Matter of Gordon v. Bialystoker Ctr

In Matter of Gordon v. Bialystoker Ctr. (45 N.Y.2d 692 [1978]), the Court of Appeals addressed the validity of a gift made by an elderly, infirm woman, shortly before her death, to the nursing home which she entered for the last 22 days of her life. In discussing the applicability of the law of constructive fraud, the Court (45 NY2d 692, 698-699, supra) stated as follows: "Under that doctrine, where a fiduciary relationship exists between parties, 'transactions between them are scrutinized with extreme vigilance, and clear evidence is required that the transaction was understood, and that there was no fraud, mistake or undue influence. Where those relations exist there must be clear proof of the integrity and fairness of the transaction, or any instrument thus obtained will be set aside or held as invalid between the parties' ( Ten Eyck v. Whitbeck, 156 NY 341, 353, 50 N.E. 963). As was said long ago, in articulating the concept of constructive fraud: 'It may be stated as universally true that fraud vitiates all contracts, but as a general thing it is not presumed but must be proved by the party seeking to relieve himself from an obligation on that ground. Whenever, however, the relations between the contracting parties appear to be of such a character as to render it certain that they do not deal on terms of equality but that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from an overmastering influence, or on the other from weakness, dependence, or trust justifiably reposed, unfair advantage in a transaction is rendered probable, there the burden is shifted, the transaction is presumed void, and it is incumbent upon the stronger party to show affirmatively that no deception was practiced, no undue influence was used, and that all was fair, open, voluntary and well understood. This doctrine is well settled' ( Cowee v. Cornell, 75 NY 91, 99-100). So here, the Appellate Division properly concluded that defendant, rather than plaintiff (as the Justice at Trial Term had held), bore the burden of proof on the issue whether Ida's gift of funds was freely, voluntarily and understandingly made."