Glover v. Cornish (In re Estate of Carlson)

• Decision Date: 20 January 2016
• Docket Number: No. 110,720.,110,720.
• Parties: In the Matter of the ESTATE OF Carol Jean CARLSON Debra Glover, Personal Representative of the Estate of Carol Jean Carlson, Appellant, v. Clifford Cornish, Farm Credit Services and Eldin Lewis, Appellees.
• Court: Oklahoma Supreme Court

367 P.3d 486

In the Matter of the ESTATE OF Carol Jean CARLSON

Debra Glover, Personal Representative of the Estate of Carol Jean Carlson, Appellant,
v.
Clifford Cornish, Farm Credit Services and Eldin Lewis, Appellees.

No. 110,720.

Supreme Court of Oklahoma.

Jan. 20, 2016.

Randall Allen Gill and Jeff K. Rhodes, Tulsa, OK, for Appellant Debra Glover.

Brent D. Coldiron, Oklahoma City, OK, for Appellees Clifford Cornish and Eldin Lewis.

Victor Eric Morgan, Tulsa, OK, for Appellee Farm Credit Services.

COMBS, V.C.J.:

¶ 1 At issue in this cause is whether the estate of a deceased grantor of mortgaged properties conveyed by transfer-on-death deed is liable for the underlying debt, when the grantor's will contained express instructions for the payment of all debts secured by mortgages. We determine that it is.

I.

FACTS AND PROCEDURAL HISTORY

¶ 2 Carol Jean Carlson (Decedent) learned she was terminally ill in 2011, and retained an attorney to assist her in planning the disposition of her estate (Estate). On August 24, 2011, Decedent executed three transfer-on-death deeds (TODDs) pursuant to the Nontestamentary Transfer of Property Act (NTPA), 58 O.S. 2011 §§ 1251 –1258 for real property she owned, as well as a Last Will and Testament. One of the pieces of real property transferred via TODD went to Debra Glover—who was later appointed Personal Representative of the Estate—and is not at issue in this appeal. The first of the other two TODDs named Appellee Clifford Cornish (Cornish) as grantee and the second named Eldin Lewis (Lewis). For purposes of this opinion, Appellees Cornish and Lewis will be collectively referred to as Grantees. Decedent died on August 29, 2011, five days after executing the TODDs and her Last Will and Testament.

¶ 3 The TODD to Lewis concerns the following parcel:

[a] tract of land being a part of the South Half (S/2) of the Northeast Quarter (NE/4) of Section Five (5), Township Twelve (12) North, Range One (1) West of the Indian Meridian, Oklahoma County, Oklahoma....

TODD to Eldin B. Lewis, R. 285.

Prior to Decedent's estate planning and the execution of the TODD, Decedent executed a promissory note in the amount of $140,224.35 on December 19, 2006, in favor of The Margee and Robert W. Minter Living Trust (Trust). R. 241. This note was secured by a mortgage, filed December 21, 2006, which encumbered the property conveyed to Lewis via the TODD. Mortgage of Real Estate, R. 242. Lewis timely accepted the TODD. On December 7, 2011, Lewis filed a proof of claim with the Personal Representative for the remaining debt in the amount of $123,530.09. The Personal Representative rejected Lewis' claim on December 16, 2011. Notice of Rejection of Creditor's Claim, R. 74

¶ 4 The TODD to Cornish concerns a 31–acre parcel of real property in Oklahoma County described as:

[a]ll that part of the West Half (W/2) of Section Thirty–Three (33), Township Fourteen (14) North, Range One (1) East of the Indian Meridian, Oklahoma County, Oklahoma,

367 P.3d 490

that lies West of the S.L. & S.F. Railroad right-of-way and South of Hogback road (sometimes referred to as Jones Spencer road).

Transfer on Death Deed to Clifford Earl Cornish, R. 59.

Previously, on May 27, 2007, Decedent executed a note and security agreement in favor of Appellee Farm Credit Services (FCS) in the amount of $96,000.00. The note is secured by a mortgage in favor of FCS executed on the same day and filed on May 29, 2007. A second note and security agreement, amending the first, were executed on September 16, 2010, for the amount of $83,778.60.

¶ 5 The record contains a letter from the Personal Representative's attorney dated November 2, 2011, advising Cornish that the property he was to receive through the TODD was subject to a mortgage. The letter noted the language of 58 O.S. 2011 § 1255(B), stated that the mortgage remained attached to the land, that the owner of the land remains responsible for paying it, and provided an enclosed disclaimer for Cornish to sign if he desired not to accept ownership of the property. Letter to Clifford Earl Cornish, R. 72–73.

¶ 6 Cornish instead decided to accept ownership of the parcel conveyed by the TODD, and signed an affidavit to that effect on December 4, 2011. During probate of the Estate, Cornish filed a creditor's claim against the Estate arguing that the note, security agreement, and mortgage were all executed by Decedent and the debt is the Estate's alone, citing a pay all debts provision in Decedent's Last Will and Testament. Claim of Clifford Earl Cornish, R. 79. The Personal Representative rejected Cornish's claim on December 16, 2011. FCS also filed a creditor's claim with the Personal Representative, for the amount of the note secured by the mortgage on the property granted to Cornish. FCS asserted that the full amount was due and payable under the terms of the note. The Personal Representative rejected this claim on December 22, 2011. The record indicates FCS has begun foreclosure proceedings on the property securing the note, taken by Cornish pursuant to the TODD.

¶ 7 FCS filed its Ancillary Petition on Claim on January 9, 2012. Grantee Cornish filed his Ancillary Petition on Claim on January 10, 2012. On January 10, 2012, the Personal Representative filed an Application for Order Determining the Extent of the Estate's Liability concerning the claims of Grantee Cornish and FCS. On January 27, 2012, Grantee Lewis filed his own Ancillary Petition on Claim. The Personal Representative filed a second Application for Order Determining Extent of Estate's Liability on February 3, 2012, concerning Grantee Lewis' claim.

¶ 8 On April 6, 2012, the trial court entered an order granting the Appellees' petitions, approving the ancillary claims, and finding the mortgages and notes to be liabilities of the Estate. The Personal Representative filed a Petition in Error on May 25, 2012. On appeal, Personal Representative contends the trial court erred as a matter of law by allowing the creditors' claims of Grantees and FCS because: 1) allowing the claims was contrary to the express language of 58 O.S. 2011 § 1255(A) and the purpose of the NTPA; 2) the trial court lacked jurisdiction because TODDs are nontestamentary instruments that may not be revoked by will; and 3) the intent/language of Decedent's Last Will and Testament was insufficient to override the provisions of the NTPA without express, specific language requiring payment.

¶ 9 The Court of Civil Appeals, in an opinion filed on June 11, 2015, reversed the decision of the trial court and remanded for further proceedings. The Court of Civil Appeals determined that Grantees did not have standing to pursue creditors' claims against the Estate to satisfy the notes and mortgages on their respective properties. Further, the Court of Civil Appeals determined that while FCS possessed standing as the holder of a note and mortgage, the trial court prematurely granted FCS' claim because FCS was required to foreclose on the property, obtain a deficiency judgment, and only then present a claim to the Estate for payment.

¶ 10 Grantees filed their Petition for Certiorari on June 24, 2015, asserting the Court

367 P.3d 491

of Civil Appeals decided a question of substance not heretofore determined by this Court. We granted certiorari on October 26, 2015, and the cause was assigned to this office on October 27, 2015.

III.

STANDARD OF REVIEW

¶ 11 Probate proceedings are of equitable cognizance. In re Estate of Holcomb, 2002 OK 90, ¶ 8, 63 P.3d 9 ; In re Estate of Sneed, 1998 OK 8, ¶ 8, 953 P.2d 1111. Although this Court will examine and weigh the evidence, there is a presumption that the trial court's decision is legally correct and cannot be disturbed unless found to be clearly contrary to the weight of the evidence or to some governing principle of law. In re Estate of Speers, 2008 OK 16, ¶ 8, 179 P.3d 1265 ; In re Estate of Holcomb, 2002 OK 90, ¶ 8, 63 P.3d 9. If legally correct, the trial court's ruling will not be reversed because of faulty reasoning, an erroneous finding of fact, or consideration of an immaterial issue. In re Estate of Speers, 2008 OK 16, ¶ 8, 179 P.3d 1265 ; In re Estate of Holcomb, 2002 OK 90, ¶ 8, 63 P.3d 9 ; In re Estate of Maheras, 1995 OK 40, ¶ 7, 897 P.2d 268.

IV.

ANALYSIS

A. The Trial Court Correctly Determined Appellees' Claims Are Liabilities of the Estate

¶ 12 The first question we must answer is whether the trial court erred when it determined the notes, secured by mortgages on the land transferred to Grantees, are liabilities of the Decedent's estate. We hold that it did not.

1. Decedent's intent, as expressed by her Last Will and Testament and the TODDs, was for her estate to pay all of her debts, including those secured by mortgages on the properties transferred to Grantees via TODD.

¶ 13 Of paramount importance in a probate proceeding is discerning and implementing a decedent's intent. Title 84 O.S. 2011 § 151 provides: "[a] will is to be construed...