Smith v. Orman

• Decision Date: 12 March 2002
• Docket Number: No. 2001-CA-00252-COA.,2001-CA-00252-COA.
• Citation: 822 So.2d 975
• Parties: Rebecca McDonald SMITH, Jimmy Smith, Cynthia S. Nance (Eaton) and Lisa S. Rogers, Appellants, v. Mark ORMAN, Administrator, D.N.B.C.T.A., David McDonald, William G. McDonald, Marion Earl Henley, Thelma McDonald Nunnery, Betty Madison Harrison Goodhart, Sam Allen Madison, Patricia Clark and Jane McDonald Brasfield (Abshire), Appellees.
• Court: Mississippi Court of Appeals

822 So.2d 975

Rebecca McDonald SMITH, Jimmy Smith, Cynthia S. Nance (Eaton) and Lisa S. Rogers, Appellants, v. Mark ORMAN, Administrator, D.N.B.C.T.A., David McDonald, William G. McDonald, Marion Earl Henley, Thelma McDonald Nunnery, Betty Madison Harrison Goodhart, Sam Allen Madison, Patricia Clark and Jane McDonald Brasfield (Abshire), Appellees.

No. 2001-CA-00252-COA.

Court of Appeals of Mississippi.

March 12, 2002.

Rehearing Denied May 21, 2002.

B. Sean Akins, Ripley, attorney for appellants.

Lester F. Sumners, New Albany, Wendell H. Bryan II, Amory, Gerry M Blaker, II, Holly Springs, attorneys for appellees.

Before SOUTHWICK, P.J., LEE, and CHANDLER, JJ.

SOUTHWICK, P.J., For The Court.

¶ 1. Rebecca McDonald Smith, the former executrix of the Fred McDonald estate, and her children appeal the judgment of the chancery court finding Smith and her son misappropriated funds from the estate, assessing monetary damages and fees, and setting aside certain property transfers. Smith and her children argue that the chancellor erred in setting aside a transfer by warranty deed of 500 acres of land from Smith to her daughter, erred in assessing punitive damages, and erred in awarding attorney's fees to counsel for the estate and heirs. We disagree and affirm.

STATEMENT OF FACTS

¶ 2. Fred McDonald died on October 5, 1995. In his will he named his sister Rebecca M. Smith as executrix and waived an accounting. On November 22, 1995, the same day Smith sought the services of an attorney to prepare a petition to open the estate and be granted letters testamentary, Smith sought the services of a different attorney to prepare a warranty deed transferring 500 acres of farmland, all of her real property, to her daughter, Cindy S. Nance. Smith reserved a life estate in the property.

¶ 3. Prior to and after her appointment as executrix on December 5, 1995, Smith applied to her own use certain funds of the estate. These included mutual fund dividend checks in the amount of $5,700, dividends from assorted bank stocks, United States savings bonds in the amount of $13,500, and $20,650 in cash derived from a certificate of deposit. Smith claimed that her brother had told her that she could have these after he died. Smith admits that McDonald never prepared any documents of transfer; she had trusted him to do so. Smith also granted her son, Jimmy, access to estate funds and for two years allowed her son to live in McDonald's house and to use McDonald's truck. Estate funds were used to pay utility bills for the period Jimmy Smith lived in the McDonald house and also for gas, insurance, tags, and maintenance for the truck. Estate funds were used to pay income tax on funds that Smith claimed McDonald gave to her.

¶ 4. On September 19, 1996, Smith executed a "disclaimer" which directed that Smith's share of the estate be deflected to her two daughters, Cynthia Nance and Lisa Rogers.

¶ 5. In 1996, a partial distribution consisting of 2,290 shares of Union Planters stock and $96,000 in cash was made to the heirs of the McDonald estate. One of the heirs, Earl Henley, was dissatisfied with the manner in which the estate was being handled and particularly dissatisfied with the lack of information provided by Smith. After unsuccessful attempts to obtain a voluntary accounting, the heirs filed a petition in April of 1998 seeking to have Smith ordered to file an accounting. In May 1999, an agreed order was entered under which Smith was to submit an accounting in June 1999. Smith failed to comply and a petition for her removal as executrix was filed. She was removed in September 1999. Smith consented to a judgment against her in the amount of $22,165.75, the amount she agrees was improperly applied to personal use.

¶ 6. Smith filed a final accounting in November 1999. The next month the new estate administrator, Mark Orman, petitioned to falsify the final accounting of Smith and to also seek additional recovery from her and her three children. A trial was held on June 23, 2000, and judgment was entered against the defendants. Smith and her children appealed.

DISCUSSION

¶ 7. Smith alleges that the chancellor adopted the administrator's proposed findings of fact and conclusions of law verbatim. "Where the chancellor adopts, verbatim, findings of fact and conclusions of law prepared by a party to the litigation, this Court analyzes such findings with greater care, and the evidence is subjected to heightened scrutiny." Brooks v. Brooks, 652 So.2d 1113, 1118 (Miss.1995).

¶ 8. The record does not contain the proposed findings of fact and conclusions of law with which we might make a comparison to those adopted by the chancellor. The Smiths included a copy of the administrator's proposed findings in their record excerpts, but this is not part of the official court record upon which we may rely. Dew v. Langford, 666 So.2d 739, 746 (Miss. 1995). However, the administrator admits that "much was adopted verbatim." The administrator only points to the changing of one phrase, the addition of one paragraph done "without suggestion by any party," and the doubling of punitive damages from $10,000 to $20,000, as proof that the chancellor's order was not entirely adopted verbatim. Such minor alterations do not affect the rule requiring a heightened level of scrutiny.

1. Punitive Damages

¶ 9. The Smiths do not contest the amount of compensatory damages that the chancellor awarded. However, they do challenge on appeal the chancellor's finding and award of punitive damages due to the alleged misappropriation and conversion of estate assets.

¶ 10. Having acknowledged that conversion occurred, the appellants are arguing that such acts do not justify punitive damages. Punitive damages are awarded when the conduct complained of is "a willful or malicious wrong" or undertaken in "gross, reckless disregard for the rights of others." Boling v. A-1 Detective & Patrol Serv., Inc., 659 So.2d 586, 588 (Miss.1995). That the conduct complained of warrants punitive damages must be proved by clear and convincing evidence. Miss.Code Ann. § 11-1-65(1)(a) (Supp.2001).

¶ 11. The chancellor rejected testimony that Rebecca and Jimmy Smith had no intent to defraud the estate, that Smith's brother Fred McDonald had given Rebecca Smith the funds she asserts were hers, that her original estate attorney, now deceased, advised her such actions would be permissible, and that the failure to keep records or remember certain transactions were without malicious intent. The only witnesses to testify for the estate were Rebecca and Jimmy Smith, Cynthia Nance, and Earl Henly. The first three were called adversely by the estate. The only witnesses for the defendants were Jimmy Smith and Judy Eddings.

¶ 12. One of the bases for reversal is the allegation "that the testimony of a witness which is uncontradicted, and who is not impeached in some manner known to the law, where he is not contradicted by the circumstances, must be accepted as true." Denson v. George, 642 So.2d 909, 914 (Miss.1994). However, Denson continues on stating that "testimony that is uncontroverted may be so improbable and incomplete that, considering the circumstances of the case, the credibility of the testimony is inadequate." Id. Additionally, the assessment of a witness's credibility is left to the chancellor. Dunn v. Dunn, 786 So.2d 1045, 1049 (Miss.2001).

¶ 13. In effect, the chancellor found that the testimony of Rebecca and Jimmy Smith was contradicted by circumstances and was improbable and incomplete. We examine the reasonableness of those conclusions by reviewing the same evidence. The chancellor found that Rebecca Smith willfully, knowingly, and fraudulently concealed her receipt of approximately $5,700 in distributions from a mutual fund. The chancellor specifically found that Smith's explanations were unbelievable that her brother Fred McDonald told her the mutual fund dividends were hers and that her original estate attorney, now deceased, told her that it was permissible for her to keep the funds. The chancellor found that her claim of "good faith" error was not credible. The chancellor also noted that Smith did not include the receipt of these dividends in her final accounting which was submitted pursuant to a court order.

¶ 14. The chancellor found that Smith converted $13,500 in United States savings bonds and concealed from the heirs of the estate the previous existence of those bonds. The final accounting, submitted after two chancery court orders, asserted that the McDonald estate was the owner of only $2,000 in U.S. savings bonds. Rebecca Smith could not recall why she stated that there were only $2,000 in savings bonds and could not recall the source of the $2,000 figure. She also does not recall why she transferred $2,000 from the personal checking account on December 20, 1996, to the estate account, which created a record of a deposit amount that corresponded to the erroneous figure for the bonds. December 20, 1996 was the date given in the final accounting for the redemption of the U.S. savings bonds. The bonds were actually redeemed in March 1997.

¶ 15. Rebecca Smith stated that she never looked at the bank statements relating to McDonald's personal checking account. She stated that her son looked after those records and that she never asked him what was in those statements. She also had no explanation for why $11,000 was taken out of the personal checking account in little over a week. Jimmy Smith testified that he never looked at the statements for the personal account. He testified that the statements were never opened and were promptly thrown away. They were not kept because McDonald's will waived an accounting and because "you just have so much room to keep things."

¶ 16. The chancellor noted that Rebecca and Jimmy Smith gave differing explanations for Jimmy's writing of checks from the estate account. Rebecca Smith asserted that her son wrote checks as a "convenience"...