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(NOTE: The status of this decision is Published.)
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4193-11T2
DAN STEPHENSON, Personal
Representative of ESTATE OF
J
APPROVED FOR PUBLICATION
January 31, 2013
APPELLATE DIVISION
ACK M. MURRAY,
Plaintiff-Respondent,
v.
WILLIAM E. SPIEGLE, III, ESQUIRE,
Defendant-Appellant.
January 31, 2013
Submitted November 27, 2012 - Decided
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Before Judges Fisher, Alvarez and St. John.
On appeal from the Superior Court of New Jersey, Chancery Division, Cape May
County, Docket No. C-39-10.
Fleming & Spiegle, P.C., and Lamarche Law, LLC, attorneys for appellant
(William E. Spiegle, III, and Daury I. Lamarche, on the brief).
Briggs Law Office, LLC, attorneys for respondent (Norman W. Briggs and
Elizabeth F. Casey, on the brief).
The opinion of the court was delivered by
FISHER, P.J.A.D.
On December 19, 2006, Jack M. Murray executed a Will, prepared by defendant William E. Spiegle, III,
Esq., leaving his estate to family members or trusts for the benefit of family members. On February 2,
2007, less than two months after executing the Will, Murray appeared at Union State Bank in Naples,
Florida, and opened an account, which directed the payment of the balance, upon Murray's death, to a
designated beneficiary. Desirous of naming a trust as the beneficiary, Murray was dissuaded by a bank
representative because the trust documents were not at hand. Consequently, Murray named "William
Spiegle Atty" as the "pay-on-death" beneficiary. When Murray died on December 19, 2007, the account
held $143,151.26, approximately one-third of his entire estate.
While marshaling the estate's assets, plaintiff Dan Stephenson, the estate's executor, discovered the Union
State account. When inquiries were made, Union State expressed a need to reach out to defendant. Plaintiff
learned nothing more until May 12, 2010, when defendant wrote to advise he was the account's sole
beneficiary. Defendant conveyed these further thoughts about the account:
I have no idea why this account was established. It was established approxi-
mately six weeks after [Murray] executed his will in my office, which leads me to
believe the intent of this account was clearly to take it outside the estate itself. I
have no idea what motivated this action. I was completely unaware that this had
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occurred. I had not seen nor talked with Jack since the day he left my office
December 16, 2006. I can only surmise that something happened on his way to
Florida or after he got to Florida for him to take this action.
. . . I have looked at this situation from various points of view seeking to fathom
the intent of this account. I come back to the only conclusion that I can draw,
which is -- for whatever reason -- he wanted me to have this money.
As a result of defendant's decision to retain the funds, plaintiff commenced this action. He alleged Murray
was not competent or that he had made a mistake and, also, that the terms of the account were a product
of defendant's undue influence.
Defendant unsuccessfully moved for summary judgment, and the matter proceeded to a trial.
At the conclusion of a bench trial, the Chancery judge rendered thorough findings regarding the account's
creation. Viewing the equitable theory that would support relief as somewhat unique, and finding most
other potential theories inapplicable, the judge concluded it would be unconscionable to withhold the
remedy of rescission and, as a result, declared the estate's entitlement to the funds.
Defendant appeals, arguing:
I. THE RECORD ON THE MOTION FOR SUMMARY JUDGMENT WAS DEVOID OF
ANY EVIDENCE TO SUPPORT THE VARIOUS COUNTS IN THE COMPLAINT AND
THE MOTION SHOULD HAVE BEEN GRANTED.
A. No Issue Of Material Fact Existed As To Undue Influence.
B. No Issue Of Material Fact Existed As To Mistake.
C. No Issue Of Material Fact Existed As To Conversion.
II. THE COURT'S UNILATERAL MISTAKE DETER-MINATION WAS AN ERROR,
AND THE PLAINTIFF IS NOT ENTITLED TO RELIEF BECAUSE IT IS PREJUDICIAL
TO THE DEFENDANT.
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A. Restitution Is Not An Available Remedy Because It Is Prejudicial
To Spiegle.
B. The Trial Court Improperly Relied Upon A Rescission Analysis;
However, Even Under That Analysis The Court Erred In Granting
Restitution.
C. Spiegle Is Not The Proper Party Against Whom A Claim For Uni-
lateral Mistake Can Be Brought.
We find insufficient merit in Point I to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). In
rejecting Point II, we affirm the judgment under review substantially for the reasons set forth by the
Chancery judge with the following additional comments about the applicable remedy to which plaintiff was
entitled.
The judge's findings of fact are based on substantial credible evidence and entitled to our deference.
Brunson v. Affinity Fed. Credit Union, 199 N.J. 381, 397 (2009); Rova Farms Resort, Inc. v. Investors Ins.
Co., 65 N.J. 474, 484 (1974). In his comprehensive and thoughtful oral opinion, the Chancery judge found
"a variety of reasons" to conclude that Murray did not intend the funds to pass to defendant in his
individual capacity. In ascribing to Murray "those impulses which are common to human nature," including
a natural desire for the construction of his actions "so as to effectuate those impulses," In re Estate of
Cook, 44 N.J. 1, 6 (1965), the judge rejected as highly unlikely defendant's claim that Murray suddenly
decided to convey a substantial portion of his estate to defendant personally instead of Murray's family
members,1 particularly when Murray made a Will that left his entire estate to family members less than two
months earlier. In essence, the judge found that Murray made a mistake. As the judge summarized, to
conclude that the terms of the bank account were consistent with Murray's actual intentions "just doesn't
make any sense."2
That is, the judge found it "virtually inconceivable" that Murray intended to benefit defendant, and that it
was only "conceivable" that Murray walked into the bank that day "thinking he was going to establish a
trust for someone in his family, or maybe fund a trust that was going to be created in the Will." Murray
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undoubtedly improvised when a bank representative referred to the absence of the relevant trust
documents and decided he would "direct these funds to pass to his estate by designating . . . his attorney"
as the "pay-on-death" beneficiary. This, according to the judge, was the "only . . . explanation that's
meaningful."
For these and the other reasons cogently set forth in his oral opinion, the Chancery judge found as fact
that the creation of an account in favor of defendant personally was the product of a mistake.
The judge then sought to identify a cause of action that would permit the estate's recovery. He initially
considered reformation. The availability of this remedy, however, is largely dependent upon a finding of
mutual mistake, Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599, 608-09 (1989); Beachcomber Coins, Inc. v.
Boskett, 166 N.J. Super. 442, 446 (App. Div. 1979), which the judge did not find because Murray was the
only party, other than the neutral bank, engaged in the formation of the account. The mistake the judge
endeavored to correct was Murray's "unilateral" mistake and, because no fault could be placed at
defendant's doorstep, the principles normally applicable when reformation is sought due to a party's
unilateral mistake were viewed by the judge as unavailing to the estate. See Bonnco, supra, 115 N.J. at
608-09; St. Pius X House of Retreats v. Diocese of Camden, 88 N.J. 571, 579 (1982).
In the face of this obstacle, the judge searched further for an applicable cause of action to remedy Murray's
unilateral mistake. He considered whether it was appropriate to impose a constructive trust. He examined
the doctrine of probable intention and the tort of conversion. He also considered plaintiff's claim that
defendant had exerted undue influence. The judge ultimately recognized, however, that all these theories
require some unconscionable, fraudulent or wrongful conduct on defendant's part, and the record did not
permit a determination that defendant had acted inequitably or failed to act when conscience required
action. This prompted the judge to conclude that no theory other than rescission based on a unilateral
mistake applied.
"Inevitably," to borrow from the author of Six Characters in Search of an Author,3 an equitable cause of
action "often constructs itself."4 Here, the judge ultimately ordered rescission on a theory mainly utilized in
other circumstances. Quoting Villanueva v. Amica Mut. Ins. Co., 374 N.J. Super. 283, 289-90 (App. Div.
2005), the Chancery judge found Murray's mistake was "of so great a consequence" that, despite the
absence of wrongful acts or omissions on defendant's part, "to enforce the contract as actually made would
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be unconscionable."
We agree rescission was appropriate in this case to remedy the unilateral mistake. In this particular context,
plaintiff was not required to show any inequitable conduct on defendant's part. It was only necessary for
plaintiff to prove: (1) Murray made a mistake of such consequence that enforcement of the account's
express terms would be unconscionable; (2) his mistake was material to the undertaking; (3) the mistake
occurred regardless of his exercise of reasonable care under the circumstances; and (4) rescission would not
cause serious prejudice to defendant. This is the approach that has been applied when considering whether
insurance companies, see Villanueva, supra, 374 N.J. Super. at 289-90; see also Hamel v. Allstate Ins. Co.,
233 N.J. Super. 502, 507 (App. Div. 1989), and those who bid on public contracts, see Conduit &
Foundation Corp. v. Atlantic City, 2 N.J. Super. 433, 440 (Ch. Div. 1949); see also Intertech Assocs. v. City
of Paterson, 255 N.J. Super. 52, 59-60 (App. Div. 1992); Cataldo Constr. Co. v. Cnty. of Essex, 110 N.J.
Super. 414, 418-19 (Ch. Div. 1970), should be relieved of their good faith unilateral mistakes. We see no
reason for refusing to apply these principles in favor of beneficiaries of an elderly individual who tried but
failed to establish a valid trust. Because the judge properly recognized that a consideration of these four
factors weighed in favor of the relief sought, we conclude that rescission was appropriately awarded.5
Other equitable theories, not considered by the Chancery judge, also support the judgment under review.
First, the Chancery judge found Murray's intention in opening the bank account was to either create a trust
for the benefit of his heirs or fund the trusts required by his Will. Certainly, as the bank account was
crafted, Murray fulfilled neither intent; instead, he mistakenly created a windfall for his attorney. In such an
instance, a court of equity may impose a resulting trust and allow the corpus of the failed trust to revert to
the settlor. See In re Voorhees, 93 N.J. Super. 293, 298 (App. Div. 1967); In re Estate of Kovalyshyn, 136
N.J. Super. 40, 45 (Cty. Ct. 1975). As explained in Pedrick v. Guar. Trust Co., 123 N.J. Eq. 395, 400 (Ch.
1938), when "an express trust does fail, in whole or in part, for any reason, the equitable interest
automatically returns to the settlor and his successors in interest and the beneficial interest is considered as
never having left the settlor." See George Bogert and Ronald Chester, The Law of Trusts and Trustees §
468 at p. 572 (2005); Restatement (Third) of Trusts § 8; see also Estate of Hann v. Hann, 614 N.E.2d 973,
978 (Ind. App. 1993) (imposing a resulting trust on a bank account in light of the parties' mistaken or
inadvertent failure to create a right of survivorship).6 The judge's findings permitted a determination that
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Murray's intent -- to fund the trusts identified in his Will, by opening this account and naming his attorney
as beneficiary upon his death -- failed, and the funds in the account should have been treated as if they
had never left Murray's possession, thereby devolving to his estate. Bogert, supra, § 468 at 572-74.
Second, the judge was permitted to apply the doctrine of probable intention, which has been used by
courts to reform mistaken testamentary dispositions.7 Here, the judge found that Murray intended the bank
account to pass to the beneficiaries of his estate and mistakenly thought designating his attorney as the
"pay-on-death" beneficiary would accomplish that. Based on that finding, the judge was entitled to order
rescission of the account or reformation of the account's terms. See, e.g., In re Estate of Dawson, 136 N.J.
1, 9-10 (1994); In re Estate of Burke, 48 N.J. 50, 63-64 (1966).
Although this case did not fit many of the various causes of action applicable when a mistake in the
creation of a contract or instrument is made, the judge appropriately granted relief through a common
sense and equitable application of rescission principles. Ultimately, the equities -- that so heavily
preponderated in plaintiff's favor -- governed the disposition, and the difficulties in defining the applicable
cause of action were not insurmountable, as the experienced Chancery judge recognized. As Chief Judge
Cardozo elegantly stated in Graf v. Hope Bldg. Corp., 171 N.E. 884, 888 (N.Y. 1930) (dissenting opinion),
"equity will find a way, though many a formula of inaction may seem to bar the path."
Affirmed.
1The judge found nothing about Murray's relationship with defendant -- largely limited to an attorney-client
relationship -- to suggest Murray intended to confer such a substantial personal benefit. Indeed, as the
quoted portion of defendant's letter suggests, even defendant was surprised and without explanation for
Murray's ostensible gift of one-third of the estate.
2In the quoted letter, defendant suggested something -- such as a rift between Murray and family
members -- may have occurred after execution of the Will and before or when Murray arrived in Florida
shortly after executing the Will. The judge, however, found "nothing in the record to suggest any [such]
thing happened."
3See www.goodreads.com/author/quotes/7702.Luigi_Pirandello (last visited January 16, 2013).
4Indeed, equity jurisprudence evolved as a means of avoiding injustices when meritorious claims failed to
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fit the rigid causes of action known at law. See, e.g., Judge Kimmelman's foreward to William A. Dreier &
Paul A. Rowe, Guidebook to Chancery Practice in New Jersey at xi (4th ed. 1997) (observing that "[h]ad the
law courts not been so unyielding, there would have been no need for the development of a separate
branch of equity law").
5We reject any claim of prejudice to defendant. A party's loss of a windfall is not the type of prejudice
envisioned by these principles. Villanueva, supra, 374 N.J. Super. at 290.
6Although courts have, at times, viewed resulting and constructive trusts as being indistinguishable, the
difference is clear. The latter is dependent on a wrongful act, see, e.g., D'Ippolito v. Castoro, 51 N.J. 584,
589 (1968); Thompson v. City of Atlantic City, 386 N.J. Super. 359, 376-77 (App. Div. 2006), affirmed as
modified, 190 N.J. 359 (2007), whereas the need for the former may innocently arise, see, e.g., Hann,
supra, 614 N.E. 2d at 978.
7Bank accounts like this are often referred to as "poor man's wills." See Sadofski v. Williams, 60 N.J. 385,
397-99 (1972); Lebitz-Freeman v. Lebitz, 353 N.J. Super. 432, 436-37 (App. Div. 2002), appeal dismissed,
179 N.J. 262 (2003). Because the purpose in creating the account is the same as the purpose in creating a
Will, it follows that the probable intention doctrine should be applicable not only to the latter but also the
former.
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