Nicholas v. Wright

• Court: Tennessee Court of Appeals
• Writing for the Court: CARNEY; BEJACH; AVERY
• Citation: Nicholas v. Wright, 42 Tenn.App. 241, 301 S.W.2d 540 (Tenn. App. 1956)
• Decision Date: 18 May 1956
• Parties: Mrs. Louise Lewis NICHOLAS, Petitioner, v. Mrs. Katie L. WRIGHT, Respondent. 42 Tenn.App. 241, 301 S.W.2d 540

Page 540

301 S.W.2d 540

Mrs. Louise Lewis NICHOLAS, Petitioner, v. Mrs. Katie L. WRIGHT, Respondent.

42 Tenn.App. 241, 301 S.W.2d 540

Court of Appeals of Tennessee, Western Section at Jackson.

May 18, 1956 Certiorari Denied by Supreme Court Oct. 5, 1956.

[42 TENNAPP 242] John S. Montedonico, Memphis, and M. Watkins Ewell, Dyersburg, Canale, Glankler, Montedonico, Boone & Loch, Memphis, of counsel, for appellants, Katherine C. Prothro and Clifton B. Cates.

Lowell W. Taylor, Memphis, for appellee, Mrs. Louise Lewis Nicholas.

CARNEY, Judge.

Mrs. Katherine C. Prothro and Major General Clifton B. Cates appeal from an order of the Chancery Court of Lake County overruling the exceptions filed by them to the report of Mrs. Louise Lewis Nicholas as guardian of Mrs. Katie L. Wright, now deceased. They contend that Mrs. Nicholas received gifts from Mrs. Wright totaling $136,150 during the period 1947 through 1951 and that said gifts were illegal and therefore that [42 TENNAPP 243] Mrs. Nicholas should be required to account for the same. Mrs. Nicholas had not been appointed guardian at the time the gifts were made.

General Cates and Mrs. Prothro are brother and sister and are nephew and niece respectively of Mrs. Katie L. Wright, deceased. Mrs. Louise Nicholas is also a niece of Mrs. Wright and lived in the home with Mrs. Wright as a member of her household since she was about seven years of age and for a period of about forty years prior to the death of Mrs. Wright.

Mrs. Wright owned several thousand acres of very valuable farm land in Lake County, Tennessee, at the time of her death on August 8, 1953, at the age of ninety-three years. Mrs. Wright left no children or grandchildren surviving her and her closest relatives were nieces and nephews including the three parties involved on this appeal.

Mrs. Wright's husband died about 1912 and left considerable farm lands to Mrs. Wright which she managed very successfully and in addition she accumulated additional farm lands and personal property throughout the years. Two sons were born to her, both of whom died over thirty years ago leaving no children.

On January 28, 1953, Mrs. Wright was adjudged mentally incompetent by a jury and Mrs. Nicholas first became temporary guardian and then on April 1, 1953, she was appointed and qualified as regular guardian.

After the death of Mrs. Wright in August, 1953, the guardian filed a petition for approval of a final settlement as such guardian. The appellants, General Cates and Mrs. Prothro, filed exceptions to the approval of this final settlement alleging, in substance, that Mrs. [42 TENNAPP 244] Wright had been incompetent for several years prior to her death and before the appointment of a regular guardian; that Mrs. Louise Lewis Nicholas had been living in the home with and managing all of the financial affairs of their aunt, Mrs. Wright, for several years and that Mrs. Louise Lewis Nicholas had received, during the course of this period, illegal gifts in the total amount of $136,150.

The exceptors, General Cates and Mrs. Prothro, contend that even if Mrs. Wright were mentally competent, yet the gifts were void nevertheless because obtained by Mrs. Nicholas at a time when she occupied a confidential relationship with Mrs. Wright.

The gifts received by Mrs. Nicholas which are under attack are as follows:

During the year 1947 a total of   $19,650.00
                During the year 1948 a total of    75,500.00
                During the year 1949 a total of    10,000.00
                During the year 1951 a total of    31,000.00
                                                 -----------
                Total gifts of cash and bonds    $136,150.00
                

The gift taxes paid by Mrs. Wright on the above gifts to Mrs. Nicholas amounted to $18,041.10.

The exceptors also contend that Mrs. Nicholas received title to two parcels of real estate in Tiptonville which were purchased with funds belonging to Mrs. Wright. The deeds to these parcels of property were made to Mrs. Nicholas who in turn conveyed a life estate to Jim Taylor, the Negro cook who had worked for Mrs. Wright for some forty years, and a life estate in the other to Eugene Hicks, the Negro man who had worked for Mrs. Wright [42 TENNAPP 245] during the last eight or nine years as chauffeur, house boy, etc.

We agree with the insistence of appellants that there was a confidential relationship existing between Mrs. Nicholas and Mrs. Wright. For several years prior to Mrs. Wright's death Mrs. Nicholas handled a large portion of Mrs. Wright's business including the receiving and disbursing of money, collection of farm rents and management of farm property. Bayliss v. Williams, 46 Tenn. 440; Miller v. Proctor, 24 Tenn.App. 439, 145 S.W.2d 807.

Upon the evidence in the record we concur in the finding of the Chancellor that Mrs. Wright was mentally competent at the time these gifts were made during the period from 1947 through 1951.

Since we have found that the gifts were received by Mrs. Nicholas during the period when she occupied a confidential or trust relationship toward Mrs. Wright, a court of equity must review such transactions with the strictest scrutiny.

From the case of Miller v. Proctor, 1940, 24 Tenn.App. 439, 145 S.W.2d 807, at page 811, we quote as follows:

'(4) The existence of such a relation between two persons does not of course prevent the one who is dependent upon the other from giving him his property; but such relation does raise a presumption of the invalidity of such a gift, and the burden is upon the donee to show by the 'clearest and most satisfactory evidence to be adduced, that at the time the transaction took place, no advantage whatever was taken, either of the confidential relations existing[42 TENNAPP 246] in order to obtain a benefit, or of the weakness and frailty of the party from whom the benefit was received.' Graves v. White, 4 Baxt. 38, 41, 63 Tenn. 38, 41. In Pomeroy's Eq.Jur. it is said: 'The transaction is not necessarily voidable, it may be valid; but a presumption of its invalidity arises, which can only be overcome, if at all, by clear evidence of good faith, of full knowledge and of independent consent and action.' (Citing many cases.) Vol. 2, Sec. 957, pp. 2042, 2043.

'(5) It is held in many jurisdictions that where a confidential relationship exists the donee must show not only that no undue influence was used and the gift was understandingly and voluntarily made by the donor, but also that he had the benefit of competent and independent advice of a disinterested third party. See cases cited in annotations, 16 L.R.A.,N.S., 1088, 15 Ann.Cas. 1033; 24 Am.Jur. 757.'

This rule has been reannounced in subsequent cases including Roberts v. Chase, 25 Tenn.App. 636, 166 S.W.2d 641; Turner v. Leathers, 1950, 191 Tenn. 292, 232 S.W.2d 269; Black v. Pettigrew, 1953, 38 Tenn.App. 1, 270 S.W.2d 196.

When we review the evidence in the instant case concerning these gifts which are under attack in the light of the foregoing decisions we find the following evidence:

Soon after Mrs. Wright became a widow about 1912, her sister, Mrs. Lewis, together with her young daughter, Louise, then aged about seven years, came to make their home with Mrs. Wright. Mrs. Lewis had little or no money and Mrs. Wright paid all of the expenses of [42 TENNAPP 247] the household and supported Louise Lewis and her mother. The mother died in 1933 and Louise Lewis continued to live in the home of Mrs. Wright occupying the status of an only daughter until about a year before Mrs. Wright's death when the household was broken up and Mrs. Wright spent the remaining days in Memphis, Tennessee, in the hospital or in a nursing home. Miss Louise Lewis married a few years before the death of Mrs. Wright but her marriage does not seem to have interrupted her close association with and attention to Mrs. Wright in her last days.

The record shows that Mrs. Wright was a very astute business woman and one who paid very close attention to her ever expanding farm and financial interests. She rented her land to many different tenants; she financed them in the cultivation and gathering of said crops; she personally attended to the building and repairing of farm houses, barns, fences, etc. The record shows that she owned stock in one of the Tiptonville banks; had some interests in ginning operations; she loaned money to various people in addition to her tenants around Tiptonville with mostly real estate as security. The record also shows that Mrs. Wright was accustomed to lending approximately $50,000 each fall to one of the gins to buy soybeans, cotton, cotton seed, etc., from its customers which loans were usually repaid the following spring.

Through the years Miss Louise Lewis, as a member of her aunt's household, became accustomed to driving Mrs. Wright out to look over the farms, observe the cultivation and harvesting of the crops and attend to the many other duties incident to the operation of such vast farming enterprises. In this way Miss Lewis became [42 TENNAPP 248] thoroughly conversant with every phase of Mrs. Wright's financial operations.

Certainly from 1930 onward, and possibly earlier, the appellant, Major General Clifton Cates, was away from Tiptonville in service in the Marines and the appellant, Mrs. Prothro, was away from Tiptonville living at various parts of the United States and in recent years in Memphis, Tennessee. The relations between Mrs. Wright and General Cates and his family and Mrs. Prothro and her family were most pleasant and cordial and they kept in communication with her by letter and visited with Mrs. Wright or she visited with them several times each year.

As early as 1941 when Mrs. Wright was 81 years of age and in good health and in full and complete charge of all of her financial affairs, Mrs. Wright told her friend, Mr. Ivy, that she was extremely fond of Louise and that she wanted to do more for her than for anyone else. Mr. Ivy is an auditor who had been coming to Tiptonville each year since about 1931...