In The Matter of the Estate of Nellie Ellis, Charles W. Moore. v. Clyde Green ( 2002 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
July 9, 2001 Session
IN THE MATTER OF THE ESTATE OF NELLIE K. ELLIS
CHARLES W. MOORE, ET AL. v. CLYDE GREEN, ET AL.
An Appeal from the Circuit Court for Davidson County
No. 99P-1461 Frank Clement, Jr., Judge
No. M2000-01516-COA-R3-CV - Filed April 15, 2002
This case involves the interpretation of a remainder interest granted in a will. The decedent’s
husband bequeathed to the decedent a life estate in stock in a family-owned business, with the
remainder to go 50% to his “living heirs” and 50% to “some deserving person in the music
department at Belmont College.” After her husband’s death, the decedent purchased the remainder
interest in the stock from all of the remaindermen. By virtue of this purchase, the decedent presumed
that she owned the stock outright. At her death, her will included a bequest of the stock. Her heirs
brought this declaratory judgment action, seeking a declaration that the decedent did not own the
stock at her death. They argued that the decedent’s purchase of the remainder interest in the stock
was invalid because the remaindermen did not own a vested interest in the stock at the time of the
husband’s death. The trial court found that the case was barred by the statute of limitations and that
the decedent had, in fact, acquired 100% ownership in the stock. The heirs now appeal. We affirm,
finding that the remaindermen in the husband’s will acquired a vested, transmissible remainder
interest in the stock at the husband’s death.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is Affirmed
HOLLY K. LILLARD, J., delivered the opinion of the court, in which ALAN E. HIGHERS, J., and DAVID
R. FARMER , J., joined.
Homer R. Ayers, Goodlettsville, Tennessee, for the appellants Charles W. Moore and Linda Moore
Maggart as executrix for the estate of William Herschel Moore, a/k/a Herschel Moore, deceased.
Grant W. Smith, Goodlettsville, Tennessee, for the appellants Ray Swing, Juanita Swing Sircy,
Jeanne Swing Pennington, and James Edward Swing.
William H. Lassiter, Jr., of Lassiter, Tidwell & Hildebrand, PLLC, Nashville, Tennessee, for the
appellee, Clyde Green.
William L. Harbison of Sherrard & Roe, PLC, Nashville, Tennessee, for the appellee, First American
National Bank.
OPINION
This case involves the interpretation of the remainder interest granted in a holographic will.
Clarence E. Ellis (“Clarence”) and Nellie K. Ellis (“Nellie”) were husband and wife. On July 1,
1986, at age eighty-five, Clarence died leaving a holographic will dated March 21, 1970. The will
provided in pertinent part:
I . . . Bequeath all my personal and real property if any to my wife Nellie K. Ellis for
her lifetime to be used for her comfort and lively hood [sic] and at her death one half
the remainder to my living heirs and the other half to be put in trust in the First
American National Bank of Nashville for some deserving person in the music
department of Belmont College of Nashville Tenn.
(Emphasis in original). Thus, he devised all of his property in a life estate to Nellie, and 50% of the
remainder to his “living heirs” and the other 50% to “some deserving person . . . of Belmont
College.” The principal asset of Clarence’s estate was his 100% stock ownership in Ellis Funeral
Home, Inc., a Tennessee corporation.1
On August 27, 1986, Nellie filed a petition to probate Clarence’s holographic will. On
September 18, 1986, she filed an application for a year’s support and a petition for an elective share
in the estate. Rather than pursue her two motions, however, Nellie obtained “Receipt and Waiver
of Accounting” forms signed by each of the remaindermen who were living at the time of Clarence’s
death – his then-living heirs2 and a Vice President of Belmont College on behalf of the “deserving
person.” In those waivers, each remainderman accepted a payment of $2,500 in exchange for his
share in Clarence’s estate. The waiver stated that the “payment represents . . . [t]he final and
complete payment to which I am entitled. I will no longer have any claim against the estate as an
heir, beneficiary or claimant. I hereby waive notice of the final accounting and direct the clerk to
pass the account without my presence.” On September 16, 1988, the probate court entered an order
closing the estate of Clarence Ellis.
Until December 31, 1988, Nellie was the sole owner of the real property on which the funeral
home was located on Nolensville Road in Nashville, Tennessee, and she leased the land to the
1
At the time of its incorporation in 1972, the stock in the company was owned 60% by Clarence Ellis and 40%
by W. E. Neal, Jr. In 1980, Neal sold his shares back to the corporation, and Clarence then became the sole shareholder
in the com pan y at tha t time.
2
Clarence’s only heirs at the time of his death were U ral A . Ellis, Ivy Ellis H olt, Leslie R. Ellis, and W.
Raym ond E llis, who w ere his three brothers and sister.
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funeral home for the operation of the business.3 On January 1, 1989, Nellie executed a warranty
deed and installment note (“note and deed”), selling the Nolensville Road property to the corporation
for $260,000, to be paid to her by the corporation in installments of $1,871.13 per month for thirty
years.4
On January 6, 1989, Nellie executed her Last Will and Testament. Believing that she owned
outright the stock in the funeral home from her husband’s estate, she bequeathed the stock in fee
simple “to my friend, Clyde Green,” who was president and manager of the funeral home at all
pertinent times. Regarding the debt owed to Nellie by the corporation on the note and deed, Nellie’s
will provided that “the remaining installments on the said note are to be cancelled and forgiven.”5
The rest and residue of her estate was bequeathed to the children of Mamie Moore and Ada Kemper
Swing, Nellie’s two sisters, namely: Charles W. Moore, Linda Moore Maggart (as executrix for the
estate of William Herschel Moore), Jeanne S. Pennington, Juanita Swing Sircy, Ray Swing, and
James E. Swing.6 Nellie’s will provided that all of Nellie’s legal debts, including the estate taxes,
were to be paid from her residual estate.
On March 13, 1998, the First American National Bank (“First American”), as Nellie’s
conservator, filed a petition for approval of purchase of real estate in probate court, requesting that
the court approve the purchase by Ellis Funeral Home, Inc., of a house and lot on Grandview Avenue
in Nashville, Tennessee, for $50,000. On April 9, 1998, the probate court approved that sale, based
on First American’s representation that Nellie was the sole owner of Ellis Funeral Home, Inc.
On May 28, 1999, Nellie died at age ninety-four. On September 3, 1999, Clyde Green filed
a petition to probate her Last Will and Testament. Though the plaintiffs contested the will, that
contest is not at issue in this appeal.
On April 10, 2000, Nellie’s living heirs (collectively “plaintiffs”) filed in the probate court
below a complaint for declaratory judgment and rescission, cancellation, and/or reformation of the
note and deeds for the Nolensville Road property and the Grandview Avenue property. The
complaint named as defendants Clyde Green, the unknown living heirs of Clarence E. Ellis, the
undesignated “deserving” person at Belmont College, Ellis Funeral Home, Inc., and the First
3
Nellie and Clarence Ellis also maintained a residential apartment on that premises behind the funeral home.
4
The appellants infer that this transaction was undu ly influenced by N ellie’s attorney and form er conservator,
Walter S. C lark. T he ev idence ind icating und ue influen ce is clea rly insu fficient, and this argum ent is w ithou t merit.
5
Actually, Nellie bequ eathe d a life estate in the installm ents to her sister, Mam ie M oore. Ho wever, M am ie
pred eceased N ellie, so the deb t was canc eled u nde r the terms of N ellie’s w ill.
6
Though her sister, Mamie Moore, was to share in the residuary, Mam ie predeceased Nellie. Mamie’s share,
therefore, was to go to her ow n children und er the term s of N ellie’s w ill.
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American National Bank.7 The plaintiffs asserted that Nellie never owned the stock in Ellis Funeral
Home, Inc., through her husband’s estate because the will bequeathed to her only a life estate in the
stock. At her death, the plaintiffs claimed, the stock was owned 50% by Clarence’s unknown living
heirs at the time of Nellie’s death and 50% by the unknown “deserving person” at Belmont College.
In making this claim, the plaintiffs alleged that “the payments by Nellie K. Ellis to Belmont College
did not satisfy the requirements of the Will of Clarence E. Ellis, since the gift was to become
effective at the termination of the life estate of Nellie K. Ellis and was to a ‘. . . deserving person .
. .’, which has yet to be identified, and not to Belmont College.” The complaint further alleged that
“the payments made by Nellie K. Ellis to the brothers and sister of Clarence E. Ellis did not satisfy
the requirements of the Will of Clarence E. Ellis, since the gift was to become effective at the
termination of the life estate of Nellie K. Ellis and was to the ‘living heirs’ of Clarence E. Ellis,
which could only be identified at the moment of death of Nellie K. Ellis.” In essence, the plaintiffs
alleged that the interests of the remaindermen in Clarence’s will were not vested and, therefore, not
transferable at the time of Clarence’s death.
In the complaint, the plaintiffs sought several forms of relief. First, they sought declaratory
relief, asking the trial court to determine the ownership of the stock in Ellis Funeral Home, Inc., and
to vest ownership of the stock in the rightful parties. If the trial court concluded that Nellie did not
own stock in the Ellis Funeral Home, Inc., the plaintiffs reasoned, this would remove the stock from
the total asset value of the estate, thereby reducing the estate taxes to be assessed against the
plaintiffs’ residuary share of the estate.8 Moreover, because the note and deeds pertaining to the
Nolensville Road property and the Grandview Avenue property were executed by Nellie based on
the mistaken belief that she owned outright the stock in the funeral home, the plaintiffs argued that
the deeds should be revoked, rescinded, or reformed so as to vest ownership and title to those
properties in Nellie K. Ellis or her heirs. Finally, the plaintiffs sought damages from First American
for its alleged negligence in failing to determine at an early date the ownership of the stock in Ellis
Funeral Home, Inc., and for its alleged mishandling of Nellie’s affairs during her conservatorship.
On April 14, 2000, defendant Clyde Green filed a motion under Tennessee Rule of Civil
Procedure 12.02(6) to dismiss the complaint for failure to state a claim upon which relief could be
granted. On May 25, 2000, after a hearing on the motion, the trial court granted the motion to
dismiss, stating:
Taking as true, for purposes of this motion, the allegations in the complaint for
declaratory judgment filed by [the appellants], the Court finds that granting the relief
7
The complaint initially listed W. E. Neal, Jr., as a defendant, claiming that he owned 40% of the stock in Ellis
Funeral Home, Inc. As we have indicated, however, it was discovered that Neal sold his stock back to the corporation
in 1980, and that Clarence owned 100% of the stock in the funeral home at the time of his death. Consequently, the
plaintiffs abando ned their claim against that original defenda nt. See sup ra, note 1.
8
Alternatively, the plaintiffs alleged that the additional taxes due based on the erroneous inclusion of the stock
in Nellie’s estate sho uld be p aid by F irst American N ational Bank because o f their negligent misrep resentations.
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sought would require the Court to reopen the estate of Clarence Ellis and find that the
distributions made in the estate of Clarence Ellis were improper. Mr. Ellis’ estate
was closed over ten years ago . . . with all persons having an interest in that estate
waiving their rights in favor of Nellie K. Ellis. Therefore, the claims in the
complaint, as a matter of law, are barred by the applicable statute of limitations. In
addition, the gravamen of the complaint is that parties other than Nellie K. Ellis may
have some interest in the stock of Ellis Funeral Home, Inc. As a matter of law,
because all persons interested in the estate of Clarence Ellis waived their rights in
favor of Nellie K. Ellis, she became the sole owner of Ellis Funeral Home, Inc.
Accordingly, the complaint fails to state a claim on which relief can be granted.
Thus, the trial court dismissed the plaintiffs’ complaint based on the applicable statute of limitations,
as well as the finding that Nellie became the sole owner of the stock in Ellis Funeral Home, Inc.,
after the other persons interested in Clarence’s estate waived their rights in her favor. The plaintiffs
now appeal that order.
The pertinent facts on appeal are undisputed, and therefore the questions presented in this
appeal are purely legal. Consequently, we review the trial court’s decision de novo. See State v.
Levandowski, 955 S.W.2d 603, 604 (Tenn. 1997); Ridings v. Ralph M. Parsons Co., 914 S.W.2d
79, 80 (Tenn. 1996). In considering a motion to dismiss for failure to state a claim, a court must
“construe the complaint liberally in favor of the plaintiff[s], taking all of the allegations of fact
therein as true.” Randolph v. Dominion Bank, 826 S.W.2d 477, 478 (Tenn. Ct. App. 1991). A
motion to dismiss under Rule 12.02(6) “tests the legal sufficiency of a complaint; it admits the truth
of all relevant and material allegations, ‘but asserts that such facts do not constitute a cause of action
as a matter of law.’” Riggs v. Burson, 941 S.W.2d 44, 47 (Tenn. 1997) (quoting Pursell v. First
American Nat’l Bank, 937 S.W.2d 838, 840 (Tenn. 1996)); see Humphries v. West End Terrace,
Inc., 795 S.W.2d 128, 130 (Tenn. Ct. App. 1990). However, “inferences to be drawn from the facts
or the legal conclusions set forth in a complaint are not required to be taken as true.” Riggs, 941
S.W.2d at 47-48.
The trial court based its decision on two alternative grounds, the applicable statute of
limitations and the legal disposition of the estate of Clarence Ellis. We first address the trial court’s
determination that Nellie owned 100% of the stock in Ellis Funeral Home, Inc., through the estate
of her husband.
The plaintiffs argue on appeal that the “Receipt and Waiver of Accounting” forms signed by
the remaindermen named in Clarence’s will were invalid, because the clear language of Clarence’s
will indicates that the remainder interest was contingent until Nellie’s death. Additionally, the
plaintiffs contend that the bequest to “some deserving person in the music department of Belmont
College” was not made to Belmont College itself, but to a person at the College, who could have
been virtually anyone associated with the music department of the College, such as a student,
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professor, secretary, or janitorial employee. As such, the plaintiffs argue that Belmont College had
no authority to transfer of interest.
In response, the defendants argue that the remainder interest granted in Clarence’s will
vested in the remaindermen at Clarence’s death. They assert that the bequest to the “living heirs”
vested under the Tennessee class doctrine, which was modified by Tennessee Code Annotated § 32-
3-104:
Where a bequest, devise, conveyance, transfer or gift is made to a class of persons
subject to fluctuation by increase or diminution of its number in consequence of
future births or deaths, and the time of payment, distribution, vestiture or enjoyment
is fixed at a subsequent period or on the happening of a future event, and any
member of such class shall die before the arrival of such period or the happening of
such event, and shall have issue surviving when such period arrives or such event
happens, such issue shall take the share of the property which the member so dying
would take if living, unless a clear intention to the contrary is manifested by the will,
deed or other instrument.
Tenn. Code Ann. § 32-3-104 (2001). Under that statute, “a class takes a vested, transmissible interest
in the remainder, unless the will unquestionably discloses [the] testator’s intention that the interest
remain contingent until the date of distribution.” Nicholson v. Nicholson, 496 S.W.2d 477, 479
(Tenn. 1973). Further, the defendants argue that the bequest to “some deserving person in the music
department of Belmont College” vested in Belmont College because it was a “discretionary charitable
gift” given to the College to choose, at its discretion, a charitable beneficiary. See Tenn. Code Ann.§
35-13-105.9
The defendants maintain that leaving such discretion with Belmont College granted the
College itself a vested, transmissible interest at the testator’s death. Thus, because each of the named
remaindermen had a vested interest in the funeral home stock at Clarence’s death, the defendants
conclude, then the signed waiver forms validly transferred the remainder interest in the stock back
to the estate. After execution of the waiver forms, Nellie, the only heir of Clarence’s estate, had both
the life estate and the remainder. At that point, defendants argue, the remainder estate merged with
the life estate, resulting in Nellie owning 100% of the stock as a matter of law.
9
Discretion ary C haritable G ifts.- When the donor makes a discretionary charitable gift the following
provision s app ly:
(1) The person to w hom discretion is given shall ch oose the charitable beneficiaries and charitable
purposes within a reasonable time after having accepted the duty to select the beneficiaries or
purposes of th e discretionary charitable gift.
Ten n. Co de A nn. § 35-13-105 (1) (2 001 ).
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The issue then becomes whether the remainder interest granted in Clarence’s will was a
vested, transmissible interest, so that each signed “Receipt and Waiver of Accounting” form effected
a transfer of the remainder interest back to the estate. In Nicholson, noted above, the testator’s will
granted a life estate to his wife in certain stock and granted the reminder interest to two named
individuals. The will provided that if the two named individuals predeceased the wife, the remainder
would pass “to my heirs at law.” Nicholson, 496 S.W.2d at 478. Of course, the two named
individuals predeceased the wife. Prior to their deaths, the company purchased all rights and interests
in the testator’s stock from all of the remaindermen – the two named individuals as well as all of the
testator’s then-living heirs. Id. At the wife’s death, the testator husband’s then-living heirs, who
were apparently not living at the time of the testator’s death, sought to claim an interest in the stock,
arguing that all remainder interests in the stock during the wife’s lifetime were contingent until the
wife’s death, and therefore were not transmissible until the wife’s death.
In Nicholson, the Tennessee Supreme Court held that the husband’s will granted in the
remaindermen an interest that vested at the testator’s death. The Court explained:
Prior to the enactment of [Tennessee Code Annotated § 32-3-104], Tennessee courts
supported the so-called “Tennessee Class Doctrine,” which held that remainder gifts
to a fluctuating class of persons remained contingent until the time set in the will for
distribution or payment of the gift. That doctrine has been significantly modified by
[Tennessee Code Annotated § 32-3-104]. Tennessee case law since passage of the
statute in 1929 has held that such a class takes a vested, transmissible interest in the
remainder, unless the will unquestionably discloses [the] testator’s intention that the
interest remain contingent until the date of distribution.
Id. at 479 (citations omitted). Based on the language in the statute and the ensuing case law, the
Court determined that the provision in the will directing “that said stock be distributed to my heirs
at law at the date of death of my said wife” reflected an intention that the stock vest in those heirs who
were alive at his own death, and that the clause “merely sets the time for possession . . . at the time
of the widow’s death.” Id. The Court also found that “neither this isolated clause nor the will as a
whole manifests a clear intention on testator’s behalf to postpone the vesting of the interest until the
wife’s death.” Id. The Court concluded that, where the language in a will implies “two different
results with equal force, . . . in such cases of doubt, Tennessee courts have always broken the
deadlock in favor of vested interests.” Id. at 479-80 (citations omitted).
The plaintiffs assert that Nicholson is not controlling here because “a clear intention to the
contrary is manifested by the will” in this case. Clarence’s will bequests to Nellie a life estate, and
“at her death one half the remainder to my living heirs . . . .” The plaintiffs argue that the phrases
“living heirs” and “at her death” indicate that Clarence intended the remainder of his estate to become
vested at the termination of the life estate – at Nellie’s death.
While the plaintiffs’ interpretation of the will is plausible, where the language in a will is
ambigous, the Nicholson Court indicated a clear preference for interpreting such an instrument in a
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manner consistent with a finding that the testator intended the remainder interest to vest at his death.
Id.; see also Huggins v. United States, 684 F.2d 417, 421 (6th Cir. 1982) (finding that the remainder
interest vested at testator’s death and deferring to the rule that Tennessee favors a construction that
will effect a quick vesting). In Clarence’s will, we conclude that the use of the phrase “living heirs”
means heirs living at Clarence’s death, and the phrase “at her death” “merely sets the time for
possession.” Nicholson, 496 S.W.2d at 479. Likewise, the grant of a remainder interest to “some
deserving person in the music department of Belmont College” was also vested and transmissible.
The plaintiffs also argue that the remainder interest granted to “some deserving person in the
music department of Belmont College” was not effectively transferred to Nellie. The plaintiffs argue
that the waiver form signed by the Belmont College representative on behalf of “some deserving
person” was ineffective to transfer any interest back to the estate, because the remainder interest
belonged to an unknown person and not to the College itself. They argue that the waiver amounted
“to something akin to a quitclaim deed. Clarence E. Ellis never gave any interest in his estate to
Belmont College.” They also argue that Tennessee Code Annotated § 35-13-105, relating to
discretionary charitable gifts, does not apply in this situation because the bequest was made to a
“deserving person,” not a charity.
In construing this provision, we must strive to interpret the will in a manner that effectuates
the intention of the testator. Id., 496 S.W.2d at 479. In determining the testator’s intent, we must
look to the “manifest language of the entire will.” Martindale v. Union Planters Nat’l Bank, No.
02A01-9502-CH-00030, 1996 Tenn. App. LEXIS 298, at *8 (Tenn. Ct. App. May 21, 1996). In
considering Clarence’s bequest to the “deserving person,” we must conclude that the language
manifests an intent to give the remainder interest to a person designated by Belmont College.
Clarence’s will in effect grants Belmont College a remainder interest to hold in trust and distribute
at its discretion.10 Accordingly, at Clarence’s death, Belmont College had a vested, transmissible
remainder interest, and therefore could accept $2,500 in cash to hold in trust for the “deserving
person” in exchange for its remainder interest in 50% of the funeral home stock.11
Because all of the remaindermen named in Clarence’s will validly transferred their remainder
interest back to the estate, Nellie received that interest as Clarence’s wife and sole heir. After the
transfer of the remainder interests, then, Nellie held both a life estate and a remainder interest in the
stock in Ellis Funeral Home, Inc., and those interests merged and she held the property in fee simple
as a matter of law.12 See Davis v. Winsett, 1991 Tenn. App. LEXIS 904, at *5-*6 (Tenn. Ct. App.
10
The defendants note that, although Clarence’s will designated First American as the trustee for this interest,
First Am erican formally declined to serve in this capacity and Belmont College assumed that responsibility. This fact
does not affect our conclusion on this issue.
11
The plain tiffs do not allege th at Belmo nt Co llege im properly adm inistered the trust.
12
The plaintiffs do not allege that applying the merger d octrin e w ould defeat the testator’s in tent. See
Browning v. Browning, 132 S.W .2d 359, 361 (Tenn. Ct. App . 1939).
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1991) (recognizing that “when the holder of a life estate in property also purchases a vested remainder
in the property, merger takes place and that person becomes the holder of the fee simple in the
property”). Accordingly, we affirm the trial court’s conclusion that Nellie owned outright the funeral
home stock at the time of her death.
Our holding makes it unnecessary for us to address the issues of whether the plaintiffs had
standing or whether their claims were brought within the applicable statute of limitations.
Furthermore, our holding necessarily disposes of the plaintiffs’ claims relating to the proper
disposition of the parcels of real estate, because Nellie had the actual authority to negotiate contracts
relating to that property. Thus, we will not address those issues further in this appeal.
The decision of the trial court is affirmed. Costs are taxed to the appellants, Charles W.
Moore, Linda Moore Maggart as executrix for the estate of William Herschel Moore, a/k/a Herschel
Moore, deceased, Ray Swing, Juanita Swing Sircy, Jeanne Swing Pennington, and James Edward
Swing, and their sureties, for which execution may issue if necessary.
___________________________________
HOLLY K. LILLARD, JUDGE
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