In re Estate of Glenda Joyce Panter Hillis ( 2016 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
November 18, 2015 Session
IN RE ESTATE OF GLENDA JOYCE PANTER HILLIS
Appeal from the Chancery Court for Warren County
No. 2775P Larry B. Stanley, Jr., Chancellor
No. M2015-00404-COA-R3-CV – Filed February 25, 2016
The surviving husband of the decedent challenges the validity of their 1992 antenuptial
agreement and a 2010 quitclaim deed from the decedent to her son. The decedent, Glenda
Joyce Panter Hillis, presented her husband with an antenupital agreement on the day
before their wedding. The agreement stated that each party waived “all claims of
inheritance, descent and distribution in and to the parties [sic] private and real property
. . . which in any way or manner arise or accrue by virtue of said marriage . . . .”
However, it did not include any financial or asset disclosures. The husband signed the
agreement, and the parties married on December 30, 1992. In March of 2010, Mrs. Hillis
executed a will that left her husband a car and a life estate in her real property, including
some of the personal property in the marital residence, with the residue of her estate
going to her son. Three months later, she executed a quitclaim deed pursuant to which
she transferred a life estate in all of her real property to herself and her husband, with the
remainder to her son. Mrs. Hillis died in 2012, following which her will was admitted to
probate. Soon thereafter, her husband filed a petition for an elective share and a separate
civil action in which he sought to invalidate the 2010 quitclaim deed as a fraudulent
conveyance. The executor and Mrs. Hillis‟s son opposed both petitions. The son
demanded a jury trial regarding the validity of the antenuptial agreement, but the trial
court concluded there was no way to separate the legal and factual issues without
confusing a jury and consolidated both cases for trial. Following a bench trial, the court
concluded that the antenuptial agreement was invalid because it did not include the
required disclosures about Mrs. Hillis‟s assets and because it contained contradictory
provisions. As for the 2010 quitclaim deed, the court ruled that the conveyance was not
fraudulent and refused to set the deed aside. All parties appeal. The son contends the
court erred in denying him a jury trial. The son also contends the court erred by
invalidating the antenuptial agreement. The husband contends the trial court erred by
denying his petition to invalidate the 2010 quitclaim deed. We find no reversible error
with the decision to deny the son‟s request for a jury trial. We affirm the trial court‟s
decision to invalidate the antenuptial agreement because the agreement did not include
the requisite financial and asset disclosures. We affirm the decision concerning the 2010
quitclaim deed because the evidence does not preponderate against the trial court‟s
finding that the 2010 transfer was not fraudulent.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
FRANK G. CLEMENT, JR., P.J., M.S., delivered the opinion of the Court, in which ANDY D.
BENNETT and RICHARD H. DINKINS, JJ., joined.
William J. Butler, McMinnville, Tennessee, for the appellants, First National Bank of
McMinnville and Gregory Kent Hendrixson.
Thomas Oliver Bratcher and Robert Oliver Bratcher, McMinnville, Tennessee, for the
appellee, John T. Hillis.
OPINION
Glenda Joyce Panter Hillis (“Mrs. Hillis”) met John T. Hillis (“Husband”) in the
summer of 1990. After dating for over two years, they married in December 1992. Mrs.
Hillis had one child, Gregory Kent Hendrixson (“Son”). Husband and Mrs. Hillis did not
have any children together.
On December 29, 1992, the day before the wedding, Mrs. Hillis presented
Husband with an antenuptial agreement that was drafted by Mrs. Hillis‟s attorney.1
Significantly, the agreement does not contain any disclosures concerning the finances or
assets of either party. In relevant part, the agreement states:
Whereas each of the parties are seized and possessed of both real and
personal properties in their individual rights . . . and each of the parties is
desirous of retaining full and absolute control of their property and do
retain all rights of any kind or character whether by virtue of the statute of
descent and distribution or whether by statute either party would have in
the other parties [sic] property in the event of the death of either party.
...
[T]he parties agree that each shall release, remise and relinquish all claims
of inheritance, descent and distribution in and to the parties [sic] private
and real property . . . and to the estate of the other party which in any way
1
The 1992 antenuptial agreement, which consists of only two pages, reveals that the possibility
of divorce was not a consideration because it does not discuss the parties‟ property rights in the event of a
divorce – only death – giving true meaning to the phrase “until death do us part.”
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or manner arise or accrue by virtue of said marriage and unto the heirs and
devisees and representative of each of the other party that may arise in the
death of either party of this agreement.
(Emphasis added).
The agreement also expressly stated Mrs. Hillis‟s desire that “her son receive her
real estate,” with the exception of a small portion of her land that she agreed to transfer to
Husband “as tenants by the entireties” upon which they would build their home. The
couple moved to Mrs. Hillis‟s property, and Husband built a house there with Son‟s help;
however, Mrs. Hillis never transferred any real property to Husband and herself as
tenants by the entireties as promised in the antenuptial agreement. To the contrary, in
2003 Husband executed a quitclaim deed that transferred to Mrs. Hillis any interest he
may have had in her real property.
Mrs. Hillis was diagnosed with cancer in early 2010, for which she had surgery.
Shortly thereafter, in March 2010, she executed a will leaving Husband a car, some
personal property, and a life estate in her real property. Four months later, on July 14,
2010, she executed a quitclaim deed conveying a remainder interest in her real property
to Son while reserving a life estate for herself and Husband in all of her real property.
The deed states that the consideration for the transfer was $10, but the notarized
statement accompanying the deed states that the actual consideration received is “$0.”
Mrs. Hillis‟s cancer returned, and she died on December 25, 2012. Her will was
admitted to probate, and First National Bank of McMinnville was appointed executor.
Upon learning of his meager beneficial interest under the 2010 will, Husband filed a
petition for an elective share along with a separate civil action to set aside the July 2010
quitclaim deed as a fraudulent conveyance under Tenn. Code Ann. § 31-1-105.2 Son and
the executor opposed the petitions, contending that Husband had waived his right to
claim an elective share in the antenuptial agreement and that the quitclaim deed was
valid.
Husband moved for summary judgment regarding the validity of the antenuptial
agreement and the invalidity of the July 2010 quitclaim deed. The trial court denied
Husband‟s motion as to both issues and ruled that the two cases would be tried together.
With respect to the antenuptial agreement, the court found that several factual questions
existed, including “the questions of what Husband knew about [Mrs. Hillis‟s] property,
when he knew it, and the import of his subsequent conduct . . . .” The trial court denied
2
“Any conveyance made fraudulently to children or others, with an intent to defeat the surviving
spouse of the surviving spouse‟s distributive or elective share, is, at the election of the surviving spouse,
includable in the decedent‟s net estate . . . and voidable to the extent the other assets in the decedent‟s net
estate are insufficient to fund and pay the elective share amount . . . .” Tenn. Code Ann. § 31-1-105.
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Son‟s jury demand, stating that it would conduct a bench trial on all issues because there
was “no way to separate [the legal] issues from the issues of fact without the likelihood of
confusing a jury . . . .”
The bench trial of both actions occurred in July 2014, and Husband was the
primary witness. He testified that he had begun work at a factory and eventually became
a shift superintendent. As a shift superintendent, he had experience reading and signing
contracts. He also testified that he first saw the antenuptial agreement on the day before
the wedding at the office of Mrs. Hillis‟s lawyer. He stated that he executed the
agreement voluntarily but did not have his own lawyer.
Husband testified that he knew Mrs. Hillis owned a car, had a “little brick home,”
and that “there was some land,” but he did not know the value of her bank accounts,
debts, or stocks and bonds. Additionally, Husband testified that he knew Mrs. Hillis and
another woman owned a business together, but he did not know “the degree of
partnership.” He testified that he assumed Mrs. Hillis owned half of the business.
After trial, the court ruled that the antenuptial agreement was invalid even though
Husband executed it voluntarily. The trial court found that the agreement contained
contradictory language and did not provide an adequate disclosure of Mrs. Hillis‟s assets.
The court also ruled that the July 2010 real estate transfer from Mrs. Hillis to Son was not
fraudulent and refused to set it aside. Both Son and Husband appealed.3
STANDARD OF REVIEW
In cases such as this when the action is tried without a jury, we review a trial
court‟s factual findings de novo, accompanied by a presumption of the correctness unless
the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d); see Boarman v.
Jaynes, 109 S.W.3d 286, 290 (Tenn. 2003). The evidence preponderates against a trial
court‟s finding of fact when it supports another factual finding with greater convincing
effect. Watson v. Watson, 196 S.W.3d 695, 701 (Tenn. Ct. App. 2005). The presumption
of correctness in Tenn. R. App. P. 13(d) applies only to findings of fact, not to
conclusions of law. See Blair v. Brownson, 197 S.W.3d 681, 683-84 (Tenn. 2006).
Accordingly, no presumption of correctness attaches to the trial court‟s conclusions of
law, and our review is de novo. Id.
3
The executor of the estate, First National Bank of McMinnville, also appealed. The executor and
Son are represented by the same attorney and make the same arguments on appeal. Accordingly, we will
refer only to “Son” when addressing those arguments.
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ANALYSIS
On appeal, Son contends that the trial court should have submitted the factual
issues regarding the antenuptial agreement to a jury and that the court erred by
invalidating the antenuptial agreement between Husband and Mrs. Hillis. Further, Son
contends that Husband is estopped from claiming an elective share because he accepted
some property under provisions of Mrs. Hillis‟s will. For his part, Husband contends that
the July 2010 property transfer to Son was a fraudulent conveyance under Tenn. Code
Ann. § 31-1-105 and should be set aside. We will address each issue in turn.
I. Jury Trial
Son contends that the trial court erroneously denied him a jury trial with respect to
the validity of the antenuptial agreement. Notably, neither Son nor Husband has argued
that it was error for the trial court to conduct a bench trial on the issue of the July 2010
property transfer. Son prevailed on that issue in the trial court and thus does not appeal it.
Although Husband has appealed the trial court‟s decision on this issue, he has not argued
that it was error to try the issue without a jury. Accordingly, we will only consider
whether the trial court erred by conducting a bench trial of the validity of the antenuptial
agreement.
Article I, § 6 of the Tennessee Constitution states that “the right of trial by jury
shall remain inviolate . . . .” Despite this language, the Tennessee Constitution does not
guarantee the right to a jury trial in every case. See Sneed v. City of Red Bank, Tenn., 459
S.W.3d 17, 29 (Tenn. 2014). Instead, this section preserves the right only to the extent it
existed at common law “under the laws and constitution of North Carolina at the time of
the adoption of the Tennessee Constitution of 1796.” Id. at 29-30 (quoting Helms v. Tenn.
Dep’t of Safety, 987 S.W.2d 545, 547 (Tenn. 1999)). At common law, there was no right
to a jury trial in matters that fell within the inherent equitable jurisdiction of chancery
courts. Smith Cnty. Educ. Ass’n v. Anderson, 676 S.W.2d 328, 336 (Tenn. 1984). The
inherent jurisdiction of chancery courts includes the administration of estates. Dick v.
Dick, 443 S.W.2d 472, 474 (Tenn. 1969); Ferguson v. Moore, 348 S.W.2d 496, 498-99
(Tenn. 1961).
Although the Tennessee Constitution does not preserve the right to jury trials in
inherently equitable matters, a statutory right to jury trials in chancery court exists. The
Tennessee Code provides:
Either party to a suit in chancery is entitled, upon application, to a jury to
try and determine any material fact in dispute, save in cases involving
complicated accounting, as to such accounting and those elsewhere
excepted by law or by this code, and all the issues of fact in any proper
cases, shall be submitted to one (1) jury.
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Tenn. Code Ann. § 21-1-103 (emphasis added); see In re Estate of Thompson, 952
S.W.2d 429, 432 (Tenn. Ct. App. 1997). Based on this statute, cases involving
complicated accounting are exempt from the jury trial requirement. Tenn. Code Ann.
§ 21-1-103. In addition, our courts have held that complex and intricate cases involving
mixed questions of law and fact may not be suitable for resolution by a jury. Sasser v.
Averitt Exp., Inc., 839 S.W.2d 422, 434 (Tenn. Ct. App. 1992) (quoting Moore v.
Mitchell, 329 S.W.2d 821, 824 (Tenn. 1959)); see Gibson’s Suits in Chancery § 203 (7th
ed. 1988) (“[I]f the questions [of fact] are so intermixed with questions of law that they
cannot be singled out, there is nothing that should be submitted to a jury and the
application [for a jury trial] should be denied.”).
Here, Son submitted a timely demand for a jury trial, and Husband has not argued
that this case involves complicated accounting. Instead, the trial court conducted a bench
trial based on the likelihood that a jury would be confused by the complexity of the
mixed questions of law and fact present in the case. According to the trial court, these
questions included “what Husband knew about [Mrs. Hillis‟s] property, when he knew it,
and the import of his subsequent conduct . . . .”
Although it may be difficult to answer these questions, they are not “of such a
complicated and intricate nature” that this case is inappropriate for a jury. See Moore, 329
S.W.2d at 824. Indeed, juries often make determinations about a party‟s knowledge in a
variety of complex contexts. See, e.g., McWhorter v. Barre, 132 S.W.3d 354, 365-66
(Tenn. Ct. App. 2003) (discussing whether material evidence supported the jury‟s finding
that the defendant entertained serious doubts about the truth of his publication); Workman
v. Wal-Mart Stores East, Inc., M2002-00664-COA-R3-CV, 2002 WL 500988, at *4
(Tenn. Ct. App. April 4, 2002) (material evidence supported jury‟s finding that premises
owner had constructive knowledge of a dangerous condition); Edmondson v. Coates, No.
01-A-01-9109-CH000324, 1992 WL 108717, at *3-4 (Tenn. Ct. App. May 22, 1992)
(jury question existed concerning whether the defendants knew representations they made
were false). Consequently, the difficulty of the questions in this case does not make it
inappropriate for a jury. Therefore, the legal basis identified by the trial court does not
justify denying Son a jury trial on this issue of the validity of the antenuptial agreement.
Nevertheless, this determination does not end our inquiry concerning the propriety of
denying Son‟s jury demand.
The right to a jury trial in chancery court extends only to “material fact[s] in
dispute . . . .” See Tenn. Code Ann. § 21-1-103 (emphasis added). Accordingly, the
erroneous denial of a jury trial is harmless when there are no facts in dispute or when
there is no conflicting evidence on any of the material issues. See id.; Elliott v. Lewis, 463
S.W.2d 698, 701 (Tenn. 1971) (“Since the undisputed evidence sustains the holding of
the court . . . the error in denying a trial by jury was not prejudicial. We are forbidden to
reverse for such error.”); Hopson v. S. Am. Ins. Co., 618 S.W.2d 745, 746 (Tenn. Ct. App.
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1980) (denial of a jury trial harmless when there was “no conflicting evidence on the
material issues.”). Similarly, if a party was entitled to a jury trial based on the pleadings
but ultimately failed to present a jury issue, the denial of a jury trial is harmless. See
Transouth Mortg. Corp. v. Keith, 1985 WL 4677, at *2 (Tenn. Ct. App. Dec. 24, 1985)
(“Even if defendant were entitled to a jury under the pleadings but then failed to make out
a jury issue, what harmful error would be committed by a denial of a jury at the outset?”).
Here, the relevant factual issues relate to the circumstances surrounding
Husband‟s decision to sign the antenuptial agreement, including his knowledge of Mrs.
Hillis‟s assets at that time. There is no disputed evidence concerning these issues. Both
Mrs. Hillis and the attorney who drafted the antenuptial agreement are dead, and
Husband was the only witness who testified about his knowledge of Mrs. Hillis‟s assets.
Husband testified that he entered the agreement voluntarily on the day before the
wedding without the advice of an independent lawyer. He stated that he knew that Mrs.
Hillis owned a car, some land, and part of a business. He also stated that he did not know
the value of her bank accounts, investments, or business interest. No other evidence
contradicted this testimony.
Son contends that Husband‟s credibility creates a question for a jury to resolve. He
argues that Husband‟s testimony was contradictory and that he was impeached or made
additional admissions on cross-examination. Based on our review of the record,
Husband‟s testimony appears largely consistent, and Son has not identified any additional
evidence that contradicts Husband‟s testimony about his knowledge of Mrs. Hillis‟s
assets.
The foregoing notwithstanding, the credibility of an interested witness may
present an issue for a jury even if the witness‟s testimony has not been impeached or
contradicted. See Jennings v. Case, 10 S.W.3d 625, 633 n.4 (Tenn. Ct. App. 1999); Price
v. Allstate Ins. Co., 614 S.W.2d 377, 379 (Tenn. Ct. App. 1981); Poole v. First Nat. Bank
of Smyrna, 196 S.W.2d 563, 568 (Tenn. Ct. App. 1946). Under this rule, “once the
plaintiff makes out a prima facie case, the testimony of a party to the suit who has an
interest in the outcome of the case presents a jury question even if it is uncontradicted,
unimpeached, and not discredited.” Anderson v. Mason, 141 S.W.3d 634, 637 (Tenn. Ct.
App. 2003). Importantly, this rule does not convert the denials of interested witnesses,
standing alone, into “affirmative evidence for the plaintiff . . . .” Morris v. Columbia
Const. Co., Inc., 109 S.W.3d 314, 317 (Tenn. Ct. App. 2003). Plaintiffs cannot carry the
burden to establish their cases by pointing only to the testimony of an interested witness.
See id. As a result, the fact that an interested witness has presented uncontradicted
testimony, without more, will not create a dispute of fact for a jury. See id.
Although Husband is clearly interested in the outcome of this case, this fact does
not create an issue for a jury unless it is coupled with other evidence. See id.; Anderson,
141 S.W.3d at 637. Son has not produced any such evidence. Therefore, Husband‟s
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interest in the outcome of this litigation, without more, is not sufficient to create an issue
for a jury. See Morris, 109 S.W.3d at 317.
Based on the foregoing, we affirm the trial court‟s decision to deny Son‟s request
for a jury trial, although on different grounds. See City of Brentwood v. Metro. Bd. of
Zoning Appeals, 149 S.W.3d 49, 60 n.18 (Tenn. Ct. App. 2004) (“The Court of Appeals
may affirm a judgment on different grounds than those relied on by the trial court when
the trial court reached the correct result.”).
II. The Antenuptial Agreement
The trial court found that the antenuptial agreement was invalid because it was
contradictory and because Husband did not enter it knowledgeably. After examining the
agreement, we have concluded that it is not contradictory as to render it void. However,
the evidence does not preponderate against the trial court‟s finding that Husband did not
enter the agreement with the requisite knowledge of Mrs. Hillis‟s assets. Accordingly, we
affirm the trial court‟s ruling that the antenuptial agreement is unenforceable.
A. Inconsistencies Between Recitals and Operative Provisions
Antenuptial agreements are interpreted using the principles of construction that
apply to other written instruments. Reed v. Reed, No. M2003-02428-COA-R3-CV, 2004
WL 3044904, at *6 (Tenn. Ct. App. Dec. 30, 2004). Moreover, because antenuptial
agreements are favored by public policy, they must be construed liberally to give effect to
the intention of the parties. Id. (citing Sanders v. Sanders, 288 S.W.2d 473, 477 (Tenn.
Ct. App. 1955)). As this court has previously stated:
In general, the provisions of a contract must be examined in the context of
the entire agreement. Contractual terms should be given their plain,
ordinary meaning and should be construed harmoniously to give effect to
all provisions and to avoid creating internal conflicts. With respect to
antenuptial agreements, the substance of the parties‟ intent will prevail over
the form of the instrument, and the agreement will not be held invalid for
technical or trifling reasons.
Id. (internal citations and quotation marks omitted).
Contracts may include clauses called “recitals,” which are “preliminary
statement[s] in a contract or deed explaining the reasons for entering into it or the
background of the transaction, or showing the existence of particular facts.” Black‟s Law
Dictionary 1084 (9th ed. 2010). “Traditionally, each recital begins with the word
whereas.” Id.
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Because the purpose and function of recitals is to provide background information
about the parties and their reasons for entering the contract, recitals are not part of the
operative, binding portion of the contract. See S.M. Williamson & Co. v. Ragsdale, 95
S.W.2d 922, 924-25 (Tenn. 1936); 17A Am. Jur. 2d Contracts § 383. At issue in S.M.
Williamson was the validity of a guaranty contract signed by several individuals. See S.M.
Williamson & Co., 95 S.W.2d at 923-24. The contract contained a recital stating
“[w]hereas S.M. Williamson and Company, Incorporated, have sold to third parties a
series of Fifty-seven (57) notes . . . .” Id. at 923 (emphasis added). The individual
guarantors sought to avoid the contract by arguing that the words “have sold” in the
recital indicated that the contract was invalid because it was based on past consideration,
which is insufficient to support a contract. See id. at 924. The Supreme Court rejected this
argument, holding that “[t]he words „have sold‟ are no part of the consideration of the
contract, but considered with their proper context are merely descriptive of the
transaction by reason of which the contract of guaranty was executed.” Id. at 924-25.
Subsequently, our courts have held that recitals “may have a material influence”
when construing a contract and should, if possible, be reconciled with the operative
provisions of the contract and given effect. King v. Tubb, No. 88-273-II, 1989 WL 5446,
at *3 (Tenn. Ct. App. Jan. 27, 1989) (quoting 17 Am. Jur. 2d Contracts § 268 (1964));
see McClendon v. Crowder, No. 03A01-9703-CV-00083, 1997 WL 412120, at *3 n.4
(Tenn. Ct. App. July 24, 1997). Thus, if the recitals in a contract are clear and the
operative part is ambiguous, the recitals govern the contract‟s construction. King, 1989
WL 5446, at *3; see 17A Am. Jur. 2d Contracts § 383. However, “[i]f both the recitals
and the operative part are clear, but they are inconsistent with each other, the operative
part must control.” 17A Am. Jur. 2d Contracts § 383 (footnote omitted).4
4
Courts in many other jurisdictions distinguish between recitals and operative provisions when
interpreting contracts. See All Metals Fabricating, Inc. v. Ramer Concrete, Inc., 338 S.W.3d 557, 561
(Tex. App. 2009) (recitals will not control the operative provisions of a contract unless those provisions
are ambiguous); Jones Apparel Grp., Inc. v. Polo Ralph Lauren Corp., 16 A.D.3d 279, 791 N.Y.S.2d 409,
410 (1st Dep‟t 2005) (“Since the contract is unambiguous on its face, there is no need to refer to its
recitals, which are not part of the operative agreement . . . .”); Demorias v. Wisniowski, 841 A.2d 226, 236
(Conn. App. Ct. 2004) (noting that “whereas” clauses are explanations of the circumstances surrounding
the execution of the contract); Johnson v. Johnson, 725 So. 2d 1209, 1212-13 (Fla. Dist. Ct. App. 1999)
(“[W]e do not agree that the prefatory recitations contained in the various „whereas‟ clauses are binding,
operative provisions to this otherwise unambiguous contract.”); Fugate v. Town of Payson, 791 P.2d
1092, 1093-94 (Ariz. Ct. App. 1990) (operative provisions of a contract prevail when both operative
provisions and recitals are clear but inconsistent); accord Cain Rest. Co. v. Carrols Corp, 273 Fed.
App‟x. 430, 434 (6th Cir. 2008) (“In light of a preamble‟s purpose in a contract, we recognize that
provisions in a preamble, like recitals or other prefatory provisions of a contract, do not necessarily
control over provisions in the operative sections.”); U.S. v. Hamdi, 432 F.3d 115, 123 (2d Cir. 2005)
(Sotomayor, J.) (“[C]ontracts may, and frequently do, include recitals of the purposes and motives of the
contracting parties, which may shed light on, but are distinct from, the contract‟s operative promises to
perform.”).
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Although inartfully drafted, the recitals here do not contradict the operative terms
of the agreement.5 Instead, the whereas clause in question describes the reasons the
parties entered this agreement. As the recitals indicate, the parties desired to preserve
their autonomy but they also possessed – i.e. retained – certain rights to inherit the other
party‟s property that would take effect when they married. In order to maintain their
autonomy, Husband and Mrs. Hillis had to relinquish these rights, which they did in the
operative clauses of the antenuptial agreement. Thus, when viewed as a whole the entire
agreement indicates the parties‟ desire to maintain control over their respective assets and
to relinquish their right to inherit the other‟s property.
Moreover, to the extent the agreement contains a contradiction or inconsistency,
the operative provisions must prevail over the recitals. See S.M. Williamson & Co., 95
S.W.2d at 924-25; 17A Am. Jur. 2d Contracts § 383. Recitals only prevail if the
operative provisions of the agreement are ambiguous. See Mclendon, 1997 WL 412120,
at *3 n.4; King, 1989 WL 5446, at *3; 17A Am. Jur. 2d Contracts § 383. Here, the
operative portion of the antenuptial agreement is clear: the parties agreed to relinquish
their rights to inherit the other party‟s property. Accordingly, to the extent there is an
inconsistency, the operative provision that relinquishes rights prevails over the recital
provision. See 17A Am. Jur. 2d Contracts § 383. As a result, this agreement was not
invalid based on inconsistency between its recitals and operative provisions.
B. Full and Fair Disclosure of Assets
Although the agreement is not void because of a contradiction, it is unenforceable
because Husband did not enter it knowledgably.
In Tennessee, antenuptial agreements are binding if they are entered into “freely,
knowledgeably and in good faith and without exertion of duress or undue influence upon
either spouse.” Tenn. Code Ann. § 36-3-501. Antenuptial agreements must meet this
standard whether they are construed in the probate context or the martial dissolution
context. See In re Estate of Davis, 184 S.W.3d 231, 237 (Tenn. Ct. App. 2004). “The
courts of Tennessee, moreover, have applied the standard with the same rigor in both the
5
At least two cases in Tennessee have involved antenuptial agreements with language similar to
the agreement in this case. See In re Estate of Davis, 213 S.W.3d 288, 291 (Tenn. Ct. App. 2006); In re
Estate of Baker v. King, 207 S.W.3d 254, 257-58 (Tenn. Ct. App. 2006). Notably, the agreements in those
cases recite that the relevant parties desire to relinquish their rights rather than retain them. See In re
Estate of Davis, 213 S.W.3d at 291 (“WHEREAS . . . each of said parties is desirous of retaining absolute
and full control of their said property . . . and of relinquishing all rights of every kind or character . . . .”
(emphasis added)); In re Estate of Baker, 207 S.W.3d at 257 (“WHEREAS . . . each of said parties is
desirous of retaining absolute and full control of their said properties . . . and of relinquishing all rights of
every kind and character whether by virtue of their marriage to each other, of descent and distribution
. . . and all other rights of every kind and character arising from their said marriage in the property of the
other.” (emphasis added)).
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probate and dissolution contexts.” Id. at 237-38 (citing In Re Estate of Miller, C.A. No.
88-316-II, 1989 WL 19921, at *2 (Tenn. Ct. App. March 8, 1989)). In order to enforce an
antenuptial agreement, the proponent of the agreement must prove that the agreement
meets the statutory requirements by a preponderance of the evidence. See Randolph v.
Randolph, 937 S.W.2d 815, 821 (Tenn. 1996).
There are two ways to demonstrate that an antenuptial agreement was entered
knowledgably. First, proponents of the agreement can show that the spouse seeking to
avoid the agreement was provided with “a full and fair disclosure of the nature, extent
and value of [the other spouse‟s] holdings . . . .” Id. at 817. Second, in the absence of
sufficient disclosure, the agreement may still be enforceable if the proponent
demonstrates that “disclosure was unnecessary because the spouse seeking to avoid the
agreement had independent knowledge of the full nature, extent, and value of the
proponent spouse‟s holdings.” Id. Here, it is undisputed that Husband was not provided
with any disclosures of Mrs. Hillis‟s holdings when he executed the antenuptial
agreement. Accordingly, the agreement can only be binding if such disclosures were
unnecessary because Husband had sufficient independent knowledge of Mrs. Hillis‟s
holdings. See id. at 817, 822.
Whether one spouse had sufficient knowledge of the other spouse‟s holdings
depends upon the particular facts and circumstances of each case. See id. at 822. Relevant
factors include:
the parties‟ respective sophistication and experience in business affairs, the
duration of the relationship prior to the execution of the agreement, the time
of the signing of the agreement in relation to the time of the wedding, and
the parties‟ representation by, or opportunity to consult with, independent
counsel.
Id. Although the “participation of independent counsel representing each party is not the
sine qua non of enforceability, it provides the best assurance that the legal prerequisites
will be met and that the antenuptial agreement will be found enforceable in the future.” In
re Estate of Baker v. King, 207 S.W.3d 254, 267 (Tenn. Ct. App. 2006) (citing Randolph,
937 S.W.2d at 822).
Tennessee law does not require that a spouse have knowledge “of the specific
appraised values of the other spouse‟s assets, [but] knowledge of the [other] spouse‟s
overall net worth is necessary.” Id. at 270. Accordingly, being “aware of the nature” of
the other spouse‟s business affairs and having “general knowledge” of his or her financial
assets are insufficient to meet this requirement. See id.; Baker v. Baker, 142 S.W.2d 737,
746 (Tenn. Ct. App. 1940) (“[T]he fact that the intended [spouse] knows in a general way
that the [other spouse] is reputed to be wealthy is not sufficient to satisfy the requirement
of a full disclosure in making antenuptial contracts.”). This court has upheld antenuptial
agreements when a proponent-spouse‟s assets are “visible and easily comprehensible, and
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it is shown that the other spouse could clearly see the fully extent, nature, and value of
the holdings . . . .” Ellis v. Ellis, No. E2013-02408-COA-R9-CV, 2014 WL 6662466, at
*7 (Tenn. Ct. App. Nov. 25, 2014), perm. app. denied (Tenn. Mar. 12, 2015). In contrast,
this court will invalidate antenuptial agreements when “the extent and value of the
proponent spouse‟s assets were not easily comprehensible or ascertainable.” Id.
Here, both the circumstances surrounding the execution of the antenuptial
agreement and Husband‟s general knowledge of Mrs. Hillis‟s assets support the finding
that the agreement was not entered knowledgably. Son emphasizes that Husband was a
shift superintendent with experience reading and signing contracts. Husband is
intelligent, has some experience with business affairs, and entered this agreement
voluntarily; however, the undisputed evidence at trial was that Husband first saw this
agreement one day before the wedding and that he did not have the independent advice of
counsel. Son argues that Husband knew and “was comfortable with” the attorney who
drafted the agreement, but comfort and familiarity are not what the statute requires.
Instead, the relevant inquiry is whether Husband had opportunity to consult with
independent counsel, see Randolph, 937 S.W.2d at 822, and the attorney who was
employed by Mrs. Hillis to draft the antenuptial agreement was certainly not independent
in this situation.
Further, Husband did not have sufficient knowledge of Mrs. Hillis‟s holdings.
Husband testified that he was aware that Mrs. Hillis had greater earning capacity than he
did, but this kind of general knowledge hardly satisfies the statutory requirement that
agreements be entered knowledgably. See In re Estate of Baker, 207 S.W.3d at 270. Son
notes that Husband dated Mrs. Hillis for over two years and knew that she owned a car,
some real state, and some personal property. But even if Husband could see the extent of
Mrs. Hillis‟s “visible and easily comprehensible assets” after two-and-a-half years of
dating, see Ellis, 2014 WL 6662466, at *7, it is undisputed that he knew very little about
her other assets, such as bank accounts and investments. See id.
In addition, although Husband correctly assumed that Mrs. Hillis owned half of a
business, he did not know the value of that interest or of the business as a whole. Mrs.
Hillis‟s business interest alone accounts for nearly 40% of her net estate.6 There is no
evidence to support a finding that husband knew the extent or value of her business
interest, bank accounts, and investments, which were significant, when he signed the
agreement. Therefore, there is no factual foundation upon which to conclude that
Husband had knowledge the “full nature, extent, and value” of Mrs. Hillis‟s holdings. See
Randolph, 937 S.W.2d at 817, 822.
6
Although the real estate that was conveyed in 2010 is estimated to represent only 22% of her
assets at the time, if the real estate was included in the value of Mrs. Hillis‟s estate at the time of her
death, the value of her entire estate would have been approximately $1.3 million.
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Based on the foregoing, the evidence does not preponderate against the trial
court‟s finding that, in 1992, Husband did not enter the agreement knowledgably.
Accordingly, we affirm the trial court‟s conclusion that the antenuptial agreement was
unenforceable.7
III. The Doctrine of Election
Son contends that Husband is estopped from claiming an elective share because he
accepted property under the will.
In Tennessee, the doctrine of election prevents parties from claiming inconsistent
rights with respect to the same subject. See Standefer v. Standefer, No. 03A01-9209-CH-
00328, 1993 WL 6548, at *2-3 (Tenn. Ct. App. Jan. 15, 1993) (quoting Elmore v.
Covington, 172 S.W.2d 809, 811 (Tenn. 1943)). Under this doctrine, surviving spouses
are prohibited from claiming an elective share if they have accepted benefits under a
decedent spouse‟s will. In re Estate of Davis, M2012-00559-COA-R3-CV, 2013 WL
5827640, at * 7 (Tenn. Ct. App. Oct. 28, 2013), perm. app. denied (Tenn. Mar. 4, 2014).
Surviving spouses cannot “take any beneficial interest in a will, and at the same time set
up any right or claim . . . which shall defeat, or in any way prevent, the full effect and
operation of every part of the will . . . .” In re Estate of Sanderson, No. W2001-01928-
COA-R3-CV, 2002 WL 31423847, at *4 (Tenn. Ct. App. Oct. 28, 2002) (quoting
Williams v. Williams, 83 Tenn. 438, 445 (1885)). Accordingly, surviving spouses are
required to “either accept a benefit under a will and adopt the whole contents of the
instrument, conforming to all its provisions, or renounce the will and exercise rights
inconsistent with the testator‟s intent.” In re Estate of Grass, No. M2005-00641-COA-
R3-CV, 2008 WL 2343068, at *11 (Tenn. Ct. App. June 4, 2008) (citing Colvert v.
Wood, 25 S.W. 963, 965 (Tenn. 1894)). Election must be made by a direct and
unequivocal act. Barnes v. Walker, 234 S.W.2d 648, 650 (Tenn. 1950) (“[A]n election is
made by the adoption, by an unequivocal act, of one of the two existing remedies.”
(internal quotation marks omitted)); O’Bryan v. Glenn, 17 S.W. 1030, 1031 (Tenn. 1892)
(“The question is, has an election been made by a direct and unequivocal act?”); Allied
Sound, Inc. v. Neely, 909 S.W.2d 815, 822 (Tenn. Ct. App. 1995) (“The plaintiff must
unequivocally choose one remedy and is thereafter estopped to resort to the other
remedy.”).
Husband filed his petition for an elective share in April 2013, four months after his
wife‟s death, and never withdrew it. See Tenn. Code Ann. § 31-4-102(c) (“The surviving
spouse may withdraw a demand for an elective share at any time before entry of a final
7
The trial court also determined that the antenuptial agreement was invalid because Mrs. Hillis
never transferred a portion of her real property to Husband as provided by the agreement. Based on our
conclusion that the agreement is unenforceable because Husband did not enter it knowledgably, we need
not address this issue.
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determination by the court.”). Son notes that, after Husband filed his petition, the trial
court extended the time for Husband to claim an elective share by one year. See Tenn.
Code Ann. § 31-4-102(a)(2). Although Son does not challenge the trial court‟s decision
to extend the time for making an election, he argues that Husband‟s petition “had
essentially been withdrawn when he was granted further time in which to decide whether
he wished to do so at all.” (Emphasis omitted). Son has not cited any authority for this
proposition, and our research has revealed none. Consequently, the record indicates that
Husband has consistently pursued his claim of an elective share.
Son cites portions of Husband‟s testimony that, according to him, demonstrate that
Husband is claiming or has claimed property under the will. This testimony, when
considered in context, merely addresses Husband‟s understanding of what the will
bequeathed to him, not what he elected to take. Expressing an understanding of what a
will provides is not the same as a “direct and unequivocal” act indicating an election to
take under the will. See Barnes, 234 S.W.2d at 650; O’Bryan, 17 S.W. at 1031.
Son also argues that Husband cannot claim an elective share because he accepted
benefits under the will. According to Son, Husband received benefits under the will
because he had “already taken possession of [some of Mrs. Hillis‟s personal property] . . .
before electing against the estate.” (Emphasis in original). This sentence, however, is not
accompanied by a citation to the record as Tenn. R. App. P. 27(a)(7)(A) requires and we
find no evidence to support a finding that Husband “took possession of this property.”
Following Mrs. Hillis‟s death, Husband simply remained in the marital home, in which
he had a life estate and where the personal property at issue remained following her
death. Thus, Husband did not “take” personal property belonging to the estate; he merely
allowed it to remain where it had been for years. Based on these facts, it is disingenuous
for Son to contend that Husband took “direct and unequivocal action” that constitutes an
election to take personal property under the will. See Barnes, 234 S.W.2d at 650;
O’Bryan, 17 S.W. at 1031.
Based on the foregoing, we have concluded that Husband did not assert any rights
under the will or accept any benefits under it. Accordingly, he is not estopped from
claiming an elective share.
IV. The 2010 Quitclaim Deed
Husband contends that the trial court erred when it found that the 2010 quitclaim
deed did not constitute a fraudulent conveyance
The Tennessee Code provides:
Any conveyance made fraudulently to children or others, with an intent to
defeat the surviving spouse of the surviving spouse‟s distributive or elective
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share, is, at the election of the surviving spouse, includable in the
decedent‟s net estate under § 31-4-101(b), and voidable to the extent the
other assets in the decedent‟s net estate are insufficient to fund and pay the
elective share amount payable to the surviving spouse under § 31-4-101(c).
Tenn. Code Ann. § 31-1-105.
The gravamen of a claim under this statute is “whether the decedent spouse
intended to practice fraud on the surviving spouse.” Simpson v. Fowler, No. W2011-
02112-COA-R3-CV, 2012 WL 3675321, at *5 (Tenn. Ct. App. Aug. 28, 2012). When
determining whether a conveyance was made with fraudulent intent, this court will
consider:
(1) the consideration given for the transfer, (2) the size of the transfer in
relation to the decedent‟s total estate, (3) the time between the transfer and
the transferor‟s death, (4) the relations which existed between the spouses
at the time of the transfer, (5) the source from which the property came, (6)
whether the transfer was illusory, and (7) whether the surviving spouse was
adequately provided for in the will.
Id. (citing Finley v. Finley, 726 S.W.2d 923, 924 (Tenn. Ct. App. 1986)). “Circumstances
which establish fraudulent intent are as varied as the ingenuity of the human mind may
devise.” Warren v. Compton, 626 S.W.2d 12, 17 (Tenn. Ct. App. 1981). Accordingly, our
analysis is not limited to the above-listed factors, and we will consider all the facts and
circumstances surrounding the transfer. See id.; Simpson, 2012 WL 3675321, at *5.
In addition to the above-listed factors, Husband contends the 2010 quitclaim was a
fraudulent transfer because Mrs. Hillis kept the deed and transfer of her real property a
secret from him. Although the secrecy of a real property transfer can be significant
depending on the totality of circumstances, it is not significant here. Instead, after
reviewing the circumstances of this transfer, we have determined that the evidence
supports the trial court‟s finding that the 2010 quitclaim deed was not a fraudulent
conveyance. The consideration for the 2010 transfer was nonexistent or nominal, but the
transfer itself was not illusory. Mrs. Hillis acquired the real property before her marriage
to Husband and was its sole owner at all relevant times. The real property represented
only 22% of her estate, the transfer was made more than two years prior to her death, the
relations between she and Husband were good at all relevant times, and Husband was
provided a life estate in the real property under the 2010 quitclaim deed and her will.
Based on the foregoing, we affirm the trial court‟s finding that the transfer of Mrs.
Hillis‟s real property pursuant to the 2010 quitclaim deed was not a fraudulent
conveyance.
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IN CONCLUSION
The judgment of the trial court is affirmed, and this matter is remanded with the
costs of appeal assessed equally against John T. Hillis and Gregory Kent Hendrixson.
______________________________
FRANK G. CLEMENT, JR., JUDGE
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