Hays v. Hay's Adm'r

• Decision Date: 23 March 1956
• Citation: 290 S.W.2d 795
• Parties: J. Smith HAYS, Sr., Appellant, v. Iva Coy HAY'S ADM'R et al., Appellees. J. Mack COY, Adm'r, et al., Appellants, v. J. Smith HAYS, Sr., et al., Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 795

290 S.W.2d 795

J. Smith HAYS, Sr., Appellant, v. Iva Coy HAY'S ADM'R et al., Appellees.

J. Mack COY, Adm'r, et al., Appellants, v. J. Smith HAYS, Sr., et al., Appellees.

Court of Appeals of Kentucky.

March 23, 1956.

As Modified on Denial of Rehearing June 22, 1956.

Robert H. Hays, Lexington, William Hays, Winchester, for appellants.

Wiggins & Wiggins and E. Selby Wiggins, Richmond, for appellees.

CLAY, Commissioner.

These consolidated appeals arise out of the settlement of the estate of Iva Coy Hays, wife of J. Smith Hays, Sr. The present controversy involves conflicting claims between the administrator and Mr. Hays with respect to two items in the respective amounts of $8,000 and $3,000. The Chancellor disallowed Mr. Hays the $8,000 item and adjudged him entitled to the $3,000 item.

The $8,000 Item

In 1940 Mrs. Hays purchased with her own funds eight $1,000 U. S. bonds, made payable to 'Iva Coy Hays or J. Smith Hays'. In 1950, when the bonds matured, they were cashed by Mr. Hays and the proceeds deposited by him in a bank to the account of 'Iva Coy Hays or J. Smith Hays, joint tenants with the right of survivorship.' Mrs. Hays signed the signature card creating this joint account.

It is the claim of Mr. Hays that his wife made him an inter vivos gift of an interest in these bonds in 1940 and that the gift was somehow consummated or ratified when the joint account was created. The controlling question is whether or not Mrs. Hays intended to make a gift of these bonds to her husband.

it is a general rule that gifts inter vivos, first asserted after the death of the donor, are regarded with suspicion and must be established by clear and convincing evidence. Chipman's Adm'r v. Gerlach, 286 Ky. 157, 150 S.W.2d 633. This is particularly true where the relationship of the parties is one of a confidential nature. O'Brien's Administratrix v. Murray, 258 Ky. 140, 79 S.W.2d 414. As said in Brown's Adm'r v. Brown, 308 Ky. 796, 215 S.W.2d 971, at page 976:

"Where a close and confidential relationship between the parties is shown, the evidence to support the gift must be of such quality as to leave no reasonable doubt about the transaction * * *."

It was clearly shown that a close and confidential relationship existed between Mr. and Mrs. Hays. For many years the husband had handled his wife's financial affairs. He wrote checks on her accounts and invested and reinvested her money. He kept her stocks and bonds in a lock box rented by him. He was a successful businessman, and his wife appears to have had complete confidence in him.

It is true that the appearance of Mr. Hays as a joint payee on the face of the bonds and the creation of the joint bank account was evidence that Mr. Hays may have had some interest in either or both. However, the proven facts refute this inference. It is apparent the bonds and the account were thus handled for the convenience of Mrs. Hays and to permit her husband to act as her agent. Apparently she was not aware of the legal effect of the survivorship provision on the account card she signed.

There is persuasive evidence establishing that Mrs. Hays had no intention of giving the bonds or the bank account to her husband. In the first place, Mr. Hays, who was freely permitted to testify concerning transactions with the deceased, at no time stated that his wife had ever expressed any intention of giving him the bonds or the bank account. Secondly, in her will Mrs. Hays had listed the bonds as part of 'my investments'. In the third place, Mr. Hays testified that his wife had on numerous occasions expressed the wish that the $8,000 be used for the last illness and burial expenses of herself and her husband. The evidence was insufficient to establish an intention to make a gift in her lifetime. At the very least there was no clear and convincing evidence of such an intent, and the finding of the Chancellor to that effect was not clearly erroneous. CR 52.01.

It seems to be the alternative position of Mr. Hays that if no gift was proven, the creation of the joint bank account constituted a contract with the bank of which he was a third party beneficiary and that Mrs. Hays' estate is bound by the terms of that agreement. In support of that position, the cases of Armstrong's Ex'r v. Morris Plan Industrial Bank, 282 Ky. 192, 138 S.W.2d 359, and Bishop v. Bishop's Ex'x, 293 Ky. 652, 170 S.W.2d 1, are cited. While such a contract principle may be applicable in the proper case, in the situation we have before us two necessary elements upon which those decisions were based are lacking. They are, first, a conscious intent to create a binding obligation; and second, mutual valuable considerations to support the contract.

We conclude that the Chancellor correctly adjudged this item.

The $3,000 Item

In disallowing the claim of the administrator against Mr. Hays with respect to the $3,000 item, the court determined that it either constituted a gift or was barred by the statute of limitations. Applying the same principles heretofore discussed, we are doubtful if the evidence justified the finding of a gift. In 1929 Mrs. Hays paid over to her husband the sum of $3,000 to be used in paying off a mortgage...