In re Guardianship of Spinnie , 2016 IL App (5th) 150564 ( 2016 )

Rule 23 order filed 2016 IL App (5th) 150564October 25, 2016;
Motion to publish granted NO. 5-15-0564
November 22, 2016.
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
________________________________________________________________________
In re GUARDIANSHIP OF AGNES SPINNIE, ) Appeal from the Circuit Court of
a Disabled Adult ) St. Clair County.
)
(Richard Ervin, Guardian of the Person and ) No. 13-P-273
Estate of Agnes Spinnie, Petitioner-Appellee, )
v. Patricia A. Gooch, Respondent-Appellant). ) Honorable Christopher T. Kolker,
) Judge, presiding.
________________________________________________________________________
PRESIDING JUSTICE SCHWARM delivered the judgment of the court, with
opinion.
Justices Cates and Moore concurred in the judgment and opinion.
OPINION
¶1 The petitioner, Richard Ervin, the guardian of the person and estate of Agnes
Spinnie, brought this action against the respondent, Patricia A. Gooch, among others, to
recover assets that the petitioner alleged were improperly acquired from Agnes. After
hearing evidence, the circuit court entered judgment in favor of the petitioner and against
the respondent in the amount of $31,733.19. For the following reasons, we reverse the
circuit court's judgment.
¶2 BACKGROUND
¶3 On July 5, 2007, Agnes, who was born on January 13, 1922, executed an Illinois
Statutory Short Form Power of Attorney for Property, appointing the respondent as
1
attorney-in-fact. Agnes also executed a power of attorney for healthcare, naming the
respondent as attorney-in-fact. At about the same time, Agnes received a substantial
settlement in excess of $400,000, as compensation for her deceased husband's work-
related injury. Thereafter, Agnes gifted funds to her daughters, the respondent and Helen
Odell; her grandchildren, Shelley Brown, Lisa Brown, and Barbara Davis; and her great-
grandchild, Morgan Brown, among others.
¶4 On May 29, 2013, the petitioner filed a petition for adjudication of disability and
appointment of guardian for Agnes, along with a petition to terminate the respondent's
agency under the power of attorney documents. On the same date, the court appointed a
guardian ad litem for Agnes. On June 11, 2013, the guardian ad litem filed his report,
revealing that his attempts to meet with Agnes "were frustrated by [her] anger towards
[her son, the petitioner,] for filing the" petition. Agnes informed the guardian that she
had three children and that the respondent was the oldest. Agnes indicated to the
guardian ad litem that guardianship was unnecessary and that she did not want the
petitioner appointed as guardian. Agnes denied that she was financially exploited. On
September 24, 2013, the circuit court appointed the petitioner as temporary guardian of
Agnes's person and estate. On this date, the circuit court also revoked the respondent's
agency pursuant to the power of attorney for property and the power of attorney for
healthcare.
¶5 After an examination performed on October 20, 2013, Daniel J. Cuneo, Ph.D.,
submitted a report, which was later admitted into evidence, noting that Agnes was 91
years old at the time of the examination and that she was living at Charles Gardens, an
2
independent living center in O'Fallon, Illinois. Dr. Cuneo opined that Agnes's emotional,
mental, and psychological functions were impaired and that she required a guardian over
her person and estate. Accordingly, on November 21, 2013, the circuit court found that
Agnes was a disabled adult without capacity and appointed permanent guardianship of
Agnes's person and estate to the petitioner.
¶6 On January 14, 2014, the petitioner filed an inventory of Agnes's real and personal
property, valuing her mobile home at $21,000; her checking account at $1,600; and her
monthly income at $2,002.50. Thereafter, on February 4, 2014, and also on October 10,
2014, the petitioner filed petitions for citation against the respondent, Lisa, Shelley, and
Barbara to produce estate assets or information to explain why approximately $358,939
of Agnes's funds or property had not been produced. On February 25, 2015, citing the
five-year limitations found in section 13-205 of the Code of Civil Procedure (735 ILCS
5/13-205 (West 2014)), the respondent filed a motion to strike and to limit the petitioner's
recovery to assets transferred less than five years prior to the petition for recovery
citation.
¶7 After notification that the petitioner had settled with Lisa and Barbara, the circuit
court heard evidence in February 2015. The respondent testified that in 2007, she "did
everything" for Agnes by taking her to the doctor, to church, and to the store. The
respondent testified that she visited Agnes two or three times a week and called her
almost every day. The respondent acknowledged that Agnes spent the $440,000
settlement she received in 2007 in a short period of time. The respondent testified that
3
Agnes gifted funds to Lisa, Shelley, and Helen and that Agnes went on a cruise, bought
hearing aids, prepaid for her funeral, bought appliances, and paid for her mobile home.
¶8 The respondent testified that she received approximately $15,500 to $20,000 from
Agnes. The respondent testified specifically that when Agnes received the first
settlement payment, Agnes gave the respondent $2,500 to repay a loan. The respondent
testified that in 2008, Agnes also reimbursed the respondent for paying Shelley's rent and
for purchasing Agnes's groceries, thereby paying her $5,700 and $4,000, which were
amounts due on the respondent's credit cards. The respondent testified that prior to 2010,
Agnes gave her an additional $1,000 and then $500 to thank her for her help. The
respondent testified that she had paid almost $1,800 for an air conditioner for Agnes, and
Agnes repaid her through monthly amounts of $78, $20, and $50. The respondent
testified that in 2010, she borrowed $5,000 from Agnes, but on May 10, 2010, she began
repaying the loan with cash and had repaid over $1,000. The respondent testified that
Agnes had not indicated that she expected repayment.
¶9 The respondent testified that Agnes told her she would "do what she want[ed]
with" her money. The respondent testified that Agnes was "in her right mind" until 2013,
when the respondent began managing Agnes's finances. The respondent testified that she
"kept the checkbook" from the middle of 2013 until 2014. The respondent testified,
however, that she did not sign any check from Agnes to herself. The respondent testified
that she "never signed [Agnes's] name to anything."
¶ 10 Shelley, Helen's daughter, testified that Agnes periodically paid her rent, bought
three cars for her, and provided $6,000 cash to purchase a trailer. Shelley testified that
4
Agnes provided funds to her throughout her life, both before and after Agnes received the
substantial settlement. Shelley testified that Agnes also bought a vehicle for Shelley's
boyfriend. Shelley testified that she received approximately $20,000 from Agnes.
¶ 11 Lisa, Helen's daughter, testified that she received approximately $13,000 from
Agnes. Lisa testified that Agnes paid a $1,500 deposit to purchase her home and
provided funds for her car payment. Lisa testified that Agnes paid Helen's loan for her
home and bought Shelley's friend, Tim McClade, a pickup truck for $1,500, in addition to
giving him additional funds. Lisa testified that Agnes often provided cash or a debit card
to her, to Shelley, and to other family members. Lisa testified that Agnes also donated to
many solicitors telephoning or mailing in requests for donations. Lisa testified that
Agnes often said that she would do what she wants with her money. Lisa testified that
from 2007 through 2012, she often took Agnes to the bank where Agnes would write a
check to cash. Lisa testified that in 2012, Agnes began having episodes where she
hallucinated that there were 19th century men and women outside of her home.
¶ 12 Dr. James J. Needles, who had acted as Agnes's physician since February 23,
1993, testified that on June 3, 2013, he examined Agnes after she had been hospitalized
for an evaluation for dementia. Dr. Needles testified that he diagnosed her with early
dementia of Alzheimer's type.
¶ 13 The petitioner testified that Agnes received income—including pension payments,
social security, and black lung compensation—to pay her monthly expenses. The
petitioner identified various checks wherein he alleged that Agnes's signature had been
falsified. The petitioner testified that the falsified checks amounted to $85,000. The
5
petitioner also testified that, pursuant to the respondent's family account records, the
following amounts were added to the respondent's checking accounts: $17,000 in 2007,
$17,263 in 2008, $10,000 in 2009, $11,000 in 2010, $10,000 in 2011, $13,000 in 2012,
and $8,000 in 2013.
¶ 14 On September 9, 2015, the circuit court entered its order. In its order, the circuit
court found that Agnes wrote many checks to cash and gifted the cash to relatives. The
circuit court found, however, that the petitioner had not met his burden to show that
additional funds represented by checks payable to cash were transferred to the
respondent. Instead, the circuit court found that Agnes gifted these funds to her other
relatives who "also took advantage of her." The circuit court found that Agnes
consistently told her family members that she would do what she wanted with her money.
The circuit court found that Agnes had transferred $31,733.19 to the respondent.
Considering that a presumption of fraud arose pursuant to the execution of the power of
attorney for property document, the circuit court determined that the respondent's
testimony that the transactions were gifts or loans was self-serving and did not overcome
the presumption of fraud. The circuit court entered judgment in the petitioner's favor in
the amount of $31,733.19. Considering no presumption of fraud with regard to Shelley,
the circuit court found the evidence insufficient to support judgment against her.
¶ 15 On September 28, 2015, the respondent filed a motion to reconsider, noting,
among other things, that the circuit court incorrectly included in its judgment transactions
that occurred prior to the execution of the power of attorney. On November 25, 2015,
after hearing arguments, the circuit court denied the motion to reconsider. On December
6
10, 2015, the respondent filed a motion to clarify the judgment order, requesting the court
to itemize the components of its $31,733.19 judgment. The circuit court dismissed the
respondent's motion to clarify. The respondent thereafter filed a timely notice of appeal.
¶ 16 ANALYSIS
¶ 17 A citation proceeding under section 16-1 of the Probate Act of 1975 (755 ILCS
5/16-1 (West 2014)) is the statutory mechanism to recover assets that belong to the estate
for purposes of paying estate expenses. In re Estate of Zagaria, 2013 IL App (1st)
122879, ¶ 24. " 'In a citation proceeding, the probate court is empowered to determine
the title and right of property and enter such order as the case requires.' " Id. ¶ 25
(quoting In re Estate of Elias, 408 Ill. App. 3d 301, 315 (2011)). " 'The proceeding may
be merely for the purpose of obtaining information with no adversary aspects, or it may
develop into an out and out suit for the recovery of money.' " Id. (quoting Keshner v.
Keshner, 376 Ill. 354, 359-60 (1941)).
¶ 18 " 'A finding of the trial court that certain property belonged to the estate will not
be disturbed on appeal unless it is against the manifest weight of the evidence, [citation],
as the trial court in such proceedings is authorized to determine all questions of title,
claims of adverse title and the right of property.' " Id. ¶ 26 (quoting In re Estate of
Joutsen, 100 Ill. App. 3d 376, 380 (1981)). " 'A decision is against the manifest weight
of the evidence only when an opposite conclusion is apparent or when the findings appear
to be unreasonable, arbitrary, or not based on the evidence.' " Sheth v. SAB Tool Supply
Co., 2013 IL App (1st) 110156, ¶ 41 (quoting Eychaner v. Gross, 202 Ill. 2d 228, 252
(2002)).
7
¶ 19 In Illinois, a power of attorney creates a fiduciary relationship between the
principal and the agent as a matter of law. Deason v. Gutzler, 251 Ill. App. 3d 630, 637
(1993). An agent under a power of attorney has a fiduciary duty to the principal who
made the designation. See 755 ILCS 45/2-7(a), (b) (West 2014); Spring Valley Nursing
Center, L.P. v. Allen, 2012 IL App (3d) 110915, ¶ 12. The mere existence of a fiduciary
relationship prohibits the agent from seeking or obtaining any selfish benefit for herself,
and if the agent does so, the transaction is presumed to be fraudulent. See Clark v. Clark,
398 Ill. 592, 601-02 (1947); Spring Valley Nursing Center, L.P., 2012 IL App (3d)
110915, ¶ 12; Pottinger v. Pottinger, 238 Ill. App. 3d 908, 918 (1992); White v. Raines,
215 Ill. App. 3d 49, 59 (1991). "Thus, any conveyance of the principal's property that
either materially benefits the agent or is for the agent's own use is presumed to be
fraudulent." Spring Valley Nursing Center, L.P., 2012 IL App (3d) 110915, ¶ 12.
¶ 20 The presumption of fraud is not conclusive, however, and may be rebutted by
clear and convincing evidence that the agent exercised good faith and did not betray the
confidence placed in her. Jones v. Washington, 412 Ill. 436, 441 (1952); Clark, 398 Ill.
at 601; Spring Valley Nursing Center, L.P., 2012 IL App (3d) 110915, ¶ 13; In re Estate
of DeJarnette, 286 Ill. App. 3d 1082, 1088 (1997); Glass v. Burkett, 64 Ill. App. 3d 676,
681 (1978). If the agent rebuts the presumption of fraud, the transaction in question will
be upheld. See 755 ILCS 45/2-7(a) (West 2014) (agent who acts with due care for the
benefit of the principal will not be held liable merely because the act also benefits the
agent); Clark, 398 Ill. at 602 ("[i]f a conveyance was not procured through improper
means attended with circumstances of oppression or overreaching, but was entered into
8
by the grantor with full knowledge of its nature and effect and because of his or her
deliberate, voluntary and intelligent desire, the existence of a fiduciary relation does not
invalidate the transaction"); Spring Valley Nursing Center, L.P., 2012 IL App (3d)
110915, ¶ 13.
¶ 21 A rebuttable presumption does not shift the burden of proof, and is not evidence in
itself, but arises as a rule of law or legal conclusion, which establishes a prima facie case
of undue influence, in the absence of evidence to the contrary. Franciscan Sisters Health
Care Corp. v. Dean, 95 Ill. 2d 452, 461-62 (1983). "Stated differently, the presence of a
presumption in a case only has the effect of shifting to the party against whom it operates
the burden of going forward and introducing evidence to meet the presumption."
(Internal quotation marks omitted.) Id. at 462. "If evidence is introduced which is
contrary to the presumption, the presumption will cease to operate." (Internal quotation
marks omitted.) Id.¶ 22 The amount of evidence necessary to meet the presumption is not determined by
any fixed rule and depends on the circumstances of each case. Id. at 463; In re Estate of
Pawlinski, 407 Ill. App. 3d 957, 966 (2011). "Some of the significant factors to be
considered in determining if the presumption of fraud has been rebutted include whether
the fiduciary made a frank disclosure to the principal of the information he had, whether
the fiduciary paid adequate consideration, and whether the principal had competent and
independent advice." Spring Valley Nursing Center, L.P., 2012 IL App (3d) 110915,
¶ 13. The respondent must show by clear and convincing evidence that she exercised
good faith and did not betray the confidence placed in her. See Lemp v. Hauptmann, 170
9
Ill. App. 3d 753, 757 (1988) (presumption of fraud is overcome by clear and convincing
evidence that the transaction was fair and equitable and was not a result of undue
influence). "The term 'clear and convincing' is a relative term." In re Estate of
Pawlinski, 407 Ill. App. 3d at 966. "[T]he amount of evidence *** to meet the
presumption varie[s] with the strength of the facts supporting the presumption." Id. at
965. "A party may simply have to respond with some evidence or may have to respond
with substantial evidence." (Emphasis in original.) Id. at 966.
¶ 23 "Where there is a fiduciary relationship, a gift is not presumed, regardless of the
relationship of the parties involved." Deason, 251 Ill. App. 3d at 638; Lemp, 170 Ill.
App. 3d at 758 (fiduciary relationship between parent and child defeats presumption of a
gift). "A trial court's determination as to whether a presumption of fraud has been
overcome, made after an evidentiary hearing, is entitled to deference and will not be
reversed on appeal unless it is against the manifest weight of the evidence." Spring
Valley Nursing Center, L.P., 2012 IL App (3d) 110915, ¶ 14.
¶ 24 The respondent argues that the circuit court erred in applying a presumption of
fraud or undue influence in this case because the gifts from Agnes to the respondent were
not executed pursuant to the power of attorney. We reject the respondent's contention.
¶ 25 The execution of the 2007 power of attorney for property document authorized the
respondent to manage and control Agnes's property and financial matters and established
a fiduciary relationship between the respondent and Agnes as a matter of law. In re
Estate of Miller, 334 Ill. App. 3d 692, 697 (2002); Lemp, 170 Ill. App. 3d at 757. As a
result of the property power of attorney, any subsequent conveyance of Agnes's property
10
that either materially benefitted the respondent or was for the respondent's own use was
presumed to be fraudulent. See Jones, 412 Ill. at 441; Spring Valley Nursing Center,
L.P., 2012 IL App (3d) 110915, ¶ 12; cf. McDonald v. McDonald, 408 Ill. 388, 394
(1951) (because fiduciary relationship arose from business partnership, it did not extend
to conveyance outside scope of partnership); In re Estate of Stahling, 2013 IL App (4th)
120271, ¶ 26 (because fiduciary relationship arose from healthcare power of attorney, no
presumption of undue influence in transactions involving property or financial matters).
¶ 26 Because Agnes's transfers of property to the respondent were within the scope of
the property power of attorney, the transfers gave rise to a presumption of fraud, even
though almost all of the transfers were signed by Agnes personally and not by the
respondent as agent under the power of attorney. See Spring Valley Nursing Center,
L.P., 2012 IL App (3d) 110915, ¶ 13 (no question under the law that transfer of life estate
from principal to agent gave rise to a presumption of fraud, even though deed was signed
by principal personally); In re Estate of Elias, 408 Ill. App. 3d at 320 (subsequent to
execution of power of attorney, transfer of property from principal to agent pursuant to
transfer-on-death form gave rise to presumption of fraud even though principal, not agent
under power of attorney, signed transfer-on-death form); Pottinger, 238 Ill. App. 3d at
920 (subsequent to execution of power of attorney, transfer of property from principal to
agents gave rise to presumption of fraud or undue influence even though some of the
transactions benefitting agents were executed by principal herself, not by agent through
power of attorney); White, 215 Ill. App. 3d at 59 (subsequent to execution of power of
attorney, transfer of property from principal to agent gave rise to presumption of fraud
11
even though none of the property in question was transferred pursuant to power of
attorney). The fact that the power of attorney was not necessary for the transactions does
not diminish the fact that a fiduciary relationship existed. See In re Estate of Miller, 334
Ill. App. 3d at 700 ("fact that the power of attorney was not necessary for the checking
account transactions *** does not diminish the fact that a fiduciary relationship existed").
The respondent's duty was not limited only to transactions invoking her power of
attorney. See In re Estate of Elias, 408 Ill. App. 3d at 320 (transactions benefitting the
defendant after grant of power of attorney are presumed fraudulent).
¶ 27 Accordingly, as a result of the presumption, the respondent was required to show
by clear and convincing evidence that she exercised good faith and did not betray the
confidence placed in her. See Lemp, 170 Ill. App. 3d at 757 (presumption of fraud is
overcome by clear and convincing evidence that the transaction was fair and equitable
and was not a result of undue influence). We note that the strength of the facts
supporting the presumption of fraud was tenuous. See In re Estate of Pawlinski, 407 Ill.
App. 3d at 965 (amount of evidence to meet presumption varies with strength of facts
supporting the presumption). The evidence revealed that Agnes's gifts to the respondent
were consistent with the gifts she bestowed on her other relatives, the gifts were given
while Agnes was competent and expressing a desire to gift, and Agnes consistently
signed checks to the respondent in her own capacity, with the respondent signing only
one check written to cash for $300. Thus, as noted, the respondent did not utilize her
power of attorney to acquire the great majority of the gifts given by Agnes. Cf. id. at
12
966-68 (presumption of undue influence was strong because the evidence went far
beyond the mere signing of the power of attorney).
¶ 28 Undue influence is defined as " 'any improper *** urgency of persuasion whereby
the will of a person is overpowered and he is induced to do or forbear an act which he
would not do or would do if left to act freely.' " Franciscan Sisters, 95 Ill. 2d at 460(quoting Powell v. Bechtel, 340 Ill. 330, 338 (1930)). The petitioner offered no evidence
whatsoever of actual undue influence or fraud, relying completely on the presumption
that arose from the execution of the power of attorney. However, the presumption of
fraud was overcome by clear and convincing evidence that the transactions were fair and
equitable and were not a result of undue influence. See Lemp, 170 Ill. App. 3d at 757.
¶ 29 Although we also recognize that the circuit court's judgment amount is
unsubstantiated by its order, in that it seems to have improperly included, inter alia,
funds transferred prior to the execution of the power of attorney (In re Estate of Miller,
334 Ill. App. 3d at 701 (no presumption of fraud regarding transfers prior to obtaining
power of attorney)), we need not address the respondent's remaining arguments. The
evidence before the circuit court revealed that the conveyances were not procured
through improper means attended with circumstances of oppression or overreaching but
were entered into by Agnes with full knowledge of their nature and effect and as a result
of her deliberate and voluntary desire. Accordingly, the existence of the fiduciary
relationship between Agnes and the respondent did not invalidate the transactions at
issue. See Clark, 398 Ill. at 602; Spring Valley Nursing Center, L.P., 2012 IL App (3d)
110915, ¶ 13. The circuit court improperly entered judgment against the respondent.
13
¶ 30 CONCLUSION
¶ 31 For the reasons stated herein, we reverse the judgment of the circuit court of St.
Clair County, and we remand the cause for further proceedings consistent with this
opinion.
¶ 32 Reversed and remanded.
14
2016 IL App (5th) 150564NO. 5-15-0564
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
______________________________________________________________________________
In re GUARDIANSHIP OF AGNES SPINNIE, ) Appeal from the Circuit Court of
a Disabled Adult ) St. Clair County.
)
(Richard Ervin, Guardian of the Person and ) No. 13-P-273
Estate of Agnes Spinnie, Petitioner-Appellee, )
v. Patricia A. Gooch, Respondent-Appellant). ) Honorable Christopher T. Kolker,
) Judge, presiding.
______________________________________________________________________________
Rule 23 Order Filed: October 25, 2016
Motion to Publish Granted: November 22, 2016
Opinion Filed: November 22, 2016
______________________________________________________________________________
Justices: Honorable S. Gene Schwarm, P.J.
Honorable Judy L. Cates, J., and
Honorable James R. Moore, J.,
Concur
______________________________________________________________________________
Attorneys Edward J. Kionka, Lesar Law Building, MS 6804, 1150 Douglas Drive,
for Carbondale, IL 62901; Curtis L. Blood, 1602 Vandalia, P.O. Box 486,
Appellant Collinsville, IL 62234-0486
______________________________________________________________________________
Attorneys Jayni A. Desai, Alana I. Mejias, Charles W. Courtney, Jr., Courtney,
for Clark & Mejias, P.C., 104 S. Charles Street, Belleville, IL 62220
Appellee
______________________________________________________________________________