March 23, 2010
LORETTE WOLPIN, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
MILES D. WOLPIN AND CARL WOLPIN, DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-126-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 25, 2010
Before Judges Rodríguez, Reisner and Chambers.
The parties to this litigation are plaintiff Lorette Wolpin, the second wife of Arthur Wolpin, and defendants Miles D. Wolpin and Carl Wolpin, the sons from Arthur Wolpin's first marriage. They dispute the right to the proceeds from the sale of a condominium that had been owned by Arthur Wolpin, who is now deceased.
At the conclusion of the trial, the trial judge found that the 1984 recorded mortgage on the condominium in the sum of $180,000, given by Arthur Wolpin to his sons, was a valid inter vivos gift and enforceable. He determined that the 1987 deed which purported to convey the condominium and Arthur Wolpin's interest in a cabana to the sons was an incomplete inter vivos gift and not enforceable. He further held that defendants' rights under the deed would have been extinguished when plaintiff sold the property to a bona fide purchaser for value. He also concluded that the 1994 deed executed by plaintiff pursuant to a power of attorney from Arthur Wolpin in which she conveyed the condominium and Arthur Wolpin's interest in a cabana to herself was enforceable, finding that the transfer had been subsequently ratified by Arthur Wolpin. Judgment was entered in favor of defendants for $180,000 plus prejudgment interest, and the balance of the claims were denied.
Both sides appeal. We affirm the trial judge's determination that the 1984 mortgage is enforceable and that the 1987 deed is not enforceable. We disagree with the trial judge's conclusion that the 1994 deed is enforceable. We do not reach the question regarding the effect the sale of the condominium to a bona fide purchaser for value would have had on the 1987 deed if that deed had been found enforceable.
These are the pertinent facts. In April 1984, Arthur Wolpin, an attorney, purchased a condominium unit in Long Branch in his name for the sum of $206,800. At the time, he had been married to plaintiff, his second wife, for about four years. This condominium was their marital home until Arthur Wolpin died in 2006 at the age of ninety-nine.
At the time of the purchase, Arthur Wolpin executed a mortgage in the sum of $180,000 on the condominium unit in favor of defendants, his sons from his first marriage. He recorded the mortgage on April 12, 1984. This mortgage did not represent any underlying debt from Arthur Wolpin to his sons. Defendant Carl Wolpin testified that his father had sent him the original mortgage in April 1984, and three or four weeks later asked him to send the original back; a note from Arthur Wolpin indicates that he understood his son had a copy of the mortgage.
Carl Wolpin also testified that his father said that he had executed and recorded the mortgage because "he wanted to leave us something and it was a gift for the kids and the grandchildren." The mortgage was never discharged during Arthur Wolpin's lifetime.
Three years later, in July 1987, Arthur Wolpin prepared and executed a deed granting the condominium and use of a cabana to his sons but retaining a life estate for himself and providing that the conveyance did not merge with any mortgage. He also executed at that time an Affidavit of Consideration for tax purposes indicating that the only consideration for the deed was the nominal sum of $100. While he did not record this deed, he placed the original deed with his sons. Defendant Carl Wolpin testified that his father told him to keep the deed in a safe place and "not to act upon it unless he was, basically terminally ill or dead." He stated that his father made this request because "he was scared of Lorette [plaintiff]." The deed remained in his sons' possession until this litigation.
Thereafter, Arthur Wolpin executed a number of wills, namely four typewritten wills and two holographic wills. Specifically, on April 5, 1988, he executed a typewritten will leaving the condominium and cabana to his wife and, after a number of other bequests, bequeathing to her seventy percent of his residuary estate and to his sons the remaining thirty percent.
However, this typewritten will was quickly revoked a few months later by a holographic will dated July 12, 1988. Arthur Wolpin sent the July 12, 1988, holographic will to his son Carl Wolpin. In that will, Arthur Wolpin explained that he was writing a holographic will because his spouse, who had typed his earlier will, had inserted a second page increasing a bequest and that "it can hardly be called the testator's will, free from undue influence and pressure." In the 1988 holographic will, he left his wife a life estate in the condominium and cabana and left his residuary estate to his sons and grandchildren. Notably, this holographic will contradicts the 1987 deed, which did not give his wife a life estate in the condominium and cabana.
On December 21, 1992, Arthur Wolpin executed a second holographic will indicating that he was leaving his wife the minimum required by law, and the balance to his children and grandchildren. This will does not expressly mention the condominium and cabana. In this holographic will, he states that his wife has been greedy and that she has given away his money to her children.
In 1994, after Arthur Wolpin sustained a fall and had a pacemaker installed, he gave his wife a power of attorney dated August 10, 1994, enabling her to control his assets and financial affairs. She immediately had an attorney prepare a deed which she executed on August 16, 1994, under the power of attorney, conveying the condominium to herself.
Arthur Wolpin thereafter executed a series of wills prepared by an attorney who had represented his wife. On September 16, 1994, Arthur Wolpin executed a will prepared by the attorney expressly ratifying the deed in which his wife conveyed the condominium to herself under the power of attorney. The balance of his estate was left to his wife, with his sons the contingent beneficiaries. Two months later he executed another will making his wife's daughter his contingent beneficiary in place of his sons. This will also contained language ratifying his wife's deed to herself. However, he later revoked this will by a handwritten note on the will itself.
The record contains a letter from Arthur Wolpin dated February 28, 1995, in which he stated that his wife was liquidating his assets and putting them in her name and giving money to her daughter. He stated that he had "lost [his] confidence" in her but "at the present time I need her." A few days later on March 1, 1995, he signed a written statement reasserting his holographic will of July 12, 1988, and stating that "[b]ecause of my living situation and pressures thereof, I may have to make other wills in the future under 'undue influence.' Any will I sign as Arthur Abraham Wolpin represents a will such as this and should be looked at as 'null and void.'"
That same year, Arthur Wolpin executed a will dated July 7, 1995, again leaving his assets to his wife, ratifying her 1994 deed, and designating her daughter as his contingent beneficiary. In 1997, he signed a deed conveying to his wife his ownership rights in the cabana he had at the condominium complex. In 2006, shortly before Arthur Wolpin's death, his wife executed a deed transferring the condominium unit to herself and Arthur Wolpin in order to avoid capital gains taxes.
On December 29, 2006, a week after Arthur Wolpin's death, his wife sold the condominium to bona fide purchasers for value for the sum of $763,000. It was in the course of that transaction that her attorney learned of the recorded mortgage in favor of the sons.
Plaintiff Lorette Wolpin commenced this declaratory judgment action seeking to invalidate and discharge the 1984 mortgage in favor of the sons. They filed a counterclaim seeking to enforce the 1984 mortgage and the 1987 deed and to impose a constructive trust upon the proceeds of the sale.
After conducting a two-day trial, the trial court placed a lengthy oral decision on the record over the course of ten days. In determining whether the 1984 mortgage and 1987 deed represented enforceable gifts to the sons, the trial court applied the law set forth in Jennings v. Cutler, 288 N.J. Super. 553 (App. Div. 1996). There we stated that "[t]he three elements required to establish an inter vivos gift are (1) a donative intent on the part of the donor; (2) an actual or symbolic delivery of the subject matter of the gift; and (3) an absolute and irrevocable surrender by the donor of ownership and dominion over the subject matter of the gift, at least to the extent practicable or possible, considering the nature of the thing to be given." Id. at 562. We recognized that these three factors are "interrelated" and that "[t]o constitute an inter vivos gift, not only must the donor have a clear intention to give a gift, but the gift must be completed." Ibid.
The trial judge found that the 1984 mortgage was a valid inter vivos gift. In doing so, he noted that donative intent was not in dispute, but rather the focus was on whether the requirement of delivery had been met. The trial judge concluded that the requirement of delivery had been satisfied. He found that Arthur Wolpin had delivered the l984 mortgage to his son Carl Wolpin based on the credible testimony of Carl Wolpin that it had been delivered, a note from Arthur Wolpin indicating Carl Wolpin's possession of a copy of the mortgage, and the non-merger clause in the 1987 deed referencing a mortgage on the property. The trial court also viewed the fact that Arthur Wolpin himself recorded the mortgage as a further affirmative act indicating his intent that the gift be finalized. Judgment was entered in favor of the sons in the amount of $180,000, representing the amount of the mortgage, plus $21,010.68 in prejudgment interest through October 1, 2008, for a total judgment of $201,010.68.
With respect to the 1987 deed, the trial court noted that there was no factual basis to challenge delivery since the original 1987 deed was in possession of the sons. However, there were questions as to whether there was donative intent and "an absolute and irrevocable surrender by the donor of ownership and dominion over the subject matter of the gift." Ibid.
The trial judge found that the 1987 deed was an incomplete gift relying on the following circumstances. First, Arthur Wolpin's failure to record the deed was evidence of his lack of donative intent and evidence of his failure to relinquish dominion and control. Second, Arthur Wolpin's statement to his son Carl Wolpin not to do anything with the deed until after his death was further evidence that the gift was incomplete. Third, the fact that the sons never took dominion and control of the premises or paid any of its expenses is consistent with a incomplete gift. Fourth, Arthur Wolpin did not obtain consent of the condominium association for the transfer. Although such consent was not then necessary due to N.J.S.A. 46:8B-38, the trial court noted that there was no evidence that Arthur Wolpin was aware of the statute, but conceded that the failure to obtain the consent was "a minimal point." Fifth, in 1997, Arthur Wolpin conveyed title to the cabana to his wife, an action that is inconsistent with the 1987 deed because only a condominium owner could own a cabana. Sixth, the series of wills supported an intent that the wife have the property, namely the wills of September 16, 1994, November 16, 1994, and July 7, 1995. While the trial judge noted defendants' delay in coming forward with the deed, this was not a factor in finding an incomplete gift, although he observed that this circumstance could have raised a laches argument.
The trial judge also concluded that the 2006 transfer of the property to bona fide purchasers for value would have extinguished any rights the sons had under the 1987 deed, and hence for this reason also they had no rights to the proceeds of the sale. Finally, the trial court determined that the deed executed by the wife in 1994 conveying the property to herself had been ratified by Arthur Wolpin's subsequent wills, and hence constituted a valid transfer of the property to her. The trial judge did not make any findings on whether undue influence was involved with respect to execution of the various wills.
The sons have appealed this decision, contending that the 1987 deed should be enforced, that they are entitled to a constructive trust upon the proceeds of the sale, that the 2006 sale to bona fide purchasers for value did not extinguish their rights to the proceeds of the sale, and that the 1994 deed had not been ratified by Arthur Wolpin. In her cross-appeal, the wife contends that the trial court erred in declaring the 1984 mortgage enforceable, arguing that defendants failed to establish that it had been delivered.
On appeal, we defer to the factual determinations of the trial judge provided they are supported by adequate, substantial and credible evidence. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). However, our review is de novo on questions of law and the legal consequences that flow from the established facts. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
After a careful review of the record, for the reasons set forth by the trial judge, we find adequate, substantial and credible evidence to support the trial court's conclusion that Arthur Wolpin made a binding inter vivos gift when he delivered the 1984 mortgage to his son Carl Wolpin and recorded it. Indeed, the recordation of a document is sufficient to constitute its delivery for purposes of establishing a gift, Fischer v. Gerndt, 94 N.J. Eq. 53, 55 (Ch. 1922), and Arthur Wolpin recorded the 1984 mortgage. We affirm the judgment in favor of the sons in the sum of $201,010.68, inclusive of prejudgment interest through October 1, 2008.
We also find adequate, substantial and credible evidence to support the trial court's conclusion that the 1987 deed was not an effective gift. In so holding, we recognize that the deed was delivered by Arthur Wolpin to his sons and that the law does not require that the deed be recorded to be an effective gift. See H.K. v. Dep't of Human Servs., 184 N.J. 367, 382 (2005) (noting that recording is not a necessary prerequisite to pass title). However, while ownership of property is transferred upon execution, delivery, and acceptance of the deed, "[w]hether delivery and acceptance have taken place . . . is a matter of intention." Ibid. (quoting Dautel Builders v. Borough of Franklin, 11 N.J. Tax, 353, 357 (Tax 1990)). If a deed is physically delivered without the requisite intent to immediately convey title, then the requirement of delivery has not been met. Ibid.
Here, there was substantial credible evidence to support the trial judge's conclusion that Arthur Wolpin had not intended, with the delivery of that deed, to immediately convey gifted property rights to his sons. That evidence included Arthur Wolpin's failure to record the deed, a particularly pertinent fact because he had recorded the mortgage. Although as noted above, recordation was not necessary to pass title, his failure to record the deed is nonetheless evidential on whether he had absolutely and irrevocably made a gift. In addition, his statement to his son to hold the deed and do nothing further with it suggested that something was being held in abeyance.
The fact that Arthur Wolpin subsequently devised the condominium and cabana to his wife would be evidence that he did not consider the l987 deed a binding gift. However, the trial court's reliance on language in the three wills executed in 1994 and 1995 ratifying the transfer of the condominium to plaintiff is weak evidence for this purpose due to the undue influence issues swirling about these wills. Nonetheless, when we look at the holographic will executed by Arthur Wolpin only a year after he gave his sons the l987 deed, a will that appears free from the spectre of undue influence, we see that he gave his wife a life estate in the condominium. This devise is inconsistent with the 1987 deed, and is good evidence that Arthur Wolpin had not intended the l987 deed to be a completed gift.
We recognize that it was not necessary for defendants to assert control over the property for the deed to be effective. Arthur's continued control of the property was consistent with a life estate to him. The fact that the sons never took dominion and control of the premises or paid any of its expenses is consistent with an incomplete gift as the trial court stated but it is also consistent with a life estate to Arthur Wolpin. If the sons had in some way contributed toward expenses or overtly projected their future ownership of the premises, that would, of course, be evidence in their favor. However, the absence of such conduct on their part, particularly in light of their father's instructions, does not provide evidentiary support for plaintiff's position that no gift took place. The trial judge recognized that this factor alone would not be enough to defeat the gift, but noted that this circumstance was consistent with an incomplete gift.
We conclude that the other factors noted by the trial judge also lend support to the conclusion that the gift was incomplete with the above caveat. For all of these reasons we find sufficient, adequate and reliable evidence to support that the trial judge's decision that the l987 deed was not an enforceable gift to the sons.
We disagree with the trial judge's determination that the 1994 deed conveyed the condominium to plaintiff. That deed was executed by plaintiff pursuant to the power of attorney given to her by Arthur Wolpin a few days earlier. She used the power of attorney to convey the condominium to herself. Under New Jersey common law in effect at the time, one holding a power of attorney could not appropriate to oneself or give away the assets of the principal unless the power of attorney "contain[ed] very clear language" permitting such action. Manna v. Pirozzi, 44 N.J. Super. 227, 230 (App. Div. 1957).*fn1 The power of attorney held by plaintiff did not contain any such language. As a result, she did not have the authority to convey the condominium to herself under the power of attorney.
The trial court recognized this circumstance but nonetheless concluded that the 1994 deed was enforceable on the theory that it had been ratified by Arthur Wolpin in his subsequent 1994 and 1995 wills and the cabana deed. Reliance on the 1994 and 1995 wills was misplaced. As noted above, the viability of those wills was in question due to evidence of undue influence. The trial court never addressed the claims of undue influence and made no findings on whether the wills reflected undue influence, leaving those issues to be resolved in a will contest should one develop. Similar reasons mar the evidentiary value of the cabana deed. As a result, without resolution of the undue influence issues, this record does not support a finding that the wills executed in 1994 and 1995 and the cabana deed represent the intent of Arthur Wolpin and establish his ratification of the 1994 deed.
Since we have determined that the 1987 deed is unenforceable, we need not reach the issues of whether that deed, if viable, would have been extinguished by the sale of the condominium to bona fide purchasers for value or if a constructive trust could have been placed upon the proceeds of the sale.