Luse v. Grenko

Decision Date15 December 1959
Docket NumberNo. 49846,49846
PartiesM. G. LUSE, Administrator of the Estate of Mary Kauzlarich, Deceased, Appellee, v. Albena GRENKO, Appellant.
CourtIowa Supreme Court

Valentine, Greenleaf & Griffing, Centerville, for appellant.

Milani & Milani, Centerville, for appellee.

GARFIELD, Justice.

The administrator of the estate of Mary Kauzlarich, deceased, brought this suit in equity against Albena Grenko, a daughter, claiming the estate is the owner of a bank savings account of $6,500 and three U. S. bonds, Series H, in the total amount of $2,500 (two for $1,000 and one for $500), held by defendant. Plaintiff claims that on June 2, 1956, when defendant was made joint owner with decedent of the bank account, previously in decedent's name, a confidential relation existed between them in which defendant was the dominant person, thus giving rise to a presumption of fraud or undue influence in the transaction. Also that such relation existed July 10, 1956, when the bonds, payable to decedent or defendant, were purchased with decedent's money.

Following trial the court held there was such a confidential relation at the times mentioned and defendant failed to overcome the presumption of overreaching on her part by showing decedent acted of her own free will, with full knowledge of the effect of her actions. Defendant was ordered to transfer the bank account and bonds to plaintiff. Of course the appeal to us is by defendant.

I. Although our review is de novo we give weight to the trial court's findings. Groves v. Groves, 248 Iowa 682, 692, 82 N.W.2d 124, 130, and citations. Indeed, where similar issues were involved we have said, 'We deem this a proper case for us to lean heavily on the judgment of the trial court, even though we try it on appeal de novo.' Luebke v. Freimuth, 248 Iowa 58, 67, 78 N.W.2d 473, 479. Although the case may be close, when we give the trial court's findings the weight to which they are entitled, we feel we are not justified in reaching a contrary decision.

II. Plaintiff had the burden to show by clear proof the existence of the confidential relation claimed by him, in which defendant was the dominant person and decedent the subservient one. Groves v. Groves, supra, and citations; Barber v. Powell, 248 Iowa 785, 792, 82 N.W.2d 665, 669; Van Emmerik v. Mons, 249 Iowa 1299, 1304, 90 N.W.2d 433, 436.

III. The question of confidential relationship assumes such importance here because actions of this kind in which such relationship exists are governed by a different rule than applies where it is not shown. Ordinarily one who attacks a transfer of money or property because of fraud or undue influence must show existence thereof by clear, satisfactory and convincing proof. However, where it clearly appears the transferee was the dominant person in a confidential relationship with the transferor a presumption arises that the transfer was obtained by fraud or undue influence which the transferee must rebut by clear, satisfactory and convincing evidence. Groves v. Groves, supra, 248 Iowa 682, 692-693, 82 N.W.2d 124, 130, 131; Barber v. Powell, supra, 248 Iowa 785, 787, 82 N.W.2d 665, 666-667.

The Groves opinion goes on to point out: 'We have been slow to define the precise limits of a confidential relationship. It is clear it may exist although there is no fiduciary relation. As Restatement, Trusts, section 2, comment b, says, it exists when one person has gained the confidence of another and purports to act or advise with the other's interest in mind. It does not arise solely from blood relationship such as between parent and child. The gist of the doctrine of confidential relationship is the presence of a dominant influence under which the act is presumed to have been done. Purpose of the doctrine is to defeat and correct betrayals of trust and abuses of confidence.

'Numerous decisions support the above views. The leading ones are Curtis v. Armagast, 158 Iowa 507, 138 N.W. 873, and Merritt v. Easterly, 226 Iowa 514, 284 N.W. 397.' [248 Iowa 682, 82 N.W.2d 131.]

IV. Decedent Mary Kauzlarich, then 84, died intestate March 5, 1957, survived by three sons and two daughters. A fourth son, Matt, died in 1950 leaving two daughters. Mary's husband died in 1945. The first six years she was a widow Mary made her home with her daughter, Ruth Swab. In 1951 she moved into the dwelling on the home farm of something less than 80 acres in which her husband left her a life estate. Defendant Albena Grenko and her husband moved into the same dwelling at that time. The three continued to live there until the mother died. Mary paid defendant $25 a month for her board. The Grenkos paid no rent. Mary's son John, who farmed adjoining land, rented the farm land on the home place from his mother for $300 a year.

Mary was born in Croatia in 1872 and came to this country in 1920. She never went to school. She could not read or write English or her native language, Croatian. Except for a few simple words such as 'hello' and 'goodbye' she could not speak English. Members of her family always conversed with her in Croatian. Mary's husband conducted the business of the family as long as he could. When he was no longer able to do so the son John helped him.

While the mother lived with her daughter Mrs. Swab she did her mother's business for her with some help from her brother John. During the six years the mother lived with the Grenkos defendant looked after her business for her. Defendant testified, I handled financial transactions for my mother. * * * Q. While your mother lived with you did other of her children take her to handle transactions? A. No.' On several occasions during the last few years the mother lived defendant signed the former's name to receipts for her money withdrawn from the bank. Sometimes the two were together and sometimes defendant was alone on these occasions.

When defendant's name was added to her mother's savings account in the bank on June 2, 1956, defendant went there with Mary and told the bank teller her mother desired to withdraw interest on the account ($70.17) and $500 from the principal, and that defendant's name was to be added to the balance of the account ($6,500). Before doing so defendant talked with her mother in Croatian, which the teller did not understand, and then told the teller what she said Mary's wishes were. The banker then added the words 'or Albena Grenko' following the name 'Mary Kauzlarich' on the bank's ledger sheet of the account and on Mary's passbook. The teller also stamped the words, 'As joint tenants with remainder to survivor' on the passbook.

The bonds were purchased with money Mary kept in postal savings since it was turned over to her by her husband shortly before his death. On July 10, 1956, defendant accompanied her mother to the post office where $50 interest was withdrawn in cash from the account and a check or draft was obtained for the principal of $2,500. The two then went to the bank with this paper and an order was placed for the Series H bonds payable to Mary Kauzlarich or Albena Grenko. Later that month the bonds were received by mail at the family home. Defendant put them in her safety deposit box at the bank. Defendant's husband testified that in a conversation in which he took no part he heard Mary tell Albena to put the bonds in the latter's 'safety box just like her own.'

The bank account and the postal savings were substantially everything of value decedent had except the life estate in the farm. No assets came into the administrator's hands except this claim against defendant for the bank account and bonds. Defendant and her husband filed a claim for more than $8,000 against plaintiff for care and services furnished decedent during the six years they lived together. The claim states it is filed for the sole purpose of preserving claimant's rights should Albena be unsuccessful in her defense of the present suit.

Decedent was in failing health when the transactions under attack occurred. The daughter Ruth Swab testified her mind was getting weaker while Mary lived with her. Ruth and one of Matt's daughters said that during the last year of her life she had spells when her mind wasn't right. Defendant testified her mother was in pretty good health until 1956 when she got a feeling she was weakening a little. The latter part of May, 1956, a doctor was called to treat decedent and she was a patient of his until her death. She was suffering from arteriosclerosis with some senility, but not senile dementia. She was not mentally incompetent, at least until about December, 1956. (She died March 5, 1957.)

It seems quite clear decedent because of her inability to read, write or speak the English language, her age and failing health was unable to transact business for herself. Naturally she turned to defendant and depended upon her to do it for her. Defendant had gained her mother's confidence and purported to act with the latter's interest in mind. We think the showing of confidential relationship is sufficient.

We have little doubt defendant has failed to rebut by the requisite degree of proof the presumption of fraud or undue influence which surrounds these two transactions. At best it is questionable decedent intended to make defendant the owner of either the bank account or bonds or understood she was doing so. Defendant says in argument she 'makes no claim of a present gift of the bank account. Her mother did not part with dominion or control over it. * * * What she actually did was to create a contractual agreement providing for the payment of such sums as might remain at her death to the daughter who had so lovingly cared for her the last six years of her life. Appellant does claim there was a valid gift of the bonds.'

One answer to this argument is that the main support for it is defendant's own testimony which she was incompetent to give under section 622.4, Code 1958, I.C.A., the dead man statute,...

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