Arthur L. Rawlings, Jr. v. The John Hancock Mutual Life Insurance Company ( 2001 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs August 2, 2001
ARTHUR L. RAWLINGS, JR. v. THE JOHN HANCOCK MUTUAL
LIFE INS. CO., ET AL.
Appeal from the Circuit Court for Davidson County
No. 99C-2393 Carol Soloman, Judge
No. M2000-03191-COA-R3-CV - Filed November 2, 2001
This appeal involves a dispute between a decedent’s estranged husband and brother over the
proceeds of a $12,000 life insurance policy. When he discovered that his deceased wife had
removed him as the beneficiary of her policy, the husband filed suit in the Circuit Court for
Davidson County seeking to invalidate the change of beneficiary form. Following a bench trial, the
trial court found that the decedent lacked the capacity to change the beneficiary on her life insurance
policy and that the decedent’s brother had procured the change through undue influence.
Accordingly, the trial court awarded the decedent’s husband the proceeds of her life insurance policy
as well as $350 that his brother-in-law had removed from a joint account using a power of attorney
he obtained from the decedent. We have determined that the evidence does not support the trial
court’s conclusion that the decedent lacked capacity to change the beneficiary of her life insurance
policy and that the decedent’s husband never asserted an undue influence claim in the trial court.
Accordingly, we reverse the judgment and remand the case with directions to award the proceeds
of the life insurance policy to the decedent’s brother.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Reversed and Remanded
WILLIAM C. KOCH , JR ., J., delivered the opinion of the court, in which WILLIAM B. CAIN and
PATRICIA J. COTTRELL, JJ., joined.
Alan C. Housholder, Nashville, Tennessee, for the intervenor appellant, Darden Holt.
Larry L. Roberts and Audrey Lee Anderson, Nashville, Tennessee, for the appellee, Arthur L.
Rawlings, Jr.
OPINION
I.
Arthur Rawlings and Eleanor Rawlings were married in February 1946. Throughout most
of their marriage, Mr. Rawlings worked for Genesco, and Ms. Rawlings worked for the Nashville
Electric Service. This dispute revolves around a $12,000 life insurance policy Ms. Rawlings
obtained in 1961 through her employer. She originally named Mr. Rawlings as the sole beneficiary
of this policy.
Ms. Rawlings was an alcoholic and struggled with her addiction throughout her adult life.
She was finally forced to retire from the Nashville Electric Service, and in 1984 she broke her hip
while inebriated. Diagnostic x-rays of this injury revealed twenty-seven other fractures from
previous falls. Ms. Rawlings did not recover from this injury; she was discharged from the hospital
to the first of several nursing homes where she spent the rest of her life.
One year later, Ms. Rawlings’s mother died. With Ms. Rawlings confined to a nursing home,
Mr. Rawlings served as the executor of his mother-in-law’s will. During the probate proceeding,
a dispute arose with Darden Holt, Ms. Rawlings’s brother who lived in Texas. Mr. Holt eventually
successfully contested the will. This dispute left Ms. Rawlings quite angry with Mr. Holt. While
Ms. Rawlings and Mr. Holt continued to communicate, their relationship became strained. Ms.
Rawlings disinherited Mr. Holt in her 1988 will specifically because of the will contest. Thereafter,
Ms. Rawlings and Mr. Holt reconciled, and Mr. Holt visited his sister two or three times a year
between 1988 and 1998.
Ms. Rawlings was admitted to the Bordeaux Hospital in May 1994. Mr. Rawlings continued
to visit her there three to four times per week except when the weather limited his ability to travel.
Ms. Rawlings’s mental acuity began to slip as the years went on, and in November 1997 she was
diagnosed with senile dementia and depression. She went through periods of confusion, and she was
uncommunicative much of the time. By August 1998, Ms. Rawlings’s world consisted only of her
room at the Bordeaux Hospital. Her severe arthritis restricted her mobility. She was unable to get
out of bed, turn over, or bathe and groom herself without assistance. She was on occasion able to
feed herself, but usually she required assistance for this activity as well.
In August 1998, Mr. Rawlings told Ms. Rawlings that he wanted a divorce. This news upset
Ms. Rawlings. During one of Mr. Holt’s visits in October 1998, Ms. Rawlings told him about Mr.
Rawlings’s plans to divorce her and asked for his help. Mr. Holt agreed to help and began visiting
his sister more frequently. In November 1998, Ms. Rawlings, with her brother’s assistance, took
several steps to separate herself from Mr. Rawlings. On November 9, 1998, she told the nursing
staff that she desired legal assistance in the divorce proceeding and that she desired to change the
address where her social security checks were being delivered. On November 11, 1998, Ms.
Rawlings gave Mr. Holt her power of attorney. The following day, Mr. Holt used the power of
attorney to change the address where her pension checks were being sent, and Ms. Rawlings signed
a change of beneficiary form naming Mr. Holt as the beneficiary on her life insurance policy.
Finally, on November 23, 1998, Ms. Rawlings executed a new will naming Mr. Holt as her executor
and the sole beneficiary of her estate. Thereafter, Mr. Holt returned to his home in Texas, but not
before making arrangements to forward all of Ms. Rawlings’s mail to him and using the power of
attorney to withdraw $350 from a joint account Ms. Rawlings maintained with Mr. Rawlings.
Mr. Rawlings continued to visit Ms. Rawlings even after he told her he wanted a divorce.
Eventually, they agreed to an uncontested divorce, but Ms. Rawlings insisted that Mr. Holt review
and approve the marital dissolution agreement. Mr. Rawlings had not filed for divorce by the time
Ms. Rawlings died on July 20, 1999. Soon after Ms. Rawlings’s death, Mr. Rawlings contacted the
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John Hancock Life Insurance Company to obtain the proceeds of Ms. Rawlings’s life insurance
policy. Only then did he learn that he was no longer the named beneficiary of Ms. Rawlings’s life
insurance policy.
In August 1999, Mr. Rawlings filed suit in the Circuit Court for Davidson County against
the John Hancock Life Insurance Company and the Nashville Electric Service seeking the $12,000
proceeds from Ms. Rawlings’s life insurance policy on two grounds – that Ms. Rawlings was not
competent in November 1998 to change the beneficiary on her life insurance policy and that the
change had been procured by fraud. Mr. Holt intervened in the suit to defend his sister’s action. All
parties other than Messrs. Rawlings and Holt were dismissed after the death benefits from the
insurance policy were paid into court. Following a bench trial, the trial court determined that Ms.
Rawlings lacked the mental capacity in November 1998 to change the beneficiary on her life
insurance policy or to execute a power of attorney and that Mr. Holt had exerted undue influence
over her to obtain these two documents. Accordingly, on November 30, 2000, the trial court filed
a memorandum and order awarding the $12,000 death benefit to Mr. Rawlings and directing Mr.
Holt to return the $350 he had removed from the Rawlings’ joint account in November 1998. The
trial court also awarded Mr. Rawlings $1,557.50 in discretionary costs. Mr. Holt has appealed.
II.
THE STANDARD OF REVIEW
We turn first to the proper standards of review for the issues presented in this appeal.
Because this is an appeal from a decision made by the trial court itself following a bench trial, the
now familiar standard in Tenn. R. App. P. 13(d) governs our review. This rule contains different
standards for reviewing a trial court’s decisions regarding factual questions and legal questions.
With regard to a trial court’s findings of fact, we will review the record de novo and will
presume that the findings of fact are correct “unless the preponderance of the evidence is otherwise.”
We will also give great weight to a trial court’s factual findings that rest on determinations of
credibility. In re Estate of Walton, 950 S.W.2d 956, 959 (Tenn. 1997); B & G Constr., Inc. v. Polk,
37 S.W.3d 462, 465 (Tenn. Ct. App. 2000). However, if the trial judge has not made a specific
finding of fact on a particular matter, we review the record to determine where the preponderance
of the evidence lies without employing a presumption of correctness. Ganzevoort v. Russell, 949
S.W.2d 293, 296 (Tenn. 1997).
Tenn. R. App. P. 13(d)’s presumption of correctness requires appellate courts to defer to a
trial court’s findings of fact. Fell v. Rambo, 36 S.W.3d 837, 846 (Tenn. Ct. App. 2000); Taylor v.
Trans Aero Corp., 924 S.W.2d 109, 112 (Tenn. Ct. App. 1995). Because of the presumption, an
appellate court is bound to leave a trial court’s finding of fact undisturbed unless it determines that
the aggregate weight of the evidence demonstrates that a finding of fact other than the one found by
the trial court is more probably true. Estate of Haynes v. Braden, 835 S.W.2d 19, 20 (Tenn. Ct. App.
1992) (holding that an appellate court is bound to respect a trial court’s findings if it cannot
determine that the evidence preponderates otherwise). Thus, for the evidence to preponderate
against a trial court’s finding of fact, it must support another finding of fact with greater convincing
effect.
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The presumption of correctness in Tenn. R. App. P. 13(d) applies only to findings of fact,
not to conclusions of law. Accordingly, appellate courts review a trial court’s resolution of legal
issues without a presumption of correctness and reach their own independent conclusions regarding
these issues. Johnson v. Johnson, 37 S.W.3d 892, 894 (Tenn. 2001); Nutt v. Champion Int’l Corp.,
980 S.W.2d 365, 367 (Tenn. 1998); Hicks v. Cox, 978 S.W.2d 544, 547 (Tenn. Ct. App. 1998);
McCormick v. Aabakus, Inc., ___ S.W.3d ___, ___, 2000 WL 1473915, at *1 (Tenn. Sp. Workers
Comp. Panel 2000).
III.
MS. RAWLINGS’S MENTAL CAPACITY
Mr. Holt first asserts that the evidence does not support the trial court’s conclusion that Ms.
Rawlings lacked the mental capacity in November 1998 to give him her general power of attorney
or to execute a form to change the beneficiary of her life insurance policy. He asserts that Mr.
Rawlings failed to present evidence establishing that in November 1998, Ms. Rawlings lacked the
ability to understand the nature and probable consequences of her actions. We agree.
A.
The question of Ms. Rawlings’s mental capacity depends upon the nature of the activities in
which she was engaged. Transactions at issue in this case are (1) her execution of a general power
of attorney on November 11, 1998 and (2) her execution of a change of beneficiary form on
November 12, 1998. Because both of these transactions are essentially contractual in nature,1 we
will employ the standards commonly used to determine whether a person possesses mental capacity
to contract.
The degree of mental capacity required to enter into a contract is a question of law.
Nashville, Chattanooga & St. Louis R.R. v. Brundige, 114 Tenn. 31, 34, 84 S.W. 805, 805 (1905).
Competency to contract does not require an ability to act with judgment and discretion. In re Ellis,
822 S.W.2d 602, 607 (Tenn. Ct. App. 1991). All that is required is that the contracting party
reasonably knew and understood the nature, extent, character, and effect of the transaction. Mays
v. Prewett, 98 Tenn. 474, 478, 40 S.W. 483, 484-85 (1897); In re Estate of Holmes, No. 02A01-
9707-PB-00158, 1998 WL 134333, at *3 (Tenn. Ct. App. Mar. 26, 1998) (No Tenn. R. App. P. 11
application filed); Roberts v. Roberts, 827 S.W.2d 788, 791-92 (Tenn. Ct. App. 1991). Thus, persons
will be excused from their contractual obligations on the ground of incompetency only when (1) they
are unable to understand in a reasonable manner the nature and consequences of the transaction or
1
Changing a benefic iary on a life insuranc e contrac t affects an am endm ent to the ex isting contr act and is itself
the makin g of a new contract. Moore v. New York Life Ins. Co., 146 S.E.2d 492, 498 (N.C. 1966). Accordingly,
changing a beneficiary requires the same m ental capa city as exec uting a va lid contrac t. Union Na t’l Bank v. Ma yberry,
533 P.2d 13 03, 130 7 (Kan . 1975); Lynn v. Ma gness, 62 A.2d 60 4, 607 (M d. 1949); Lee R. Russ & Thomas F. Segalla,
Couch on Insurance § 60:70 (3d ed. CD-ROM 2001). By the same token, a power of attorney establishes an agency
relationship by agre emen t. Thus, to have an agency relationship under a power of attorney, the principal must have the
capacity to contrac t. Testa v. Ro berts, 542 N .E.2d 65 4, 658 (O hio Ct. A pp. 198 8); In re Thames, 544 S.E.2d 854, 856-
57 (S.C. 2001).
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(2) when they are unable to act in a reasonable manner in relation to the transaction, and the other
party has reason to know of their condition. Restatement (Second) of Contracts § 15(1) (1981).
All adults are presumed to be competent enough to enter into contracts. Uckele v. Jewett,
642 A.2d 119, 122 (D.C. 1994); Foltz v. Wert, 2 N.E. 950, 953 (Ind. 1885). Accordingly, persons
seeking to invalidate a contract for mental incapacity have the burden of proving that one or both
of the contracting parties were mentally incompetent when the contract was formed. Knight v.
Lancaster, 988 S.W.2d 172, 177-78 (Tenn. Ct. App. 1998); Williamson v. Upchurch, 768 S.W.2d
265, 269 (Tenn. Ct. App. 1988). It is not enough to prove that a person was depressed2 or had senile
dementia.3 To prove mental incapacity, the person with the burden of proof must establish, in light
of all the surrounding facts and circumstances,4 that the cognitive impairment or disease rendered
the contracting party incompetent to engage in the transaction at issue according to the standards set
forth above. Butler v. Harrison, 578 A.2d 1098, 1101 (D.C. 1990); Weakley v. Weakley, 198 S.W.2d
699, 702-03 (Mo. 1947); see also Woods v. Mutual of Omaha, No. 02A01-9510-CV-00218, 1996
WL 578489, at *3 (Tenn. Ct. App. Oct. 9, 1996), perm. app. denied (Tenn. 1997) (rejecting an
affidavit that did not address the party’s competency regarding the specific contract at issue).
B.
Mr. Rawlings’s evidence regarding Ms. Rawlings’s mental capacity in mid-November 1998
consisted of six witnesses. Mr. Rawlings, his sister, and his lawyer’s secretary testified at trial. Mr.
Rawlings also presented the depositions of three physicians who had some contact with Ms.
Rawlings at Bordeaux Hospital. The testimony of these witnesses does little to substantiate Mr.
Rawlings’s claim that Ms. Rawlings lacked the mental capacity to execute a power of attorney or
a change of beneficiary form.
We turn first to the testimony of the three physicians.5 All of them agree that Ms. Rawlings
was depressed and that she had been prescribed the antidepressant Prozac to address this condition.
Dr. Sator testified that Ms. Rawlings was taking the smallest possible dose of Prozac in November
1998 and that this medication did not impair Ms. Rawlings’s competence.
Drs. Janes and Cochran also diagnosed Ms. Rawlings with dementia. While they explained
the nature of this condition, neither of them were able to state how Ms. Rawlings’s dementia would
2
Forman v. Brown, 944 P.2d 559, 56 2 (Colo . Ct. App. 1 996); Juliani v. Juliani, 531 N.Y.S.2d 322, 325 (App.
Div. 1988); Drewry v. Dre wry, 383 S.E.2d 12, 16 (Va. Ct. App . 1980); DiPietro v. DiPietro , 460 N .E.2d 65 7, 664 (O hio
Ct. App. 1983).
3
Hanks v. McNeil Coal Corp., 168 P.2d 256, 260 (Colo. 19 46); Street v. W addell , 3 S.W.3d 504, 505-06 (Tenn.
Ct. App . 1999) (h olding th at eviden ce of dem entia alone does no t prove lac k of testam entary ca pacity).
4
Roberts v . Roberts , 827 S.W.2d at 792.
5
Dr. Daisey B. Sator was Ms. Rawlings’s attending physician from May 1994 to June 1999. Dr. Cynthia Janes
is a consulting psychiatrist who briefly interviewed Ms. Rawlings on three occasions between May and October 1998.
Dr. Michele Cochran is also a consulting psychiatrist who briefly interviewed Ms. Rawlings on two occasions in March
1999.
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have affected her mental capacity in mid-November 1998. Dr. Cochran candidly stated that she
knew nothing about Ms. Rawlings’s condition in November 1998 and speculated that Ms. Rawlings
might have had pseudodementia, a condition brought on by depression that resolves itself as the
depression clears. Dr. Janes also observed that dementia and competency are “somewhat different
things” and that she could not offer an opinion regarding Ms. Rawlings’s competency in mid-
November 1998. Dr. Sator, the physician with the most sustained medical relationship with Ms.
Rawlings, stated unequivocally that Ms. Rawlings was competent in November 1998.
Mr. Rawlings’s remaining evidence is as unpersuasive as his medical evidence. Peggy
Howell, a secretary employed by Mr. Rawlings’s lawyer, testified that she had not seen Ms.
Rawlings since February 1988 when she witnessed Ms. Rawlings sign her will. Mr. Rawlings’s
sister testified that Ms. Rawlings became “a little confused” approximately eighteen months before
she died and that Ms. Rawlings “never really talked too much.” Mr. Rawlings observed that Ms.
Rawlings began going “in and out” in 1997 and that she became less communicative.
The record is not devoid of evidence establishing Ms. Rawlings’s competency in mid-
November 1998. In addition to Dr. Sator’s testimony, David Lampley, the hospital’s Advocacy Risk
Management Director, testified he was present on November 17, 1998, when Ms. Rawlings signed
her durable power of attorney for health care and that at that time, Ms. Rawlings was oriented to
“person, time, place, and situation” and that she was “aware of what she was doing.” The persons
who witnessed Ms. Rawlings execute her will on November 23, 1998, executed an affidavit attached
to the will stating that Ms. Rawlings “declared to them that . . . [the will] was her Last Will and
Testament,” that “she wanted each of us to sign it as a witness,” and that she was “of sound mind”
at the time.6
After reviewing the evidence surrounding Ms. Rawlings’s circumstances in mid-November
1998, we have concluded that Mr. Rawlings failed to prove that Ms. Rawlings did not reasonably
understand the nature and consequences of the transactions she engaged in on November 11 and 12,
1998. Nor has he proved that Ms. Rawlings was unable to act in a reasonable manner with regard
to these transactions. Accordingly, we find that the evidence preponderates against the trial court’s
conclusion that Ms. Rawlings lacked the mental capacity to execute her durable power of attorney
or the change of beneficiary form. It therefore follows that the trial court’s findings regarding Ms.
Rawlings’s competency are reversed.
IV.
MR. HOLT’S UNDUE INFLUENCE
6
Mr. Rawlings did not appear to be overly concerned about Ms. Rawlings’s mental competency between
August 1998 and February 1999. He must have thought she was competent enough to nego tiate the term s of their
marital dissolution agreement because he permitted his lawyer to talk with her about the matter. In a February 22, 1999
letter Mr. Rawlings’s lawyer informed Mr. Holt that he had spoken to Ms. Rawlings “a couple of w eeks ago.” H e also
requested Mr. Ho lt to approv e a marital d issolution ag reemen t that vested th e marital h omep lace in Mr. Rawlings rather
than selling the property and dividing the proceeds. The reasons given for not dividing this asset equally were:
“Considering Mrs. Rawlings’ [sic] condition, it makes little sen se to requ ire that the pr operty b e sold and the proceeds
divided. Any proceeds received by Mrs. Rawlings would nec essarily go to the government for her suppor t.
Accordingly, it just make s sense to ve st that prop erty togeth er with the hou sehold g oods in Mr. Rawlings. Of course,
any per sonal effe cts which Mrs. Ra wlings m ight wan t should b e distributed to her and to mem bers of he r family.”
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Mr. Holt also takes issue with the trial court’s conclusion that his sister “did not have the
capacity to resist the pressure and undue influence that her brother placed on her.” First, he argues
that the trial court erred by basing its decision on undue influence grounds because Mr. Rawlings
had neither pled nor proved an undue influence claim. Second, he asserts that, even if Mr. Rawlings
had properly claimed undue influence, the evidence preponderates against the trial court’s
conclusion. We agree with Mr. Holt’s argument that Mr. Rawlings’s amended complaint does not
contain a claim that he had exerted undue influence to obtain Ms. Rawlings’s power of attorney or
her signature on the change of beneficiary form.
A.
Mr. Rawlings’s theory about the change of beneficiary form is found in one paragraph of his
original complaint. Before he became aware of the circumstances surrounding Ms. Rawlings’s
execution of the change of beneficiary form, he alleged that
said beneficiary was fraudulently changed without Mrs. Rawlings
[sic] consent and/or permission, when Mrs. Rawlings was
incompetent, and/or with a forged power of attorney executed by
someone other than Mrs. Rawlings or while she was incompetent.
Thereafter, Mr. Holt filed an intervening complaint setting out how Ms. Rawlings had executed the
change of beneficiary form. In his response to Mr. Holt’s intervening complaint, Mr. Rawlings
alleged that Mr. Holt “began to operate in his sister’s behalf through an attorney, based upon a
forged power of attorney, to obtain property to which he had no legal right, including the insurance
proceeds in question in the instant case.”
As the litigation continued, Mr. Rawlings filed two amended and substituted complaints.
Rather than including a specific undue influence allegation in these complaints, he left the
allegations in his original complaint unchanged. Thus, this case went to trial based Mr. Rawlings’s
claims that the beneficiary of Ms. Rawlings’s life insurance policy had been “fraudulently changed”
either because Ms. Rawlings was incompetent or because the change was accomplished “with a
forged power of attorney executed by someone other than Mrs. Rawlings.”
The bulk of the evidence introduced at trial related to Ms. Rawlings’s competence. The
transcript contains no specific mention of undue influence, although Mr. Holt was examined and
cross-examined about the circumstances surrounding Ms. Rawlings’s execution of her power of
attorney and the change of beneficiary form. The first direct reference to “undue influence” appears
in the trial court’s memorandum and order. After concluding that Ms. Rawlings lacked the mental
capacity to execute the power of attorney and the change of beneficiary form, the trial court added:
“Further this court finds that Mrs. Rawling’s [sic] mental health had deteriorated to such a point that
she was severely depressed and she was easily manipulated. Essentially, she did not have the
capacity to resist the pressure and undue influence that her brother placed upon her.”
B.
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The pleadings required by the Tennessee Rules of Civil Procedure provide the vehicle for
identifying and refining the matters at issue in a lawsuit. They provide the parties and the trial court
with notice of the claims and defenses involved in the case. Poster v. Andrews, 182 Tenn. 671, 677,
189 S.W.2d 580, 582 (1943); Hammett v. Vogue, Inc., 179 Tenn. 284, 290, 165 S.W.2d 577, 579
(1942). Thus, even under today’s relaxed rules of pleading, it is necessary to include enough facts
in a complaint to articulate a claim for relief. Jasper Engine & Transmission Exchange v. Mills, 911
S.W.2d 719, 720 (Tenn. Ct. App. 1995).
The failure to assert a claim or defense in a timely manner is deemed a waiver of the right
to rely on the claim or defense later in the proceeding. Castelli v. Lien, 910 S.W.2d 420, 429 (Tenn.
Ct. App. 1995). Thus, unless the unpled claim has been tried by consent in the trial court,7 it cannot
provide a basis for a judgment in favor of the claimant. Fidelity-Phenix Fire Ins. Co. v. Jackson, 181
Tenn. 453, 463, 181 S.W.2d 625, 629 (1944); Roddy v. Volunteer Med. Clinic, Inc., 926 S.W.2d 572,
576-77 (Tenn. Ct. App. 1996); John J. Heirigs Constr. Co. v. Exide Corp., 709 S.W.2d 604, 607
(Tenn. Ct. App. 1986). Similarly, an unpled claim cannot be asserted for the first time on appeal.
Simpson v. Frontier Cmty. Credit Union, 810 S.W.2d 147, 153 (Tenn. 1991); Davis v. Tennessee
Dep’t of Employment Sec., 23 S.W.3d 304, 310 (Tenn. Ct. App. 1999); Cobble v. McCamey, 790
S.W.2d 279, 283 (Tenn. Ct. App. 1989).
The courts should avoid construing pleadings in any artificially technical sense. Thus, they
should give the language of a pleading its fair and natural construction, Farmers State Bank v. Jones,
34 Tenn. App. 57, 69, 232 S.W.2d 658, 663 (1950), and they should give effect to the substance of
a pleading rather than its form. Fann v. City of Fairview, 905 S.W.2d 167, 175 n.14 (Tenn. Ct. App.
1994); Brown v. City of Manchester, 722 S.W.2d 394, 397 (Tenn. Ct. App. 1986). However, the
courts must stop short of reading a claim into a pleading where none exists. Donaldson v.
Donaldson, 557 S.W.2d 60, 62 (Tenn. 1997); Rampy v. IPI Acrylics, Inc., 898 S.W.2d 196, 198
(Tenn. Ct. App. 1994).
C.
The pivotal issue with regard to the trial court’s undue influence conclusion is whether Mr.
Rawlings’s amended complaint includes an undue influence claim. If this claim exists, it can only
be embodied in the allegations that the “beneficiary was fraudulently changed without Mrs.
Rawlings’ [sic] consent” or that the beneficiary was changed “with a forged power of attorney
executed by someone other than Mrs. Rawlings.” We conclude that these allegations do not make
out an undue influence claim.8
7
Tenn. R. Civ. P. 15 .02; BVT Leb anon Sh opping C tr. v. Wal-Mart , 48 S.W.3d 132, 135 n.2 (Tenn. 2001); In
re Adoption of E.N.R., 42 S.W .3d 26, 3 0 n.1 (T enn. 20 01); Zack Cheek Builders, Inc. v. McLeod, 597 S.W.2d 888, 890-
91 (Ten n. 1980 ).
8
This case does not require us to determine whether an undue influence claim must comply with the
particularity requirements in Tenn. R. Civ. P. 9.02. While other courts have held that undue influence claims need not
be plead w ith particular ity, Gosa v . Willis, 341 So .2d 699 , 701 (A la. 1977 ); Nelson v. Covington, 519 A.2d 177, 179
(D.C. 1986); Skelton v. Skelton, 308 S.E.2d 838, 841 n.2 (Ga. 1983), we are addressing a more fundamental issue here.
W e must decide whether Mr. Rawlings’s amended complaint contains any language at all that can be fairly construed
(continu ed...)
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Fraud and undue influence are two conceptually different theories. Nelson v. Covington, 519
A.2d at 179; Joseph Warren, Fraud, Undue Influence, and Mistake in Wills, 41 Harv. L. Rev. 309,
326-27 (1928). The basic ingredient of a fraud claim is deception. Fraud is a trick or artifice or
other use of false information that induces a person to dispose of his or her property in a way he or
she would not otherwise have done but for the fraud. 1 William J. Bowe & Douglas H. Parker, Page
on the Law of Wills § 14.3, at 695 (1960). Fraud does not override a person’s free agency or free
will. It induces a person to exercise his or her free will mistakenly based on false information.
Union Planters Nat’l Bank v. Inman, 588 S.W.2d 757, 761-62 (Tenn. Ct. App. 1979).
Undue influence, on the other hand, consists of exerting enough influence or pressure to
break down a person’s will power and to overcome a person’s free agency or free will so that the
person is unable to keep from doing what he or she would not otherwise have done. Bills v. Lindsay,
909 S.W.2d 434, 440 (Tenn. Ct. App. 1993); Hollis v. Thomas, 42 Tenn. App. 407, 423, 303 S.W.2d
751, 758 (1957). Simply attempting to influence another person’s decision regarding the disposition
of his or her property in not undue influence. Kelly v. Allen, 558 S.W.2d 845, 847 (Tenn. 1977);
Keasler v. Estate of Keasler, 973 S.W.2d 213, 219 (Tenn. Ct. App. 1997); Parham v. Walker, 568
S.W.2d 622, 624 (Tenn. Ct. App. 1978). To amount to undue influence, the persuasion or influence
must cause a person to act contrary to his or her duty and inclination. Hager v. Hager, 13 Tenn.
App. 23, 30 (1930).
Mr. Rawlings’s amended complaint articulates claims based on lack of mental capacity and
fraud. It alleges that the beneficiary of Ms. Rawlings’s life insurance was changed at a time when
she was incompetent and that the beneficiary of Ms. Rawlings’s life insurance policy was changed
without her consent using a forged power of attorney executed by someone other than Ms. Rawlings.
However, even giving the complaint a most liberal reading, it does not allege that Mr. Holt exerted
such undue influence over Ms. Rawlings that he was able to induce her to dispose of the proceeds
of her life insurance policy in a way that she would not otherwise have done. Accordingly, we
conclude that Mr. Rawlings’s amended complaint does not contain an undue influence claim.
We also conclude that the parties did not try an undue influence claim by consent. The
transcript fails to reflect that “undue influence” was ever mentioned during the trial itself. There is
likewise no indication that Mr. Rawlings moved to conform the pleadings to the proof in accordance
with Tenn. R. Civ. P. 15.02. In the absence of an undue influence claim in Mr. Rawlings’s amended
complaint or any proof regarding undue influence at trial, the trial court erred by basing its decision,
even in part, upon its conclusion that Mr. Holt unduly influenced Ms. Rawlings to change the
beneficiary of her life insurance policy.9
8
(...continued)
as an und ue influen ce claim.
9
W e would reach the same result if we addressed the substance of the trial court’s undue influence
determination. Even if Mr. Rawlings succeeded in shifting the burden of going forward to Mr. Holt, we find that the
record contains clear and convincing evidence that Ms. Rawlings’s decision to change the beneficiary of her life
insurance policy w as entirely h er own . Matlock v. Simpson, 902 S.W.2d 384, 386 (Tenn. 1995) (holding that the
presumption of undue influence may be rebutted by clear and convincing evidence o f the fairness of the transaction).
Ms. Rawlings’s decision came approximately three months after Mr. R awlings to ld her that he wanted a divorce after
(continu ed...)
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V.
We reverse the judgment and remand the case to the trial court for the entry of an order
awarding the proceeds of Ms. Rawlings’s life insurance policy to Mr. Holt. Because Mr. Rawlings
is no longer the prevailing party, we vacate the portion of the order awarding him discretionary costs
under Tenn. R. Civ. P. 54.04(2). We also tax the costs of this appeal to Arthur L. Rawlings, Jr. for
which execution, if necessary, may issue.
_____________________________
WILLIAM C. KOCH, JR., JUDGE
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(...continued)
fifty-two years of marriage. The only person Ms. Raw lings cou ld turn to for help was her only surviving blood relative,
Mr. Holt. Mr. Ho lt agreed to assist her. Accordingly, it not remarkable that Ms. Rawlings, facing the grim prospect
of being left alone in a nursing home for the rest of her days, decided to transfer her remaining assets to her brother who
had agreed to help her in her m ost despe rate hour . This is espec ially the case in light of M r. Rawlin gs’s efforts to
convince Ms. Raw lings to give him the marital home rather than selling the home and using half of the proceeds for her
medical care.
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