Herm's Estate, Matter of, s. 62092

• Citation: 284 N.W.2d 191
• Decision Date: 17 October 1979
• Docket Number: 62093,Nos. 62092,s. 62092
• Parties: In the Matter of the ESTATE of Clara O. HERM, Deceased. Harry HELGESON, Temporary Administrator of the Estate of Clara O. Herm, Appellee, v. Arthur A. HENDERSON, Appellant.
• Court: United States State Supreme Court of Iowa

Page 191

284 N.W.2d 191

In the Matter of the ESTATE of Clara O. HERM, Deceased.

Harry HELGESON, Temporary Administrator of the Estate of Clara O. Herm, Appellee, v. Arthur A. HENDERSON, Appellant.

Nos. 62092, 62093.

Supreme Court of Iowa.

Oct. 17, 1979.

Leo E. Fitzgibbons and Harold W. White of Fitzgibbons Brothers, Estherville, for appellant.

William Pappas, Mason City, and Eugene G. Sarno, Lake Mills, for appellee.

Considered by REYNOLDSON, C. J., and REES, McCORMICK, McGIVERIN and LARSON, JJ.

REYNOLDSON, Chief Justice.

This consolidated appeal arises from the combined trial of two actions in district court. In an equity action Harry Helgeson, as conservator of Clara O. Herm and later as temporary administrator of her estate, sought to set aside a deed and to nullify numerous inter vivos transfers of assets by Clara to Arthur A. Henderson, her nephew. The other action was brought by Elise C. Wood and Judith E. Bakke, Clara's nieces, raising objections to the probate of Clara's purported will dated June 21, 1976. Following trial to the court, a decree was entered in the equity case which voided the deed and transfers. Judgment was entered in the second action declaring the will invalid. Arthur A. Henderson appeals and we affirm.

On April 16, 1977, Clara O. Herm, age 91, died at Lake Mills, Iowa. She survived her husband and left no children. Her next of kin were Arthur A. Henderson, Lowell A. Henderson, and Constance Hurd, children of her deceased brother Arthur; Elise C. Wood and Judith E. Bakke, children of a sister Ruth, who died in 1973 also survived by her husband Jacob Grimstead; and a sister Lilian Henderson Debban.

Plaintiff temporary administrator Helgeson alleged the deed and transfers of various accounts and certificates of deposit to Arthur A. Henderson were made when the latter stood in a confidential relationship with Clara and occurred when she was incompetent to transact such business. The objectors alleged the document Clara signed on June 21, 1976, purporting to be her last will, was made when she was incompetent. They claim the instrument was the result of fraud and undue influence practiced upon her by Arthur A. Henderson and Lowell A. Henderson.

Clara had a prior will executed in 1966. A first codicil was dated in 1969, the second in February, 1974. As finally amended this instrument bequeathed her home to Elise and Judith. The residuary was divided one-half to Elise and Judith and one-half to Constance, Arthur, and Lowell.

In May of 1975 Clara, accompanied by Arthur who had come from California, talked to her banker-lawyer Dean L. Brackey about deeding her home to Arthur, reserving a life estate. Brackey referred her to Richard Schwarm, an attorney in Lake Mills. Schwarm testified Clara called his secretary, informing the latter "she had to make a deed." He prepared and Clara executed the deed in controversy, dated May 19, 1975, conveying the home to Arthur subject to her life estate. Thereafter Schwarm conferred with Clara several times concerning her will. He prepared a will which Clara signed October 24, 1975. It left her household furnishings and related personal property to Elise and Judith. The document bequeathed the remainder equally among eleven persons: Clara's sister Lilian, Arthur and his wife, Lowell, Constance, Hazel Henderson (the wife of her brother Arthur), Judith and her husband, Elise and her husband, and Jacob Grimstead.

Attorney Schwarm testified Clara was concerned that farmland she sold in 1967 to the Grimsteads and to Elise and Judith for market price had subsequently increased in value and she felt the Hendersons (Arthur, Lowell, and Constance) had "not fared as well." He suggested she make an adjustment through "the use of her CD's and savings bonds." She made no such transfers at that time. Mr. Schwarm opined Clara was competent when these transactions occurred.

Dr. William B. Wood testified that five days after execution of the deed Clara stated to Elise and him, "I think I've done something bad. I think I've given my house away. What can I do? Help me." On June 24, 1976, Clara wrote Judith and her husband that, "I expect to see Arthur A. Henderson when he come (Sic ) and he may decide to live in the house he asked for . . . ."

In the summer of 1976 Arthur had moved from California into Clara's Lake Mills home. Apparently by May of 1976 Clara was staying with her sister Lilian in Albert Lea, Minnesota. The latter wrote the Wood family, "She (Clara) burns up lots of energy in her restless routine each day. I do think she is best off here but she needs watching. If I were more knowledgeable in the mental aspect of her condition, I could be more helpful in her daily routine. Maybe." There is no rebuttal to Dr. Wood's testimony that in October of 1976 he visited Clara in Lilian's apartment and at that time Clara was helpless, bedridden, incontinent with respect to her kidneys and bowels, unable to walk, falling asleep almost involuntarily, and "(h)er level of conscious awareness was almost zero."

Meanwhile, on June 21, 1976, Arthur and Lowell, an internal revenue agent, visited Clara in Lilian's apartment. Lowell typed the will in controversy in which Clara left all her property to Arthur and Lowell and named them co-executors. At the same time Lowell prepared a plenary power of attorney with the power vested exclusively in Arthur. Clara executed both instruments on the same day in Arthur's presence at the First Federal Savings and Loan Association in Albert Lea. The two witnesses were never called to testify in this litigation.

Commencing in June of 1976 through January 10, 1977, Arthur entered Clara's safety-deposit box in the Lake Mills bank eight times. By early October, 1976, using his power of attorney, Arthur had made himself a joint tenant with Clara on certificates of deposit totaling $29,500, issued by the Lake Mills bank. He obtained $13,000 of this by withdrawing it from Clara's checking account. Starting in August, 1976, Arthur withdrew large amounts of cash from Clara's account in the First Federal Savings and Loan in Albert Lea. A portion of these funds was transferred to his own account in Crocker National Bank in California and commingled with his own funds. Arthur cashed United States bonds, a number of them payable on death to Elise C. Wood, and purchased a $29,500 certificate of deposit with Arthur and Clara as joint tenants.

Arthur never used the power of attorney for any purpose other than to transfer assets into his own name. By the time Clara died in April, 1977, he had placed his name on almost all of her assets.

By November of 1976 Clara had been confined to an Albert Lea nursing home with complete nursing care. She had to be strapped in a chair, helped to the bathroom, and fed with a spoon. In January or February of 1977 she was transferred to a Lake Mills nursing home. Upon her death an autopsy disclosed death from bronchopneumonia. It also disclosed she had suffered from cerebral sclerosis with moderately severe cerebral atrophy a degenerative process described as one which takes place over a long time period.

Dr. Edwin Bayrd, a Mayo Clinic physician who had treated Clara for many years, testified that by 1974 she could handle minor routine matters but not transactions so complex as making a will or investments. In his opinion by May of 1975 she would not have had the mental capacity to understand the implications of a property conveyance and would not have understood the nature and extent of her property.

Dr. Byron C. McGregor of Mankato testified he treated Clara commencing in January, 1976, through subsequent surgery and until May 3, 1976. In his opinion she was confused and would not have known the nature and extent of her property, nor would she have been able to handle business affairs. She would not have understood the nature of a conveyance. In his opinion this condition had existed for some time.

Dr. Wood, whom trial court found to be an interested but candid witness, also testified to Clara's incompetency in May of 1975 and at all subsequent times.

In a four-page rambling letter to district Judge Stone, Arthur stated, "Mrs. Herm deeded her home to me in June of 1975 by her own volition and desire and unknown to me." He also wrote, "During the spring, summer and fall of 1976 I and others of the Henderson family assisted Mrs. Herm in her business, and in everyway possible at her request." Arthur's testimony was vague concerning his knowledge of the deed and his whereabouts when it was executed. He first said he was in California, but finally conceded he was in Lake Mills on May 15, 1975, and "several days probably." While there is a question whether he realized the legal implications of his statements, he testified he occupied a position of mutual trust with Clara, that she was fond of him, and they enjoyed a confidential relationship.

Dr. Donald Bunce, an osteopathic physician-surgeon at Forest City, had never treated Clara but testified as a qualified expert witness that persons with arteriosclerosis have good days and bad days, and that he would place much credence in the testimony of lay persons who had been in daily contact with Clara. Several lay persons testified that in their opinion Clara was not incompetent.

Trial court found that on and after May 19, 1975, Clara was incompetent and lacked mental capacity with respect to the conduct of her business affairs. The court further found that the relationship between Clara and Arthur was a confidential and fiduciary relationship and that Arthur was guilty of undue influence on Clara in all of the transactions occurring between them. The purported will and all the other transactions were declared void.

Appealing, Arthur claims these decisions should be reversed on the following grounds: (1) Trial court should have dismissed the equity case under the "clean hands" doctrine; (2) trial court erred in not permitting Arthur's counsel to...