Testa v. Roberts

• Decision Date: 04 March 1988
• Docket Number: No. L-87-043,L-87-043
• Citation: 542 N.E.2d 654,44 Ohio App.3d 161
• Parties: TESTA, Exr., Appellee and Cross-Appellant, v. ROBERTS et al., Appellants and Cross-Appellees. *
• Court: Ohio Court of Appeals

Page 161

44 Ohio App.3d 161

542 N.E.2d 654

TESTA, Exr., Appellee and Cross-Appellant, v. ROBERTS et al., Appellants and Cross-Appellees. ^*

No. L-87-043.

Court of Appeals of Ohio, Sixth District, Lucas County.

March 4, 1988.

Syllabus by the Court

1. The creation of a power of attorney requires that the principal be mentally competent at the time the power is executed.

2. The test to be used to determine mental capacity is the ability of the principal to understand the nature, scope and the extent of the business he is about to transact.

3. Although mere confusion and the infirmities of old age are not of themselves determinative of an incapacity to transact one's business, they are competent proof of capability to understand the nature of the transaction and the ability of one to protect his own interests.

4. Ratification by a principal cannot occur unless that principal has full knowledge and understanding of the acts performed by the agent. The burden of proving that a principal ratified an agent's acts is upon the agent who must clearly show that the principal had knowledge of all the facts pertaining to the act.

5. In a transaction where one party occupies a confidential or fiduciary relationship with another party, a presumption arises that the occupier of the superior position must go forward with the burden of proof on the issue of the fairness of the transaction.

6. Evid.R. 804(B)(5) is a hearsay exception for the declarations of a decedent which rebut testimony of an adverse party and is available only to the party substituting for the decedent.

7. R.C. 1343.03(A) bestows automatically a right to the statutorily stated interest as a matter of law.

Warren D. Wolfe, Toledo, for appellee and cross-appellant.

Roger J. Kania, Oregon, for appellants and cross-appellees.

CONNORS, Judge.

This appeal arises from the Lucas County Court of Common Pleas, Probate Division, wherein that court entered judgment in favor of plaintiff-appellee and cross-appellant (hereinafter appellee), finding that monies in the hands of defendants-appellants and cross-appellees (hereinafter appellants) are the property of the estate of Florence M. Whipple and ordering that these funds be turned over to the executor of that estate. The facts of this case are as follows:

Following a short illness and subsequent confinement to a nursing home, Florence M. Whipple, decedent, executed a power of attorney appointing her nephew, Jack Roberts, her attorney-in-fact. Said power of attorney, signed by decedent on October 7, 1983, gave Roberts the general authority to conduct decedent's business and included the control of her bank accounts.

Beginning in January 1984, Jack Roberts proceeded to transfer funds from savings accounts held solely under the name of Florence M. Whipple and distributed these funds in the following manner:

(1) January 17, 1984--transferred $20,009.17 to a joint and survivorship account in the names of decedent and himself.

(2) July 17, 1984--transferred $35,633.58:

(a) $10,000 to a joint and survivorship account in the names of decedent and appellant Jacqueline Breno, a grandniece.

(b) $20,000 to a joint and survivorship account in the names of decedent and appellant Ralph Roberts, a nephew.

(c) $5,633.58 to an account in the name of decedent only.

(3) July 19, 1984--transferred $24,768.58:

(a) $10,000 to a joint and survivorship account in the names of decedent and Lloyd Cary, a nephew.

(b) $14,768.56 to decedent's checking account.

(4) August 2, 1984--$32,460.25 to decedent's checking account.

(5) Sometime after August 2, 1984--$40,000 to a money market account at E.F. Hutton which was later invested in annuities in the names of himself, appellant Ralph Roberts, and appellant Virginia Roberts.

(6) January 16, 1985--$20,000 to a joint and survivorship account in the names of decedent and himself. Withdrew a check made payable to Jack Roberts for $2,706.47.

According to witness testimony, Mrs. Whipple's mental state during this period varied from "confused and agitated" to "almost normal." In addition, between January 1984, and the time of her death on July 10, 1985, decedent suffered two strokes, the second leaving her partially disabled.

After Florence M. Whipple's death, the various accounts engendered by her attorney-in-fact were again made joint and survivorship with the respective spouses of the original joint tenants. Jack Roberts died shortly after his aunt. Lloyd Cary is not a party to this action having settled with appellee prior to trial.

The record also reveals that decedent left a will dated April 28, 1978, and a codicil dated September 20, 1978. Under this will, the parties to this action were devised specific, but modest, bequests. The residue of the estate was bequeathed to charity. At the present time, approximately $122,000 is in the estate and $90,000 is in the possession of appellants.

The court below concluded, among other things, that Florence M. Whipple did not have the requisite mental capacity on October 7, 1983, to sign a power of attorney, thus invalidating this instrument, and that she was incapable of understanding or ratifying the various fund transfers made by Jack Roberts pursuant to that legally invalid power of attorney. Based on these conclusions, the court ordered appellants to pay to appellee the balance of their respective accounts plus accrued interest. From these findings and order appellants filed a timely appeal and set forth the following assignments of error:

"I. The lower court's decision stating that the facts show a clear intent to take advantage of an elderly widow, confined to a nursing home by periods of mental fatigue and strokes (finding of fact, p. 8) and that Florence Whipple was incompetent to sign a power of attorney on October 7, 1983 (finding of fact, p. 9) was clearly against the manifest weight of the evidence presented at trial.

"A. There was no testimony * * * adduced at trial indicating that Ms. Whipple lacked the required testamentary capacity to dispose of her property in the way she saw fit.

"B. The plaintiff brought forth no testimony to rebut the defendant's [sic] testimony that the decedent had had the power of attorney read to her and that she understook [sic] it and signed it.

"II. The lower court erred in finding that the decedent did not ratify the acts of her agents, Jack Roberts and Ralph Roberts.

"III. The lower court erred in its conclusions of law when it stated the defendant[s] had the burden of showing that no undue influence was used and that the decedent acted voluntarily and with full understanding of the act and its consequences.

"A. A person is presumed to be competent until it is shown otherwise.

"B. The plaintiff failed to show any evidence that the decedent was incapacitated or incompetent at the time the power of attorney was signed.

"IV. The lower court erred in not allowing the decedent's witnesses to testify as to what the decedent, Florence Whipple, had told them concerning the setting up of accounts and the signing of the power of attorney."

Appellee also filed timely a cross-appeal asserting as his sole assignment of error:

"The Trial Judge failed to award plaintiff interest at the rate of 10 per cent per annum pursuant to § 1343.03(A), Ohio Revised Code, from the date of his decedent's death."

Initially, appellants contend that the probate court's finding that Florence M. Whipple did not have the mental capacity to sign a power of attorney on October 7, 1983, was against the manifest weight of the evidence adduced at trial.

We wish to note at the outset that appellants set forth in their brief several arguments and supporting case law involving the requisite mental capacity for the making of a will. To dispel any confusion concerning that legal standard and the mental capabilities required to sign a power of attorney, this court will briefly discuss the meaning and creation of a valid power of attorney.

A power of attorney is a written instrument authorizing an agent to perform specific acts on behalf of his principal. Trenouth v. Mulroney (1951), 124 Mont. 499, 227 P.2d 590. In Ohio, the execution of a power of attorney is controlled by statute and must conform to its provisions to be valid. See R.C. 1337.01. The creation of a power of attorney requires that the principal be mentally competent at the time the power is executed. 3 American Jurisprudence 2d (1986), Agency, Section 24. Derived from contracts law, the test to be used to determine mental capacity is the ability of the principal to understand the nature, scope and the extent of the business she is about to transact. Vnerakraft, Inc. v. Arcaro (1959), 110 Ohio App. 62, 64, 12 O.O.2d 229, 230, 168 N.E.2d 623, 625.

The party seeking to prove mental incapacity to sign a power of attorney must do so by clear and convincing evidence. Lyon v. Jackson (App.1955), 72 Ohio Law Abs. 5, 8, 132 N.E.2d 779, 781.

This brings us to the essence of appellants' first assignment of error, i.e., whether the trial court's findings were contrary to the weight of the evidence. In determining whether a lower court's judgment is against the manifest weight of the evidence, the standard established by the Ohio Supreme Court mandates that:

"Judgments supported by some competent, credible evidence going to all the essential elements of the case will not be reversed by a reviewing court as being against the manifest weight of the evidence." C.E. Morris Co. v. Foley Constr. Co. (1978), 54 Ohio St.2d 279, 8 O.O.3d 261, 376 N.E.2d 578, syllabus.

In Seasons Coal Co., Inc. v. Cleveland (1984), 10 Ohio St.3d 77, 10 OBR 408, 461 N.E.2d 1273, the court further delineated the duty of a reviewing court in reversing a judgment as being against the manifest weight of the evidence by stating:

"While we agree with the proposition that in some instances an appellate court is duty-bound to exercise the limited prerogative of reversing a judgment as...