Campbell v. Graf , 2014 Ark. App. LEXIS 131 ( 2014 )

Cite as 2014 Ark. App. 98
ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-13-196
JERRY L. CAMPBELL AND Opinion Delivered February 12, 2014
JAMES FRANK CAMPBELL, AS
EXECUTOR OF THE ESTATE APPEAL FROM THE VAN BUREN
JAMES FINIS CAMPBELL COUNTY CIRCUIT COURT
APPELLANTS [NO. CV-2007-60]
V. HONORABLE CHARLES E.
CLAWSON, JR., JUDGE
MARY GRAF
APPELLEE AFFIRMED IN PART; REMANDED
IN PART
RITA W. GRUBER, Judge
Appellants Jerry L. Campbell and James Frank Campbell filed this action after the
death of their father, James Finis Campbell (Mr. Campbell), against Mary Graf. They alleged
fraud, conversion, unjust enrichment, and breach of fiduciary duties surrounding Ms. Graf’s
involvement in and alleged undue influence over Mr. Campbell’s financial affairs and in the
management of his trust. Ms. Graf denied the allegations and filed a counterclaim, alleging
conversion by Jerry and James and asking for repayment of certain funds. The circuit court
entered an order dismissing appellants’ claims of undue influence and ordering appellants to
restore to Ms. Graf funds they removed from Mr. Campbell’s accounts. It also awarded Ms.
Graf reimbursement for amounts she expended to protect the assets of Mr. Campbell’s trust.1
Appellants bring two points on appeal: (1) the circuit court erred in ordering them to restore
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This finding of reimbursement was not appealed.
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money withdrawn from Mr. Campbell’s bank accounts; and (2) the circuit court erred in
denying their request for setoff of $11,000 of Mr. Campbell’s money that was allegedly spent
by Ms. Graf solely for her own benefit. We remand with regard to point one and affirm
regarding point two.
Mr. Campbell passed away on December 15, 2006, at the age of ninety-two.
Appellants are his only surviving children. This lawsuit concerns the disposition of some of
Mr. Campbell’s assets. A brief history of the facts surrounding these assets is helpful. After the
death of Mr. Campbell’s wife in 1999, he executed a will and trust, pursuant to which all of
his assets would flow from his estate into the James Finis Campbell Family Trust. In 2003,
Mr. Campbell met Ms. Graf, and the two remained close companions until his death. Despite
Mr. Campbell’s numerous marriage proposals, they never married. At Mr. Campbell’s death,
his trust named Ms. Graf as successor trustee.
Twice in 2003, Mr. Campbell made amendments to the trust, leaving one condo that
he owned to Ms. Graf in the first amendment and leaving two condos to Ms. Graf in the
second amendment. On January 10, 2005, he again amended the trust, deleting Ms. Graf as
a beneficiary under the trust and leaving all of his property to appellants. On March 9, 2005,
appellants filed a petition for guardianship of Mr. Campbell, alleging that he lacked capacity
to manage his affairs. Mr. Campbell’s deposition was taken and he was evaluated by a
neurologist who, according to the court, found him competent and gave a glowing appraisal
of his mental capacity and awareness. Appellants voluntarily dismissed the petition in October
2005. During the pendency of this guardianship case, on March 22, 2005, Mr. Campbell
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executed a fourth amendment to the trust, leaving one-sixth of his estate to each of six
beneficiaries, including Ms. Graf and each of the appellants.
At some point during their relationship, Ms. Graf and Mr. Campbell bought a condo
together, which they held as rental property before Ms. Graf sold her house. They each paid
$21,000 for the property and took out a loan for the balance. They maintained a joint bank
account at Bank of the Ozarks into which they put the rental proceeds. They then used these
funds to pay the mortgage, dues, and related expenses for the jointly owned condo. After Ms.
Graf sold her house, she paid Mr. Campbell $21,000 for his share of the condo and moved
in. Mr. Campbell deposited $11,000 of that payment into their joint account, and Ms. Graf
used the money to pay expenses for the condo.
In addition to the joint account at Bank of the Ozarks, Mr. Campbell had several
accounts at Regions Bank, including a checking account that was payable on death to Ms.
Graf and a $25,000 certificate of deposit. It was the funds from these Regions accounts that
Ms. Graf alleged appellants had converted and that the court ordered appellants to return.
Although the parties dispute whether appellants should be required to return the funds, they
do not dispute that appellants procured the funds through a longtime neighbor of Mr.
Campbell, Frances Dubach.
Ms. Dubach testified at the hearing that Mr. Campbell had given her a general durable
power of attorney in March 2005 in order to sign an extension of a contract he had entered
into for the sale of his condo. She said that Ms. Graf called her and told her that the realtor
would bring her a power of attorney so that she could sign an extension for the closing. She
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said that James had called her after that transaction asking her “what was going on,” and she
told him she did not want to have Mr. Campbell’s power of attorney. Jerry’s wife, Lindalyn,
brought papers for her to sign to revoke the power of attorney, but Ms. Dubach said that
James and Jerry thought it might be to their advantage to have someone on their side, so she
did not revoke it. In early December 2006, while Mr. Campbell was in hospice care,
appellants, through Lindalyn, contacted Ms. Dubach to ask if she would go with them to
Regions Bank. On December 7, 2006, Ms. Dubach, accompanied by Lindalyn and Jerry,2
went to Regions, taking Ms. Dubach’s power of attorney, and changed the ownership of
several of Mr. Campbell’s accounts. James and Jerry were added as co-owners of a checking
account (containing approximately $41,000 at that time), which was payable on death to
Mary Graf, and as co-owners of Mr. Campbell’s CD, worth $25,000. While it is not clear
from the briefs exactly when these funds were removed by James and Jerry, it is clear that
they took the money out of these accounts. Mr. Campbell died on December 15, 2006.
This lawsuit began when James and Jerry filed a complaint against Ms. Graf on
February 20, 2007. Their final complaint, the third amended complaint, was filed on
February 28, 2008, and alleged in relevant part that Ms. Graf had breached her duties as
trustee of Mr. Campbell’s trust, that Ms. Graf had a power of attorney for Mr. Campbell, and
that she had “taken control over him, isolating him from family members and others.”
Appellants alleged that she deposited $11,000 that she paid Mr. Campbell for his share in
their jointly owned condo into a Bank of the Ozarks account controlled by her. According
2
Appellants dispute whether Jerry was present at the Bank.
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to the complaint, Ms. Graf proceeded to convert this money to her sole use and benefit. In
Ms. Graf’s amended answer to third amended complaint and amended counterclaim, she
denied their allegations, but admitted that she purchased Mr. Campbell’s share of their jointly
owned condo for $21,000. She alleged “on information and belief” that he deposited $10,000
of that amount into one of his Regions Bank accounts and that he deposited $11,000 into
their jointly owned account on February 15, 2005. She affirmatively claimed that appellants
unlawfully converted to their own use $78,000 of the cash assets that belonged to the James
F. Campbell Estate, and thus to the trust, which was the sole beneficiary of the estate.
Specifically, she alleged that Ms. Dubach, as appointed attorney in fact for Mr. Campbell
through her power of attorney, agreed to assist appellants and Lindalyn in changing
ownership of Mr. Campbell’s Regions Bank accounts without Mr. Campbell’s knowledge
and consent. She contended that appellants then removed all funds from the accounts,
totaling more than $78,000. They then represented to Ms. Graf that the estate had no
money, causing the mortgage holder on Mr. Campbell’s condos to foreclose on the condos
belonging to the trust. She also alleged that appellants had attempted to perpetrate a fraud
upon the court by concealing assets of the estate and trust. She asked the court to dismiss
appellants’ complaint and order them to pay the estate $78,000 plus interest.
After the hearing, the circuit court entered an order dismissing appellants’ claims for
lack of capacity and lack of competence of Mr. Campbell and for undue influence by Ms.
Graf. The court found that the fourth amendment to the trust was the operative document
for distribution of trust assets and ordered the assets to be gathered by Ms. Graf, the trustee,
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and distributed pursuant to the trust. The court also ordered appellants to restore to Ms. Graf
the funds removed by them due to Ms. Dubach’s change of ownership of the accounts on
December 7, 2006. Specifically, the court ordered appellants to pay $40,449.75, representing
the balance of the amount in the payable on death account, and $25,000, representing the
balance of the certificate of deposit. The court also ordered appellants to restore to
themselves and Ms. Graf $8,759.62, representing the balance of another Regions checking
account they had liquidated. Finally, the court awarded to Ms. Graf $21,623.04 to be satisfied
from the trust assets for sums she spent to protect trust assets.
When a case is tried by a circuit court sitting without a jury, our inquiry on appeal
is whether the court’s findings are clearly erroneous or clearly against the preponderance of
the evidence. Buck v. Gillham, 80 Ark. App. 375, 378–79, 96 S.W.3d 750, 753 (2003).
Disputed facts and determinations of the credibility of witnesses are within the province of
the fact-finder. Ford Motor Credit Co. v. Ellison, 334 Ark. 357, 974 S.W.2d 464 (1998).
I.
For their first point on appeal, appellants contend that the circuit court erred in
ordering them to restore money that was withdrawn from bank accounts by the rightful
owners of the accounts. Specifically, they argue that the general power of attorney given by
Mr. Campbell to Ms. Dubach was valid and gave her authority to change the ownership of
the accounts. They argue that, because the court did not make a finding that the power of
attorney was invalid and because they removed the funds “well before” the court ordered
the accounts frozen, there was no basis for ordering them to restore the money.
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The relevant portions of the power of attorney to Ms. Dubach provide as follows:
I, JAMES F. CAMPBELL, a resident of Van Buren County, Arkansas, do
hereby designate FRANCES DUBACH, as my agent and attorney (subsequently
called my agent), in my name and for my benefit:
1. General Grant of Power. To exercise or perform any act, power, duty,
right or obligation whatsoever that I now have or may hereinafter acquire relating to
any property, real or personal, tangible or intangible, now owned or hereafter
acquired by me, including, without limitation, the following specifically enumerated
powers, I grant to my agent full power and authority to do everything necessary in
exercising any of the powers herein granted as fully as I might or could do if
personally present, with full power of substitution or revocation, hereto ratifying and
confirming all that my agent shall lawfully do or cause to be done by virtue of this
power of attorney and the powers herein granted.
...
D. Banking Powers. To make, receive and endorse checks and drafts,
deposit and withdraw funds, acquire and redeem certificates of deposit in banks,
savings and loan associations and other institutions, execute or lease such deeds of trust
of other security agreements as may be necessary or proper in the exercise of the rights
and powers herein granted;
....
2. Interpretation and Government Law. This instrument is to be construed
and interpreted as a general durable power of attorney. The enumeration of specific
powers herein is not intended to, nor does it, limit or restrict the general power
herein granted to my agent. This instrument is executed and delivered in the State of
Arkansas, and the laws of the State of Arkansas shall govern all questions as to the
validity of this power and the construction of its provisions.
The court’s order contains nothing to indicate whether it found this power of
attorney valid or invalid. And, although the court recognized on the first page of its seven-
page order that Ms. Graf filed a counterclaim for conversion, it also did not indicate whether
it found that appellants had converted these funds. Ms. Graf’s counterclaim alleged that
appellants unlawfully converted to their own use $78,000 of the cash assets belonging to the
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James F. Campbell Estate, and thus to the trust, which was the sole beneficiary of the estate.
Specifically, she alleged that they persuaded Ms. Dubach, who held a power of attorney for
Mr. Campbell, to assist them in changing ownership of Mr. Campbell’s accounts without his
knowledge and consent. She contended that appellants then removed all funds from the
accounts, totaling more than $78,000. They were able to do this precisely because Ms.
Dubach had the apparent authority to change ownership of the accounts.
Conversion is a common-law tort action for the wrongful possession or disposition
of another’s property. McQuillan v. Mercedes-Benz Credit Corp., 331 Ark. 242, 961 S.W.2d
729 (1998). The tort of conversion is committed when a party wrongfully commits a distinct
act of dominion over the property of another which is inconsistent with the owner’s rights.
Dillard v. Wade, 74 Ark. App. 38, 45 S.W.3d 848 (2001). The intent required is not
conscious wrongdoing but rather an intent to exercise dominion or control over the goods
that is in fact inconsistent with the plaintiff’s rights. Volgelgesang v. Volgelgesang, 2010 Ark.
App. 178, at 4 (affirming finding of conversion from victim’s bank account that were initially
procured through a power of attorney).
The relevant part of the court’s order provides as follows:
It is further considered, ordered; and adjudged that the accounts payable upon
death shall be restored to the owner of the accounts prior to the December 7, 2006
change of ownership under Frances Dubach’s power of attorney; specifically, that the
plaintiffs Jerry Campbell and James Frank Campbell jointly and severally should be
and are hereby ordered to restore to Mary Graf by payment to her forty thousand four
hundred forty nine dollar [sic] and seventy five dollars ($40,449.75) [sic] representing
the December 6, 2006 balance of Regions Bank Checking No. [ ], and twenty five
thousand dollars ($25,000.00) representing the balance of Regions Bank Certificate
of Deposit No. [ ]on the December 6, 2006 before the transfer of ownership; and that
Jerry Campbell and James Frank Campbell jointly and severally should be and are
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hereby ordered to restore to themselves and Mary Graf jointly eight thousand seven
hundred fifty nine dollars ($8,759.62) [sic] representing the balance of Regions
CheckingAccount No. [ ]before the December 7, 2006 change of ownership[.]
The only finding to support this is contained in paragraph 23:
The accounts payable upon death shall be restored to the owner to the accounts prior
to the December 7, 2006 change of ownership under Ms. Dubach’s power of
attorney. The plaintiffs Jerry L. Campbell and James Frank Campbell shall be ordered
to pay to Mary Graf the December 6, 2006 balance of Regions Bank checking
account no. [ ] of Forty thousand four hundred forty nine dollars and seventy five
cents ($40,449.75) and Regions Bank Certificate of Deposit No. [ ] of twenty five
thousand dollars ($25,000); and to restore to Mary Graf and the plaintiffs jointly eight
thousand seven hundred fity seven dollars and sixty two cents ($8,759.62),
representing the December 6, 2006 balance in Regions Checking Account no. [ ].
The circuit court made no findings regarding whether Ms. Dubach’s power of
attorney was valid or whether Ms. Graf established her claim for conversion. It is unclear
from this order on what basis the court required appellants to return the funds. We cannot
review this portion of the court’s order on appeal without findings sufficient to explain and
support the court’s ruling. Therefore, we remand for further findings on this issue.
II.
For their second point on appeal, appellants argue that the court erred in not awarding
them a setoff of $11,000 they claim belonged to Mr. Campbell that Ms. Graf spent solely for
her own benefit. They suggest that Ms. Graf fraudulently converted this money to her own
use. Mr. Campbell testified in a deposition taken during the guardianship proceeding that
Ms. Graf paid him $21,000 for his interest in their jointly owned condo. He said that part of
that $21,000 was used to pay a bill that he owed to a retirement home and that Ms. Graf
“gave [him] a check for the difference of $11,000,” which he put into their jointly owned
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account. Ms. Graf testified at the hearing in this case that she paid Mr. Campbell $21,000 for
his interest in the condo and that $11,000 of that amount was deposited into their joint
account.
Disputed facts and determinations of the credibility of witnesses are within the
province of the fact-finder. Ford Motor Credit Co. v. Ellison, 334 Ark. 357, 974 S.W.2d 464
(1998). In this case, appellants do not argue that the account was not a joint account, co-
owned by Mr. Campbell and Ms. Graf. Rather, they claim that Ms. Graf, and not Mr.
Campbell, deposited the $11,000 check into the account and then spent it solely for her own
benefit. The circuit court determined that Mr. Campbell voluntarily deposited this $11,000
into an account jointly owned by Mr. Campbell and Ms. Graf. It found that this act was not
done under the exertion of undue influence by Ms. Graf.
Generally, funds deposited into a joint account are owned by both parties. Ark. Code
Ann. § 23-47-204 (Repl. 2012). Moreover, contrary to appellants’ argument that Ms. Graf
testified that she put the $11,000 into the account, Ms. Graf said only that $11,000 was put
into their joint account. She did not indicate by whom. Mr. Campbell testified that he
deposited the check. This is a matter of credibility for the fact-finder. Appellants have failed
to demonstrate that the circuit court clearly erred on this issue.
Accordingly, we affirm the court’s denial of appellants’ request for a setoff as stated
above. With regard to the court’s ruling requiring appellants to restore funds taken by them
from Mr. Campbell’s Regions accounts, we remand for further findings to clarify the court’s
order.
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Affirmed in part; remanded in part for further findings.
WHITEAKER and VAUGHT, JJ., agree.
Robert A. Newcomb, for appellants.
Grayson & Grayson, P.A., by: Keith L. Grayson, Melanie L. Grayson, and Ginger L.
Grayson; and Jerry C. Post, for appellee.
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