Frain v. Perry

⁶⁰⁸ ROSALYN B. BELL, Judge. Appellant, Catherine Frain, asks us to set aside a decision of a trial judge in the Circuit Court for Prince George’s County, denying her complaint for constructive trust and/or resulting trust against her real property, or a rescission of the deed that she had conveyed to appellee, Charleen Perry, her granddaughter. Frain contends the court erred —in not imposing a constructive trust against her real property; —in not imposing a resulting trust against her real property; —in finding no fraudulent conveyance; and —in refusing to hear a rebuttal witness. We see the issues differently.

The real questions presented by the facts in this case are: (1) Did Mrs. Frain have a confidential/dependent relationship with Ms. Perry? (2) Did Ms. Perry use that relationship to deprive Mrs. Frain of her property? and (3) What is the appropriate standard to be used in determining whether the conveyance was fair and just? We hold that the trial judge never really reached the first two questions. We also hold that the judge applied the wrong standard in reaching his conclusion.

In the interest of justice, we remand the case to allow the trial judge to reexamine the parties’ relationship and the effect this relationship had on the transfer of the property. We explain. Catherine Frain is a 79-year-old stroke victim. She also suffers from diabetes and hypertension; she is overweight and has other health problems.

Mrs. Frain had her first stroke in 1984. Between 1984 and 1989, she suffered four to five more strokes and was hospitalized intermittently. After one of her hospitalizations, Mrs. Frain gave Ms. Perry ⁶⁰⁹ a power of attorney to handle her financial affairs. 1 The power of attorney was executed on February 7, 1989. During her deposition, Mrs. Frain claimed that Ms. Perry had access to everything she owned.

Ms. Perry would come by and pick up her checks and bills in order to deposit the checks and pay the bills. Mrs. Frain also claimed during her deposition that Ms. Perry had handled her affairs for two-and-one-half years prior to 1989, even without the power of attorney. On March 25, 1989, Mrs. Frain was served with a suit by Montgomery Wards for $683.80, with judgment entered on June 6, 1989. On April 1, 1989, Mrs. Frain was served with a suit by Chase Bank for $2,785.37 and judgment was entered for that amount plus $10 costs on June 2,1989.

On April 17,1989, a foreign judgment was entered against Mrs. Frain on behalf of Signet Bank for $2,639.28. On May 12, 1989, another foreign judgment was also entered against her by Signet Bank for $2,725.09. Finally, on August 25, 1989 judgment was entered for $9,147, against Mrs. Frain in favor of Sears, Roebuck & Company. No allegations were ever made that anyone other than Mrs. Frain had incurred the debts and was liable for the judgments.

During this time, Mrs. Frain executed the deed to her house on Montrose Street in Upper Marlboro, conveying it to Ms. Perry. Mrs. Frain transferred her interest in the property in fee simple to Ms. Perry, reserving a life estate to herself. No consideration was paid. This transfer took place on April 25, 1989 in the office of attorney Eugene E. Pitrof.

It is unclear why the conveyance was made at that time. During her deposition, however, Mrs. Frain testified that Ms. Perry told her that she would not take care of her if she did not sign the property over to her. Mrs. Frain also ⁶¹⁰ claimed that she went back to the attorney’s office the next day to get the deed back, but was unable to see him. In addition, she testified that subsequent efforts to see Pitrof or contact another attorney to help her rescind the deed were fruitless.

The deed was recorded on May 25, 1989. Mrs. Frain was hospitalized on May 24,1990 until July 30, 1990 when she was transferred directly to Pleasant Living Convalescent Center (PLLC). William Frain, Mrs. Frain’s son, testified that he had heard that his mother was residing at PLLC. After being discharged from PLLC at the end of October 1990, Mrs. Frain went to reside with her son and is paying him room and board.

On November 19, 1990, Mrs. Frain filed a complaint against Ms. Perry, seeking to impose a trust and reconveyance of her real property. Mrs. Frain was hospitalized again in December of 1990 for an additional stroke and on January 3, 1991 a deposition was taken at the hospital to preserve her testimony. 2 A trial on the merits was held in October, 1991. The trial court then rendered its decision, finding in favor of Ms. Perry that there was insufficient proof of actual fraud, and no undue influence or misuse by Ms. Perry of her power of attorney necessitating the establishment of a constructive or resulting trust. CONFIDENTIAL RELATIONSHIP The threshold issue from which everything else flows is whether the parties had a confidential/dependent relationship.

During trial, the judge heard a great deal of testimony on the interactions between appellant and appellee. The judge never decided, however, whether a confidential/dependent relationship existed. Since this finding is ⁶¹¹ essential in determining what the appropriate standard of proof is, we must remand the case for him to enter a finding on that question. The issue of confidential/dependent relationship normally arises in a parent-child situation.

In Treffinger v. Sterling, 269 Md. 356, 361 , 305 A.2d 829 (1972), for example, the Court of Appeals was asked to consider whether a father’s conveyance of a choice piece of river front property was made because of the undue influence of one of the children. The Court said: “Among the factors to be examined in determining whether this relationship has come into being are the parent’s advanced age, his physical debility, his mental feebleness, and his dependence on his child. None of these factors is necessarily conclusive and each should be given that weight which is warranted by the circumstances then present. Normally it is the minor child who relies heavily upon his parent for care and protection or for guidance in business affairs so that a confidential relationship exists between them with the duties running from the adult to the minor.

It is only when, as a result of debility or feebleness, a parent becomes dependent on his child for aid and counsel, that a confidential relationship is re-established but with the duties reversed in the latter case and with the burden of establishing the fairness of the transaction case upon the child.” (Citations omitted.) Thus, age, debility and dependence are important considerations. While the instant case does not involve a parent and child relationship, it does warrant similar consideration since the parties’ relationship is analogous to that of a parent and child. The trial judge heard a great deal of testimony that pointed toward the formation of such a relationship, but he never concluded that a confidential/dependent relationship existed. While the testimony presented at trial would have led us to conclude that a confidential/dependent relationship did exist, since we are not fact finders, we must remand the case to the trial judge. ⁶¹² The record portrays appellant as a woman who is hindered, both physically and mentally, by a series of strokes.

Up until the time of the strokes, appellant had lived by herself and had been fiercely independent and self-reliant. Neighbors testified that during the time they had known her she had kept her own house, cut her own grass, driven a car, and in general, had taken care of her own needs. The neighbors further testified that, although appellee visited appellant prior to the series of strokes, she did so on an infrequent basis. After appellant suffered the strokes, however, things changed.

Paul Tabel, one of appellant’s neighbors, testified that, during the three to four years after appellant’s strokes, she was “dependent” on appellee. In her deposition, appellant stated that appellee had “pestered the living life out of me to have that deed transferred over to her so she could take care of my financial needs.” Appellant further testified that she was “upset and crying and I was having a real hissy.[ 3 ] I really carried on. And then I was so upset about that deed when I go[t] home and thought about it that I decided to get myself back down to that attorney’s office and have that deed rescinded.” Appellant was not, however, able to meet with the lawyer again and the deed was not rescinded. 4 Additional evidence showed that appellee took appellant’s telephone out of her home sometime in mid-1989 after she signed the deed and that this made it difficult for her to communicate from her home. This testimony is supported by her then estranged son, William Frain, who testified that he was unable to contact his mother by telephone during this period.

He testified that, when he tried calling his ⁶¹³ mother in 1989, the home telephone number was changed to an unlisted number and, when he tried again in 1990, the phone company told him it was disconnected. Frain remarked during trial that he thought it was odd that his mother had no telephone because he knew that elderly people relied heavily on telephones for assistance. Frain admitted that he did not try to see his mother at that time because of the break in their relationship. The judge found that appellee signed appellant into hospitals; installed and removed telephones in appellant’s hospital rooms; signed the nursing home admission contract, underlining the no resuscitation provision; and used her power of attorney to pay bills.

Staff members at PLLC were consistent in their testimony that appellant complained that her property had been taken from her by appellee and that appellee had forced her to live at PLLC. The nurses at PLLC testified that appellant had only limited access to the telephone and that most of the calls had to be made at the nurses’ station or a pay phone. Other witnesses testified that appellee appeared to exert a great deal of control over appellant. Joan O’Sullivan, an attorney with the Senior Law Project division of Legal Aid, who was contacted and met with appellant, testified that her phone conversations with appellant were often interrupted and the phone was removed from appellant’s room.

A long-term care ombudsman for the Anne Arundel County Department of Aging testified that she met with appellant and made arrangements for O’Sullivan to take on appellant’s case. O’Sullivan executed a revocation of the power of attorney for appellant, but was unable to secure the revocation of the deed. On remand, the trial judge must take another look at the nature of the relationship between appellant and appellee and determine whether a confidential/dependent relationship existed. CONSTRUCTIVE TRUST If the trial judge finds that the parties had a confidential/dependent relationship, the burden shifts to appellee ⁶¹⁴ to prove that appellant’s transfer of the deed to appellee was a “free, voluntary and unbiased” act.

See Mattingly v. Mattingly, 92 Md.App. 248 , 607 A.2d 575, 582 (1992). Mattingly states: “ ‘[If] the party occupying the position of dominion ... receives a benefit’ from the transaction, there is a presumption against its validity, placing upon the beneficiary ... the burden of establishing by clear and convincing evidence that there has been no abuse of confidence, and that [appellee] ‘acted in good faith, and that the act by which [appellee] benefitted was the free, voluntary and independent act of the other party to the relationship.’ ” 607 A.2d at 582 , quoting Wenger, Admx. v. Rosinsky, 232 Md. 43, 49 , 192 A.2d 82 (1963). In the instant case, appellant asked that a constructive trust be imposed to take back the property that she claims was wrongfully taken by appellee. The remedy of “constructive trust” is an equitable one.

Constructive trusts are raised by equity in respect to property which has been acquired by fraud. Bowie v. Ford, 269 Md. 111, 118 , 304 A.2d 803 (1973); Wooddy v. Wooddy, 258 Md. 224, 232-33 , 265 A.2d 467 (1970). Constructive trusts are not true trusts in a technical sense, but are imposed by the courts. “Such trusts are ‘fraud rectifying’ trusts and not ‘intent enforcing’ ones.” Bowie, 269 Md. at 119 , 304 A.2d 803 . If a transferee obtains title to property through his or her own dishonesty or that of another acting for him or her, courts of equity have the power and, indeed, the duty to reach out and regain the property for the benefit of those wronged.

Bowie, 269 Md. at 119 , 304 A.2d 803 . In denying appellant’s request for a constructive trust on the Montrose Street property, the court found that appellant failed to meet her burden of proving by “clear and convincing” evidence 5 that the property had been obtained ⁶¹⁵ by appellee through fraud or undue influence. As previously discussed, if the trial judge had found that a confidential/dependent relationship existed between the parties, appellee had the burden to demonstrate that the transfer of the deed was done freely, voluntarily and independently by