Midler v. Shapiro

Gilbert, C. J., delivered the opinion of the Court. Joseph Midler, personal representative of Dorothy L. Midler, his mother, seeks to have us reverse a dismissal in the Circuit Court for Baltimore County (Raine, J.) of the bill of complaint brought by Joseph against Miriam Shapiro and her husband, Martin. Joseph perceives grievous errors as having been committed by the chancellor, but our examination of the record and the applicable law leads us to a different conclusion. Accordingly, for the reasons stated infra, we shall affirm the circuit court.

A perusal of the record discloses that the late Dorothy Midler was married to Isadore Midler. The union produced two sons, Joseph, the appellant, and Samuel J. Midler. All parties lived in New York until Isadore’s retirement in 1960, whereupon Dorothy and Isadore Midler moved to St. Petersburg, Florida. Approximately three years later, Isadore died.

He left his entire estate to his widow, Dorothy Midler. Mrs. Midler continued to reside in Florida until she moved to the Baltimore area in 1970. During the seven years of his mother’s widowhood that she lived in Florida, Samuel would visit her about once a year, and Mrs. Midler would, in ²⁶⁶ turn, visit her sons in their respective homes in New York State for approximately one week each. She would also spend a week at the home of her niece, Miriam Shapiro, both en route to visiting her sons and in returning to Florida.

Samuel Midler testified that upon his father’s demise he aided his mother in straightening out her financial matters. This was necessary, he said, because his father had been a very dominating man and his mother “. . . knew very little of what was going on.” The Florida local bank assisted Mrs. Midler after Samuel’s return to New York. When Mrs. Midler died in December, 1971, at age 78, Joseph, a member of the New York Bar, qualified as her personal representative and set about administrating his mother’s estate in accordance with her will dated 1963. By the terms of the will, Joseph and Samuel were to divide the assets of the estate.

As personal representative, Joseph located some fifty thousand dollars in stocks, two watches, and a house in St. Petersburg. The total estate coming into the hands of Joseph, as personal representative, was approximately $55,000. Joseph discovered there was no cash in the estate, and upon inquiry, he ascertained that the sum of approximately $40,000 had been on deposit in various banks or savings and loan associations. Two of the accounts were in the joint names of Dorothy Midler and the appellee, Miriam Shapiro, “in trust” for the other, subject to the order of either.

After Dorothy Midler’s death, Miriam transferred the monies to her own account. Joseph made demand for the money, but his demand was rejected, and the instant litigation resulted. In this Court, Joseph puts four issues to us. We shall discuss each in the order in which it has been raised.

I. “The Chancellor’s finding that there existed a confidential relationship between Dorothy L. Midler and Miriam and Martin Shapiro from the time that Mrs. Midler moved to Baltimore and lived in the Shapiros’ home in July, 1970 until her death ²⁶⁷ at the age of seventy-eight on December 19, 1971 was based on substantial evidence.” 1 The evidence disclosed that Mrs. Midler and Miriam Shapiro had always been “close.” Their relationship was described as being more like mother and daughter than aunt and niece. Miriam took her aunt shopping and usually provided transportation. The appellant characterized Miriam as a domineering person who ran her family affairs in the manner suggestive of a “matriarch.” Prior to Mrs. Midler’s moving to Baltimore, she, on June 27, 1969, opened an account in the Baltimore Federal Savings and Loan Association. At the same time, another account, bearing the next consecutive account number, was opened in the name of Miriam and Martin Shapiro.

At the trial of the instant case, Miriam denied knowing that the account was opened at that time. In September, 1971, Mrs. Midler closed her account and transferred the amount of $15,121.20 into the Shapiro account. Shortly after moving to Baltimore in July, 1970, Mrs. Midler opened a joint account at the Equitable Trust Company in her own name and the name of Miriam. Following Mrs. Midler’s death, Miriam withdrew all the proceeds therefrom, a total of $14,738.74.

No other sums had been withdrawn from the account during its life span. A similar account was opened in the Provident Savings Bank on August 24, 1970. Miriam withdrew the sum of $2,000 therefrom in November, 1971, to cover medical expenses of Mrs. Midler. The expenses totaled $800.

The balance was placed in Miriam’s checking account. Subsequent to Mrs. Midler’s death, Miriam withdrew the balance of the monies on deposit in the Provident account, namely, $10,989.35. It was admitted that Miriam handled the banking for Mrs. Midler and often, if not usually, made the deposits and ²⁶⁸ wrote out the checks, although Mrs. Midler generally signed the checks. When Mrs. Midler became ill, it was Miriam who insisted that she see a doctor.

The doctor testified that Mrs. Midler did not appear to be her stated age and was alert and in control of her faculties. Judge Raine found as a fact that a confidential relationship existed between Mrs. Midler and her niece. It is manifest from the record that Mrs. Midler reposed confidence and trust in Miriam, else she would not have conferred upon Miriam the right to withdraw Mrs. Midler’s funds, nor in all likelihood would she have created joint accounts subject to her own and Miriam’s order. There is nothing in the evidence to suggest even remotely that Mrs. Midler did not comprehend the effect of a joint account.

A confidential relationship exists whenever confidence is placed by one person in another and accepted by that other person. Lynn v. Magness, 191 Md. 674, 684 , 62 A. 2d 604, 609 (1948); Grimes v. Grimes, 184 Md. 59, 63 , 40 A. 2d 58, 61 (1944). Such a relationship may arise where a party is, under the existing circumstances, justified in believing that the other party will not act in a manner adverse or inconsistent with the reposing party’s interest or welfare. Bass v. Smith, 189 Md. 461, 469 , 56 A. 2d 800, 804 (1948).

It “. . . extends to all relations in which confidence is reposed, and in which dominion and influence resulting from such confidence, may be exercised by -one person over another.” Zimmerman v. Bitner, 79 Md. 115, 126 , 28 A. 820, 821 (1894). See also Zimmerman v. Hull, 155 Md. 230, 240 , 141 A. 531, 535 (1928); Upman v. Thomey, 145 Md. 347, 358-59 , 125 A. 860, 865 (1924). Absent a presumption arising out of certain relationships (e.g., attorney-client, trustee-beneficiary, principal-agent), the existence vel non of a confidential relationship is a question of fact, not of law. Sanders v. Sanders, 261 Md. 268, 276 , 274 A. 2d 383, 388 (1971); Wenger v. Rosinsky, 232 Md. 43, 48 , 192 A. 2d 82, 86 (1963); Masius v. Wilson, 213 Md. 259, 264-65 , 131 A. 2d 484, 486-87 (1957); Zimmerman v. Hull, supra at 240, 141 A. at 535 . ²⁶⁹ Judge Raine, in the ease mbjudice, opined: “The relationship [between Mrs. Midler and Miriam Shapiro] has been described by Mrs. Shapiro and also by an independent witness,... as being a very close mother-daughter type of relationship, and it is clear to me that for the periods of time in question Dorothy Midler, who was in her late seventies, . . . did place a great deal of trust and confidence in her niece, just as a mother would place trust and confidence in a beloved daughter.

So, I make that finding as to the existence of a confidential relationship without any doubt whatever. I think it is crystal clear based on the testimony.” Our review of the evidence leads us to conclude that Judge Raine’s finding of fact was not clearly erroneous, Md. Rule 1086, if indeed he was erroneous at all. Needless to say, we reject appellees' argument that the confidential relationship between the parties was not demonstrated, and that they should not have been required to go forward with evidence showing no undue influence 2 upon Mrs. Midler. II. “The Chancellor applied an incorrect legal standard in concluding that the Equitable Trust Company and Provident Savings Bank joint accounts, established with funds of Dorothy Midler, were intended to confer the right of survivorship uon [sic] Miriam Shapiro where the Chancellor did not follow the criteria of Whalen v. Milholland [, 89 Md. 199 , 43 A. 45 (1899),] and its progeny and disregarded undisputed evidence that the accounts were established solely so Mrs. Midler might have the assistance and aid of her trusted niece in handling financial affairs.” ²⁷⁰ Both the Equitable Trust account and the Provident account were titled in the names of the decedent and Miriam Shapiro as joint owners, in trust for one another, subject to the order of either and the balance upon death to belong to the survivor.

Such language has been held to create a trust, the corpus of which, by operation of law, becomes “. . . the property of the survivor on the death of the other.” Wenger v. Rosinsky, supra at 50, 192 A. 2d at 87 ; Haller v. White, 228 Md. 505, 509-10 , 180 A. 2d 689, 692 (1962); Hancock v. Savings Bank, 199 Md. 163, 170 , 85 A. 2d 770, 772 (1952); Bradford v. Eutaw Savings Bank, 186 Md. 127, 133-34 , 46 A. 2d 284, 287 (1946); Milholland v. Whalen, 89 Md. 212, 218 , 43 A. 43, 45 (1899). The creation of such a trust gives rise to a rebuttable presumption of its validity, and, usually, the burden is thrust upon the party seeking to rebut it. Haller v. White, supra at 510, 180 A. 2d at 692 ; Blair v. Haas, 215 Md. 105, 115 , 137 A. 2d 145, 150 (1957); Ragan v. Kelly, 180 Md. 324, 330 , 24 A. 2d 289, 293 (1942). When, however, a confidential relationship is shown, as in the case now before us, the burden shifts to the party seeking to uphold the validity of the trust and gift.

Wenger v. Rosinsky, supra at 50, 192 A. 2d at 87 ; Tribull v. Tribull, 208 Md. 490, 507 , 119 A. 2d 399, 408 (1956). It then becomes the duty of the donee to demonstrate “. . . that the donor understood the nature of the transaction and intended to make a gift.” Tribull v. Tribull, supra at 507, 119 A. 2d at 408 . See Hancock v. Savings Bank, supra. Appellant strongly suggests that the “First Milholland Case,” 89 Md. 199 , 43 A. 45 (1899), is controlling because there, as here, all the funds were the donor’s, who retained possession of the bank book.

The Court concluded upon that proof that no gift was intended or perfected. We think the “First Milholland Case” to be inapposite. In the instant case, unlike Milholland, the account was in “trust form,” i.e., in trust for each other. The bank account in the “First Milholland Case” was not in “trust form,” but read: “Elizabeth O’Neill and Mary Whalen.

Payable to the order of either or the survivor.” Later, apparently without the knowledge of the donor, Elizabeth O’Neill, the words “Joint Owners” were added when that form was adopted by the ²⁷¹ bank. Although the words “Joint Owners” were stamped upon the passbook, Miss O’Neill could not read. The Court held that a deposit of money by an owner thereof in a savings account with another person as “joint owners,” payable to the order of either and the survivor of them, is not sufficient to constitute a gift to the survivor if the donor retains dominion over the passbook. Seemingly attempting to draw an analogy between the “First Milholland Case” and that which now confronts us, appellant points to evidence tending to show that, as in Milholland I, Mrs. Midler retained possession of the passbooks.

Even if that evidence, in the instant case, were undisputed as to that fact, the “First Milholland Case” is readily distinguishable. The evidence in the case subjudice is that the bank account was in the trust form sanctioned by “The Second Milholland Case,” 89 Md. 212 , 43 A. 43 (1899), and that it was in such form when it was opened. Mrs. Midler could read and was capable of comprehending what she was doing. No analogy may be properly drawn between the two cases.

Moreover, there is no requirement that the passbook of the type of trust account used in the case now before us need be delivered to the donee in order to perfect the gift. Appellant also invites our attention to Pearre v. Grossnickle, 139 Md. 274 , 115 A. 49 (1921), wherein the Court said that even the use of the trust form does not create a trust unless there is evidence of a specific intent to so do. Pea,rre does not mandate direct testimony of intent on the part of the creator of the trust. We think Pearre is satisfied if the trier of fact is able to draw from the evidence a rational inference of the specific intent-of the donor to create the trust.

Judge Raine found as a fact that Mrs. Midler intended to create the trust account, that the accounts were not mere convenience accounts made for the purpose of assisting Mrs. Midler in her everyday needs, and that Miriam did not play a “. . . role in the creation of the accounts . . . .” In short, Judge Raine was of the view that the appellees met the burden thrust upon them and demonstrated to the trier of fact that Mrs. Midler “. . . understood the nature of the ²⁷² transaction and intended to make a gift.” Tribull v. Tribull, supra at 507, 119 A. 2d at 408 . We have carefully reviewed the record, and we are unable to conclude that Judge Raine was clearly erroneous in his finding of fact. Md. Rule 1086. We perceive no error by the chancellor.

III. “In the context of a confidential relationship, the Chancellor applied incorrect legal standards in concluding that Appellees met the burden of proving by clear and convincing evidence transactional fairness where he acknowledged that evidence of fairness was ‘very scant’ but nevertheless went on to disregard the test of Highberger v. Stiffler [, 21 Md. 338 (1864),] and its progeny by considering the case as if requiring proof of actual fraud and overweening influence rather than from the point of view of