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Wilson v. Wilson

April 6, 2007


Appeal from Marshall District Court, JOHN L. WEINGART, judge.


1. The interpretation of a statute is a question of law over which an appellate court has unlimited review. An appellate court is not bound by the district court's interpretation of a statute.

2. The purpose of the Kansas Uniform Transfer to Minors Act (UTMA) is to provide an inexpensive, easy mechanism for transferring property to minors. Any transfer under the UTMA is irrevocable and the custodial property is vested in the minor, but the custodian has rights, powers, duties, and authority over the property as provided in the Act.

3. When a district court issues findings of fact and conclusions of law, the function of an appellate court is to determine whether the district court's findings of fact are supported by substantial competent evidence and whether the findings are sufficient to support the district court's conclusions of law. Substantial evidence is such legal and relevant evidence as a reasonable person might accept as sufficient to support a conclusion. An appellate court does not weigh conflicting evidence, pass on credibility of witnesses, or redetermine questions of fact. An appellate court's review of conclusions of law is unlimited.

4. There are no provisions in the Kansas UTMA prohibiting a parent custodian from using custodial property to pay expenses for the minor's benefit, even when the expenses are for necessities a parent is generally obligated to provide for his or her child. However, in paying such expenses, the parent custodian must comply with the provisions of the UTMA. The UTMA places at least two explicit restrictions on the custodian's ability to dispose of custodial property. First, the custodian must exercise the standard of care that would be observed by a prudent person dealing with property of another. Second, the custodian must expend the funds for the use and benefit of the minor.

5. In determining whether a joint tenancy account is created, general contract principles are applied. A joint tenancy account is created when the depositor signs a signature card naming himself and another as joint tenants with right of survivorship and not as tenants in common. These magic words meet the clarity requirement of K.S.A. 58-501 and create an enforceable written contract. The provisions of the signature card constitute a contract in writing between the depositor and the bank, enforceable according to its terms, and a parol understanding at variance with such terms is inadmissible in the absence of fraud or mutual mistake.

6. Whether parties have a fiduciary relationship is an evidentiary question which must be determined from the facts in each case. The appellate court must ascertain whether there is substantial competent evidence to support the finding of the district court viewing the evidence in the light most favorable to the party who prevailed in the district court.

7. There are two types of fiduciary relationships: (1) those specifically created by contract such as principal and agent, and (2) those implied in law due to the factual situation surrounding the involved transactions and the relationship of the parties to each other and to the questioned transactions. However, the mere relationship of parent and child does not raise a presumption of a confidential and fiduciary relationship.

8. A fiduciary relationship imparts a position of peculiar confidence placed by one individual in another. A fiduciary is a person with a duty to act primarily for the benefit of another. A fiduciary is in a position to have and exercise and does have and exercise influence over another. A fiduciary relationship implies a condition of superiority of one of the parties over the other. Generally, in a fiduciary relationship, the property, interest, or authority of the other is placed in the charge of the fiduciary.

9. Subject to the provisions of K.S.A. 60-3702 and K.S.A. 60-3703, an appellate court reviews a district court's award of punitive damages for an abuse of discretion.

10. To warrant an award of punitive damages, one party must prove by clear and convincing evidence that the other party against whom damages are sought acted with willful or wanton conduct, fraud, or malice.

11. K.S.A. 60-3702(b) sets forth seven factors the district court may consider in determining the amount of punitive damages to be awarded. The district court need not make an explicit statement of all the relevant facts in its consideration of the factors so long as the record indicates that the court considered the statutory factors when making its determination regarding punitive damages.

12. Supreme Court Rule 7.07(b) (2006 Kan. Ct. R. Annot. 57) grants an appellate court authority to award attorney fees for services on appeal in cases in which the district court had authority to award attorney fees.

The opinion of the court was delivered by: Malone, J.


Before RULON, C.J., MALONE and HILL, JJ.

Michael L. Wilson and his wife, Penny Wilson, established two investment accounts for each of their three children pursuant to the Kansas Uniform Transfer to Minors Act (UTMA). They also opened a certificate of deposit (CD) for each of the three children. Michael and Penny subsequently divorced and, shortly thereafter, Michael withdrew all the funds in two of the children's UTMA accounts and two of the children's CDs. The three children, after reaching the age of majority, sued Michael for violating his duties under the UTMA regarding the investment accounts and for breaching his fiduciary duty regarding the CDs. After a 2-day bench trial, the district court ordered Michael to repay the UTMA accounts and CDs with interest, and the district court further ordered Michael to pay punitive damages. Michael appeals the district court's verdict and award of punitive damages.

Factual and procedural background

Michael and Penny married on November 12, 1976. They had three children: Sarena L. Wilson, born August 19, 1978, Jared M. Wilson, born June 18, 1980, and Joshua A. Wilson, born January 15, 1982. On March 2, 1995, Michael and Penny established two irrevocable accounts with Edward Jones for each of their three children, for a total of six accounts pursuant to the Kansas UTMA. Michael was designated as custodian on each account.

On March 26, 1996, Michael and Penny opened a $5,000 CD in the names of Jared Michael Wilson and/or Mike or Penny Wilson, a $4,000 CD in the names of Joshua A. Wilson and/or Mike or Penny Wilson as joint tenants and not as tenants in common, and a $2,000 CD in the names of Sarena L. Wilson and/or Mike or Penny Wilson as joint tenants and not as tenants in common. Michael testified that the CDs were opened to "benefit the kids later on."

On May 21, 1998, Penny filed for divorce from Michael. Neither Michael nor Penny claimed any interest in the children's accounts during the divorce proceedings, nor did they address the children's accounts in their property settlement agreement. Michael never indicated in the divorce proceedings that the children were indebted to him. The divorce became final on September 7, 1999.

On September 24, 1999, Michael contacted Kate Manley of Edward Jones and requested that Sarena's UTMA accounts be transferred to him. Manley informed Michael that because Sarena had reached the age of 21, the accounts could not be transferred without Sarena's approval. In November 1999, Sarena received a letter from Manley advising her that the accounts were hers to control now that she was 21, and Sarena placed the accounts into her name only. On November 23, 1999, Michael told Sarena to transfer the money back because the accounts belonged to him. Sarena refused to do so.

On January 4, 2000, Michael redeemed both of Jared's and Joshua's UTMA accounts. Michael did not inform his sons he had closed the accounts.

On March 9, 2000, Michael brought Sarena's CD to the bank for withdrawal. The CD was later determined to contain a forgery of Sarena's signature. A Kansas Bureau of Investigation agent could not identify Michael as the person who signed Sarena's name, but he did indicate that the endorsement was not Sarena's. Michael had no explanation for how the CD came to have Sarena's forged signature.

On June 2, 2000, Michael asked Joshua to sign his CD over to him. Joshua complied, and Michael cashed the CD for his own use. Joshua testified that he only endorsed the CD because Michael told him he was transferring the CD to another institution that paid a higher interest rate.

In July 2000, Jared and Joshua learned that Michael had redeemed their UTMA accounts. In July 2001, Sarena learned that her CD was gone. Thereafter, the three children sued Michael for conversion of the funds. The petitions requested an accounting from Michael of all funds transferred from the UTMA accounts and from the CDs. The petitions were subsequently amended to include claims for punitive damages.

The district court held a 2-day bench trial. At the trial, Michael claimed that he reimbursed himself with the proceeds of Jared's and Joshua's UTMA accounts for expenses he had incurred on their behalf. Michael presented exhibits, including numerous invoices and canceled checks, representing expenditures he had made for Jared and Joshua from 1995 through 2000. The expenditures covered a wide variety of items, including payments for clothing, medical bills, car insurance, and car repairs. The total expenditures exceeded the amounts Michael had withdrawn from the UTMA accounts. Michael also testified that he had not received any explanation as to how to manage the UTMA accounts and what types of withdrawals were permissible. Manley directly contradicted Michael's testimony by testifying that she had informed Michael of the rules governing the UTMA accounts. As for the CDs, Michael testified he was entitled to cash the CDs because they were joint tenancy accounts.

The district court issued a memorandum decision containing detailed findings of fact and conclusions of law. The district court concluded that Michael had breached his fiduciary duty to his children and had converted the funds for his own use. The district court ordered Michael to return to Jared and Joshua the amounts taken from their UTMA accounts and to return to Joshua and Sarena the total value of their CDs, plus interest. The district court granted judgment in favor of Jared for $8,846.56, judgment in favor of Joshua for $14,477.18, and judgment in favor of Sarena for $3,044.55. The district court further found that Michael had acted willfully and that punitive damages were appropriate. At a ...

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