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Nicholson v. Shockey

May 7, 1951

RUTH SHOCKEY NICHOLSON, ET AL.
v.
HARRY A. SHOCKEY, INDIVIDUALLY, AND AS EXECUTOR OF THE LAST WILL AND TESTAMENT OF FANNIE C. SHOCKEY, DECEASED, ET AL



Appeal from a decree of the Circuit Court of Fairfax county. Hon. Paul E. Brown, judge presiding.

Present, Hudgins, C.J., and Eggleston, Spratley, Buchanan, Miller and Smith, JJ.

Eggleston

EGGLESTON, J., delivered the opinion of the court.

Mrs. Fannie C. Shockey, a resident of Fairfax county, died testate on May 14, 1947, at the age of seventy-nine years. She left surviving her husband, Joseph L. Shockey, who was eighty-three or eighty-four years old, two sons, Harry A. Shockey, a member of the local bar, and Joseph A. W. Shockey, and three

married daughters, Mrs. Ruth Shockey Nicholson, Mrs. Margaret Shockey Hand, and Mrs. Catherine Shockey Stone.

Under the terms of her will Mrs. Shockey devised "a one-half life interest" in her home place to her husband in lieu of curtesy. All the rest of her property, "real, personal and mixed," she devised to her son, Harry A. Shockey, "for the purpose of distribution between himself and my other living children, then living, their heirs or assigns in such proportions as my executor, the above-named legatee or devisee, may deem appropriate for them to have." The will further provided that, "This power is to be left wholly within his discretion and not to be questioned," and was granted to him because of her "full faith and confidence in his ability and integrity."

On April 21, 1947, Mrs. Shockey closed the sale to the Virginia Electric & Power Company of a right of way across her homestead property in Fairfax county, for the sum of $16,200 cash, which was deposited in the Arlington Trust Company, Inc., at Arlington, Virginia. One-half of the amount was deposited in a joint account to the credit of "Fannie C. Shockey" and "Harry A. Shockey," and the other in a joint account to the credit of "Jos. L. Shockey" and "Harry A. Shockey."

According to the provisions printed on the signature cards,*fn1 the sums deposited in the two accounts were owned jointly by the respective depositors, "with right of survivorship," and were "subject to the check or receipt of either of them or the survivor of them."

On the day after these deposits were made, namely, April 23, Mrs. Shockey executed a deed, in which her husband did not join, conveying the homestead property to her son, Harry A. Shockey, in consideration of the sum of "five dollars * * * and

other good and valuable consideration." This deed was recorded on July 3, 1947, after Mrs. Shockey's death, under circumstances hereinafter related.

On October 13, 1948, Harry A. Shockey filed a bill of complaint on behalf of himself individually and as executor of his mother's last will and testament, against his father, brother and sisters, praying for a construction of the will. Some months later in that suit a consent decree was entered in which it was adjudicated that the deed from his mother to him should be set aside, and that this real estate was subject to and should be administered under the terms of the will.

However, Harry A. Shockey claimed absolute title to the balance of the fund which had been deposited to his and his mother's joint account. He likewise claimed absolute title to any balance which might remain after his father's death in the joint account which had been opened to the credit of his father and himself.

Thereupon his brother and sisters filed the bill of complaint in the present suit against Harry A. Shockey, individually and as executor of their mother's will, and against their father, Joseph L. Shockey, to determine the status and ownership of the funds which had been deposited in the two joint accounts.

The bill alleged that the fund derived from the sale of the easement or right of way across the homestead property had come into the hands of Harry A. Shockey acting as attorney for and confidential advisor to his mother; that such fund was impressed with a trust in favor of Mrs. Shockey; that the deposit thereof in the joint accounts, with the right of survivorship in both to Harry A. Shockey, "was not the free and voluntary act of Fannie C. Shockey;" that she did not at the time "have a full understanding either of her rights or of the legal effect of said deposits;" that they were made as the result of the exercise by him "of undue influence on his client and aged mother;" and that because of the confidential relationship which existed between him and her, the transaction was invalid in so far as it operated as a gift to him of any interest in the fund.

The prayer of the bill was that the transaction whereby Harry A. Shockey had derived an interest in the deposits, other than that to which he was entitled under the provisions of his mother's will, be annulled and set aside; that the sum which had been deposited in the joint account of Harry A. Shockey and his mother should be decreed to be an asset of her estate and administered

under her will; and that the balance of the other deposit which had been made to the credit of Joseph L. Shockey and Harry A. Shockey, subject to the life estate of the father, should likewise be decreed to be an asset of the mother's estate and administered under the terms of her will.

After Harry A. Shockey's demurrer to the bill had been overruled, he filed an answer in which he denied that he had received the fund derived from the sale of the easement as the attorney for or confidential advisor of his mother. He alleged that the money had been paid to his mother who had deposited it in bank in the manner described; that such deposits had not been made as the result of any undue influence exercised by him upon her, but were her free and voluntary act. He further alleged that the title to or ownership of such fund remaining in the joint account of his mother and himself passed by operation of law to him; that the same would be true of any balance remaining in the other joint account after the death of his father; and that his mother's estate had no interest whatsoever in these funds.

Joseph L. Shockey, the father, filed no answer and made no appearance either in person or by counsel.

After an ore tenus hearing upon the issues thus drawn, the lower court entered a decree dismissing the bill on the ground that the evidence was "insufficient to sustain the allegations" therein. On this appeal from that decree we need consider only the assignment of error that the finding of the lower court is contrary to the law and the evidence.

The appellants do not minimize the full force and effect of the lower court's finding on the issues of fact on the ore tenus hearing. They concede that such finding is tantamount to an adverse verdict of a jury. Their argument on the insufficiency of the evidence to sustain the decree runs thus:

The evidence shows, as a matter of law, that Harry A. Shockey received the fund derived from the sale of the easement as the attorney for or confidential advisor to his mother; that a gift from her to him of that fund, or any interest therein, is presumptively invalid on the ground of constructive fraud or undue influence; and that in this situation the burden was on him to overcome that presumption by clear and satisfactory evidence that his mother had a full understanding of the nature of the transaction and made the deposits with the purpose and intent of bestowing upon him a complete title to the money, subject

only to her interest and that of her husband therein. This burden of proof, the appellants say, their brother has not borne.

Moreover, the appellants say, under Code, § 8-286, the validity of the alleged gift requires corroboration, and such corroboration is not found in the evidence.

In our opinion the position of the appellants is sound on both aspects of the case.

[1] Although Harry A. Shockey insisted both in his answer and at the hearing that in the transaction between his mother and the Virginia Electric and Power Company he acted merely as her son or advisor, and not as her attorney, the circumstances and especially the documentary evidence conclusively refute that contention.

The purchase of the easement was negotiated on behalf of the Power Company by Franklin R. Murray. Mr. Murray testified that he first approached Mrs. Shockey either in December, 1946, or January, 1947, and that she referred him to her son, Harry A. Shockey, who she said was authorized to act for her, and who thereafter conducted all negotiations in her behalf for the sale of the right of way. Murray knew that Shockey was an attorney, and on April 16, 1947, wrote a letter to "Fannie C. Shockey and Joseph L. Shockey, c/o Mr. Harry A. Shockey, Attorney," confirming the verbal agreement reached between "your attorney and our company." Shockey acknowledged acceptance of the offer by this endorsement on the letter which he returned to Murray: "Fannie C. Shockey, Joseph L. Shockey, By Harry A. Shockey, Atty., Date: April 21, 1947."

The purchase price for the right of way was paid by a draft of Stone & Webster Engineering Corporation, agent for Virginia Electric & Power Company, payable to the order of "Harry A. Shockey, Atty. for Fannie C. and Joseph L. Shockey." Acknowledgment of the payment of the money was made by receipt which was signed, "Fannie C. Shockey, Joseph L. Shockey, By Harry A. Shockey, Atty." Neither Mrs. Shockey nor her husband was present when the draft and receipt were executed and delivered.

At the time the deposit was made the draft was endorsed in Harry A. Shockey's handwriting, "Harry A. Shockey, Atty. for Fannie C. and Joseph L. Shockey, Harry A. Shockey."

[2] "Formality is not an essential element of the employment

of an attorney. The contract may be express or implied, and it is sufficient that the advice and assistance of the attorney is sought and received, in matters pertinent to his profession." 7 C.J.S., Attorney and Client, § 65, p. 848.

Clearly, we think, the evidence here meets these requirements and shows that there was an implied relation of attorney and client between the son and mother.

[3] As is said in 7 C.J.S., Attorney and Client, § 65, p. 848, "* * * where the necessary elements of a contract (of employment) exist, the creation of the relation is not prevented merely by the fact that a blood relationship exists between the attorney and client."

[4] It is true that Shockey made no charge to his mother for his services, but that was not necessary to the creation of the relation of attorney and client. See 5 Am. Jur., Attorneys at Law, § 31, p. 279; 7 C.J.S., Attorney and Client, § 65-b, p. 849; Shoup v. Dowsey, 134 N.J. Eq. 440, 36 A.2d 66, 85.

[5] It is well settled that a gift by a client to an attorney of funds which the attorney has in his hands is presumptively nugatory on the ground of constructive fraud, and the burden of proof is on the attorney to show by clear and satisfactory evidence that there was no undue influence or undue advantage because of the relation, and that the client was fully informed as to the nature and effect of the gift. See 5 Am. Jur., Attorneys at Law, § 51, p. 290; 7 C.J.S., Attorney and Client, § 129, p. 971.

In Thomas v. Turner, 87 Va. 1, 12 S.E. 149, 668, this court said: "* * * all dealings between attorney and client for the benefit of the former, are not only regarded with jealousy and closely scrutinized, but they are presumptively invalid, on the ground of constructive fraud; and that presumption can be overcome only by the clearest and most satisfactory evidence. The rule is founded in public policy, and operates independently of any ingredient of actual fraud, or of the age or capacity of the client, being intended as a protection to the client against the strong influence to which the confidential relation naturally gives rise." See also, Bruce v. Bibb, 129 Va. 45, 49, 105 S.E. 570; Stiers v. Hall, 170 Va. 569, 577, 578, 197 S.E. 450, 454.

[6] But the presumption of fraud or undue influence which casts the burden of proving the bona fides of the transaction upon the appellee, Harry A. Shockey, is not dependent upon the

existence of the relation of attorney and client between him and his mother. The rule is not limited to attorneys at law. It springs from any fiduciary relationship, and when such relationship is found to exist, any transaction to the benefit of the dominant party and to the detriment of the other is presumptively fraudulent. The same high standard of good faith and loyalty is required of an agent to his principal as of an attorney to his client. See Byars v. Stone, 186 Va. 518, 529, 530, 42 S.E.2d 847, 852, 853.

Admittedly, Shockey was his mother's agent in handling and consummating this transaction. But that is not all. It is quite clear from the evidence that a confidential relationship had existed between the mother and son over a period of years. He was a trained lawyer in the prime of life, while she was a person of limited education and of advanced years. According to his own testimony each reposed the greatest confidence in the other. He had furnished the purchase price for sundry pieces of property, had the titles taken in her name, and later had them conveyed by her to him.

In fact, just prior to his marriage he executed and recorded a deed for his own home property to his mother, which he says she held as "a straw person" for his benefit. He then had her execute and deliver a deed reconveying the property to him, and this deed he withheld from recordation. There was no satisfactory explanation of this unusual transaction other than the obvious effect of placing the property beyond the control of his intended wife.

As has been said, on the day after the deposit which is the subject of this suit had been made, his mother executed in his office a deed conveying the fee-simple title in the home place to him, a transaction which he concealed from his father, who did not join in the deed, and from his brother and sisters, until after his mother's death. According to his own testimony she gave him custody of this deed only for the purpose of placing it in the lockbox to which they had joint access. Although he admitted that there had been no legal delivery of this deed to him, and that he had no right to record it, he did so after his mother's death. It was this conveyance which he later agreed should be set aside.

In all of these transactions with his mother he was the dominant person, and she readily executed or accepted such deeds as he presented to her. That she fully understood and

comprehended the purpose and effect of these transactions is by no means clear from the evidence.

Although there is evidence that Mrs. Shockey was mentally competent to transact business on the day the deposit was made, the record clearly shows that her physical condition was not good. From January 14 to 31, 1947, both inclusive, she was a patient at the Arlington Hospital and left there against the wishes of her attending physician. From January 31 to April 19 she was at the home of her daughter, Mrs. Nicholson, and during that time was attended by two physicians. On April 19 she returned to her home near Falls Church and remained there until May 14, when she suffered a stroke and was taken to a hospital where she died.

The evidence with respect to the purpose of the deposit, as to whether Mrs. Shockey understood the nature of the transaction and intended thereby to make him a gift of an interest therein, comes only from the lips of Harry A. Shockey himself.

His story is that he advised his mother to divide the proceeds of the draft into two equal parts, and deposit one-half to her own credit and one-half to the credit of the husband, with the right of each to check on her or his share. He said she was unwilling to do this because, she said, her husband would "squander" his share, and the other children would importune her to give them her share of the fund. To avoid this, he said, she wanted the money deposited in such a manner that "I would have to sign with her so she would tell these children and my father we would open up a joint account and both of us would have to sign the checks together." Furthermore, she said, "I want you to have this money in the event of your father's death or my death."

Upon her insistence that she wanted the money deposited in this manner, he suggested that they discuss the matter "with the young lady in the bank," and see whether this could be done. They went to the bank where "the young lady," he said, explained the effect of the deposit to his mother "who fully understood it." After this explanation the necessary signature cards for the two accounts were prepared.

Mr. Shockey positively identified Mrs. Julia Lyle, an employee of the Arlington Trust Company, as "the young lady in the bank" who explained the deposit to his mother. However, when Mrs. Lyle was called as a witness on his behalf she signally

failed to corroborate his testimony. She did recall having opened the account with Mr. Shockey, and was "under the impression" that at the time he was accompanied by "an elderly lady." But she was not "absolutely sure" of that, and could not "definitely" "recall any discussion" with reference to the matter.

Mr. Shockey further testified that it was his mother's wish that the fund deposited to her and his joint account be subject to checks signed by either him or her, and that this arrangement was carried out.

As to the fund deposited to the joint credit of his father and himself, Mr. Shockey testified that it was his mother's wish and direction that the account be opened in such manner that all checks thereon be signed by both him (Harry) and his father. He admitted, however, that this account was not opened in this manner, that a joint account was established, with the right of either him or his father to draw thereon over his individual signature. Despite the manner in which the account was opened, he said that he told his father that all checks drawn thereon must be signed by both of them. He admitted on cross-examination that this statement was not true.*fn2

He further admitted that his father continued under the impression that he was unable to check on the fund by a check bearing his (the father's) signature alone until he learned the truth from the other members of the family. In the meantime he (Harry) had checked the entire sum of $8,100 out of the father's account. He placed $5,948.66 in his own lockbox, but what disposition he made of the balance is not clearly shown.

He further testified that after his mother's death he drew out the fund deposited to her and his joint account ...


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