Mehus' Estate, Matter of, 9436-A

Citation278 N.W.2d 625
Decision Date24 April 1979
Docket NumberNo. 9436-A,9436-A
PartiesIn the Matter of the ESTATE of Artha MEHUS, Deceased. Gunder MEHUS, Appellant, v. George Arthur MEHUS, Raymo Mehus, Morris Mehus, Amy Mehus Thompson, Evelyn Mehus Holdahl, Hazel Mehus Satrom, Nina Mehus Thompson, and First Bank of North Dakota Grand Forks, formerly known as Red River National Bank and Trust Company, Personal Representatives of the Estate of Artha Mehus, Appellees. Civ.
CourtUnited States State Supreme Court of North Dakota

Shaft, McConn, Fisher & Thune, Grand Forks, for appellant; argued by Gary R. Thune, Grand Forks.

Vaaler, Gillig, Warcup, Woutat & Zimney, Grand Forks, for appellee Nina Mehus Thompson.

John T. Paulson, Valley City, for appellee George Arthur Mehus.

S. Lee Vinje, Mayville, for appellee Raymo Mehus.

A. Roger Kringlie, Northwood, for appellee personal representatives; argued by A. Roger Kringlie, Northwood.

SAND, Justice.

Gunder Mehus appealed from a judgment entered in district court affirming an order of the county probate court declaring two savings certificates, held in joint tenancy with the right of survivorship in the names of Gunder and his deceased mother, Artha Mehus, and which were created while Gunder was acting as co-attorney-in-fact for his mother, were the sole property of his mother's estate. The district court reached its conclusion on the ground that Gunder failed to "overcome the presumption of misrepresentation, concealment, threat, or adverse pressure of any kind" of his part in the creation of the certificates while serving as a fiduciary.

Artha Mehus was the mother of Gunder and the seven other Mehus brothers and sisters named as appellees in this case. In an earlier opinion of this court concerning the estate of Artha Mehus, we noted she was an extremely diligent, capable woman, with excellent business sense and judgment who amassed considerable property during her lifetime. Mehus v. Thompson, 266 N.W.2d 920 (N.D.1978). We also noted that by 1968, Artha's health restricted her to her home and largely confined her to bed. During the bedridden months prior to her death in 1970, Artha was cared for primarily by Gunder and two of his sisters, Nina Thompson and Evelyn Holdahl. Although Artha was bedridden during the latter years of her life, no issue has been raised in this case as to her mental capacity to contract or appoint an agent.

In 1966, Artha appointed her daughter, Nina Thompson, as her attorney-in-fact. While Nina was serving as attorney-in-fact, her mother signed a blank deed to which she attached the description of a 260 acre tract of real property. She directed Nina to have the deed completed and recorded naming Nina as the grantee. 1 This transfer of property to Nina was one of several gifts made by Artha to her children between the years 1967 and 1969, a period during which Artha made outright gifts of cash and real property to her seven children in excess of $300,000 and varying in amounts from a total value of $86,765 given to Nina Thompson to a total value given to Raymo Mehus of $19,640.

In February 1969, Artha revoked the power of attorney given to Nina Thompson and appointed her sons Gunder and Morris as her co-attorneys-in-fact. In addition to the power to endorse and deposit checks and to draw checks on her account for the payment of taxes, farm-related expenses, and living and medical expenses, the document appointing Gunder and Morris provided them with the power to conduct Artha's agricultural business affairs, including the power to execute leases and contracts.

The first of the two savings certificates in issue in this case was purchased with a check dated 9 July 1969 payable to "Midwest Federal" in the amount of $5,000 and signed by Artha. Gunder testified his mother gave him this check and told him to purchase a joint savings certificate in their names from the Robbinsdale, Minnesota, office of Midwest Federal Savings and Loan Association. The certificates had been advertised in a Minneapolis paper and Gunder clipped the application form from the paper and sent it and the check to Midwest. A signature card on this certificate was sent to Artha and Gunder by Midwest Federal, signed by both parties, and returned. The savings certificate was in the possession of Artha Mehus at the time of her death.

On 28 July 1969 a joint savings certificate was also purchased in the name of Artha Mehus and Evelyn Holdahl. This certificate is not in issue in this case.

The second savings certificate in question was purchased from Grand Forks Federal Savings & Loan Association in joint tenancy in the names of Artha and Gunder on 26 September 1969 in the amount of $10,000. The certificate was purchased with a check drawn on the account of Artha Mehus and signed by Gunder and Morris Mehus by power of attorney. A signature card on this certificate was also signed by Artha and Gunder. The funds from this certificate were subsequently withdrawn by Gunder and a new joint certificate was issued at a higher interest rate. This $10,000 certificate was in Artha's possession at the time of her death.

The interest from both certificates was paid to Artha during her lifetime.

Following Artha's death, the $10,000 certificate was reissued at the request of the administrator of Artha's estate in the names of Gunder and the administrator. The funds from this certificate were later withdrawn and deposited as an asset of the estate without the consent of Gunder.

Gunder filed a motion on 23 November 1976 requesting the $10,000 certificate be removed from Artha's estate. The appellees in this case opposed Gunder's motion and also placed in issue the $5,000 Midwest Federal certificate. The county probate court denied Gunder's motion and ordered both the $5,000 and $10,000 certificates be placed in Artha's estate. Gunder appealed from the order of the county probate court to the district court, which affirmed the county court's order. Gunder filed a notice of appeal from the judgment of the district court on 2 August 1978.

The issues raised in this case are:

(1) Did Gunder Mehus have the authority to purchase the savings certificate in joint tenancy with himself and Artha Mehus;

(2) Did Gunder present sufficient evidence to overcome a presumption of undue influence in the purchase of the joint savings certificates.

The district court in this case ruled that Gunder, as a fiduciary of Artha Mehus, had the burden of proving the transactions involving the savings certificates were not tinged with misrepresentation, concealment, threat, or adverse pressure of any kind, and that there is a presumption that the transactions were entered into under undue influence and without sufficient consideration. The court concluded Gunder had not overcome this presumption.

A power of attorney is an instrument in writing authorizing another to act as one's agent. The agent holding the power of attorney is termed an "attorney-in-fact" as distinguished from an attorney at law. McLaren Gold Mines Co. v. Morton, 124 Mont. 382, 224 P.2d 975, 979 (1950).

Because the power of attorney creates an agency relationship, the principles of the law of agency are applicable in determining the authority and duties of an attorney-in-fact. Scott v. Hall, 177 Or. 403, 163 P.2d 517 (1945); 2A C.J.S. Agency §§ 44, 150; 3 Am.Jur.2d Agency § 28. As summarized in 2A C.J.S. Agency § 150, although the powers of an attorney-in-fact are confined to those conferred upon him by the instrument:

"This does not, of course, mean that the authority of the person holding a power of attorney is to be determined finally and conclusively from the instrument, for a more extended, or an added, actual authority or a binding apparent authority may be given notwithstanding the instrument and independent of it. The purpose of written powers of attorney, or equivalent instruments in writing, is not to define the authority of the agent, as between himself and the principal, but to evidence such authority to others with whom the agent deals or may deal; but, even so, the existence of a written instrument has a tendency to establish the authority of the agent as being that which is therein contained, and none other."

The power of attorney given Gunder and Morris in this case was restricted in the authority it bestowed. It did not include a power to draw checks on Artha's account for all purposes or more specifically for the purpose of making gifts either to the attorneys-in-fact or to others. Nor did the power of attorney authorize the attorneys-in-fact to manage the private financial affairs of Artha. Consequently, if Gunder had the power to purchase the savings certificates in this case, that power was derived from a source other than the formal written power of attorney given him and Morris.

Section 3-01-06, North Dakota Century Code, provides authority may be conferred on an agent by either a prior authorization or a subsequent ratification. In this case we must necessarily determine if Gunder had the authority to both purchase the savings certificates and to make those purchases in joint tenancy with him as a joint tenant. We therefore examine the evidence to determine if there was an authorization or ratification of authority on both these questions.

As to the $5,000 savings certificate, Gunder testified its purchase was carried out at the specific request of Artha. Although such testimony might be construed as sufficient evidence of a prior authorization in Gunder to purchase the savings certificate, a more convincing indication of authority to create both certificates is shown by the ratification of the purchases by Artha.

In the law of agency, ratification is defined as:

" 'The affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.' " Restatement of Agency 2d § 82; Askew v. Joachim Memorial Home, 234 N.W.2d 226,...

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