Gorham Savings Bank v. Susan MacDonald, corrected 5-8-98
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	1998 ME 97
Docket:	Cum-97-106
Argued:	December 3, 1997
Decided:	May 4, 1998	

Panel:		WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN, and DANA, JJ.

GORHAM SAVINGS BANK

v.

SUSAN MacDONALD et al.

DANA, J.

	[¶1]  Susan MacDonald, the personal representative of the estate of
Fred S. Plummer and co-trustee under the will of Etta Plummer, appeals
from a judgment entered in the Superior Court (Cumberland County,
Brennan, J.) after a jury verdict finding the estate liable for a $520,000
personal guaranty executed by Fred Plummer.  She contends that the court
erred in instructing the jury regarding estoppel and in granting a summary
judgment on her defense of unconscionability and her counterclaims of
violation of the Improvident Transfers Act and conversion.  Gorham Savings
Bank cross-appeals the jury's verdict that found the existence and breach of
a fiduciary relationship between the Bank and Fred Plummer.  Finding no
error in the court's instructions or grant of a summary judgment, we affirm.

I.

	[¶2]  This case arises out of the attempted enforcement of a personal
guaranty given to Gorham Savings Bank by Fred Plummer before his death in
1993.  Fred founded and served as president of F.S. Plummer, Co., Inc., a
developer of residential subdivisions, from 1957 until 1973 when, upon his
retirement, his son Mark Plummer assumed the presidency of the company. 
Fred continued to assist the business after his retirement.  During Fred's
tenure as president of F.S. Plummer Co., the business established close
professional relationships with Gorham Savings Bank and the law firm of
Perkins, Thompson, Hinckley & Keddy, and Fred developed personal
friendships with Allison Edwards, Gorham Savings Bank's president and
chief executive officer, and Roy Keddy, a partner at Perkins, Thompson,
Hinckley & Keddy.  Keddy also served as chairman of the Bank's board of
trustees and provided legal advice to the Bank over many years.
	[¶3]  Because of the very nature of its business, F.S. Plummer Co.
needed to borrow substantial sums of money from lending institutions to
cover the cost of building homes.  It secured its debts with the properties
under development and paid off the loans with the revenue generated by
their sale.  By the fall of 1991, F.S. Plummer Co. owed approximately $2.2
million to Gorham Savings Bank and maintained banking relationships with
several other banks, including Maine Savings Bank.  Gorham Savings Bank
also held notes reflecting five personal loans to Fred in the approximate
amount of $130,000.  The personal loans were fully secured by nine
certificates of deposit owned by Fred and held by the Bank.  When Maine
Savings Bank collapsed during the difficult financial period of the late 1980s
and early 1990s, F.S. Plummer Co.'s loans with that bank were taken over by
Fleet Bank and its subsidiary Recoll Management Corporation.  Recoll
expressed a willingness to sell the loans at a substantial discount, and in the
fall of 1991, Mark Plummer presented Gorham Savings Bank with a proposal
for the Bank to finance the Recoll buy-out.  The Bank initially rejected the
proposal because it would have caused the Bank to exceed its legal lending
limit to one customer.  Over the ensuing months, Mark and his attorneys at
Perkins, Thompson, Hinckley & Keddy had ongoing discussions with Bank
officials regarding proposals for facilitating the Bank's involvement in the
Recoll buy-out.  At some point during this period of negotiation, the Bank,
acting on the advice of an attorney at Perkins, Thompson, Hinckley &
Keddy, retained counsel from the law firm of Drummond & Drummond
because of the conflict created by Perkins, Thompson, Hinckley & Keddy's
representation of both the Bank and F.S. Plummer Co.  By June of 1992,
Mark had negotiated with Recoll to lower the overall cost of the buy-out and
had put together a business proposal that was sufficiently acceptable for the
Bank.
	[¶4]  One aspect of the proposal was designed to provide a portion of
the loan proceeds to F.S. Plummer Co. without the company becoming
primarily liable for repayment, thereby avoiding the lending limit.  To that
end, upon Mark Plummer's direction, attorneys at Perkins, Thompson,
Hinckley & Keddy formed a new entity, Samuels Corp., making Fred the
corporation's sole shareholder and naming Mark as its vice president.  Mark
discussed this arrangement with his father and assisted Fred in completing
the incorporation documents.  Gorham Savings Bank agreed to loan Samuels
Corp. $520,000, which Samuels Corp. in turn would use to purchase F.S.
Plummer Co.'s business property in Gorham with the understanding that F.S.
Plummer Co. would be allowed to lease the property from the new company. 
F.S. Plummer Co.'s lease payments would be used by Samuels Corp. to make
payments on the note given in exchange for the $520,000.
	[¶5]  On July 8, 1992, Samuels Corp. executed both a promissory note
in the amount of $520,000 and a mortgage deed on the business property in
favor of the Bank.  Both instruments were executed by Mark Plummer in his
capacity as vice president of Samuels Corp.  In addition to the note and
mortgage, the Bank insisted that Fred, as sole shareholder of Samuels Corp.,
execute an unlimited personal guaranty of the loan.  On July 14 several
documents relating to the loan transaction remained to be signed including
the personal guaranty.  The Bank's attorneys had drafted these documents
and were instructed by Mark's attorneys at Perkins, Thompson, Hinckley &
Keddy that Mark would pick up the documents at the Bank and take
responsibility for getting the proper signatures.  An F.S. Plummer employee,
John Peverada, brought the documents to Fred, who was at that time in
Mercy Hospital with complications from his persistent medical problems. 
John notarized Fred's signature on several of the documents, including the
guaranty, before returning the documents to a Drummond & Drummond
employee who was waiting for the documents at the Bank.
	[¶6]  It is undisputed that throughout the negotiation and closing of
this complicated loan transaction, nobody at the Bank had any direct contact
with Fred Plummer.  All of Fred's involvement in these transactions was
conducted either through Mark Plummer, John Peverada, or through
attorneys at the law firm of Perkins, Thompson, Hinckley & Keddy.{1}
	[¶7]  Samuels Corp., whose obligations on the note for $520,000 were
being paid by F.S. Plummer's lease payments after the transfer of property,
defaulted on the note in 1993, and the Bank brought this action against the
estate of Fred Plummer for enforcement of the guaranty.{2}  The estate's
answer to the complaint interposed twenty-four affirmative defenses and
raised a number of counterclaims, including claims for breach of fiduciary
duty and conversion on the part of the Bank.  The Bank filed a motion for
summary judgment on its claim to enforce the guaranty and on the estate's
defenses and counterclaims.  The court granted the Bank's motion in large
part, but allowed the following claims and defenses to proceed to trial:  (1)
the Bank's guaranty claim; (2) the estate's defenses of failure to disclose
risk, incapacity, misrepresentation, and fraudulent inducement; and (3) the
estate's counterclaims of breach of fiduciary duty and conversion.  After a
five-day trial, the jury returned a verdict in favor of the Bank.  The jury, in
answering four special verdict forms, found that Fred Plummer had the
capacity to sign the personal guaranty; the Bank had a fiduciary relationship
with Fred that it breached; despite the breach of fiduciary duty, the estate
was estopped to assert the fiduciary relationship or breach; the estate did
not prove that the Bank committed conversion; and finally, the estate failed
to prove that punitive damages should be awarded in the case.  The court
entered judgment on the verdict in favor of the Bank and subsequently
denied the estate's motions for a judgment notwithstanding the verdict and
for a new trial.  This appeal followed.{3}

II.

	[¶8]  The estate initially contends that the trial court erred by allowing
the jury to consider whether the estate could be estopped from receiving
the benefit of its breach of fiduciary duty defense, arguing that estoppel was
not supported by the evidence and the court erroneously instructed the jury
as to its elements.  The court instructed the jury that the estate could be
estopped from relying on its breach of fiduciary duty defense if it found "that
any representative of Fred Plummer, including . . . Mark Plummer or
attorneys from Perkins, Thompson, made statements or engaged in conduct
which led the bank to reasonably believe that the interests of Fred Plummer
were being protected by them . . . ."
	[¶9]  The estate asserts that Casco Northern Bank, N.A. v. Pearl, 584
A.2d 643 (Me. 1990), controls the estoppel issue in this case.  In Pearl, the
debtors, who were also beneficiaries of a trust administered by Casco
Northern Bank, were estopped from challenging the propriety of a
transaction with the fiduciary bank.  We instructed in Pearl that "a
beneficiary will be estopped from challenging the propriety of the
transaction when the beneficiary is competent, acts with full knowledge of
the material facts and of the effect on his rights, is not induced by the
trustee's misrepresentations or coercion, and voluntarily consents to the
transaction."  Id. at 645.  The estate maintains that the Bank was not
required to prove any of these elements with regard to the guaranty signed
by Fred Plummer and argues that it was error to allow the Bank's breach of a
fiduciary duty to be excused by the breach of other fiduciaries.  The estate's
focus on the Bank's relationship with Fred, however, fails to directly address
the essential point at issue here, namely, whether the estate can be
estopped because of the conduct of Fred's agents or persons with apparent
authority.  In Pearl, we simply were not faced with a need to determine how
the existence of an intervening agency relationship might affect the
relationship between a fiduciary and a beneficiary. 
	[¶10]  In Berman v. Griggs, 145 Me. 258, 75 A.2d 365 (1950), we held
that the statements of an attorney to his clients' creditors that the clients
had agreed to convey a building to a corporation as an additional asset
estopped the clients from later asserting the contrary position against the
assignees of the creditors, thereby recognizing the proposition that
principals can be estopped by the conduct of their agent.  Id. at 264-65, 75
A.2d at 368.
	[¶11]  In the case before us there was sufficient undisputed evidence
that the Bank reasonably could have believed that Fred's interests were
being protected by his agents.  Mark Plummer had a durable power of
attorney to represent his father's interests and had in fact borrowed money
from the Bank on a regular basis in his father's name and against his father's
certificates of deposit.  The Bank also had no reason to know that Perkins,
Thompson, Hinckley & Keddy's longstanding representation of Fred was
being suspended for this one transaction.  In fact, each of the Plummer
children who testified at the trial was under the assumption that Perkins,
Thompson, Hinckley & Keddy was continuing its representation of Fred
individually as well as representing the business entities.  The estate has
offered us no authority for its contention that the Bank's fiduciary duty to
Fred necessitated an inquiry into whether Fred's interests were being
protected by independent counsel, especially in these circumstances where
the Bank was dealing directly with Mark Plummer and the law firm of
Perkins, Thompson, Hinckley & Keddy who had both actual and apparent
authority to act on behalf of Fred and had done so many times in the past. 
We find no error in the court's instruction that permitted the jury to
consider the conduct of Fred's agents when determining whether his estate
could be estopped from benefiting from a defense of breach of a fiduciary
duty.{4}

III.

	[¶12]  The estate also asserted Fred's incapacity at the time of signing
the guaranty as a defense to enforcement of the promise.  The jury rejected
this defense and found that Fred was competent when he executed the
guaranty.  On appeal, the estate claims the jury was improperly instructed
and argues that "the trial court instructed that the jury could find that
capacity existed even if Fred Plummer was incompetent if the Bank were led
to believe there was no issue regarding Fred Plummer's capacity."  This is
an inaccurate characterization of the jury instruction.  The court's actual
instruction to the jury was as follows:

[I]f you should find in this case that any representatives of Fred
Plummer, which could include any person acting as his agent,
and whether -- who his agents are is for you to determine, could
include Mark Plummer or representative of Perkins, Thompson
law firm -- made statements or engaged in conduct which led
the bank to reasonably believe that there was no issue regarding
the capacity of Fred Plummer to enter into this transaction, then
you may find in favor of the bank, regardless of whether Mr. Fred
Plummer was incompetent or incapacitated.

Although this instruction permitted the estate to be estopped from taking
advantage of the incapacity defense, the jury's finding that Fred was in fact
competent rendered the court's estoppel instruction moot.  The jury was
instructed to make a separate finding of Fred Plummer's capacity before
even considering whether the estate should be estopped from asserting lack
of capacity as a defense.{5}  Based on those instructions, the jury found as a
matter of fact that Fred Plummer had capacity to contract when he signed
the guaranty.  Contrary to the estate's contentions, this finding is supported
by credible evidence in the record.

IV.

	[¶13]  The estate next contends that the court should have entered a
judgment as a matter of law finding the Bank liable to the estate on its
counterclaims of breach of a fiduciary duty and conversion.  Our conclusion
that the estate could be estopped from relying on a breach of duty defense
applies equally to the estate's counterclaim for damages caused by the
Bank's alleged breach.  Therefore, the court properly denied judgment on
the estate's breach of fiduciary duty claim.
	[¶14]  The estate's conversion claim arises from the Bank's
application of Fred's certificates of deposit toward the defaulted loan
pursuant to Fred's guaranty.  The estate argues that the Bank did not have
the right to offset the funds at the time it did if it did not have a valid
guaranty.  Because we conclude that the Bank did have a valid guaranty
executed by Fred, judgment on the estate's conversion counterclaim was
properly denied.

V.

	[¶15]  Finally, the estate challenges the trial court's granting of a
summary judgment on its defense of unconscionability and its counterclaims
for the violation of the Improvident Transfers of Title Act and for the
conversion of Etta Plummer's certificates of deposit.  We review the entry of
a summary judgment for errors of law, viewing the evidence in a light most
favorable to the party against whom the judgment was entered.  Kandlis v.
Huotari, 678 A.2d 41, 42 (Me. 1996).  A party is entitled to a summary
judgment "only when the pleadings, depositions, answers to interrogatories,
and admissions on file, together with any affidavits, show there is no genuine
issue of material fact."  Maine State Academy of Hair Design, Inc. v.
Commercial Union Ins. Co., 1997 ME 188, ¶ 5, 699 A.2d 1153, 1156; M.R.
Civ. P. 56(c).
	[¶16]  Contrary to the estate's contentions, the record, when viewed
in the light most favorable to the estate, does not raise a genuine issue of
material fact with respect to the elements of unconscionability.  See, e.g.,
A.L. Brown Constr. Co. v. McGuire, 495 A.2d 794, 797 (Me. 1985) (contract
of adhesion); Oullette v. Maine Bonding & Casualty Co., 495 A.2d 1232, 1235
(Me. 1985) (terms of contract dictated by superior party); Dairy Farm
Leasing Co. v. Hartley, 395 A.2d 1135, 1139 n.3 (Me. 1978) ("take it or leave
it" contract where parties are in vastly unequal bargaining positions); Bither
v. Packard, 115 Me. 306, 314, 98 A. 929, 933 (1916) (fraud in negotiation
or performance of contract).
	[¶17]  The estate also failed to raise a genuine issue of material fact
regarding its claim pursuant to Maine's Improvident Transfers of Title Act,
33 M.R.S.A. §§ 1021-1025 (Pamph. 1997).{6}  Assuming, without deciding,
that a cause of action pursuant to the Act survives the death of an elderly
person entitled to the statute's protection, see Estate of Campbell, 651 A.2d
382, 383-84 (Me. 1994), the estate has made no showing that a transfer of
real estate, personal property, or money was involved in the execution of
Fred's guaranty, nor has it challenged the summary judgment granted on its
defense of lack of consideration.  Because both of these elements are
essential to maintain an action pursuant to the Act, the court properly
granted a summary judgment in the Bank's favor on this count.
	[¶18]  MacDonald has also appealed the court's grant of a summary
judgment on her claim that the Bank converted funds from her mother's
estate.  This claim arose out of the Bank's refusal to release funds of the
estate of Etta Plummer.  Mark Plummer, as personal representative of Etta's
estate, had pledged the funds to obtain personal loans from the Bank, which
he later defaulted on.   Because we agree with the trial court that MacDonald
failed to adequately brief this issue at the summary judgment stage of these
proceedings, we decline to address the merits of her contentions on appeal.
	The entry is:
					Judgment affirmed.
Attorneys for plaintiff:
	
Peter DeTroy, Esq., (orally)	
Russell B. Pierce, Jr., Esq.	
Norman Hanson & DeTroy	
P O Box 4600	
Portland, ME 04112-4600

Attorney for defendants:

John S. Campbell, Esq., (orally)	
Campbell & McArdle, P.A.
P O Box 369
Portland, ME 04112-0369	

FOOTNOTES******************************** {1}. Unbeknownst to the Bank and the Bank's attorneys, on July 7, 1992, just prior to the closing of these complex loan transactions, an attorney at Perkins, Thompson, Hinckley &
Keddy gave Mark Plummer a letter to be hand-delivered to Fred with eleven documents that required either Mark or Fred's signature. These documents related to the incorporation of Samuels Corp. and the lease between F.S. Plummer and Samuels Corp. on the Gorham business property. At the conclusion of that letter, Fred was informed that although the law firm of Perkins, Thompson, Hinckley & Keddy had represented him in other matters, with regard to this matter the firm was acting only on behalf of F.S. Plummer Co. and advised him that he might wish to contact separate counsel. Mark Plummer reviewed this letter, but did not discuss its details with his father. {2}. The Bank brought a separate action for foreclosure on the business property in Gorham. A judgment of foreclosure was entered against Samuels Corp. on February 7, 1994. Gorham Sav. Bank v. Samuels Corp., CV-93-1083 (Me. Super. Ct., Cum. Cty., Feb. 7, 1994) (Lipez, J.). {3}. This appeal involves only those claims between Gorham Savings Bank and Susan MacDonald as personal representative of the estate of Fred Plummer, Susan MacDonald as co- trustee under the will of Etta Plummer, and Samuels Corp. There are claims pending in the Superior Court between the Bank and Mark Plummer and F.S. Plummer Co. {4}. Because of our disposition of the estoppel issue, we need not address the Bank's cross- appeal regarding the court's instruction and the jury's finding of a breach of a fiduciary duty on the part of the Bank. {5}. The court instructed the jury at length regarding the concept of the capacity to contract and the estate does not challenge that portion of the jury charge on appeal. {6}. The pertinent section of the Act provides: In any transfer of real estate or major transfer of personal property or money for less than full consideration by an elderly person who is dependent on others to a person with whom the elderly dependent person has a confidential or fiduciary relationship, it shall be presumed that the transfer was the result of undue influence, unless the elderly dependent person was represented in the transfer by independent counsel. When the elderly dependent person successfully raises the presumption of undue influence by a preponderance of the evidence and when the transferee fails to rebut the presumption, the elderly dependent person shall be entitled to avoid the transfer . . . . 33 M.R.S.A. § 1022(1) (Pamph. 1997).