (personal representative of the Estate of Joseph C. Gilbert), and Bebe Gilbert (surviving spouse of the late Mr. Gilbert) over the ownership of three promissory notes and the interest accrued thereon.

Joseph C. Gilbert died in the summer of 1983. Three demand notes were found in his office after his death. Two notes were made by the Palm Management Corporation. These notes were made on November 27, 1981, in the amount of $196,083.57, and on December 1, 1981, in the amount of $54,173.06. Each bore an interest rate at the prime rate charged by Morgan Guaranty Bank. The third note was made by Dominique Restaurant in the amount of $100,000.00 dated August 13, 1982. This later note bore an interest rate at 1% over the prime rate charged by Security National Bank. All three notes were made payable to Ida Hamilton. All interest on the notes was paid to Joseph Gilbert, who deposited it in a checking or savings account that he held jointly with Ida Hamilton.

Joseph C. Gilbert was an accountant. His accounting firm prepared tax returns, maintained books and records for various persons and businesses, prepared documents such as promissory notes, gave investment advice, and invested funds for others. Gilbert handled the affairs of several clients, among whom was his sister, Ida Hamilton. The evidence is uncontradicted that Gilbert prepared his sister's tax returns, maintained her financial records, paid some bills out of their joint account, and wrote and held for safekeeping his sister's last will and testament.

After Joseph Gilbert's death, Ida Hamilton sought a declaratory judgment that the notes and accumulated interest were her property and that the money that she had deposited in a joint account with Joseph Gilbert for investment purposes be repaid to her. As support for her assertion that the notes and bank account belonged to her, Ida Hamilton presented evidence that the decedent had (1) placed the notes in her name, (2) deposited the interest in their joint account, ¹ (3) spoken of the notes' existence as an investment made on her behalf, ² and (4) otherwise demonstrated an intent that the notes were made for her.

In a separate suit, the estate of Joseph C. Gilbert contested Mrs. Hamilton's claim, alleging that since the notes were found in Joseph C. Gilbert's office there had been no "delivery" and hence no "gift" of the notes. The estate interpreted the existence of the joint account between the decedent and appellant Hamilton as purely for the convenience of the decedent. The estate further asserted that Joseph Gilbert provided the entire funding for the notes, such that the estate sought to recover not only the notes and interest paid thereon but also the balance of the joint accounts.

In yet a third suit, Bebe Gilbert, the surviving spouse of the decedent, also contested Hamilton's position. The widow alleged in that suit that the money loaned in return for the notes came solely from a joint account between herself and her husband. She further alleged that since one-half of all the money in the marital account belonged to her, she was at least entitled to half of the money represented by the notes and half the interest accrued thereon. She asserted, however, that she was properly entitled to the entirety of the notes and interest because her husband had an oral agreement with her that any investment made from their joint account would be shared equally between the spouses.

The three cases were consolidated for trial. At trial, a special verdict was requested and the jury found as follows:

i. That Joseph C. Gilbert during his lifetime did not make a gift of the promissory notes to Ida Hamilton.

ii. That there was an oral agreement between Bebe Gilbert and the late Joseph C. Gilbert that any "investment" made by Joseph C. Gilbert from funds from a joint account in the names of Joseph C. Gilbert and Bebe Gilbert would be shared equally between them.

iii. That the joint bank accounts between Ida Hamilton and Joseph C. Gilbert were jointly owned by them with rights of survivorship.

iv. That Ida Hamilton gave Joseph C. Gilbert $16,870.00 to invest on her behalf.

Based on these jury determinations, the court entered a declaratory judgment as follows:

i. That Bebe Gilbert and Donald Caplan, personal representative of the estate of Joseph Gilbert, each own a one-half interest in the notes and accrued interest thereon.

ii. That Ida Hamilton was the sole owner, by survivorship, of any funds remaining in the joint accounts in the names of Ida Hamilton and Joseph C. Gilbert.

iii. That Section 8-103, Estates and Trusts, Annotated Code of Maryland, barred Ida Hamilton from recovering investment funds for failure to file a claim within the six month period prescribed by the foregoing statute.

Appellant, Ida Hamilton, appeals from the lower court's determination with respect to judgments i and iii above and raises the following questions:

1. Where the undisputed evidence disclosed that decedent was an accountant who prepared appellant's tax returns; paid her bills when she was away or disabled; maintained at his office all of appellant's financial documents, Last Will and Testament and records, did the Court err in refusing to instruct the jury that although to perfect a gift there must be "delivery," that delivery may be "constructive" such that it is not always necessary that a donor physically deliver the gift into the possession of a donee?

2. Did the Court err in refusing to instruct the jury that there may be an inter vivos gift of a remainder interest, such that a donor may retain the benefits of an item of gift for life, but irrevocably give the remainder to his donee upon death?

3. Did the Court err in failing to rule as a matter of law that an irrevocable gift of the notes was made to the appellant since appellant was the sole named payee, and only she or a party authorized by her could cash the interest checks, extend or negotiate the notes, or demand payment, and hence from the time the notes were made all of the rights and entitlement in the notes irrevocably vested in her? Neither Joseph C. Gilbert while he lived nor his estate could lawfully collect the notes once they were put into appellant's name or substitute another payee for appellant.

4. Did the Court err in failing to permit appellant's testimony concerning what decedent told her about the notes and their arrangement concerning certain money appellant invested with decedent on the basis that the "Dead Man Rule" barred such testimony, where every party and witness other than appellant gave testimony about what the decedent had said to them or said to others?

5. Where both parties to a joint checking account were authorized without consent or restriction of the other party to withdraw funds or issue checks, can one party to the account claim an ownership interest in a gift purchased by the other party for his sister with funds from the account, where it is proven each party contributed equally to the account?

6. Where appellant gave money to her brother Joseph C. Gilbert to invest for her, does such money become a part of Joseph C. Gilbert's estate upon his death, such that appellant is required to make claim under Section 8-103, Estates and Trusts, Annotated Code of Maryland?

I. Constructive Delivery

Appellant asserts that the trial court erred in refusing to instruct the jury on the issue of constructive delivery of the notes. We agree. Although trial courts are not required to present instructions to the jury in support of the unfounded theories of litigants, it is error to refuse a requested instruction where sufficient evidence was presented to generate a jury issue. Levine v. Rendler, 272 Md. 1, 13, 320 A.2d 258 (1974); Schaefer v. Publix Parking Systems, 226 Md. 150, 152-53, 172 A.2d 508 (1961).

The burden of establishing all the elements of a gift is cast upon the donee. Dorsey v. Dorsey, 302 Md. 312, 318, 487 A.2d 1181 (1985). The standard of proof is clear and convincing evidence. Id. at 318, 487 A.2d 1181, citing Pomerantz v. Pomerantz, 179 Md. 436, 440, 19 A.2d 713 (1941). In the case sub judice, appellant presented sufficient evidence to generate a question of fact as to whether the notes were delivered to her from the decedent. We explain.

"The validity of the alleged gifts depends upon the legal sufficiency of the deliveries." Schenker v. Moodhe, 175 Md. 193, 196, 200 A. 727 (1938). Delivery may be actual or constructive, but in either case must place the gifted property beyond the dominion and control of the donor and within the dominion and control of the donee. Id. at 196-97, 200 A. 727. The Court of Appeals explained:

To be valid, a constructive delivery must not only be accompanied by words sufficient to show a donative intent, but must be of such a character as to completely divest the donor of dominion and control over the donation and to place it "wholly under the donee's power."

Id. at 197, 200 A. 727 (citations omitted).

The cases in which constructive delivery has been found involved circumstances where the donor thought he had done all he could do to relinquish dominion and control over the donated item. Malloy v. Smith, 265 Md. 460, 466, 290 A.2d 486 (1972). The concept of constructive delivery evolved from the gift of items too difficult to deliver physically, such that the only practicable way to...