Opinion
No. 659-2000.
Decided January 14, 2004.
New York County Public Administrator, as Administrator CTA of decedent's estate: Schram and Carew PC, (Colleen Carew and Amy Chen, of counsel). for Petitioner.
Sanford B. Glatzer, for Respondent, Shirley Sidbury.
JP Morgan Chase Legal Department (Sandra Ahn, of counsel), for Respondent, JP Morgan Chase.
Petitioner, the New York County Public Administrator and the administrator CTA of decedent's estate (the "PA"), and respondents, Shirley Sidbury, decedent's neighbor, and JP Morgan Chase Bank ("Chase Bank") move and cross-move for summary judgment in this turnover proceeding regarding the title of certain bank accounts.
A year and a half before Carrie Clinton's death on November 12, 1999, several Chase Bank savings accounts, were, according to bank records, changed from decedent's name to "Carrie Clinton ITF [in trust for] Shirley Sidbury," making them payable on death as Totten Trust accounts to Sidbury. Two days before death, while decedent was hospitalized in critical condition, Sidbury used a durable power of attorney from decedent to write a check in the amount of $230,000 on an account in decedent's name at another bank and deposited it into one of the Totten Trust accounts for Sidbury's benefit. The funds are the subject of a continuing restraining order, preventing their release. The main issues are the validity of the transfer under the power of attorney, decedent's capacity, and alleged fraud and undue influence on the part of Sidbury.
A few years earlier, on March 1, 1996, Dr. Alan Egelman, a cardiologist and internist, first treated Carrie Clinton, who was then 83 years old. She had hypertension and high blood pressure, which sometimes made her weak and frequently resulted in shortness of breath. Egelman remained decedent's treating physician until her final hospitalization on November 6, 1999, six days before her death, during which time, according to hospital records, decedent was heavily medicated, usually sedated, and intubated for the purposes of breathing.
Throughout the course of his treatment of decedent, which consisted of several visits a year, Egelman noted that she had a deteriorating memory, although she never failed to recognize him as her doctor. In April of 1997, he noted that decedent had early organic mental syndrome, which Egelman stated, was a deterioration of mental function that occurs with aging. Of principal concern to Egelman was decedent's ability to obtain the medication he prescribed to her and to administer the medication. According to Egelman, decedent stated that she "didn't have the means" to buy the medications and Egelman began to supply her with enough of the prescribed medication to last until her next visit. Unbeknownst to Egelman, decedent had over $500,000 in five bank accounts, four at Chase Bank and one at Apple Savings Bank.
Sidbury claims that decedent was mentally competent throughout her life and that it was decedent's desire, uninfluenced by Sidbury, to make Sidbury the beneficiary at her death of the Chase Bank savings accounts. Sidbury avers that she drove decedent to the Chase Bank branch in the Bronx, but that she remained in the car while Clinton went in on "her own two feet" to conduct her banking. Sidbury further states that she did not know until sometime thereafter that decedent had changed the form of the bank accounts. Sidbury claims that decedent wanted Sidbury to have her money because of Sidbury's friendship and loyalty and because most of the beneficiaries of her 1987 will, which has been admitted to probate and which does not mention Sidbury, had either died or she had lost contact with them.
Regarding the power of attorney, Pamela Woodley, an attorney who is Sidbury's daughter, states that it was decedent who requested that Woodley prepare it ( see GOL § 5-1501). Sidbury states that "while decedent was hospitalized, I was asked as her attorney in fact, to change the form of one of decedent's Apple Bank accounts, in the amount of $230,000 from an account in decedent's name only to a Totten Trust account naming [Sidbury] as Totten Trust beneficiary."
When Sidbury, with the power of attorney, sought to withdraw $230,000 from decedent's individual account at Apple Bank, she was told that a doctor's note attesting to the decedent's competence was required. On November 8, 1999, Sidbury requested and obtained such a note from Egelman without telling him the specific reason for the request. Egelman states that he was left with the impression that it was needed to pay decedent's bills or to prevent her eviction. On November 10, 1999, two days before decedent's death, Sidbury presented the note and a $230,000 check drawn on the decedent's Apple Bank account and signed "Shirley Sidbury, P.O.A." to a bank teller at Chase Bank for deposit into one of the Totten Trust accounts payable to Sidbury on death. The check cleared on the date of decedent's death.
As is well-established, the Court's role on a motion for summary judgment is issue-finding, not issue-determination ( Cordovi v. Karnbad, 214 AD2d 476; Matter of Goldberg, 180 AD2d 528). It is the movant's initial burden to show entitlement to summary judgment by evidentiary facts, which, if demonstrated, shifts the burden to the non-movant to lay bare their evidence and show a triable issue of fact ( Hucko v. Apple Bank for Savings, 210 AD2d 39; see Matter of Bustanoby, 262 AD2d 407; Matter of Ward, 242 AD2d 303; Matter of Cagney, 186 Misc 2d 760, 763).
Regarding the alleged change of accounts in March of 1998, neither the PA nor Sidbury has met her respective initial burden of coming forward with evidence showing entitlement to summary judgment. There are issues of fact as to capacity, fraud, and undue influence based on the possible conflicting inferences from the facts. On the one hand, decedent's hospitalization at the end of February, 1998 may have induced a desire to change her estate plan and to benefit a helpful friend and neighbor ( see Lefurgy v. Lefurgy, 183 AD 502). On the other, decedent may have been so weak physically and mentally as to be incompetent to further dispose of her estate or, at least more susceptible to the domineering wiles of a greedy neighbor on whom she depended ( see In re Mazak, 288 AD2d 682). Thrift, even to the degree of decedent's, and some forgetfulness do not amount to the disconnection with reality that equals incapacity ( Matter of Hedges, 100 AD2d 586). The record goes beyond that, however, to reveal periods of extreme physical and mental frailness, most often on those occasions when decedent failed or forgot to take her medication, and could support an inference that, at least at times, she was lacking in comprehension or easily coerced into changing title to her wealth. Only testing of the evidence at trial will determine the actual facts ( see Matter of Donovan, 47 AD2d 923).
The PA and Sidbury also assert that this record can support conclusions of law as to whether a confidential relationship existed between decedent and Sidbury. Neither party is correct. If a confidential or fiduciary relationship is established, the burden shifts to the party benefitted by the complained-of transaction to show that it was free from fraud or undue influence ( Matter of Connelly, 193 AD2d 602). Circumstances such as long-standing friendships or close neighbors are elements to be weighed, but the "test is the reposing of confidence in the sense of trust" in another ( M.L. Stewart Co., Inc. v. Marcus, 124 Misc 86, 90-91). Without indicia of close familial ties or professional fiduciary relationships, this analysis often requires fact finding and no party here has established or negated, as a matter of law, a confidential or fiduciary relation between Sidbury and decedent for the time period when title to the accounts was changed ( see In re Mazak, supra; Matter of Galasso, NYLJ, Jan. 20, 1995, at 30 [deciding issue after trial]).
By virtue of the power of attorney in September of 1999, however, a fiduciary relationship existed in November of 1999 between Sidbury and decedent at the point when Sidbury sought to use the power to deposit $230,000 of decedent's money into a Totten Trust for her benefit ( see Estate of Roth, 283 AD2d 504; Estate of Agrest, 279 AD2d 471). Apart from burdens of proof, this relationship imposed a duty on Sidbury as the agent and attorney-in-fact to "utilize the power for the benefit of the principal," in this case, the decedent ( Semler v. Naples, 166 AD2d 751, 752; Moglia v. Moglia, 144 AD2d 347, 348). If the agent does not so use the power and takes the principal's property by gift, a presumption of impropriety arises, which can only be overcome with a clear and convincing showing that the principal intended to make the gift ( Mantella v. Mantella, 268 AD2d 852).
Sidbury seeks to avoid this basic principle and distinguish her case, claiming that the transfer by check under the power of attorney cannot be considered a gift because the transfer to a Totten Trust account gave Sidbury no present interest in the funds, an essential element of a gift. Sidbury correctly sums up the law of gifts, which in part requires a change of dominion and ownership ( Matter of Szabo, 10 NY2d 94, 98), and accurately states that the power of attorney encompasses "banking transactions" including the creation and modification of accounts (GOL § 5-1502D).
Nevertheless, Sidbury cannot overcome the law regarding fiduciaries. Although the cases speak primarily in terms of gifts by agents to themselves of a principal's property, the duty, at the same time, is explained more broadly, and easily encompasses those acts where the agent exercises the power of attorney by transferring in some manner the decedent's property for the agent's benefit ( see In re Naumoff, 301 AD2d 802; Moglia v. Moglia, 144 AD2d at 348; Semmler v. Naples, 166 AD2d at 752). Moreover, Sidbury does not claim that there is a specific provision added to the power of attorney authorizing this transaction for her benefit (GOL § 5-1503). Nor does she rely on a statutory provision specifically authorizing transactions that may benefit the agent ( see GOL § 5-1502M [limiting annual gifts to $10,000 to certain family members of principal, including agent]; see also GOL § 5-1502L [L 1996, ch 500]; cf. Matter of Griffin, 160 Misc 2d 871). The Court perceives no reason why the standard applied to gifts of the principal's property to an agent by that agent should not be applied when the agent without specific authorization uses the power to make transfers to a Totten Trust account that will benefit the agent upon the principal's death.
This means that Sidbury, as with proving an inter vivos gift, must clearly and convincingly show that decedent intended to transfer $230,000 of her money to the Totten Trust account benefitting Sidbury ( Mantella v. Mantella, 268 AD2d 852; see Gruen v. Gruen, 68 NY2d 48, 52; Matter of Abramowitz, 38 AD2d 387). In considering the PA's motion, the Court should make all inferences favorable to Sidbury ( see Zuckerman v. City of New York, 49 NY2d 557). The Court will assume without deciding: that decedent had capacity to sign the durable power of attorney on September 17, 1999 and duly did so; and, that the check was negotiated before the time of decedent's death on November 12, 1999 ( Matter of Goebel, 295 NY 73; Matter of McCallister, NYLJ, Nov. 27, 2000, at 37). Even with the benefit of such assumptions, Sidbury has failed to present a question of fact as to decedent's intent to give her, in November of 1999, $230,000 via a Totten Trust account. Sidbury relies exclusively on her unsupported statement that during decedent's final hospitalization, decedent verbally instructed Sidbury to take $230,000 of her assets by Totten Trust account from decedent's Apple Bank savings account. This is not credible as a matter of law. The uncontroverted hospital records show that decedent was intubated during the entire time of her final hospitalization, and was heavily medicated, usually sedated or unconscious, and often restrained ( see Borchardt v. NY Life Ins. Co., 102 AD2d 465, 467 affd on opn below 63 NY2d 1000). That decedent was somehow lucid and conversing with Sidbury about the disposition of a substantial portion of her wealth can only be deemed fantasy on this record, given that the heavily medicated decedent had a breathing tube preventing her from speaking ( see Matter of Mirsky, 154 Misc 2d 278; see also Gordon v. Bialystoker Center, 45 NY2d 692). Additionally, Sidbury has failed to offer anything other than her own self-serving statements, which are highly unlikely to be admitted over dead man's statute objections (CPLR § 4519; Albany Savings Bank v. Seventy-Nine Columbus Street, 197 AD2d 816; Matter of Kacprzyk, NYLJ, July 19, 2002, at 23; see Phillips v. Kantor Co, 31 NY2d 307). Under these circumstances, the $230,000 sought to be transferred under the power of attorney should be returned to the estate, plus interest.
Chase Bank's cross-motion for summary judgment seeks to determine that it is only a stakeholder with no liability in these proceedings ( see EPTL § 7-5.4). According to an affidavit of the then branch manager of a Bronx branch of Chase Bank, on March 6, 1998 the account titles on the three savings accounts, totalling approximately $291,000, were changed from decedent's name alone to Totten Trust accounts payable on death to Shirley Sidbury. The remaining account for checking was not changed. The then branch manager further avers that Chase Bank could not locate signature cards related to these transactions, but that according to computer records, a Ms. Erazo was the customer service representative who handled the change of account (she is no longer employed at the bank) and that it was the bank's procedure to require proof of identification from the bank customer to confirm that they were, in fact, the person authorized to transact in that account. To the best of his recollection, the branch manager was not informed of any irregularities regarding the change of account titles. Bank statements for these accounts from then on listed the account title as "Carrie Clinton ITF Shirley Sidbury."
EPTL § 7-5.4, in relevant part, provides that a financial institution that pays the beneficiary of a Totten Trust account upon the death of a depositor of the account before a restraining order or injunction "shall, to the extent of such payment, be released from liability to any person claiming a right to the funds." The PA states that until the summary judgment motion in this matter, Chase Bank repeatedly represented that it did not have any information as to the creation of trust accounts by decedent. The PA suggests that since Chase Bank did not, before the motion, provide the computer generated printouts or the affidavit of the then branch manager which it has now provided, even though the PA requested such or similar information over several years, it cannot be assumed that these records existed prior to the motion. The PA requests that the Court disregard all papers filed by Chase Bank in response to the motion. Although Chase Bank has come perilously close to the wilful failure to disclose information that ought to have been earlier disclosed, and for which CPLR § 3126 provides a full range of sanctions, nothing in this record supports the PA's assertions that its computer records regarding the Totten Trust accounts at issue were fabricated after the fact. The Court will consider the submissions of Chase Bank, which were timely provided in response to the PA's motion.
Nonetheless, to gain the benefit of the EPTL § 7-5.4's release from liability there must be a payment to a "beneficiary" which is defined as a "person who is described by the depositor as a person for whom a trust account is established." (EPTL § 7-5.1[a] [emphasis added]). While the bank's computer records are probative, they are not always determinative on a motion for summary judgment ( Matter of Posch, NYLJ, Aug. 12, 2002, at 26). Chase appears to argue that its computer account records would not reflect a Totten Trust account without one having been validly established by the depositor. Yet the best evidence of such a transaction would be a signature card signed by the decedent, or at the very least, some other admissible indication of the decedent's intent to create the Totten Trust accounts ( Matter of Tate, NYLJ, Nov. 5, 2001, at 20; see Matter of Posch, supra). Chase Bank, however, concedes it does not have signature cards corresponding to this account change transaction, and instead offers only its computer records and the statements of an employee who has no recollection of the transaction, nor personal knowledge of it. Having put forth essentially nothing but its computer account records, Chase Bank's cross motion for summary judgment seeking stakeholder status should be denied.
Finally, Sidbury has sought to assert a cross-claim against Chase Bank for negligence and breach of contract by failing to keep proper records. However, this cross-claim is improperly interposed in an affirmation in opposition to the summary judgment motion. Cross-claims should be included in the pleadings, in this case, in Sidbury's answer, which she can move to amend, if desired ( see CPLR §§ 3011, 3025).
Accordingly, partial summary judgment is granted in favor of petitioner, to the extent of directing respondent JP Morgan Chase to release to the Estate of Carrie Clinton the amount of $230,000 plus statutory interest from the date of decedent's death; the motions for summary judgment herein are otherwise denied.
Settle Order.