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Barth v. Gregory





APPEAL from the Circuit Court of Will County; the Hon. THOMAS W. VINSON, Judge, presiding.


Rehearing denied January 22, 1980.

The plaintiff, Charles S. Werr, conservator of the estate of Bernard Barth, an incompetent, succeeded to an action originally brought by Barth in the Circuit Court of Will County to rescind a land sale agreement and to reconvey real estate deeded to a land trust on the ground that at the time of these transactions Barth was incompetent and unable to comprehend the nature and effect of his actions. The plaintiff also sought compensatory and punitive damages from the defendants on the grounds that they had entered into a conspiracy to defraud Barth of his property. In a bench trial, the court found for the defendants on all counts and entered a judgment for $11,065 on defendant Naperville National Bank & Trust Company's counterclaim for attorney's fees. It is from these judgments that plaintiff appeals.

On December 29, 1975, Barth, a 72-year-old widower, represented by attorney Albin Dommermuth, executed a deed conveying his 77 1/2-acre farm to a land trust which was created by an instrument executed contemporaneously. The Naperville National Bank & Trust Company was the trustee under this trust, designated as Trust No. 7-433. This transaction was orchestrated by the real estate brokerage firm of E.C. Gregory & Co. of Naperville, Illinois. Under the terms of this trust the power of direction was in the settlor, Barth, and upon his death the interest was to pass to designated beneficiaries of another trust, the "Bernard Barth Trust," which, contrary to the provision of the trust agreement, was not yet in existence. Present when these documents were executed in the office of Gordon Gregory of E.C. Gregory & Co. were Gordon Gregory, Everett Gregory, Dommermuth and Barth.

On January 9, 1976, Barth executed a letter of direction, drafted by Dommermuth, to the land trustee directing the trustee to sell the res of the trust (Barth's 77 1/2-acre farm) to the buyers that E.C. Gregory & Co. had procured, i.e., the Macom Corporation and the Oliver-Hoffman Corporation (who were beneficiaries of another land trust, Trust No. 7-437, in which the Naperville National Bank was also designated as trustee). The land-sale contract was executed on January 13, 1976. Under this agreement, Barth was to receive a total of $400,000 for his farm, with a $50,000 down payment, and the remainder payable in monthly installments of $2,819.60 over 20 years. The terms of the contract provided that Barth was to receive $10,000 upon the execution of the contract, and another $40,000 within 10 days after a tender of commitment for title insurance. Pursuant to a listing agreement between Barth and E.C. Gregory dated December 22, 1975, a $24,000 broker's commission was to be paid out of this $50,000 down payment.

On February 27, 1976, Barth executed a will and simultaneously an intervivos pour-over trust, the "Bernard Barth Trust" to which we have heretofore referred. Under the trust provisions, said Gordon Gregory and a Gus Pakosta were the beneficiaries of the land trust upon Barth's death. The wives of Gregory and Pakosta were made secondary beneficiaries.

The first issue that we will deal with concerns the plaintiff's allegation that on December 29, 1975 (the day Barth executed the deed and Land Trust No. 7-433 agreement), and January 9, 1976 (the day Barth executed the letter of direction to the land trustee), Barth did not have the requisite mental capacity to execute the pertinent documents. If our review of the evidence presented before the trial court reveals it to be insufficient to justify the court's decision, and as a consequence we find that Barth indeed was mentally incompetent and therefore unable to comprehend the nature and effect of his actions at the times the documents were executed, we must rescind the land sale contract of January 13, 1976, and order the reconveyance of Barth's property by the land trust. A detailed recitation of much, though not all, of the testimony is necessary to our consideration of Barth's requisite mental capacity and whether the trial court's finding in this regard was against the manifest weight of the evidence.

Two medical doctors testified on behalf of the plaintiff, and a third doctor's medical findings were stipulated into the evidence. The first doctor to testify was Donald Carducci, who had been Barth's regular physician since 1963. On December 1, 1975, Barth was brought to Dr. Carducci's office by one of the co-defendants in this case, Gus Pakosta, a Naperville barber and recent acquaintance of Barth. During the course of his relationship with Barth, Pakosta had observed the rapid deterioration of Barth's mental and physical condition (which will be discussed subsequently), and saw in this deterioration an opportunity to be made the primary beneficiary of Barth's will. On November 24, 1975, Pakosta took Barth to the office of Ralph Gust, a Naperville attorney, for the purpose of having Barth's will drawn by which he would leave the entirety of his estate (including his farm) to Pakosta and his wife. Gust, however, came to the conclusion after initially drawing the will that Barth lacked testamentary capacity, and he told Pakosta that unless he (Pakosta) obtained a statement from a doctor that Barth had the requisite mental capacity to execute a will, he would not allow the proposed testator to sign. Pakosta then brought Barth to Carducci's office in the hope that he would receive a favorable report from him regarding Barth's mental makeup.

In his examination of Barth, Carducci found that he suffered from diabetes mellitus, generalized arteriosclerosis, and cerebral arteriosclerosis which was causing a mental senility manifested by a lack of orientation as to time and place. When Carducci examined Barth, Barth did not know the month, date, or year. He was unable to tell Carducci the name of the president of the United States, and in fact stated that there had been no president since the assassination of John F. Kennedy. On the basis of this examination, Carducci concluded that Barth was, at least at times, incapable of managing his own affairs, and incorporated his findings in a letter dated December 1.

On cross-examination, Carducci admitted that Barth could have lucid intervals during which time he could be quite rational. However, Dr. Carducci further stated that the probability of lucid intervals was greater in familiar surroundings than in unfamiliar surroundings, where an individual in Barth's condition might get "all confused." He stated that in his opinion, a lawyer's office, the office of a bank trust officer, or the office of a real estate broker that Barth had not been in prior to December 1, 1975, could not be considered to be familiar surroundings, although Barth could have gained familiarity with them in lucid moments. Dr. Carducci further testified that in his opinion the lucid intervals could last for "periods of time," but he had his doubts that such periods could last for days. In response to the question of whether Barth could be lucid and "clear as a bell" from eight o'clock in the morning until noon on any one day and be able to transact business during that period, Carducci replied that he could but also said "I don't know about if he could have a lucid moment lasting that long * * *." In his opinion, Barth's overall mental condition would not improve.

The second doctor to testify at trial on behalf of the plaintiff was Dr. Richard Gallagher, a psychiatrist. Gallagher examined Barth on June 24, 1976, at the request of Margaret Werr, a second cousin of Barth and sister of the plaintiff/conservator. Gallagher testified that when he examined Barth he found that although his consciousness was not impaired, he was disoriented as to time and place. Barth's memory, particularly his recollection of immediate events, was also "grossly impaired." Barth could remember events occurring many years ago, but was unable to recall events occurring within a past few minutes, hours, or days.

In the course of his examination, Dr. Gallagher made observations with respect to Barth's intelligence and thinking ability. He found that Barth was unable to make a simple calculation which involved the use of anything more than rote memory. He further found that Barth's judgment was impaired, although he stated that it was difficult to render an opinion on this subject without relying on a history of the patient.

Based upon his observation of Barth, Dr. Gallagher's medical opinion was that Barth was suffering from organic brain syndrome. Dr. Gallagher defined organic brain syndrome as a mental condition involving disturbances in the higher cortical functions of a person. As a result of these disturbances, he has difficulty planning and executing purposeful behavior. Gallagher further stated that Barth's condition was chronic (i.e., partially irreversible) and was moderate in degree (did not require institutionalization).

Dr. Gallagher was asked to respond to two hypothetical questions. In the first, Dr. Gallagher was asked to give his opinion on how long Barth had suffered from organic brain syndrome, given the findings of Dr. Carducci on December 1, 1975. Gallagher replied that his opinion was that Barth's condition "must have existed at least from that date to the time that I saw him, and probably long before that." The second hypothetical recited, inter alia, Barth's medical history since 1972, the findings of Doctors Carducci, Gallagher, and Buencafino (whose findings are hereinafter recited), and the recent condition of Barth and his home. On the basis of the hypothetical, Dr. Gallagher's opinion was that Barth was incompetent on December 29, 1975, January 9, 1976, and February 27, 1976.

Dr. Arnesto E. Buencafino had examined Barth on April 9, 1976, in order to evaluate his diabetic status. The following findings of Dr. Buencafino were stipulated to by all parties and admitted into evidence:

1. Fatty liver with jaundice due to alcoholism

2. Acute pancreatitis

3. Hyperlipemia, type IV

4. Alcoholic hepatitis

5. External hemorrhoids, infected

6. Diabetes mellitus

7. By x-ray, lower left lobe pneumonia.

The testimony of Dr. Carducci and Dr. Gallagher, supplemented by the stipulated findings of Dr. Buencafino, clearly favored the plaintiff's contention that Barth was incompetent on the days that the pertinent documents were executed.

The only medical evidence that is in any way favorable to the defendants was a letter from a Dr. F. Wayne Hollinger, dated December 16, 1975, a copy of which was introduced into evidence. Apparently, Gus Pakosta took Barth to Dr. Hollinger after receiving the unfavorable medical report from Dr. Carducci regarding Barth's mental capacity. The letter from Hollinger states that after examining Barth, he was found to be "of sane and sound mind and both physically and mentally capable of signing a legal document." However, there are several factors which cause us to seriously question the credibility of this letter. Pakosta testified that he was told by a friend of his that if he went to Dr. Hollinger he would get a favorable report regarding Barth's competency. Pakosta further testified that he was billed five times the normal price for the examination, and the doctor did not impress him "one bit." In light of this testimony, and in light of the fact that Dr. Hollinger was never called upon to testify by the defendants, we believe that this letter lacks credibility and is not to be given much weight.

In addition to the medical testimony presented by the plaintiff, testimony for the plaintiff was also given by laymen, including attorney Gust and four Naperville policemen, in support of plaintiff's contention that Barth was mentally incompetent. Gus Pakosta, one of the defendants in this case, was called as an adverse witness under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 60). He testified that he had become acquainted with Barth in August of 1975. Shortly after the middle of August, he visited Barth's house for the first time, and became aware of the deplorable condition of Barth and his home. Pakosta testified that the house was dirty, dishes were scattered over the floor in the kitchen, and located just outside of the house was a big pile of garbage. Barth would wear the same pair of pants day after day. His eating habits were poor, and beginning the end of August, Pakosta began to bring Barth food.

Until January of 1976, Pakosta saw Barth on a regular basis, sometimes visiting as often as four or five times a day. Pakosta testified that during these November and December visits the odor inside Barth's house was "very, very terrible." He would often find the floors of the house full of human excrement, particularly the floors in the kitchen and the main bedroom. Human waste could also be found outside of the house, as Barth would defecate outdoors when the weather was warm. ("You kind of had to watch where you were walking or else you would walk all over it," Pakosta said). Barth himself would often have feces on his pants and underwear.

Pakosta further testified that in November and December of 1975 Barth's toilet was not functioning and due to the lack of water pressure in his home Barth was unable to bathe himself. The supply of heat to his house was sporadic. As concerns Barth's eating habits, Pakosta testified that Barth never cooked for himself during these months. In fact, towards the end of August, Barth had begun to discard all of his pots, pans, and cooking utensils into a pile outside of his house. Some of the pots and pans appeared to have holes in them which might have been made by a hatchet. Although Barth sometimes had lunchmeat in his refrigerator, he seldom had canned or fresh fruits or vegetables in the house. His refrigerator, however, was well-stocked with brandy and beer. Pakosta testified that he observed dozens of beer cans in Barth's refrigerator, some a quarter empty. During November and December, Barth always appeared to have been drinking.

Beginning the first week in November, through the second week in December, Barth would call Pakosta 10 to 25 times a day at his home. On one day he called Pakosta 45 times. Barth would not make much sense on the telephone. Pakosta stated that when Barth called in the first or second week of December, Barth didn't know what to say to him. Pakosta would ask him what he wanted, and after responding "Oh, nothing", Barth would hang up. Five minutes later Barth would call again. Many times Barth would simply hang up on Pakosta without ending the conversation.

Pakosta testified that Barth was in the habit of signing checks for Pakosta after he had written the amount and the name of the payee on the check. Pakosta stated that from the beginning of December until February of 1976, he did this at least on four occasions. Pakosta further testified that ...

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