Haley v. Regions Bank

• Decision Date: 15 September 2003
• Docket Number: No. S03A1059.,S03A1059.
• Citation: 277 Ga. 85,586 S.E.2d 633
• Parties: HALEY et al. v. REGIONS BANK et al.
• Court: Georgia Supreme Court

586 S.E.2d 633

277 Ga. 85

HALEY et al. v. REGIONS BANK et al.

No. S03A1059.

Supreme Court of Georgia.

September 15, 2003.

Kilpatrick Stockton, Richard R. Cheatham, Stephen E. Hudson, Burleigh L. Singleton, Atlanta, for appellants.

Powell, Goldstein, Frager & Murphy, David G. Ross, Nicole J. Wade, Atlanta, William J. Linkous, Jr., Atlanta, Perry & Walters, Robert K. Raulerson, James E. Reynolds, Jr., Albany, Brock, Clay, Calhoun, Wilson & Rogers, Charles C. Clay, for other appellees. CARLEY, Justice.

W.B. Haley (Testator) executed his will in 1931, under which each of his seven children would receive an equal share of the estate as a "defeasible fee, subject to be divested, as to any one or more of them, by the death of such child without leaving lineal descendants surviving him or her." Testator died in 1950 and the will was probated in solemn form. In 1964, his widow and his eldest son, Herbert Haley, as co-executors under the will, filed a petition for construction of the will. In that case, this Court held that the lineal descendants of the children never actually became beneficiaries under the will, that the interest of each child of Testator was vested for life and contingent only as to the event of death without surviving lineal descendants, and that such interest, including reversionary and remainder interests, could be transferred during the child's lifetime. Busbee v. Haley, 220 Ga. 874, 142 S.E.2d 786 (1965). Testator's children subsequently executed agreements and quitclaim deeds (Transfer Documents) by which they granted to one another the reversionary interests which each had in the respective shares of the others.

Herbert died in July, 1999 and was survived only by his wife and adopted daughter. In December, 1999, Testator's two sole surviving children, Reeves and Joel, and two descendants of another child brought suit against Herbert's widow and Regions Bank (Appellees) individually and as co-executors under Herbert's will. Thereafter, Reeves died and his two sons were substituted as plaintiffs in their capacities as co-executors of their father's will. Joel voluntarily dismissed his claims. The remaining plaintiffs (Appellants) are seeking their alleged share of the portion of testator's estate which Herbert inherited under his father's will. In an extensive order, the trial court granted summary judgment in favor of Appellees on the ground that Herbert's adopted daughter is his "lineal descendant and thus no act of defeasance occurred under [Testator]'s will and on the further ground that the Transfer Documents are valid and bar any recovery by Plaintiffs." The trial court also denied Appellants' cross-motion for partial summary judgment, which was based on the alleged res judicata effect of Busbee.

1. Appellants contend that the trial court erroneously ruled that the Transfer Documents extinguished their rights to Herbert's interest in Testator's estate. According to Appellants, Herbert and the lawyer who represented both the estate and all but one of Testator's children acted to benefit Herbert personally despite his fiduciary capacity as executor.

"Equity encourages settlement of controversies by compromise, and especially family controversies." Cagle v. Justus, 196 Ga. 826, 832(1), 28 S.E.2d 255 (1943). See also McVay v. Anderson, 221 Ga. 381, 382, 144 S.E.2d 741 (1965); Mitchell v. Mitchell, 191 Ga.App. 139, 140(1), 381 S.E.2d 84 (1989). "It is well settled that agreements among the heirs at law to distribute or divide property devised under a will, in lieu of that manner provided by the will, are valid and enforceable. [Cits.]" West v. Downer, 218 Ga. 235, 241(5), 127 S.E.2d 359 (1962).

Such agreements have as their consideration the termination of family controversies. [Cit.] The agreements are supported by the public policy of furthering family harmony and avoiding lengthy litigation. [Cit.] The agreements are in essence solely contractual and governed by the rules applicable to all contracts. [Cit.]

Beckworth v. Beckworth, 255 Ga. 241, 243(1)(a), 336 S.E.2d 782 (1985). A family settlement is generally valid where the beneficiaries of a will exchange, by quitclaim deeds, future interests which were created to follow their defeasible fees, so as to achieve a merger and the vesting of a fee simple in each present holder. Towns v. Walters, 225 Ga. 293, 168 S.E.2d 144 (1969). See also Busbee v. Haley, supra at 880(3), 142 S.E.2d 786. And where, as here, "any interest of minors is based upon previous agreements of the adults, that interest is controlled by the agreement of the same adults[.] [Cits.]" McVay v. Anderson, supra at 382, 144 S.E.2d 741. See also Busbee v. Haley, supra at 877(1), 142 S.E.2d 786.

Those cases which forbid the executor from purchasing property at his own sale and allow the legatee to set aside any such sale, however fair and honest it may have been, are clearly inapplicable here. Dorsey v. Green, 202 Ga. 655, 659, 44 S.E.2d 377 (1947); Collier v. Collier, 137 Ga. 658, 664(1), 74 S.E. 275 (1912). Herbert acted as one of several heirs who exchanged reversionary interests in properties which had already been distributed. Thus, this appeal also differs from those cases regarding an executor's purchase of property from a legatee, rather than the estate. Compare Dorsey v. Green, supra; Collier v. Collier, supra. Cases involving family settlements simply impose the basic requirement that the "contract be fair and without fraud." Mercier v. Mercier, 50 Ga. 546, 548 (1874). See also McDonald v. McDonald, 180 Ga. 771(1), (5), 180 S.E. 815 (1935) (settlement must be procured without fraud, coercion, threats, or intimidation).

Appellants argue that the execution of the Transfer Documents was demonstrably against the economic interest of Testator's children, and that Herbert misinformed them that those documents were necessary in order to clear up a title problem. However, a family settlement agreement

"`will not be considered voluntary and without consideration, but will be enforced in equity as a fair family arrangement independent of its being a compromise of doubtful rights ... (.) To render valid such compromise agreements it is not essential that the matter should be in real doubt; but it is sufficient if the parties should consider it so far doubtful as to make it the subject of compromise.'" [Cit.] Once the existence of a family settlement is established, it will be enforced without an inquiry "`into the adequacy or inadequacy of the consideration.' (Cit.)" [Cit.]

Mitchell v. Mitchell, supra at 140(1), 381 S.E.2d 84. Moreover, the undisputed evidence of record shows the existence of adequate consideration for the execution of the Transfer Documents, as well as some difficulty with the existing condition of the title. Indeed, this Court has recognized the problem of how to transfer or release a future interest so as to merge the title. Towns v. Walters, supra at 295, 168 S.E.2d 144. Until that problem was resolved, the title of Testator's children, as the holders of the defeasible fees, was not in question, but the value and marketability of the property clearly was unsettled and could have caused considerable difficulty to an heir who wished to sell. Furthermore, by exchanging identical future interests, Testator's children passed legally indistinguishable consideration to one other. Of course, there were factual differences in each child's circumstances with respect to the existence of lineal descendants and the resulting potential for reversion. At the time of execution of the Transfer Documents, however, it was undeniably possible for the potential lineal descendants of a Testator's child to predecease that child. In addition, Georgia law conclusively presumes that the possibility of issue is not extinct until death. Clark v. C & S Nat. Bank, 243 Ga. 703, 706(2), 257 S.E.2d 244 (1979); Landrum v. Nat. City Bank of Rome, 210 Ga. 316, 318(1), 80 S.E.2d 300 (1954). Thus, although the circumstances of Testator's children caused the potential for reversion to vary, their rights were in doubt, and the compromise of such doubtful rights simply furnished additional consideration for the execution of the Transfer Documents. See Mitchell v. Mitchell, supra. Although the circumstances regarding lineal descendants never changed, such hindsight does not prove that the settlement was unfair at the time. Family agreements are binding even if it eventually turns out that had the party complaining "`not entered into the same he would have been more largely benefited.'" McDonald v. McDonald, supra at 772(9), 180 S.E. 815.

The only surviving child of Testator, Joel, testified by deposition that Herbert did not improperly influence his siblings or make any misrepresentations in connection with the Transfer Documents. Joel also testified that Testator's children understood the purpose of the documents to pass free and clear title which would become a part of each child's estate even if the child had no lineal descendants, and that Testator's children specifically intended for Herbert's adopted daughter to share in her father's estate. Even assuming that Joel was not clear regarding every legal detail and effect of the Transfer Documents, his deposition testimony stands as positive and uncontradicted evidence in support of summary judgment. In response to that direct evidence, Appellants rely on circumstantial evidence which is consistent with Joel's testimony and does not create a genuine issue of material fact. Evidence that Herbert asked his sister Marie to send a letter suggesting the exchange of future interests pursuant to Busbee does not contradict Joel's testimony. Instead, the evidence demonstrates that Marie agreed with the proposal and that Herbert believed, for whatever reason, that it would be better for the initial proposal to come from her. Where, as here, "`direct and positive testimony is presented on an issue, the...