Willis v. Smith

• Decision Date: 02 November 1984
• Citation: 683 S.W.2d 682
• Parties: A.W. WILLIS, Jr., Successor Executor of the Estate of Chew Cornelius Sawyer, et al., Plaintiff-Appellee, v. Mary SMITH, Defendant-Appellant, and Universal Life Insurance Company, Successor in Interest to Union Protective Life Insurance Company, Appellee.
• Court: Tennessee Court of Appeals

Page 682

683 S.W.2d 682

A.W. WILLIS, Jr., Successor Executor of the Estate of Chew Cornelius Sawyer, et al., Plaintiff-Appellee, v. Mary SMITH, Defendant-Appellant and Universal Life Insurance Company, Successor in Interest to Union Protective Life Insurance Company, Appellee.

Court of Appeals of Tennessee Western Section, at Jackson.

Nov. 2, 1984.

Application for Permission to Appeal

Denied by Supreme Court

Jan. 22, 1985.

Prince C. Chambliss, Jr. and Teresa J. Sigmon of Armstrong, Allen, Braden, Goodman, McBride & Prewitt, Memphis, for defendant-appellant.

Ray A. Bratcher of Pierce, Rice, Bratcher, Nichols & Stone, Memphis, for plaintiff-appellee.

Walter L. Evans and Rita L. Stotts, Memphis, for Universal Life.

Herman Morris, Jr., Memphis, for Tri-State Bank.

TOMLIN, Judge.

A.W. Willis, Jr., as executor of the estate of C.C. Sawyer, deceased, filed this action against Universal Life Insurance Company, Tri-State Bank, and Mary Smith, the mother of C.C. Sawyer's widow, to recover the value of certain corporate stock and dividends that had been wrongfully converted to the detriment of the estate he was administering. ¹ Universal filed a cross-claim against Mary Smith for indemnification. The Chancery Court of Shelby County awarded plaintiff a judgment against both Mary Smith and Universal for the value of the stock plus certain dividends paid thereon. Universal was awarded a judgment for the value of the stock on its cross-claim against Mary Smith. Mary Smith is the only defendant appealing. Plaintiff has appealed only as to the failure of the chancellor to award prejudgment interest. Universal has not appealed. Therefore, we will at times use the term "defendant" in its singular form to refer to Mary Smith only.

Defendant, by her appeal, presents a bushel basket of issues for this Court to consider, some eight in number. Defendant contends that the chancellor erred (1) in holding that the plaintiff's claim was not barred by the statute of limitations, Tennessee Code Annotated Sec. 28-3-105; (2) in holding that plaintiff's claim was not barred by laches and estoppel; (3) in not holding that plaintiff's decedent owned the stock as tenants by the entirety with his late wife; (4) in admitting stock certificates and related affidavits without a proper foundation; (5) in failing to give defendant credit for one-third of the amount of the recovery in accordance with a prior settlement pertaining to estate assets; (6) in giving plaintiff a judgment for the amount of dividends paid on the stock; (7) in giving judgment for Universal on its cross-complaint against defendant; and (8) in dismissing the bank from the lawsuit.

C.C. Sawyer died testate in September, 1973. The beneficiaries under his will were certain brothers and sisters along with his widow Helen Sawyer, who was named executrix. Several months elapsed before Helen Sawyer could be persuaded to open her husband's lockbox, take inventory of same and enter his will for probate. His lockbox was opened and inventoried in her presence in March, 1974. The inventory was signed by her as one of the witnesses. Among the assets included therein was Certificate No. 181 for 20 shares of stock in Union Protective, issued to C.C. Sawyer in 1958. In 1970, the Union Protective stock split five to one. Thus, the certificate represented 100 shares.

The largest beneficiary under Sawyer's will was his sister, Othella Sawyer Shannon. That there was substantial open hostility between Othella and Helen is well documented in the record. It appeared at that time that Sawyer's estate might be insolvent. For this reason, and perhaps others, Helen Sawyer elected to dissent from the will and withdrew in her capacity as executrix in September, 1974. Shortly thereafter plaintiff was appointed as successor executor. When plaintiff assumed his responsibilities as executor Mrs. Sawyer turned over to him the contents of her late husband's lockbox, which included Certificate No. 181 for 20 shares of Union Protective stock. In connection with the settlement of Sawyer's estate, first Mrs. Sawyer and then the plaintiff were represented by The Honorable H.T. Lockard, now a circuit judge in Shelby County.

At the time of his death C.C. Sawyer owned stock in several companies, as well as owning considerable real estate. Several of his heirs conveyed to the plaintiff their opinion that Sawyer owned substantially more assets than those revealed by the inventory of his lockbox. However, because of the resistance and attitude of Sawyer's widow, plaintiff was unable to determine the existence of any additional assets. Plaintiff testified that Mrs. Sawyer advised him that the assets from the deceased's lockbox that were turned over to him were "all that there was" and that she knew nothing about additional assets.

In October, 1976, after substantial negotiations between the parties, a settlement agreement was reached by all of the beneficiaries of Sawyer's estate. At that time Mrs. Sawyer was represented by independent counsel. Prior to execution of the agreement its contents were discussed in detail in Mrs. Sawyer's presence and in the presence of her counsel. The agreement was ultimately approved by her when she signed the document. Among other things it provided that the shares of Union Protective stock represented by Certificate No. 181, the only stock in that company known by the plaintiff to be in existence, would ultimately belong to the deceased's sister, Othella Shannon. Furthermore, this settlement agreement provided that should other assets of C.C. Sawyer be discovered subsequent to the date of execution of the agreement they were to be divided in such a way that Mrs. Sawyer would receive one-third of the "subsequently discovered assets." At this point it should be noted that the defendant, Helen Sawyer's mother, had moved into the Sawyer residence shortly after the death of C.C. Sawyer in 1973 and was aware of the agreement. Sawyer's widow proceeded to take those assets assigned to her under the agreement.

In January, 1977, Helen Sawyer died intestate, leaving the defendant, her mother, as her sole heir. A friend of Mrs. Sawyer's, Martha House, was appointed administratrix of her estate. The Honorable George Brown represented Mrs. House in her administrative capacity. Mrs. House received only such assets as Mary Smith turned over to her. She made no active search for any assets. The estate was duly administered by Mrs. House and was closed in September, 1979. There were no shares of Union Protective stock listed as assets of Mrs. Sawyer's estate.

In October, 1980, pursuant to a merger arrangement, Universal agreed to purchase all of the outstanding capital stock of Union Protective for $48 per share. At that time the estate of C.C. Sawyer was still open due to the inability of plaintiff to obtain waivers and receipts from some of the beneficiaries and other problems. Among the assets then remaining in plaintiff's possession was Certificate No. 181 of Union Protective, representing 100 shares of stock due to the stock split heretofore mentioned. Plaintiff tendered this certificate to the escrow agent, the Tri-State Bank, for redemption. It was at this time that plaintiff discovered that the name C.C. Sawyer did not appear as an owner of capital stock in Union Protective on the stockholder list submitted to Universal by Union Protective in connection with the merger and acquisition. Upon making this startling discovery, plaintiff contacted Universal and upon investigation at plaintiff's request discovered the following facts that form the basis of this litigation, for up to the present time one might truly ask, "where's the beef"?

Much to plaintiff's surprise and shock it appears that on January 7, 1975, only four months after surrendering her deceased's husband's assets to the plaintiff, Helen Sawyer filed an affidavit with Union Protective which stated in substance that she was the legal owner of Certificate Nos. 181 and 174, for 20 and 60 shares respectively, that had been issued to her deceased husband, C.C. Sawyer. The affidavit further stated that she had been unable to locate the two certificates, and that to the best of her knowledge they had either been lost or misplaced. This was the first time that plaintiff had ever heard of the existence of Certificate No. 174 for 60 shares (worth at that time 300 shares by virtue of the split). It was news to plaintiff's counsel as well.

At the time the affidavit was made and submitted to Union Protective, Helen Sawyer was well aware that only nine months before she had participated in the inventory of her deceased husband's lockbox in which Certificate No. 181 was found and that in September, 1974, she had surrendered that certificate to the plaintiff as the successor executor of her deceased husband's estate. By the same token, she had to be aware that under the will she was not entitled to possession or ownership of either certificate.

Notwithstanding that Union Protective knew that C.C. Sawyer was deceased, on the strength of Helen's affidavit alone, with no inheritance tax waivers or copies of letters testamentary being filed with the company, it issued Certificate No. 443 for 400 shares in the company to Helen Sawyer to replace the 400 shares represented by the two "lost or misplaced" certificates.

Helen continued her fraud when some 20 months after she acquired the stock in her name she participated in the settlement of the estate by being a signator to the settlement agreement. The agreement called for the stock represented by Certificate No. 181 to be transferred to Othella Sawyer Shannon. Helen also knew that she was in possession of 300 more shares represented by Certificate No. 174, unknown to the other beneficiaries. She obviously made no revelation of this fact to anyone except her mother, the defendant, who, following Helen Sawyer's death, discovered that this certificate was in a chest of drawers in the...