Gordon v. Busbee (Lawyers Weekly No. 011-006-12, 12 pp.) (Aphrodite K. Konduros, J.) Appealed from Aiken County Circuit Court. (Doyet A. Early III, J.) S.C. App.
Holding: Where the wife’s power of attorney did not contain a gift-giving provision, and where the record contains no written evidence of her authorization for her husband/attorney-in-fact to make the transfers he did, the trial court erred in failing to direct a verdict for the wife’s heirs as to any transactions involving the husband’s taking funds that were undisputedly the wife’s and transferring them into a fund solely owned by him.
We affirm in part and reverse in part the trial court’s denial of plaintiffs’ motions.
In Fender v. Fender, 285 S.C. 260, 329 S.E.2d 430 (1985), our Supreme Court adopted “a rule barring a gift by an attorney-in-fact to himself or a third party absent clear intent to the contrary evidenced in writing.“
Fender‘s mandate is designed to protect the vulnerable from improper conduct by those in whom they place the greatest trust. Accordingly, plaintiffs’ directed verdict motion to disallow the transfers under Fender was sufficiently specific to operate as a directed verdict motion for breach of fiduciary duty.
The wife’s power of attorney (POA) did not contain a gift-giving provision, and the record contains no written evidence of her authorization for the husband to make the transfers he did. The trial court based its decision on the existence of evidence, however slight, showing an arrangement between the husband and wife to allow him to make transfers to avoid estate taxes. However, under Fender, the existence of such an oral agreement is insufficient to authorize the transfers.
Any transactions involving the husband’s taking funds that were undisputedly the wife’s and transferring them into a fund solely owned by him would fit within the construct of Fender. Therefore, the circuit court erred in failing to grant plaintiffs’ directed verdict motion as to those transactions.
With the exception of a $70,000 withdrawal from a joint account, the transactions made during April 2000 were transfers from the wife’s accounts to the husband’s accounts. Even if these transfers were made in furtherance of some oral agreement between the husband and wife, they are exactly the types of transactions prohibited by Fender as a matter of law.
Some of the transactions at issue in the trial involve facts that arguably bring them outside the scope of Fender. As to those transactions, determining whether the husband had breached a fiduciary duty was within the jury’s province.
Fender mandated a grant of directed verdict on transactions in which the evidence demonstrated the wife’s solely-owned assets were transferred by the husband for his sole benefit. Therefore, withdrawals in excess of $190,000 should be returned to plaintiffs.
We remand this matter to the circuit court for a determination of the interest due to plaintiffs on these sums. The issue of the propriety of the remaining transactions was properly submitted to the jury because they involved questions of disputed fact.
Other Issues
Plaintiffs presented no evidence that the husband’s attorney had actual knowledge of the transfers the husband made before or at the time he made them. Even if the attorney should have conducted additional investigation into the assets of the wife’s estate, that does not constitute evidence of actual knowledge of improper activity on the husband’s part. Therefore, the circuit court did not err in granting a directed verdict in the attorney’s favor.
The trial court correctly directed a verdict against plaintiffs on their fraud claims. There was no evidence that the husband’s son had committed any sort of fraud, and he had yet to receive any of the funds transferred from the wife’s estate to the husband’s estate. Even though the husband’s daughter received a benefit from the husband’s conduct in the form a loan from her father, the trial court indicated those funds might be owed to the wife’s estate pending the resolution by the jury of the remaining claims against the husband’s estate. Finally, the husband’s attorney did not benefit from the alleged fraud, and there is no evidence that she knew any representations she made in filing the inventory of assets of the husband’s estate were false at the time they were made.
The trial court correctly directed a verdict for the husband’s attorney on the plaintiffs’ claim that she converted the wife’s assets. There is no evidence that the attorney assumed control of any funds without authorization. At the time she became personal representative of the husband’s estate, the assets at issue were in accounts held by the husband, and the attorney properly exercised control over them as personal representative of his estate. Furthermore, she exercised no control over the assets in her individual capacity.
Where the record contains only speculation that any of the parties conspired with each other for the purpose of harming the wife or her estate, and where plaintiffs failed to allege any special damages incurred as a result of any conspiracy, the trial court did not err in granting a directed verdict against plaintiffs on their civil conspiracy claim.
Even though there is no absolute ban on submitting requests for jury instructions after closing arguments, since the jury clearly believed the defense in this case, plaintiffs were not prejudiced by the trial court’s refusal to give the plaintiffs’ requested instruction: “Funds placed in a joint account with right of survivorship remain property of the contributing party until that party’s death, unless there is clear and convincing evidence of a different intent.”
Although no S.C. case discusses the burden-shifting scheme in a conversion claim against an attorney-in-fact or personal representative, Howard v. Nasser, 364 S.C. 279, 613 S.E.2d 64 (Ct. App. 2005), is instructive.
While the fiduciary may have the burden to offer some evidence to establish a lack of undue influence, or in this case the validity of the transfers, the ultimate burden of proof remains with the complaining party unless the fiduciary offers no evidence to rebut the relevant presumption. In this case, the circuit court’s instruction indicated the ultimate burden of proof was on plaintiffs and also indicated that the husband’s estate, as his representative, was required to offer a valid explanation for the transfers he made. These statements appear to accurately represent the burden-shifting scheme that should be employed. Therefore, the instruction was not erroneous and did not constitute reversible error.
Finally, the trial court did not err in declining to grant the equitable relief requested by plaintiffs. Evidence was presented that the husband was attentive and loving to the wife and at least some evidence showed that the two of them had arranged a plan for him to transfer funds for his benefit. Furthermore, a large portion of the transfers did not occur until the end of the wife’s life was near and she would no longer need them for her own benefit. Furthermore, the husband was entitled at least to his elective share of the wife’s estate. Based on the record as a whole, the circuit court did not err in declining to create a constructive trust in favor of the wife’s estate.
Affirmed in part, reversed in part, and remanded.