Opinion
C.A. No. 16043
Submitted: December 4, 2001.
Decided: December 7, 2001.
Clifford B. Hearn, Jr., Esquire, Wilmington, Delaware, Attorney for Plaintiff.
Gary A. Bryde, Esquire, Hockessin, Delaware, Attorney for Defendants.
MEMORANDUM OPINION I.
This case raises the question whether a gift or a loan resulted when an 80 year old mother transferred of a sum of money to her grown daughter who used it as a down payment to purchase a home in Middletown, Delaware. In analyzing this question, I look first to the decision of the Delaware Supreme Court in Hudak v. Procek, which holds that there is a presumption of a gift when a parent supplies funds to a child for the purpose of purchasing real property and title to the property is taken in the name of the child.
"Del. Supr., 727 A.2d 841 (1999).
In her verified complaint, the mother claimed that the daughter induced her to sell her home in Florida and to use the proceeds to fund the purchase of the Middletown house in exchange for a promise that the mother's name would be on the deed and that she would be entitled to live there for the remainder of her life. Allegedly after learning that her name was not on the deed and moving out of the house, the mother sued for the imposition of a resulting or constructive trust on the house and sought to have title to the house transferred into her name alone.
At trial, the plaintiff pursued a decidedly different factual and legal theory. The mother testified that the decision to sell her home in Florida was not induced by her daughter but was hers alone. She also disavowed any understanding or intention that she was to live permanently with her daughter in Middletown or that the reason her name was to appear on the deed was to ensure her right to reside in the house. She testified, instead, that the transaction was simply a two-year interest-free loan and that the purpose of putting her name on the deed was to secure her right to repayment. There are no loan documents, and there is no testimony that there ever was any discussion about the preparation of any such documents. The defendants testified that the transaction was an unconditional gift.
Having given careful consideration to the evidence adduced at trial, I conclude that the presumption of a gift recognized in Hudak v. Procek has not been overcome. As further explained below, I will enter judgment on the complaint in favor of the defendants.
The defendants filed counterclaims that were not pursued at trial. They will be dismissed with prejudice.
II.
No one who studies the record of this case could fail to agree with the famous observation that "every unhappy family is unhappy in its own way." In the late 1940s, the plaintiff, Angeline A. Laskowski, had twin daughters by her first marriage. One of them is the defendant, Carol McCambridge-Dager. Laskowski ended that marriage when the children were infants and, because their father did not provide support for the girls, placed them in an orphanage in Philadelphia where she returned to live and work with her family. The twins remained in one orphanage or another until they reached 12 years of age, despite their mother's remarriage and relocation to New Jersey during that time. They then briefly lived with their mother and stepfather, following which they were reinstitutionalized, first in New Jersey and later in Delaware. Carol ended her confinement by marrying at 15 years of age.Since then, Carol testified, she has had occasional contact with Laskowski by letter or telephone but has visited with her only five times. In later years, Laskowski began both to share details of her financial situation with Carol and to include Carol in her financial planning. Laskowski executed a will in 1991 naming Carol as the sole beneficiary of her estate. She also opened a series of bank accounts over the years naming Carol as joint tenant or beneficiary. In addition, Laskowski frequently leased safety deposit boxes in joint names with Carol and sent Carol one of the keys. Despite Carol's often pressing need for financial help, however, there is no evidence that Laskowski ever made either a gift of money or a loan to Carol before the events at issue here.
There is no longer a dispute that Laskowski decided on her own to sell her home in Florida in 1997. The closing took place on August 26, 1997 and resulted in net proceeds of $48,600.62 to the seller. The parties agree that this sum (less a $10 fee) was wire transferred to an attorney's escrow account for the benefit of the defendants. In addition, the parties agree that Laskowski had earlier sent a check in the amount of $5,000 to Carol. Similarly, there is no dispute that these funds were used by Carol and her husband, defendant Lawrence M. Dager, to make the down payment on and pay other costs associated with buying and moving to a house located at 101 S. Broad St., Middletown, Delaware.
Certain other pertinent facts are also not contested. These may be summarized as follows:
• At the time the events at issue here began to unfold, Carol and Lawrence were living with his mother in Newark. They had no immediate plans to move and had not entered into any contract to purchase a home.
• As the result of telephone conversations between mother and daughter, Carol and Lawrence entered into a contract to purchase a home in Middletown for approximately $172,000.
• Following the sale of her Florida home in late August 1997, Laskowski shipped eight boxes of "my pots and pans and all my personal things that I'll need in this lovely mother-in-law suite up there," and then immediately drove to Delaware where she spent nearly two weeks at the Comfort Inn in Newark, located across the street from Carol's office.
• Laskowski did not attend the closing on the Middletown house on September 10, 1997, remaining instead at Carol's office in the company of Carol's mother-in-law, Dorothy Dager.
• Laskowski first saw the Middletown house after the closing and was very disappointed both by its physical condition and its location that was not — as she had envisioned — "exclusive, all professional people." Instead, Laskowski expressed dismay that the house was in an urban, racially mixed neighborhood.
• Very soon after the move to Middletown, Laskowski packed her bags to return to Florida and demanded that Carol and Lawrence pay her back the money. This demand was refused and there ensued a series of confrontations between them that resulted in Laskowski's arrest for striking Carol in the presence of a police officer on or about September 24, 1997. On October 14, 1997, the Family Court issued an order placing Laskowski on probation for 12 months and directing that she have no contact with Carol.
The settlement sheet lists the sale price as $172,029.37. Evidently, a portion of the realtor's commission was credited to Carol, who is a licensed real estate sales person, and deducted from the total selling price.
• Laskowski, through counsel, filed this action on November 18, 1997.
The disputed facts revolve around whether the transfer of funds was intended as a gift or something else. Laskowski's testimony is to the effect that she had a series of conversations with Carol during 1996 and 1997 about Carol's living situation. At some point, she testified, Carol told her that she had been looking at a house in Rehoboth but lost it to a cash buyer. Laskowski testified that she told Carol that she could have loaned Carol the money for that house but that her name would have to be on the deed for her protection. Later, in July of 1997, Laskowski said she received a call from Carol telling her that she had found the Middletown house and wanted to buy it. According to Laskowski, they then agreed that Laskowski would lend her money to help finance the purchase. Laskowski later testified that the loan was to be for two years without interest. Laskowski never reduced the terms of this "loan" to writing, and never required that Carol or Lawrence sign a promissory note or a mortgage.
A central theme of Laskowski's testimony is that her name was supposed to appear on the deed to the Middletown property, along with Carol and Lawrence. For example, she testified that she wanted to attend settlement to make sure that this happened but that Carol imposed on her not to attend, asking her instead to stay behind. She also testified that the matter came to a head later that day when she demanded to see a copy of the deed and was unable to get it from Carol or Lawrence.
Laskowski also submitted into evidence and relies on the deposition testimony of two of her friends from Florida, Helen Cominsky and Portia Riccio. Defendants generally objected to the admission of any of this testimony on hearsay grounds. Portions of these depositions that reflect the deponents' personal observation of Laskowski are admissible, for example as proof that she lives modestly and does not exhibit any significant wealth. Other portions of these depositions relate to statements made by Laskowski in the presence of the witnesses and is offered to prove the truth of those statements. Obviously, any of those statements offered by her to prove the truth of the matter contained therein is inadmissible hearsay. It should be noted, however, that nothing either Cominsky or Riccio says is at all consistent with Laskowski's position at trial that the transfers of money to Carol were intended as a loan. On the contrary, they both testified that Laskowski told them she was going to live in the Middletown house with Carol. Laskowski, of course, now adamantly denies that she ever intended to do so, and there is no evidence that she ever discussed this issue with Carol. The testimony of both Riccio and Cominsky can be admitted to impeach Laskowski on this issue.
DRE 801(c). If offered by the defendants, however, testimony about those same statements would be admissible as an admission of a party-opponent. DRE 801(d)(2).
Carol testified to a very different set of facts. According to Carol, while she was at work on June 6, 1997, she received a telephone call from her mother. It was Carol's birthday. According to her, Laskowski offered her a gift of $55,000, without any conditions attached, although Carol said her mother hoped she would buy herself a new car. Carol asked her where the money would come from and Laskowski told her that she was selling her house and that the money would come from the proceeds of that sale. Carol testified that she told Laskowski that she would call her back and did so on June 8, 1997. Telephone records introduced at trial show a 27 minute call that day to Laskowski in Florida. Carol testified that she asked again about any conditions and was told there were none. On the strength of this discussion, Carol and Lawrence contracted to buy the Middletown house. Laskowski thereafter sent Carol the funds as they were needed and became available.
Carol testified that she was "shocked" when Laskowski arrived in Delaware in late August. She did not want her to come as "there was too much going on." After the closing, Laskowski began to complain about the house and the neighborhood. One day she called the police because she thought someone had stolen one of her pots. The police came and found the pot in the kitchen. The next day, Carol testified, Laskowski woke her up at 6:30 a.m., packed and ready to go back to Florida, and demanded the return of her money. Carol refused, saying that it was a gift and could not be repaid. Later that day, Laskowski again called the police to the house but was arrested herself after she struck Carol in the face in the presence of the police officer.
Carol's version of the June 6, 1997, telephone call was confirmed by the testimony of her daughter, Joeli McCambridge, who said that she overheard the entire conversation, which Carol took on the speakerphone in her office. Joeli further testified that when Laskowski was living in the Middletown house, Joeli found a zippered bag full of cash in Laskowski's bedroom, pinned to the mattress. She could not estimate the amount of cash. She also testified to several conversations with her grandmother, including one that took place in the courthouse during the pendency of this case. She said that Laskowski took her aside and told her that (i) Joeli was not a credible witness because she had an interest in helping Carol, and (ii) Laskowski had friends in Florida who "are going to commit perjury and say they overheard the same telephone conversation [Joeli] heard."
Neither Cominsky nor Riccio claimed to have overheard that conversation.
III.
There are three possible explanations for the events in this case. The first is that, as the defendants maintain, Laskowski made a completed unconditional gift of the funds involved and now seeks to rescind that gift. The second is, as Laskowski contends, she only ever agreed to lend the money to Carol for a period of two years without interest. The third explanation (that no party supports) is that Laskowski helped finance the purchase of the house with the undisclosed intention of living there with Carol for the remainder of her life.The evidence in this case can be seen to support either the first or the third possible explanation. But there is no evidence other than Laskowski's own testimony to support her contention that she and Carol agreed to a two-year interest-free loan. Most obviously, there are no loan documents, although Laskowski clearly was familiar with promissory notes and mortgages. There is also no explanation of how Laskowski could ever have had any expectation that Carol and Lawrence would be able to repay the loan at the end of two years. On the contrary, as Laskowski knew, they could not have done so without selling the very house she had just helped them purchase. There is also the fact that Laskowski's complaint, filed only months after the events, does not even allege the existence of a loan. Finally, there is a fatal inconsistency between Laskowski's argument that she would never have given Carol the money because she needed it to buy a condominium for herself and her story that she loaned it to Carol for two years on an interest free basis. She completely fails to explain where or how she expected to live during the term of the loan.
For these reasons, I find that Laskowski own testimony that the transfer of funds was intended as a loan is wholly incredible. Thus, I conclude that she has failed to overcome the legal presumption recognized in Hudak that she made a gift of the moneys transferred to Carol.
In reaching this conclusion, I have considered and rejected the argument that the unusually strained and distant nature of the family relationship between this mother and this daughter is such that I should not apply the Hudak presumption. The court in Hudak first discussed the general rule that a court of equity "presumes 'absent contrary evidence that the person supplying the purchase money for property intends that its purchase will inure to his benefit, and the fact that title is in the name of another is for some incidental reason.'" The court then explained that a different rule, one presuming a gift, is applied where the transfer is between a husband and wife or a parent and child, where one would not ordinarily expect to find the same motives of self interest as one would in transactions between strangers. In this case, the fact that Laskowski mistreated and neglected Carol as a child does not support the inference that she did not take an interest in her welfare at the time of the events at issue. On the contrary, Laskowski appears to have taken a strong and consistent interest in Carol's future financial welfare in later years. She named Carol as the sole beneficiary under her will in 1991 and regularly put Carol's name as co-owner or beneficiary on various financial instruments and accounts. Moreover, Laskowski acknowledged at trial an intention to make a gift of some amount to Carol when she stated that the "loan" was to be interest-free and described that aspect of the transaction as a gift. Considering all of these factors, it seems reasonable to conclude that the presumption generally recognized in the case of transactions between parent and child should govern the outcome here.
Del. Supr., 727 A.2d 841, 843 (1999) (quoting Adams v. Jankoukas, Del. Supr., 452 A.2d 148 (1982).
Id.
IV.
For all the foregoing reasons, judgment on the complaint will be entered in favor of the defendants in accordance with the terms of the attached order.