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In Re Estate of Ray

SEPTEMBER 1, 1972.

IN RE ESTATE OF FELIX MELVIN RAY, DECEASED — (MAE LOMAN, RESPONDENT-APPELLANT, CROSS-APPELLEE,

v.

BURTON R. CROCKER, ADMR. OF THE ESTATE OF FELIX MELVIN RAY, DECEASED, PETITIONER-APPELLEE, CROSS-APPELLANT.)



APPEAL from the Circuit Court of Franklin County; the Hon. RANDALL S. QUINDRY, Judge, presiding.

MR. JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

This is an appeal and cross-appeal from a judgment of the trial court rendered following a non-jury hearing upon a citataion to discover assets. The citation was a proceeding under section 183 of the Probate Act (Ill. Rev. Stat., ch. 3, sec. 1 et seq.), brought by the administrator of decedent's estate for an order requiring respondent, a daughter of the decedent, to turn over to the administrator as property of the estate the sum of $11,200 which represented the proceeds of a fire insurance policy received by decedent prior to his death as a result of a loss by fire of a farm dwelling and its contents.

Felix Melvin Ray was 80 years of age when he died intestate on May 25, 1967. At the time of his death he was in a nursing home where he had been for approximately 10 days. Before that he had undergone surgery in the Pinckneyville Hospital. Mr. Ray's wife, who had inherited from her parents, a 65-acre tract improved with a dwelling died in 1961 seized of 61 acres of the tract. She and Mr. Ray had previously, about 1938, conveyed 4 acres of the tract to their daughter, the respondent, who with her husband, built thereon a home which they occupied for about 29 years prior to the death of Mr. Ray. The home of respondent was in close proximity of the home of her father, which was located on the remaining 61 acres.

Following the death of his wife, Mr. Ray continued to occupy the dwelling as his homestead. Shortly after the death of his wife in 1961 Mr. Ray sold another 50 acre tract of land that he and his wife had purchased to pay some debts. With the proceeds of this sale he opened a bank account in his name and the name of respondent as joint tenants. This fact was known by some, if not all, of the other children of Mr. Ray.

Mae Loman, the respondent, was one of six living adult children of Mr. Ray. She had helped look after her mother during her lifetime and continued to look after her father after the mother's death. She never deposited any of her own funds in the joint bank account nor did she make any withdrawals other than for the use or benefit of decedent. Mr. Ray received social security in the amount of $44.00 a month and his children either expressly or tacitly allowed him to keep all the rentals and profits from the 61 acre tract. Mr. Ray paid the taxes and his bills from his social security and the proceeds of the farm rental. Practically all of Mr. Ray's business affairs were managed by respondent, Mae Loman, with the knowledge of the other five children.

In 1961 Mr. Ray had purchased a homeowners insurance policy with the Aetna Insurance Company. The policy was issued to Mr. Ray in his name solely and provided coverage in the amount of $8,000 on the dwelling and $3,200 on the contents. Mr. Ray told some of the children that he had purchased the policy. None of the children were ever called upon to pay any part of the taxes or insurance premiums on the property or in any other way to contribute to the support or maintenance of decedent.

In 1960 Mr. Ray was diagnosed as having a carcinoma of the prostate. He was treated for this condition over the years and until his death by his family doctor. In 1967 he experienced difficulty in urination and this led to his hospitalization and surgery to relieve the condition. While he was in the hospital his home burned. The doctor testified that the news of the loss of his home caused Mr. Ray to be depressed and led to his ultimate deterioration.

About a month after the fire a check in the amount of $11,200 representing the policy proceeds was sent by the insurance agency to Mr. Ray. Respondent took the check to her father who was then in the nursing home. He endorsed it, and, according to respondent's testimony, gave it to her and told her to deposit it in their joint bank account, that he wanted her to have it.

Following Mr. Ray's death respondent and two of her brothers petitioned the circuit court for letters of administration upon his estate to issue to respondent. Two other sisters and a brother objected and filed their own petition for letters to issue to one of them. The court rejected both petitions and appointed Burton R. Crocker, who was then the Public Administrator of Franklin County, as administrator of the decedent's estate. Even though Mr. Crocker is no longer the Public Administrator he continues as administrator of the estate. Mr. Crocker was also the agent of the Aetna Insurance Company who sold the insurance policy to Mr. Ray and who had mailed the check representing the policy proceeds to Mr. Ray. Respondent deposited the $11,200 check in the joint account, immediately transferring $5,000 to a bank in Pinckneyville in anticipation of expenses arising from Mr. Ray's illness.

Trial issues were drawn upon the amended petition for citation which recited the tenancy in common of the 61 acres, charged that respondent had in her possession the proceeds of the $11,200 draft, and alleged as alternatives three separate grounds for recovery of the draft proceeds by the estate; first, the $11,200 was collected by Felix Melvin Ray as constructive trustee for himself and the other tenants in common, secondly, that decedent was aged, senile, recovering from a serious operation, in a state of depression over loss of his home and belongings and under the influence of sedatives and drugs, and as a consequence was of unsound mind and without legal capacity to make a gift, and thirdly, that respondent stood in a fiduciary capacity with decedent, that the gift was not the free and voluntary act of decedent but was obtained through undue and improper influence and was therefore presumed to be, and was, fraudulent.

Following a hearing an order was entered wherein the court found that the total proceeds of $11,200 received by Felix Melvin Ray from the insurance company represented the payment of $3,200 for personal belongings of decedent and $8,000 for the value of the residence at the time of the loss. Further, that decedent was a tenant in common in possession of the 61 acre farm and managed the farming operation for the benefit of himself and the other tenants in common. The court further found that at the time the loss occurred and at the time the proceeds of the policy were issued to Felix Melvin Ray and at the time of his death he was a constructive trustee of that portion of the proceeds of the insurance collected by himself which represented payment by the insurer for the loss of the residence. As constructive trustee of the $8,000 for the persons who owned the residence as tenants in common decedent had no authority to transfer by gift or otherwise such proceeds to the respondent other than to transfer the portion of the proceeds which represented his one-third interest, or $2,666.66, and that the respondent should be directed to pay over to the administrator of the estate the sum of $5,333.34 which represents the portion of the proceeds held by decedent as constructive trustee for which he had no authority to make a gift. The order directed that respondent deliver the sum of $5,333.34 to the administrator of the estate to make distribution thereof to the tenants in common other than decedent. The order implicitly recognized the capacity of decedent to make an inter vivos gift and permitted the gift of the proceeds of the check which represented the loss of decedent's personal property and decedent's one-third interest in the residence to stand.

Respondent appeals with the contention that there was no evidence of actual fraud or breach of a confidential relation and the court was therefore in error in impressing a constructive trust upon the portion of the insurance proceeds paid for the loss of the residence. She argues that the children had a legal duty to support their father, the decedent, and accordingly the income of the farm represented a gift to him. Accordingly, the insurance premiums were paid with decedent's own funds and not with common funds of the tenants in common, and since decedent had the largest insurable interest in the property the entire policy proceeds were his. The respondent-appellant further argues that in any event that the insurer was the only one who could complain of making a payment for an uninsurable interest and no such complaint was made.

The petitioner-appellee has filed a cross-appeal from the order of the trial court arguing that error was committed when the trial court refused to order the entire insurance proceeds check of $11,200 to be returned to the administrator. It is his contention that the evidence shows that the inter vivos gift from decedent to respondent is invalid because the decedent lacked the mental capacity to make a gift and that it was not the voluntary act of decedent but was obtained by undue and improper ...


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