Tennessee

Warning: The following opinion is provided for purposes of discussion only. We have not Shepardized™ this opinion, and do not know the subsequent disposition of this case nor whether the effect of the opinion has been overruled or superceded by other law.

Callie Hixon v. A.W. Potter et al.,
1984.TN.1052 (Tenn.App. 07/31/1984)

COURT OF APPEALS OF TENNESSEE, MIDDLE SECTION AT NASHVILLE

1984.TN.1052

July 31, 1984

CALLIE HIXSON, PLAINTIFF-APPELLEE

v.

A. W. POTTER, FLOYD H. HISXON, KENNY L. HIXSON, JAMES MILBURN BOYCE, ROBERT P. MINUE, EDWIN P. TURNER, JUDY TURNER GORDON, DEFENDANTS-APPELLANTS

Warren Equity, APPEAL FROM CHANCERY COURT OF WARREN COUNTY, TENNESSEE, THE HONORABLE SCOTT CAMP, CHANCELLOR, SITTING BY DESIGNATION.

R. E. Bonner, Jr., 111 West Court Street, McMinnville, Tennessee 37110, Attorney For Plaintiff-appellee

B. Timothy Pirtle, City Bank Building, McMinnville, Tennessee 37110, Attorney For Defendants-appellants

Todd, Presiding Judge, Middle Section wrote the opinion. Concur: Samuel L. Lewis, Judge William C. Koch, Jr., Judge

The opinion of the court was delivered by: Todd

HENRY F. TODD, PRESIDING JUDGE, MIDDLE SECTION

This is a suit by a widow against the heirs of her deceased husband to recover her statutory widow's share of certain bank deposits held in the name of deceased or defendants. The Chancellor awarded the widow one third of the deposits, and the heirs have appealed.

Appellants' first issue is stated as follows:

Evidence preponderates against the Trial Court finding of fraudulent intent in the transfer by decedent of personalty to children and grandchildren.

There is no palpable material contradiction in the testimony. The only factual issue relates to the inferences which should be drawn from the facts related by the witnesses.

Plaintiff testified that she and deceased were married in 1952; that she resided with him until his death in 1982; that they acquired and held a 50 acre farm as tenants by the entireties; that her husband would not tell her anything about his financial affairs; that he was a farmer, had 8 cows and a few hogs at marriage, but accumulated more livestock during the marriage; that she knew he had a will but never talked to him about it because "he was easy to get mad"; that, after the death of her husband, she learned that he had $20,000.00 in the bank in the name of himself, children and grandchildren; that the $20,000.00 came from the sale of cattle which she helped him tend; that her husband owned another farm in his own name which was sold after his death for $60,000.00; that this farm was owned by deceased at the marriage but was heavily mortgaged and the mortgage was paid off from farm income during the marriage; that the will of deceased gave her the farm held by the entireties (in which he had no deviseable interest) household goods and automobile; that she (plaintiff) had a separate savings account; and that she had Dissented from her husband's will.

Floyd Hixson, co-executor of the estate of W. C. Hixson, testified that deceased received $77.10 per month pension and $157.34 per month interest on certificates of deposit; that the arrangement of payees on the certificates of deposit was in exact accord with the provisions of his will for equal division of the residue of his estate among his four children or their issue; that the certificates of deposit were kept in a bank vault with the will until October, 1982, when deceased was in a hospital during his last illness at which time deceased said to the witness:

You know about the certificates of deposit? Well, they are in the Bank of Viola. You might as well get them and distribute them, because I don't think I'll get out of here again.

The witness further testified that he procured the certificates from the bank and distributed them to the "co-parties" before the death of the deceased, except those having four "co-parties" which were retained by him under an agreement to distribute the proceeds when collected; that deceased received the interest on all of the certificates during his lifetime; and that they were included in the inventory of the estate "for the purpose of determining if we had to pay inheritance tax on all this".

This witness testified that, shortly before the death of deceased, and while he was in the hospital, plaintiff went to her family in Mississippi, but this is not deemed to be material to the issues.

The witness further testified that he and other children arranged hospitablization for deceased and saw to his needs during his last illness after plaintiff announced that they would have to "take over".

The inventory includes a list of certificates of deposits in the amounts and with payees as follows:

$5,000.00 - W. C. Hixson or A. W. Potter (son-in-law)

$5,000.00 - W. C. Hixson or Floyd H. Hixson (son)

$5,000,00 - W. C. Hixson or Kenny L. Hixson (son)

$5,000.00 - W. C. Hixson or James M. Boyce Robert R. Minue July Williams Edwin Turner, Jr. (grandchildren)

$1,000.00 - W. C. Hixson or Callie Hixson

Upon the foregoing evidence, the Chancellor stated his findings orally as follows:

Well, Gentlmen, I am of the opinion, from the facts and circumstances of the case, that the widow has been substantially deprived of her right to her statutory interest in the personal property involved in the lawsuit. The situation is fairly clear to me in this regard: These two (2) persons, Mr. and Mrs. Hixson, were married to each other after they had each been married and reared families or were in the process of rearing families. And it is obvious, from the testimony, as I see it, that they were unhappy with their - although they lived together for many years; they worked together for many years, and Mrs. Hixson milked cows and did whatever was necessary to operate the farm-that they really were at odds with each other a great deal of the time. And there is no question in my mind but that Mr. Hixson made the deposits in the bank which are involved in this lawsuit in order to effectively deprive Mrs. Hixson of her-whatever interest that she might have or that the law might give her in the money. And I think she is entitled to her statutory interest in the proceeds of the certificates. Do I need to pass upon anything else?

The judgment was in favor of plaintiff and against A. W. Potter, Floyd Hixson, and Kenny Hixson for $1,667.67 each (1/3 of the $5,000.00 sum of certificates received by each of them, and against James M. Boyce and Judy Gordon (jointly) for $833.84 (1/3 of the $2,500.00 proceeds received by them). The suit against Robert R. Minue and Edwin Turner was nonsuited.

Appellants cite Warren v. Compton Tenn. App. 1981, 626 S.W.2d 12, wherein the husband by will gave the wife "exactly what the was entitled to under the law". This Court said:

We would have a different situation had Mr. Warren left his wife out in his will - such an attempted disinheritance could be found to establish a fraudulent intent in the two transfers under consideration.

It is argued that even though Mr. Warren provided for his wife as provided by law, he depleted his estate to the extent of the $57,300.00 by the two transfers -- the widow's counsel values Mr. Warren's estate at about $313,500.00 -- -- It is the amount by which the estate was depleted which must be considered on the issue of fraudulent intent on the part of the transferrer. Under the circumstances, we hold that the amount of the transfers in relation to the total estate is not so great as to infer fraudulent intent on the part of the donor-spouse. - 626 S.W.2d at 18.

It is seen that the cited case turned on the relation of the size of the gifts to the total estate. This Court held that the gifts were not of sufficient size to "infer fraudulent intent".

The inventory in the present case lists the following:

Bank account $4,497.91

Certificates of Deposit 21,000.00

"Home Place", 74 acres 69,050.00

Grundy County Farm 23,300.00

Household Goods 2,000.00

The Grundy County farm, held by the entireties with plaintiff was not a part of the estate of deceased. The remainder of the above items total $96,547.91. If the sale price of the Home Place ($60,000.00) is used, the total would be $87,497.91.

Excluding the Grundy County farm from the will, the wife received under the will $2,000.00 of $87,497.91. In addition she apparently received the proceeds of the $1,000.00 certificate of deposit payable to W. C. Hixson or Callie Hixson. The remainder of the estate of deceased was devised to the children and grandchildren of deceased.

$3,000.00 out of $87,000.00 is a far cry from the facts in Warren, wherein the deceased "provided for his wife as provided by law".

This Court agrees with the Chancellor that fraudulent intent should be inferred from a will which almost entirely excludes the wife from participation in the estate coupled with a transfer of property which substantially reduced the value of the estate, ergo the amount available to the widow upon Dissent.

This is not to say that the Chancellor or this Court has found the deceased to have committed an act equivalent to theft. It is simply to say that when a person exhibits an intention to deprive his or her spouse of that share of his or her estate to which the spouse is lawfully entitled (one-third), then any divestment of any substantial part of the estate may be inferred to be a part of the plan to deprive the surviving spouse of lawful share and thereby becomes "fraudulent in law", that is of such nature and effect that it will not be countenanced by the law.

Appellant insists that provisions were made by will and gift for the surviving spouse. Such provisions are not cited in appellants' argument, but have been discussed above and found to be inadequate.

Appellant insists that consideration for the transfers was received by the decedent. The attention showed to deceased by his children is not deemed equivalent to that of a stranger to blood who cared for deceased in the Warren case. Moreover, as pointed out, the determinative factor in the Warren case was that deceased did provide in his will that his wife would receive her lawful share of his estate.

Appellant insists that the total transferred was insignificant. As demonstrated above, the reverse is true.

Appellant insists that the gifts were inter vivos and without badges of fraud. While it appears that delivery was made before death (except for one), this is not deemed determinative. The badge of fraud is the exclusion of plaintiff from any but nominal participation in the estate and the substantial depletion of the estate available upon Dissent.

Finally, appellant insists that the relationship between the decedent and the surviving spouse mitigates (sic) against any fraudulent intent. As stated in Warren, the circumstance of strained relations is a "two-edged sword". That is, inferences may be drawn therefrom favorable to or unfavorable to the claims of the spouse. In the present case, it is shown that the spouses thought enough of each other to marry and live together for 30 years; that deceased was secretive and disagreeable about his financial affairs and that he expected and received substantial labor from his wife. For example, he would drive the cows to the barn if necessary, but all feeding and milking of the cows, caring for and marketing the milk was required of the wife who was obliged to buy groceries from "her money". Nevertheless, they remained together for 30 years and were not separated by animosity but by the severe illness of deceased and the inability of his aging wife to care for him.

Moreover, as pointed out in Warren, this is not a divorce case in which fault is an issue; nor is love and affection an issue as in a will case where testamentary intent is an issue. The Courts are not authorized to deprive a spouse of lawful share of an estate for inattention, nor are they authorized to deprive a spouse of the statutory right to set aside a transfer in fraud of marital rights for inattention or estrangement.

Any unfavorable attitude of deceased toward plaintiff during his last days would be a circumstance supporting the hypothesis that his gifts to others were with the intent to deprive plaintiff of her lawful rights.

T.C.A. § 31-4-101 provides that a surviving spouse shall have a right of election to take an elective share of one-third (1/3) of decedent's net estate.

T.C.A. § 31-1-105 provides that any conveyances made fraudulently to children or others, with an intent to defeat the surviving spouse of his distributive or elective share, is voidable at the election of the surviving spouse.

Decisions under prior law are applicable to the present statute. Warren v. Compton, supra.

Among the factors to be considered in determining whether the gift or transfer is colorable of has a fraudulent intent so as to be void are whether the transfer was without consideration, the size of the transfer in relation to the husband's total assets, the time between the transfer and the husband's death, relations which existed between the husband and wife at the time of transfer and the source from which the property came. If the properties transferred prior to the husband's death are of such quantity in relation to the total of the estate as to substantially deprive the widow of that which she would otherwise take, fraud may be presumed from such transfer certain circumstances and conditions. Sherrill v. Mallicote 57 Tenn. App. 241, 417 S.W.2d 798 (1967).

The ascertainment of inferences to be drawn from circumstances is a function of fact finding as to which the decision of the Chancellor is reviewed de novo by this Court with a presumption of correctness "unless the evidence preponderates otherwise". TRAP Rule 13d. The evidence does not "preponderate otherwise". Therefore the finding of the Chancellor must be affirmed.

Appellants' first issue is found to be without merit.

Appellants' second and last issue is:

Trial Court erred by entering judgment against defendants who were not personally served with process.

As above indicated, judgments were entered against A. W. Potter, Floyd Hixson, Kenny Hixson, James Boyce and Judy Gordon.

The record shows that summons was personally served on James Boyce.

The record shows that process for Judy Gordon was returned as follows:

Served Judy Gordon by leaving summons with her housekeeper at her abode.

There is no record of the issuance or service of process upon A. W. Potter, Floyd Hixson, or Kenny Hixson.

On November 5, 1983, the defendants, A. W. Potter, Floyd Hixson, Kenny Hixson, James M. Boyce and July Gordon, filed a joint answer to the merits which also contained the following:

7. These defendants deny the sufficiency of the service of process upon them and, therefore deny the jurisdiction of this Court over their persons.

At the beginning of the trial on December 16, 1983, counsel for appellees made the following announcement:

I represent the beneficiaries of the will of Mr. W. C. Hixson.

Each of the judgment defendants is named as a beneficiary in the will of W. C. Hixson.

The same counsel then stated:

This action is brought under a provision of the probate statute that provides that, if a decedent fraudulently transfers property to defeat the surviving spouse's elective share, then, that fraudulent transfer may be set aside by the Court, and the surviving spouse reach the one-third (1/3) interest or elective share of the property so fraudulently transferred. Your honor, it is our contention that the defendant was never aware of the change in the law that even provided for the elective share which was enacted by the legislature after the decedent had executed his last will and testament. And, without knowledge of the statute, the decedent, obviously, could not have fraudulently transferred the property to defeat the surviving spouse's elective share.

Thereafter both counsel made further statements as to the issues, objection was made to out-of-state service upon Robert Minue and Edwin Parker Turner, whereupon the plaintiff took a non-suit as to Minue and Turner.

Counsel for appellee then stated a defense of venue which was discussed and overruled.

Plaintiff was cross-examined by counsel for appellees who moved for a directed verdict, which motion was overruled, and conducted direct examination of Floyd H. Hixson.

The record does not state that A. W. Potter was present at the trial, but it does contain a statement that his testimony will not be presented because it would be cumulative and that Kenny Hixson did not attend the trial for reasons of health.

No reference whatsoever can be found in the transcript of the trial as to the defense of lack of proper service upon resident defendants.

It has been repeatedly held that, as a general proposition, the appellate courts will not consider contentions that were not first presented to and decided by the Trial Court. 2 Tenn. Dig. Appeal & Error § 169, pp 598, 599.

In State ex rel Loser, Attorney General v. National Optical Stores Co. 189 Tenn. 433, 225 S.W.2d 263 (1950), the defendant filed a number of dilatory motions and pleas, including res judicata. The Supreme Court said:

In any event, although the plea of res judicata was relied on in the answer, no mention of its merits, nor Disposition of its was made by the Chancellor in his final opinion and decree. The defendant took no steps by way of petition for rehearing to correct this pretermission. The fact that the record shows no action taken by the Chancellor on the plea constituted a waiver by defendant and should prevent our considering the plea on review. (Citing authorities).

In the present case, neither the oral opinion of the Chancellor nor any order, decree or judgment suggests in any way that the issue of personal service upon the appellees was ever called to the attention of the Chancellor, considered or decided by him. The issue must therefore be deemed to have been waived.

It is not enough for a defendant to insert a denial of proper service of process in his answer, the burden is upon the defendant to bring the special defense to the attention of the Trial Judge by motion or otherwise and to seek a ruling thereon. Failure to seek a ruling in such a case must be interpreted as a waiver. Otherwise, a defendant may quietly question service of process in his answer and leave it unnoticed by the trial court as an "ace in the hole" to be used only in event of an unfavorable judgment, and that on appeal without a judgment thereon by the trial Judge.

Although not in identical circumstances, it has been held that appearance and defending on the merits generally is a waiver of service of process. Hanley v. Burton Tenn. App. 1975, 543 S.W.2d 599 and authorities cited therein.

In the present case, it must be presumed that counsel who announced that he represented the beneficiaries of the will did, in fact, represent them and that he engaged in the trial of the case with full authorization from each of them. This being true, each of the judgment defendants, through counsel, did waive service of process by voluntary appearance and participation in the trial without expressly reserving the special defense relating to process.

No merit is found in appellants' second and last issue.

The judgment of the Chancellor is affirmed. Costs of this appeal are taxed against the appellants. The cause is remanded to the Chancery Court for such further proceedings, if any, as may be necessary and proper.

Affirmed and Remanded.

Concur: SAMUEL L. LEWIS, JUDGE WILLIAM, C. KOCH, JR., JUDGE

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