Samford v. First Alabama Bank of Montgomery, N.A.

• Decision Date: 01 April 1983
• Citation: 431 So.2d 146
• Parties: John Bennett SAMFORD v. The FIRST ALABAMA BANK OF MONTGOMERY, N.A., et al. 81-475, 81-475-A.
• Court: Alabama Supreme Court

Page 146

431 So.2d 146

John Bennett SAMFORD v.The FIRST ALABAMA BANK OF MONTGOMERY, N.A., et al.

81-475, 81-475-A.

Supreme Court of Alabama.

April 1, 1983.

G. Houston Howard, II of Howard, Dunn & Howard, Wetumpka, for appellant.

Robert T. Meadows, III of Harper & Meadows, Auburn, for appellee The First Ala. Bank of Montgomery.

Drayton N. James of Clark, James & Crittenden, Birmingham, for appelleeWestcott Bell Samford.

SHORES, Justice.

These are appeals by John Bennett Samford from an order entered by the Circuit Court of Lee County, Alabama, approving a proposed distribution of the estates of Millard Westcott Samford and Gwendolyn Bell Samford by First Alabama Bank of Montgomery, N.A. (the Bank).

Millard Westcott Samford died on August 29, 1969, leaving a last will and testament.After providing for the payment of debts, taxes, and expenses, and after disposing of certain personal items, Mr. Samford left one-half of the residue of his estate to his wife, Gwendolyn Bell Samford, and the other half of the residue of his estate in trust for the benefit of his four children, in equal shares.Each child, other than one child who was incompetent, was entitled to receive his or her share of the estate free of trust at age thirty-one.Gwendolyn Bell Samford served as executrix of the will and trustee of the trust until her death on December 3, 1974.The Bank succeeded her in both capacities and was named executor and trustee under Mrs. Samford's will.

At the time of his death, Mr. Samford owned numerous parcels of property, the most significant of which were described as the Wright's Mill Road property, the Callahan Farm, the Gwen Mill Farm, and the Harwell Place.Under Mr. Samford's will, an undivided one-half interest in these and other less valuable properties passed to his wife, and an undivided one-half interest in the same properties passed into the testamentary trust for the children.

In September, 1974, John Samford, one of the four children, desired to enter a business venture in Birmingham.In that regard, he found it necessary to obtain a loan for $250,000 from the First National Bank of Birmingham; however, he needed property to pledge as collateral for the loan.Since, at that time, he was not yet thirty-one, John requested, through his lawyer, a partial distribution to him of his share of the trust properties.John's mother, as trustee, agreed to the partial distribution, but only if she could make equal and simultaneous distributions to each of the other children.

To facilitate this partial distribution, the children (except the incompetent child) and the mother entered into an agreement for partial distribution.Under this agreement, each child would receive an undivided one-half interest in one of the four parcels of property mentioned previously, free of trust, with the mother retaining her undivided one-half interest in each tract.John Samford received an undivided one-half interest in the Wright's Mill Road property.Each party further agreed to indemnify and hold Mrs. Samford harmless from any liability or loss which she might incur as trustee under the will of Mr. Samford as a result of these conveyances.

On the same day that the agreement for partial distribution was effectuated, John Samford borrowed $250,000 from the First National Bank of Birmingham.Mrs. Samford was not a party to and did not sign the note.Contemporaneously with the signing of the note, John Samford and his mother, Gwendolyn Bell Samford, mortgaged the Wright's Mill Road property to the First National Bank of Birmingham as security for the loan.Mrs. Samford's signature on the mortgage instrument enabled John to use the entire property as security for the loan, but did not expose Mrs. Samford to any liability for the repayment of the indebtedness or for the performance of the covenants and conditions contained in the mortgage.

On the same day, September 24, 1974, John Samford's business partner, Michael Danner, executed an agreement by which he agreed to convey unto Mrs. Samford and John Samford, in the event of foreclosure, interests in certain properties that he owned.

Gwendolyn Bell Samford died on December 3, 1974, less than three months after executing the mortgage, leaving a last will and testament.Under her will, Mrs. Samford left the residue of her estate, including her one-half interest in the Wright's Mill Road property, to the Bank as trustee for the four children, each child to receive his or her share free of trust at age thirty-five.The Bank managed the estate as one trust with no actual division or designation of any of the assets.

During the Bank's management of the estate, the estate taxes for the Gwendolyn Bell Samford estate were established and paid, based upon the inclusion of Mrs. Samford's one-half interest in the Wright's Mill Road property in the estate.The estate also paid ad valorem taxes on this property.

On September 9, 1975, John Samford and Danner entered into an agreement by which John agreed to indemnify and hold Danner harmless from any personal liability on notes executed by the parties for loans made to the parties individually, including loans obtained from the First National Bank of Birmingham.The agreement further provided that John Samford was to use his best efforts to have Danner removed from any personal liability on notes executed by him to the First National Bank of Birmingham, to other banks, and to the estate of Mrs. Samford.In consideration for this, Danner basically transferred and assigned unto John all of his interest in their business venture, American Country Clubs, Inc.

The business did not prosper and, on November 19, 1976, the First National Bank of Birmingham foreclosed on the mortgage, which included the Wright's Mill Road property, as well as two lots in Opelika.The properties were bought in by the First National Bank of Birmingham for the sum of $290,757.48.

At some point in 1977, the Bank first devised a proposed distribution of the mother's estate.Each subsequent proposal was objected to by John, and no actual division or distribution was made.On January 15, 1981, the Bank filed its petition for final settlement of the mother's estate.Under the attached distribution scheme, the Bank proposed to distribute to each child the mother's one-half interest in the parcel of land in which the child had already received an undivided one-half interest by virtue of the distribution agreement of September 24, 1974.Al Byrne, vice president and trust officer of the Bank, explained the Bank's reasoning as follows:

"It seemed to me when we were getting into the initial stages of Gwendolyn Samford's Estate, and looking at the pattern of distribution, that she made as an Executor and Trustee of Millard Samford's Estate, that it was her intention that eventually Mickey would end up with dominion and control over Gwen Mill Farm; and Wes would end up with dominion and control over Callahan Farm; and Bubba's trust would own the Harwell Place; and John would have dominion and control...