Bennett v. King
| Decision Date | 15 June 2022 |
| Docket Number | Appellate Case No. 2020-000901,Opinion No. 28099 |
| Citation | 436 S.C. 614,875 S.E.2d 46 |
| Parties | Jacquelin S. BENNETT and Kathleen S. Turner as Personal Representatives of the Estate of Jacquelin K. Stevenson, Petitioners, v. ESTATE OF James Kelly KING and Genevieve S. Felder, Respondents. |
| Court | South Carolina Supreme Court |
Daniel Scott Slotchiver, Stephen Michael Slotchiver, and Andrew Joseph McCumber, all of Slotchiver & Slotchiver, LLP, of Mount Pleasant, for Petitioners.
George R. McElveen, III, of McElveen & McElveen, of Columbia, for Respondents.
In this case we decide whether the broad powers granted to a personal representative in a will extend to distributions under the will's residuary clause, and whether the personal representatives’ proposed distribution constituted a breach of their fiduciary duty. The probate judge, the circuit court, and the court of appeals all determined the broad powers did not govern distributions of the residual estate. Also, the court of appeals affirmed the probate court's finding that the personal representatives’ conduct constituted a breach of fiduciary duty. We hold the court of appeals erred and reverse.
This is a dispute between two daughters and a stepdaughter of the testatrix, Jacquelin K. Stevenson, who died on September 17, 2007. She was survived by six children: four from her marriage to Thomas Stevenson, a son by a former marriage, and a stepdaughter.1 Thomas Stevenson predeceased her in 1988, leaving her as the sole beneficiary of two trusts created by his will. The residual beneficiaries of the two trusts were her children by Stevenson—two sons, Thomas Stevenson III and Daniel Stevenson II, and two daughters, Kathleen Stevenson Turner and Jacquelin Stevenson Bennett. She died with a Last Will and Testament dated October 21, 1996, which devised all real property in her estate to her four children by Stevenson and made bequests of $400,000 to her son by her former marriage, James Kelly King, and her stepdaughter, Genevieve Stevenson Felder.2 While the step-children were left monetary bequests, the two daughters of the marriage received a house on Wadmalaw Island, South Carolina, and the two sons of the marriage were left a home located in Lake Summit, North Carolina. In addition to the Wadmalaw Island and Lake Summit properties, the testatrix also owned two properties not mentioned in the will: one lot on Edisto Island ("Bailey's Island") and another in Mount Pleasant ("Paradise Island").3 This dispute centers around the Lake Summit property, used by the family as a vacation home and rental.4
This litigation concerns only the two daughters of Thomas Stevenson by the testatrix and his daughter by a former marriage. The testatrix's two sons by Stevenson—Thomas and Daniel—stole millions from the estate while co-trustees from 1996 to 2006, thereby forfeiting any rights they had to take under their mother's will and leaving Jacquelin and Kathleen as the personal representatives.5 Her son by a former marriage is not involved in this action because his interest in the residuary estate was bought out by his two half-sisters and his stepsister.
The theft by Thomas and Daniel Stevenson left the estate with insufficient monies remaining to fund the specific bequests of $400,000 each to the two stepchildren of the marriage. Further, the bequest of the Lake Summit property to the two sons failed, sending it to the residuary, and because no amendment by codicil preceded the testatrix's demise, the after acquired properties of Bailey's Island and Paradise Island passed through the residuary as well. The residuary clause provided that "[a]ll the rest, residue and remainder of my property and estate ... I give, devise and bequeath to Kathleen S. Turner, Jacquelin S. Bennett, Thomas C. Stevenson, III, Daniel R. Stevenson, James Kelly King, and Genevieve S. Felder in equal shares." The probate court, the circuit court, and the court of appeals all interpreted this to mean in equal ownership interests rather than equal monetary values.
Just as the language of the residuary clause is relevant to the resolution of this dispute, so is section 10 of the will, which sets forth the powers of the personal representatives and expressly states the testatrix's intention to give broad discretion and flexibility to her personal representatives. Section 10.6 grants the personal representatives power to make distributions, "[w]ithout the consent of any beneficiary ... in cash or in specific property, real or personal, or an undivided interest, or partly in cash and partly in such property, ... without making pro-rata distributions of specific assets."
As personal representatives, Petitioners had the residuary properties appraised. Bailey's Island appraised for $725,000; Lake Summit for $1,100,000; and Paradise Island for $390,000. Petitioners then proposed a distribution of these three properties, splitting the Lake Summit property between themselves and allocating the remaining properties between the three parties, with Respondent receiving the majority of the Bailey's Island property. The appraised values assigned to the respective properties are not in dispute, nor is the fact that the proposed distributions are of equal monetary value; rather, only the manner in which Petitioners propose to allocate the properties is contested. Specifically, Respondent objects to not receiving an equal share of the Lake Summit property.
Respondent argued before the probate court that the proposed distribution was not fair and equitable, and that Petitioners, as personal representatives, were required to consider certain intangibles in dividing the properties, such as the fact that the Lake Summit property earned rental income and could be used, while the Bailey's Island and Paradise Island properties were unimproved lots. Petitioners, conversely, argued that these intangibles were taken into account in the appraisal of the properties; that it was stipulated that the appraisal was correct; that the proposed distribution was equal; and, that section 10.6 of the will afforded them broad powers to distribute the assets of the estate.
In its order, the probate court ruled the three parties should each receive an equal ownership interest in all three pieces of property. While the court noted Petitioners’ argument that the terms of the will gave them broad powers to distribute the properties so that each received an equal monetary share, section 10.6 of the will was not even mentioned in the order. Instead, the court relied on the residuary clause and held that the language the property should be distributed "in equal shares" meant each party should receive an equal ownership interest. In their motion to alter or amend, Petitioners argued, inter alia , that the specific terms of section 10.6 of the will afforded them broad discretionary powers to distribute the residuary assets of the estate. In its order denying the motion to reconsider, the probate court again relied on the language of the residuary clause and held that the testatrix's intent was to distribute property passing through the residuary estate in equal ownership shares. With respect to sections 10.1 and 10.6 of the will, the court held the broad powers granted to the personal representatives therein applied only to distributions of a specific asset and did not govern distributions under the residuary clause.
On appeal, the circuit court upheld the order of the probate court, accepting Respondent's argument that notwithstanding the broad powers granted to the personal representatives by the will, Petitioners were required to treat all beneficiaries equitably and fairly and to include "non-economic considerations such as sentimental value, utility, and other intangible factors" in their proposed distribution. Specifically, the circuit court held that Petitioners’ proposed distribution "serves no apparent purpose other than to favor themselves, allowing them to ‘cherry pick’ among the assets at the expense of the remaining beneficiary, which fails the test of equity and good faith." The circuit court upheld the order of the probate court on a breach of fiduciary duty by Petitioners.
Petitioners appealed to the court of appeals, which affirmed in an unpublished opinion. Bennett v. Est. of James Kelly King , Op. No. 2019-UP-412 (S.C. Ct. App. filed Dec. 31, 2019). The court of appeals held there was evidence in the record that the personal representatives’ proposed allocation of the residuary estate into shares of equal monetary value "would be inequitable because there is no reasonable purpose for their proposal." Additionally, the court of appeals held that "[a] plain reading of the Will supports the probate court's contention that Article 10.6 referred to the Will's grant of specific property, not the Residuary Estate." We granted certiorari and now reverse.
Whether the court of appeals erred in affirming the probate court's decision to reject the personal representative's proposal and instead dividing the Lake Summit property in pro-rata ownership shares?6
Throughout this litigation, the parties have assumed this was an action at law and that an "any evidence" standard of review controlled. However, an appellate court is not bound by the parties’ characterization of an action. Moreover, the circuit court clearly reviewed this case de novo, making findings of fact based on its own view of the evidence. Thereafter, the court of appeals viewed this as a will construction case and applied the "any evidence" standard. We acknowledge that ordinarily, an action to construe a will is an action at law, and appellate review is limited to correcting errors of law. Epworth Children's Home v. Beasley , 365 S.C. 157, 164, 616 S.E.2d 710, 714 (2005) ; Kemp v. Rawlings , 358 S.C. 28, 34, 594 S.E.2d 845, 848 (2004). However, an action for breach of...
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