## Facts

- John J. Pascale, Sr. founded Quality Tool & Die Co., Inc., and later formed another profitable company; he transferred the second company’s stock to one son, John Jr.
- David Pascale, John Sr.’s other son, worked full-time for Quality beginning in 1971 and became closely aligned with his father after family conflict and divorce litigation.
- During the divorce, John Sr. executed a backdated stock transfer to David to minimize his apparent net worth in the matrimonial matter.
- Separately, John Sr. later pursued estate planning intended to transfer his business assets (including all Quality stock and related real estate) to David while minimizing taxes.
- John Sr. retained attorney Bernard Berkowitz for the estate plan, instructed him to structure the transfers so David would receive the assets with minimal tax consequences, and directed that Berkowitz work primarily through David.
- John Sr. executed the transfers, and David executed a will prepared by Berkowitz the same day; witnesses (Berkowitz and an accountant) believed John Sr. understood the plan and that it gave David control of Quality.
- In 1981, John Sr. and David’s relationship deteriorated; David ordered John Sr. to leave the business premises and terminated his salary.
- John Sr. sued to rescind the stock and real estate transfers, alleging a confidential relationship, attorney conflict of interest, and undue influence.

## Issues

1. Whether a confidential relationship between father and son in connection with an inter vivos transfer created a presumption of undue influence, and whether the donee rebutted that presumption by clear and convincing evidence.
2. Whether dual representation by the same attorney for donor and donee, without adequate disclosure and consent, required invalidation of the transfers.

## Decision

- The New Jersey Supreme Court reversed the Appellate Division and reinstated the Chancery Division’s judgment for David and Quality.
- The Court held that John Sr.’s reliance on David for financial and legal affairs established a confidential relationship sufficient to raise a presumption of undue influence as to the inter vivos transfers.
- The Court found the attorney’s dual representation placed him in a conflict position and that disclosure fell short of applicable professional standards.
- The Court nonetheless held David rebutted the presumption by clear and convincing evidence that the transfers were fair, voluntary, and well understood by John Sr., and that John Sr. was not left without adequate support.
- The Court deferred to the trial court’s credibility-based findings that John Sr. intended and understood the transfers and that no undue influence occurred.

## Legal Principles

- An adult donor is presumed competent to make a gift.
- For inter vivos gifts, proof of a confidential relationship between donor and donee is sufficient to raise a presumption of undue influence; additional “suspicious circumstances” are not required.
- Once the presumption arises, the donee bears the burden to prove by clear and convincing evidence that no deception or undue influence occurred and that the transaction was fair, open, voluntary, and well understood.
- If an inter vivos gift leaves the donor without adequate means of support, the presumption of undue influence becomes conclusive.
- An attorney representing both sides of a transaction where interests may diverge must make full disclosure and obtain informed consent; a professional-conduct violation is relevant to undue influence but does not automatically void the transfer.

## Conclusion

The court upheld a father’s inter vivos transfer of closely held business interests to his son, holding that although the father’s trust in the son created a presumption of undue influence and the attorney’s dual representation raised concerns, the son rebutted the presumption with clear and convincing evidence that the father initiated, understood, and voluntarily completed the transfers while retaining adequate support.


Pascale v. Pascale, 549 A.2d 782 (N.J. 1988)