## Facts

- Blanche Fletcher Petersen, an elderly, stroke-impaired woman, lived in a hospital for many years and relied heavily on Paul Mathew, her longtime attorney, for personal and financial matters.
- In 1981 Petersen executed a written power of attorney appointing Mathew as her attorney-in-fact; it authorized management of her affairs but did not expressly authorize gifts to Mathew.
- After receiving the power of attorney, Mathew restructured Petersen’s assets by borrowing against certificates of deposit and creating new certificates and other transfers that placed Mathew and Petersen in joint positions or otherwise benefited Mathew.
- The estate alleged Mathew manipulated Petersen’s finances through these transactions and acquired approximately $500,000 of her money.
- After Petersen’s death, the personal representative sued Mathew in equity for fraud and undue influence, seeking an accounting and return of funds.
- The district court entered a general judgment for the estate against Mathew for $590,165.04, without specifying whether liability rested on fraud, undue influence, or both, and awarded prejudgment interest.

## Issues

1. Whether the estate proved fraud by clear and convincing evidence, considering the confidential/fiduciary relationship between Mathew and Petersen.
2. Whether an attorney-in-fact who benefits from transactions with the principal must prove the fairness of those transactions, particularly when the power of attorney does not expressly authorize self-gifting.
3. Whether the evidence required setting aside the transfers for undue influence.
4. Whether prejudgment interest was properly awarded.

## Decision

- The Nebraska Supreme Court affirmed the district court’s general judgment for the estate and against Mathew in the amount awarded.
- Because the judgment did not specify the theory, the court affirmed if the record supported either fraud or undue influence, and concluded the record supported recovery.
- The court rejected Mathew’s challenge to the sufficiency of proof of fraud under the clear-and-convincing standard in light of the fiduciary relationship and the transaction pattern.
- The court did not grant additional relief on the estate’s cross-appeal seeking an explicit undue-influence finding because the existing judgment already provided recovery.
- The court found no reversible error warranting alteration of the prejudgment-interest component in a manner that disturbed the estate’s recovery.

## Legal Principles

- In an equity appeal, the appellate court reviews the record de novo, reaching independent factual conclusions while giving weight to the trial judge’s opportunity to observe witnesses where testimony conflicts.
- A power of attorney is a written instrument authorizing another to act as an agent for the principal.
- A confidential relationship exists when one person gains another’s confidence and purports to act or advise with the other’s interests in mind.
- Fraud is never presumed and must be proved by clear and convincing evidence; whether conduct constitutes fraud is a fact question.
- A confidential or fiduciary relationship can support a fraud finding on circumstances that might be insufficient absent that relationship and can place the burden of producing explanatory evidence on the party accused of wrongdoing.
- Circumstantial evidence of fraud must be so related that the inference of fraud is the only fair and reasonable conclusion.
- An agent must act solely for the principal’s benefit in matters connected with the agency; when the fiduciary benefits from a transaction with the principal, the fiduciary bears the burden to prove the transaction’s fairness.

## Conclusion

The court upheld a substantial monetary judgment against an attorney-in-fact who used a power of attorney to arrange transfers that materially benefited himself, holding that the fiduciary relationship required close scrutiny and that the fiduciary failed to justify the fairness and propriety of the self-interested transactions; the general judgment was affirmed because the record supported recovery under at least one pleaded theory, and no reversible error was shown as to prejudgment interest.


Fletcher v. Mathew, 448 N.W.2d 576 (Neb. 1989)