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and do not know the subsequent disposition of this case nor whether the effect of the opinion has been overruled or superceded by other law.

William H. Young v. Linda M. Hudgens,
1989.TN.1205 (Tenn.App. 06/30/1989)

COURT OF APPEALS OF TENNESSEE, MIDDLE SECTION, AT NASHVILLE

No. 89-19-II

1989.TN.1205

June 30, 1989

WILLIAM H. YOUNG, PLAINTIFF-APPELLANT,

v.

LINDA M. HUDGENS, DEFENDANT-APPELLEE

From the Equity Court, Davidson County, Honorable C. Allen High, Chancellor.

C. Michael Robbins, Ingram & Lowe, Goodlettsville, Tennessee, Attorney for Plaintiff-Appellant.

W. R. Baker, Ashland City, Tennessee, Attorney for Defendant-Appellee.

Ben H. Cantrell, Judge, Henry F. Todd, Presiding Judge, Samuel L. Lewis, Judge, concur.

The opinion of the court was delivered by: Cantrell

OPINION

BEN H. CANTRELL, JUDGE

In this action pursuant to Tenn. Code Ann. § 31-1-105 (1984), the plaintiff challenges a conveyance of real property on the grounds that the conveyance was made fraudulently to defeat his distributive or elective share in his wife's estate. The trial court held that the conveyance was not fraudulent.

Plaintiff-appellant William H. Young brought this action to set aside a conveyance of real property located at 1417 Montgomery Avenue in Nashville and to declare an equitable lien against that property. The complaint alleges that the plaintiff's wife conveyed the property to defendant-appellee Linda W. Hudgens, her daughter by a previous marriage, to deprive the plaintiff of his distributive or elective share in his wife's estate.

In overruling the plaintiff's motion for summary judgment, the trial court held that "there is an issue of material fact shown in the pleadings and affidavits, to wit whether the defendant was justified in giving property away to defeat her husband's receiving it because of his treatment of her."

The parties stipulated the following facts:

1. Plaintiff married Alva Allene Napier, now deceased, on March 28, 1970 in Robertson County with no issue being born of the marriage.

2. Plaintiff and Allene lived together at 1417 Montgomery Ave., Nashville, Tennessee, from about March 1970 until Allene's death on September 18, 1986 in Cheatham County, except for a short period in the spring of 1974 and for appromiately three weeks before Allene's death, during which Allene stayed with her brother in Cheatham County.

3. At the time of their marriage, both plaintiff and Alva had living adult children from prior marriages.

4. Alva Allene Napier Young died intestate on September 18, 1986, survived by plaintiff, her husband, defendant, her daughter, and Marvin D. Napier, of St. Petersburg, Florida, her son.

5. Title to the property known as 1417 Montgomery Avenue was at all times pertinent to this lawsuit in the name of Allene Alva Napier until her conveyance of same by warranty deed to defendant on April 7, 1986, without consideration. This deed was subsequently recorded on June 9, 1986 and is of record, Davidson County Register's Office, Book 6880, Page 888.

6. At the time of the conveyance, the property was insured by Aetna for $58,300.00 in the name "William H. Young and wife, Allene A. Young."

7. From the time of the conveyance until mid October 1986, defendant neither resided in nor enjoyed the use of said property, nor did she receive any rent or thing of value from either plaintiff or deceased who did possess, use and enjoy the property at all times.

8. In mid October 1986, plaintiff involuntarily left the premises at defendant's insistence, and has since been denied by defendant the rights of possession, use, and enjoyment of said property.

9. At the time of her death, Alva Allene Napier Young owned the following property:

A. A 1973 Chevrolet Automobile;

B. A bank account jointly held with defendant at Third National Bank, balance on 7/15/86 of $1,449.99, account number 57 1000 39;

C. A jointly held savings account at Fidelity Federal with plaintiff, closed on 9/12/86 with balance of $1,285.57; account number 327000 400;

D. A jointly held checking account at Third National Bank with plaintiff with a balance of approximately $600.00, account number 89048563;

E. Personal and household effects of value of approximately $2,000.00.

F. An estate by the entireties with plaintiff in approximately four acres of land in Sumner County, Tennessee.

10. Within six months of her death, Alva Allene Napier Young had conveyed to defendant a 19 acre tract of land in Cheatham County and the 1417 Montgomery Ave. property in Davidson County, thus leaving her estate to consist of the items detailed in paragraph 9 above.

The case went to trial. A large portion of the testimony presented concerned the relationship between Mr. and Mrs. Young. The plaintiff sought to establish that the Youngs had a good relationship. The defendant tried to prove that Mr. and Mrs. Young did not have a good relationship at the time of the conveyance and that Mr. Young was unkind toward his wife during her final illness.

The court set forth its factual findings and determined that the conveyance was not fraudulent. Therefore, the complaint was dismissed.

On appeal, Mr. Young objects to the admission of certain evidence and to some of the trial court's factual findings. We find it unnecessary to resolve most of the issues raised. Even accepting the allegedly objectionable evidence and most of the allegedly erroneous factual findings, we conclude that the trial court erred in upholding the conveyance.

Tenn. Code Ann. § 31-1-105 provides:

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.

Recent cases indicate that the dispositive inquiry is whether the transfer was made with a fraudulent intent -- an intent to deprive the surviving spouse of his or her distributive or elective share of the estate. See Finley v. Finley, 726 S.W.2d 923 (Tenn. Ct. App. 1986); Warren v. Compton, 626 S.W.2d 12 (Tenn. Ct. App 1981). For an analysis of Warren and a review of prior cases, see Wasson, Descent and Distribution -- Fraudulent Conveyances -- Intent to Deprive Surviving Spouse of His or Her Distributive or Elective Share, 50 Tenn. L. Rev. 551 (1983).

In Finley v. Finley, a case in which the wife alleged that her husband had conveyed property with the intent to defeat her elective share, the court stated:

he following factors should be considered in determining whether the husband intended to practice a fraud upon his wife: (1) whether the transaction was made with or without consideration, (2) the size of the transfer in relation to the husband's total estate, (3) the time between the transfer and the husband's death, (4) relations which existed between the husband and the wife at the time of the transfer, (5) the source from which the property came, (6) whether the transfer was illusory, and (7) whether the wife was adequately provided for in the will.

726 S.W.2d at 924. Warren v. Compton, 626 S.W.2d at 17, indicates that "ll facts and circumstances surrounding the transfer must be considered."

The trial court made factual findings as to all of the relevant factors:

I will make findings as to all the factors. The first is whether or not there was consideration for the transfer, and it was undisputed that is was a gift.

The second is the size of the transfer in relation to the wife's total estate. The evidence shows it was something in excess of 50 percent.

The third factor is the time between the transfer and the wife's death. The transfer was in April 1986, and the wife died in September of 1986. At the time of the transfer she knew that she had a terminal illness, cancer.

The fourth factor, the relationships that existed at the time between the parties -- I will come back to that.

The fifth is source of the property. The property was purchased by the deceased before the marriage and was owned and remained titled in her name throughout the marriage until the transfer.

The sixth, whether the transaction was an illusory transfer . . . . The possession, however -- the deceased maintained possession of the property. So under those facts it does appear that falls within the definition of an illusory transfer or what the case refers to as an illusory transfer.

Seven, what provision was made for the husband to be adequately provided for in the will? Of course, there was no will. The evidence does show that the husband was and had been fully employed and was able to provide for himself and was not dependent on the wife for his support; she knew that he was fully employed and in addition that he was going to inherit the balance of her estate, that is her car, her personal household belongings, and that he would inherit the house and the acreage in Sumner county that was acquired during the marriage.

The seventh and eighth factors that I have just talked about, the state of mind and all circumstances surrounding the transfer, really deal with the same evidence that was presented on issue number four, the relationship which existed between the parties at the time of the transfer. . . . I'll make a finding of fact concerning those together.

At the time of the transfer in April of 1986, the deceased was terminally ill from cancer. She was undergoing chemotherapy that caused her to react by losing her hair and by having reactions, becoming nauseous, and was in a weakened condition. She was living at that time on the property. The plaintiff was working and was not at home during the day. She had no one to look after her. At that point in time, she wasn't able to physically carry out the normal house cleaning and cooking of meals and those types of things. She needed assistance. That was provided by a next-door neighbor. They helped provide her with meals from time to time and with other help, called her everyday to see what she needed. Her sister came on once a week and cleaned up the house and helped with the meals. The ex-daughter-in-law also helped out and helped care for her, looked after her, was concerned about her, and visited with her. In spite of the need for attention, the plaintiff persisted in stopping by a beer joint everyday after he got off work at 3:30 p.m. and did not really show the kind of concern that should have been shown to someone who was in that desperate a condition. He would go home after drinking at the beer joint for several hours, and this was upsetting to her. She talked with him about stopping drinking. That was the condition that existed at the time the transfer was made.

Also at the time the transfer was made she knew, of course, that this was her property and that she purchased it many years before the marriage and paid for most, if not all, the payments by her own efforts. She also knew that during the marriage the parties had acquired some acreage they owned by the entirety in Sumner County, Tennessee, where they had built a residence that would, upon her death, go to her husband. Also in her mind was the fact that the balance of her estate, including her car and personal belongings, would go to her husband, her spouse, upon her death.

Having set forth all of its findings as to the factors bearing on fraudulent intent, the trial court stated the following findings as to Mrs. Young's motivation and intent in conveying the house to her daughter:

So with this information she wanted to give this property to her daughter and expressed this desire with her daughter to share the property with her other child. Both parties at the time of the marriage had children that were adults. The Court finds that it was through that desire, that is knowing the source of the property and knowing what were the ties to her husband and what his condition was as far as his needs, and because his treatment towards her during her illness at that time, April 1986, and because of the fear that he might waste the property, that that was the motive she had in transferring this property to her daughter. And that was not made with the intent to defeat the rights of the plaintiff.

Therefore, the court held that the conveyance was not fraudulent.

Even assuming that the evidence supports all of the other factual findings to which Mr. Young objects, we disagree with the trial court's ultimate finding that Mrs. Young did not transfer the property with the intent to defeat her husband's share in the estate.

An analysis of the Finley factors points toward a fraudulent intent in this case. Factors one through three and factor six all militate in favor of the plaintiff: the conveyance was a gift representing over 50% of Mrs. Young's estate, was made within six months of Mrs. Young's death at a time when she knew she was dying of cancer, and was illusory since the Youngs retained possession of the house until after Mrs. Young's death. Considering the fourth factor, the strained relationship between Mr. and Mrs. Young at the time of the transfer also cuts in favor of the plaintiff. (The significance of this factor will be discussed more fully below.) The fifth factor cuts in favor of the defendant since Mrs. Young bought the house before the marriage and the trial court found that she "paid for most, if not all, the payments by her own efforts." The seventh factor may also but in favor of the defendant since she knew her husband would get their property in Sumner County. *fn1 After considering "the weight and significance to be given each factor under the facts" of this case, Finley v. Finley, 726 S.W.2d at 926, this court determines that the overall weight of the evidence concerning the seven factors militates in favor of a finding of fraudulent intent.

A finding of fraudulent intent is also supported by the secrecy with which the conveyance was made and Mrs. Young's expressed intent in making the conveyance to insure that her husband did not get any interest in the Montgomery Avenue property. See Hughes' Lessee v. Shaw, 8 Tenn. (Mart. & Yer.) 323, 328 (1827). The defendant herself testified as follows:

Q. Isn't it true that your mother told you a few days before April 7th, 1986 That she intended to deed this property on Montgomery to you?

A. She did.

Q. And the night before April 7th, that is the evening of April 6th, 1986, she Cold you not to say anything about it and that it was just to be kept between you and her; is that correct?

A. Yes, she did.

Q. In fact, she said, let's just keep it between us?

A. She did.

Q. So you knew at that time that she did not want Mr. Young to have any interest in that property?

A. Right.

Q. And there is no doubt in your mind and there was not doubt in your mind that she intended to keep him from getting it?

A. Pardon me?

Q. There was no doubt in your mind at that time that she intended to prevent Mr. young from getting this property?

A. She didn't want him to have it.

Q. She went further, did she not, and asked you not to tell this to anyone?

A. Right.

Q. She stated to you that this was in order to keep Mr. Young from finding out?

A. To keep down arguments

Q. She also told you that she did not want her husband to have anything to do or any interest in the property at 1417 Montgomery?

A. That's correct.

Q. I'm not talking about what Mr. Young did. I'm talking about what the relationship was between them, her attitude towards him, her feelings towards him. What would she tell you was her attitude or her feelings towards him?

A. She had just lost everything for him. I mean, she just, she had just lost all feelings for him.

Q. Tell me what she said when she said it.

A. Well, I know it was the Sunday night before I went to get the deed done over, she just said, Linda, I'm not leaving him that house because Montgomery Avenue will have the biggest yard sale that's ever hit that street. She said, "I know him, and I don't want him to have it. I want you and Butch to have it."

And we talked, going over there that morning, she even told me the same thing, said I don't want him to have it. She said, it's my house, me and my first husband bought it

We think that the evidence preponderates against the trial court's finding that Mrs. Young did not transfer the Montgomery Avenue property to her daughter with the intent to defeat her husband's distributive or elective share. The great weight of the evidence indicates that Mrs. Young's intent was to make sure her husband did not get any interest in the property.

It appears that the trial court's erroneous determination may have been the result of a misconception concerning the significance of the relationship between Mr. and Mrs. Young at the time of the transfer. In denying summary judgment, the court indicated that there was an issue of material fact as to whether Mr. Young's treatment of his wife justified her transfer of the house to her daughter. The parties, too, seemed to be under the assumption that bad treatment by Mr. Young toward his wife would work in the defendant's favor; the plaintiff tried to prove that Mr. and Mrs. Young had a good relationship and the defendant sought to establish that Mr. Young was unkind to Mrs. Young during her illness.

it may be that the parties and the trial court were guided in their assumptions in this regard by the following statements by the court in Warren v. Compton:

The widow's attorney insists that this strained relationship is a factor which aids in establishing fraudulent intent on the part of Mr. Warren. We would point out that a strained marriage relationship is a sword which cuts two ways. The surviving spouse could have been so inconsiderate, cold, and self-centered as to justify a transfer of property by the other spouse to those in whom he found solace, comfort, and care. We do not necessarily approve of Mr. Warren's acts, but we are not trying a divorce lawsuit. We are determining whether the transfers were made with the intent to defeat the rights of the surviving spouse. The chancellor heard these people testify and observed their demeanor. He apparently found that the strained marriage relationship, taken in Consideration of all other factors, did not establish a fraudulent intent on the part of the husband. We agree.

626 S.W.2d at 18. This passage is subject to at least two interpretations.

After quoting part of the above passage from Warren, the court in McClure v. Stegall, 729 S.W.2d 263 (Tenn. Ct. App. 1987), stated: "We agree, as did the Court in Warren, that a strained marriage relationship does not, of itself, establish fraudulent intent. " McClure v. Stegall, 729 S.W.2d at 266. We agree that a strained marital relationship does not conclusively establish fraudulent intent. A strained marriage relationship does militate in favor of a finding of fraudulent intent because it suggests a motive for defrauding the surviving spouse. Despite a bad marriage, however, the transferor spouse may not have made the conveyance with the intent to deprive the surviving spouse of his or her elective or distributive share.

The Warren passage can also be interpreted to mean that, in some circumstances, a strained marriage can militate in favor of upholding a conveyance. We disagree with the theory that one spouse's misconduct can justify the other spouse's transfer of property to someone else. Under Tenn. Code Ann. § 31-1-105, the dispositive inquiry is whether the conveyance was made with the intent to deprive the surviving spouse of his or her statutory share in the estate. In determining the transferor spouse's intent, the fact that the surviving spouse may have given the transferor good reason for wanting to give property to someone else supplies a motive for a fraudulent transfer. Moreover, a sincere desire to benefit someone else and an intent to deprive the surviving spouse of his or her elective or distributive share are not mutually exclusive.

The theory that one spouse's conduct can justify the other spouse in transferring property to others is rooted in the idea that a bad spouse should not be rewarded. However, the right to an elective or distributive share is not dependent on whether the surviving spouse deserves to enjoy such benefits. Tenn. Code Ann. § 31-2-104 (1984) and Tenn. Code Ann. § 31-4-101 (Supp. 1988) indicate that a surviving spouse has a right to claim at least one-third of the decedent spouse's estate. Tenn. Code Ann. § 31-1-106 (1984) indicates that a felonious killing of one spouse in which the other spouse was involved results in a forfeiture of inheritance rights. Otherwise, a surviving spouse's right to claim an elective or distributive share is absolute. In Fogo v. Griffin, 551 S.W.2d 677 (Tenn. 1977), the decedent's father argued that the decedent's widow forfeited her right to an elective share by her adulterous activities. The Supreme Court held that a widow's misconduct does not affect her entitlement to the elective share.

We hold that a strained marital relationship, even when caused by one spouse's misconduct or lack of consideration, militates against upholding a conveyance because it suggests that the transferor spouse had a motive for attempting to defeat the surviving spouse's share in the estate. If this holding results in a bad spouse taking something he or she does not deserve at the death of the other spouse, that is a matter for the legislature to address.

Since we have found that Mrs. Young conveyed the property in question to her daughter with the intent to defeat her husband's distributive or elective share in her estate, the conveyance is hereby set aside. Mr. Young requests an equitable lien against the property for his interest. Pursuant to Tenn. Code Ann. § 31-2-104, he is entitled to one-third of the estate. Therefore, Mr. Young is awarded an equitable lien against the property for one-third of its value less any improvements made by the defendant since Mrs. Young's death.

The judgment of the court below is reversed and the cause is remanded to the Probate Court of Davidson County for the ascertainment of the amount to which the appellant is entitled and for any further proceedings that may be necessary. Tax the costs on appeal to the appellee.

Opinion Footnotes

*fn1 Although Mr. Young has not raised this point, we note that Mr. Young's employment and earning capacity (mentioned by the trial court in its factual findings) are not relevant considerations. Finley v. Finley indicates that factor seven should include consideration of benefits not passing by inheritance to which the surviving spouse is entitled upon the transferor spouse's death -- for example, pension benefits. See Finley v. Finley, 726 S.W.2d at 925. Thus, in this case, the trial court properly considered the Sumner County tenancy by the entireties. But assets not receivable due to the transferor spouse's death should not have any bearing.

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