Persche v. Jones, 14993

• Decision Date: 30 April 1986
• Docket Number: No. 14993,14993
• Citation: 387 N.W.2d 32
• Parties: Matthew E. PERSCHE, Executor of the Estate of Ernest A. Persche, Also Known as Ernest Persche, Deceased; and Matthew E. Persche, Individually; and Erna Persche, Individually, Plaintiffs and Appellees, v. Arthur W. JONES, Individually, and the Tri-State National Bank, Defendants and Appellants.
• Court: South Dakota Supreme Court

Page 32

387 N.W.2d 32

Matthew E. PERSCHE, Executor of the Estate of Ernest A.

Persche, Also Known as Ernest Persche, Deceased; and Matthew E. Persche, Individually; and Erna Persche, Individually, Plaintiffs and Appellees, v. Arthur W. JONES, Individually, and the Tri-State National

Bank, Defendants and Appellants.

No. 14993.

Supreme Court of South Dakota.

Argued Feb. 10, 1986.

Decided April 30, 1986.

Joseph M. Butler of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, for plaintiffs and appellees.

Thomas W. Stanton of Costello, Porter, Hill, Nelson, Heisterkamp & Bushnell, Rapid City, for defendants and appellants.

HENDERSON, Justice.

ACTION/PARTIES

This is an appeal from a Judgment entered on a jury verdict awarding plaintiffs-appellees $125,000 damages resulting from defendants-appellants' unauthorized practice of law. We affirm.

Ernest Persche (Ernie) was a Butte County rancher who died October 15, 1981. Matthew Persche (Matt) and Erna Persche (Erna) are Ernie's children and plaintiffs-appellees herein. Defendants-appellants are Arthur W. Jones (Jones) and the Tri-State National Bank (Bank). The Bank is located in Belle Fourche and Jones was its president and loan officer. Jones was also Ernie's long-time friend and financial advisor. Betty Craft Persche (Betty) was Ernie's friend, live-in housekeeper, and purported wife.

FACTS

In October 1978, Betty began working as Ernie's live-in housekeeper and this arrangement continued until the Fall of 1980 when Betty moved to Montana. Thereafter, Ernie fell ill and on November 19, 1980, Ernie executed a will drawn by Attorney Ken Graves. This will appointed Matt and Attorney Graves co-executors and gave the bulk of Ernie's estate to Matt and Erna. No provision for Betty was contained in this will.

In December 1980, Ernie visited Jones at the Bank. Ernie was upset about his will and he insisted that Jones help him revise it--help him change it, so that the will was the way he wanted it. Ernie told Jones the changes he wanted to make and Jones had a Bank secretary type a new will. This second will was signed by Ernie on December 16, 1980, in the Bank, and witnessed by two Bank secretaries. This second will made changes in specific bequests and appointed Jones as executor of Ernie's estate. The propriety of the second will's attestation, however, is highly suspect for it is uncertain whether all parties signed in the presence of each other.

On February 16, 1981, Ernie was again at the Bank requesting changes in this second will. It appears Ernie wanted to add another specific bequest. Jones then had a Bank secretary type this bequest onto the will, cross out the December 1980 date, and type in February 1981. Ernie, Jones, and the two secretary-witnesses then initialed these changes.

In March 1981, Betty returned as Ernie's live-in housekeeper. On April 28, 1981, Ernie had Attorney Leroy Hill draw a codicil to the second will. This codicil gave Betty a life estate in Ernie's ranch house and provided her a specific bequest of $10,000. This codicil was duly executed in Attorney Hill's office. At this time, Ernie told Attorney Hill that Jones had drawn the will to which the codicil pertained and Attorney Hill explained why it was wrong to have a banker draw a will.

On June 1, 1981, Ernie and Betty were purportedly married. Prior to this marriage, however, Ernie and Betty executed an antenuptial agreement which limited Betty's rights to $2,500 from Ernie's estate. This marriage, however, was void because Betty, although previously married four times, had never obtained a formal divorce from her first husband. Thus, under SDCL 25-1-8, the marriage of Ernie and Betty was void. Betty's first marriage was formally dissolved some two or three years after Ernie's death.

In August 1981, Ernie left a copy of his second will with Jones at the Bank. On this copy Ernie had made several handwritten changes. On August 31, 1981, Ernie was in a Belle Fourche hospital. On this date, Ernie contacted Attorney Hill and requested him to come to the hospital so as to construct a new testamentary instrument. Attorney Hill went to the hospital but after seeing Ernie's condition, Attorney Hill determined that Ernie was unable to attend to the requested business. On this same date, and apparently after Attorney Hill's visit, Ernie called Jones at the Bank and requested that a will incorporating his changes be typed up. Jones told Ernie that this had to stop, but Jones had a Bank secretary type a third will. This third will eliminated Betty's life estate, reduced the $10,000 bequest to Betty to $5,000, and divided the bulk of the estate between Matt and Erna. On the same date, August 31, 1981, Jones took this third will to the hospital. While Jones was out of the room, Ernie signed it. Jones then took the third will back to the Bank and asked the two previous secretary-witnesses if they recognized Ernie's signature and would witness his signature. Both secretaries recognized Ernie's signature and both signed the third will, at the Bank, as witnesses, but outside the presence of each other and outside the presence of Ernie who was still at the hospital. On October 15, 1981, Ernie died at his ranch near Belle Fourche.

Jones offered the third will of August 31, 1981, for probate but Betty objected to its admission. The circuit court determined that the third will was not properly executed. Probate was refused. Matt thereafter offered the first will of November 19, 1980, for probate. Betty objected to probate of this first will. She filed a Petition for Elective Share of Surviving Spouse and a Petition to Set Apart Exempt Personal Property and for Family Allowances.

On January 6, 1983, Matt and Betty executed a Stipulation for Settlement wherein Betty agreed not to contest probate and to release Ernie's estate from all claims and demands. In return, Betty was to receive $50,000 from Ernie's estate; the first $50,000 recovered from a suit against Jones and the Bank to be brought by Ernie's estate; the payment of some $13,000 in debts; and all furniture, appliances, and household goods located in Ernie's ranch residence.

Suit was thereafter brought against Jones and the Bank by the Estate seeking to recover damages allegedly resulting from their negligence and unauthorized practice of law. After a jury trial on the merits, a verdict was returned awarding Matt and Erna $125,000. Thereupon, the trial court entered judgment.

From the whole of this Judgment, Jones and the Bank now appeal asserting some nine issues and subissues for our determination. We group these issues into three categories and address their merits seriatim.

LIABILITY

Jones and the Bank make various assertions relating to nonliability. The first such contention is that this action is not maintainable because a duty was not owed to the beneficiaries of Ernie's third will as no privity existed between the beneficiaries with Jones and the Bank. Numerous courts, however, under third party and/or tort theories, have upheld beneficiary actions against the attorney responsible for drafting or supervising the execution of a defective testamentary instrument, see Lucas v. Hamm, 56 Cal.2d 583, 364 P.2d 685, 15 Cal.Rptr. 821 (1961), cert. denied, 368 U.S. 987, 82 S.Ct. 603, 7 L.Ed.2d 525 (1962); Licata v. Spector, 26 Conn.Supp. 378, 225 A.2d 28 (1966); Needham v. Hamilton, 459 A.2d 1060 (D.C.App.1983); Lorraine v. Grover, Ciment, Weinstein & Stauber, P.A., 467 So.2d 315 (Fla.App.1985); Ogle v. Fuiten, 102 Ill.2d 356, 80 Ill.Dec. 772, 466 N.E.2d 224 (1984); Woodfork v. Sanders, 248 So.2d 419 (La.App.1971), writ denied, 259 La. 759, 252 So.2d 455 (1971); Guy v. Liederbach, 501 Pa. 47, 459 A.2d 744 (1983); Auric v. Continental Cas. Co., 111 Wis.2d 507, 331 N.W.2d 325 (1983); and in Biakanja v. Irving, 49 Cal.2d 647, 320 P.2d 16, 65 A.L.R.2d 1358 (1958), a duty was found to exist and a beneficiary action was upheld when a layman negligently failed to have a will properly attested. The reasoning of Biakanja for upholding the beneficiary's action despite an absence of privity is persuasive. ¹ Based thereon, and under the facts and circumstances of this case, we determine that Jones and the Bank owed a duty to Matt and Erna. Therefore, Matt and Erna can properly maintain this action. One who negligently fails to direct proper attestation of a will becomes liable in tort to an intended beneficiary who suffered damage because of the invalidity of the testamentary instrument. Biakanja; Heyer v. Flaig, 70 Cal.2d 223, 226, 449 P.2d 161, 163, 74 Cal.Rptr. 225, 227 (1969).

Jones and the Bank next contend the evidence fails to reveal that they supervised the signing and witnessing of Ernie's third will; moreover, that mere supervision of a will's execution does not constitute the unauthorized practice of law. After examining the record and pertinent law, however, we are unable to concur in these contentions.

"Supervise" is defined in Black's Law Dictionary 1290 (5th ed. 1979), as: "To have general oversight over, to superintend or to inspect." In the present case, the record reveals that Ernie went to Jones at the Bank on three separate occasions to have his will changed, that Jones directed a Bank secretary to type the changes and two Bank secretaries were directed to sign the wills as witnesses. The record further reveals that on August 31, 1981, Ernie requested changes in his will, that Jones had a Bank secretary type a new will, that Jones delivered this third will to Ernie at the hospital for his signature, and that Jones thereafter directed two Bank secretaries to sign as witnesses. The trial court instructed the jury that Jones supervised the signing and witnessing of Ernie's August 1981 will. ² Based on the record, we find no error with such an instruction. Not only did Jones violate this licensure statute, he failed to exercise a degree of care in the will's execution. SDCL 16-18-1 provides that no person shall engage in the...