Opinion
No. CV04 4000219 S
January 24, 2007
MEMORANDUM OF DECISION
The Estate of Frank Kalakay, acting by its duly appointed Executor, John Kalakay, commenced this action by way of a writ, summons and complaint dated June 13, 2004, bearing a return date of July 20, 2004. The complaint consists of two counts sounding in conversion of funds by the defendant from joint bank accounts maintained by the decedent Frank Kalakay and Mae Parson who is also deceased. At the time of the alleged conversion of funds, the defendant Everlith is alleged to have acted under a Power of Attorney executed by Parson, designating Everlith as Parson's attorney-in-fact. It is alleged that the defendant, prior to, and after the death of Parsons, withdrew monies from the joint bank accounts maintained by the decedent and Parson and converted said monies to her own use and benefit and thereby exceeded the scope of authority granted to the defendant by the Power of Attorney from Parson. The plaintiff seeks money damages and punitive damages.
The defendant, while admitting that she withdrew funds from the joint accounts on June 30, 2004 and at other times prior to the death of Mae Parson, denies that said withdrawals were not authorized or exceeded the scope of her duties under the Power of Attorney. Additionally, the defendant denies that she appropriated and converted any funds from the joint accounts for her own use and benefit.
The court conducted a trial on October 24, 2006 and heard testimony from the defendant Joan Everlith and John F. Kalakay, Executor of the Estate of Frank Kalakay, deceased. Thereafter, the parties were given the opportunity to file a post-trial memorandum of law. The plaintiff filed its memorandum of law on December 1, 2006. The court has not received a memorandum of law from the defendant as of this date.
I. Findings of Fact
The decedent Mae Parson was the aunt of the defendant Everlith's husband. Mae Parson died on June 30, 2001 at the age of 92 years. At the time of Mae Parson's death, the defendant, also known as Genevieve Joan Everlith, was her duly appointed attorney-in-fact, as Parson had executed a general power of attorney on May 1, 2001, appointing the defendant her attorney-in-fact. The decedent, Frank Kalakay, a long-time friend and companion of Parson, was a witness to the execution and signing of the power of attorney by Parson. John F. Kalakay is the son of Frank Kalakay, deceased, and is the duly appointed Executor of the Estate of Frank Kalakay.
The cause of death for Mae Parson is listed as respiratory failure and pulmonary embolism on June 30, 2001 at 10:15 a.m.
Frank Kalakay died on May 31, 2002 of liver cancer.
Mae Parson and Frank Kalakay had a long-term friendship dating back to the mid-1960s and in 1988, they jointly purchased a home at 918 Cutspring Road, Stratford, Connecticut, where they each resided until their respective deaths. Parson, a widow at the time of her death, had known Frank Kalakay in excess of forty years, and the two of them had determined that they did not wish to live alone. Therefore, they jointly purchased said real estate in 1988. They shared expenses for the cost of maintaining the home. While each maintained individual bank accounts, they also opened several joint bank accounts together.
As a result of the deaths of Parson and Frank Kalakay, the home has since been sold.
In the spring of 2001, due to Parson's health, Parson and Frank Kalakay determined that it would be in Parson's best interests for her to execute a power of attorney, appointing the defendant Everlith as her attorney-in-fact. At the time that the power of attorney was executed on May 1, 2001, the defendant had been assisting both Parson and Frank Kalakay, who was elderly, as well, with their bill paying and banking transactions. Parson and Kalakay each maintained their own checking accounts. As to Mae Parson, the defendant would write out checks to the designated payees, and Parson would then review the checks and sign her signature.
The defendant continued this process for paying Mae Parson's bills until the middle of May 2001, when title to Parson's checking account number 008-0006972 at the Peoples Bank was changed to a power of attorney account bearing the names of Mae H. Parson and Genevieve J. Everlith, POA. Subsequent to this change of the account, the defendant Everlith completed and endorsed all checks for this account.
Parson had became upset when she learned that Frank Kalakay had closed an account held jointly with Parson containing $35,978.64 on March 29, 2001. She then instructed the defendant to close certain other bank accounts she held jointly with Kalakay. Pursuant to Parson's instructions, the defendant on June 4, 2001 closed three bank accounts held jointly by Parson and Frank Kalakay and withdrew a total of $58,816.44. Thereafter, on June 30, 2001, eighteen minutes prior to the time of Parson's death, the defendant closed an additional joint account held by Parson and Kalakay and withdrew the sum of $19,424.99. The withdrawals by the defendant for four of these accounts totaled $78,241.43. These sums were deposited in the power of attorney checking account maintained by Parson and the defendant. No additional sums of money were deposited in the POA account after June 30, 2001.
Sec. 36a-290. (Formerly Sec. 36-3). Joint deposit and share accounts.
(a) When a deposit account has been established at any bank, or a share account has been established at any Connecticut credit union or federal credit union, in the names of two or more natural persons and under such terms as to be paid to any one of them, or to the survivor or survivors of them, such account is deemed a joint account, and any part or all of the balance of such account, including any and all subsequent deposits or additions made thereto, may be paid to any of such persons during the lifetime of all of them or to the survivor or any of the survivors of such persons after the death of one or more of them. Any such payment constitutes a valid and sufficient release and discharge of such bank, Connecticut credit union or federal credit union, or its successor, as to all payments so made.
(b) The establishment of a deposit account or share account which is a joint account under subsection (a) of this section is, in the absence of fraud or undue influence, or other clear and convincing evidence to the contrary, prima facie evidence of the intention of all of the named owners thereof to vest title to such account, including all subsequent deposits and additions made thereto, in such survivor or survivors, in any action or proceeding between any two or more of the depositors, respecting the ownership of such account or its proceeds.
Upon her arrival home from the bank on June 30, 2001, the defendant received a message from the hospital that Parson had died that same morning.
The total sum of $112,905.79 was deposited in the POA checking account on June 30, 2001. Prior to this deposit the account balance was $11,012.58.
On July 9, 2001 six checks in the amount of $10,000 each were presented against and paid out of the POA account. The checks, dated April 12, 2001, were written and signed by Mae Parson herself prior to her death, which occurred on June 30, 2001. April 12, 2001 was nineteen days prior to the execution of the power of attorney to the defendant, which occurred on May 1, 2001. Among these six checks for $10,000 each were checks payable to the defendant and five family members of the defendant. The balance of funds remaining in the POA account after these six checks were presented and paid was later disbursed through the decedent's Estate of Mae Parson. The defendant was a beneficiary under the Last Will and Testament of Mae Parson and received a specific bequest of $10,000. She was also received a 1/6th residuary bequest.
The payees were Charles Everlith III, Charles Everlith, Joan Everlith, Kim Everlith, Stacey Everlith and Kristina Everlith.
There is no evidence that formal claims for any return of monies from the subject joint bank accounts were filed against the Estate of Mae Parson at the Stratford Probate Court or that Frank Kalakay pursued litigation for a return of any monies during his lifetime against the Estate of Parson or against Everlith in an individual capacity. As noted herein, Frank Kalakay died on May 31, 2002, approximately one year following the death of Mae Parson. His decedent's estate was also probated at the Probate Court in Stratford, Connecticut. The S-2 Succession Tax Form dated December 6, 2002 and signed by John Kalakay, fiduciary, indicates that the value of solely owned property passing to Frank Kalakay's beneficiaries was $140,500.00 and the value of jointly-owned property passing other than by will or laws of intestacy was $114,646.42. There is no evidence that the Estate of Frank Kalakay was pursuing the recovery of any assets from the defendant, individually, or the Estate of Mae Parson at the time they reported the assets of Frank Kalakay, decedent to the State of Connecticut, Department of Revenue Sevices.
The sum of $114,646.72 represents balances in bank accounts at the People's Bank held jointly by the decedent and John F. Kalakay, his son.
On January 27, 2004, the Estate of Frank Kalakay, acting by John F. Kalakay, Executor, notified the Stratford Probate Court regarding its concern over the joint bank accounts and informed the Probate Court that it was considering legal action against the Estate of Mae Parson. No action was pursued against Parson's estate. However, the subject legal action against the defendant Joan Everlith was commenced by way of a complaint dated June 13, 2004. CT Page 1514
II. Discussion
In the First Count, the plaintiff alleges that the defendant withdrew funds from the bank accounts held jointly by Mae Parson and converted said funds for her own benefit, and that, in doing so, the defendant exceeded the scope of the authority granted to her by the Power of Attorney document executed by Mae Parson on May 1, 2001. The First Count applies to withdrawals from the joint accounts made by the defendant on dates prior to, and including June 30, 2004. The Second Count also sounds in allegations of conversion and applies to any withdrawals from joint accounts including June 30, 2001 and dates subsequent thereto.The decedent Frank Kalakay and the decedent Mae Parson established joint bank accounts which are governed by General Statutes § 36a-290. Both Frank Kalakay and Mae Parson at any time had access to the full amounts of the monies deposited in said accounts. The evidence shows that Frank Kalakay exercised this right when he closed a joint account number 032-8004595 with Mae Parson at the People's Bank on March 29, 2001. At that time Kalakay withdrew the sum of $34,978.64. He did this without the permission or prior knowledge of Parson.
On May 1, 2001, Mae Parson executed a Connecticut Short Form Power of Attorney, which is governed by General Statutes §§ 1-42 to 1-56 inclusive, granting broad and sweeping powers to the defendant to act in her behalf. Among those powers granted by Parson to the defendant were the powers to act in Parson's stead in any which way that Parson could do, with respect to various matters, including but not limited to: (1) banking transactions; (2) estate transactions; (3) claims and litigation; (4) personal relationships and affairs; and (5) all other matters. The Power of Attorney by its written terms expressed that the authority of the defendant Everlith was to survive any disability or incompetence of Parson. The defendant, thereafter, opened a checking account with Parson designating the account as a power of attorney account pursuant to General Statutes § 1-56a. Prior to the death of Parson, the defendant at the direction of Parson, closed several joint bank accounts that Parson maintained with Frank Kalakay. "It is clear that, under Connecticut law, coholders of a joint account are considered owners of the entire account . . . with access to the entire amount therein." (Citations omitted; internal quotation marks omitted.) Grass v. Grass, 47 Conn.App. 657, 661, 706 A.2d 1369 (1998).
Banking transactions are governed by General Statutes § 1-47 which reads in relevant part as follows:
In a statutory short form power of attorney, the language conferring general authority with respect to banking transactions shall be construed to mean that the principal authorizes the agent: (1) To continue, modify and terminate any deposit account or other banking arrangement made by or on behalf of the principal prior to the creation of the agency; (2) to open, either in the name of the agent alone, or in the name of the principal alone, or in both their names jointly or otherwise, a deposit account of any type with any banker or in any banking institution selected by the agent . . .; (3) to make, sign and deliver checks or drafts for any purpose; to withdraw by check, order or otherwise any funds or property of the principal deposited with, or left in the custody of any banker or banking institution, wherever located, either before or after the creation of the agency; . . . (8) to make, assign, endorse, discount, guarantee and negotiate, for any and all purposes, all promissory notes, bills of exchange, checks, drafts or other negotiable or nonnegotiable paper of the principal, or payable to the principal or to his order; to receive the cash or other proceeds of any such transactions; to accept any bill of exchange or draft drawn by any person upon the principal, and to pay it when due; . . . and (17) in general, and in addition to all the specific acts in this section enumerated, to do any other act or acts, which the principal can do through an agent, in connection with any banking transaction which does or might in any way affect the financial or other interests of the principal. All powers described in this section shall be exercisable equally with respect to any banking transaction engaged in by the principal at the giving of the power of attorney or thereafter engaged in, and whether conducted in the state of Connecticut or elsewhere.
Sec. 45a-562. (Formerly Sec. 45-69o.) Power of attorney to survive disability or incompetence.
(a) The subsequent disability or incompetence of a principal shall not revoke or terminate the authority of any person who acts under a power of attorney in a writing executed by the principal, if the writing contains the words "this power of attorney shall not be affected by the subsequent disability or incompetence of the principal," or words of similar import showing the intent of the principal that the authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incompetence; provided the power of attorney is executed and witnessed in the same manner as provided for deeds in section 47-5.
(b) If a conservator of the estate of the principal is appointed after the occurrence of the disability or incompetence referred to in subsection (a) of this section, the power of attorney shall cease at the time of the appointment, and the person acting under the power of attorney shall account to the conservator rather than to the principal.
Sec. 1-56a. Definitions.
For the purposes of this section and section 1-56b:
(1) "Account" means any account at a financial institution which is in the name of one or more natural persons and into which deposits may be made;
(2) "Power of attorney account" means an account in the name of a natural person as principal and with respect to which one or more other natural persons have been designated as agents with the right to make deposits to and to withdraw funds from or draw checks on such account;
(3) "Financial institution" means any state bank and trust company, national banking association, state or federally chartered savings bank, state or federally chartered savings and loan association or state or federally chartered credit union.
There was no evidence that the defendant was not acting at the direction of Mae Parson, and, in fact the defendant had a fiduciary duty to follow the directions of Mae Parson, who instructed her to close these various bank accounts. The defendant owed no such duty to Frank Kalakay. Any fiduciary relationship that existed was between the defendant and the decedent. The plaintiff is a stranger to that relationship and would have no standing to complain about an alleged breach of a fiduciary duty owed to the decedent. Ardito v. Olinger, 65 Conn.App. 295, 299, 782 A.2d 698 (2001).
There is no evidence suggesting fraud by the defendant in the execution of the Power of Attorney form; the closing of the joint accounts with Kalakay; or the creation of the power of attorney checking account naming Parson as principal and the defendant as the attorney-in-fact. The clear and convincing evidence, as well as the preponderance of the evidence is that the decedent Parson's wishes were being obeyed, that Parson was aware of what the defendant was doing. The court also notes that no evidence was presented that any heirs or beneficiaries of Parson's decedent's estate brought claims against the defendant for financial mismanagement of Parson's funds during Parson's lifetime or any time thereafter.
The court is aware that the plaintiff's claim is not a breach of fiduciary duty, which would require clear and convincing evidence. The plaintiff would have no standing to bring a breach of fiduciary claim in behalf of the decedent Parson. See Ardito v. Olinger, supra, 65 Conn.App. 295, and Brown v. Villano, 49 Conn.App. 365 (1998) CT Page 1520 716 A.2d 111. The court has utilized the fair preponderance of the evidence standard for evaluating the plaintiff's claims alleging conversion.
The plaintiff claims that by her actions, the defendant has converted the plaintiff's funds to her own use. Conversion is "an unauthorized assumption and exercise of the right of ownership over goods belonging to another, to the exclusion of the owner's rights . . . It is some unauthorized act which deprives another of his property permanently or for an indefinite time; some unauthorized assumption and exercise of the powers of the owner to his harm. The essence of the wrong is that the property rights of the plaintiff have been dealt with in a manner adverse to him, inconsistent with his right of dominion and to his harm." (Internal quotation marks omitted.) Aetna Life Casualty Co. v. Union Trust Co., 230 Conn. 779, 790-91, 646 A.2d 799 (1994). Thus, for this plaintiff to establish a prima facie case of conversion the plaintiff has to prove that (1) the monies in the joint accounts solely belonged to Frank Kalakay; (2) the defendant's action in closing the joint accounts at the direction of Parson, the other joint account holder, deprived the plaintiff of his funds; (3) the defendant was not authorized by Parson to close the joint accounts; and (4) the defendant's action harmed the plaintiff. Label Systems Corp. v. Aghamohammadi, 270 Conn. 291, 330, 852 A.2d 703 (2004).
The plaintiff has not sufficiently proved conversion by the defendant bank in that the plaintiff has not proved the first, second and third required elements to establish a prima facie case of conversion. Pursuant to General Statutes § 36a-290, Parson had the authority to withdraw all of the monies in the joint accounts. By virtue of the terms of a joint account, the plaintiff cannot claim to have been deprived of his monies by an action sounding in conversion. Pursuant to the terms of the Power of Attorney form executed by Parson on May 1, 2001, the defendant had the power to act in Parson's stead. General Statutes § 1-47 authorized Parson to give the defendant the power to conduct banking transactions in Parson's stead and this power was included in the Power of Attorney form. The defendant was authorized by Parson to close these accounts. Thus, if the removal of the funds from the joint bank accounts was within the bounds of the law, the defendant cannot be found to have illegally converted them.
As for the allegations that the defendant eventually benefitted from the transfer of the funds by her inheritance from Parson's estate and by the subsequent presentment and cashing of the six $10,000 checks written by Parson in April 2001, those types of claims rightfully belonged to the heirs, beneficiaries and claimants to the proceeds of Parson's estate and not to the plaintiff as against the defendant.
The court is aware of the decision in Gaynor v. Payne, 261 Conn. 585, 598, 804 A.2d 170 (2002), which states: "[T]he plaintiff's allegations of breach of the defendant's fiduciary duty arising before the decedent's death are not barred; the Probate Court's jurisdiction, as previously addressed herein, was limited to those matters relating to the accounting rendered by the defendant in his capacity as executor. Because these allegations relate to the defendant's provision of legal services and his exercise of a durable power of attorney to the decedent prior to her death, they are not being brought against the defendant in his capacity as executor of the decedent's estate and do not pertain to the accounting submitted by the defendant to the Probate Court. The plaintiff, therefore, could not have raised these claims before the Probate Court." However, this is not a claim for a breach of fiduciary duty, and the plaintiff and the defendant in the present matter did not have a fiduciary relationship.
III. Conclusion
For the reasons stated herein, the court finds for the defendant Joan Everlith as against the plaintiff, the Estate of Frank Kalakay, acting by John Kalakay, Executor as to First and Second Counts alleging conversion.