Stacy v. Burke

Barnes, J., delivered the opinion of the Court. The two principal questions in this appeal are whether the Circuit Court for Montgomery County (Shook, J.) in a suit by a decedent’s executor to declare a constructive trust on certain property of the decedent in the hands of the appellant erred (1) in declining to admit two documents signed by the decedent in regard to alleged gifts of the property and (2) in withdrawing its original order ruling for the defendant and entering a second order ruling for the plaintiff, executor, after the plaintiff (appellee) had already filed an appeal to this Court from the initial order. The basic facts are substantially undisputed. Erie Edwards Stacy, the decedent (Uncle Erie) died on January 23, 1969, at the age of 88 in a nursing home in Wheaton, Maryland.

He was a widower at the time of his death. He had no children. His only surviving heirs were a brother and the children of a deceased brother Arthur Stacy. The appellant, Erie M. Stacy (Nephew Erie), who was the defendant below, was one of the children of the ³⁹² deceased brother Arthur and was named for his Uncle Erie.

Uncle Erie was an educated person who had graduated from William and Mary College in 1901. He became a professor of mathematics at William and Mary College and at the University of Texas. There was a close business relationship between Uncle Erie and his brother Arthur. Uncle Erie had founded a plumbing, heating and roofing contracting business in Washington, D. C. in 1907.

He operated it himself until 1921 when his brother Arthur joined him as a partner. Together they operated the business until 1932 when Arthur bought out his brother’s interest in the business. Uncle Erie, however, never lost interest in the business; and whenever Nephew Erie, who was employed in the business, visited his Uncle Erie, he always inquired about collections and other relevant business matters. After Nephew Erie acquired and operated the business, Uncle Erie’s interest in it continued.

The relationship between Uncle Erie and his Nephew Erie was a close one and Uncle Erie was interested in his nephew’s progress and welfare. Uncle Erie’s wife, Bertha, died on January 4, 1967, leaving him alone in their home in Arlington, Virginia. Nephew Erie obtained a housekeeper for his uncle; but after four months, Uncle Erie desired to move to Maryland and thereafter did move to Montgomery County to a nursing home where he could be close to Nephew Erie and his family as well as to his brother William. The Arlington house was closed and remained vacant for approximately one year.

Thomas F. Burke was a co-executor and a co-trustee with his Uncle Erie under Bertha’s will. Shortly after Bertha’s death on January 4,1967, Thomas F. Burke, who had represented Uncle Erie from time to time, met Uncle Erie and Nephew Erie at the Riggs National Bank in Washington, D. C., where Uncle Erie and his wife had their bank accounts, and assisted in obtaining a power of attorney for Nephew Erie so that he could draw funds from Uncle Erie’s account to pay bills. On February 22, ³⁹³ 1967, Uncle Erie executed a general power of attorney with broad powers. This general power of attorney was duly witnessed by a notary public who took Uncle Erie’s acknowledgement of the power of attorney.

On April 5, 1967, when Uncle Erie moved to Montgomery County, he signed a letter offered in evidence by Nephew Erie, but not admitted into evidence by the trial court. The letter read as follows: “April 5,1967 “Dear Erie: “Along the lines of our previous discussion, please place the proceeds from the sale of my home in Arlington in one or more joint savings accounts, using my name and yours. “I intend that you have full ownership of these funds should I predecease you and that they shall not in any way be considered as a part of my estate. “I truly appreciate all of the time and effort you are devoting to help get my affairs in order. “Affectionately yours, ,/s/ Uncle Erie /s/ Erie E. Stacy” After the Arlington house was sold but prior to the settlement and distribution of the proceeds of sale, Uncle Erie, on December 6, 1967, signed a document which read as follows: “December 6,1967 “TO WHOM IT MAY CONCERN : “I have asked my nephew, Erie M. Stacy, to write these instructions for my signature so that he may act legally in conducting my business and financial affairs; while acting under the General Powers of Attorney I previously gave to him: “1. In keeping with our prior understanding I have agreed that he should pay to himself forty ³⁹⁴ dollars ($40.00) per month for his services to me. “2. I want the money from the sale of my Arlington house in his name alone.

It is my wish that he have these funds. “3. I have instructed him to purchase shares in the B. F. Saul Co. Investment Trust. The shares to be purchased from the proceeds from principal payments of first trust notes that I own. These shares are to be made out in our joint names, with the right of survivorship. “4.

These instructions have been discussed with my nephew and have been carefully read by me. Accordingly I sign my name. /s/ Erie Edwards Stacy” This document was offered in evidence by Nephew Erie but was not admitted by the lower court into evidence. It was stipulated that the signatures of Uncle Erie on the letter of April 5, 1967, and the document of December 6, 1967, were genuine—and written by Uncle Erie. The evidence indicates that Uncle Erie was mentally alert during all times relevant in the present case and there is no contention that he was mentally incompetent at such times.

Beginning December 7, 1967, Nephew Erie drew checks through September 10, 1968, on Uncle Erie’s account in-a total amount of $23,944.93 payable to B. F. Saul Company for the purchase of B. F. Saul Real Estate Invest-ment Trust shares of stock registered in the joint names of Uncle Erie and Nephew Erie as joint tenants with the right of survivorship. On March 15 and 20, 1968, Nephew Erie drew checks on Uncle Erie’s account in a total amount of $25,480.00 which was deposited in the name of Nephew Erie alone or in the joint names of Nephew Erie and his wife Virginia. These funds were the proceeds from the sale of the Virginia house of Uncle Erie. Two checks for $1,926.00 and for $2,000.00 were drawn ³⁹⁵ by Nephew Erie to A. A. Stacy & Son, Inc. on June 14, 1967, and August 22, 1968, respectively, as loans to that corporation.

The $1,926.00 loan has been repaid by the corporation; the $2,000.00 loan was unpaid at the time of the hearing and was due and owing to the executor of Uncle Erie’s estate. If the corporation has not paid the $2,000.00 to the executor when the mandate in this case is returned to the lower court upon the remand, the executor may proceed to collect this debt due the estate, and the mandate is without prejudice to such collection. At the hearing before the lower court on October 16, 1969, in addition to Nephew Erie, his wife Virginia and Mr. Burke, the appellee, Nephew Erie’s brother William and his mother Essie Mae Stacy, testified. William confirmed the close and affectionate relationship between his Uncle Erie and his uncle’s namesake, Nephew Erie.

He testified in regard to the kind of a person his Uncle Erie was, as follows: “He was a person of very strong English type tradition on family ties who considered himself to be the patriarch of the family upon the demise of his father, my grandfather, and the leader of the family and one who was very concerned with all the workings of the family, the social, religious and business and financial workings.” Nephew Erie’s mother Essie Mae, testified, without objection, that she saw Uncle Erie several times a week when he was in a nursing home. In the latter part of January 1968 she had a conversation with him as follows: “I don’t know the date that was, just the last of January and we went out into the living room and talked for quite a while. And, as usual, he was asking about Erie M., my son, and then he got around to the subject of his house in Arlington. He mentioned he would be so glad when it was sold; that he didn’t want the house stand ³⁹⁶ ing vacant.

He said to me, I expect to give Erie the proceeds from the sale of the house in appreciation for what he’s done for me. He also said that he, having been in the business himself for so long, realized that Erie had all he could do to managing his own business without the extra responsibility of taking care of his, Erie E’s financial and personal affairs. In appreciation he was going to give Erie the proceeds from the sale of the house in Arlington.” Essie Mae saw Uncle Erie several times after January 1968 and had a conversation with him on June 6, 1968. She testified that he told her the same things he had told her before.

The conversation continued as follows: “He said also I have instructed him to take the money that has accumulated from the paid-up first trust notes that I have with B. F. Saul, the principal, my shares in the real estate mortgage investment fund of Saul Company, and I have also instructed him to use my name, Erie E. Stacy, and Erie M. Stacy’s name as joint tenants with rights of survivorship and buy the certificates with it.” * * * “As I said, the first conversation was in January, when we were sitting out in the living room or lobby and, as usual, he asked about Erie M., my son, and the business.” * ❖ * “Q. What did he say? A. He said, I know from experience Erie has all he can do to manage the plumbing and heating business and take care of himself. He said I feel very keenly how busy he is and I appreciate more than I can say his having enough interest in me to take care of my personal affairs and my financial affairs. He said I do appreciate it and he said I’m going ³⁹⁷ to give Erie the proceeds from the sale of the house. “Q. Are you sure that is what he said, ‘I’m going to give Erie the proceeds of the house?’ A. Yes, at that time.

(Emphasis added) “Q. Did you ever talk to him again about the proceeds from the house? A. Yes, sir. “Q. When ? A. The 6th of June 1968. “Q. What did he say at that time ? A. He said at that time, I have given Erie the proceeds from the sale of the house.

(Emphasis added) “Q. What else did he say? A. He said also I have authorized Erie to take the money from the notes which have been paid, the principal which has been paid and accumulated and buy shares in the B. F. Saul Real Estate Mortgage Investment Trust Company and also to sign my name, Erie E. Stacy, and Erie M. Stacy as joint tenants with right of survivorship. “Q. What does that mean; do you know? A. Yes, I know. Whichever one survives the other the money goes to them.

(Emphasis added) “Q. The money? A. The shares. “Q. How do you know that? A. Because I have had experienced it myself. I make investments with Saul Company. “Q. Do you own shares?

A. I own a few shares and so did my husband. The Stacy family has been doing business with Saul Company for the last forty years.” No copy of Uncle Erie’s will was offered into evidence and no evidence was offered in regard to the amount of his estate. In the verified answer of Nephew Erie, it was recited that the Mt. Vernon Place Methodist Church had been made residuary legatee and Mr. Burke had been made executor, contrary to a prior will made some months before.

It was stated at the argument, without contra ³⁹⁸ diction, that Uncle Erie’s estate was valued at approximately $70,000.00 which did not include the gifts of $25,-480.00 and $23,944.93 to Nephew Erie. Legal memoranda were submitted by both parties and the lower court took the case under advisement. On December 23, 1969, the Chancellor filed an opinion and order dismissing the bill of complaint. Copies were mailed to counsel for the respective parties.

In the opinion the Chancellor stated, inter alia: “The testimony of Mrs. Essie Mae Stacy, mother of the defendant and sister-in-law of the decedent, was clear and convincing as to the voluntariness of the decedent’s intention and the ultimate consummation of the gift some months later. Plaintiff has in no way controverted this evidence. It is noted, too, that these discussions between Mrs. Stacy and the decedent occurred in January and June 1968 and the period between the declaration of the decedent’s intention to give the defendant the proceeds from the sale of the house and the date when he affirmed the action, certainly was sufficient for decedent to reflect adequately as to the wisdom of his deed.” After reviewing the applicable law, the Chancellor stated: “Accordingly, this court is of the opinion that there could have been a confidential relationship ■between the decedent and defendant but that such relationship did not extend to the subject matter of the gift and further, that the defendant in no way breached any fiduciary responsibility by inducing or influencing his uncle to make the defendant a gift of the proceeds of the sale of decedent’s home.” In regard to the gift of money to purchase the shares .of B. F. Saul Investment Trust, and placing them in the ³⁹⁹ joint names of Uncle Erie and Nephew Erie with the right of survivorship, the Chancellor stated: “The donative intent has previously been expressed in the testimony of Mrs. Stacy and need not be belabored further.” The Chancellor concluded that this was a “valid inter vivos gift” to Nephew Erie. From the order of December 22, 1969 (filed December 23, 1969), dismissing the bill of complaint, the plaintiff below and appellee here, filed an appeal to this Court on January 6, 1970, and filed a supersedeas bond, duly approved, at the same time.

Later in the day of January 6, after the appeal to this Court had been filed, the Chancellor, apparently sua sponte, ordered the reporter to furnish the testimony in the case and passed an order withdrawing the opinion and order filed on December 23,1969. Thereafter, on February 16, 1970, the Chancellor filed another opinion and decree in which the following was stated: “It, therefore, follows that the burden of presenting clear and convincing proof that the funds of the decedent taken by the defendant were intended to be an inter vivos gift must be borne by Erie M. Stacy. Such burden of proof must be sufficient to overcome the presumption of the invalidity of the gift as between a fiduciary and principal. This, the defendant has not done.

The only evidence to corroborate defendant’s claim is that of Essie Mae Stacy, mother of the defendant. This evidence is unclear as to time of the making of the gift, uncertain as to the corpus of the gift and insufficient to prove the elements of a gift. “This Court can only conclude that because of the lack of evidence to support the validity of the alleged gifts, they are, therefore, facially ⁴⁰⁰ void and such funds as enumerated herein rightfully belong to the estate of the decedent.” The Chancellor thereupon passed a decree that “the equitable relief prayed for by the plaintiff be and it is hereby granted.” From this decree, Nephew Erie, the defendant below and appellant here, took an appeal to this Court on March 10,1970. (1) We will first consider the unusual posture in which the case reaches us. It will be observed that the appeal from the lower court’s order of December 22, 1969, (filed December 23, 1969) has not been withdrawn or abandoned by the plaintiff and present appellee, Burke, Executor.

He explains his reasons for this in his brief as follows: “Because of uncertainty of the jurisdiction of the trial Court to withdraw, sua sponte, on January 6, 1970, its Opinion and Order of December 23, 1969, Appellee did not withdraw his Notice of Appeal filed on January 6, 1970. The second Opinion and Order was filed more than thirty days after the Opinion and Order of December 23, 1969. Conceivably, it might be