In Re: The Estate of Sally B. Coggins ( 1996 )

IN THE COURT OF APPEALS OF TENNESSEE
FILED
October 3, 1996
Cecil Crowson, Jr.
Appellate C ourt Clerk
: ANDERSON CHANCERY
: CA No. 03A01-9604-PB-00131
:
:
IN RE: THE ESTATE OF : HON. WILLIAM E. LANTRIP
SALLY B. COGGINS, deceased : CHANCELLOR
:
:
: AFFIRMED AND REMANDED
JERRY SHATTUCK, WITH SHATTUCK & ELLEGE, OF CLINTON, TENNESSEE, FOR
APPELLANT WILMA J. BOWMAN
LYNN M. LAUDERBACK, WITH LAUDERBACK & LAUDERBACK, OF KINGSPORT,
TENNESSEE, and
HUGH P. CLINE, WITH CLINE, ADKINS & CLINE, OF NORTON, VIRGINIA, FOR
APPELLEE LUCILE B. CARTER
O P I N I O N
Sanders, Sp.J.
The pivotal issue on this appeal is, if an attorney in
fact issues a check to a bank, drawn on the checking account of her
principal, for which the bank issues a time certificate of deposit
for the amount of the check in the name of the principal "or" the
attorney in fact, and there is no specific provision in the power
of attorney for such transaction and no signature card or contract
relating to the certificate of deposit signed by either the
principal or the attorney in fact, upon the death of the principal,
which is entitled to the funds, the principal's estate or the
attorney in fact? We hold the estate is entitled to the funds, and
affirm.
Sally B. Coggins died intestate in Anderson County in
March, 1992. She left three adult daughters, Wilma J. Bowman,
Lucille B. Carter, and Pauline M. Fletcher, as her surviving next
of kin.
In 1989, due to badly impaired eyesight, Mrs. Coggins
executed a power of attorney designating her daughter, Wilma June
Bowman, as her attorney in fact. As pertinent, the power of
attorney granted Ms. Bowman the following powers: (1) to endorse
checks or drafts payable to me; (2) to make deposits in my bank
account; (3) to sign and issue checks on my account to pay my bills
and make purchases for my benefit; (4) to collect debts owed to me;
(5) to purchase my necessities and execute contracts or agreements
for my needs; (6) to buy or sell stocks, bonds or mutual funds that
my attorney may deem to be in my best interest; (7) to settle,
adjust or compromise any claims for personal injury, property
damage or debt I may have against others or they against me. It
further provided: "In other words, my attorney-in-fact is granted
the power to manage my money and conduct my business affairs in
general and to perform all and every other act or acts, thing or
things, in law needful and necessary in and about the premises, as
fully, completely, and amply, to all intents and purposes
whatsoever as I might or could do if acting personally."
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It appears Mrs. Coggins's husband, Van R. Coggins, died
in the early part of 1990. After his death Mrs. Coggins had assets
valued at approximately $400,000, consisting primarily of cash,
certificates of deposit, stocks and securities. Between the latter
part of 1990 and Mrs. Coggins's death in 1992, transfers were made,
or attempts to transfer were made, of stocks, securities, and
certificates of deposit in the names of Mrs. Coggins and Wilma J.
Bowman, the attorney in fact, or members of her family, as joint
tenants with the right of survivorship, in the amount of
approximately $170,000.
In April, 1992, after Mrs. Coggins's death, Wilma J.
Bowman and Lucille B. Carter, two of Mrs. Coggins's daughters,
qualified in chancery court, probate division, as co-administrators
of Mrs. Coggins's estate.
In May, 1992, Wilma J. Bowman filed in the court an
inventory of the assets of the estate showing the assets of the
estate to be $226,202.14. The bulk of the assets were certificates
of deposit, savings accounts, checking accounts, and household
furnishings and personal effects with a value of $20,000.
In August, 1993, Wilma Bowman filed a petition for
confirmation of final settlement and to close the estate. She
filed as an exhibit to the petition a list of income and expenses
in the administration of the estate, together with the amount of
assets to be distributed to the heirs of the estate. This
consisted of income of approximately $900, expenses approximately
$1,700 and distributable assets of approximately $205,000.
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Lucille Carter, the co-administrator of the estate with
Ms. Bowman, did not join in the inventory of the estate or the
petition for confirmation of the final settlement, but filed
objections to the petition and inventory and asked the court to
deny the petition for confirmation and final settlement. As
pertinent, Ms. Carter alleged that during the years Ms. Bowman had
been attorney in fact for Mrs. Coggins, she had wrongfully and
without authority caused stocks, securities, and certificates of
deposit to be transferred from Mrs. Coggins's funds into stocks,
securities and certificates of deposit in the joint names of Ms.
Bowman or members of her family and Mrs. Coggins, with the right of
survivorship. The amount involved was $169,000. These funds
rightfully belonged to the estate but had been excluded from the
inventories filed by Ms. Bowman. Ms. Carter asked the court to
deny the petition for confirmation of the proposed settlement filed
by Ms. Bowman, to hold a hearing and declare the $169,000 of assets
to be assets of the estate, and require Ms. Bowman and the other
members of her family to surrender these assets to the estate.
A hearing was ordered, which was originally held before
the clerk and master. The hearings centered around three separate
sets of transactions in which Ms. Bowman, as attorney in fact, was
involved. One group involved stocks and securities of
approximately $70,000 which were placed in the joint names of Ms.
Bowman and Mrs. Coggins. Upon the hearing, the proof showed Mrs.
Coggins had personally signed these transfer documents. The second
set of documents involved two certificates of deposit in the amount
of $10,000 each, one of which was in the joint names of Sally B.
Coggins or Joe Kent Bowman, and the other was in the joint names of
Sally B. Coggins or John Scott Bowman. The record also shows a
check had been drawn on Mrs. Coggins's checking account in First
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American National Bank for $20,000, payable to Sovran Bank for "2
C.D.'s @ $10,000 each." The check was signed by Ms. Bowman under
her power of attorney.
The record also shows Sally B. Coggins personally signed,
jointly with Joe Kent Bowman, a signature card for the certificate
of deposit which, as pertinent, states: "Joint tenants with right
of survivorship." Also, as pertinent, printed in one of the blocks
on the signature card was "Acct.5SN/TAX ID No. and under this
abbreviation was the number "XXX-XX-XXXX." Also, attached to the
signature card was a printed form with five separate squares
followed by different printed statements for the person signing to
check the square preceding the statement which was applicable.
Above the blocks to be checked was printed the following: "Under
penalties of perjury, I certify that" and following the square that
was checked was: "the number shown on this form is my correct
taxpayers identification number." This form was personally signed
by Mrs. Coggins. A joint signature card of like import was also
signed by Mrs. Coggins with John Scott Bowman and the same
certifying attached form was signed by Mrs. Coggins.
The third set of documents around which the hearing
revolved, and the ones at issue on this appeal, are five separate,
purported certificates of deposit in the joint names of Sally B.
Coggins "or" Wilma J. Bowman which were purchased by Wilma Bowman
with Mrs. Coggins's money, between March 5, 1990 and March 2, 1992,
in amounts from $10,000 up to $29,000, for a total of $80,000.
Mrs. Coggins did not participate in any way in the purchase of
these certificates. She did not sign any signature cards or any
other documents relating to these certificates, and neither did
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Wilma Bowman sign signature cards in connection with the
certificates.
In his report, the clerk and master recommended an order
be entered holding the stocks and securities transferred to the
joint names of Sally B. Coggins and Wilma J. Bowman in the amount
of approximately $70,000, with the right of survivorship, and the
two certificates of deposit of $l0,000 each, in the joint names of
Sally B. Coggins and Joe Kent Bowman and John Scott Bowman,
respectively, with the right of survivorship, all having been
signed by Mrs. Coggins, pass outside the estate of Mrs. Coggins.
He recommended, however, that the five certificates of deposit in
the names of Sally B. Coggins or Wilma J. Bowman, in the total
amount of $80,000, be declared assets of the estate.
The Appellant filed objections to the report of the clerk
and master and filed a petition pursuant to Rule 53.04, TRCP,
asking the court to reject the recommended report of the clerk and
master insofar as it recommended the certificates of deposit be
declared assets of the estate.
The Appellee, Lucille Carter, in response to Appellant's
petition, asked the court to affirm the clerk and master's report.
The chancellor conducted a hearing pursuant to
Appellant's petition. Upon the hearing, he, in effect, affirmed
the recommended report of the clerk and master. He held the
certificates of stock and securities on which Mrs. Coggins had
signed transfer documents and the two certificates of deposit on
which she had signed signature cards should pass outside the estate
to the surviving parties. He also held the remaining five
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certificates in the names of Sally B. Coggins or Wilma J. Bowman
should pass to the estate. As pertinent, the court, in his brief
opinion, said: "The remaining certificates were acquired by the
fiduciary and established in her name and the name of the deceased
for which no signature cards were presented. The account is silent
as to any right of survivorship. The proceeds were stipulated to
be solely from the monies of Sally B. Coggins.
"A review of the Power of Attorney convinces me that the
fiduciary did not possess the authority to establish these
accounts. I further find that these accounts are not survivorship
account.
"I therefore find that these remaining certificates
constitute a part of the decedent's estate and do not in any manner
pass to Wilms J. Bowman."
Ms. Bowman has appealed, saying the court was in error in
holding the five certificates of deposit constituted a part of
decedent's estate and did not pass to her. We cannot agree, and
affirm.
The issues for review presented by the Appellant in her
brief are as follows: (1) "Can the trial court declare invalid
transactions done at the direction of a principal who was
competent, not under undue influence, aware of the transactions
both before and after the fact; and without hearing evidence to
establish the fairness of the transactions because they were
effected by her agent through a power of attorney due to the
principal's legal blindness and resulting difficulty in writing?"
and (2) "Did the proof in this case and the offer of proof
establish the fairness of the transactions involving the creation
and existence of five certificates of deposit in the name of Sally
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B. Coggins, and her daughter, Wilma J. Bowman, by clear and
convincing evidence?"
The Appellant's 26-page brief, following the above-stated
issues, consists of a restatement of the testimony of the witnesses
in the hearing before the chancellor. Appellant's argument is that
the testimony established there was no undue influence exercised
over Mrs. Coggins. The Appellant, however, fails to cite a single
case or any statute in her brief to support her argument that the
court was in error.
There was no contention on the trial of the case, nor is
there any on this appeal, by the Appellee, Ms. Carter, that Ms.
Bowman exercised undue influence over Mrs. Coggins. Mrs. Coggins
was not a party to purchasing the certificates of deposit here at
issue. It was Ms. Bowman, acting alone, using her power of
attorney and the funds of Mrs. Coggins, who purchased the
certificates of deposit and had her name added as a joint
beneficiary.
In his determination of the case, the chancellor made the
following findings of fact and conclusions of law:
1."The...certificates were acquired by the fiduciary and
established in her name and the name of the deceased, for which no
signature cards were presented." 2. "The account is silent as to
any right of survivorship." 3. "The proceeds were stipulated to be
solely from the monies of Sally B. Coggins." 5. "A review of the
power of attorney convinces me that the fiduciary did not possess
the authority to establish these accounts." 5. "I...find these
accounts are not survivorship accounts".
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The law and the evidence support each of the findings of
the chancellor. The Appellant, however, does not address a single
one of these specific issues.
The general rule in construing powers of attorney is:
It is the general rule that a power of attorney
must be strictly construed and strictly pursued.
Under this rule, the instrument will be held to
grant only those powers which are specified, and the
agent may neither go beyond nor deviate from the
power of attorney--in other words, the act done must
be legally identical with that authorized to be
done. For example, an attorney in fact has no power
to make a gift of his principal's property unless
that power is expressly conferred on him by the
instrument or unless such power arises as a
necessary implication from the powers which are
expressly conferred.
Where the mode of exercising power is
prescribed in the instrument in which it is created,
there must be a strict compliance therewith in every
substantial particular.
Where power is conferred on an agent by a power
of attorney, the meaning of general words in the
instrument is restricted by the context and
construed accordingly and the authority given is
construed strictly, so as to exclude the exercise of
any power that is not warranted either by the terms
actually used or as a necessary means of executing
with effect the authority given. Accordingly a
general clause in a power of attorney given for a
specific purpose, authorizing the agent to do "any
and every act" in the principal's name which he
could do in person, must be construed to relate to
the specific purpose, and does not constitute such
agent a general agent.
3 Am.Jur.2d Agency §§ 31, 32, p. 535.
We agree with the chancellor that the attorney in fact
did not possess the authority under the power of attorney to
establish the certificates of deposit and they are void and of no
effect.
The Appellee relies upon TCA § 34-6-108(c)(6), which
provides: "(c) Nothing contained in this section and § 34-6-109
shall be construed to vest an attorney in fact with, or authorize
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an attorney in fact to exercise, any of the following powers: ....
(6) Change, add or delete any right of survivorship designation on
any property, real or personal, to which the principal holds
title, alone or with others."
We agree this section of the Code would expressly
prohibit the attorney in fact from creating the certificates of
deposit. We observe the statute became effective in 1991 and four
of the certificates predate the statute. The court was correct in
his finding that the certificates of deposit contained no
provision creating a right of survivorship and no signature card
was presented.
We think the case of Lowry v. Lowry, 541 S.W.2d 128(Tenn.1976) is controlling in the case at bar. In Lowry, our
supreme court adopted the contract theory in this jurisdiction as
the basis for creating a joint tenancy with the right of survivor,
as opposed to the gift theory used in some other states. In
adopting the contract theory, the court said, in effect, a right
of survivorship may be created by a written contract between the
parties and the signature card may be looked to to ascertain the
intent of the parties. Id. 130, 131.
The following quotes are from the Lowry court:
"Although some jurisdictions have adopted the 'gift' theory...we
feel the better reasoned approach utilizes the 'contract' theory."
Id. at 130; "Of primary importance is the case of Melhorn v.
Melhorn, 208 Tenn. 678, 348 S.W.2d 319 (1961)...[T]he Court looked
to the intention of the parties as expressed by the joint
signature card and the testimony of the bank officers, and made it
clear that it considered the joint account a contractual
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undertaking." Id. at 130, 131; "The most recent Tennessee case
relevant to the issue is Iacometti v. Frassinelli, 494 S.W.2d 496(Tenn.App.1973)....The Court stated that absent a finding of
fraud, undue influence, or overreaching: '...the written agreement
signed by the deceased speaks just as loudly and clearly as if the
deceased herself took the stand and orally expressed the words
written on the paper.' Id. at 500". Id. at 131; "Absent clear and
convincing evidence of contrary intent expressed at the time of
its execution, we hold that a bank signature card containing an
agreement in clear and unambiguous language that a joint account
with rights of survivorship is intended, creates a joint tenancy
enforceable according to its terms; and upon the death of one of
the joint tenants, the proceeds pass to the survivor." Id. at 132.
We hold that, absent a signature card or other written
document signed by the parties creating a joint tenancy with the
right of survivorship, none was created.
The decree of the chancellor is affirmed. The cost of
this appeal is taxed to the Appellant and the case is remanded to
the trial court for any further, necessary proceedings.
__________________________
Clifford E. Sanders, Sp.J.
CONCUR:
__________________________
Herschel P. Franks, J.
__________________________
Charles D. Susano, Jr., J.
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