In Re Estate of Kaminski , 200 Ill. App. 3d 309 ( 1990 )

JUSTICE JOHNSON

delivered the opinion of the court:

Respondent, Leon Sender, appeals from the order and judgment of the circuit court of Cook County that ordered him to remit to the estate of Edward Kaminski, deceased, the sum of $49,000, less credit for any amount previously paid to Kaminski. The following issues are raised on appeal: (1) whether the trial court failed to consider the presumption favoring the transfer of real estate to respondent; (2) whether the special administrator failed to bear the burden of showing by clear and convincing evidence that a fiduciary relationship existed between respondent and Kaminski; (3) whether the trial court’s factual findings were supported by the evidence; (4) whether the transfer of real estate to respondent was pursuant to an agreement between respondent and Kaminski that had been fully performed by the parties; (5) whether the trial court erred in inquiring into Kaminski’s mental capacity; (6) whether the trial court erred in allowing the previously removed executrix to testify as to alleged conversations she had with Kaminski; (7) whether the trial court should have disqualified counsel who had previously represented respondent in another matter; and (8) whether a constructive trust was improperly imposed upon the proceeds from the sale of the real estate in question.

We affirm.

J. Stirling Mortimer, special administrator of the estate, brought a citation proceeding against respondent, the nephew and godchild of Kaminski, to recover property that the estate claimed Kaminski owned. The property, located at 6449 South Kedvale, in Chicago, had been Kaminski’s place of residence until 1979. Title to the property had been held in a land trust since 1969. Beneficiaries to the land trust had at one time included respondent, but respondent was removed as a named beneficiary by Kaminski in 1978. In 1979 Kaminski, in ill health and saddened by the memories that the house brought of his deceased wife, moved to Indiana to live with a relative, Mary Zalesiak. Respondent testified that he provided for the maintenance of the properly from 1979 until he sold the real estate in 1982.

In March or April 1982, Kaminski returned to Chicago. Respondent testified that during Kaminski’s stay with him they had various conversations concerning the transfer and ownership of the property in question. Initially, respondent testified that the property was a gift from Kaminski. On appeal, respondent maintains that the property was transferred to him in the form of a sale. A real estate sales contract was never drafted that reflected the agreed upon purchase price of $40,000. According to respondent, the terms of the purchase were that he would pay Kaminski $300 per month, or more if needed, until the time of his uncle’s death. Respondent could not, however, produce the memorandum reflecting these payment terms.

Subsequently, respondent instructed his attorney to prepare the necessary papers to effect transfer of the title. Once the papers were completed, respondent traveled to Michigan, where Kaminski then resided, to obtain his uncle’s signature. Kaminski signed the papers without the benefit of counsel. The papers were notarized in Michigan on May 20, 1982. Although respondent testified at trial that he had explained the contents of the documents to his uncle and that his uncle said he understood the nature of the transaction, at respondent’s deposition, he testified that he did not know if Kaminski understood the terms of the transaction.

On June 24, 1982, 34 days after the alleged transfer of the real estate, respondent sold the property in question to a third party for $49,000. Kaminski died on March 3, 1983, at the age of 71. Payments were made to Kaminski up to the time of his death. Respondent reported that the payments approximated $10,600.

Following a citation hearing, the trial court found that the transaction between respondent and Kaminski did not constitute a gift, but was, instead, “a questionable transaction where an individual of confidential relationship took advantage of the decedent.” It further found that a fiduciary or confidential relationship existed whereby respondent used undue influence to procure the property. The trial court ordered respondent to remit $49,000, less credit for any monies paid to Kaminski, to the estate of Kaminski. It is from this order that respondent appeals.

In a citation proceeding, the testimony of a donee as to what was said to him by a deceased donor is a question of credibility and must be carefully scrutinized. (See In re Estate of Shanahan (1978), 59 Ill. App. 3d 269.) The trial court is in the best position to make a determination as to witness credibility and the weight to be afforded to the testimony. (Metropulos v. Chicago Art Glass, Inc. (1987), 156 Ill. App. 3d 727, 741.) The findings of the trial court are not to be disturbed unless they are against the manifest weight of the evidence. Metropulos, 156 Ill. App. 3d at 737.

Respondent first contends that the trial court ignored the presumption that a deed duly acknowledged and recorded effectively passes title of the property to the grantee. (In re Estate of Shedrick (1984), 122 Ill. App. 3d 861, 864.) This presumption, however, is not conclusive but rebuttable. (Shedrick, 122 Ill. App. 3d 861.) A transfer of property may be set aside because of undue influence or breach of a fiduciary or confidential relationship. Crawford v. Krebs (1976), 40 Ill. App. 3d 568, 573.

In the instant case, we do not find that the trial court ignored the presumption that an acknowledged deed may effectively transfer property; rather, the court found that there existed a confidential or fiduciary relationship which warranted imposing a constructive trust on the proceeds from the sale of the property. We do not find that the trial court’s findings were against the manifest weight of the evidence.

The court considers the following factors in making its determination of whether a confidential relationship exists: the degree of kinship of the parties; the disparity in age; health and mental condition; education and business experience between the parties; and the degree of trust placed in the dominant party. (Metropulos v. Chicago Art Glass, Inc. (1987), 156 Ill. App. 3d 727, 737.) “Additionally, where a confidential relationship is found to exist, there is a presumption that the transaction complained of resulted from undue influence [citation], thereby shifting the burden to the other parties to establish the fairness of the transaction.” Metropulos, 156 Ill. App. 3d at 737.

In the instant case, the trial court found, after carefully reviewing the records, hearing arguments from both parties, and evaluating the facts against the law in this area, that the evidence was clear and convincing that a confidential or fiduciary relationship existed between the parties and that respondent failed to rebut the presumption of undue influence. We do not find this holding to be against the manifest weight of the evidence.

The trial court gleaned from the facts presented at trial that all of the factors indicative of a confidential or fiduciary relationship were present in the instant case. Respondent was the nephew and godchild of Kaminski. The discrepancy in ages was approximately 24 years. Kaminski was in failing health and still emotionally distraught over his wife, who had died in 1971. Respondent was in the real estate business and had been a broker for more than 25 years. Kaminski was a retired employee of Crane Company in Chicago. There was no evidence presented that Kaminski had, at any time, any experience in the real estate business.

The high degree of trust placed in respondent by Kaminski is evidenced by the fact that respondent was co-tenant on several joint tenancy accounts with Kaminski; by respondent’s own admission he was Kaminski’s favorite relative; and, according to respondent, Kaminski discussed certain financial matters with respondent concerning Kaminski’s assets. Kaminski had also advanced the sum of $10,000 to respondent at some point in time.

The court further noted that Kaminski did not have benefit of counsel at the time of the signing of the transfer documents. Respondent, on the other hand, had handled thousands of residential real estate transactions and also had the benefit of counsel. Although respondent’s attorney was not present when Kaminski signed the transfer papers, he had drafted the transfer documents that were presented to Kaminski by respondent for signing. At respondent’s deposition, he even testified that he did not know whether Kaminski understood the nature or consequences of signing the transfer documents. Under these circumstances, we do not find that the trial court erred in finding that respondent was clearly in the more advantageous or dominant position at the time of the alleged transfer.

The trial court also noted that there was some question as to whether Kaminski was of sound mind. This query was based, in part, on respondent’s charge in a chancery action that Kaminski was not mentally competent in August of 1982 to demand any withdrawals from Kaminski’s account. Respondent testified that even Kaminski’s signature “was not in his usual form.”

Although mental capacity to engage in a transfer must be made at the time of the conveyance (In re Estate of Clements (1987), 152 Ill. App. 3d 890, 894), we find that the trial court did not err in finding Kaminski’s mental capacity questionable at the time of the alleged transfer, since respondent’s allegations of incompetency came only a few months after Kaminski signed the transfer documents.

Based upon the above facts, we do not find that the trial court erred in finding a confidential or fiduciary relationship between respondent and Kaminski. Nor did the trial court err in finding that respondent had not rebutted the presumption of undue influence. Based upon a careful review of the record, we find that the trial court’s findings were supported by the evidence.

Respondent next contends that the transfer of real estate was pursuant to a valid agreement that had been fully performed by both parties. The only evidence of this agreement was respondent’s testimony. Although respondent testified that there had been a written agreement, that alleged agreement has not been produced to date. Respondent now, in the alternative, argues that he had offered evidence of an oral agreement.

Respondent correctly argues that Illinois courts have recognized that oral agreements for the conveyance of land are enforceable when the contracts are fully executed. (See In re Estate of Manikowski (1967), 82 Ill. App. 2d 201.) However, we find that even assuming arguendo that a fully executed oral agreement was found to exist, the breach of a fiduciary or confidential relationship would warrant setting the agreement aside. We, therefore, find no merit in respondent’s argument on this issue.

Respondent also argues that the trial court erroneously considered Kaminski’s mental capacity without proof of mental infirmity. We disagree. Respondent’s own sworn affidavit in the chancery court proceeding charged that Kaminski was mentally incompetent. Respondent also testified at his deposition that after reviewing the transfer documents, which had been prepared by respondent’s attorney, he could not ascertain whether Kaminski understood the nature of the documents or the resulting consequences that would arise from signing such documents. Further, mental condition is a factor that the court must consider in determining whether a confidential or fiduciary relationship exists. (Metropulos v. Chicago Art Glass, Inc. (1987), 156 Ill. App. 3d 727, 737.) The trial court, therefore, properly inquired into Kaminski’s mental capacity.

Next, respondent contends that Anna Zalesiak, a previously removed executrix and sister of Kaminski, was improperly called as a witness by the special administrator and allowed to testify to conversations she had with Kaminski even though she was also an interested party. All witnesses in a citation proceeding are witnesses for the court, and the rules of evidence in such proceedings are to be liberally construed, particularly those rules under the Dead Man’s Act (Ill. Rev. Stat. 1985, ch. 110, par. 8—201). (See In re Estate of Vercillo (1960), 27 Ill. App. 2d 151, 157.) “It is within the trial court’s discretion to determine whether [such] testimony is necessary to a full and fair presentation of the facts of the case.” In re Estate of Shanahan (1978), 59 Ill. App. 3d 269, 273.

We find that the trial court did not abuse its discretion in allowing the testimony of Anna. Anna was a witness for the court and not for the special administrator. She testified that her brother did not intend the transfer of the property to be a gift to respondent. This was in response to an allegation that was made, at one point, by respondent that the alleged transfer was a gift to respondent from Kaminski. We do not find that the trial court erred in determining that this was necessary in providing a full and fair presentation of the case. Further, Anna testified that Kaminski was of sound mind up until the time of his death. Competency of Kaminski at the time of the transaction would go to the validity of the transaction between Kaminski and respondent. If the transaction were found to be valid, the proceeds from the sale of the real property would not be included as an asset of Kaminski’s estate, in which she has an interest as a one-third legatee of the estate. Testimony that is adverse to the pecuniary interests of the legatee is admissible. In re Estate of Shanahan (1978), 59 Ill. App. 3d 269, 272.

As to respondent’s contention that Edmund Urban III, who had previously represented respondent in the chancery action, should have been disqualified, we find that the trial court did not err in refusing to disqualify counsel. Urban did not participate in the citation proceeding; he was merely an observer. Respondent points out that during the proceeding Urban retrieved the chancery court file for the special administrator. This, however, could not be characterized as participating in the proceedings. Further, there is no evidence of communication of any confidential information. In fact, Urban, when questioned by the court as to his status as a bystander to this action, stated that “no confidential information was revealed with regard to that Chancery action.” Respondent’s argument fails with respect to this issue.

Finally, respondent contends that the trial court incorrectly imposed a constructive trust on the proceeds gained from the sale of the property. A constructive trust may be imposed due to breach of a fiduciary or confidential relationship. (Metropulos v. Chicago Art Glass, Inc. (1987), 156 Ill. App. 3d 727, 736.) As we previously decided, the trial court properly found that a confidential or fiduciary relationship existed between the parties and that respondent failed to rebut the presumption of undue influence. Under these circumstances, a constructive trust was properly imposed.

For the foregoing reasons, the judgment of the circuit court is affirmed.

Affirmed.

JIGANTI, J., concurs.