Laird v. Shelnut

Decision Date16 May 2002
Docket NumberNo. 01-1155.,01-1155.
Citation348 Ark. 632,74 S.W.3d 206
PartiesMelba LAIRD, Max Laird, Individually and In Their Capacities as Respective Trustees for the Melba Laird Living Trust and Max Laird Living Trust As Maintained By Stephens, Inc. v. Sandra SHELNUT, Executrix of the Estate of Don McMann, Deceased.
CourtArkansas Supreme Court

Hatfield & Lassiter, by: Richard F. Hatfield, Little Rock, for appellant.

Baxter, Jenson, Young & Houston, by: Ray Baxter, Benton, for appellee.

DONALD L. CORBIN, Justice.

Appellants Melba and Max Laird, individually and as respective trustees for the Melba Laird Living Trust and Max Laird Living Trust, appeal the order of the Saline County Chancery Court granting Appellee Sandra Shelnut's motion for summary judgment. On appeal, the Lairds argue that in deciding the issue of summary judgment, the chancellor improperly relied upon a transcript from another court proceeding, and that the proper record reflects genuine issues of material fact. The Lairds argue in the alternative that the chancellor erred in determining that $738,000 was to be held in a constructive trust. This appeal involves an issue of first impression; hence, our jurisdiction is pursuant to Ark. Sup. Ct. R. 1-2(b)(1). We affirm.

The events leading up to the present action date back to the execution of reciprocal wills by Don and Dixie McMann on June 23, 1995. Dixie had contacted attorney John Lovell to discuss the drafting of their wills. Dixie explained that her husband had a problem and that she was sickly. Dixie also told Lovell that her son-in-law was Alfred Shelnut, a friend of Lovell's and Sandra's husband. Lovell went to the McManns' home to meet with the couple on three separate occasions. During the initial meeting, the McManns told Lovell that they wished to leave their entire estate to Sandra, Dixie's daughter. Don also told Lovell that "he had a greedy sister and a worthless husband and he did not want them to share in anything that he and his wife had earned or acquired." During the second meeting, Lovell, at the request of the McManns, explained the effects of the wills to Sandra.

Thereafter, Lovell drafted reciprocal wills on behalf of Don and Dixie. Don's will contained the following reciprocal language:

FIFTH: I declare that this Will is executed contemporaneously with a Will of similar testamentary plan executed by my said wife, DIXIE MCMANN, and I declare that my said wife and I have agreed that we shall not alter, amend or change our Wills or do any act or suffer any omission which will have the effect of defeating the testamentary plan stated in our Wills, except by mutual agreement at the time when both of us are alive."

Dixie's will contained identical reciprocal language, but referenced Don as her spouse. The wills appointed Sandra Shelnut as executrix. The McManns' wills provided that upon the death of one of them, their estate would pass to the surviving spouse, until their death, and then the residue would pass to Sandra and Alfred Shelnut.

Dixie passed away on February 2, 1998. Four days prior to her death, Dixie, Don, and Sandra withdrew $900,000 from a joint account titled in all three parties' names, and split the proceeds evenly between Don and Sandra. Following Dixie's death, Don moved in with the Lairds. He added Melba, his sister and only surviving heir, to his investment account, as a joint owner with a right of survivorship. On July 14, 1998, Don executed a new will naming Melba executrix and sole heir.

Upon Don's death on June 5, 1999, Sandra attempted to probate the 1995 will with the Saline County Probate Court. Melba contested the will and sought to probate the 1998 will instead. In an order dated April 19, 2000, the probate court admitted the 1995 will to probate and appointed Sandra executrix. In an unpublished opinion, the court of appeals reversed that order and remanded the case on the ground that the probate court lacked subject-matter jurisdiction to enforce the contract to execute reciprocal wills. See Laird v. Shellnut, CA 00-1226, 2001 WL 1021813 (Ark.App. Sept. 5, 2001).

While the probate matter was pending, Sandra, acting as executrix of the Estate of Don McMann, filed an action in Saline County Chancery Court requesting an injunction and temporary restraining order preventing the Lairds from accessing or using Don's stock account at Merrill Lynch, Pierce, Fenner & Smith. In her complaint filed on August 16, 1999, Sandra alleged that Don's actions of adding Melba to his stock account and drafting a new will were prohibited under the language of the reciprocal wills drafted by him and Dixie in 1995. Melba responded that the terms of the 1998 will superseded the 1995 will and that the 1995 will was the product of fraud, coercion, and duress. Melba then filed a counterclaim alleging that Sandra initiated a scheme to defraud Don of his estate and a parcel of real property. Melba requested that the transfers from Don to Sandra prior to his death be set aside.1

Sandra subsequently filed two amended complaints. The first sought the imposition of a constructive trust over the assets removed from Don's estate. Next, Sandra filed an "Amended and Substituted Complaint" substituting the defendants as Melba and Max Laird, individually and in their official capacities as trustees, respectively, for the Melba Laird Living Trust and the Max Laird Living Trust. This complaint was filed on April 19, 2000, the same day that the probate court entered its order admitting the 1995 will to probate and appointing Sandra as executrix. Therein, Sandra alleged that during the pendency of the probate proceeding, it was discovered that funds from Don's estate that passed to Melba upon his death, had been transferred into the two living trusts. Sandra requested that the chancellor order the Lairds to return such monies, as well as any earnings resulting from the investment of those monies.

Sandra filed a motion for summary judgment on September 15, 2000, alleging that there were no contested issues of fact to be resolved. Sandra based this motion on the order of the probate court finding that Don executed a contractually binding reciprocal will in 1995, and alleged that because of the validity of that will, the transfers to the Lairds were invalid, and as such, they held the funds in constructive trust. A brief in support of the motion was also filed, and attached to the brief was a copy of Don's 1995 will and a certified copy of a transcript from a hearing in the probate matter. In response to the summary-judgment motion, the Lairds argued that there were questions of fact still at issue. The Lairds also argued that because Shelnut failed to attach any admissible evidence to the pleadings in the case, there was no basis for the chancery court to grant summary judgment.

Sandra specifically alleged in her motion for summary judgment that the amount held by the Lairds in constructive trust was $738,000. This amount was based on the testimony of Martin Northern in a hearing held on September 5, 2000. There, Northern, a stock broker and registered investment advisor, testified that he was able to trace $493,249.18 originally in Don's account to the Laird's living trust accounts. He further testified that the Lairds never contributed to the accounts and that they now contained $737,791.96 that formerly belonged to Don.

The chancellor entered an order on January 12, 2001, granting Sandra's motion for summary judgment. In that order, the chancellor stated that after considering the filings, including the forms of court orders and transcripts from the probate case, he found no unresolved questions of fact remaining. The chancellor specifically found that the Lairds held in constructive trust $738,000, which was Sandra's equitable property, and ordered that the funds not be disturbed, pending the outcome of the appeal in the probate proceeding.

The Lairds appealed to the Arkansas Court of Appeals. Relying on the decision in Imbraguglio v. Great Atlantic & Pacific Tea Co., Inc., 358 Md. 194, 747 A.2d 662 (2000), the court of appeals determined that the probate transcript possessed all the indicia of reliability and was properly considered in granting summary judgment. It thus affirmed the decision of the chancellor. See Laird v. Shelnutt, 75 Ark.App. 193, 55 S.W.3d 795 (2001). The Lairds petitioned for review of that decision on the basis that the court of appeals' opinion conflicted with our prior holdings and Ark. R. Civ. P. 56(c). When we grant review following a decision by the court of appeals, we review the case as though it had been originally filed in this court. See Elam v. First Unum Life Ins. Co., 346 Ark. 291, 57 S.W.3d 165 (2001); Regions Bank & Trust v. Stone Co. Skilled Nursing Facil., Inc., 345 Ark. 555, 49 S.W.3d 107 (2001). Thus, we review the trial court's judgment, not that of the court of appeals.

The Lairds raise two points for reversal: (1) the chancellor improperly considered the probate transcript, and that once the transcript is stricken from consideration, the proper record reflects genuine issues of material fact; and (2) the chancellor erred in ordering the Lairds to hold $738,000 in constructive trust for Shelnut. We disagree and affirm the decision of the chancellor.

We first turn to the Lairds' argument that the probate transcript was not part of the proper record below and thus should not have been considered by the chancellor. Rule 56 governs summary-judgment proceedings. Pursuant to Rule 56(c)(2), summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The Lairds aver that Rule 56 does not provide for the submission of a trial transcript; therefore, it was error for the chancellor to rely on it in granting summary judgment....

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