Grahl v. Davis

IN THE SUPREME COURT OF TENNESSEE
AT KNOXVILLE
FILED
February 23, 1998

Cecil Crowson, Jr.
Appellate C ourt Clerk

GENEVA GRAHL, ) FOR PUBLICATION
) Filed: February 23, 1998
Appellant, )
) Blount Circuit
v. )
) Hon. W. Dale Young,
LILLIE DAVIS, ) Judge
)
GREGORY SCOTT JUDKINS and )
JEFFREY TODD JUDKINS, ) Appeal No.
) 03S01-9701-CV-00011
Appellees. )
)

For Appellant: For Appellees
David R. Duggan Norman H. Newton
DUGGAN & ANDERSON CRAWFORD, CRAWFORD & NEWTON
Maryville, Tennessee Maryville, Tennessee

J. Michael Garner Duncan V. Crawford
NICHOLSON & GARNER CRAWFORD, CRAWFORD, & NEWTON
Maryville, Tennessee Maryville, Tennessee

John A. Walker, Jr.
WALKER & W ALKER, P.C.
Knoxville, Tennessee

OPINION
COURT OF APPEALS AFFIRMED. DROWOTA, J.

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 The primary issue in this appeal is whether the conservator, Geneva Grahl,

breached her fiduciary duty to the deceased conservatee, Lillie Davis, by allowing the

conservatee’s husband, Omer Davis, to transact four certificates of deposit in which

the conservatee had an interest and reinvest the funds into certificates of deposit

held either solely in the name of Omer Davis or jointly in the name of Omer Davis and

Geneva Grahl. After carefully considering the controlling authority, we have

determined that Grahl breached her fiduciary duty by allowing Omer Davis to transact

the accounts without first seeking court approval, and by dealing with the

conservatee’s property so as to eventually attain a personal benefit. Accordingly, we

affirm the judgment of the Court of Appeals reversing the judgment of the trial court,

and remand this case for further proceedings consistent with this opinion.

FACTUAL BACKGROUND

This case arises from the action of the trial court in approving a final

accounting by Geneva Grahl in her capacity as conservator of the estate and person

of Lillie Davis, who is now deceased. There are no material facts in dispute.

In May of 1989, Geneva Grahl, the daughter of Lillie Davis and Omer Davis,

filed a complaint in the Circuit Court of Blount County asking the court to approve the

sale of land owned by her parents as tenants by the entirety. Grahl alleged that her

mother was confined to a nursing home and incompetent. Grahl also alleged that her

father was in a nursing home, but that he could competently manage his own affairs.

In June of 1989, Grahl amended her complaint to seek appointment as conservator

over the person and estate of her mother, Lillie Davis. Notice of the amended

complaint was served upon the defendants, Gregory Scott Judkins and Jeffrey Todd

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Judkins, grandsons of Lillie Davis, the conservatee, and the only children of a

deceased daughter of the conservatee. The defendants thereafter filed an answer.

A hearing was held on June 19, 1989, at which both Geneva Grahl and Omer

Davis testified that the cash assets of Lillie Davis consisted of four certificates of

deposit and a joint checking account for a total balance of $197,512.00. The next

day, June 20, 1989, the trial court entered an order finding Lillie Davis incompetent

and appointing Geneva Grahl conservator of both her person and estate. This order

directed Grahl, as conservator, to file an inventory and bond in the amount of

$135,000.00. By a separate order, the Court approved the sale of the jointly held

property for $68,000.00 and directed that the proceeds be divided $34,000.00 to

Omer Davis and $34,000.00, less expenses, to the conservatee, Lillie Davis.

On March 8, 1990, the conservator filed an inventory which showed the

conservatee had total assets in financial institutions in the amount of $197,512.00,

which consisted of a joint checking account, and four certificates of deposit. Three

certificates were owned by “Omer Davis or Lillie Davis” and one certificate was owned

by “Mr. Omer Davis, Trustee for Mrs. Omer Davis.”

On June 19, 1990, the conservator filed the first annual accounting which

covered the period June 19, 1989, the date of her appointment, through June 19,

1990. This accounting reflects itemized expenditures of $24,034.94 and indicates

total assets in the conservatorship estate in the amount of $16,659.92. The

conservatee’s share of the proceeds from the court-approved sale of property are

included in this figure.

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 The second page of this first accounting is the conservator’s hand-written

explanation of the disposition of the four certificates of deposit and the checking

account shown on the conservator’s original inventory. In summary, the conservator

reported that Omer Davis had redeemed the certificates of deposit he had held jointly

with or in trust for the conservatee and had used the proceeds to purchase four new

certificates of deposit, two of which he held in the name of Omer Davis alone, and

two of which he held jointly with the conservator. With respect to the joint checking

account, the conservator explained that Omer Davis had utilized the remaining

$1,167.71 in the account after a separate conservatorship account had been

established.

Omer Davis died testate in Blount County on December 20, 1989,

predeceasing his wife, the conservatee, Lillie Davis. His will provided in pertinent part,

as follows:

I hereby give, devise and bequeath to my daughter, GENEVA
GRAHL, all my property, of whatever nature, or wherever located or
situated, in Trust, for the use and benefit of my dear wife, Lillie Davis.
The entire property is to be used for the best interest of my wife, and
as far as possible in the same way and manner that I would do were I
living.

The trust shall continue for, and during the natural life of my dear
wife, Lillie Davis, or as long as there are any assets left in the Trust.
The Trust shall terminate upon the happening of the first of the events
mentioned above.

In the event that there is [sic] any assets left in the Trust after it
is terminated as provided above, I give, bequeath the same to my
daughter, GENEVA GRAHL, in its entirety, absolutely and in fee
simple, without condition or limitation, it being her sole discretion to
retain all of the assets or funds as hers, or to make any gifts of them
which she may choose.

I make this provision having great confidence that she will care
for my dear wife in the same way and manner I would do were I living.

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 Following the death of Omer Davis, the conservator became the owner of two

of the successor certificates of deposit by right of survivorship. With regard to the

other two certificates of deposit held in the sole name of Omer Davis, the

conservator, in accordance with her father’s will, changed both into trust accounts in

the name of “Lillie Davis, Geneva Grahl, Trustee.” The interest earned on these two

certificates was deposited into the conservatorship account and used on behalf of the

conservatee. Grahl transferred funds between these accounts to obtain the best rate

of interest, but the sum of the principal of the two accounts remained the same. The

conservator did not use any of the principal from these two trust accounts for the

conservatee’s care. The conservator filed a second annual accounting on June 26,

1991, which reflected the interest from these two accounts as income. This

accounting showed that the conservatorship estate had total assets in the amount of

$3,871.11.1

Lillie Davis died intestate on October 5, 1991. Grahl was appointed and

qualified as administratrix of her estate. Sometime in November of 1991, Grahl, in

her capacity as conservator, filed a motion to approve a final accounting and transfer

the remaining assets in the conservatorship estate to the administratrix. The final

accounting indicated total assets in the conservatorship estate in the amount of

$1,937.17.

1
Though none of these documents bear a stamp from the clerk’s office, reflecting the precise
date of filing, the parties agree that the documents were filed with the clerk. However, no court action
was tak en on the m.

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 On November 20, 1991, the trial court approved the final accounting and

termination of the conservatorship. The defendants received no notice of the hearing

or order approving the final accounting. On December 17, 1991, the defendants filed

a motion to amend, alter, or modify the order, or in the alternative to grant a new trial

on the motion to approve the final accounting. The trial court denied the motion, but

the Court of Appeals reversed the denial and remanded the case for further

proceedings, finding that the defendants “are entitled to be heard on the matter of the

final accounting and settlement of the conservatorship.”

The trial following remand focused on whether Grahl, as conservator, had

breached her fiduciary duty by allowing Omer Davis to transact the certificates of

deposit and purchase other certificates which did not reflect the conservatee’s

ownership interest. The conservator testified that Omer Davis had been diagnosed

with cancer in November of 1988 and that he had been told by physicians that the

cancer would likely be fatal within two years. Because of his deteriorating physical

health, Omer Davis moved out of his home and into the same nursing home where

Lillie Davis was already residing. This move culminated in the petition to sell the

jointly owned property which was converted to a conservatorship proceeding.

Grahl testified that at the time of the conservatorship proceeding, and later,

when the inventory was filed, the deceased conservatee and her husband, Omer

Davis, held three certificates of deposits in the name of “Omer or Lillie Davis” and a

fourth certificate of deposit in the name of “Omer Davis, Trustee for Mrs. Omer

Davis.”

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 Consistent with the summary attached to the first annual accounting, Grahl

testified that, after her appointment as conservator, Omer Davis, on June 22, 1989,

redeemed First Tennessee Bank certificate of deposit number 219244, which was

owned by “Omer Davis or Lillie Davis.” He combined the proceeds from the

certificate, $69,485.35, with additional funds and purchased another First Tennessee

Bank certificate of deposit in the amount of $100,000.00, in the name of “Omer Davis

or Geneva Grahl,” as joint tenants with the right of survivorship.

On June 28, 1989, Omer Davis redeemed First American National Bank

certificate of deposit number 0096463, which was held in the name of “Omer Davis

or Lillie Davis.” He received a cashier’s check payable to “Omer Davis or Lillie Davis”

in the amount of $28,530.72. He negotiated the cashier’s check at First Federal

Savings and Loan Association of Maryville, combined it with other funds he had at

that institution, and purchased a First Federal certificate of deposit in the amount of

$90,983.90, in the name of “Omer Davis or Geneva Grahl,” as joint tenants with right

of survivorship.

On August 17, 1989, Omer Davis transferred the entire balance in the amount

of $84,816.87 from the First Federal Savings and Loan Association of Maryville

certificate of deposit number 1207825, which was held in the name of “Mr. Omer

Davis, Trustee for Mrs. Omer Davis,” to a new First Federal certificate of deposit held

solely in the name of “Omer Davis.”

Finally, on August 17, 1989, Omer Davis redeemed First Tennessee Bank

certificate of deposit number 0109679, which was held in the name of “Omer Davis

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or Lillie Davis.” He deposited the proceeds in the amount of $13,723.59 into an

existing joint savings account at First Tennessee Bank in the names of “Omer Davis

or Geneva Grahl.” These proceeds remained on deposit for less than a month, until

Geneva Grahl withdrew the proceeds, and additional funds from the account, and

purchased a new certificate of deposit at First Tennessee in the amount of

$15,000.00, which was held in the sole name of “Omer Davis.”

Grahl testified that she drove her father to the financial institutions and

accompanied him when he accomplished these transactions. It is undisputed that

Omer and Lillie Davis were married at the time these transactions were effected.

Grahl testified that she had realized Omer Davis was transacting certificates of

deposit which reflected the conservatee’s ownership interest and transferring the

funds to certificates of deposit which did not reflect the conservatee’s ownership

interest. Grahl testified that she had taken no action to stop Omer Davis from

completing these transactions. When asked why she had not taken any action, Grahl

replied that her father had known the consequences of his actions and could not be

easily dissuaded after he had decided on a course. Grahl also said that she had

been unaware that she was supposed to do anything to stop him. Grahl had become

the owner of two of the successor certificates of deposit by right of survivorship upon

the death of her father, and she had become the owner of the two successor trust

accounts after the death of the conservatee, her mother, under the terms of her

father’s will.

With respect to the joint checking account listed on the inventory of the

conservatorship assets, Grahl testified that it had been utilized by her father for his

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personal purposes, and she had opened a separate conservatorship account. After

her appointment as conservator, Grahl’s name had been added to the joint account

so that she could write checks on it if needed. Following the death of Omer Davis in

1989, the conservator expended several hundred dollars from the joint account on

behalf of the conservatee. Thereafter, she transferred the remaining balance in the

amount of $396.17, from the joint account to the conservatorship account.

The defendants also testified at the hearing and said that they had no

knowledge of undue influence or fraud on the part of the conservator in relation to the

transactions involving the certificates of deposit. The defendants testified that they

had seldom seen their grandparents in the years preceding their death.

Based upon this proof, the trial court again granted Grahl’s motion and entered

an order approving the final accounting and transfer of the funds to the administratrix

of the probate estate of Lillie Davis. In so holding, the trial court stated that the

conservator had committed no fraud or undue influence and that Omer Davis had the

unquestioned authority to engage in the transactions involving the accounts in this

case. The Court of Appeals reversed the trial court’s judgment, finding that three of

the certificates of deposit purchased by Omer Davis with funds from the joint

accounts of Omer and Lillie Davis remained property owned by them as tenants by

the entirety, even though the conservatee’s name did not appear on the successor

instruments. As to the funds in the fourth trust certificate which had been transferred

to Omer Davis, the intermediate court held that the conservator had a duty to act to

protect the interest of the conservatee. Thereafter, we granted permission to appeal

to determine whether the conservator violated her fiduciary duty to the conservatee.

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On the separate grounds stated below, we affirm the judgment of the Court of

Appeals.

FIDUCIARY DUTIES

We begin our analysis with a brief review of the fiduciary duties which govern

the actions of a conservator. The purpose of appointing a conservator is “to preserve

the estate of an incompetent or disabled person.” Tenn. Code Ann. § 34-4-202 (1991

Repl.).2 Pursuant to Tenn. Code Ann. § 34-4-207 (1991 Repl.), a conservator “shall

have the same duties and powers as a guardian of a minor, and all laws related to

the guardianship of a minor shall be applicable to a conservator.” A conservator

occupies a fiduciary position of trust of the highest and most sacred character. See

Meloy v. Nashville Trust Co., 177 Tenn. 340, 149 S.W.2d 73 (1941). The

conservator is to manage the conservatee’s estate to the best advantage. See

Steele v. Reese, 14 Tenn. (6 Yer.) 263 (1834). The conservator should endeavor to

manage the estate so that if the incompetent person recovers, he or she will find the

estate as nearly as possible in the same condition as he or she left it. Folts v. Jones,

175 Tenn. 74, 132 S.W.2d 204, 208 (1939). A conservator should not change the

character of the conservatee’s property interests unless the change is necessary to

protect and promote the interests of the conservatee. Id. In considering a

conservator’s request to cash a life insurance policy for the benefit of the

conservatee’s estate, this Court, in Folts v. Jones, stated:

2
W e are aware that Tenn. Code Ann. §§ 34-4-101 through 34-4-310 have been repealed and
replaced with Tenn. Code A nn. §§ 34-11-101 through 34 -13-109, which becam e effective January 1,
1993. However, this circumstance was not raised by the parties in the Court of Appea ls or in this Co urt.
Therefore, statutory citations are to the C ode prov isions in effect prior to January 1, 1993. However,
in our view, t he ne w law wou ld not chan ge th e out com e of th is app eal.

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 Before the character of the interest in property held by a [conservatee]
can be changed, it must be made manifest that it is necessary to
protect and promote his interest. Although as a rule, the court will
preserve, as far as possible, the interests of the succession, this rule
yields to the paramount rule which makes the [conservatee’s] welfare
the first consideration without regard to the rights of those who may
have eventually rights to succession.

Id.; see also Morris v. Morris, 195 Tenn. 133, 258 S.W.2d 732 (1953).

A conservator is not the alter ego of the conservatee, however, and has no

authority to exercise an elective right or power of the conservatee. Folts, 132 S.W.2d

at 207. Therefore, a conservator has no authority to terminate joint accounts in which

the conservatee has an interest or to change a beneficiary on a life insurance policy.

Folts, 132 S.W.2d at 207; see also Howard v. Imes, 90 So.2d 818 (Ala. 1956); In Re:

Estate of Wright, 424 N.W.2d 268 (Mich. 1988); Hendricks v. Grant County Bank,

379 P.2d 693, 697 (Okla. 1963); Matter of Guardianship of Rich, 520 N.W.2d 63

(S.D. 1994); Rozycke v. Sroka, 279 N.E.2d 155 (Ill. Ct. App. 1972); Matter of Estate

of Briley, 825 P.2d 1181 (Kan. Ct. App. 1992); Maess v. Greenfield, 547 S.W.2d 777

(Ky. Ct. App. 1977); Strain v. Rossman, 614 P.2d 102 (Or. App. 1980). Instead, the

conservator must petition the court, and the court, on behalf of the conservatee, can

exercise such an election if it is clearly proven to be in the best interests of the

conservatee. Folts v. Jones, 132 S.W.2d at 207; see also Schlieper v. Rust, 360

N.E.2d 1192, 1197 (Ill. Ct. App. 1977); Rozycke v. Sroka, 279 N.E.2d at 158.

A conservator owes the conservatee an undivided duty of loyalty. 18 Tenn.

Juris., Mentally Ill and Other Incompetents, § 8, p. 323 (1984). The conservator

cannot be allowed by law to have any inducement to neglect the interests of the

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conservatee. Freeman v. Martin, 181 Tenn. 470, 181 S.W.2d 745, 746 (1944).

Therefore, it is generally held that a conservator violates his or her fiduciary duty by

acquiring, by purchase or otherwise, the property of the conservatee. Id.; see also

Lanius v. Donnell, 222 Tenn. 158, 432 S.W.2d 659 (1968).

Having generally described the fiduciary obligations of a conservator toward

the property and estate of the conservatee, we must next consider whether the

conservatee had a proprietary interest in the certificates of deposit and the joint bank

account. To that end, we begin with the well-settled proposition that tenancy by the

entirety is a form of property ownership which is unique to married persons. Griffin

v. Prince, 632 S.W.2d 532, 534 (Tenn. 1982). The essential characteristic of a

tenancy by the entirety is that “each spouse is seized of the whole or the entirety and

not of a share, moiety, or divisible part.” Sloan v. Jones, 192 Tenn. 400, 241 S.W.2d

506, 507 (1951). Upon the death of one spouse, ownership of tenancy by the

entirety property immediately vests in the survivor, and the laws of descent and

distribution do not apply. Id. at 509. It is well-settled in this state that personal

property as well as realty may be owned by spouses by the entirety. Griffin, 632

S.W.2d at 535. It has also been expressly held that a tenancy by the entirety with the

right of survivorship may exist in certificates of deposit and bank accounts. White v.

Watson, 571 S.W.2d 493, 495 (Tenn. App. 1978); Smith v. Haire, 133 Tenn. 343,

181 S.W. 161 (1915) (certificates of deposit); Sloan, supra, and Griffin, supra, (bank

accounts). In fact, there is clear authority in this state that a bank account or

negotiable instrument in the name of “husband or wife” will be deemed to create a

tenancy by the entirety with right of survivorship, in the absence of proof to the

contrary. Griffin, 532 S.W.2d at 536.

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 Applying these longstanding principles to the facts in this case, it is clear that

when the conservator filed the inventory, three of the certificates of deposit and the

joint bank account were held by Lillie Davis and Omer Davis as tenants by the

entirety, with right of survivorship. There is no proof to the contrary in this record. The

fourth certificate of deposit was held by Omer Davis, as trustee for the conservatee,

Lillie Davis. Therefore, the conservatee had a proprietary interest in the certificates

of deposit and in the joint checking account. Further, that interest was listed as an

asset of the conservatorship estate on the initial inventory. From the very beginning,

therefore, the conservator had a duty to preserve the conservatee’s property interest

in those assets. We must next determine if the conservator breached her fiduciary

duty when she allowed and assisted Omer Davis to transact the certificates of deposit

and utilize the joint checking account.

Relying upon a decision of the Court of Appeals, Mays v. Brighton Bank, 832

S.W.2d 347 (Tenn. App. 1992), perm. app. denied, the conservator argues that

Omer Davis, as one of the entirety tenants, had the right to redeem the certificates

of deposit, reduce the entire amount to his separate possession, and reinvest the

proceeds. According to the conservator, under such circumstances, the divested

spouse can recover the funds only if fraud is alleged and proven. She asserts that

the defendants have neither alleged nor proven fraud in this case, and therefore are

not entitled to recover the funds.

Relying upon this Court’s decisions in Griffin and Sloan, the defendants

respond that the conservatee’s interest was not defeated because money withdrawn

from a tenancy by the entirety account is impressed with the entirety provision. The

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defendants also claim that the conservator’s reliance upon Mays is misplaced

because Mays is factually distinguishable and inconsistent with this Court’s decisions

in Griffin and Sloan.3

The conservator fails to recognize that this case does not involve a dispute

between two competent persons over funds withdrawn from a tenancy by the entirety

account. In our view, resolution of this appeal does not depend upon the rights of

Omer Davis. Instead, resolution of this appeal depends upon whether the

conservator violated her fiduciary duties by allowing and assisting Omer Davis to

transact and utilize accounts in which the conservatee had an interest. Evaluating

the conservator’s actions and inaction in light of the fiduciary obligations previously

delineated, we clearly must answer that question in the affirmative.

Whatever the rights of Omer Davis, Grahl had a fiduciary obligation to protect

and conserve the assets of the conservatee. Grahl owed a duty of undivided loyalty

to the conservatee. Moreover, Grahl had no authority to change the character of the

conservatee’s property interests unless the change had been necessary to protect

3
W e note that in Sloan this Court, in considering whether an account payable to “husband or
wife” created a tena ncy by t he en tirety, q uote d with appr oval th e follo wing pass age from a Pe nns ylvania
case,”W here a deposit is made payable to either spouse, agency or authority exists by implication, and
the husband or th e wife m ay, from that autho rity, withdraw the entire acc ount, but the money thus
withdrawn is impre ssed w ith the entirety pro vision that it is the property of both, and any one dealing
with such spec ific pro perty a s se vera lty, kno wing it belongs to both, must submit to the consequences.”
Sloan, 241 S.W.2d at 508- 509 (em pha sis added and internal quotations omitted), quoting Madden v.
Gos ztonyi Sav. & Trust Co., 200 A. 624, 630 (Pa.1938). This passage was again quoted and reaffirmed
in the more recent case of Griffin v. Prince, 632 S.W.2d at 536.

The intermediate court in Mays characterized the legal statu s of prop erty purch ased w ith
tenancy by the entirety funds as a question of first impression. That precise question was not at issue
in Sloan and Griff in, so technica lly, the charac terization is co rrect. Th e interm ediate court decided the
issue by rejecting the decision of the Pennsylvania Supreme Court, quoted with approval in Sloan and
Griff in, and by adopting instead the position of the Ark ansas courts that funds withdrawn by one spouse
from a ten anc y by the entir ety account are not impressed with the entirety provision and can not be
recovered by the other spous e abse nt a show ing of frau d. Mays appears to be incon siste nt with this
Cou rt’s pr ior de cisio ns. H owe ver, w e nee d not reac h this issue to res olve th is app eal.

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and promote the interests of the conservatee. The proof in this record established

that the principal amount of the certificates of deposit were never utilized to meet the

needs of the conservatee. Even if a conservator deems it necessary to change the

character of property to meet the needs of the conservatee, the appropriate course

of action is to seek court approval. Folts, 132 S.W.2d at 207.4 If a conservator has

no authority to change the nature of the conservatee’s interest for the benefit of the

conservatorship estate, certainly a conservator has no authority to act or fail to act

so that the conservatee’s interest is completely extinguished, with no benefit to the

conservatorship estate. Therefore, when Omer Davis expressed his desire to transact

the certificates of deposit, as conservator, Grahl was obligated to seek guidance from

the trial court. This proposition applies with equal force to both the certificates of

deposit held jointly by Omer and Lillie Davis and to the certificate held by Omer Davis

as Trustee for Mrs. Omer Davis. Accordingly, Grahl had no authority to consent to

the withdrawal of the funds on behalf of the conservatee, and violated her fiduciary

duty by failing to petition the trial court for guidance.5

Moreover, in this case, Grahl personally benefited by allowing Omer Davis to

transact the certificates of deposit. Grahl was named as the joint tenant with right of

survivorship on two of the successor certificates of deposit. Therefore, Grahl became

the owner of those funds immediately upon the death of Omer Davis. By virtue of the

fact that Omer Davis changed the other two successor certificates of deposit into his

4
See Tenn. Code Ann. 34-11-115(c) (1997 Repl.), which specifically requires a cons ervator to
seek court ap proval be fore cha nging the nature o f a cons ervatee ’s investm ent.

5
Seeking guidance from the trial court was particularly important in this case because, on
January 10, 1 989 , Om er Da vis had executed a power of attorney appointing Geneva Grahl attorney
in fact. The dual capacity in which Grahl was func tioning, attorney-in-fact for Omer Davis and
conservator for Lillie Davis inherently, posed a conflict of interest with respect to the assets in which
they both held interests.

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name alone, they passed through his will to Grahl to be held in trust for the

conservatee, Lillie Davis. Upon the death of the conservatee, Grahl became the

owner of these funds. By allowing Omer Davis to transact the certificates of deposit,

Grahl eventually acquired legal ownership of the funds which otherwise would have

passed to the conservatorship estate, by right of survivorship, upon the death of

Omer Davis. Therefore, Grahl violated her fiduciary duty by acquiring the property

of the conservatee.6

Moreover, contrary to the conservator’s assertion, damages arose as a result

of the breach of her duties. Though the proof is undisputed that the personal needs

of the conservatee were fully satisfied, the proof also clearly demonstrates that the

assets in the estate of the conservatee substantially decreased as a result of the

action and inaction of the conservator. Since Grahl was functioning as conservator

of the person and estate of Lillie Davis, she was duty bound to carefully manage the

estate in addition to providing for the personal needs of the conservatee.

CONCLUSION

Having determined, for the reasons previously explained, that the conservator

breached her fiduciary duties by allowing Omer Davis to redeem the certificates of

deposit without first seeking court approval, and by dealing with the conservatee’s

property so as to eventually attain a personal benefit, we affirm the judgment of the

6
In so holding, we do not by any m eans im ply that Grah l acted in ba d faith or fra udulently. In
fact the proof in this case, including the testim ony of the d efenda nts, indicate s that she did not.
However, when she was appointed conservator, she was then bound to act in accordance with the
duties imposed by law upon all fiduciaries. The good faith of a conservator does not justify a breach
of those strict legal requirements.

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Court of Appeals reversing the judgment of the trial court approving the final

accounting of the conservator. This cause is remanded to the trial court for a new

and correct final accounting under which the conservator shall be required to restore

to the conservatorship estate of Lillie Davis the total amount of the four certificates

of deposit when redeemed in 1989 and interest earned on that sum from the dates

of redemption to the date of restoration to the conservatorship estate. The

conservator shall also be required to account for the amount of funds held in the joint

checking account at the time of the initial accounting, $1,167.71, and restore to the

conservatorship estate any portion of that amount for which a proper accounting is

not provided. The trial court shall allow a set off for the interest that was deposited

to the conservatorship estate after the date of redemption of the certificates of

deposit.

_____________________________________
FRANK F. DROWOTA, III,
JUSTICE

Concur:

Anderson, C. J.
Reid, Birch, Holder, JJ.

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