Welton v. Gallagher

• Court: Hawaii Court of Appeals
• Writing for the Court: Before HAYASHI; BURNS
• Citation: Welton v. Gallagher, 630 P.2d 1077, 2 Haw.App. 242 (Haw. App. 1981)
• Decision Date: 24 June 1981
• Docket Number: No. 7100,7100
• Parties: Richard E. WELTON, Plaintiff-Appellant, v. Florence GALLAGHER, Defendant-Appellee.

Page 1077

630 P.2d 1077

2 Haw.App. 242

Richard E. WELTON, Plaintiff-Appellant, v. Florence GALLAGHER, Defendant-Appellee.

No. 7100.

Intermediate Court of Appeals of Hawai'i.

June 24, 1981.

Certiorari Granted July 16, 1981.

As Amended July 28, 1981.

Syllabus by the Court

1. A gift is a voluntary transfer of property without consideration or compensation.

2. Burden of proving a gift is on the donee.

3. Clear and convincing evidence is that measure or degree of proof that will produce in the mind of the trier of facts a firm belief or conviction as to the allegations sought to be established. It is intermediate, being more than a mere preponderance but not to the extent of such certainty as is required beyond a reasonable doubt as in criminal cases.

4. The burden of proving a confidential or fiduciary relationship rests on the one attacking the gift.

5. Where a fiduciary relationship exists, the donee is required to come forward with evidence contrary to the presumption of undue influence.

6. There is a presumption of competency; the burden of proving lack of competency to make a gift rests on the donor.

7. A donor must divest himself of control of the gift for delivery to be complete.

8. The exercise by the donee of dominion over the subject of the gift or an assertion of a right thereto is generally held to be evidence of acceptance; and where the gift is beneficial to the donee and imposes no burdens upon her, acceptance is presumed.

9. The existence or absence of intent to make a gift is an evidentiary issue to be resolved by the finder of fact.

10. Elements of a gift causa mortis are (1) the gift must be made in view of approaching death from some existing sickness or peril; (2) the donor must die from such without having revoked the gift; and, (3) there must be a delivery of the subject of the gift to the donee, subject to revocation in the event of recovery from the pending sickness.

11. Evidence is not admissible to prove that the reputation of a witness for truth and veracity is good where there has been no attempt to impeach him by showing that his reputation for truth and veracity is bad.

Jack C. Morse, Honolulu, for plaintiff-appellant.

Gene Bridges, Honolulu, for defendant-appellee.

Before HAYASHI, C. J., and PADGETT and BURNS, JJ.

BURNS, Judge.

This is an appeal by Plaintiff-Appellant Welton from the judgment of the court below in favor of Defendant-Appellee Gallagher after a jury-waived trial.

Mr. Welton argues that the court erred in finding that he had made a valid inter vivos gift of bearer bonds worth $20,000 to Mrs. Gallagher. He contends that either no gift was made or, in the alternative, that the gift was causa mortis and had been revoked, and urges upon us the following propositions:

1. That the evidence presented by Mrs. Gallagher did not meet the "clear and convincing" standard of proof;

2. That Mr. Welton was incompetent to form the requisite donative intent because of any or all of the following: drunkenness, depression, or undue influence exerted by Mrs. Gallagher;

3. That Mr. Welton had not actually delivered the bonds nor had Mrs. Gallagher accepted them; and that regardless of his competency, Mr. Welton did not have any donative intent;

4. That if, in fact, a gift was made, it was motivated by Mr. Welton's fear of imminent death and was therefore a revocable gift causa mortis; and,

5. That the trial court erred in its refusal to hear evidence of Mr. Welton's reputation for truth and veracity.

We are unable to agree with any of these contentions and, accordingly, affirm the judgment below.

Mr. Welton, a businessman in his late sixties, and Mrs. Gallagher, a widow in her forties, met in October 1973. Shortly thereafter, Mr. Welton underwent several operations for cancer. When he was released from the hospital in late 1973 or early 1974, Mrs. Gallagher devoted much time and attention to his needs. Mr. Welton was very appreciative and their friendship prospered.

In January 1975, Mr. Welton's corporation purchased an ice cream business, which he and Mrs. Gallagher operated until it was sold in July of that year. During this period, they shared a house in Wahiawa.

After the sale, Mr. Welton and Mrs. Gallagher moved to her residence on Bernice Street, where Mr. Welton remained except during periods of disagreement when he moved out temporarily until late 1975. Mr. Welton spent a good deal of money on repairs and improvements to the Bernice Street property. In addition, he had earlier paid off some $8,000 of Mrs. Gallagher's debts.

During this last half of 1975, Mr. Welton and Mrs. Gallagher intermittently discussed other types of businesses they could become involved in together; however, nothing concrete developed.

In November 1975, Mr. Welton moved out of the Bernice Street house. In January 1976, he began living with Mrs. Gallagher's calabash niece, Sandra Kwock, a woman in her twenties. Mr. Welton and Ms. Kwock entered into an agreement whereby Ms. Kwock would take care of Mr. Welton for the rest of his life and Mr. Welton would give Ms. Kwock $25,000 in bearer bonds for her financial security and, possibly, toward the purchase of a condominium.

In February or March of 1976, Ms. Kwock left town with these bonds and has not since been located.

Mr. Welton, in his distress, turned to Mrs. Gallagher for comfort. Although she had been deeply hurt by the affair, she consoled Mr. Welton and invited him to return to the Bernice Street residence. Mr. Welton moved back in and the parties resumed their previous relationship.

In April 1976, Mr. Welton presented Mrs. Gallagher with $20,000 in bearer bonds and told her to place them in her safe deposit box. Mr. Welton testified that he did this for the dual purpose of preserving capital to start a theoretical new business venture and for Mrs. Gallagher's financial security in case of his death. Mrs. Gallagher testified that the bonds were given as a gift: Mr. Welton had told her that because she was so much more deserving of his generosity than Ms. Kwock, he wanted her to have bonds as well.

In October or November 1976, Mr. Welton and Mrs. Gallagher ended their relationship and Mr. Welton moved out of the Bernice Street house permanently. When he subsequently demanded that Mrs. Gallagher return the bonds and she refused, he commenced this action.

A "gift" is generally defined as a voluntary transfer of property by one person to another without any consideration or compensation therefor. City of Bellevue v. State, 92 Wash.2d 717, 600 P.2d 1268 (1979). Because of the obvious potential for abuse inherent in such a transaction, courts have generally placed the burden of establishing the gift on the donee, Siko v. Sequirant, 51 Haw. 118, 452 P.2d 447 (1969), even when the issue of gift is first raised by a defendant in his answer, Detra v. Bartoletti, 150 Mont. 210, 433 P.2d 485 (1967).

There is some question as to the extent of this burden whether it be a preponderance of the evidence, as is customary in civil cases, or the higher standard of clear and convincing evidence. The general rule is that in order to sustain a gift, the evidence must be clear and convincing. 38 Am.Jur.2d Gifts § 103 (1968). However, Professor Corbin elaborates on and refines this rule by stating that the evidence must be clear and convincing if the trial in which the proof is offered is held after the donor's death. 4 Corbin on Contracts 654-55 (1951). The higher standard is then required because of the greater possibility of fraud or pretension. In Hawaii, the question of burden of proof, whether the donor be living or dead, has not been decided. ¹ Nor need the question today be decided, for in its findings of fact, the trial court stated:

28. The testimony of Defendant was clear and convincing in showing that at the times Plaintiff delivered the bonds to Defendant, he did not place any conditions on her use of the bonds and he intended to make an outright gift of them. (Emphasis added.)

Clear and convincing evidence has been defined as "that measure or degree of proof which will produce in the mind of the trier of facts a firm belief or conviction as to the allegations sought to be established. It is intermediate, being more than a mere preponderance, but not to the extent of such certainty as is required beyond a reasonable doubt as in criminal cases. It does not mean clear and unequivocal." Cross v. Ledford, 161 Ohio St. 469, 477, 120 N.E.2d 118, 123 (1954).

Fred C. Walker Agency, Inc. v. Lucas, 215 Va. 535, 211 S.E.2d 88, 92 (1975). See also Jolley v. Jolley, 46 Ohio Misc. 40, 347 N.E.2d 557 (1975); Hobson v. Eaton, 399 F.2d 781 (C.A. 6th 1968).

To ascertain whether the appellee's evidence fails to produce in the mind of a reasonable person a firm belief as to the facts sought to be established, we must pursue the further questions raised by this appeal.

Mr. Welton raises as a preliminary issue several questions regarding his competency as a donor. First, he avers that no gift may be found because he was the victim of Mrs. Gallagher's undue influence. He draws our attention to the case of Teixeira v. Teixeira, 40 Haw. 631 (1955), wherein our supreme court held:

The fact that a confidential or fiduciary relationship existed between the grantor and the grantee has been held to require very close scrutiny by the courts and also to justify, along with other circumstances such as inadequacy of consideration, etc., a finding of fraud or undue influence, and the authorities hold there is a presumption of fraud where such facts exist.

40 Haw. at 636.

We find no evidence whatsoever of undue influence in this case. First, the burden of proving that a donor was dominated by the donee, or that a confidential or fiduciary relationship existed between them, rests on the one attacking the gift. Amado v. Aquirre, 63 Ariz. 213, 161 P.2d 117, 160 A.L.R. 1126 (1945). Basically a "fiduciary relationship implies a condition of...