Hoffman v. Gregory

• Citation: 204 S.W.3d 541
• Decision Date: 03 March 2005
• Docket Number: No. 04-934.,04-934.
• Parties: Betty HOFFMAN, Jimmy Brown, Molly Brown, John L. Bowen, Christopher Brown, Elizabeth S. Goodwin, Lynn Taylor, Appellants, v. Mary Ann GREGORY, the Revocable Trust of William J. Brown and Ann O. Brown, the Estate of Ann O. Brown, Deceased, Community First Trust Company, Appellees.
• Court: Supreme Court of Arkansas

204 S.W.3d 541

Betty HOFFMAN, Jimmy Brown, Molly Brown, John L. Bowen, Christopher Brown, Elizabeth S. Goodwin, Lynn Taylor, Appellants, v. Mary Ann GREGORY, the Revocable Trust of William J. Brown and Ann O. Brown, the Estate of Ann O. Brown, Deceased, Community First Trust Company, Appellees.

No. 04-934.

Supreme Court of Arkansas.

March 3, 2005.

COPYRIGHT MATERIAL OMITTED

Wright, Lindsey & Jennings LLP, by: C. Tad Bohannon, Little Rock, for appellants.

Friday, Eldredge & Clark, LLP, by: R. Christopher Lawson, Little Rock, for appellee.

ANNABELLE CLINTON IMBER, Justice.

This appeal concerns whether a memorandum written by Appellee Mary Ann Gregory constitutes an enforceable release of her expectancy interest in Ann O. Brown's estate. The circuit court held that the memorandum was not an enforceable release of her expectancy interest. We agree and affirm the circuit court's decision.

Appellee Mary Ann Gregory's grandparents, William J. Brown and Ann O. Brown, created a revocable living trust ("Trust") that listed Appellants Betty Hoffman, Jimmy Brown, Molly Brown, John L. Bowen, Christopher Brown, Elizabeth Goodwin, Lynn Crawford Taylor, and Appellee Mary Ann Gregory as the beneficiaries. Mr. Brown died on October 26, 1993, and his wife, Ann O. Brown, died almost ten years later on January 5, 2003. Four years before Mrs. Brown's death, Mary Ann and her husband moved into the Brown's home to provide personal care services for her grandmother.

On July 3, 2001, Mary Ann signed a memorandum requesting that she be removed from any proceeds left to her upon the passing of her grandmother, Ann O. Brown, or her mother, Betty Jo Hoffman. Later, on August 23, 2001, Mrs. Brown and Mary Ann signed a contract for personal care and indemnity agreement. According to this agreement, Mary Ann agreed to continue providing personal care services for Mrs. Brown, and, in return, Mrs. Brown agreed to pay Mary Ann for those services. The agreement also instructed the trustee of the Trust to defend Mary Ann from any claims made against her by family members for the recovery of any payments Mary Ann received from her grandmother. Subsequently, on September 28, 2001, Mrs. Brown executed her last will and testament. Under the terms of the will, Mrs. Brown devised a portion of the assets of the Trust, including the Browns' home and furnishings, to Mary Ann. The will also included an in terrorem, or a "no contest," clause. Shortly after Mrs. Brown's death on January 5, 2003, the will was admitted to probate as the last will and testament of Ann O. Brown, and Appellee Community First Trust Company was appointed executor of the estate.

Mary Ann then filed a petition in the Garland County Circuit Court for declaratory relief concerning the contract for personal care and indemnity agreement, which petition requested (1) a declaration that the agreement was valid and enforceable, and (2) an order directing the trustee to defend and hold her harmless from all claims asserted against her by other beneficiaries of the Trust.¹ Appellants responded by intervening in the proceeding filed by Mary Ann. They also petitioned for declaratory judgment in a separate action, seeking a declaration that the July 3, 2001 memorandum constituted an enforceable release of Mary Ann's expectancy interest in Mrs. Brown's estate. In addition to disputing the merits of Appellants' petition for declaratory judgment, Mary Ann urged the circuit court to find that Appellants' filing of the petition constituted a violation of the "no contest" provision of Mrs. Brown's will such that Appellants should be forever barred from taking any share of her estate.

Following a bench trial on both petitions, the circuit court denied Appellants' petition for declaratory judgment. In its order entered on June 3, 2004, the court found that the memorandum was nothing more than a request by Mary Ann that her grandmother not bequest anything to her by will or trust. Furthermore, the court stated that Mrs. Brown's subsequent action of executing a last will and testament that bequeathed a portion of the Trust, including real property, to Mary Ann was evidence that Mrs. Brown "declined to concede to [Mary Ann's] unilateral request." As to the relief requested by Mary Ann, the circuit court concluded that Appellants' petition for declaratory judgment did not constitute a "will contest" but merely represented an attempt to enforce a perceived unilateral agreement. Finally, the court ruled that the contract for personal care and indemnity agreement was ineffective to require the Trust to defend Mary Ann against any claims because Mrs. Brown signed the document in her individual capacity and not in her capacity as trustee. On June 9, 2004, an amended order was entered, which substantively mirrored the previous order but also included a certification pursuant to Ark. R. Civ. P. 54(b) (2004). From this order, Appellants appeal the denial of their petition to enforce the memorandum as a binding release of Mary Ann's expectancy interest in Mrs. Brown's estate. Mary Ann argues on cross appeal that the circuit court erred in finding that Appellants did not violate the "no contest" provision of the will and in declining to enforce the contract for personal care and indemnity agreement signed by Mary Ann and Mrs. Brown.

This case was assumed by us to balance the docket, which we may do pursuant to Ark. Sup.Ct. R. 1-2(g) (2004). Although the final distribution of Mrs. Brown's estate is still pending, the circuit court executed a Rule 54(b) certificate to permit an immediate appeal. See Ark. R. Civ. P. 54(b) (2004). We therefore have jurisdiction to consider this appeal.

A declaratory-judgment proceeding is reviewed in the same manner as any other judgment, and if there is any substantial evidence to support the finding upon which the judgment is based, it will be affirmed. Commercial Printing Co. v. Rush, 261 Ark. 468, 549 S.W.2d 790 (1977) (citing Mid-South Insurance Company v. Dellinger, 239 Ark. 169, 388 S.W.2d 6 (1965)). In determining whether there is any substantial evidence to support the circuit court's finding, we must view the record in the light most favorable to the appellee. Id. (citing Power v. Howard, 253 Ark. 1052, 490 S.W.2d 435 (1973)). The presumptions on appeal are all in favor of the validity of the judgment of the trial court. Id. (citing Woodman of Union of America v. Henderson, 186 Ark. 524, 54 S.W.2d 290 (1932)).

For Appellants' sole point on appeal, they argue that the circuit court erred when it decided not to treat the July 3 memorandum as an enforceable release of Mary Ann's expectancy interest in Mrs. Brown's estate. The memorandum signed by Mary Ann stated:

I am requesting as of the above date to be removed from any proceeds to be left to me upon the passing of either Ann O. Brown or Betty Jo Hoffman. These funds are meant to compensate any expenses my Grandmother has incurred while I was living with her.

This is a decision that I have made on my own accord without my coercion or duress. I would request immediate action on the part of the Trustee, Mr. Wingfield Martin, to finalize my request.

A release of an expectancy interest is an agreement whereby the prospective heir releases an interest in the ancestor's estate "in consideration of an advancement or for other valuable consideration." Leggett v. Martin, 203 Ark. 88, 94, 156 S.W.2d 71, 74 (1941). In the Leggett case, we specifically adopted the majority rule governing the enforceability of a release by an expectant heir in his or her ancestor's estate:

[T]he release of an expectant heir to an ancestor, in consideration of an advancement or for other valuable consideration, excludes the heir from participation in the ancestor's estate at his death, provided, in case part or all the estate is realty, there is such a writing as to satisfy the statute of frauds, and provided further that the person executing the release was at the time competent to contract, and that the release was not obtained by means of fraud or undue influence.

Id. (citing CJ: 18 C.J. Descent and Distribution § 112 (1919)). See CJS: 26B C.J.S. Descent and Distribution § 69 (2004). The Leggett court also referred to the majority rule as stated in ALR: Annotation, Release to ancestor by heir expectant, 28 A.L.R. 428 (1924):

The weight of authority is that an agreement between a prospective heir and his ancestor by which the former promises, in effect, to accept certain property or other valuable consideration then given him by his ancestor as his full share of the latter's estate, and to make no further claim as heir, is freely and fairly entered into, and made in such form (according to some of the cases) as to comply with the Statute of Frauds, is valid and will be enforced in the courts against such heir after the ancestor's death.

Id. This approach adopted in Leggett remains the majority rule used by courts in other jurisdictions. See Ware v. Crowell, 251 Va. 116, 465 S.E.2d 809 (1996); Martin v. Smith, 404 So.2d 341 (Ala. 1981); Stewart v. McDade, 256 N.C. 630, 124 S.E.2d 822 (1962); and Anderson v. Forbes, 169 Tenn. 223, 84 S.W.2d 104 (1935); Henrich v. Newell, 59 S.D. 372, 240 N.W. 327 (1932). See also CJS: 26B C.J.S. Descent and Distribution § 69 (2004). In general, these courts hold that releases by expectant heirs are enforceable if the agreement to release the expectancy is supported by valuable consideration and is free from fraud. Id. In sum, when a court considers whether an agreement to release an expectancy interest is enforceable, it evaluates the agreement for the same elements as it would in determining the enforceability of any contract: offer, acceptance and consideration. Id. Thus, as with any other agreement, an agreement to release an expectancy interest is not enforceable when it lacks proof that an offer to release the expectancy interest was made, that the offer was accepted, and that consideration of...