On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County.
Approved for Publication March 30, 1995.
Before Judges Shebell, Wallace and Kleiner. The opinion of the court was delivered by Wallace, J.A.D.
The opinion of the court was delivered by: Wallace
Defendants Stanley Stanton and Edward Stanton appeal from a bench trial verdict in favor of plaintiff Paula De Pontrex Oachs ordering Stanley to reconvey certain property to plaintiff, and from an order denying their motions for reconsideration. Although submitted in separate briefs, defendants essentially contend that the trial court misapplied the Rules of Professional Conduct; that a fully executed gift cannot be set aside; that after finding at trial that plaintiff was not dominated by Stanley or Edward, the trial court cannot base its denial of Stanley's motion for reconsideration on a contradictory finding of dependence; and the trial court's judgment was the result of bias, prejudice and lack of impartiality. We reverse and remand.
The evidence developed at trial reveals the following pertinent facts. Plaintiff was ninety-three years old at the time of trial. Since 1974 she lived at 97 Dickman Drive in Lavallete. She had worked as a research doctor as well as an architect and invested in real estate. She had also piloted airplanes and sailed boats.
Plaintiff met Stanley in the 1960's. He was a policeman and worked a second job as a contractor. Stanley worked on several construction projects for plaintiff and became very friendly with her. In 1979, Stanley and his wife moved to Florida but kept in contact with plaintiff. He would call plaintiff every week and in the summer he returned to stay with plaintiff for a week or two.
In 1981 Stanley informed plaintiff that he did not intend to visit that summer because his wife was recovering from an operation. However, in June 1981, plaintiff called Stanley and asked him to come see her because she had something very important to tell him. Stanley agreed to visit. During the visit, plaintiff told Stanley that she wanted to give her home to him because he was her closest friend and she had no close relatives.
Plaintiff asked Stanley to talk to his brother Edward, who was an attorney, about preparing the papers. Stanley telephoned Edward, handed the telephone to plaintiff, and left the room. Plaintiff and Edward discussed drafting her will and the best way to effectuate the transfer of her home to Stanley. Plaintiff was concerned about avoiding inheritance taxes. Edward suggested that plaintiff secure independent counsel to handle the transfer since his brother was involved. Plaintiff insisted that Edward handle the transaction and Edward acquiesced. However, Edward did not obtain plaintiff's written waiver of any conflict of interest.
In a letter dated June 24, 1981, Edward wrote to plaintiff that "the best way to reduce federal and state taxes is to dispose of the house while you are ... alive. This can be done by making a gift of your home or selling it.... The deed would reserve in yourself a life estate in the home." On June 30, 1981, Edward discussed with plaintiff the gift of her home to Stanley and the conditions she wished to impose on the gift. Thereafter, Edward discussed with Stanley the conditions plaintiff wished to place on the transfer of her home to him. Stanley agreed to those conditions.
Plaintiff wanted the gift to remain a secret. As a result of this, Edward inserted a purchase price of $65,000 in the agreement and deed transferring plaintiff's home to Stanley. At the time the property was worth approximately $135,000. Although plaintiff never received any consideration for the transfer of her home, Edward executed an affidavit of consideration and an affidavit on the deed indicating that plaintiff received $65,000. However, the deed did not mention plaintiff's reservation of a life estate. Rather, a separate agreement spelled out the conditions plaintiff imposed on the gift including her right to live in the home during her lifetime. The agreement also provided that Stanley would pay plaintiff a sum adequate to cover the annual property taxes and homeowner's insurance premiums which plaintiff would then pay.
On July 2, 1981, plaintiff executed the will, deed, and agreement at her home. Thereafter, Edward, Stanley, and plaintiff drove to a notary outside of Lavallete where plaintiff executed a power of attorney that Edward had also prepared. The deed was subsequently recorded but the agreement embodying the life estate was not.
In September 1981, Edward drafted Stanley's will in which Edward was a contingent beneficiary.
For several years after the transfer Stanley paid the homeowner's insurance premiums and water bills. He would send plaintiff a check for the property taxes which she deposited in her account and then would pay the taxes. However, in 1989, ...