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awarding the full amount of attorneys' fees incurred at the trial court level
Summary of this case from In re CrossOpinion
April 16, 2004 Session.
December 7, 2005. Permission to Appeal Denied by Supreme Court March 12, 2007.
Appeal from the Chancery Court, Putnam County, Vernon Neal, Chancellor.
Rankin P. Bennett, Cookeville, Tennessee, for the appellant, Gretta Guyton Stanger.
Joy Buck Gothard, Cookeville, Tennessee, for Anna L. Ham.
Kenneth S. Williams, Cookeville, Tennessee, for the appellees, Jiro Ishibashi and Hideo Ishibashi.
Dale Bohannon, Cookeville, Tennessee, for the appellee, Carol Gibbons.
WILLIAM C. KOCH, JR., P.J., M.S., delivered the opinion of the court, in which WILLIAM B. CAIN, J., joined. FRANK G. CLEMENT, JR., J., filed a separate opinion concurring in part and dissenting in part.
OPINION
This appeal involves a dispute regarding the fate of specific bequests in a will prepared by a college professor without the assistance of counsel. The professor's mental capacity declined after he prepared the will, and the Chancery Court for Putnam County appointed a conservator for the professor who, with the court's approval, auctioned off his personal property, including property subject to specific bequests in the professor's will. After the professor died, his executrix petitioned the trial court to construe several provisions of his will. The trial court heard the matter without a jury and, relying on In re Estate of Hume, 984 S.W.2d 602 (Tenn. 1999), concluded that several of the specific bequests had been adeemed by extinction. The trial court also concluded that the parties attorney's fees and the court costs should be paid from the intestate funds in the estate. On this appeal, one of the beneficiaries of an adeemed bequest takes issue with the court's conclusion that she was not entitled to the proceeds from the sale of the property bequeathed to her and that she was not entitled to recover all of her attorney's fees. The professor's sole surviving heir at law takes issue with the trial court's decision to award this beneficiary any attorney's fees. We have determined that the trial court's decision regarding the fate of the specific bequests of personal property is correct but that the trial court erred with regard to the award of attorney's fees.
I.
Edward Louis Greenamyre was an anthropologist who served as a professor in the Department of Sociology and Philosophy at Tennessee Technological University in Cookeville, Tennessee. He studied and conducted extensive research in East Asia and was married to Fusako Ishibashi Greenamyre.
On April 12, 1994, Dr. Greenamyre executed a will that he had apparently prepared without the assistance of counsel. The will named Ms. Greenamyre as Dr. Greenamyre's sole beneficiary; however, it also contained detailed provisions regarding the disposition of Dr. Greenamyre's property if Ms. Greenamyre died first. In the event that Ms. Greenamyre predeceased Dr. Greenamyre, the will contained specific bequests to Gretta Guyton Stanger, Dr. and Ms. Edmond D. Dixon, Henry W. Mannle, and Jiro and Hideo Ishibashi. The will contained no residuary clause. Dr. Greenamyre named Ms. Greenamyre as his executrix, but he designated Carol Gibbons, a secretary employed in the Department of Sociology and Philosophy, to serve as his executrix if Ms. Greenamyre died before he did.
Dr. Stanger was one of Dr. Greenamyre's colleagues at Tennessee Technological University. Her bequest included (1) all of Dr. Greenamyre's personal property except specific items of property given to others, (2) all cash in Dr. Greenamyre's checking account at Citizens Bank, and (3) the contents of Dr. Greenamyre's safe deposit box at Citizens Bank. Dr. Stanger was also named as secondary beneficiary of a life insurance policy issued by Franklin Life Insurance Company.
Dr. Edmond Dixon was another one of Dr. Greenamyre's colleagues at Tennessee Technological University. The Dixons' bequest included all of Dr. Greenamyre's framed pictures, hanging artwork, pottery, a woman's Rolex watch, and two men's Rolex watches.
Mr. Mannle's bequest included all of Dr. Greenamyre's books on law enforcement and criminal justice.
Jiro and Hideo Ishibashi were Ms. Greenamyre's nephews. Each of them were to receive one-half of the value of all certificates of deposit and interest thereon owned by Dr. Greenamyre at the time of his death.
Ms. Greenamyre died first, and Dr. Greenamyre was eventually placed in The Renewal Center in Carthage, Tennessee. In April 1998, The Renewal Center petitioned the Chancery Court for Putnam County to appoint a conservator for Dr. Greenamyre because he lacked the capacity to manage his resources or to protect himself. The petition identified Dr. Anna Lois Ham of Louisiana, Dr. Greenamyre's first cousin, as his closest living relative. It also requested that Kelly Tayes of the Office of the Public Guardian for the Upper Cumberland Development District be appointed as Dr. Greenamyre's conservator. Dr. Stanger also sought to be named conservator.
Following a hearing on May 1, 1998, the trial court appointed Ms. Tayes as the conservator for Dr. Greenamyre's person and property. The court also appointed Charles L. Hardin as Dr. Greenamyre's guardian ad litem. On June 25, 1998, Ms. Tayes filed a petition seeking permission to sell Dr. Greenamyre's personal property at auction. She stated that he owned household goods and furnishings, two automobiles, and other personal property that he would not need in the future. She supported this petition with the affidavit of Dr. Greenamyre's physician stating that Dr. Greenamyre would never be able to return home. The trial court entered an order on July 6, 1998 authorizing the public auction.
Dr. Greenamyre's personal property was sold at public auction on August 11, 1998. Among the items sold were a 1.8 carat diamond ring, a ruby ring, a woman's Rolex watch, two men's Rolex watches, and two automobiles. The auction grossed $61,692.00 and netted $50,993.30. Ms. Tayes deposited the auction proceeds in Dr. Greenamyre's checking account at Union Planters Bank. The trial court confirmed the sale on August 28, 1998.
The appraised value of this ring was $18,500. It was sold at auction for $12,250. Had the ring not been sold, it would have been part of the bequest to Dr. Stanger.
The appraised value of this ring was $475. It was sold at auction for $200. Had this ring not been sold, it would have been part of the bequest to Dr. Stanger.
The woman's Rolex watch was sold at auction for $210. Dr. Greenamyre had left this watch to Ms. Dixon.
These Rolex watches were sold at auction for $4,125. Dr. Greenamyre had left these watches to Dr. Dixon.
A 1995 Mercury was sold for $7,300, and a 1995 Ford Escort was sold for $5,600. Had these automobiles not been sold, they would have been part of the bequest to Dr. Stanger.
On April 21, 1999, Ms. Tayes filed a property management plan reflecting that Dr. Greenamyre's assets consisted of $329,625.57 in cash and certificates of deposit at Union Planters Bank, First Tennessee Bank, and Regions Bank. In addition, the report stated that Dr. Greenamyre's monthly income was $3,615.42 and that his monthly expenses were $2,800.00. Ms. Tayes stated that her intention was to deposit the funds in the Regions Bank savings account and one of the Regions Bank certificates of deposit into a J.C. Bradford money market account as soon as the certificate of deposit matured. She also stated that it was her intention to pay Dr. Greenamyre's expenses from his income and that she planned to use the principal only if Dr. Greenamyre's income was insufficient to pay his expenses. On May 10, 1999, the trial court entered an order approving this management plan.
For some unexplained reason, the report did not include Dr. Greenamyre's $1,398 per month military pension that was being deposited directly into a savings account at First Tennessee Bank. Counting this pension, Dr. Greenamyre's monthly income exceeded $5,000.
These two accounts contained approximately $146,475.
Dr. Greenamyre died on December 5, 2000 at the age of seventy. On January 23, 2001, Ms. Gibbons filed a petition in the trial court to probate Dr. Greenamyre's April 12, 1994 will. On August 20, 2001, Ms. Gibbons filed an inventory valuing Dr. Greenamyre's estate at $592,594.11. Thereafter, questions arose regarding the fate of Dr. Greenamyre's bequests to Dr. Stanger, the Dixons, and Jiro and Hideo Ishibashi. Ms. Gibbons also had questions about Dr. Greenamyre's instructions regarding his funeral and burial expenses, the safe-keeping of his six cats, and a $25,000 contribution to the Twin Cities Buddhist Association.
Dr. Stanger insisted that she was entitled to receive an amount equal to the balance in Dr. Greenamyre's Union Planters Bank account on May 4, 1998 when the conservatorship was created, as well as the proceeds from the sale of the personal property she would have received under Dr. Greenamyre's will. The Dixons insisted that they were entitled to receive an amount equal to the proceeds from the sale of Dr. Greenamyre's art and the three Rolex watches. Jiro and Hideo Ishibashi asserted that they were entitled to all of the certificates of deposit in Dr. Greenamyre's name when he died, regardless of the source of the funds used to purchase these certificates. Finally, Dr. Ham asserted that she was Dr. Greenamyre's sole heir at law and, therefore, that she was entitled to the remainder of Dr. Greenamyre's estate under the rules of intestate succession because Dr. Greenamyre's will did not contain a residuary clause.
After Dr. Greenamyre executed his will, Citizens Bank was acquired by Union Planters Bank. When the conservatorship was created, this account contained $16,618.80.
Ms. Gibbons also faced one other ambiguity as Dr. Greenamyre's executrix. Dr. Greenamyre's will instructed her to use the proceeds of "any travel insurance policy to which I have subscribed or will subscribe in the future" (1) to pay for his funeral and burial expenses, (2) to make a $25,000 donation to the Twin Cities Buddhist Association, and (3) to arrange for the safe-keeping of his six cats. Dr. Greenamyre apparently had no travel insurance policies in force at the time of his death, but his estate contained sufficient funds to pay these expenses.
Accordingly, on March 5, 2002, Ms. Gibbons filed a complaint requesting the trial court to address four questions regarding the construction of the will. She named as defendants all the persons receiving special bequests in Dr. Greenamyre's will. The first question involved the bequest to Dr. Stanger of "[a]ll cash in any checking account at Citizens Bank held singly or jointly in my name." The second question involved the bequest of the Rolex watches to the Dixons. The third question involved the bequest of "[a]ny certificates of deposit listed in my name at the time of my death" to Jiro and Hideo Ishibashi. The final question sought the court's permission to use other funds in the estate to pay for Dr. Greenamyre's funeral expenses, the safekeeping of his six cats, and the $25,000 contribution to the Twin Cities Buddhist Association.
On April 3, 2003, following hearings on December 10, 2002 and February 18, 2003, the trial court entered an order construing Dr. Greenamyre's will. The most significant decision made by the trial court, at least as far as this appeal is concerned, involved the legal effect of the sale of Dr. Greenamyre's personal property in 1998. Relying on In re Estate of Hume, 984 S.W.2d 602 (Tenn. 1999), the trial court concluded that the sale worked an ademption by extinction of the specific bequests of personal property to Dr. Stanger and the Dixons. Accordingly, the trial court determined that Dr. Stanger was only entitled to the $8,474.68 balance in Dr. Greenamyre's Union Planters Bank account at the time of his death and that the Dixons were entitled to nothing.
In re Estate of Hume was later superceded by the enactment of Tenn. Code Ann. § 32-3-111 (Supp. 2005).
The trial court also determined that Dr. Ham was the sole intestate beneficiary and heir of Dr. Greenamyre and that Jiro and Hideo Ishibashi were entitled to the certificates of deposit and their pro rata share of interest on these funds. In addition, the court determined that the costs and the fees of the parties' attorneys should be paid from the intestate funds in the estate. Dr. Stanger and Dr. Ham have appealed. Dr. Stanger takes issue with the trial court's conclusion that the bequest to her of Dr. Greenamyre's personal property was adeemed by extinction and that she was not entitled to the amount of money in Dr. Greenamyre's Union Planters Bank account when the conservatorship was created. She also insists that the trial court erred by failing to award her all her attorney's fees. Dr. Ham takes issue with the trial court's decision to award Dr. Stanger any attorney's fees from the intestate funds in the estate.
II. THE PERSONAL PROPERTY SOLD AT AUCTION
Dr. Stanger's primary argument on appeal is that the trial court erred by relying on In re Estate of Hume, 984 S.W.2d 602 (Tenn. 1999) when it determined that the conservator's sale of Dr. Greenamyre's personal property resulted in an ademption by extinction of his specific bequests to her. She insists that the holding of In re Estate of Hume should be limited to its facts and that we should instead adopt the reasoning of two unpublished decisions. We have determined that no principled basis exists for refusing to apply the legal reasoning of In re Estate of Hume to this case.
In re Estate of Rutledge, No. 85-338-11, 1986 WL 6063 (Tenn.Ct.App. May 29, 1986) (No Tenn. R.App. P. 11 application filed); In re Estate of Phillips, No. OOP-656 (Davidson Cir., Aug. 21, 2002).
When the Tennessee Supreme Court decided In re Estate of Hume in 1999, it clearly aligned Tennessee with the jurisdictions that follow the strict "identity" theory of ademption by extinction. Stewart v. Sewell, No. M2003-01031-COA-R3-CV, 2005 WL 873304, at *13 (Tenn.Ct.App. Apr.14, 2005). The Court stated in plain terms that:
Ademption by extinction results because of "the doing of some act with regard to the subject-matter which interferes with the operation of the will." Balfour, 198 S.W. at 71. In these cases:
American Trust Banking Co. v. Balfour, 138 Tenn. 385, 198 S.W. 70 (1917).
the rule [of ademption by extinction] prevails without regard to the intention of the testator or the hardship of the case, and is predicated upon the principle that the subject of the gift is annihilated or its condition so altered that nothing remains to which the terms of the bequest can apply.
Wiggins v. Cheatham, 143 Tenn. 406, 225 S.W. 1040, 1041 (1920) (emphasis added) (citation omitted). In other words, it only matters that the subject of the specific bequest no longer exists because of "the doing of some act;" it is irrelevant who or what initiates "the doing." Balfour, 198 S.W. at 71.
In re Estate of Hume, 984 S.W.2d at 604. Citing McGee v. McGee, 122 R.I. 837, 413 A.2d 72 (1980), the court concluded that the "rule that the intent of the testator is irrelevant in ademption by extinction cases is in harmony with the modern holdings found in the majority of states." In re Estate of Hume, 984 S.W.2d at 604-05.
Dr. Stanger argues that the reasoning of In re Estate of Hume should be limited to foreclosure sales where the testator has defaulted on a loan secured by the property subject to the specific bequest. She insists that this court should instead follow the rule adopted in other states and embodied in the Uniform Probate Code that the sale of specifically devised property by a guardian or conservator, acting in good faith, does not result in an ademption by extinction of the bequest. We find no defensible basis for limiting the holding of In re Estate of Hume.
See Jeffrey F. Ghent, Annotation, Ademption or Revocation of Specific Devise or Bequest By Guardian, Committee, Conservator, or Trustee of Mentally or Physically Incompetent Testator, 84 A.L.R.4th 462, 1991 WL 741695 (1991).
Uniform Probate Code § 2-606(b) (1997), 8 U.L.A. 47 (Supp. 2005).
Earlier this year, this court held that the holding of In re Estate of Hume did not apply in cases where the testator's fiduciaries acted in bad faith when they disposed of the property subject to a specific bequest. Stewart v. Sewell, 2005 WL 873304, at *14.
No language in In re Estate of Hume reflects the Tennessee Supreme Court's intention to limit its holding regarding the legal elements of ademption by extinction. In fact, the court rested its decision on an opinion by the Supreme Court of Rhode Island in a case factually akin to this one. McGee v. McGee, 413 A.2d at 72. In that case, the son of the testator, acting pursuant to his mother's power of attorney, withdrew funds from a bank account subject to a specific bequest and used the funds to purchase a United States Treasury bond. In reaching its conclusion that the withdrawal of the funds and the purchase of the treasury bond resulted in an ademption by extinction of the specific bequest, the Rhode Island court noted that the concept of ademption by extinction applies to "actions of a testator himself or through his guardian, conservator, or agent." McGee v. McGee, 413 A.2d at 75.
The authors of the Uniform Probate Code cite McGee v. McGee as an example of the harsh results that can follow the strict application of the identity rule in cases involving ademption by extinction. Uniform Probate ("ode § 2-606 cmt, 8 U.L.A. 47 (Supp. 2005). We are confident that neither the facts of McGee v. McGee nor the view of the drafters of the Uniform Probate Code regarding the: holding of McGee v. McGee were lost on the Tennessee Supreme Court. In fact, the court, again citing McGee v. McGee, noted that the fact that the strict application of the rule might frustrate the intent of the testator was outweighed by the stability, uniformity, and predictability that the rule would bring. In re Estate of Hume, 984 S.W.2d at 605.
In 2004, five years after the Tennessee Supreme Court handed down In re Estate of Hume, the Tennessee General Assembly adopted Uniform Probate Code § 2-606. This Act, however, has no application to this case. The law in effect when a testator dies controls all the substantive rights in the estate, and thus a statute taking effect after the testator's death cannot change the construction of the testator's will. Fell v. Rambo, 36 S.W.3d 837, 844-45 (Tenn.Ct.App. 2000). Dr. Greenamyre died in December 2000, and thus the rights of the persons taking under his will must be determined based on the law as it existed at that time.
Act of May 20, 2004, ch. 866, § 3, 2004 Tenn. Pub. Acts 1974 (codified at Tenn. Code Ann. § 32-3-111).
Our decision in this case is thus controlled by In re Estate of Hume. This court does not have the prerogative to disregard decisions of the Tennessee Supreme Court. See Payne v. Johnson, 2 Tenn. Cas. (Shannon) 542, 543 (1877). As intermediate appellate judges, we are obliged to follow the directions of the Tennessee Supreme Court, particularly after the "court has given definite expression to its views in a case after careful consideration." Holder v. Tenn. Judicial Selection Comm'n, 937 S.W.2d 877, 881 (Tenn. 1996). The court's holding in In re Estate of Hume embodies the principles of the ademption by extinction doctrine that we must apply to this case.
Even though the Tennessee Supreme Court did not address our decision in In re Estate of Rutledge in In re Estate of Hume, it is clear that the reasoning in In re Estate of Hume undermines the continuing validity of In re Estate of Rutledge.
Like the trial court, we have determined that the bequest to Dr. Stanger was a specific bequest and, therefore, was subject to ademption by extinction. Based on the law as it stood in December 2000 when Dr. Greenamyre died, we have also concluded that the auction sale of Dr. Greenamyre's personal property in 1998 amounted to an ademption by extinction of the personal property bequeathed to Dr. Stanger. The subjects of these specific bequests no longer exist. Accordingly, she is not entitled to the net proceeds of the sale of this property.
III. THE UNION PLANTERS BANK ACCOUNT
Dr. Stanger makes a similar argument with regard to the money in Dr. Greenamyre's Union Planters Bank account. While Dr. Stanger stops far short of accusing Ms. Tayes of any wrong doing, she asserts that she is entitled to receive an amount equal to the balance in the account when the conservatorship was established because no financial necessity forced Ms. Tayes to transfer the money to other accounts. For the same reasons that we concluded that Dr. Stanger is not entitled to the net proceeds from the sale of the personal property she would have received under Dr. Greenamyre's will, we conclude that she is not entitled to receive anything more than the $8,474.68 that was in the Union Planters Bank account when Dr. Greenamyre died.
IV. THE ESTATE'S LIABILITY FOR DR. STANGER'S ATTORNEY'S FEES
The final issue in this case involves the payment of Dr. Stanger's attorney's fees. Dr. Stanger takes issue with the trial court's decision to award her only a portion of the fees she requested. However, Dr. Ham insists that the trial court erred by requiring the estate to pay any portion of Dr. Stanger's attorney's fees. After reviewing the record, we find no appropriate factual basis for differentiating between the services of Dr. Stanger's attorney and the services of the attorneys representing the other parties in this proceeding. Accordingly, we have determined that the estate should be required to pay the full amount of Dr. Stanger's attorney's fees accrued in the trial court. However, we find no basis for awarding Dr. Stanger additional attorney's fees for this appeal.
Tennessee follows the American Rule with regard to attorney's fees. Under the American Rule, each litigant must wage its own fight for justice with its own resources, James H. Cheek III, Note, Attorney's Fees: Where Shall the Ultimate Burden Lie, 20 Vand. L.Rev. 1216, 1221 (1967), and litigants are responsible for their own attorney's fees no matter "however wrongful may have been the suit, or however groundless the defense." Corinth Bank Trust Co. v. Security Nat'l Bank, 148 Tenn. 136, 154, 252 S.W. 1001, 1006 (1923). Accordingly, in the absence of a statute, contract, or equitable rule requiring otherwise, attorneys must generally look to their own clients for their fees. Kline v. Eyrich, 69 S.W.3d 197, 204 (Tenn. 2002); State v. Brown Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000); Elliott v. Elliott, 149 S.W.3d 77, 88 (Tenn.Ct.App. 2004).
Will construction cases represent a well-known exception to the American Rule. When a will contains an ambiguity, litigation may be to the mutual benefit of the estate and the beneficiaries. Harris v. Bittikofer, 562 S.W.2d 815, 817-18 (Tenn. 1978). If an ambiguity in a will requires litigation to resolve it, the expenses of the litigation, including the parties' attorney's fees may be charged against the estate of the testator who was responsible for the ambiguity. Marshall v. First Nat'l Bank of Lewisburg, 622 S.W.2d 558, 560 (Tenn.Ct.App. 1981). Thus, the courts frequently require a testator's estate to pay the attorney's fees of parties named as defendants in will construction cases filed by executors. See, e.g., Leaver v. McBride, 506 S.W.2d 141, 145 (Tenn. 1974); Boulton v. Cochran, 41 Tenn.App. 43, 64, 292 S.W.2d 511, 520 (1954). However, the courts shift the burden of paying attorney's fees from the client to the estate only after they are satisfied that the purpose of the litigation was to benefit the estate. First Am. Nat'l Bank v. Charlton, 557 S.W.2d 500, 501 (Tenn. 1977); Pierce v. Tharp, 224 Tenn. 328, 338, 455 S.W.2d 145, 149 (1970).
Dr. Ham first insists that Dr. Stanger is not entitled to have her attorney's fees paid by the estate because she did not include a specific request for attorney's fees in her answer as required by Tenn. R. Civ. P. 9.07. While including a specific prayer for attorney's fees in an answer is a prudent practice, see Hardcastle v. Harris, 170 S.W.3d 67, 90 (Tenn.Ct.App. 2004), we have concluded that there are two reasons why Dr. Stanger's oversight in this case should not undermine her request for attorney's fees. First, her pretrial brief clearly put both the estate and all other parties on notice that she was seeking to have her attorney's fees paid by the estate. Second, despite our observation approximately twenty-five years ago that requests for attorney's fees were "fairly unusual," seeking the payment of attorney's fees is now more commonplace. Thus, the courts now hold with some consistency that failing to request attorney's fees specifically is not fatal in cases where the parties already know that attorney's fees may be recovered from another party.
Marshall v. First Nat'l Bank of Lewisburg, 622 S.W.2d at 561.
Thus, the courts have overlooked failure to comply with Tenn. R. Civ. P. 9.07 in cases where a statute specifically authorizes the recovery of attorney's fees from another party. See, Bloomingdale's By Mail v. Huddleston, 848 S.W.2d 52, 56 (Tenn. 1992) (recovery of a tax refund); Deas v. Deas, 774 S.W.2d 167, 169 (Tenn. 1989) (child support); Hardcastle v. Harris, 170 S.W.3d at 91 (Tennessee Securities Act of 1980); Killingsworth v. Ted Russell Ford, Inc., 104 S.W.3d 530, 533-34 (Tenn.Ct.App. 2002) (Tennessee Consumer Protection Act).
Determining (1) whether filing suit to construe the will was necessary, (2) whether the attorney's services benefitted the estate, (3) whether the parties' attorney's fees should be paid from the estate, and (4) the amount of the attorney's fees are discretionary decisions. Chaille v. Warren, 635 S.W.2d 700, 703 (Tenn.Ct.App. 1982); Tigrett v. Tigrett, 61 Tenn.App. 172, 203, 453 S.W.2d 100, 114 (1967). The reasonableness of a particular attorney's fee depends on the facts of the case. Alexander v. Inman, 903 S.W.2d 686, 695 (Tenn.Ct.App. 1995). Accordingly, we review a trial court's decisions regarding the award of attorney's fees using the "abuse of discretion" standard of review.
The "abuse of discretion" standard is a review-constraining standard of review that calls for less intense appellate review and, therefore, less likelihood that the trial court's decision will be reversed. State ex rel. Jones v. Looper, 86 S.W.3d 189, 193 (Tenn.Ct.App. 2000); White v. Vanderbilt Univ., 21 S.W.3d 215, 222-23 (Tenn.Ct.App. 1999). Appellate courts do not have the latitude to substitute their discretion for that of the trial court. Henry v. Goins, 104 S.W.3d 475, 479 (Tenn. 2003); State ex rel. Vaughn v. Kaatrude, 21 S.W.3d 244, 248 (Tenn.Ct.App. 2000). Thus, a trial court's discretionary decision will be upheld as long as it is not clearly unreasonable, Bogan v. Bogan, 60 S.W.3d 721, 733 (Tenn. 2001), and reasonable minds can disagree about its correctness. Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001); State v. Scott, 33 S.W.3d 746, 752 (Tenn. 2000). Discretionary decisions must, however, take the applicable law and the relevant facts into account. Ballard v. Herzke, 924 S.W.2d 652, 661 (Tenn. 1996). Accordingly, a trial court will be found to have "abused its discretion" only when it applies an incorrect legal standard, reaches a decision that is illogical, bases its decision on a clearly erroneous assessment of the evidence, or employs reasoning that causes an injustice to the complaining party. Perry v. Perry, 114 S.W.3d 465, 467 (Tenn. 2003); Clinard v. Blackwood, 46 S.W.3d 177, 182 (Tenn. 2001); Overstreet v. Shoney's, Inc., 4 S.W.3d 694, 709 (Tenn.Ct.App. 1999).
The trial court's decision to require the estate to pay the fees of the four attorneys who participated in this case reflects its conclusions that the suit to construe Dr. Greenamyre's will was appropriate, that the work of all the attorneys benefitted the estate, and therefore, that the estate should be required to pay all or a portion of the parties' attorney's fees. These conclusions are supported by the record.
Deciding whether a party's attorney's fees should be paid by the estate does not necessarily hinge on the success of the party's claims. See First Am. Nat'l Bank v. Cole, 211 Tenn. 213, 222, 364 S.W.2d 875, 879 (1963); Howell v. Stroud, 1 Tenn.App. 301, 312-13 (1925). The controlling question is whether the entire estate benefitted from the efforts of the party's lawyer. Dr. Stanger's participation in the suit to construe Dr. Greenamyre's will benefitted the estate even though she did not prevail. Her claims have now been definitively resolved, and her attorney aided materially in that resolution. Now that the questions regarding Dr. Greenamyre's will have been laid to rest, Ms. Gibbons may distribute the assets and close the estate without further controversy or dispute.
The final issue involves the portion of Dr. Stanger's attorney's fees that should be paid by Dr. Greenamyre's estate. Dr. Stanger's attorney submitted an affidavit establishing that his fees and expenses amounted to $9,807.92; however, the trial court, without explanation, directed the estate to pay only $6,751.62 of the requested fee. Based on the record before us, we find that the trial court erred by failing to direct Dr. Greenamyre's estate to pay all of Dr. Stanger's legal expenses in the trial court.
Four attorneys were involved in this litigation. All four attorneys submitted fee requests to the trial court and requested the court to find them reasonable and then order that these fees be paid from the intestate funds in Dr. Greenamyre's estate. The trial court found that the fees requested by three of the four attorneys were reasonable and directed that they be paid from the estate. However, the trial court approved only seventy percent of the fee requested by Dr. Stanger's attorney. Other than the fact that the attorneys representing Dr. Ham and Jiro and Hideo Ishibashi were on the "prevailing" side of the dispute involving the application of the ademption by extinction doctrine, we find no substantive difference between the role that these lawyers played during this litigation and the role played by Dr. Stanger's attorney.
The trial court determined that the $13,807.50 fee requested by the attorney representing Jiro and Hideo Ishibashi, the $6,375.00 fee requested by the attorney representing Dr. Ham, and the $5,580.82 fee requested by the attorney representing Ms. Gibbons were reasonable. Accordingly, the trial court directed the estate to pay all but $7,500.00 of these fees. Based on a prior agreement between Dr. Ham and Jiro and Hideo Ishibashi, the trial court directed that $7,500 of the fee requested by Jiro and Hideo Ishibashi's attorney be paid from their portion of the proceeds.
We have already pointed out that the success of a party's claim is not the sole factor for determining whether an estate should pay that party's legal expenses in a suit to construe a will. By awarding Dr. Stanger's attorney a portion of his requested fee, the trial court necessarily determined that the efforts of Dr. Stanger's attorney benefitted Dr. Greenamyre's estate. The trial court never concluded that the attorney's fees requested by Dr. Stanger's lawyer were unreasonable and never explained the legal or factual basis for its decision to award Dr. Stanger's attorney only a portion of his requested fee. Accordingly, we find that the trial court erred by directing Dr. Greenamyre's estate to pay only a portion of Dr. Stanger's attorney's fees in the trial court.
Dr. Stanger also insists that this court should require Dr. Greenamyre's estate to pay the legal expenses she incurred on this appeal. While we have the authority to award attorney's fees on appeal, we decline to do so in this case. The trial court's order properly addressed the ademption by extinction issue raised by Dr. Stanger. Thus, this appeal was primarily intended to benefit Dr. Stanger.
V.
We affirm the trial court's conclusion that the specific bequests of personal property to Dr. Stanger were adeemed by extinction and that Dr. Stanger is entitled only to the funds in Dr. Greenamyre's Union Planters Bank account when he died. We reverse the trial court's order directing Dr. Greenamyre's estate to pay $6,751.62 of Dr. Stanger's attorney's fees and direct the court to enter an order directing the estate to pay Dr. Stanger's attorney's fees in the amount of $9,807.92. We remand the case to the trial court with directions to enter the order heretofore required and for whatever other proceedings may be required. We also direct that the costs of this appeal be taxed to the Estate of Edward Louis Greenamyre for which execution, if necessary, may issue.
FRANK G. CLEMENT, JR., J., concurs.
The majority has provided a well reasoned opinion, based upon a strict interpretation of In re Estate of Hume, 984 S.W.2d 602, 605 (1999), concluding that the sale and reorganization of other assets and bank accounts by the court appointed conservator effected an ademption by extinction of several of Mr. Greenamyre's testamentary bequests. I, however, submit a strict interpretation of Hume is not required.
Being fully aware of the strictures of the longstanding doctrine of stare decisis et non quieta movere embodied in Payne v. Johnson, 2 Tenn. Cas. (Shannon) 542, 543 (1877), I am of the opinion the material facts of this case and those of In re Estate of Hume are so disparate they permit this court to step beyond the shadow of the inflexible "in specie" doctrine by distinguishing the facts. Doing so is not an uncommon practice. Tennessee's ademption landscape is rich with rulings based upon the well recognized protocol of "distinguishing the facts" of each case. See Rhodes v. Kebke, 179 Tenn. 480, 167 S.W.2d 345, 349-50 (1943) (holding an ademption had not occurred based upon a finding that although the testator no longer had a legal interest in specifically bequeathed shares of stock at his death, he had an equitable interest therein which "ought to pass to the beneficiary under the terms of the will"); Wiggins v. Cheatham, 143 Tenn. 406, 225 S.W. 1040, 1042 (1920) (holding the bequest of a liquor business had not been adeemed, stating: "the fact that the testator was not actually engaged in business at the time of his death did not destroy the specific character of the property intended to be bequeathed in his will . . ." because it "was subject to identification."); Baldwin v. Davidson, 37 Tenn. App. 606, 267 S.W.2d 756, 759 (1954) (holding there was no ademption due to the change of the subject of the bequest from a partnership to a corporation where the will bequeathed the testator's interest in the partnership, noting "the identity of the thing given, the subject of the legacy, has been substantially preserved"); Bedford v. Bedford, 38 Tenn.App. 370, 274 S.W.2d 528 (1954) (holding that only a partial ademption had occurred where the deceased devised life estates in specific property to three beneficiaries and thereafter deeded to one of the beneficiaries a part of the land; finding that the deed resulted in a partial ademption by satisfaction (distinguished from extinction) of the devise to the devisee who received the deed, but did not adeem the devise of the remainder of the land to the other devisees).
Another example of distinguishing the facts is In re Estate of Rutledge, No. 85-338-11, 1986 WL 6063 (Tenn.Ct.App. May 29, 1986), wherein the court was presented with two ademption issues. One pertained to real property devised in the will, which had been disposed of by the testatrix. The other pertained to personalty disposed of by the conservator for the testatrix without the knowledge or consent of the testatrix. The Rutledge court treated the dispositions differently, holding that the acts by the testatrix caused an ademption, yet the acts by the conservator did not.
The relevant provisions of the Rutledge will directed the Executrix to sell all real property, and after the payment of expenses, give the residue of the proceeds to named beneficiaries. The will also specifically bequeathed personal property — diamond ring, dinner ring, silver service, certificates of deposit, household furnishings, etc. — to other named beneficiaries. As the petition to construe the Rutledge will revealed, all of the property bequeathed or devised in the will had been sold prior to the testatrix' death. As a consequence, the estate consisted of cash and certificates of deposit. The trial court found the testatrix sold her real property and transferred money from bequeathed designated bank accounts to other investment instruments. It also found the conservator sold the diamond ring, the dinner ring, the sterling silver service, and the household furnishings bequeathed in the will. Based upon these findings, the trial court held an ademption had occurred as to the property disposed of by the testatrix, but the transactions by the conservator did not cause an ademption. As a consequence of these findings and holding, the trial court ordered the executrix to pay the respective legatees the amount for which the personalty was sold, which was affirmed by this court. Rutledge, 1986 WL 6063, at *3.
This court reasoned it was insufficient to contend that the absence of the object of a specific bequest from a testator's estate — the diamond ring, dinner ring, silver service and household items — by whatever means, constitutes an ademption. Rutledge, 1986 WL 6063, at *4. Specifically, we held "the absence of the thing from the estate must result from an act of the testator or other person acting with the knowledge and consent of the testator." (emphasis added) Id. Obviously, a strict interpretation of the "in specie" doctrine adopted by the Supreme Court in In re Estate of Foster Hume in 1999 would require a different holding by this court today. The other issue in Rutledge involved the sale of property by the testatrix. We affirmed the finding of an ademption as to property that was sold by the testatrix. Rutledge, 1986 WL 6063, at *4.
Based upon the recognized practice of distinguishing the facts in ademption cases, we may distinguish the significant factual differences between Mr. Hume's and Mr. Greenamyre's estates. Unlike Mr. Greenamyre, Mr. Hume was sui juris at all times. Additionally, the ademption in the Hume estate was a direct result of an act and omissions by Mr. Hume. The devised property was voluntarily encumbered by Mr. Hume while he was sui juris, the default on the note secured by the property occurred while he was sui juris, the foreclosure occurred while Mr. Hume was sui juris, and he remained sui juris until his death.
The facts of Mr. Greenamyre's case are entirely different. Mr. Greenamyre was not sui juris at any time material to the issues. Most significantly, he was a ward of a conservatorship for his person and property when the disputed transactions took place. Moreover, Mr. Greenamyre had no involvement, direct or indirect, in the transactions. All sales and transfers of the assets at issue were the acts of a court-appointed fiduciary, a conservator, without the knowledge or consent of Mr. Greenamyre. In fact, it was legally impossible for Mr. Greenamyre to object or consent to the transactions because Mr. Greenamyre was previously declared a disabled person subject to a conservatorship.
No one contends the conservator acted improperly, and no impropriety should be inferred from this opinion. To the contrary, it appears the conservator's actions were well intended.
It is, or should be, of significance that the ademption at issue was not the result of any act or omission by Mr. Greenamyre. Indeed, Mr. Greenamyre's only act or omission relevant to the issue was to fall victim to infirmities of age, which necessitated that he be placed in a nursing home and have a conservator appointed to handle all of his legal and personal affairs.
Prior to the adoption of the "in specie" doctrine by the Hume court, ademption was based upon the doing of some act by the testator. PRITCHARD ON WILLS AND ADMINISTRATION OF ESTATES, which is recognized by probate judges and practitioners as the leading authority on probate matters and the administration of estates in Tennessee, provides that an ademption is "the extinction, alienation, withdrawal, or satisfaction of the legacy by some act of the testator by which an intention to revoke is indicated; the doing of some act with regard to the subject matter which interferes with the operation of the will." (emphasis added) PRITCHARD ON WILLS AND ADMINISTRATION OF ESTATES, § 486 (JACK W. ROBINSON. SR. JEFF MOBLEY, 5th ed.1994) (citing Wiggins v. Cheatham, 143 Tenn. 406, 225 S.W. 1040 (1920); American Trust Banking Co. v. Balfour, 138 Tenn. 385, 198 S.W. 70 (1917)).
The principle upon which the Hume court applied the "in specie" doctrine was that it matters not that the ademption was a result of an act by the testator. The ademption in Hume was, however, a direct result of an act by Mr. Hume and subsequent omissions by Mr. Hume. The "act" was when Mr. Hume encumbered the real estate, which put the resulting foreclosure in play. The "omissions" include Mr. Hume's failure to pay the note secured by the devised property and his subsequent failure to revise the will to remedy the effect of the ademption. Accordingly, the facts before the Hume court involved a sui juris testator who committed an act and at least two omissions that caused the ademption. Accordingly, by taking a strict interpretation of Hume and the doctrine of obiter dictum, it appears the adoption of the "in specie" doctrine is obiter dictum, at least to the extent the testator was not sui juris when the transactions occurred, because it was not essential to the determination in Hume.
In State of Tennessee, Department of Children's Servs. v. B.F., No. E2004-00338-COA-R3-PT, 2004 WL 2752808, *4 (Tenn.Ct.App. Oct. 2, 2004), DCS contended that in State v. Haynes, No. 01C01-9611-CC-00494, 1998 WL 307949 (Tenn.Crim.App. June 12, 1998) the Tennessee Court of Criminal Appeals ruled "there is no distinction in the business records hearsay exception between admission of the actual records and admission of testimony based on the records." This court in B.F. concluded the Haynes court had not addressed the merits of the business records issue; therefore, any comments it made in that regard were obiter dictum and as such, did not constitute binding precedential authority. Id. (citing Shepherd Fleets, Inc. v. Opryland USA, 759 S.W.2d 914, 921 (Tenn.Ct.App. 1988)). Significantly, this court went on to observe that the cases relied on in Haynes were factually distinguishable from B.F.Id. Of course, we are not free to disregard directives when the Supreme Court is speaking directly on the matter before it and is seeking to give guidance to the bench and bar. See Holder v. Selection Comm'n, 937 S.W.2d 877, 881-82 (Tenn. 1996).
The critical distinguishing factors present in Hume and not present here are legal competency and the ability or lack thereof of the testator to remedy the impending ademption by revising the will. Mr. Hume could have but did not remedy the ademption. Mr. Greenamyre could not; in fact, it was a legal impossibility.
Application of the "in specie" doctrine by the Hume court was logical and equitable, because Mr. Hume, being sui juris could have, but did not, revise his will after the foreclosure. Nevertheless, I am confident the Hume court would not have applied the "in specie" doctrine to Mr. Greenamyre's set of facts. I submit the apparent broad application of the holding in Hume is the unintended result of the Hume court painting with too broad a brush. It is for such artistry we have the safeguard of obiter dictum.
As the majority noted, it is significant but not controlling that the General Assembly recently expressed its intention that the harsh "in specie" doctrine not apply to persons like Mr. Greenamyre. This intent is evident from adoption of relevant parts of the Uniform Probate Code, which favor the "intention of the testator" rule instead of the harsh "in specie" rule when a devise or bequest is sold by a conservator for an incapacitated person who cannot approve or object to the fiduciary's acts. See Tenn. Code Ann. § 32-3-111 (Supp. 2005); see also The Uniform Probate Code, Sec. 2-606 (amended 1997), 8 U.L.A. 37 (Supp. 2002). Moreover, Tenn. Code Ann. § 32-3-111 provides guidelines when specifically bequeathed or devised property has been changed by a conservator or attorney-in-fact. Id.
Since the effective date of the legislation was subsequent to the death of Mr. Greenamyre, the legislation can not be applied retro-actively to this estate.
The relevant parts of the Uniform Probate Code adopted by the General Assembly, which pertain to specific devises and bequests by persons who subsequently become incapacitated provide:
(a) A specific legatee or devisee has a right to the specifically gifted or devised property in the testator's estate at death or if the property has been disposed of and a contrary intention is not manifest during the testator's lifetime:
(1) Any balance of the purchase price, together with any security interest, owing from a purchaser to the testator at death by reason of sale of the property;
(2) Any amount of a condemnation award for the taking . . . unpaid at death;
(3) Any proceeds unpaid at death on fire or casualty insurance on, or other recovery for injury to, the property; and
(4) Property owned by the testator at death and acquired as a result of foreclosure, or obtained in lieu of foreclosure, of the security interest for a specifically devised obligation.
(b) If specifically devised or bequeathed property is sold or mortgaged by a conservator or by an agent acting within the authority of a durable power of attorney for an incapacitated principal, or if a condemnation award, insurance proceeds, or recovery for injury to the property are paid to a conservator or to an agent acting with the authority of a durable power of attorney for an incapacitated principal, the specific devisee has the right to a general pecuniary devise equal to the net sale price, the amount of the unpaid loan, the condemnation award, the insurance proceeds, or the recovery.
(c) The right of a specific legatee or devisee under subsection (b) is reduced by any right the legatee or devisee has under subsection (a).
. . . .
(e) For the purposes of the references in subsection (b) to an agent acting within the authority of a durable power of attorney for an incapacitated principal:
(1) "Incapacitated principal" means a principal who is an incapacitated person;
(2) No adjudication of the principal's incapacity need occur before death; and
(3) The acts of an agent within the authority of a durable power of attorney are presumed to be for an incapacitated principal, such presumption rebuttable by clear and convincing evidence of capacity.
Tenn. Code Ann. § 32-3-111.
With the adoption of the Uniform Probate Code, Tennessee has joined a number of jurisdictions that apply the less harsh "intent of the testator" doctrine when property is sold by a guardian or conservator of an incapacitated, incompetent or disabled person. Iowa, in Estate of Bierstedt, 254 Iowa 772, 119 N.W.2d 234 (1963), reversed an earlier ruling of total ademption, and held that a guardian's sale of a testator's farm while the testator was incompetent did not effect a total ademption. Labeling this the "intention" rule, the Iowa court explained, "to hold otherwise would allow the guardian, either intentionally or unintentionally, to disrupt the dispositive scheme of the testator as evidenced by his last competent act in relation to the specific devise." Bierstedt, 119 N.W.2d at 238. Reversing a decree of partial ademption of a devise, which was the incompetent testatrix' home, California, in Estate of Mason, 62 Cal.2d 213, 42 Cal.Rptr. 13, 397 P.2d 1005 (1965), reasoned that an incompetent testator lacks intent to adeem and the opportunity to avoid the effect of ademption by making a new will, and that a contrary rule would allow the guardian, by changing the form of guardianship property, to determine the distribution of the estate. " To permit such ademption," said the court, " would allow the guardian to destroy his ward's testamentary plan. . . ." Id. (emphasis added); see also Matter of Estate of Warren, 81 N.C.App. 634, 344 S.E.2d 795 (1986); 84 A.L.R.4th 455 (upholding the pronouncement that the principle of ademption does not apply when the testator becomes incompetent and the subject matter of a specific bequest or devise is sold by a guardian or conservator); Lewis v. Hill, 387-111. 542, 56 N.E.2d 619, 622 (1944) (stating the principle arises from the recognition that the sale of property by a guardian or conservator is "in no sense to be regarded as a conveyance by the testatrix"). Several jurisdictions, perceiving harshness in the strict application of the rule to such circumstances, and realizing that favoritism or greed may be present, have adopted special rules to the effect that the representative's conduct does not necessarily or entirely adeem the legacy or bequest. See Jeffrey F. Ghent, Annotation, Ademption or Revocation of Specific Devise or Bequest by Guardian, Committee, Conservator, or Trustee or Mentally of Physically Incompetent Testator, 84 A.L.R.4th 462, 1991 WL 741695 (1991).
For the reasons stated above, I respectfully dissent from that part of the majority opinion that upholds the ademption. With that exception, I concur with the majority.