Simpson v. Wethington

• Court: Supreme Court of Kentucky
• Writing for the Court: OPINION OF THE COURT BY JUSTICE CONLEY
• Citation: Simpson v. Wethington, 641 S.W.3d 124 (Ky. 2022)
• Decision Date: 24 February 2022
• Docket Number: 2020-SC-0567-DG
• Parties: Mitzi SIMPSON and Karen Hill as Co-Administrator of the Nannie Catherine Wethington Estate, Appellant v. Kerry T. WETHINGTON; and Jeremy Wethington, Individually, and as Administrator of the James Patrick Wethington Estate, Appellee

641 S.W.3d 124

Mitzi SIMPSON and Karen Hill as Co-Administrator of the Nannie Catherine Wethington Estate, Appellant

v.Kerry T. WETHINGTON; and Jeremy Wethington, Individually, and as Administrator of the James Patrick Wethington Estate, Appellee

2020-SC-0567-DG

Supreme Court of Kentucky.

FEBRUARY 24, 2022

COUNSEL FOR APPELLANT: E. Gregory Goatley, Springfield.

COUNSEL FOR APPELLEE: Dawn L. McCauley, Lebanon.

OPINION OF THE COURT BY JUSTICE CONLEY

This case is before the Court on appeal by Mitzi Simpson and Karen Hill, as Co-Administrator of the Nannie Wethington Estate, the Appellant, from the opinion of the Court of Appeals affirming the Marion Circuit Court. After a bench trial, the circuit court declared the Estate of Nannie Wethington had no dower right, pursuant to KRS ¹ 392.020, in $38,500 withdrawn from the bank account of her husband, James Wethington, by their son, Kerry Wethington, two days prior to James’ death.²

The Court of Appeals agreed the $38,500 was a valid inter vivos gift from James to Kerry thereby defeating the dower rights of Nannie. Nannie appealed and we granted discretionary review. After review of the record and appropriate case law, we conclude the lower courts failed to apply controlling precedent. We reverse the Court of Appeals, and the circuit court's judgment is vacated in part. Nannie's Estate is entitled to recoup her dower pursuant to KRS 392.020.

I. Facts and Procedural Background

The trial court described the procedural history of this case as "chaos" and "dysfunctional." No claim of procedural impropriety is raised before us though, so we will restrict our account to the facts underlying the litigation.

James and Nannie were married in July of 1990. They remained married until James passed away on January 5, 2017. He died intestate. His heirs at law are his sons, Kerry, Jeremy Wethington, James Mills, and a daughter, Valerie Wethington. Nannie passed away on September 6, 2017. She died intestate. Her heirs at law are Karen Hill, Mitzi Simpson, and Travis Godbey.

Sometime in October 2015, James signed a blank check and delivered it to Jeff Miller as collateral for money owed to Miller by Kerry related to a fencing business. Miller eventually placed a lien on some of Kerry's real property and no longer needed the check. The trial court found Miller returned the signed, blank check to James within a year of October 2015. Although some details differed, both Kerry and Miller testified to witnessing James sign the check.

On November 30, 2016, Kerry drove his father to the Veterans Administration hospital as James was battling a serious illness. During the trip, Kerry testified, his father handed him the signed, blank check. For clarity, we quote from the cross examination:

Counsel: And he told you to write the check for $38,500?

Kerry: He didn't tell me the exact amount, no. He told me to fill it out and take every dime he had. That's the only way we was [sic] going to get anything.

Later, the court noted the check was backdated to November 30, 2016, but was not presented to the bank for deposit until January 3, 2017. The court asked Kerry to explain the backdating. Kerry answered, "He [James] said date it for today [November 30] and take every dime I've got. That's the only way you're going to get anything." The court then inquired:

Court: Why did you wait five weeks to fill out the check and cash it?

Kerry: I done what he told me to do.

Court: Which was?

Kerry: Wait until anything ever happened to him, whenever they started stealing and taking stuff, to take the check to the bank and take every dime he had, that's the only way we's [sic] going to get anything.

Finally, the court clarified with Kerry that when he deposited the check on January 3, 2017, he did so in contemplation that his dad was going to die or was near death. Kerry affirmed he did not believe his dad would ever leave the hospital the day he cashed the check. The court then asked Kerry if when he cashed the check it was his intent to ensure Nannie did not receive her portion of the $38,500 should it have passed to James’ estate. Kerry said it was not his intent to do that.

The circuit court found Kerry to be a credible witness. It determined Kerry had not forged James’ signature on the check but rather James made a valid inter vivos gift to Kerry. It determined James had expressed a desire before his death to give Kerry access to the bank account—and even inquired about putting his name on the account but found the effort prohibitive due to illness—and the signing of blank check was merely a means to accomplish this desire.

One fact that is crucial in our analysis is the trial court's finding that "Nannie, upon being appointed Administratirx of [James’] estate, filed an Inventory and Appraisement of the Estate on January 23, 2017, claiming he had total assets of $35,000, not including any mention of cash or accounts ..." Thus, it would appear Nannie failed to mention the bank account containing $38,500. Nonetheless, taking the appraisement of the estate as true, and we have no evidence to suggest it is not, $38,500 represents more than half the total cash value of James’ estate at the time of his death. The significance of this fact will be elucidated in Section III below.

From the $38,500, Kerry testified he spent $5,000 to fund purchases of fences for his business dealings. He also loaned $8,500 to his brother, Jeff Wethington, that has since been paid back to Kerry in cash. Additionally, a summary judgment award of costs and fees totaling $3,643 was granted to First National Bank which administered the account. This would bring the sum of the account to $21,357, but the trial court states the current figure stands at $22,392.77. This discrepancy is ultimately irrelevant to our disposition, but we proceed assuming the latter figure is accurate. The funds are being held in escrow by the Marion Circuit Clerk.

On appeal, the Court of Appeals affirmed the trial court's conclusion that Kerry had not forged James’ signature on the check, as supported by substantial evidence. Secondly, the Court of Appeals considered the question of inter vivos gift. It held the legal elements were satisfied and that a gift of $38,500 was made by James to Kerry on January 3, 2017, pursuant to Howell v. Herald , 197 S.W.3d 505, 507 (Ky. 2006), and Foxworthy v. Adams , 136 Ky. 403, 124 S.W. 381, 382-83 (1910). Finding the gift valid, it affirmed the trial court.

Finally, the Court of Appeals affirmed James intended to give Kerry the money to ensure he would receive a portion of his property upon his death. Specifically saying, "Lastly and significantly, [James] told Kerry, as he gave him the check, that this was ‘the only way you will ever get anything.’ The reasonable inference to be drawn is that [James], having made no will, feared Kerry would receive nothing upon his death."

Further facts will be developed in our analysis as necessary. We now address the merits of the appeal.

II. Standard of Review

This is an appeal from a bench trial. The factual findings of the trial court will not be set aside unless clearly erroneous. CR ³ 52.01. Although we grant a high degree of deference to factual findings, "appellate review of legal determinations and conclusions from a bench trial is de novo. " Barber v. Bradley , 505 S.W.3d 749, 754 (Ky. 2016).

III. Analysis

A. The Rule Against Fraudulent Deprivation of Dower

A widow⁴ has an absolute estate to one-half of the personalty of her deceased husband's estate. KRS 392.020. To protect that right, the rule against fraudulent deprivation of dower developed. It is well-settled and of long duration. We quote at length from the leading cases. In Murray v. Murray , the court stated:

If the advancements or gifts be reasonable, when considered with reference to the amount of property owned by the husband, and his purpose be to provide for the children, and not to defraud the wife, then she cannot complain, although they in fact diminish the property to which her inchoate rights have attached by the marriage. It is a question of intention upon the part of the grantor. If the property given away constitute all, or the principal part, of the husband's estate, and be such an advancement as is unreasonable, when compared with his entire property, then, while it should not be conclusively presumed to have been made in fraud of the wife's marital rights, yet prima facie it should be so regarded, and the onus of showing otherwise be cast upon the donee. Each case must depend upon its own circumstances.

90 Ky. 1, 13 S.W. 244, 246 (Ky. 1890). Courts must consider "the amount of the husband's estate, the value of the advancements, the time within which they are made, and all other indicia which will serve to determine the intention accompanying the transaction." Id. In another case, the court held:

The right of the father to give to his children money, choses in action, as well as goods and chattels, during the life of the wife, or the existence of the marital relation, cannot be questioned; but, when such a gift is made with and for the purpose of defrauding the wife, it will be set aside to the extent it may affect her rights as widow.

Manikee's Adm'x v. Beard , 85 Ky. 20, 2 S.W. 545, 546 (1887). Finally, in the third leading case, the rule was stated,

while the wife cannot complain of reasonable gifts or advancements by a husband to his children by a former marriage, yet, if the gifts constitute the principal part of the husband's estate and be made without the wife's knowledge, a presumption of fraud arises, and it rests upon the beneficiaries to explain away that presumption; and in judging of the good faith of the transaction the court must look to the condition of the parties and all the attending circumstances.

Payne v. Tatem , 236 Ky. 306, 33 S.W.2d 2, 3 (1930). We have recently reiterated this rule, and in so doing made clear when a spouse attempts to defeat dower rights through inter vivos gifts, "rather than constituting...