Appeal from Circuit Court of Macon County. Nos. 91P111, 92L173. Honorable Scott B. Diamond, Judge Presiding.
As Corrected March 31, 1994. Petition for Leave to Appeal Denied October 6, 1994.
Honorable Carl A. Lund, J., Honorable Frederick S. Green, J., Concurring, Honorable Robert J. Cook, J., Dissenting
The opinion of the court was delivered by: Lund
JUSTICE LUND delivered the opinion of the court:
Defendants Sharon Cochran and David Cochran appeal from a judgment of the circuit court of Macon County awarding each defendant, Dewey Savage, Jr., and Robert Savage, $31,354.61 compensatory damages and $5,000 punitive damages. Plaintiffs are Sharon's brothers, and the cause of action was based upon alleged fiduciary violations involving their father's assets.
The allegations of fiduciary violations involved Sharon and David using, for their own use, funds placed in a joint account by the father, Dewey Savage, Sr. The funds were removed from the account by Sharon after her father designated her his power of attorney. The accounts containing the funds were joint tenancy accounts with right of survivorship. The trial court specifically found the accounts were convenience accounts, thus limited to the father's expenses and not subject to the survivorship provision. The Conclusion of convenience accounts destroys the survivorship provision of the accounts and requires one with a power of attorney to act as a fiduciary. ( In re Estate of Blom (1992), 234 Ill. App. 3d 517, 519, 600 N.E.2d 427, 429.) Evidence established that from April 1987, the time of the power of attorney designation, until his death in March 1991 at age 92, total assets, savings, and income of Dewey, Sr., in these accounts totaled approximately $154,000. At the time of his death, the accounts had been totally depleted. Approximately $53,000 had been spent for the benefit of the father and the balance used for the benefit of Sharon and David. A debt for the father's nursing home treatment was unpaid.
Once the power of attorney was executed, Sharon was responsible as a fiduciary to her father. ( White v. Raines (1991), 215 Ill. App. 3d 49, 59, 574 N.E.2d 272, 279.) A presumption of fraud would attach to a transfer made by the fiduciary for her own use. ( Franciscan Sisters Health Care Corp. v. Dean (1983), 95 Ill. 2d 452, 464, 448 N.E.2d 872, 877-78.) However, a conflicting presumption arose from the joint tenancy with survivorship creation and this presumption, like the fraud presumption, can only be rebutted by clear and convincing evidence. Murgic v. Granite City Trust & Savings Bank (1964), 31 Ill. 2d 587, 590-91, 202 N.E.2d 470, 472; Blom, 234 Ill. App. 3d at 519, 600 N.E.2d at 429.
The issue of importance before our court is whether the trial court's decision of convenience accounts is against the manifest weight of the evidence, cqnsidering the presumption of donative intent as described in Murgic. The trial court's findings of fact will not be disturbed unless they are contrary to the manifest weight of the evidence. ( White, 215 Ill. App. 3d at 60, 574 N.E.2d at 280.) However, the clear and convincing test must be satisfied.
Evidence established that Dewey, Sr.'s wife died in 1985 and that he enjoyed a close relationship with Sharon. He visited with Sharon, and she assisted him with his meals. She was principally responsible for handling his financial matters until his death. His son Dewey, Jr., lived on the west coast and was seldom in Macon County. His son Roger was a certified public accountant (CPA), and he completed income tax returns for his father. Roger left Decatur in 1988 and, at the time of trial, lived in Virginia. Prior to the power of attorney, the father made gifts to Sharon of approximately $11,000. Part of this amount may have been repayment for improvements made by Sharon and David to her parents' home prior to the death of her mother. Dewey, Sr., indicated by letter his deep feelings for Sharon and his preference for her.
The joint accounts were created before the power of attorney, and both Sharon and Roger were named on the accounts. Roger considered this was done for convenience purposes. Sometime after Roger's move in 1988, his name was removed from the accounts. This was after Sharon had her father's power of attorney. Evidence of how Roger's name was removed was not presented. David's name was subsequently placed on the accounts, but he did not participate in check writing. He was given checks signed by Sharon to pay his personal debt at a credit union and debts he owed for child support.
The father's home was sold and funds from the sale were placed in the joint accounts, along with all his pension and retirement income. All his assets were eventually deposited to these accounts. His living arrangements were varied, but he finally entered nursing home care. Public assistance was requested but denied, due to lack of information. Dewey, Sr., stopped writing checks on the account after March 27, 1988.
Dewey, Sr., had executed a will in 1980, leaving all his assets equally to his three children. A very few of the many checks written by Sharon were signed "Sharon Cochran[,] P.O.A.," but all except one so signed preceded execution of the power of attorney.
The fact that all assets of Dewey, Sr., were deposited to the joint accounts adds to evidence rebutting a donative intent. He knew these accounts would be necessary for his continuing expenses, as he was at an age where considerable expenses could be incurred for special care. To conclude that a donative intent existed would require a belief that others could use funds necessary for his care.
The donative presumption was also in conflict with the indications of Dewey, Sr.'s will. Moreover, the existence of Roger's name on the accounts would have indicated Roger was to share in the account. No adequate explanation is given for the removal of Roger's name (after Sharon was changed to a fiduciary) from the ...