Devlin v. Knowles, Ameriquest, Citibank

(Surrogates Court, Kings County, 2/7/07)

We represented: Respondent Knowles

Hon. Frank R. Seddio, Surrogate

DECISION and ORDER

In this miscellaneous proceeding, Veronica Devlin, the Executor of the estate of Mildred Strand, commence a turnover proceeding to transfer the real property located at 111 East 3rd Street, Brooklyn, New York, which had been partially transferred, prior to her death, to her grandson, David Knowles, on the grounds of undue influence and lack of testamentary capacity. Ameriquest is a mortgagee on the premises and was named as a respondent. Citibank, N.A., is also a mortgage and respondent herein.

The decedent died June 20, 1999. Her will, dated February 4, 1993, was admitted to probate and letters testamentary were issued to Veronica Devlin, decedent's niece. Pursuant to the will, the decedent left $5,000.00 to each of her niece's children and the remainder of her property to Ms. Devlin, her niece and executor herein.

On March 10, 1999, the decedent executed a $20,000.00 mortgage on the premises with Ameriquest Mortgage Company. On April 3, 1999, the decedent executed a deed which transferred 50% ownership of the premises to her grandson, David Knowles, which deed declared a joint ownership with a right of survivorship.

On July 19, 1999, approximately one month after the decedent died, the respondent, David Knowles, as the sole owner of the premises, executed a new mortgage for $29,000.00 with Ameriquest which paid off the mortgage executed by the decedent. On September 5, 2000, the respondent, David Knowles, signed an equity source agreement with Citibank, N.A. whereby he and Susan Knowles, his wife, mortgaged the property to secure their obligation in the sum of $76,500.00.

Petitioner seeks to declare the deed transfer invalid based on the grounds of incompetency and undue influence.

A non jury trial was held in July, 2007 and post trial memorandums of law were submitted thereafter.

Petitioner claims the following:

that the decedent was incompetent and that at the trial petitioner made out a prima facie case of undue influence;

that she proved that a confidential relationship existed between David Knowles and Mildred Strand and therefore the burden of proof shifted to the respondent to show that decedent was competent and that no undue influence existed;

that the proof shows that decedent was 95 years old, in frail health, totally dependent on the respondent to conduct her financial affairs and that the respondent was responsible for all aspects of decedent's life including hiring aides, buying food and medicine;

that respondent was completely responsible for the deed transfer;

and that if incompetency and undue influence are proven, the deed is void and ipso facto the Ameriquest and Citibank mortgages are void against the estate.

Respondent, David Knowles, claims the following:

that petitioner did not make out a prima facie case;

that there was a confidential relationship between the grandson and the grandmother;

that the decedent was not unduly influenced or incompetent at the time of the execution of the deed and transfer;

and that if petitioner did establish a prima facie case or undue influence, it was rebutted by clear and convincing evidence.

Respondents, Citibank and Ameriquest claim the following:

that even if the petitioner proves incompetency or undue influence, this would make the deed voidable and not void;

and that although a turnover proceeding was brought in this court alleging that decedent was incompetent and that the deed transfer was a result of undue influence, no notice of pendency was filed. Accordingly, the respondent's claim that they are bona fide encumbrancers for value was without notice and therefore their mortgages are valid.

At trial, David Knowles testified that Mildred Strand was both his grandmother and godmother. His mother was the decedent's only child and they lived in the grandmother's house together for thirty years. He moved out of the house into an apartment when his parents moved to Florida. After moving, he visited his grandmother in an apartment two blocks away from her home and visited her approximately twice a week. She called him when problems arose or when she needed help with a tenant who lived in the basement apartment.

Mr. Knowles further testified that around 1995-1996, he became aware of his grandmother's need for help managing her affairs. An aide was discovered to have forged the decedent's signature on checks and this necessitated his involvement in her financial matters. At this point, he arranged for her social security checks of $917.00 to be directly deposited into his own account. He collected $775.00 in rental income. He paid all of decedent's bills, was responsible for her home health care aides, dealing with the doctors, agencies, stocking the house with food, picking up her medications, and visiting her in the hospital. Respondent testified that to the best of his ability, he took care of all his grandmother's needs; financial, medical, emotional and physical. The decedent's condition continued to deteriorate and no other member of the decedent's family offered to take the responsibility for her care.

During the last three months of the decedent's life, she was admitted to the hospital twice and was discharged with medicare authorizing home health care for thirty days until March 31, 1999. The amount received from the social security checks and rent was not sufficient to pay decedent's bills. After discussing the situation with the respondent, the decedent directed him to make arrangements to obtain a mortgage on the house. The purpose of the mortgage was to pay for the mounting medical expenses. A mortgage of $20,000.00 with Ameriquest was eventually executed by the decedent on March 10, 1999.

Respondent, David Knowles testified that for several years prior to the date the deed was transferred and on the actual date his grandmother executed the deed, he discussed ownership of the house with her. He made a promise to his grandmother that he would never sell the house and never "get rid of the upstairs tenant". Thereafter, on April 3, 1999, the deed was transferred from the decedent to the decedent and the respondent, David Knowles jointly with rights of survivorship.

David Knowles further testified that a lawyer drew up a deed and arrangements were made for the notary to attend and acknowledge decedent's signature on the deed. On the day of the execution of the deed transferring the premises, Mr. Sussman, the notary appeared. The respondent woke up the decedent, whereupon she sat herself up in bed and signed all the documents. He further testified that he said to the decedent, "Ma sign this". Decedent did not say a word during this procedure. She signed all of the documents and handed them back to the notary, Mr. Sussman, page by page.

On consent of all parties, the deposition of Veronica Devlin was introduced into evidence in lieu of her appearance. Ms. Devlin, decedent's niece, who is the beneficiary of the bulk of decedent's estate testified at her deposition that she was asked in 1995 to visit the decedent on weekends. She told the decedent that she would not do so as she had just finished taking care of her mother and would not accept the additional responsibility. She further testified that without notice she abruptly stopped visiting or calling the decedent because she felt that the decedent was angry with her because she declined to help her. She also stated that as of 1995, she had no involvement at all in decedent's affairs and did not know who was taking care of the decedent or the decedent's condition.

Janet Knowles, respondent's sister in law, testified that her husband, who was also decedent's grandson, would not accept the responsibility of taking care of his grandmother. She stated that she visited the decedent twice a month with her grandchild and that in the period before death, the decedent was confused and could not recognize her.

Irwin Sussman, the notary who notarized the deed and the required ancillary documents for the transfer, testified that on April 3, 1999, he was present at the decedent's home. He stated that when he arrived, David Knowles woke his grandmother to sign the documents. Mr. Sussman testified that David Knowles told his grandmother, "Mom, please sign the papers" which she did. Upon request, the decedent gave her identification to the notary and then signed her name by herself. Both the decedent, as transferor, and David Knowles, as transferee, then signed the smoke alarm affidavit and the decedent also signed the Real Property Transfer form which Mr. Sussman then notarized. Mr. Sussman, further testified that at the time of the deed signing, Ms. Strand sat up on her own, signed each document on her own, that she handed each document back to him, that she was not forced to do that but that she did it voluntarily. He did not see any undue influence on the part of the respondent.

The hospital and home care records from late 1998 through March 31, 1999, describe the decedent as suffering from Alzheimer's, dementia, and that the decedent was uncommunicative. The hospital record also had notions that sometimes she was alert and oriented and other notions that sometimes she was confused.

Dr. Allan Kaiser, the personal physician of the decedent since 1975, testified that he had no recollection of the decedent's mental capacity in any respect in the last six months of her life, even though he was her physician in the hospital. He testified that she was admitted into the hospital on December 19, 1998, for congestive heart failure, aspiration, pneumonia, heart failure and stayed in the hospital for eight to ten days. She was too to communicate well. When he asked her to open her eyes, she did and when asked to lift her hand, she did. Upon discharge, she was sent home and confined to bed. Two months later, February 14, 1999, she was again admitted to the hospital for aspiration, pneumonia, anemia, hypertension, had a fever and an ulcer. She remained there for approximately ten days. He further testified that Mildred Strand responded to his questions when asked how she was feeling when she came into the hospital. Dr. Kaiser testified that she improved in the hospital and upon discharge, she was sometime alert, but she was bedridden and at times appeared to have diminished mental capacity. She was unable to function without the assistance of an aide. He further testified that he did not perform any mental tests. In March and April of 1999, he had conversations with the decedent but that her responses were not clear. Dr. Kaiser averred that in his opinion Mildred Strand diminished cognitive ability to deal with the everyday functions of life. This was based on his independent recollection having lost his office records. He did not recall her intellectual abilities during the last six months of her life. He stated that he spoke directly to Mildred Strand but did not recall her responses.

In his deposition taken prior to trial, Dr. Kaiser stated that in the last six months of the decedent's life, he did not recall her exhibiting inappropriate behavior. She was hard of hearing and sometimes she did not hear the doctors in the hospital which possibly led to her being labeled as "confused."

"A party's competence is presumed and the party asserting incapacity bears the burden or proving incompetence (see, Matter of Gebauer, 79 Misc 2d 715). Persons suffering from a disease such as Alzheimer's are not presumed incompetent and may execute a valid deed (see, 43 NY Jur 2d, Deeds ?23, at 208; see also Matter of Betz, 63 AD2d 769). Furthermore, it must be shown that, because of the affliction, the person was incompetent at the time of the transaction (see, Matter of Bush, 85 AD2d 887). It has been stated that the inquiry is whether the person's mind was so affected as to render him wholly and absolutely incompetent to comprehend and understand the nature of the transaction" (Aldrich v Bailey, 135 NY 85; Feiden v. Feiden, 151 A.D.2d 889, 890 [1989]. In this case, the medical evidence as to the decedent's medical capabilities is inconclusive. The hospital and home care records contain notations of Alzheimer's, dementia, confusion, and non communication although other records contain notations of being alert and oriented.

It is not unusual for a patient who is hard of hearing, with many physical ailments and in a strange environment, to be confused and disoriented. These notions are not conclusive that the decedent was incompetent at the time that the deed was executed.

More significantly, Dr Kaiser, her personal physician, who treated the decedent until her death, never opined that the decedent was incompetent to execute the deed.

It has been held that the mere fact that an Article 81 guardian was appointed to a decedent lacked capacity. (Will of Colby, 240 AD2d 338 [1st Dept 1997]). The mere fact that decedent suffered from Alzheimer's does not necessarily preclude testamentary capacity, (Estate of Woode, NYLJ, Nov 6, 2002, at 18, col 3).

The court finds that petitioner has failed to prove that the decedent lacked the requisite mental capacity when she transferred the deed to the respondent. In view of the above, the decedent, Mildred Strand is presumed to have been competent at the time of the execution of the deed.

The burden of proving undue influence rests with the party asserting it (Matter of Connelly, 193 AD2d 602 [1993]). To establish a claim for undue influence it must be shown that the influence exercised amounted to a moral coercion which restrained independent action and destroyed free agency or restrained the testator to do that which was against his free will and desire (Matter of Walther, 6 NY2d 49 [1949]). The transfer must not be prompting of affection, the desire of gratifying the wishes of another, the ties of attachment arising from consanguinity, or the memory of kind acts and friendly offices, but a coercion produced by importunity or by a silent resistless power which the strong will often exercise over the weak and infirm, and which could not be resisted (Ibid.).

In a will contest, the Objectant must prove (1) the existence and exercise of undue influence; (2) the effective operation of undue influence as to subvert the mind of the testator at the time of the execution of the will; and (3) the execution of a will that, but for undue influence, would not have occurred. The three elements are motive, opportunity and the exercise of the influence (Matter of Walther, supra).

However, if there is a confidential relationship, the burden of proof shifts to the donee to prove the lack of undue influence. The Court of Appeals held in the case of Gordon v. Bialystoker Center & Bikur Cholim, Inc., (45 NY2D 692, 698-699 [1978]) that under the doctrine of constructive fraud, where a confidential or fiduciary relationship exists between the decedent-donor and the defendant-donee so that they do not act from positions of equality, only slight evidence is required to shift to the defendant-donee the burden of proving by clear and satisfactory evidence that the transfer of the claimed gift was freely and voluntarily made and that it did not acquire the decedent's property by fraud, undue influence, or coercion.

However, a confidential relationship between family members without more does not give rise to an inference of undue influence. The Court of Appeals in Gordon v. Bialystoker Center & Bikur Cholim, Inc. (45 NY2d 692) held that an inference of undue influence arose from the confidential relationship between the testatrix and the petitioner which did not require an explanation of the bequest to the petitioner since "[the] sense of family duty is inexplicably intertwined in this relationship which under the circumstances, counterbalances any contrary legal presumption" (Matter of Swain, 125 AD2d 574 [2nd Dept. 1986] quoting Matter of Walther, supra., at p 56).

However, where a familial relationship is coupled with other factors such as where the doctor has a physical or mental weakness that makes her more susceptible to undue influence or where the donee is the guiding force at the transfer of the deed or when the donee retained the attorney and decedent never spoke to the attorney or where the decedent was isolated or where the decedent changed the testamentary plan substantially from her prior will, the court may find a confidential relationship despite the familial ties and the burden of proof shifts to the donee to prove the lack of undue influence. (Matter of Connelly, 193 AD2d 602 [2nd Dept 1993]; NY J§2d Decedent's Estates 554; Feiden v Feiden, 151 AD 2d 889 [1989]).

After reviewing all of the evidence, this court finds the following:

Petitioner has proven that respondent had a confidential relationship with the decedent. The decedent was elderly and infirm; respondent was responsible for all of the decedent's affairs, financial, emotional and physical. There was a substantial change from the will, in that the prior will left the bulk of the estate to the petitioner and the inter vivos transfer of the main asset of the estate to the respondent-grandson substantially changed the disposition of the decedent's assets. Furthermore respondent hired the attorney, decedent did not speak to the attorney and respondent was present and supervised the transfer.

Based upon all of the above facts, it is clear that although there was no direct proof of undue influence, it appears that petitioner has made a prima facie case of undue influence through circumstantial evidence. The burden then shifted to the respondent to explain by clear and convincing evidence why the above listed factors did not lead inescapably to a conclusion of undue influence.

Respondent has amply met the burden of proving lack of undue influence. Respondent is a godson and a grandchild of the decedent who lived with her for thirty years and who took care of all the decedent's affairs for many years prior to her death. Despite the fact that he recently got married and was difficult for him to do so, respondent took care of all of decedent's needs, picking up medicine, stocking the house with food, collecting rental income, paying all of her bills, dealing with the home health care agencies, doctors, applying for home care, and visiting her in the hospital.

Taking care of someone who is elderly, sick and infirm is accepting a substantial responsibility. Shouldering such an undertaking alone is a huge burden. Respondent has done an admirable job of taking care of the decedent under tough circumstances.

Contrast this action with that of the petitioner, Veronica Devlin. When the decedent contacted her that she was in need of help and requested that she take care of her on the weekends, she refused. At that point, sensing that her aunt, the decedent was angry with her, petitioner abruptly cut off all relations with the decedent for at least three years until decedent's death. Petitioner never inquired as to her aunt's welfare.

There is no direct evidence of undue influence. All of the above factors only when inadequately explained, lead to an inference that undue influence may have been used to change the disposition of decedent's assets from Veronica Devlin, to David Knowles, during her lifetime. The court notes that using petitioner's logic, the respondent could have received the transfer of the entire ownership of the premises in his name alone but did not. Furthermore, the amount of the mortgage does not indicate a pilfering of the decedent's assets. The Court of Appeals has long held that in order to find undue influence, it must appear that the inference of undue influence is the only one that could fairly and reasonably be drawn from the facts proved and that any other explanation is fairly and reasonably excluded, (Matter of Walther, supra).

In this case, respondent has met his burden by clear and convincing evidence that the transfer was made out of familiar ties and affection and has given a potent reason as to why he was favored over the petitioner, conclusively rebutting the circumstantial inference of undue influence.

Petitioner's other claims are similarly without merit. If a deed is invalidated on account of incapacity or undue influence, the deed is not void but only voidable. It remains in full force and effect until the transferor has it declared void, (NY Jur 2d, Infants and Other Persons Under Disability §111).

Petitioner further claimed that the title did not pass because the acknowledgment was defective in that it was not orally acknowledged and that the acknowledgement preceded the later date that was inserted into the deed after the acknowledgement was notarized. The insertion of a date in the deed subsequent to the date of the acknowledgment, does not render the deed invalid. Even acknowledgment of the deed prior to the actual date of execution does not invalidate the deed, (Buckley v Chevron, 149 Misc 2d 476; Warren Weed NY Real Property 37:20).

An acknowledgement encompasses two critical elements, namely the oral declaration of the signor of the document and the written certificate or acknowledgement endorsed by one of a number of authorized public officers attesting to the oral declaration (Matisoff v Dobi, 90 NY2d 127[1997]; Matter of Henkin, 150 AD2d 447). An instrument is not duly acknowledged unless both phases have been accomplished, (NY Jur 2d, Acknowledgment, §12).

Real Property Law §303 states what requisites are needed for an acknowledgment. "An acknowledgement must not be taken by any officer unless he knows or has satisfactory evidence, that the person making is the person described in and who executed such instrument". That section does not specify the format that an oral acknowledgment must take.

The purpose of an acknowledgement is to verify to a "person to whom the paper is to be presented who may not otherwise know the genuineness of the signature attached or affixed to the paper. Thus, recording officers must have proof of the genuineness of deed or other instruments evidencing conveyances of real property before they can record them in their offices, and this proof is obtained by means of the certificate of acknowledgment. While an acknowledgment is an authentication or verification of the signature of a person to a particular instrument, it does not extend to the instrument itself. It establishes merely that the instrument was duly signed and proves the identity of the person whose name appears on the instrument and that that person signed it" (NY Jur. 2d, Acknowledgment 2).

A deaf mute or a stroke victim, who is unable to verbally acknowledge his or her signature, may do so through actions which show their assent. These assents are the equivalent of an oral acknowledgment. The law is not to be applied rigidly if the person makes the acknowledgment is asked for identification which identifies to the notary the identity of the person signing and actually signs the document in the notary's presence. He is stating non verbally through actions his identity. Such acts or other indicia of assent are the equivalent of oral acknowledgment. "The efficacy of the acknowledgment should not be nullified by mere omission of the signor to orally state she signed the instrument. Form is not preferred over substance, nor should ceremonial rituals displace common sense. Where the circumstances surrounding the taking of the acknowledgment adequately disclose compliance with the statutory requirements, there is no reason why the acknowledgment of the signor may not take the form of... conduct that expressly or impliedly signifies the signor's assent." (Matter of Cerrito, NYLJ, June 12, 1995, at 36, col 6; Matter of Kazuba, 9 Misc 3d 1116(A) [Nassau County 2005].

Furthermore, counsel for the petitioner is in error when he claimed that a deed without a proper acknowledgment is void. An acknowledged deed is valid between the parties their heirs (Strough v Wilder, 119 NY 530 [1890]; NY Jur 2d Acknowledgments §20).

Accordingly, the action against all respondents is dismissed. The petition to turnover property located at 111 East 3rd Street, Brooklyn, New York to the Estate of Mildred Strand is denied.

This constitutes the decision and order of the court.

Dated: Brooklyn, New York

February 7, 2007