Hibbard v. Hibbard , 118 Ind. App. 292 ( 1947 )

DISSENTING OPINION The majority opinion squarely holds without qualification that if a parent receives anything of value from a child it is thereby prima faciely established that the benefit which the parent received was obtained through the undue influence of such parent. In support of this holding it relies on the cases of Westphal v.Heckman (1916), 185 Ind. 88, 93, 113 N.E. 299, and Keys v.McDowell et al. (1913), 54 Ind. App. 263, 269, 100 N.E. 385.

In the Westphal case, supra, the Supreme Court did use the following language (quoted in the majority opinion herein): "There are certain legal and domestic relations in respect to which the law raises a presumption of trust and confidence on one side and a corresponding influence on the other. The relations of attorney and client, principal and agent, husband and wife, and parent and child belong to this class and there may be others." In the Keys case, supra, the same statement was made with the addition of the relation of "pastor and parishioner." In my opinion the quoted statement in each of these cases, particularly as to the relationship of "parent and child" was obiter dictum. The Keys case did not in any manner involve the relationship of parent and child. The Westphal case involved a deed from father to son and it was there stated the rule quoted did not apply in such a case.

I believe the rule enunciated by the majority in this case is in conflict with the weight of American authority. It is unsound and establishes a most dangerous precedent which may seriously affect property rights. It places the ugly finger of suspicion on natural filial conduct. Under this rule, if a parent or parents had never had an education, were poverty stricken and unable to provide themselves with the necessities of life, had a son who had the advantage of a college education and had accumulated a vast fortune and was desirous of providing either or both with a decent home, etc., gave them a home and set up a trust fund to provide them with means to live decently — on the son's death such deed and trust fund could be set aside by his widow by merely showing the existence of the relationship. I think this is evil law.

The rule announced by the majority was repudiated in the case of Hanna v. Ison (1921), 76 Ind. App. 472, 476, et seq., 132 N.E. 316 (cited by appellee). In that case a deed from a daughter to her father was questioned. The court said:

"It is insisted that, when, in this case, the relation of parent and child was shown, the burden was then upon the father to show that the transaction was in all respects fair and honest.

"The authorities do not support this broad statement of the rule. In Jenkins v. Pye (1838), 12 Peters 241, 9 L.Ed. 1070, in which case a daughter twenty-three years of age had conveyed lands to her father, it was said: `But the grounds mainly relied upon to invalidate the deed, were, that being from a daughter to her father, rendered it, as least, prima facie void. And if not void on this ground, it was so, because it was obtained by the undue influence of paternal authority. The first ground of objection seeks to establish the broad principle, that a deed from a child to a parent, conveying the real estate of the child, ought, upon considerations of public policy, growing out of the relation of the parties, to be deemed void; and numerous cases in the English chancery have been referred to, which are supposed to establish this principle. We do not deem it necessary to travel over all these authorities; we have looked into the leading cases, and cannot discover anything to warrant the broad and unqualified doctrine contended for on the part of the appellees. All the cases are accompanied with some ingredient, showing undue influence exercised by the parent, operating upon the fears or hopes of the child; and sufficient to show reasonable grounds to presume, that the act was not perfectly free and voluntary on the part of the child; and in some cases although there may be circumstances tending, in some small degree, to show undue influence, yet, if the agreement appears reasonable, it has been considered enough to outweigh light circumstances, so as not to affect the validity of the deed.

"`It becomes the less necessary for us to go into a critical examination of the English chancery doctrine on this subject, for should the cases be found to countenance it, we should not be disposed to adopt or sanction the broad principle contended for, that the deed of a child to a parent is to be deemed, prima facie, void. It is, undoubtedly, the duty of the courts carefully to watch and examine the circumstances attending transactions of this kind, when brought under review before them, to discover if any undue influence has been exercised in obtaining the conveyance. But to consider a parent disqualified to take a voluntary deed from his child, without consideration, on account of their relationship is assuming a principle at war with all filial as well as parental duty and affection; and acting on the presumption, that a parent, instead of wishing to promote the interest and welfare, would be seeking to overreach and defraud his child. Whereas, the presumption ought to be, in the absence of all proof tending to a contrary conclusion, that the advancement of the interest of the child was the object in view; and to presume the existence of circumstances conducing to that result. Such a presumption harmonizes with the moral obligations of a parent to provide for his child; and is founded upon the same benign principle that governs cases of purchases made by parents in the name of a child. The prima facie presumption is, that it was intended as an advancement to the child, and so not falling within the principle of a resulting trust. The natural and reasonable presumption, in all transactions of this kind, is, that a benefit was intended the child, because in the discharge of a moral and parental duty.'

"In Towson v. Moore (1889), 173 U.S. 17, 19 Sup. Ct. 332, 43 L.Ed. 597, the court, citing authorities to sustain the proposition, said: `The influence for which a will or deed will be annulled must be such as that the party making it has no free will, but stands in vinculis.'

"In a further discussion of the matter the court said: `The principles established by these authorities may be summed up as follows: In the case of a child's gift of its property to a parent, the circumstances attending the transaction should be vigilantly and carefully scrutinized by the court, in order to ascertain whether there has been undue influence in procuring it; but it cannot be deemed prima facie, void; the presumption is in favor of its validity; and, in order to set it aside, the court must be satisfied that it was not the voluntary act of the donor. The same rule as to the burden of proof applies with equal, if not greater force to the case of a gift from a parent to a child, even if the effect of the gift is to confer upon a child, with whom the parent makes his home and is in peculiarly close relations, a larger share of the parent's estate than will be received by other children or grandchildren.'

". . .

"When the parties to a transaction are sui juris, and are dealing with each other `at arms length,' fraud is never presumed but must be clearly proven. When the parties are nearly related by blood, as in this case, but are each sui juris, something more than such blood relationship must be shown. There must be evidence showing a relationship of `trust and confidence,' as recognized by the law, before any presumption of fraud arises against the defendant." (The emphasis in this quotation are the court's.)

In the Annotations at 35 A.L.R. 314, the following cases are cited to the effect that the mere fact the parent receives a benefit from the child does not cast a suspicion on the transactions: Gregory v. Bowlsby (1902), 115 Iowa 327, 88 N.W. 822; Winkelman v. Winkelman (1923), 307 Ill. 249, 138 N.E. 637; Sloan v. McCortney (1908), 108 N.Y.S. 840; Goff v. Goff (1916), 98 Kan. 201, 158 P. 26; Kiser v. Sullivan (1921), 106 Neb. 454, 184 N.W. 93.

In an apparent effort to relax the onerous effect of the new rule announced in this case, the majority overrules the long established rule that in cases where a confidential or fiduciary relationship exists it is incumbent on the dominant party to establish the integrity of his claim by substantial evidence. In the case of Teegarden v. Ristine (1914), 57 Ind. App. 158, 164, 106 N.E. 641, this court said: Where the "confidential relation is shown to exist and it is claimed that the party occupying the superior position has dealt with the one to whom he owes a duty arising out of such relation, and has gained a substantial advantage thereby, the burden is upon the one who holds such superior position of establishing that he acted in perfect good faith, gave the other party full and accurate information possessed by him, took no advantage of his knowledge, or influence over the other party, and that the contract or transaction was fair, equitable, voluntary and well understood.Pomeroy v. Wimer (1906), 167 Ind. 440, 447, 78 N.E. 233, 79 N.E. 446; McCord v. Bright (1909), 44 Ind. App. 275, 288, 87 N.E. 654; Rochester v. Levering (1886), 104 Ind. 562, 568, 4 N.E. 203; French v. Cunningham (1898), 149 Ind. 632, 637, 49 N.E. 797; Wainright v. Smith (1886), 106 Ind. 239, 242, 6 N.E. 333; Huffman v. Huffman (1905), 35 Ind. App. 643, 646, 73 N.E. 1096; Fountain Coal Co. v. Phelps (1884),95 Ind. 271, 275; Shirk v. Neible (1901), 156 Ind. 66, 71, 59 N.E. 281, 83 Am. St. 150." See also Kratli v. Booth (1934),99 Ind. App. 178, 183, 191 N.E. 180; Johnson v. Fox (1942),110 Ind. App. 698, 704, 38 N.E.2d 865.

In my opinion, where a relationship exists which makes out aprima facie case of undue influence, it should take more than conjecture and surmise to overcome it. The majority opinion places no limitation on the new rule they adopt herein. Therefore, the age or education of the child would have no weight in overcoming the prima facie case. And, where undue influence has been established the mere fact that at the time the benefit was conferred the dominant party was not present does not remove the evil effect of such influence. In Davis, Executor v.Babb (1921), 190 Ind. 173, 180, 125 N.E. 403, the Supreme Court said:

"Such is the nature of the human mind that, when it has been habituated to the influence of another, it will yield to that influence and suffer it to have its effect, although the person in the habit of its exercise may not be present or exert it at the time an act is done. It may happen that the fruit of an evil and improper influence is born long after the influence is exerted." (My emphasis.)

I believe the question of undue influence in this case was one of fact to be determined by the trial court. The finding of the court being general is a finding against appellant on this issue. On the record I do not believe we can disturb such finding.

On the question of want of consideration raised by appellant, I believe the majority opinion departs from the theory of the parties and the trial court in this case. The appellant contends the signing of the card by decedent was an unenforceable agreement on his part which was unsupported by consideration, and that the burden was on appellee to show the agreement was supported by consideration because he was relying on this agreement. Appellant further contends the signing of the card by both decedent and appellee would preclude a showing of any consideration other than that contained in the card, i.e., the mutual promises, one given for the other, and that in the absence of both making deposits, neither of the promises on said card would furnish consideration for the other, because neither promise bound the promissor to do anything in the absence of a deposit made by himself. Appellee made no deposits.

In answer to these contentions appellee in his brief says: "It may be contended that the contract itself does not show any consideration, it being contractual. We submit that this contract is not contractual, and, therefore, is open to inquiry and proof. [Citing quotation from Inter-Ocean Casualty Co. v. Wilkins (1932), 96 Ind. App. 231, 242, 182 N.E. 252, and Brown v.Addington (1944), 114 Ind. App. 404, 407, 52 N.E.2d 640.] The contract in question does not specify any consideration. The father and son stated that all the funds `shall be our joint property.' That the father may have agreed to do certain things in consideration of this contract, or that the son may have agreed to do certain things in consideration of this contract is not disclosed by the contract. There is nothing in the contract that says that in consideration of Howard Hibbard making deposits and in consideration of L.C. Hibbard making deposits in the account it shall become joint property. We have to look beyondthe written contract in the complaint to ascertain what theconsideration was, and as decided by the cases above cited, whenthe contract does not show on its face the consideration, thenparol evidence is admissible to prove the consideration. Since parol evidence was admissible, and since appellant attempted to anticipate the defense and to avoid the same, thereby assuming the burden of proof, it rested upon appellant to produce evidence that there was no consideration for this contract. Appellant introduced no such evidence." (My emphasis.)

I am of the opinion the deposit agreement does not express a consideration and was therefore subject to parol proof.Inter-Ocean Casualty Co. v. Wilkins, supra; Brown v.Addington, supra. Any right appellee had to the funds in this account were dependent on the deposit agreement. Therefore, the burden was on appellee to prove a valid consideration. InHigham v. Harris (1886), 108 Ind. 246, 8 N.E. 255, it is stated: "The settled rule is that one who relies on an . . . agreement in writing which does not show on its face that it was made upon an adequate consideration, must aver and prove that the contract is supported by a sufficient consideration." The fact that appellant in her complaint anticipated appellee's defense of a valid contract did not relieve appellee from the burden of proving adequate consideration. Taylor v. Altgelt (1946),224 Ind. 383, 67 N.E.2d 531, 532.

The case of Kennedy v. McMurray (1915), 169 Cal. 287,146 P. 647, relied upon in the majority opinion, is not in point in this case because under the provisions of the Civil Code of California, §§ 1614, 1615, any written instrument presumes a consideration. In that case the Supreme Court of California recognized this fact. It held the mere fact a deposit is made by one person in the name of himself and another is not conclusive of his intention to create a joint ownership in the fund to which the incident of survivorship will attach as a matter of law. At page 650 of the 146 Pac., supra, the court said: "In the absence of any written instrument clearly disclosing his intention in those respects such intention was open to inquiry and to be determined from all the facts and circumstances connected with the deposit." In Indiana, except as to negotiable instruments, we have no statute importing a consideration to written agreements.

The facts in this case are singularly different from those of any other case which I have found where a similar deposit agreement was considered. In this case no deposit was made at the time the agreement was signed by decedent and appellee. In all of the reported cases which I have found on this question there was either a deposit or a transfer of funds to the new account at the time the agreement was signed.

In Gammon Theological Seminary v. Robbins (1890),128 Ind. 85, 27 N.E. 341, the written agreement before the Supreme Court was, in substance, as follows: I hereby give to the trustees the principal note of $700. . . . Said $700 to be given in trust to said trustees when the said note falls due (some three years later), and to be by them invested according to their best judgment. In an opinion by Judge Olds, the court held this written agreement did not transfer title to the note; that it was in effect a contract to give a sum in the future and was therefore void.

In Reasner, Adm. v. Bohne (1921), 76 Ind. App. 114, 129 N.E. 490, the decedent loaned the appellee $100 on his note which, at the request of decedent, was made payable to her granddaughter. Decedent kept this note until shortly before her death, when she gave it to her son with other papers. This court held that this transaction was not a gift of the note to the granddaughter and that the administrator was entitled to the proceeds of the note.

In the case of Aetna Trust, etc., Co. v. Nackenhorst, Rec. (1919), 188 Ind. 621, 630, 122 N.E. 421, our Supreme Court said: "A mere possibility cannot be the subject of an assignment."

In 7 Am. Jur. 300, 301, § 426, it is stated: "Where money belonging to one person is deposited to the account of himself and another, the relationship which is created depends primarily on the intention of the depositor. . . . Generally the right of the donee to the deposit on the death of the depositor rests upon the theory of a contract, gift or trust." The majority rule is that the mere fact that money is deposited to the account of the owner and another does not show an intent to make a gift. 7 Am. Jur. 302, § 428.

In sub-section (4) of § 3, 48 C.J.S. 925, 926, it is stated: "A bank account may be held in joint tenancy although all the funds have come from one of the parties, but the donee must establish his interest on the theory of gift, contract, or trust, unless such requirement is dispensed with by statute. The transfer may be upheld as a contract between donor and donee where there is a consideration."

The record in this case does not show a valid consideration. There is only a naked promise. The majority opinion is in conflict with ruling precedents of our Supreme Court. I believe a new trial should be granted.

NOTE. — Reported in 73 N.E.2d 181.