NationsBank of South Carolina v. Greenwood

Decision Date23 January 1988
Citation468 S.E.2d 658,321 S.C. 386
CourtSouth Carolina Court of Appeals
PartiesNATIONSBANK OF SOUTH CAROLINA, as Personal Representative of the Estate of Margaret C. York and Trustee under agreement dated

Albert L. Moses and B. Michael Brackett, Rogers, Townsend & Thomas, Columbia, for appellant.

Richard M. Kennedy, Jr., Columbia, for respondent.

SHAW, Justice.

In this probate matter, George Richard Greenwood, a residuary devisee, appeals the circuit court's order affirming the decision of the probate court which found that there was no residue in the Estate of Margaret C. York and that the unpaid pecuniary bequests should be paid from the income earned during the administration of the estate. We affirm.

On January 23, 1988, Margaret C. York executed a Trust Agreement, naming NCNB of South Carolina (now NationsBank) as the trustee. The trust was funded with the sum of one dollar. No other assets were ever placed in the trust. In pertinent part, the Trust Agreement provided Article V

(1) If my son, GEORGE RICHARD GREENWOOD, (hereinafter referred to as the named beneficiary) shall survive the Settlor, then commencing with the date of the Settlor's death, the Trustee shall pay to or apply for the benefit of the named beneficiary during such named beneficiary's lifetime all the net income from Trust B in convenient installments but no less frequently than quarter-annually.

On January 23, 1988, York executed her will. The pertinent provisions of the will are as follows:

ITEM I

I direct that all estate, inheritance, succession, death or similar taxes (except generation-skipping taxes) assessed with respect to my estate herein disposed of, or any part thereof, or on any bequest or devise contained in this my Last Will (which term wherever used herein shall include any Codicil hereto), or on any insurance upon my life or on any property held jointly by me with another or on any transfer made by me during my lifetime or on any other property or interests in property included in my estate for such tax purposes be paid out of my residuary estate and shall not be charged to or against any recipient, beneficiary, transferee or owner of any such property or interests in property included in my estate for such tax purposes.

ITEM XI

I give, devise and bequeath all the rest, residue and remainder of my property of every kind and description (including lapsed legacies and devises), wherever situate and whether acquired before or after the execution of this Will, to NCNB SOUTH CAROLINA as Trustee under that certain Trust Agreement between myself as Settlor and NCNB SOUTH CAROLINA as Trustee executed prior to the execution of this Will on January 23, 1988. The Trustee shall add the property bequeathed and devised by this Item to the corpus of the above described Trust and shall hold, administer and distribute said property in accordance with the provisions of the said Trust Agreement, including any amendments thereto made before my death.

ITEM XVII

By way of illustration and not of limitation and in addition to any inherent, implied or statutory powers granted to executors generally, my Executor is specifically authorized and empowered with respect to any property, real or personal, at any time held under any provision of this my Will; to allot, allocate between principal and income, assign, borrow, buy, care for, collect, compromise claims, contract with respect to, continue any business of mine, convey, convert, deal with, dispose of, enter into, exchange, hold, improve, incorporate any business of mine, invest, lease, manage, mortgage, grant and exercise options with respect to, take possession of, pledge, receive, release, repair, sell, sue for, to make distributions or divisions in cash or in kind or partly in each without regard to the income tax basis of such asset and in general, to exercise all of the powers in the management of my Estate which any individual could exercise in the management of similar property owned in its own right, upon such terms and conditions as to my Executor may seem best, and to execute and deliver any and all instruments and to do all acts which my Executor may deem proper or necessary to carry out the purposes of this my Will, without being limited in any way by the specific grants of power made, and without the necessity of a court order.

On January 26, 1988, York executed a codicil. The will and the codicil provided for the following bequests and devises:

                Elizabeth Jones f/k/a Elizabeth Marie Ringer  $100,000
                Carl Edward Jones                             $250,000
                Margaret Theresa Jones                        $200,000
                George Randolph Greenwood                     $ 50,000
                Betty Marie Greenwood                         $ 50,000
                George Richard Greenwood                      $100,000
                Carl Edward Jones                             4117 Mikell Lane, Columbia, SC
                                                              56 acre farm off Sumter Highway
                Pearl Sanders                                 Lake Murray lot
                Carl Edward Jones                             personal and household effects
                ----------
                

On April 6, 1989, Margaret C. York died. On that same day, NationsBank, named as the executor, filed for appointment as personal representative of the Estate of Margaret C. York, and was appointed on April 21, 1989. NationsBank distributed the specific devises of real and personal property, and made a pro-rata partial distribution of the general devises of cash. The personal representative made distributions in cash as follows:

                 On 12/4/89 one third of bequest   $249,999.97
                 On 6/7/90                         $ 50,000.03
                 On 12/14/91                       $  9,101.07
                 On 2/11/92                        $249,925.00
                 Total paid as of 2/11/92          $559,026.07
                 Balance due six heirs on 2/11/92  $190,973.93
                

After the personal representative paid the debts, expenses, and taxes of the estate and distributed the specific devises, there were insufficient principal assets remaining to pay in full all the general devises. As a result, the trust was not funded. After the date of decedent's death, the estate earned income during the period of administration. NationsBank did not distribute any of the income.

On August 17, 1992, NationsBank sought a declaratory judgment deciding the rights, duties and legal relations of NationsBank and the heirs with regard to the disposition of the income earned during the administration of the estate.

George Richard Greenwood answered and counterclaimed alleging that he, as the residuary devisee, was entitled to the income earned during the administration of the estate and the earned income was not to be applied to the remaining balance of the cash bequests.

The probate court held that each heir was entitled to receive his or her unpaid principal balance due plus a pro-rata division of earned income. The court found that the trustee was correct in not funding the trust for the reason that no funds existed. The court concluded that the estate had no residue other than the Lake Murray property which was subject to pending litigation.

George Richard Greenwood appealed the probate court's order to the circuit court. Greenwood alleged that the probate court erred as follows:

1) in determining that there were no rest and residue assets;

2) in determining that S.C.Code Ann. § 62-7-408, as in effect at the date of death, directed that post-death income, earned on estate assets not distributable to specific legatees and devisee, was payable to legatees of general pecuniary bequests not in trust;

3) in determining that general pecuniary devises in the estate were entitled to interest, beginning one year after appointment of the personal representative until payment of the devise, when the statute so providing was repealed, effective June 5, 1990; and

4) in assessing interest in favor of general pecuniary devisee after June 5, 1990.

The circuit court affirmed the decision of the probate court. With respect to each alleged error, the circuit court held the following:

1) there was no error in ruling that there were no assets in the Residue;

2) S.C.Code Ann. § 62-7-408 was inapplicable to the case;

3) the probate court erred in awarding interest but it constituted harmless error because the beneficiaries were entitled to the earned income on the unpaid principal due the beneficiaries; and

4) there was no error in awarding interest to the general devisee because they were entitled to the earned income on the undistributed amount and the amount of earned income was less than or equal to the earned interest.

Greenwood appeals.

STANDARD OF REVIEW

The determination of the standard of review by an appellate court of matters originating in the probate court is controlled by whether the cause of action is at law or in equity. Dean v. Kilgore, 313 S.C. 257, 437 S.E.2d 154 (Ct.App.1993). To make this determination, the appellate court must look to the essential character of the cause of action alleged by the petitioners in the court below. Id. 437 S.E.2d at 155. NationsBank seeks a declaratory judgment to decide whether the income earned during the administration of the estate should be applied to the unpaid bequests or be placed in the trust for the residuary devisee as provided by the will. This case involves the construction of a will which is an action at law. Epting v. Mayer, 283 S.C. 517, 323 S.E.2d 797 (Ct.App.1984). If the essential nature of the cause of action is legal, the action to be taken by the circuit court is controlled by its determination of whether or not there is any evidence to support the factual findings of the court below. Kilgore, supra. In an action at law, on appeal of a...

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