Denny v. Regions Bank

• Decision Date: 19 September 2017
• Docket Number: No. SD 34697.,SD 34697.
• Citation: 527 S.W.3d 920
• Parties: David G. DENNY and Linda J. Denny, Trustees of the David G. Denny and Linda J. Denny Revocable Trust Dated June 17, 2003, Plaintiffs-Respondents, v. REGIONS BANK d/b/a Regions Mortgage, et al., Defendants-Appellants.
• Court: Missouri Court of Appeals

527 S.W.3d 920

David G. DENNY and Linda J. Denny, Trustees of the David G. Denny and Linda J. Denny Revocable Trust Dated June 17, 2003, Plaintiffs-Respondents,

v.REGIONS BANK d/b/a Regions Mortgage, et al., Defendants-Appellants.

No. SD 34697.

Missouri Court of Appeals, Southern District, Division Two.

Filed: September 19, 2017

Attorney for Appellants: Mark C. Fels of Springfield, MO.

Attorney for Respondents David and Linda Denny: Paul F. Sherman of Springfield, MO.

Attorney for Respondent S&W Foreclosure Corp.: Michael J. Gilgrist of Maryland Heights, MO Respondents U.S. Bank, N.A., Tarquad Corp., and Terah Richardson acting pro se.

JEFFREY W. BATES, J.

This case is on appeal to this Court for the second time. See Denny v. Regions Bank , 479 S.W.3d 781 (Mo. App. 2016). Regions Bank (Bank) and Federal National Mortgage Association (FNMA) (hereinafter collectively referred to as Defendants) appeal from a judgment entered after a bench trial on remand. The underlying action involved a quitclaim deed (the Quitclaim Deed) from the trustees of the David G. Denny and Linda J. Denny Revocable Trust (the Trust) that conveyed certain real property (the Property) to John and Terah Richardson (the Richardsons).¹ The judgment declared that: (1) the Quitclaim Deed reserved a life estate in the Property, held by the trustees and measured by the natural lives of David and Linda; and (2) that instrument conveyed a vested remainder to the Richardsons, which was later purchased at a non-judicial foreclosure sale by Bank and deeded to FNMA.

Defendants present two points on appeal. In Point 1, Defendants contend the trial court erred by admitting extrinsic evidence concerning the Dennys' intent as grantors in executing the Quitclaim Deed. In Point 2, Defendants contend the language in the Quitclaim Deed was legally ineffective to reserve a life estate. Finding no merit in either point, we affirm.

Factual and Procedural Background

The Dennys were the trustees of the Trust. The Dennys owned the Property as tenants by the entirety. In 2003, they executed a deed conveying the Property to themselves in their capacities as trustees of the Trust. In 2005, the Dennys executed the Quitclaim Deed, in their capacity as trustees of the Trust, conveying the Property to the Richardsons.² In relevant part, the Quitclaim Deed stated:

WITNESSETH, The said Grantor, for and in consideration of the sum of $10.00 Ten and no/100 –––––––––––––––– DOLLARS, and other valuable consideration paid to the Grantor, the receipt of which is hereby acknowledged, do by these presents, * Remise, Release and forever Quit Claim, unto the Grantee the following [legal description of the Property].

* Grantors reserve unto themselves a life estate in the land conveyed by this Deed.

In 2007, the Bank recorded a deed of trust on the Property to secure a loan to the Richardsons. Bank's title insurance commitment and lender's title policy noted and included an exception for the life estate mentioned in the Quitclaim Deed. The Richardsons defaulted on their loan in 2012. The Bank purchased the Property at a non-judicial foreclosure sale and deeded it to FNMA.

The Dennys brought a quiet title action in their capacities as trustees to obtain declaratory relief that they had a life estate in the Property and that Defendants had no interest in the Property. By counterclaim, Defendants asked the trial court to declare, inter alia , that Defendants' title was superior to any interest of the Dennys. On cross-motions for summary judgment, the trial court made the following rulings:

1. The Dennys acted in their capacities as trustees of the Trust in deeding the Property to the Richardsons "with language that expressly included 'Grantors reserve unto themselves a life estate in the land conveyed by this [Quitclaim] Deed.' "

2. By such language, the Dennys intended to convey the Property "subject to the lives of David Denny and Linda Denny personally, husband and wife."

3. "FNMA does have title, but that title is subject to the Life Estate of David G. Denny and Linda J. Denny, personally."

Defendants appealed from the judgment. A summary judgment in favor of the moving party is only appropriate "when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law." Nationwide Ins. Co. v. Dugger, 484 S.W.3d 377, 379 (Mo. App. 2016). Defendants contended the Dennys failed to establish as a matter of law that they held personal life estates in the Property. This Court agreed:

[T]he judgment that the Dennys hold a life estate personally lacks record support in two respects: (1) that they intended to hold such estate personally, not as trustees; and (2) even assuming such intent, that they took appropriate legal action to accomplish this (contrast their 2003 deed of the Property into their trust).

Denny, 479 S.W.3d at 783 (italics in original). We remanded the case and expressed no opinion as to "whether the Dennys could prevail on any claim for life estate at a full-blown trial on remand." Id.

Thereafter, the trial court held an evidentiary hearing at which the Dennys testified. During this hearing, defense counsel objected to testimony from the Dennys concerning their intent in executing the Quitclaim Deed. The ground for the objection was that the language of the Quitclaim Deed was unambiguous. The trial court received the Dennys' testimony, subject to the objection, and stated that a ruling on the objection would be included in the judgment.

The Dennys' testimony was consistent in all material respects. Linda testified that she and David had drafted the Trust and the Quitclaim Deed without the assistance of a lawyer. Linda typed in the language in the Quitclaim Deed stating that "Grantors reserve unto themselves a life estate in the land conveyed by this Deed." Linda had copied the language from an earlier deed that conveyed real property from David's father to the Dennys and reserved a life estate for David's father. The Dennys had previously conveyed land to another relative, who "lost it financially." As a result, the Dennys wanted to retain some control of the Property when they, acting as trustees of the Trust, conveyed the Property to the Richardsons. The Property had been the family farm for "over a hundred years[,]" and the Dennys "felt like the life estate would work ... to reserve our lives that they didn't get it in full until we were both dead." As Linda testified, "once we die, of course, the life estate dies with us." David testified that Linda typed up the Quitclaim Deed with the asterisk "to kind of keep a handle on it 'cause you never know what kids are going to do." According to David, the term "themselves" in the reservation clause referred to Linda and him.

In the judgment, the trial court decided that the language of the Quitclaim Deed was ambiguous and overruled the objection to the Dennys' testimony. The court found that the Dennys' testimony was credible and that the Dennys' intent, "acting as Trustees, was indeed to convey the Subject Property to The Richardsons, subject to a life estate vested in the Trust, the duration of which would be measured by the Dennys' personal lifetimes."³ This appeal followed.

Standard of Review

"The judgment is presumed correct, and the appellant bears the burden of proving it erroneous." Randall v. Randall, 497 S.W.3d 850, 854 (Mo. App. 2016). In this court-tried case, our review is governed by Rule 84.13(d) and Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). In Re Bell, 481 S.W.3d 855, 858-59 (Mo. App. 2016). The judgment will be affirmed unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. We view the evidence in the light most favorable to the judgment and defer to the trial court regarding credibility determinations and assigning weight to witness testimony. Id. at 859. "The trial court is free to believe all, none, or part of the testimony of any witness." Metzger v. Franklin, 496 S.W.3d 547, 549 (Mo. App. 2016). We review issues of law de novo. Gray v. Shepard, 505 S.W.3d 317, 318 (Mo. App. 2016).

Point 1

In Point 1, Defendants contend the trial court erred by admitting extrinsic evidence of the Dennys' intent. This contention is based upon the following premises: (1) there was no ambiguity in the Quitclaim Deed; and (2) absent ambiguity, extrinsic evidence of the Dennys' intent was inadmissible.

The trial court decided the Quitclaim Deed was ambiguous. We review that legal ruling de novo. See McLallen v. Tillman , 386 S.W.3d 837, 840 (Mo. App. 2012). Defendants' argument also implicates the parol evidence rule:

The parol evidence rule is a rule of law, and not merely a rule of evidence. The parol evidence rule bars the use of extrinsic evidence unless the instrument to be interpreted is ambiguous. Whether a document is ambiguous is a question of law. Two types of ambiguities in an instrument may exist: (1) a patent ambiguity and (2) a latent ambiguity.

Emerald Pointe, L.L.C. v. Jonak, 202 S.W.3d 652, 659 (Mo. App. 2006) (internal citations omitted). A patent ambiguity is one arising on the face of the deed. Royal Banks of Missouri v. Fridkin, 819 S.W.2d 359, 362 (Mo. banc 1991) ; see also McLallen , 386 S.W.3d at 840-41.

We begin by noting that "every conveyance of real estate shall pass all the estate of the grantor therein, unless the intent to pass a less estate shall expressly appear, or be necessarily implied in the terms of the grant." § 442.460.⁴ The Dennys, in their capacities as trustees, held legal title to the Property. The first paragraph of the Quitclaim Deed expressly stated the Property was being conveyed to the Richardsons from the Dennys as trustees of the Trust and identified them as grantors.⁵ The reservation clause stated that "Grantors reserve unto themselves a life estate in the land conveyed by this Deed." (Italics added.) The use of this express reservation language was...