Connie Eldridge v. Deborah H. Steverson
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2007-CA-00384-COA
IN THE MATTER OF THE ESTATE OF
LUCILLE H. HART, DECEASED: CONNIE
ELDRIDGE AND POLLY WEAVER
APPELLANTS
v.
DEBORAH H. STEVERSON
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANTS:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
APPELLEE
10/30/2006
HON. WILLIAM JOSEPH LUTZ
MADISON COUNTY CHANCERY COURT
WILLIAM CHARLES BELL
DONALD A. MCGRAW
CIVIL - WILLS, TRUSTS, AND ESTATES
PETITION CONTESTING CERTAIN
TRANSFERS AND GIFTS DENIED
AFFIRMED: 10/27/2009
BEFORE KING, C.J., GRIFFIS AND MAXWELL, JJ.
KING, C.J., FOR THE COURT:
¶1.
This appeal arises from a judgment of the Madison County Chancery Court in favor
of Deborah Steverson against her two sisters, Connie Eldridge and Polly Weaver, who filed
a complaint seeking an accounting of the assets of the parties’ deceased mother, Lucille Hart.
The chancellor denied the objection to the final accounting and denied the claims of heirs.
The Appellants 1 filed a motion for a new trial and other relief. The chancellor denied the
motion and directed Steverson to file and serve a final accounting and to close the estate on
or before June 30, 2007.
Aggrieved, the Appellants appeal and argue the following
assignments of error: (1) the chancellor erred in analyzing the contested transfers and
transactions using an undue-influence analysis; (2) the chancellor erred in allowing the
contested transfers and transactions to stand; (3) the chancellor erred in ruling that Hart had
a full understanding of her finances and affairs; and (4) the chancellor erred by not ordering
Steverson to pay the charges incurred for services of the court-appointed expert. Finding no
error, we affirm.
FACTS
¶2.
When Hart retired from the restaurant business in the early 1990s, she owed a
substantial amount of money to the Internal Revenue Service. At the time, Hart’s only
source of income was approximately $565 per month social security benefits. In 1993, in an
effort to alleviate her financial woes and supplement her income, Hart made an agreement
with Steverson to secure a joint loan in the amount of $65,000. In exchange for assisting
Hart to secure the loan and to make it easier for Steverson to make the monthly loan payment
of $625, Hart gave Steverson approximately $32,000. Steverson used these funds to pay off
her personal debt, which would in turn make it easier for her to meet the monthly loan
obligation. Hart used some of her real estate, specifically the School Street property, as
security for the loan. Hart was negotiating a sale of the School Street property to the City
1
Unless the distinction needs to be made, Eldridge and Weaver will be collectively
referred to as the Appellants throughout this opinion.
2
of Ridgeland; therefore, she anticipated that the need for the loan would be short term. The
record indicates that during the negotiations, Hart gave Steverson a durable power of attorney
on June 25, 1997.
¶3.
The sale of the property did not occur as expeditiously as Hart and Steverson had
anticipated. As a result, Hart and Steverson refinanced the 1993 loan in 1998 for $75,000.
Approximately $54,327 from the 1998 loan was used to pay off the original loan, and
$20,672 was given to Steverson, who again would make the monthly payment on the loan.
That monthly loan payment was $787.
¶4.
In December 2000, Hart sold the School Street property to the City of Ridgeland for
approximately $340,000. The proceeds from the land sale were disbursed as follows:
$71,823 was used to pay off the 1998 loan; $10,000 was used to pay attorney’s fees; $5,000
was used to pay Steverson’s credit card debt which was used to pay appraisal fees during the
negotiations for purchase of the School Street property; and $100,000 and $150,000,
respectively, were placed in two new bank accounts, which were opened jointly in the names
of Hart and Steverson.
¶5.
Also, in December 2000, from proceeds from the sale of the School Street property,
Hart gave $10,000 to each of her daughters and $10,000 to her daughters’ husbands or
boyfriend. In January 2001, Hart gave Weaver an additional $10,000 to assist with her plans
to build a home. Hart also offered to give Eldridge an additional $10,000 at that time, but
she refused the gift. When Eldridge refused the gift, Hart gave $5,000 to each of Eldridge’s
two children.
¶6.
On February 24, 2001, Hart executed a will naming her daughters, Steverson,
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Eldridge, and Weaver as the beneficiaries. Hart’s real and personal property was to be
disbursed as follows: the house and property at 141 Meadowdale Drive, Madison,
Mississippi was devised equally to Eldridge and Weaver; the house and property at 694 Old
Rice Road, Madison, Mississippi was devised equally to Steverson and her husband Billy;
and the remainder of the estate, real and personal, was devised and bequeathed equally to
Steverson, Eldridge, and Weaver. Steverson was named as the executrix.
¶7.
In March 2001,2 Hart agreed to purchase Steverson’s home, which was the
Meadowdale property, to use as rental property, and Steverson would get one acre of Hart’s
property located at 289 Woods Road, Madison, Mississippi to build a new home. The
purchase of this property was to be an investment for Hart. Hart purchased the property from
Steverson for $90,000, but no consideration was given for the one acre Steverson received
to build her home.
¶8.
On June 29, 2002, Hart died. On July 18, 2002, Steverson filed a petition to probate
Hart’s will. The will was admitted to probate on July 18, 2002. On November 6, 2002, the
Appellants filed a complaint which alleged that Steverson misappropriated and mismanaged
Hart’s assets and requested an accounting from the date Hart gave Steverson power of
attorney until her death. The Appellants also requested that the chancellor order Hart’s estate
to be kept open until a full accounting had been conducted.
¶9.
On December 3, 2002, Steverson filed her first and final accounting of all receipts and
2
The agreement for purchase of the Meadowdale Drive home was reached prior to
Hart’s execution of her will on February 24, 2001; however, the warranty deed was not
executed until March 20, 2001.
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disbursements made during the course of her administration of Hart’s estate. On March 6,
2003, the Appellants filed an objection to the accounting submitted by Steverson. On April
14, 2004, the chancellor directed Steverson to provide a complete accounting of her actions
under the power of attorney from Hart from when it was granted until the time of Hart’s
death. In addition, the chancellor appointed the accounting firm of Koerber Turner PLLC
as an independent auditor to conduct a forensic investigation of Hart’s finances prior to and
after her death. At the conclusion of trial on July 26, 2006, the chancellor took the case
under advisement. Subsequently, on October 30, 2006, the chancellor denied the Appellants’
objections to the final accounting and their contests of the claims of heirs. The Appellants
filed a motion for a new trial and other relief, which was denied on June 7, 2007.
STANDARD OF REVIEW
¶10.
“We cannot interfere with or disturb a chancellor's findings of fact unless those
findings are manifestly wrong, clearly erroneous, or an erroneous legal standard was
applied.” In re Estate of Ladner v. Ladner, 909 So. 2d 1051, 1054 (¶6) (Miss. 2004) (internal
quotations omitted). “The standard of review for questions of law is de novo.” Id.
ANALYSIS
I. Whether the chancellor erred in analyzing the contested transfers and
transactions using an undue-influence analysis.
II. Whether the chancellor erred in allowing the contested transfers and
transactions to stand.
III. Whether the chancellor erred in ruling that Hart had a full
understanding of her finances and affairs.
¶11.
Because these three issues involve the validity of the contested transfers and
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transactions, they will be discussed together. The contested transfers and transactions in this
case are as follows: (1) the $48,338.20 to pay off Steverson’s mortgage; (2) three $20,000
gifts transferred to Steverson dated April 2001, June 2001, and January 2002; (3) several
cash withdrawals between December 2000 and January 2002, totaling $4,330 from an
account bearing Hart’s and Steverson’s names with no known purpose; and (4) two transfers
totaling $7,700, to Steverson’s personal account in December 2002 as reimbursements for
Hart’s funeral expenses. The parties acknowledge that Steverson had a fiduciary and
confidential relationship with Hart. The Appellants argue that these contested transactions
violated that fiduciary and confidential relationship.
¶12.
“The law in [Mississippi] on fiduciary or confidential relationships and undue
influence is well settled.” Howell v. May, 983 So. 2d 313, 317 (¶14) (Miss. Ct. App. 2007).
“Its application has been made to both inter vivos and testamentary transactions.” Id.
Determining whether an inter vivos gift is valid, is a two-step process. Id. at 318 (¶14). The
first step, involves the plaintiff seeking to set aside the inter vivos gift and to demonstrate by
clear and convincing evidence that a confidential relationship existed between the grantor
and grantee. Id. In this case, the parties stipulated that a fiduciary and confidential
relationship existed between Hart and Steverson because of the close relationship between
Steverson and Hart and the assistance Steverson provided Hart in meeting her personal and
financial needs. “Where a confidential relationship exists, there is a presumption of undue
influence concerning an inter vivos gift.” In re Estate of Reid v. Pluskatt, 825 So. 2d 1, 5
(¶13) (Miss. 2002). “Such gifts are presumed invalid.” Id. “Once a confidential relationship
is found, the burden shifts to the beneficiary to disprove the presumption of undue influence
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by clear and convincing evidence.” Id. at (¶14). To overcome the presumption of undue
influence, the proponent(s) must show the following: “(1) good faith on the part of the
grantee/beneficiary; (2) grantor’s/testator’s full knowledge and deliberation of [her] actions
and their consequences; and (3) independent consent and action by the grantor/testator.”
Wright v. Roberts, 797 So. 2d 992, 999 (¶23) (Miss. 2001).
¶13.
The Appellants argue that the chancellor failed to use the proper legal analysis in
determining whether the transactions were the product of undue influence, thus, allowing the
contested transfers and transactions of Hart’s assets to stand. The Appellants assert that the
chancellor stated that the burden rested on Steverson to prove by clear and convincing
evidence that the gifts and transfers of money to Steverson and her husband, Billy, were not
a product of undue influence. However, the Appellants contend that the analysis should have
begun with the presumption that any transfers or gifts are void. The Appellants contend that
the chancellor’s analysis applies to testamentary gifts and deeds rather than inter vivos gifts.
Additionally, the Appellants claim that Hart did not have a full understanding of her finances
and affairs; instead, she was under the undue influence of Steverson when certain gifts and
transfers of money occurred.
A. Good Faith
¶14.
There are five factors to consider when determining whether the grantee/beneficiary
acted in good faith:
(a) the determination of the identity of the initiating party in seeking
preparation of the instrument, (b) the place of the execution of the instrument
and in whose presence, (c) what consideration and fee were paid, if any, and
(d) by whom paid, and (e) the secrecy or openness given the execution of an
instrument.
7
In re Estate of Holmes v. Holmes-Price, 961 So. 2d 674, 682 (¶25) (Miss. 2007).
¶15.
The record indicates that Hart’s decision to purchase the Meadowdale property and
use it as rental property was the result of a conversation between Hart and Steverson. The
purchase was viewed as an investment for Hart. Steverson testified that a discussion she had
with Hart about the good market price Steverson’s neighbors had received from the sale of
their home resulted in Hart’s idea that she would purchase Steverson’s home and use it as
rental property.
Tammy Smith, Hart’s granddaughter, testified that Hart purchased
Steverson’s home as an investment. Smith stated that Hart wanted to use the Meadowdale
property as rental property and use the rental income for paying her living expenses and
giving gifts to her grandchildren. Donald McCraw, Steverson’s attorney, testified that
Steverson contacted him to assist with the paperwork for the sale of the Meadowdale
property. McCraw also stated that Hart consulted Attorney John Toney, who had assisted
Hart with the sale of the School Street property, regarding the purchase. McCraw testified
that the day the deed was executed he had a thorough conversation with all the parties
involved in the purchase and sale of the property to make certain that the parties understood
the transaction. McCraw stated that Hart was happy about the purchase. McCraw testified
that Hart and Steverson had agreed that no money would be exchanged from the sale, but that
Steverson would remove the funds from the proceeds from the sale of the School Street
property account as needed. Steverson explained the funds from the sale of the Meadowdale
property to Hart was expended in the following manner: $48,388.20 was used to pay off the
first and second mortgages; $1,600 was used for house plans; $50 was used for a sewer septic
system permit; $4,119 was used for site preparation to build Steverson’s new home;
8
$2,412.80 was used for builders’ fees for construction; another $1,500 was used for builders’
fees for construction; and $20,000 was transferred to Steverson’s personal bank account.
The purchase of the Meadowdale property was transacted openly. Eldridge, Weaver, and
Smith testified that Hart informed them that she was buying the house on Meadowdale.
¶16.
The record indicates that Hart initiated the three $20,000 gifts transferred to Steverson
on April 2001, June 2001, and January 2002. Steverson testified that Hart’s original plan in
selling the School Street property was to give each of her daughters, Steverson, Eldridge, and
Weaver $10,000 a year until all the money was gone. These transactions did not occur
because of a disagreement among Hart, Eldridge, and Weaver. Eldridge testified that there
was a disagreement between her and Hart, but it was resolved prior to Hart’s death. Smith
testified that each daughter and her spouse/boyfriend received $10,000 in December 2000,
and Weaver received an additional $10,000 after Christmas because Weaver was building
a house. Smith stated that Hart wanted to make it equal, so she planned to give Steverson
and Eldridge an additional $10,000. Smith testified that Hart informed her that she was
giving Steverson and Billy an additional $10,000 each. Smith stated that Eldridge refused
to take the additional $10,000, so Hart divided it between Smith and her brother. Smith also
stated that she does not recall Hart giving Eldridge or Weaver any additional money.
Steverson stated that one $20,000 payment was part of the $90,000 from the sale of the house
in order to pay for contractual services and the other two $20,000 were gifts from the sale of
the School Street property.
¶17.
Steverson stated that the several cash withdrawals between December 2000 and
January 2002, in the amount of $4,330 from an account bearing Hart’s and Steverson’s
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names, were expended on Hart’s daily living expenditures and two transfers to Steverson’s
personal account in the amount of $7,700 in December 2002 were reimbursements to
Steverson for Hart’s funeral expenses and headstone. Steverson testified that $7,864 was
spent on Hart’s funeral and $2,016.50 was spent on a headstone for Hart’s grave. Steverson
claimed that she paid for Hart’s funeral expenses then reimbursed herself later out of one of
Hart’s accounts. The record does indicate that Steverson purchased a cashier’s check in the
amount of $7,864 payable to Wright & Ferguson Funeral Home. In addition, Steverson
claimed that the cash withdrawals were spent on food, home improvements, medicine,
utilities, medical bills, credit card payments, home improvement supplies, and Christmas
gifts. Although Steverson presented no receipts showing how the funds were specifically
spent, Smith testified that Hart preferred to pay individuals in cash and would often remind
Steverson to get money to pay individuals who were performing home improvement projects
at her home. Hart also only liked to conduct her affairs in cash; she paid for medicine and
food in cash, and she gave cash gifts. Steverson provided an itemization of those expenses.
Hart’s beneficiaries and other family members were aware of Hart’s generosity in sharing
her money and the proceeds from the sale of her real property. Moreover, the record
indicates that Hart relied on Steverson to assist her in transacting self-initiated personal
activities. The Appellants provided no evidence to indicate that Steverson did not act in good
faith as to the sale of Steverson’s home and the other contested transactions.
B. Full Knowledge and Deliberations
¶18.
The following factors are considered in determining whether the grantor had full
knowledge and deliberation of her actions and their consequences:
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(a) [her] awareness of [her] total assets and their general value, (b) an
understanding by [her] of the persons who would be the natural inheritors of
[her] bounty under the laws of descent and distribution or under a prior will
and how the proposed change would legally affect that prior will or natural
distribution, (c) whether non-relative beneficiaries would be excluded or
included and, (d) knowledge of who controls [her] finances and business and
by what method, and if controlled by another, how dependent is the
grantor/testator on [her] and how susceptible to [her] influence.
Holmes-Price, 961 So. 2d at 684 (¶39).
¶19.
The record indicates that Hart had full knowledge of her assets, her natural inheritors
and who controlled her finances. Weaver testified that it was not out of the ordinary for one
of Hart’s daughters to write a check for Hart in order to transact Hart’s personal business.
Steverson, Weaver, Eldridge, and Smith all testified that Hart possessed sharp mental
capabilities until a few days prior to her death. Weaver stated that Hart knew that there was
enough money in her accounts to give a gift of $20,000 in December 2000 and a gift of
$10,000 in January 2001.
¶20.
Smith testified that Hart relied on Steverson to manage her finances and that Hart was
aware that Steverson mainly managed her bank accounts via the Internet. Smith recalls not
only trying to assist Hart in understanding the Internet banking system, but also she helped
Steverson set up electronic banking for Hart. Steverson testified that she and Hart would
reconcile the bank statements. Smith stated that Hart discussed her finances at the house and
was aware of how much money she had received from the sale of the School Street property.
Smith testified that she would often assist Hart by taking Hart to purchase items or run
errands for Hart. Smith stated that although Hart preferred to use cash, on occasion Hart
would use a credit card or give her a credit card to purchase items or pick up her medication
11
from the drugstore.
¶21.
The record indicates that Hart had full knowledge of her finances and business.
Witness testimony indicates that Hart may have needed some assistance with writing checks
for her daily needs, paying for home improvements and repairs, giving gifts, withdrawing
funds, and balancing her accounts; and she would solicit the help of Steverson, Smith,
Weaver, and Eldridge to perform those tasks. However, the evidence clearly indicates that
Hart was fully aware of her assets and her heirs. The Appellants offered no evidence to
dispute that Hart was fully aware of her assets and heirs.
C. Independent Consent
¶22.
The last prong in determining whether Steverson overcame the presumption of undue
influence by clear and convincing evidence is whether Hart exhibited independent consent
and action. Steverson must prove that Hart sought “advice of (a) a competent person, (b)
disconnected from the grantee, and (c) devoted wholly to the grantor/testator’s interest.”
Mullins v. Ratcliff, 515 So. 2d 1183, 1193 (Miss. 1987).
¶23.
Testimonial evidence indicates that Hart was a competent person who was fully aware
of her assets. Smith and Steverson testified that the bank transfers and transactions were
performed under Hart’s direction. The monetary gifts to Hart’s daughters and their husbands
and boyfriend, payments for home improvements and repairs, and inter vivos gifts to others
were given without any direction from another. Hart purchased the Meadowdale property
as an investment. The record indicates that the purchase of the Meadowdale property was
the result of a discussion between Hart and Steverson. Although McCraw, who had done
legal work for both Steverson and Hart, was instrumental in the sale and purchase of the
12
Meadowdale property, Hart also consulted Attorney Toney, a non-interested person,
regarding her investment.
¶24.
A summary of Hart’s bank records indicates how the proceeds from the sale of the
School Street property were disbursed. Although the accounting of the transactions and
transfers presented to the chancellor did not contain receipts indicating the specifics of how
the funds were spent, the evidence indicates that Hart acted independently. Smith testified
that Hart preferred to pay her bills in cash and that she was aware of her actions in making
the gifts she gave. There is no evidence in the record to dispute this testimony.
¶25.
Evidence reveals that all possible beneficiaries of Hart were aware of the inter vivos
gifts to her children and their spouses and boyfriend and grandchildren, and that Hart
initiated these gifts without any direction. Hart was aware of her assets and relied on
Steverson to assist her in conducting her financial transactions. The record supports the
chancellor’s finding that Steverson overcame the presumption of undue influence by clear
and convincing evidence. Thus, we find that the chancellor’s decision was supported by
substantial credible evidence. Therefore, this issue is without merit.
IV. Whether the chancellor erred by not ordering Steverson to pay the
charges incurred for the services of the court-appointed expert.
¶26.
Jim Koerber, a certified public accountant, was appointed as an expert by the trial
court to gather documentation relating to Hart’s assets from June 25, 1997, to June 29, 2002,
and then report his findings to the chancery court regarding the contested transactions. The
Appellants assert that they paid Koerber’s retainer fee of $5,000. The Appellants argue that
the chancellor abused his discretion and committed manifest error by not directing Steverson
13
to pay any and all charges incurred by and for Koerber.
¶27.
Mississippi Rule of Evidence 706(b) provides that “compensation [for the court-
appointed expert] shall be paid by the parties in such proportion and at such time as the court
directs, and thereafter charged in like manner as other costs.” “The assessment of court costs
is within a chancellor’s sound discretion; however, as a general rule, the costs of court should
be assessed against the losing party.” Leaf River Forest Prods Inc, v. Rowell, 819 So. 2d
1281, 1285 (¶15) (Miss. Ct. App. 2002). On May 23, 2005, the Appellants filed the motion
to have an independent auditor appointed by the chancery court. In their motion, the
Appellants requested that the auditor be compensated pursuant to Rule 706. Thus, the
Appellants were aware that the chancery court had the authority to direct them to pay the
expenses of the independent auditor. Accordingly, we find that the chancellor did not err in
ordering the Appellants to pay all the incurred charges by the court-appointed auditor.
Therefore, this issue is without merit.
CONCLUSION
¶28.
There is sufficient credible evidence to support the chancellor’s finding that Steverson
rebutted the presumption of undue influence regarding transfers and transactions performed
by Steverson as to Hart’s assets. We find that the chancellor did not abuse his discretion by
failing to direct Steverson to pay for charges incurred for the services of the court-appointed
auditor requested by the Appellants. Therefore, we affirm the chancellor’s judgment.
¶29. THE JUDGMENT OF THE CHANCERY COURT OF MADISON COUNTY
IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANTS.
LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE, ROBERTS,
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CARLTON AND MAXWELL, JJ., CONCUR.
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