Opinion
NO. 2017-CA-000463-MR
05-24-2019
TINA BRIDGEWATER, INDIVIDUALLY, AND AS ADMINISTRATRIX, OF THE ESTATE OF JOHN W. HOLLINGSWORTH APPELLANT v. COURTNEY LEYVA, ADMINISTRATRIX, OF THE ESTATE OF LINDA M. HOLLINGSWORTH AND COURTNEY LEYVA, INDIVIDUALLY APPELLEE
BRIEFS FOR APPELLANT: Thomas V. Haile Louisville, Kentucky BRIEF FOR APPELLEE: Daniel M. Oyler Edward H. Bartenstein Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE MARY M. SHAW, JUDGE
ACTION NO. 15-CI-006377 OPINION
AFFIRMING
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BEFORE: ACREE AND JONES, JUDGES, AND HENRY, SPECIAL JUDGE. ACREE, JUDGE: Tina Bridgewater, individually, and as Administratrix, WWA, of the Estate of John W. Hollingsworth, appeals the Jefferson Circuit Court's December 7, 2016 opinion and order granting summary judgment in favor of Courtney Leyva, individually, and as Administratrix, WWA, of the Estate of Linda M. Hollingsworth. We affirm.
Special Judge Henry concurred with this opinion prior to the expiration of his appointment on April 24, 2019.
With will annexed.
FACTS AND PROCEDURE
John and Linda Hollingsworth, husband and wife, had one child together - appellee Courtney Leyva. John had four children by a previous marriage, including appellant Tina Bridgewater.
John and Linda executed their respective wills on April 9, 1982. The wills were substantively identical in that each created a life estate for the surviving spouse with the remainder passing to their respective child (if Linda passed first) or children (if John passed first), when the surviving spouse dies. Linda's will included the following provision:
I give, devise, and bequeath to my husband, John, a life estate in all of the property, both real and personal, and of every kind and character whatsoever and wherever situated, which I own or to which I may be entitled at the time of my death, as his sole and absolute property during his lifetime, being fully confident that he will suitably provide for any children of mine who shall survive me, but not imposing or intending to impose, any legal or equitable obligation on him to do so. At the death of my husband, or if he fails to survive me, my remaining estate shall go to my daughter or be divided equally if other children are born to this marriage.
I hereby appoint my husband, John, as executor of this my Last Will and Testament, and I request that he be
permitted to serve without bond or surety thereon and without intervention.John's will differed slightly in that it divided his remaining estate equally among his five children, including both Tina and Courtney.
Linda died testate on January 4, 2014. The Jefferson District Court probated Linda's will, and John was appointed Executor of her estate. John opened an estate checking account with an initial deposit of $305,481.16, representing Linda's assets. At some point John made additional deposits totaling $126,810.43. On November 7, 2014, John withdrew $300,000.00 by check from the estate account and deposited it into his personal bank account. A week later, he withdrew another $14,760.66, again depositing it into his personal bank account. This left a balance of $117,530.93 in the estate account.
The circuit court's order notes, and we agree, that the record is silent as to any deposits made by John except for the initial $305,481.16. However, it is undisputed that John made two withdrawals - $300,000.00 and $14,460.66 - leaving a balance of $117,530.93. Logically, then, at some point prior to the second withdrawal, John had to have made one or more deposits totaling $126,810.43.
John died testate on April 25, 2015. Tina was appointed Administratrix WWA of his estate. At the time of John's death, his estate had cash assets valuing approximately $441,000.00. Of that, $314,760.66 indisputably came from Linda's estate.
When John died, Leyva succeeded him as Administratrix WWA of Linda's estate. In that capacity, Leyva filed a claim against John's estate in probate seeking return of the $314,760.66 that John transferred from Linda's estate into his personal bank account. Tina disallowed the claim.
The probate court went on to interpret Linda's will, concluding Leyva was not entitled to recover the $314,760.66 John paid to himself from Linda's estate. Leyva appealed the probate court's ruling to the Jefferson Circuit Court, which reversed the probate court's decision, finding it lacked the jurisdiction and authority to interpret Linda's will. At various points in her brief to this Court, Tina argues that, in light of the probate court's ruling, "[n]o court is therefore left with the authority to countermand or question the disposition of those assets by the life tenant under the direct and express terms of Linda's will. (Appellant's Brief, p. 12). Tina fails to accept that the probate court's ruling has no binding or precedential effect. The circuit court reversed it on grounds that the probate court exceeded its jurisdiction. The probate court's decision is of no consequence. Marshall v. Goodwine, 332 S.W.3d 51, 54 (Ky. 2010) ("A judgment which has been reversed is as though it had never been, and the court should not allow the party who procured it to retain an advantage gained by reason of it.").
Leyva then filed the underlying action to recover the $314,760.66 currently in Tina's possession in her capacity as Administratrix of John's estate. Leyva argued the $314,760.66 was an asset of Linda's estate that passed to her, as the remainder beneficiary under Linda's will, upon John's death.
The parties filed competing motions for summary judgment. By order entered December 7, 2016, the trial court granted Leyva's motion and, in turn, denied Tina's motion. Relying heavily upon Hoskins v. Beatty, 343 S.W.3d 639 (Ky. App. 2011), the trial court ruled that while John had the expansive power to use and consume the life estate property during his lifetime, he did not have the authority, as the possessor of a life estate, to dispose of the remaining life estate by way of his will. It further ruled that the money John deposited into his bank account is readily identifiable as the life estate corpus and, as such, it is subject to the testamentary disposition as directed in Linda's will that left the remainder of her estate after John's death to Leyva.
Tina styled her motion as on for judgment on the pleadings under Kentucky Rules of Civil Procedure (CR) 12. Because Tina relied on interrogatories she served upon Leyva, the circuit court properly treated the motion as one for summary judgment. Kentucky CATV Association, Inc. v. City of Florence, 520 S.W.3d 355, 358 n.1 (Ky. 2017).
Tina filed a CR 59.05 motion to alter, amend, or vacate the trial court's decision. The trial court denied that motion. This appeal followed.
Kentucky Rules of Civil Procedure.
STANDARD OF REVIEW
"The standard of review on appeal of summary judgment is whether the trial court correctly found there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Carter v. Smith, 366 S.W.3d 414, 419 (Ky. 2012). Summary judgment involves only legal questions and the existence, or non-existence, of material facts are considered. Stathers v. Garrard County Bd. of Educ., 405 S.W.3d 473, 478 (Ky. App. 2012).
"Furthermore, it is well established that '[t]he construction as well as the meaning and legal effect of a written instrument . . . is a matter of law for the court.'" Hammons v. Hammons, 327 S.W.3d 444, 448 (Ky. 2010) (citation omitted). Our review is de novo. Mitchell v. University of Kentucky, 366 S.W.3d 895, 898 (Ky. 2012).
ANALYSIS
Tina takes issue with the trial court's order finding the transfer of money from the life estate corpus (i.e., an estate checking account) into the life tenant's personal bank account does not amount to sufficient dominion and control as to consume the corpus. She contends that the expansive language in Linda's will authorized John to exercise control over her assets such that a transfer of money from her estate account to his personal bank account constituted "consumption" or "use" of the assets, rendering the money his to dispose of at his discretion, including by testamentary disposition. We disagree.
The "polar star rule" of wills construction is that the testator's intent controls. Hammons, 327 S.W.3d at 448. We derive the testator's intention by examining the will as a whole. Id. Thus, our primary goal in construing a will is to discern and effectuate the intent of the testator. Id.
This task is complicated by the fact that there is seldom precedent directly on point. It has been said no will has a brother, much less a twin. Conlee v. Conlee, 300 Ky. 685, 190 S.W.2d 43, 44-47 (1945). It is rare for two wills to use the same, or even substantially similar, language and "a very slight change in the verbiage calls for a different construction of two wills much alike in other respects." Id. (quoting Price v. Price, 298 Ky. 608, 183 S.W.2d 652 (1944)). To aid in the construction of wills, courts have established canons of construction,
which guide the courts to construe wills in favor of "testacy over intestacy, absolute over qualified estates, and early vesting as against contingent rights." Lincoln Bank & Trust Co. v. Bailey, 351 S.W.2d 163, 165 (Ky. 1961); Clore v. Clore, 184 Ky. 83, 211 S.W. 208, 209 (1919). Courts may use canons of construction only when doubt exists as to the testator's intent. When a testator employs clear, definite and unambiguous language, there is no need to resort to canons of construction. Conlee, 190 S.W.2d at 46.Id.
As explained in further detail below, the trial court correctly interpreted Linda's will as creating a life estate for John with the remainder interest to Leyva. Tina takes no issue with this preliminary finding. However, she argues that Linda intended to give John something more than typical life estate: that is, a life estate with the power to invade and consume the corpus. Tina's argument misses the mark.
"A life estate is a freehold interest in property" measured by the life of a specified person. Id at 451. "In general, a life tenant owns the property during the life estate and is entitled to the full use and enjoyment of the property [until his death], including the income and profits, though [he or] she may not consume any part of the corpus." Id.; English v. Carter, 300 Ky. 580, 582, 189 S.W.2d 839, 840 (1945) ("Free enjoyment is the very essence of a life estate."). As usual, there is an exception to this general rule: "[t]he life tenant may consume the corpus if the testator explicitly or implicitly so provides." Hammons, 327 S.W.3d at 452. In any event, when a life tenant dies, his estate terminates; the remaindermen are then entitled to the property. Miracle v. Miracle, 260 Ky. 624, 86 S.W.2d 536, 539 (1935).
In this case, Linda's will bequeathed to John "a life estate in all of the property, both real and personal, and of every kind and character whatsoever and wherever situated, which I own or to which I may be entitled at the time of my death, as his sole and absolute property during his lifetime[.]" It further directed that, at John's death, the remainder of Linda's estate "shall go to my daughter[,]" Leyva. The trial court found, and Tina does not dispute, that this disposition granted John a life estate with the full and unfettered power to encroach upon and use the life estate corpus for any purpose he deemed appropriate. Mitchell v. Mitchell, 276 S.W.2d 470, 471 (Ky. 1955) (finding that, by granting his daughter a life estate in all his real and personal property to "have, hold, keep and use, and dispose of as her own," the testator intended to cloak the life tenant "with [the] unlimited power to encroach upon the corpus of the estate"). This means that John, as the life tenant, was free to "use the estate for his own purposes," but whatever, if any, was "left over, it shall go to the" remainderman, Leyva. Id. (citation omitted). "Mitchell correctly states the view of [our Supreme Court] that language of unlimited power in a devise of life estate with a gift over should mean what it says and that such power to use and dispose of during the lifetime of the devisee of the life estate should be unlimited." Melton v. Wyatt, 517 S.W.2d 242, 244 (Ky. 1974).
Another defining element of a life estate, and a point of contention in this case, is that the life tenant does not possess the authority to make testamentary disposition of the property. Id. (a devise of a life estate creates an unlimited power to use and dispose of the property, except by the making of a testamentary disposition). "One having a life estate and nothing more cannot by any possession, act, or declaration of his own enlarge that estate." Gee v. Brown, 144 S.W.3d 844, 846 (Ky. App. 2004) (quoting Superior Oil Corp. v. Alcorn, 47 S.W.2d 973, 981 (Ky. 1931)). Again, language affording the life tenant broad power to invade and consume the life estate corpus gives the life tenant the authority to use and dispose of the corpus during his or her lifetime . See Melton, 517 S.W.2d at 244. If a person is endowed with such unlimited power or disposition over the property that not only can he or she convey it during his or her lifetime, but also dispose of it by testamentary disposition upon his or her death, the person was not endowed with a life tenant, but was invested with a fee. Id. at 243-44.
The trial court also found, and we agree, that Linda did not grant John the power to make a testamentary disposition of the remaining life estate corpus. By devising the remainder of her estate to her child, Linda made the testamentary disposition to Leyva effective upon John's death. She did not afford John the power to dispose of the life estate corpus through his will. Accordingly, while John had the unlimited power to use and consume the life estate property during his lifetime, he did not have the power to make a testamentary disposition of the remaining property upon his death. Whatever assets of the life estate remained at John's death, they were to pass to Leyva under Linda's will.
We are not persuaded by Tina's effort to convince us that John possessed the broad authority to consume the life estate corpus and do with the corpus all he deemed appropriate. What Tina does not recognize, however, is that the gravamen of this case is not whether John had the power to use the life estate assets at his discretion, but whether he did, in fact, "use" or "consume" the corpus, thereby divesting Leyva of her remainder interest. We conclude John's transfer of money from Linda's estate's account to his own preserved Linda's estate for the remainderman no less than if it had remained in the estate's account.
It is undisputed that the $117,530.93 remaining in the estate checking account belongs to Leyva as the remainder beneficiary. The question is whether John "used" or "consumed" the $314,760.66 by transferring the cash from the estate checking account into his personal account. Tina argues the act of transferring the funds clearly demonstrated John took, used, and exercised dominion over these assets. Leyva disagrees, arguing the funds remain identifiable as part of the life estate corpus, and simply transferring the funds into his own name was insufficient to use or consume the property. This Court answered that question, generally, in Hoskins v. Beatty, 343 S.W.3d 639 (Ky. App. 2011).
The testator in Hoskins bequeathed to his sister all his real and personal property "to [be] hers during her lifetime, free from all claims of any persons whomsoever[,]" with the remainder to the testator's nieces and nephews. Id. at 640. Upon the testator's death, the sister closed the testator's personal checking account, deposited the balance into an estate account, and then used funds from the estate account to purchase a certificate of deposit (CD). Two stock certificates totaling 120 shares were also transferred from the testator to the sister. The sister later died and, pursuant to the sister's will, the 120 shares of stock and the CD were devised to the sister's heirs pursuant to the sister's will. Thereafter, the testator's heirs filed suit to recover the stock and CD, claiming those items were part of the remaining life estate corpus that belonged to them as the remainder beneficiaries under the testator's will. The trial court agreed, and this Court affirmed. Id. at 642.
The issue in Hoskins, as in this case, was whether the sister consumed the property by transferring the assets into her own name, thereby divesting the interest that the heirs would have taken. This Court found it was not. Like John, the sister in Hoskins had the unrestricted authority to consume the estate corpus, but not to dispose of it by testamentary disposition. This Court reasoned:
[The sister's] actions to transfer the 120 shares of stock into her name and purchase a CD with cash from [the testator's] estate cannot be interpreted to enlarge her interest in the property. Thus, the property was not consumed or used to the extent it extinguishes the vested interest of the heirs. [The testator's] will makes it clear that whatever property from his estate still existing at the time of [the sister's] death is to vest in the heirs pursuant to the specific bequests [in his will].Id.
Hoskins stands for the principle that the transfer of a life estate corpus to the life tenant's name, standing alone, is not the same as "use" or "consumption" of the property, thereby making the funds subject to testamentary disposition by the life tenant. Accordingly, property identifiable as the life estate corpus that remains in the life tenant's possession at his or her death must be disposed of as intended by the original testator. Hoskins is on point and controlling. We are bound by that opinion.
Turning back to this case, it is clear from the will as a whole that Linda intended to care for both her husband and her daughter, to the greatest extent possible. To that end, she provided for her husband during his life and left whatever remained of her estate to her daughter. John was free to use the life estate corpus as he saw fit during his lifetime. Pursuant to Hoskins, merely transferring funds from Linda's estate checking account into his personal bank account was insufficient to consume or use the property to the extent it extinguished Leyva's remainder interest in those funds. Again, there is no dispute that, at John's death, the $314,760.66 he transferred from Linda's estate remained in his personal bank account, was unused, accounted for, and clearly identifiable as being part of the life estate corpus. Those funds pass to Levya as the remainder beneficiary under the terms of Linda's will.
Tina argues that Hoskins is inapplicable and reliance upon it completely unfounded. She asserts that, unlike Linda's will, the testator's will in Hoskins did not grant the life tenant the authority to invade the corpus for any reason. This is factually incorrect. Like John, the sister in Hoskins had the "unlimited power to use and consume the estate property during her lifetime." Hoskins, 343 S.W.3d at 642. In this regard, the will in Hoskins is factually similar to Linda's will.
She also contends that, unlike in Hoskins, Linda's will specifically stated that John had no legal or equitable obligation to provide for their child. Specifically, the will provided: "being fully confident that [John] will suitably provide for any children of mine who shall survive me, but not imposing nor intending to impose, any legal or equitable obligation on him to do so." The absence of any obligation for John to use the life estate corpus to provide for his and Linda's child in no way negates his life tenancy or the limitation it places upon his ability to dispose of the life estate corpus upon his death. It also did not destroy or modify Linda's intent that the remainder of the life estate pass to Leyva. Instead, it merely explains why she is allowing John full rights to use the assets of her estate, as opposed to making a direct bequest to her daughter.
Tina further argues that Linda's will provided for complete freedom for John to use the life estate assets as he saw fit. In support, she points to another section of Linda's will which provided: "I authorize and empower my husband as executor to designate what properties, real or personal, shall be set aside as representing my half of our estate." Again, this provision in no way alters our prior analysis. It did not enhance or change John's powers as a life tenant. Instead, it merely defines the scope of his powers as executor of Linda's estate. John complied with this provision when he deposited funds into an estate checking account, thereby designating those funds as Linda's half of their estate.
Linda's mandate of a life estate terminated John's interest in the life estate corpus at his death and the remaining funds comprising the life estate pass directly to the remainder beneficiary, not through his will. John could have used the $314,760.66 he transferred from the estate checking account during his lifetime for medical expenses, vacations, pay bills, or to even give as inter vivos gifts. But he did not. He did nothing more than shift the funds from the estate checking account into a personal bank account where they lingered ever since. Hoskins says this is insufficient to constitute use or consumption of the property. Those funds remain part of the life estate corpus, and pass to Leyva as the remainder beneficiary under Linda's will.
CONCLUSION
We affirm the Jefferson Circuit Court's December 7, 2016 opinion and order granting summary judgment in favor the appellee.
ALL CONCUR. BRIEFS FOR APPELLANT: Thomas V. Haile
Louisville, Kentucky BRIEF FOR APPELLEE: Daniel M. Oyler
Edward H. Bartenstein
Louisville, Kentucky