Swank v. Covington (In re Estate of Hemphill)

• Decision Date: 09 February 2016
• Docket Number: No. 2014–CA–00479–COA.,2014–CA–00479–COA.
• Parties: In the Matter of the ESTATE OF Elva Mae HEMPHILL, Deceased: Gloria Swank, Administratrix of the Estate of Elva Mae Hemphill, Deceased, Appellant/Cross–Appellee v. Geraldine W. Covington, Larry D. Ferris and Catherine H. Ferris, Appellees/Cross–Appellants.
• Court: Mississippi Court of Appeals

186 So.3d 920

In the Matter of the ESTATE OF Elva Mae HEMPHILL, Deceased:

Gloria Swank, Administratrix of the Estate of Elva Mae Hemphill, Deceased, Appellant/Cross–Appellee

v.Geraldine W. Covington, Larry D. Ferris and Catherine H. Ferris, Appellees/Cross–Appellants.

No. 2014–CA–00479–COA.

Court of Appeals of Mississippi.

Feb. 9, 2016.

Glover A. Russell Jr., Steven Alfred Kohnke, Erin Elizabeth Halford, Jackson, attorneys for appellant.

J. Niles McNeel, Louisville, J. Max Kilpatrick, Philadelphia, attorneys for appellees.

EN BANC.

INTRODUCTION AND OVERVIEW

WILSON

, J., for the Court:

¶ 1. In January 2010, Elva Mae Hemphill passed away at the age of ninety-nine without a will. Her primary assets consisted of five certificates of deposit ("CDs") and a checking account. She had invested in CDs for years and intended to use joint ownership of CDs as an estate planning tool. As of April 6, 2007, she had named three of her sisters as joint owners of her various CDs and savings account. On that day, because her health had begun to decline, Elva Mae signed a power of attorney ("POA") appointing Geraldine Covington and Larry Ferris as her attorneys-in-fact. Geraldine is Elva Mae's niece, and Larry is married to another of Elva Mae's nieces, Cathy Ferris.

¶ 2. When Elva Mae died less than three years later, her sisters were no longer joint owners of any of her assets. Rather, through a series of transactions, the CDs and savings account that she owned in April 2007 had been redeemed or liquidated, and the proceeds had been used to purchase new CDs or deposited into a checking account. Geraldine and the Ferrises were named as joint owners of the checking account and all of the CDs that Elva Mae owned at the time of her death. As such, these assets all passed to Geraldine and the Ferrises, rather than to Elva Mae's heirs-at-law.

¶ 3. Another of Elva Mae's nieces, Gloria Swank, was appointed administrator of her estate and, on behalf of the estate, filed suit against Geraldine and the Ferrises. The estate asserted a variety of claims but generally alleged that Geraldine and the Ferrises were in a confidential relationship with Elva Mae and exercised undue influence over her, and that Geraldine violated the terms of the POA by making herself and the Ferrises joint owners of Elva Mae's assets.

¶ 4. The chancery court dismissed much of the estate's case on the ground that Elva Mae's sisters were the proper plaintiffs with standing to sue for recovery of funds attributable to her CDs and savings account that they had jointly held with Elva Mae as of April 2007. The court found that the estate did have standing to sue with respect to Elva Mae's checking account and funds attributable to one CD. Thus, the case proceeded to trial as to those funds only. Following the trial, the chancellor found that Geraldine and the Ferrises had rebutted the presumption of undue influence that arises from a confidential relationship and so were entitled to retain funds attributable to Elva Mae's checking account. However, the chancellor also found that Geraldine violated the terms of the POA by making herself and the Ferrises joint owners of the one CD still at issue; thus, he awarded the estate the funds attributable to that CD. The estate appealed, and Geraldine and the Ferrises cross-appealed.

¶ 5. We conclude that there is substantial credible evidence in the record to support the chancellor's finding that Geraldine and the Ferrises rebutted the presumption of undue influence by clear and convincing evidence. Therefore, that finding is affirmed. We also affirm the chancellor's conclusion that Geraldine violated the clear terms of the POA to the extent she utilized it to make herself and the Ferrises joint owners of Elva Mae's funds. However, we reverse on the issue of standing. We hold that to the extent that Geraldine and the Ferrises acquired joint ownership of Elva Mae's funds because of a violation of the POA, those funds must be returned to the estate. Our ruling on this issue permits the estate to recover certain funds in addition to those awarded by the chancellor. Below, after a discussion of the facts and procedural history of this case, we explain how our conclusions apply, and we remand for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL HISTORY

¶ 6. Elva Mae Hemphill was born on September 3, 1910. She never married or had children. She had five brothers and three sisters. As of April 2007, three sisters (Lillie Eatman, Gertie Bateman, and Nola White) and one brother (Clovis Hemphill) were still living. Elva Mae also had numerous nieces and nephews, including Nola White's daughter, Geraldine Covington; Clovis Hemphill's daughter, Cathy Ferris; and Lillie Eatman's daughter, Gloria Swank.

¶ 7. Elva Mae worked for many years at Flintkote in Meridian. She never made a lot of money, but she was frugal. She never owned a car or had a driver's license. She walked from her home to stores and banks in downtown Meridian and relied on a coworker for transportation to and from work. She saved much of what she earned, invested her savings in CDs, and actively shopped local banks for the best interest rates. Through her diligent saving and investing, by April 2007 she had amassed more than $636,000, held in a savings account and six CDs at three different banks.

¶ 8. As Elva Mae grew older, she relied increasingly on relatives for help. Geraldine Covington, who lived in Louisville, Mississippi, visited regularly and wrote checks for Elva Mae at Elva Mae's direction. Cathy Ferris and her husband, Larry, also lived in Louisville, visited Elva Mae regularly, and brought her groceries.

¶ 9. In April 2007, Lillie Eatman and Gloria Swank visited Elva Mae and found her living in deplorable conditions. According to Gloria, Elva Mae's house was infested with rats and roaches, and there were feces on the floor and in her bed. There was a bucket in the bathroom for waste because the toilet was stopped up. There was also rotting food in the kitchen and little if any good food for Elva Mae to eat. Gloria testified that she found her aunt lying in bed in the fetal position. According to Gloria, her aunt was frail and emaciated, could not see or hear well, and said that she was "dying." When Gloria asked Geraldine and Cathy why Elva Mae was living in such conditions, they said that Elva Mae would not let them hire someone to help her.

¶ 10. Gloria called her brother John Eatman, who lived in Louisiana, and the two of them spent several days thoroughly cleaning Elva Mae's home. They also hired an exterminator. John described his aunt as very weak, unable to see, and very hard of hearing. John did not see Elva Mae again after April 2007.

¶ 11. At Gloria's insistence, she, Geraldine, Cathy, and Larry met and made a plan to ensure that Elva Mae had the assistance she needed to continue living in her own home.¹ Gloria said that someone should have power of attorney for Elva Mae, and she suggested Geraldine, since Geraldine was already writing checks for Elva Mae. However, Geraldine was not comfortable serving in that capacity on her own. Accordingly, Lillie Eatman suggested that Larry also have power of attorney, and Larry and Geraldine both agreed.

¶ 12. On April 6, 2007, Elva Mae signed a "Durable Power of Attorney for Financial Management." She signed the document at her house in the presence of Gloria, Lillie, Cathy, Larry, and two neighbors who served as witnesses. Someone either read the document aloud to Elva Mae or summarized its terms for her. According to testimony at trial, it had taken several days to persuade her that she should sign the document.

¶ 13. The POA expressly restricted Geraldine's and Larry's powers as follows:

10. Attorney-in-fact Compensation

My Attorney-in-fact will receive no compensation except for the reimbursement of all out of pocket expenses associated with the carrying out of my wishes.

11. Co-owning of Assets and Mixing of FundsMy Attorney-in-fact may not mix any funds owned by him or her in with my funds and all assets should remain separately owned if at all possible.

12. Personal Gain from Managing My Affairs

My Attorney-in-fact is not allowed to personally gain from any transaction he or she may complete on my behalf.

¶ 14. The same day, Elva Mae also signed an "Advance Health–Care Directive" form that designated Geraldine as her agent for making healthcare decisions. The document designated Larry and Gloria as the first and second alternate agents.

¶ 15. The same two neighbors signed witness certificates for the POA and notarized declarations for the healthcare directive. The neighbors certified that, in their opinions, Elva Mae "had the capacity to understand the nature and effect of the [POA]." They also declared, under penalty of perjury, that Elva Mae "appear[ed] to be of sound mind."

¶ 16. As of the date Elva Mae executed the POA, she held the following joint account and CDs with rights of survivorship with her sisters:

Account	Balance	Owner
Citizens Bank CD * * * *2226	$114,432.00	Elva Mae or Nola White
Citizens Bank CD * * * *2227	$124,844.19	Elva Mae or Lillie Eatman
Regions Bank CD * * * *0493	$101,418.59	Elva Mae or Nola White or Gertie Bateman
Trustmark CD * * * *30006	$ 36,201.80	Elva Mae or Lillie Eatman
Trustmark CD * * * *6022	$121,755.69	Elva Mae or Lillie Eatman
Trustmark CD * * * *6523	$ 52,964.63	Elva Mae or Lillie Eatman
Trustmark Savings * * * *4367	$ 85,177.08	Elva Mae or Lillie Eatman

¶ 17. At trial, Gloria recalled an occasion prior to the execution of the POA when Elva Mae told her, "I've got [my money] like I want it." Gloria testified that she and her aunt never discussed finances again after Elva Mae signed the POA.

¶ 18. Elva Mae also had a checking account at Trustmark National Bank. Not long after Elva Mae signed the POA, Geraldine and Larry drove her to the bank to add them to the account as joint owners. Sandra Robinson, the Trustmark branch manager, came out to the car to meet them because Elva Mae was in her...