Arrington v. Ready, et al.
| Docket Number: | 2010-CA-01608-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 03-01-2012 Opinion Author: Carlson, P.J. Holding: Affirmed in part, reversed in part and remanded. |
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| Additional Case Information: |
Topic: Wills & estates - Subject matter jurisdiction - Miss.Const. Art. 6, Sec. 159 - Standing - Section 93-13-27 - Section 93-13-259 - Allocation of timber proceeds - Accounting - Reimbursement Judge(s) Concurring: Waller, C.J., Randolph, Lamar, Chandler, Pierce and King, JJ. Concur in Part, Concur in Result 1: Kitchens, J. Concur in Part, Concur in Result Joined By 1: King, J. Concur in Part, Dissent in Part 1: Dickinson, P.J. Procedural History: Bench Trial Nature of the Case: CIVIL - WILLS, TRUSTS AND ESTATES |
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| Trial Court: |
Date of Trial Judgment: 09-01-2010 Appealed from: Lauderdale County Chancery Court Judge: J. Larry Buffington Disposition: Held that a trustee performed properly and no accounting was required. Case Number: 96-834 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | In The Matter of the Estate of Emogene Baumgardner: Veronica Baumgardner McKee Arrington, Conservator, Individually and as Executrix of the Estate of Emogene Baumgardner, and as Attorney in Fact for Charlie Baumgardner |
DON O. ROGERS, III
JOE CLAY HAMILTON |
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| Appellee: | William E. Ready, Sr., as Trustee | ROBERT D. JONES HENRY P. PATE, III | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Wills & estates - Subject matter jurisdiction - Miss.Const. Art. 6, Sec. 159 - Standing - Section 93-13-27 - Section 93-13-259 - Allocation of timber proceeds - Accounting - Reimbursement |
| Summary of the Facts: | The plaintiff, Veronica Baumgardner McKee Arrington, claims that the trustee of two testamentary trusts, William Ready, mismanaged the trusts’ property, improperly allocated the trusts’ funds, and wrongfully refused to render an accounting of the trusts’ assets. The chancery court found that the trustee had acted properly and within his discretion in managing the trusts and that the trustee should not be required to render an accounting. Arrington appeals, and Ready cross-appeals. |
| Summary of Opinion Analysis: | Issue 1: Subject matter jurisdiction On cross-appeal, Ready argues that the chancery court does not have subject matter jurisdiction over this case because it concerns a private trust and is not an action in an ongoing estate. Article 6, Section 159 of the Mississippi Constitution provides that “The chancery court shall have full jurisdiction in . . . matters testamentary and of administration.” The claims in this case relate to Ready’s obligations under the marital deduction trust and the family trust. Because chancery courts have jurisdiction over trust administration, and Arrington’s claims relate to Ready’s actions as trustee, the chancery court has subject matter jurisdiction over this case. Issue 2: Standing Ready argues that Arrington does not have standing to bring a claim against him as trustee because she has no “colorable interest” in the trusts. Standing is to be determined as of the commencement of suit. At the time Arrington filed suit against Ready, she was the conservator of Emogene’s estate and person. Prior to filing the complaint for accounting, Arrington filed a motion for authority to institute litigation in the chancery court. She filed the motion as conservator of Emogene’s estate and person. The same day the motion was granted, Arrington filed a complaint against Ready as conservator of Emogene’s estate and person. Pursuant to sections 93-13-27 and 93-13-259, Arrington had standing to file suit on Emogene’s behalf. Ready also argues that Arrington does not have standing because she had only a contingent remainder in the home-place land. However, this argument is without merit. Although Arrington did not have a present possessory interest in the property at the time she filed suit, her remainder interest was vested. Issue 3: Allocation of timber proceeds Arrington argues that the chancellor erred in allowing Ready to allocate the home-place timber proceeds to the family trust. Harold’s will established two testamentary trusts: a marital deduction trust and a family trust. Emogene was the life beneficiary of the marital deduction trust income. Upon Emogene’s death, the marital deduction trust corpus, along with any undistributed income, was to pass to Emogene’s estate to be distributed under the terms of her will. During the present litigation, but before Emogene died, the chancellor ordered that the marital deduction trust be dissolved. In the same order, the chancellor ordered that the liquid assets of the marital deduction trust be transferred to Emogene’s conservatorship. After the chancellor entered this order, $744,467.62 was paid from the marital deduction trust to Emogene’s conservatorship. Under Emogene’s will, the money in her conservatorship was to pass to Arrington and Charlie equally. The provisions in Harold’s will that established the family trust were revoked in a codicil. The family trust included the home-place land as well as other land. Under the codicil, upon Emogene’s death, the home place (the home and 600 acres surrounding it) was to pass to Arrington and Charlie equally. The codicil also instructed that “the balance of the corpus of the trust shall be divided equally between” five named charities. The essential issue seems to be whether the timber proceeds from the home-place land are payable to Charlie and Arrington or to the charitable beneficiaries. Arrington and Charlie claim that they are the beneficiaries of the home-place timber proceeds, and Ready contends that the charities are the beneficiaries of all the family trust timber proceeds. The testator’s intent is controlling when construing a will. Harold’s codicil did not expressly mention how timber proceeds should be distributed. Harold’s codicil instructed that, after Emogene’s death, the home place was to pass to Arrington and Charlie and the remainder of the family trust was to pass to five named charities. Along with the home-place land, Arrington and Charlie were given all of the mineral rights to the home-place property. While timber and mineral rights are distinct, this tends to show Harold’s intent was to give his children more than just the house and home-place land. When reading the instrument as a whole, it was Harold’s intent for Arrington and Charlie to inherit not only the house and home-place land, but the timber proceeds from the home place as well. Ready’s argument that all of the profits from the family trust should go to the charitable beneficiaries seems to run afoul of the principle that remaindermen may maintain an action for waste when the value of their inheritance has been injured through the harvesting of timber. Accordingly, the chancery court erred by allowing Ready to allocate all of the family trust proceeds to the charitable beneficiaries. Issue 4: Accounting Arrington argues that Ready should be required to render an accounting of the trusts’ accounts. It is possible for a testator to waive accounting. Harold’s will contained an express waiver of accounting. It is not error for a chancellor to refuse to order an accounting when the language of the trust expressly allows the trustee to serve without rendering an accounting. However, an express waiver of accounting does not absolve a trustee from rendering an accounting under all conditions, such as evidence of mismanagement or fraud. Arrington asserts that Ready has mismanaged and improperly allocated the proceeds of the timber sale. In addition to Arrington’s assertion, the record includes evidence of mismanagement. For example, the chancellor ultimately required Ready to pay Emogene’s conservatorship $205,000 for unpaid support. Ready also had granted an option to purchase realty and timber to the same people who were managing the timber lands. Ready also borrowed money from Emogene’s personal funds (not the trusts) while he was trustee. Finally, the record contains an affidavit from Emogene’s attorney, stating that Ready had Emogene sign a revocation of general power of attorney without the attorney’s knowledge or consent. For these reasons, the chancellor erred in not ordering an accounting. Issue 5: Reimbursement The chancellor ordered that the conservatorship should be reimbursed by the family trust for any expenses paid for Emogene’s support. As part of the final judgment, the chancellor requested that the parties agree on a reimbursement amount. The parties could not agree on an amount, and the chancellor entered a supplemental final judgment, finding that the conservatorship should be reimbursed for $205,000. Arrington argues that the chancellor erred in finding this amount. She claims that the conservatorship should be reimbursed $429,045.24, plus $104,653.81 interest or lost possible income. It is unclear from the record how Arrington arrived at this amount. Accordingly, upon remand, a formal accounting of Emogene’s expenses should be conducted and that her conservatorship should be reimbursed for any expenses relating to her care and maintenance. |
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