Opinion
NO. 2011-CA-001158-MR
06-14-2013
BILLY M. FARMER AND HAROLD E. FARMER APPELLANTS v. DANNY RAY FARMER APPELLEE
BRIEF FOR APPELLANT: Mark L. Ashburn Paducah, Kentucky BRIEF FOR APPELLEE: Kerry D. Smith Paducah, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM MCCRACKEN CIRCUIT COURT
HONORABLE CRAIG Z. CLYMER, JUDGE
ACTION NO. 10-CI-00277
OPINION
AFFIRMING
BEFORE: CLAYTON, STUMBO AND THOMPSON, JUDGES. THOMPSON, JUDGE: This is an appeal from a declaratory judgment action concerning a deed of trust executed by Gladys Farmer. Billy M. Farmer and Harold E. Farmer contend that the trial court erred when it declared that proceeds from the sale of real estate conveyed into a trust prior to Gladys's death should be equally divided among her three sons.
The present controversy concerns two wills and a deed of trust executed by Gladys. On January 24, 2005, Gladys executed a will naming attorney Stanley K. Spees as executor, and instructing him to sell and divide her property among her three sons, Billy, Harold, and Danny Ray Farmer, with a caveat that sums advanced to each son be considered an advancement on their share.
On April 22, 2008, Gladys signed a deed conveying the family farm, her primary asset, to "Stanley K. Spees, Trustee of the Gladys S. Farmer Real Estate Trust" that provides as follows:
THAT FOR AND IN CONSIDERATION of (a) sum of One dollar ($1.00), cash in hand paid, (b) the establishment of an estate plan to insure that the sons of [Gladys] receive equal value from the sale of her real estate after her death, and (c) the agreement of [Mr. Spees] to convey the below-described property in accordance with the trust set forth herein[.]The deed was recorded on April 23, 2008, in the McCracken County Clerk's office.
The terms of the Gladys S. Farmer Real Estate Trust are that [Mr. Spees], his successors and assigns, shall safely retain title to the above-described property for the use and benefit of [Gladys] as long as she shall live. [Gladys] shall continue to be the beneficial owner of said property, but she shall not be vested with title and therefore may not personally convey or mortgage the property, or any interest therein. Upon the death of [Gladys], [Mr. Spees] shall convey said property to the Estate of Gladys Farmer (of which he [Mr. Spees] is designated as the Executor) and shall handle said property in accordance with the terms of the Will of [Gladys].
On January 16, 2009, Harold and Billy escorted Gladys to attorney J.V. Kerly's office where she executed a new will. This will does not divide Gladys's property equally but divides it only between Billy and Harold and states: "I intentionally make no provision for my son, Danny Farmer." In the 2009 will, Billy and Harold are named co-executors and there is no reference to the 2008 conveyance of the farm to Mr. Spees, as trustee.
After Gladys's death on November 28, 2009, Harold and Billy filed a petition in the McCracken District Court to probate the 2009 will. Mr. Spees appeared at the probate motion hour and stated that the farm had been conveyed in 2008 into a trust and that Mr. Spees, as trustee, was obligated to divide the farm proceeds equally among the three sons. The district court ordered the 2009 will probated but did not appoint a personal representative at that time.
On March 9, 2010, Danny filed this action in the McCracken Circuit Court seeking a declaration that the trust corpus (the farm) be distributed equally among all three brothers. A bench trial was conducted after which the trial court issued its findings of fact, conclusions of law and judgment. The circuit court concluded that in 2008, Gladys conveyed all her right and title in the farm without reservation and that the reference to the will in the trust document referred specifically to the 2005 will in effect when the trust was created. The circuit court declared the farm was the corpus of the trust and title was vested in Mr. Spees, as trustee, who was to distribute the farm property in equal shares to the three sons pursuant to the 2005 will.
The parties agree that the trial court mistakenly referenced a 2008 will instead of the 2005 will.
Billy and Harold argue that the trial court erred when it found that the farm property was part of the trust corpus to be distributed according to the trust document and the 2005 will. They maintain that despite its conveyance in trust to Mr. Spees in 2008, the farm should be distributed in accordance with the 2009 will. Therefore, they contend that pursuant to Gladys's 2009 will, Danny is excluded from receiving any share in the farm proceeds.
When a bench trial was conducted, this Court may not set aside the trial court's findings unless they are clearly erroneous. Kentucky Rules of Civil Procedure 52.01. If supported by substantial evidence, findings of fact are not clearly erroneous. Black Motor Co. v. Greene, 385 S.W.2d 954, 956 (Ky. 1965). Evidence is deemed substantial if it has sufficient probative value to induce conviction in the mind of a reasonable person. Kentucky State Racing Commission v. Fuller, 481 S.W.2d 298, 308 (Ky. 1972).
When the court is required to interpret a settlor's will and trust documents, it must determine the settlor's intent "as gathered from the four corners of the instrument[.]" Graham v. Jones, 386 S.W.2d 271, 273 (Ky. 1965). Every part of the trust document "must be read in connection with all other parts, and if possible all parts given effect." Department of Revenue v. Kentucky Trust Co., 313 S.W.2d 401, 404 (Ky. 1958). A trust document must be "read in light of contemporary circumstances, the object to be accomplished and all other attendant facts within the knowledge of the parties." Citizens Fidelity Bank & Trust Co. v. McNeal, 279 S.W.2d 751, 754 (Ky. 1955).
In this case, two opposing interpretations were possible. The trial court could have concluded that Gladys intended Mr. Spees, as trustee, convey the farm to any executor named in a subsequent will to be sold and the proceeds divided in accordance with that will, or she intended that Mr. Spees, as trustee, divide the farm equally as provided in the deed of trust. We conclude that the trial court's conclusion is the most reasonable interpretation based on the trust document.
When read as a whole, the trial court concluded that the trust document shows that it was Gladys's intent that her sons receive equal shares of the proceeds from the sale of the farm. It noted that the deed's consideration paragraph states that its purpose is to 'insure that the sons . . . receive equal value from the sale of her real estate after death . . ." and specifically states that Mr. Spees, as trustee, "shall convey [the trust property] to the Estate of Gladys Farmer (of which he [Mr. Spees] is designated as the Executor) and shall handle said property in accordance with the terms of the Will of [Gladys]."
We agree with the trial court that the farm was part of the trust corpus to be distributed equally among the Billy, Harold, and Danny. Although a simple deed creating a lifetime interest in Gladys with a remainder interest to her three sons would have had the same effect and perhaps avoided this litigation, it remains that she executed a deed of trust providing for the disposition of the farm at her death. If Gladys intended that the farm be distributed in accordance with a future will, she could have referred in the deed to the "will in effect at the time of my death" or used similar language. Moreover, the consideration provision requiring an equal distribution would not have been included.
Based on the foregoing, the judgment of the McCracken Circuit Court is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: Mark L. Ashburn
Paducah, Kentucky
BRIEF FOR APPELLEE: Kerry D. Smith
Paducah, Kentucky