Wyman v. Bruckner , 908 N.W.2d 170 ( 2018 )

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2018 S.D. 17IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
KAREN LEE WYMAN,
Personally and as Personal
Representative of the Estate
of Barbara Ann Morris, Plaintiff and Appellant,
v.
PAMALA BRUCKNER, Defendant and Appellee.
****
APPEAL FROM THE CIRCUIT COURT OF
THE THIRD JUDICIAL CIRCUIT
BEADLE COUNTY, SOUTH DAKOTA
****
THE HONORABLE CARMEN MEANS
Judge
****
MATTHEW P. BOCK
JAMES A. POWER of
Woods, Fuller, Shultz
and Smith, PC
Sioux Falls, South Dakota Attorneys for plaintiff and
appellant.
LEE SCHOENBECK
Watertown, South Dakota Attorney for defendant and
appellee.
****
ARGUED AUGUST 29, 2017
OPINION FILED 02/21/18
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KERN, Justice
[¶1.] Karen Wyman is the personal representative of the estate of her
deceased mother, Barbara Ann Morris. Wyman alleges that her sister Pamala
Bruckner engaged in impermissible self-dealing in her capacity as Morris’s
attorney-in-fact. Wyman alleges Bruckner improperly wrote checks from an
account Bruckner owned jointly with Morris for the benefit of Bruckner and her
family. Wyman sued Bruckner on several grounds, including breach of fiduciary
duties. The circuit court granted partial summary judgment in favor of Bruckner
on that issue. Wyman voluntarily dismissed her remaining claims and appeals
from the circuit court’s grant of summary judgment. We reverse and remand.
Facts and Procedural History
[¶2.] On March 25, 2014, Morris executed an estate plan, which included a
will and revocable trust. The will provided that upon Morris’s death, her property
would pass to the trust, which in turn would be distributed to Wyman and Bruckner
per stirpes. When she executed the estate plan, Morris lived with Wyman in
Florida. Morris designated Wyman as the personal representative of her estate and
the successor trustee of the trust. In the fall of 2014, Morris received a terminal
cancer diagnosis and moved from Florida to South Dakota to live with Bruckner.
[¶3.] Shortly thereafter, Bruckner contacted a South Dakota attorney and
directed him to prepare a power of attorney for Morris’s signature. The attorney
drafted a non-springing durable power of attorney that appointed Bruckner as
Morris’s attorney-in-fact and mailed it to Bruckner. On October 29, 2014, Morris
signed the power of attorney naming Bruckner as attorney-in-fact before a notary.
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The power of attorney is a two-and-a-half-page document of single-spaced text that
reads in part:
Not to limit the full extent of the power and authority herein
granted but merely to emphasize certain powers, said attorney-
in-fact shall have full, unrestricted, power and authority as
follows:
To handle, manage, lease, sell, purchase, convey, exchange, give
or receive as a gift, loan, encumber, possess, use, consume,
abandon or otherwise deal in or with, in any manner, all or any
portion of my real or personal property, including any interest I
may have therein, whether now owned or hereafter acquired,
whatsoever and wheresoever located . . . .
[¶4.] On November 12, 2014, Morris opened a pay-on-death account at
Dakotaland Credit Union. Morris designated Wyman and Bruckner as equal
beneficiaries of any money remaining in the account upon her death. But on
December 17, 2014, Morris and Bruckner signed an account change authorization
form that made Bruckner a joint owner of the Dakotaland account. On March 12,
2015, Morris passed away. Bruckner never deposited any of her personal funds into
the Dakotaland account, and all of the funds in the account were deposited by
Morris.
[¶5.] Between January 22, 2015, and Morris’s death, Bruckner wrote several
checks to herself and her family from the Dakotaland account totaling $225,077.16.
These included a $200,000 check to Bruckner’s husband and two checks Bruckner
wrote to herself totaling $6,377.16. After Morris passed away on March 12, 2015,
Bruckner wrote one check to her son-in-law for $175 and one to Kuhler Funeral
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Home for $5,066.10. 1 On June 24, 2015, Bruckner closed the Dakotaland account
and transferred the remaining $29,070.31 to her personal account.
[¶6.] On April 5, 2015, Wyman filed a petition for formal probate of Morris’s
estate. On September 9, 2015, Wyman brought several claims against Bruckner in
a separate civil action, alleging in part that because the power of attorney did not
authorize self-dealing, Bruckner breached her fiduciary duties. Bruckner answered
that her status as joint owner entitled her to withdraw funds from the account and,
in her amended answer, argued that the power of attorney authorized self-dealing.
Wyman and Bruckner then filed cross-motions for partial summary judgment on
the issue of breach of fiduciary duties and self-dealing and to consolidate the
probate and civil actions. Bruckner argued before the circuit court that the power of
attorney permitted self-dealing, authorizing her to transfer funds out of the
Dakotaland account to herself and to her family members. On May 31, 2016, the
circuit court consolidated the actions.
[¶7.] At a June 14 motion hearing, the circuit court ruled that the power of
attorney permitted Bruckner to self-deal. Specifically, the circuit court determined
that by authorizing Bruckner to “give or receive as a gift” Morris’s property whether
“now owned or hereafter acquired,” the power of attorney permitted Bruckner to
self-deal. The court ruled that the power of attorney authorized Bruckner to gift
Morris’s money to herself as well as to her immediate family, stating: “[M]y thought
is that if essentially she could have made a gift to herself that always authorize[s]
1. Wyman does not dispute the legitimacy of the payment to Kuhler Funeral
Home.
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her to give gifts to others, and these people were not just Bruckner’s family, they
were Morris’s family.” On June 20, 2016, the court entered a final order denying
Wyman’s motion and granting partial summary judgment in favor of Bruckner. In
its order, the court concluded both that the power of attorney authorized self-
dealing of the kind alleged here and that creation of the joint account did not
involve an exercise of Bruckner’s powers as attorney-in-fact.
[¶8.] Wyman voluntarily dismissed her other claims and appeals the circuit
court’s decision. Following this Court’s request for supplemental briefing, we
restate the parties’ issues on appeal as follows:
1. Whether Bruckner is judicially estopped from arguing on
appeal that her withdrawal of funds from the Dakotaland
account was permitted by her status as joint owner of the
account rather than as authorized by the power of
attorney.
2. Whether Bruckner is barred from arguing on appeal that
she was authorized to write checks on the Dakotaland
account as a joint owner when she did not raise this
argument in her motion for summary judgment below.
3. Whether the power of attorney authorized Bruckner to
self-deal.
4. Whether Bruckner acted in a fiduciary capacity with
respect to both creating and using the joint account.
Standard of Review
[¶9.] “We review a circuit court’s entry of summary judgment under the de
novo standard of review.” Heitmann v. Am. Family Mut. Ins. Co., 2016 S.D. 51, ¶ 8,
883 N.W.2d 506, 508. “We will affirm the trial court’s grant . . . of a motion for
summary judgment when no genuine issues of material fact exist, and the legal
questions have been correctly decided.” Estate of Lien v. Pete Lien & Sons, Inc.,
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2007 S.D. 100, ¶ 9, 740 N.W.2d 115, 119. “Cases involving the interpretation of
written documents are particularly appropriate for disposition by summary
judgment, such interpretation being a legal issue rather than a factual one.”
Id. ¶ 10. “We will affirm a circuit court’s decision so long as there is a legal basis to
support its decision.” Heitmann, 2016 S.D. 51, ¶ 8, 883 N.W.2d at 509.
Analysis and Decision
1. Whether Bruckner is judicially estopped from arguing on
appeal that her withdrawal of funds from the Dakotaland
account was permitted by her status as joint owner of the
account rather than as authorized by the power of
attorney.
[¶10.] Wyman contends that Bruckner cannot argue on appeal that her
status as joint owner of the Dakotaland account authorized transfers of funds
during Morris’s lifetime. Wyman claims that the concept of judicial estoppel
applies, preventing Bruckner from now asserting a position inconsistent with what
she argued below. Bruckner counters that although she maintained a different
theory before the circuit court, this Court must affirm summary judgment “if any
legal basis exists to support the [circuit] court’s decision.” Horne v. Crozier,
1997 S.D. 65, ¶ 5, 565 N.W.2d 50, 52.
[¶11.] “The gravamen of judicial estoppel is not privity, reliance, or prejudice.
Rather it is the intentional assertion of an inconsistent position that perverts the
judicial machinery.” Hayes v. Rosenbaum Signs & Outdoor Advert., Inc., 2014 S.D.
64, ¶ 14, 853 N.W.2d 878, 882. Also known as the “doctrine of preclusion of
inconsistent positions” and “doctrine of the conclusiveness of the judgment,”
Estoppel, Black’s Law Dictionary (10th ed. 2014), the issue of judicial estoppel may
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be raised “even at the appellate stage” and on a court’s “own motion[.]” Hayes,
2014 S.D. 64, ¶ 13, 853 N.W.2d at 882.
[¶12.] The question whether to apply principles of judicial estoppel is a mixed
question of law and fact, which we review de novo. Watertown Concrete Prod., Inc.
v. Foster ex rel. Estate of Foster, 2001 S.D. 79, ¶ 11, 630 N.W.2d 108, 112. “Courts
have observed that ‘the circumstances under which judicial estoppel may
appropriately be invoked are probably not reducible to any general formulation of
principle[.]’” New Hampshire v. Maine, 532 U.S. 742, 750, 121 S. Ct. 1808, 1815,
149 L. Ed. 2d 968 (2001) (quoting Allen v. Zurich Ins. Co., 667 F.2d 1162, 1166 (4th
Cir. 1982)). Generally, for judicial estoppel to apply:
The later position must be clearly inconsistent with the earlier
one; the earlier position was judicially accepted, creating the
risk of inconsistent legal determinations; and the party taking
the inconsistent position would derive an unfair advantage or
impose an unfair detriment to the opponent if not estopped.
Wilcox v. Vermeulen, 2010 S.D. 29, ¶ 10, 781 N.W.2d 464, 468. This Court has also
said that the “inconsistency must be about a matter of fact, not law.” State v.
Hatchett, 2014 S.D. 13, ¶ 33, 844 N.W.2d 610, 618.
[¶13.] Bruckner argues on appeal that she did not rely on her authority
under the power of attorney in dealing with the Dakotaland account. Bruckner
claims that she “signed in her own name and right on the Dakotaland account
change authorization” form making her a joint owner and authorizing her to write
checks on the account. Indeed, Bruckner took this position in both her answer to
the complaint and in her amended answer, arguing that she “wrote checks from the
joint account, as she was entitled to do as a co-owner of the joint account.”
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Bruckner emphasizes that “[t]he power of attorney was never utilized for
transactions” involving the joint account.
[¶14.] Yet in Bruckner’s May 24 cross-motion for partial summary judgment,
Bruckner did not argue that her status as joint owner of the account authorized the
withdrawals. Rather, Bruckner asserted that “[t]he Durable Power of Attorney
specifically gave Pamala Bruckner authority to receive gifts from the personal
property of her mother, Barbara Ann Morris.” Further, Bruckner argued in her
brief in support of partial summary judgment that the power of attorney provided
clear language authorizing self-dealing, concluding: “based on the language
contained in the Power of Attorney, the Motion for Summary Judgment should be
granted.” (Emphasis added.) Bruckner repeated this argument in her June 1
response to Wyman’s motion for partial summary judgment and in her June 8 reply
brief in support of partial summary judgment.
[¶15.] As Wyman observes, “Bruckner repeatedly . . . maintained that the
power of attorney authorized the checks written” (or in some cases, that the “checks
should not be considered self-dealing”). However, even if such a position is
inconsistent with Bruckner’s argument on appeal that she possessed a personal
right as joint owner to write checks on the Dakotaland account without exercising
her authority as attorney-in-fact, the alleged inconsistency is not one of fact.
Rather, Bruckner presents a different legal justification for why she could take the
money from the Dakotaland account during Morris’s lifetime. Accordingly, judicial
estoppel does not bar Bruckner from arguing that her status as joint owner of the
Dakotaland account, rather than her authority as attorney-in-fact, authorized the
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transfers made during Morris’s lifetime. Hatchett, 2014 S.D. 13, ¶ 33, 844 N.W.2d
at 618.
2. Whether Bruckner is barred from arguing on appeal that
she was authorized to write checks on the Dakotaland
account as a joint owner when she did not raise this
argument in her motion for summary judgment below.
[¶16.] Wyman next argues that Bruckner waived the argument that her
withdrawals from the joint account did not involve an exercise of Bruckner’s powers
as attorney-in-fact. “We have consistently held that this Court may not review
theories argued for the first time on appeal.” Liebig v. Kirchoff, 2014 S.D. 53, ¶ 35,
851 N.W.2d 743, 751. This is true even on appeal from summary judgment. See
NattyMac Capital LLC v. Pesek, 2010 S.D. 51, ¶ 19, 784 N.W.2d 156, 161.
[¶17.] However, Bruckner contends we must affirm the grant of summary
judgment if there is any legal basis for affirming the circuit court’s decision, Horne,
1997 S.D. 65, ¶ 5, 565 N.W.2d at 52, irrespective of whether she argued it below.
According to Bruckner, while the circuit court correctly decided that the power of
attorney permitted self-dealing, Bruckner’s argument on appeal that she did not
utilize the power of attorney in withdrawing funds from the joint account “is
supported in the record and provides another basis for affirming the [circuit court’s]
decision.” In response, Wyman contends Bruckner made judicial admissions that
she relied on her authority as attorney-in-fact to transfer funds, which Wyman
argues cannot be contradicted on appeal. Further, Wyman argues Bruckner’s
status as joint owner would not justify taking money from the Dakotaland account
during Morris’s lifetime.
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[¶18.] Because we hold below that the transfers made during Morris’s
lifetime violated Bruckner’s fiduciary duties irrespective of her status as joint
account owner, we need not decide whether Bruckner is barred from arguing on
appeal that she was authorized to write checks as an owner of the account.
3. Whether the power of attorney authorized Bruckner to self-
deal.
[¶19.] Wyman contends that because the power of attorney did not clearly
and unmistakably authorize Bruckner to self-deal, Bruckner violated her fiduciary
duties when she transferred $6,377.16 out of the Dakotaland account to herself and
$218,700 to family members. Bruckner counters that the power of attorney
expressly gave Bruckner unrestricted authority to make gifts to herself and her
family members, and that this Court has never required “magic language”
permitting self-dealing.
[¶20.] We have resolutely held that “a power of attorney must be strictly
construed and strictly pursued.” Bienash v. Moller, 2006 S.D. 78, ¶ 13, 721 N.W.2d
431, 435. “Only those powers specified in the document are granted to the attorney-
in-fact.” Id. Moreover, “a fiduciary must act with utmost good faith and avoid any
act of self-dealing.” Id. ¶ 14. “In order for self-dealing to be authorized, the
instrument creating the fiduciary duty must provide ‘clear and unmistakable
language’ authorizing self-dealing acts.” Id. (emphasis added). “Thus, if the power
to self-deal is not specifically articulated in the power of attorney, that power does
not exist.” Id. (emphasis added).
[¶21.] Here, the power of attorney authorized Bruckner to “give or receive as
a gift . . . or otherwise deal in or with, in any manner, all or any portion of my real
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or personal property, including any interest I may have therein, whether now
owned or hereafter acquired, whatsoever and wheresoever located[.]” Wyman
argues that finding authorization to self-deal in the language “receive as a gift” is
contrary to our settled law and would set a dangerous precedent. We agree.
[¶22.] This Court strictly interprets the power of attorney, giving effect only
to those powers explicitly provided for. Bienash, 2006 S.D. 78, ¶ 13, 721 N.W.2d at
435. We have precluded self-dealing even when the language of a power of attorney
might logically entail the ability to self-deal. Id. ¶ 15 (held that general grant of
power authorizing the attorney-in-fact to do all the things the principal would
“personally have the right to do” did not authorize self-dealing); Studt v. Black Hills
Fed. Credit Union, 2015 S.D. 33, ¶¶ 11-13, 864 N.W.2d 513, 516 (held that power of
attorney enabling attorney-in-fact to make gifts to “any person” did not permit self-
dealing, even though “any person” is necessarily inclusive of the attorney-in-fact).
Bruckner correctly argues that we have never held that a power of attorney must
include “magic language” to authorize self-dealing. But the language of this power
of attorney provides an even less obvious authorization to self-deal than the
language purported to do so in Bienash or Studt. While a strained reading could
support an argument that the power of attorney authorized Bruckner to gift
Morris’s money to herself, we cannot say there is “clear and unmistakable
language” authorizing self-dealing acts. Bienash, 2006 S.D. 78, ¶ 14, 721 N.W.2d at
435.
[¶23.] Wyman also argues that the power of attorney does not authorize
Bruckner’s transfers to family members. Self-dealing occurs when an agent pits
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their personal interests against their obligations to the principal. See Hein v. Zoss,
2016 S.D. 73, ¶ 8, 887 N.W.2d 62, 65. Here, Bruckner gifted money from the
account to her family while Morris was still alive and the owner of all of the funds
in the account. The power of attorney does not clearly authorize transfers of the
principal’s property to family members. If we allow a fiduciary to “feather his or her
own nest,” Bienash, 2006 S.D. 78, ¶ 19, 721 N.W.2d at 436, then the power to do so
must be expressly provided for, Studt, 2015 S.D. 33, ¶ 13, 864 N.W.2d at 516. See
also In re Estate of Stevenson, 2000 S.D. 24, ¶¶ 9-20, 605 N.W.2d 818, 820-23 (held
that trustee engaged in impermissible self-dealing by leasing trust land to spouse).
The power of attorney authorizes Bruckner to “give” any or all of Morris’s property,
but the power of attorney does not clearly permit self-dealing either with respect to
Bruckner herself or her family members.
[¶24.] With respect to Bruckner’s transfers of $6,377.16 to herself, $205,300
to her husband, John Bruckner, and $13,400 to her children and grandchildren, we
hold that Bruckner engaged in impermissible self-dealing. These transactions
involved Morris’s property during her lifetime and directly benefited Bruckner.
Given our precedent, 2 “it is apparent, as a matter of law, [that Bruckner] breached
[her] fiduciary duty[.]” Bienash, 2006 S.D. 78, ¶ 15, 721 N.W.2d at 435 (affirming
2. As discussed below, we declined to extend principles of agency and self-
dealing to every action taken by an attorney-in-fact in In re Estate of
Bronson, 2017 S.D. 9, 892 N.W.2d 604. However, that case involved the well-
settled and countervailing doctrine of amanuensis, which renders a signature
penned by the agent a “direct act of the person by whose direction it was
done.” Id. at ¶ 10, 892 N.W.2d at 608. Thus, it could not be said that the
signor acted in “a matter []connected to the agency.” See id. ¶ 11. Further,
the facts of the case at bar cannot be meaningfully distinguished from our
precedent in Bienash and Studt.
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summary judgment); accord Studt, 2015 S.D. 33, ¶¶ 12-13, 864 N.W.2d at 516
(affirming summary judgment).
[¶25.] However, a durable power of attorney expires after the principal’s
death. SDCL 59-7-1. The question, then, whether Bruckner forfeited her
survivorship rights to the remaining money in the Dakotaland account at the time
of Morris’s death ($29,070.81 transferred to Bruckner and $175 given to Bruckner’s
son-in-law) turns on whether Bruckner breached her fiduciary duties in becoming a
joint account owner.
4. Whether Bruckner acted in a fiduciary capacity with
respect to both creating and using the joint account.
[¶26.] “The existence of a fiduciary duty and the scope of that duty are
questions of law for the court.” Bienash, 2006 S.D. 78, ¶ 12, 721 N.W.2d at 434.
However, Bruckner contends that if this Court reverses on the issue whether the
power of attorney permitted self-dealing, then we should remand the matter for a
jury trial. See Chem-Age Indus., Inc. v. Glover, 2002 S.D. 122, ¶ 37, 652 N.W.2d
756, 772 (“Whether a breach of a fiduciary duty occurred, however, is a question of
fact.”). Wyman responds that Bruckner conceded below that she acted in a
fiduciary capacity in dealing with the joint account and that she should be held to
that position, whether under a theory of judicial estoppel, waiver, or because such
statements constituted judicial admissions. Wyman also argues that a fiduciary
must always act in the best interests of the principal and that “an attorney-in-fact
has fiduciary duties whenever he or she participates in a transaction within the
scope of her agency.”
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[¶27.] However, in In re Estate of Bronson, 2017 S.D. 9, 892 N.W.2d 604, we
recently declined to apply principles of agency law to every action taken by an
attorney-in-fact. In that case, the principal, Bronson, added his son and attorney-
in-fact, Butch, as joint owner to one of his bank accounts. Id. ¶ 1, 892 N.W.2d at
606. Butch claimed that Bronson could not sign his own name due to a physical
disability, and the parties stipulated that Butch signed Bronson’s name on the
required bank form. Id. ¶ 5, 892 N.W.2d at 607. Following his death, Bronson’s
daughters brought suit against Butch, alleging in part that signing for Bronson was
an act of impermissible self-dealing. Id. ¶ 4, 892 N.W.2d at 606. However, the
circuit court held that Butch “did not act pursuant to the power of attorney” in
signing his father’s name. Id. ¶ 7, 892 N.W.2d at 607. Rather, Butch served as “a
mere instrument or amanuensis” for Bronson. Id.
[¶28.] On appeal, we observed that the parties agreed the power of attorney
did not authorize self-dealing. Id. ¶ 9. However, we noted that exclusively applying
principles of agency and fiduciary law “in a case like this would create an
irrebuttable presumption that once a power of attorney is granted, every subsequent
act of the attorney-in-fact involves a fiduciary duty of that agent—even if it is an act
regarding a matter unconnected to the agency.” Id. ¶ 11, 892 N.W.2d at 608
(emphasis added). This we declined to do. Instead, we explained that “the law will
imply such duties only where one party to a relationship is unable to fully protect
its interests and the unprotected party has placed its trust and confidence in the
other.” Id. While there is no “invariable rule” for determining whether a fiduciary
relationship exists, “there must be not only confidence of the one in the other, but
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there must exist a certain inequality, dependence, weakness of age, mental
strength, business intelligence, knowledge of the facts involved, or other conditions
giving to one advantage over the other.” Bienash, 2006 S.D. 78, ¶ 11, 721 N.W.2d at
434. Because Bronson could handle his own affairs when he went to the bank to
add Butch to the account, we concluded that “none of the factors necessary for a
fiduciary relationship were present in this banking transaction.” Bronson,
2017 S.D. 9, ¶ 11, 892 N.W.2d at 609 (emphasis added).
[¶29.] Bruckner argues that the placement of her name on the account did
not trigger her fiduciary duties. Bruckner observes that Morris, not she, changed
ownership of the joint account to include her. Moreover, Bruckner argues Morris
was competent at the time of the transaction. On the other hand, Wyman observes
that unlike Bronson, which involved a power of attorney signed years before it was
intended to be used, here Morris returned to South Dakota and appointed Bruckner
attorney-in-fact only after her cancer diagnosis became terminal.
[¶30.] Certainly, Bruckner violated her duty to “avoid any act of self-dealing
that place[d] her personal interest in conflict with her obligations to [Morris],” In re
Estate of Stevenson, 2000 S.D. 24, ¶ 9, 605 N.W.2d at 821 (emphasis added), when
she spent funds from the joint account on herself and her family while Morris was
still alive. However, the circuit court must determine whether “[Morris] was
independently and competently handling [her] own financial affairs when [she]
went to the bank to request the creation of the joint account.” Bronson, 2017 S.D. 9,
¶ 11, 892 N.W.2d at 609. In support of her position, Bruckner offered two affidavits.
In her first affidavit, Bruckner claims that Morris instructed bank personnel to add
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Bruckner as a joint account owner. In the second, Bruckner claims that Morris
either approved or instructed each of the withdrawals challenged by Wyman. While
these affidavits create a dispute of fact, we nevertheless find there is insufficient
evidence in the record to determine whether the markers of a fiduciary relationship
were present at the time Morris added Bruckner to the Dakotaland account. We
remand to the circuit court to make further determinations on this issue and
whether a trial is needed with reference to the status of the remaining funds.
[¶31.] The parties dispute where the funds ought to be returned if the
transactions are reversed. Wyman contends Bruckner voided her survivorship
rights to the Dakotaland account, either because she made unauthorized transfers
during Morris’s lifetime or because she engaged in impermissible self-dealing.
Further, Wyman observes that because the joint account is now closed, the funds
taken during Morris’s lifetime should be returned to the estate. Bruckner argues
that even if the Dakotaland account’s funds were improperly spent during Morris’s
lifetime, the concept of “tracing” should apply. According to Bruckner, the funds
should be distributed according to how they would have been had Bruckner not
transferred money out of the Dakotaland account prior to Morris’s death—thus,
Bruckner would receive the entire amount. In support of her view, Bruckner cites
SDCL 29A-6-104 and McDonough v. Kahle, 1999 S.D. 14, ¶ 12, 588 N.W.2d 600,
603, where we stated that “an account opened in joint names raises a rebuttable
presumption that the creator of such an account intended the usual rights of
survivorship to attach to it.”
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[¶32.] However, we agree with Wyman that the funds should be returned to
the estate. As noted above, Bruckner’s withdrawals involved impermissible self-
dealing under the power of attorney. Moreover, Bruckner fails to cite any authority
for why funds from a closed account should be traced according to the survivorship
rights stemming from said account. The only case Bruckner points to in support of
her proposition, Johnson-Batchelor v. Hawkins, 450 N.W.2d 240 (S.D. 1990), is
inapposite.
[¶33.] In Johnson-Batchelor, a husband and wife shared a joint savings
account and each contributed their own money to the account. Id. at 240-41. Before
his death, the husband took money out of the account to purchase certificates of
deposit for his estranged daughter from another marriage. Id. at 241. Upon his
death, the daughter claimed survivorship rights to the CDs. Id. However, the wife
argued she also possessed an interest in the CDs because the husband purchased
them with funds from the joint savings account. Id. We affirmed the circuit court’s
judgment granting the wife an interest in the CDs in the amount equal to that
appropriated by the husband from the wife’s contributions to the joint savings
account. Id. at 241-42.
[¶34.] Bruckner contends that Johnson-Batchelor “stands for the proposition
that you should honor the intent of a joint owner who contributed funds to a joint
account.” According to Bruckner, because Morris signed the required form to make
Bruckner joint owner of the Dakotaland account, this Court can ascertain where she
intended the funds to go. However, this overstates Johnson-Batchelor’s much more
limited holding: that an individual has an interest in property purchased with their
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money and without their knowledge or consent. Further, Johnson-Batchelor
involved present interests in an existing CD. As Wyman observes, the account here
no longer exists.
Conclusion
[¶35.] With respect to the money withdrawn from the Dakotaland account
during Morris’s lifetime, because Bruckner engaged in impermissible self-dealing,
we hold that the funds should be returned to the estate and distributed according to
Morris’s estate plan. However, we remand to the circuit court to determine, using
the factors outlined in Bienash, 2006 S.D. 78, ¶ 11, 721 N.W.2d at 434, whether
Bruckner acted in her fiduciary capacity when she was added to the Dakotaland
account. If the court determines Bruckner acted in a fiduciary capacity and
breached her duties to Morris, the funds expended after her death should likewise
be returned to the estate.
[¶36.] Reversed and remanded.
[¶37.] GILBERTSON, Chief Justice, and ZINTER and SEVERSON, Justices,
and CONNOLLY, Circuit Court Judge, concur.
[¶38.] CONNOLLY, Circuit Court Judge, sitting for WILBUR, Retired
Justice, disqualified.
[¶39.] JENSEN, Justice, not having been a member of the Court at the time
this action was submitted, did not participate.
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