IN RE ESTATE OF FOSTER HUME, III,)
)
THE UNIVERSITY OF THE SOUTH, )
)
Plaintiff/Appellant, )
) Probate Court Davidson County
) No. 98293
VS. )
) Appeal No.
) 01A01-9609-PB-00432
MEREDITH KLANK, )
)
Defendant/Appellee. )
FILED
IN THE COURT OF APPEALS OF TENNESSEE March 5, 1997
MIDDLE SECTION AT NASHVILLE Cecil W. Crowson
Appellate Court Clerk
APPEAL FROM PROBATE COURT OF DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
HONORABLE FRANK G. CLEMENT, JR., JUDGE
J. Richard Lodge, Jr. (#2833)
E. Clifton Knowles (#5889)
BASS, BERRY & SIMS PLC
2700 First American Center
Nashville, Tennessee 37238-2700
ATTORNEYS FOR PLAINTIFF/APPELLANT
Norman Gillis
1201 16th Avenue South
Nashville, Tennessee 37212
John Drummond
P.O. Box 41385
Nashville, Tennessee 37204
ATTORNEYS FOR DEFENDANT/APPELLEE
AFFIRMED AND REMANDED.
HENRY F. TODD
PRESIDING JUDGE, MIDDLE SECTION
CONCUR:
SAMUEL L. LEWIS, JUDGE
WILLIAM C. KOCH, JR., JUDGE
IN RE ESTATE OF FOSTER HUME, III,)
)
THE UNIVERSITY OF THE SOUTH, )
)
Plaintiff/Appellant, )
) Probate Court Davidson County
) No. 98293
VS. )
) Appeal No.
) 01A01-9609-PB-00432
MEREDITH KLANK, )
)
Defendant/Appellee. )
OPINION
The University of the South, residuary legatee under the will of Foster Hume, deceased,
has appealed from the judgment of the Probate Court holding that a specific devise to Meredith
Klank was not extinguished by ademption and therefore the subject of the specific devise did not
become a part of the residuary estate.
Appellee presents a preliminary issue regarding the initiation of this appeal by the
University of the South.
As residuary legatee, the University of the South was the only person or entity with any
interest in the ademption of the devise of Meredith Klank. On August 26, 1994, the University
filed a motion for leave to intervene to protect its interests. The motion was overruled by a
special probate judge, but the University continued to participate in the proceedings, particularly
in resistance to efforts of Meredith Klank to require the University to refund to the estate the
proceeds of the foreclosure which had been paid to the University. This litigation continued
before the newly elected regular Probate Judge who, on March 4, 1996, signed an order requiring
said proceeds to be paid to Ms. Klank.
There was no compliance with the conditions set out in T.R.C.P. Rule 58 for the “entry”
of an order, but the order was filed and placed on the minutes of the Probate Court. On April 15,
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the University moved for relief under T.R.C.P. Rule 60.02. On June 6, 1996, the Probate Court
granted the relief and re-entered the judgment on the same date, June 6, 1996. The grant of relief
was not strictly necessary because the March 4, 1996, order had never been effectively entered
prior to June 6, 1996. However, the grant of relief was appropriate under Rule 60.02(s), “any
other reason justifying relief from operation of the judgment. The notice of appeal, filed on June
17, 1996, was filed within 30 days after entry of judgment and was therefore timely.
Appellant states that the issue on appeal is: “Was the bequest of Defendant’s house in
Atlanta to Ms. Meredith Klank adeemed by the foreclosure and sale of the house prior to
decedent’s death?”
On August 1, 1990, the testator executed his will specifically devising his residence in
Atlanta, Georgia to Meredith Klank. On October 1, 1991, six weeks prior to the death of
testator, on November 12, 1991, the house devised to Ms. Klank was sold at a foreclosure sale
which satisfied the secured debt and produced a surplus of $59,200.07, which the foreclosing
creditor tendered to a Georgia Court accompanied by an interpleader suit. The Georgia Court
ordered that, after payment of $3,455.00 costs and fees, the $55,745.07 balance be paid to the
executrix of the estate.
The executrix tendered to the Probate Court her final accounting indicating that the
excess proceeds of the foreclosure had not been distributed. The Probate Court ordered the
executrix to pay the excess proceeds with prejudgment interest to Ms. Klank. The University
appealed.
The University insists that the devise to Ms. Klank was adeemed by the foreclosure and
sale.
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The most recent opinion of the Tennessee Supreme Court on ademption is Rhodes v.
Kebke, 179 Tenn. 480, 167 S.W.2d 345 (1943). In that case, the will, executed on July 3, 1935,
contained the following provision:
“To my sister, Mrs. Ruby Rhodes Kebke, of Memphis,
Tennessee, I hereby give, devise and bequeath all the capital
stock owned by me at the time of my death in Kebke House-
furnishing Co., a corporation, now doing business in
Memphis, Tennessee.”
On December 15, 1935, the testator agreed to sell to Ruby Rhodes Kebke, 28 shares of
Kebke Housefurnishing Co. for $23,000. Testator caused the stock to be registered in the name
of Ruby Rhodes Kebke who endorsed the stock certificate in blank and delivered it to testator
to secure her five notes covering the purchase price. The first two notes were paid to the testator.
The remaining three notes and certificate were in the possession of the testator at his death. The
legatee sued the executrix to recover the certificates and cancel the endorsement and unpaid
notes. The Trial Court overruled a demurrer (motion to dismiss for failure to state a claim for
which relief can be granted.) The Supreme Court affirmed and said:
What he really meant, as gathered from the entire will
and the situation of the parties, was to give her such interest
in the Kebke Housefurnishing Co. as he might have at the
time of his death. The unpaid notes with shares of stock
attached as collateral, and held by him at the time of his
death, represented his interest in the business at that time.
While not a legal interest, it was an equitable interest, and
ought to pass to the beneficiary under the terms of the will
and the unpaid notes be canceled and discharged.
In Wiggins v. Cheatham, 143 Tenn. 406, 225 S.W. 1040, 13 ALR 169 (1920), the
will, executed on October 28, 1916, devised to Wiggins and Gholsom “my entire whiskey
business conducted at 1221-1223 Market Street, Chattanooga, Tenn.” Prior to the decease of
the testator, adverse legislation forced the closure of the store and removal of the stock of
whiskey to a public warehouse in Louisville, Kentucky, which issued negotiable warehouse
receipts therefor. Testator pledged the receipts to a bank to secure a loan which he paid, and the
receipts were returned to him. He later pledged part of the receipts to secure a $3,000 loan which
he paid, and the receipts were returned to him. He later pledged part of the receipts to secure
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another $3,000 loan which was not paid before his death. The testator intended to resume his
whiskey business in Chattanooga, using the whiskey stored in Louisville, but was unable to do
so before his death. The Trial Court held that the bequest of the whiskey business had not been
adeemed. The Court of Appeals affirmed. Upon review by certiorari, the Supreme Court
affirmed and said:
We do not think that the fact that the testator was not
actually engaged in business at the time of his death can be
said to destroy the specific character of the property
intended to be bequeathed in his will. That part of the
specific property bequeathed, and which remained unsold,
was in existence at the time of the testator’s death, and was
subject to identification. This, we think, was sufficient to
bring it within the rule of a specific legacy, and it is enforce-
able as such.
In Baldwin v. Davidson, 37 Tenn. App. 606, 267 S.W.2d 756 (1954), testator bequeathed
to his sister his share of a partnership, but made no dispensation of his other property. Before
his death, he joined his partners in converting the partnership into a corporation. This Court held
that the legacy was not adeemed and said:
A specific legacy is adeemed if the thing given has been
lost, or disposed of by the testator, or if its condition has
been so changed that it no longer remains in specie. The
governing principle is “that the subject of the gift is
annihilated or its condition so altered that nothing remains
to which the terms of the bequest can apply.” Pritchard on
Wills (2nd Ed.), Sec. 462, pp. 479-480.
The thing given, the subject of this legacy, was J. D.
Baldwin’s share or interest in the business and property of
the partnership J. D. Baldwin & Company. There was a
shift of one of the partners and later a change to corporate
form; but these were changes in name or form only, not
changes in the nature or character of the business.
There was no change in the substance or essential nature
nature of Baldwin’s share or interest in the business. His
shares of stock in J. D. Baldwin & Company, Inc., merely
evidence his interest in the corporate business, which in turn
represent his share in the partnership J. D. Baldwin &
Company; and the real nature and identity of the thing given,
the subject of the legacy, has been substantially preserved.
So this legacy was not adeemed by these formal and
nominal changes in the personnel of the partnership and
from partnership to corporate form. Wiggins v. Cheatham,
143 Tenn. 406, 225 S.W. 1040, 13 A.L.R. 169.
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In Lane v. Lane, 22 Tenn. App. 339, 120 S.W.2d 993 (1938), a will executed on
December 17, 1933, provided:
“I desire to bequeath to my brother G. G. Lane the
restaurant he is now operating at 801 West Fifth Avenue
and that he have the same to use as his business for a period
of ten years, but in the event he vacates said property, I
desire the same to go to my son, Jack, but I desire my
brother, G. G. Lane to have said property for ten years
without paying any rent, providing he pays the taxes and
keeps said property in good repair.”
Prior to testator’s death, the legatee ceased to operate the restaurant and vacated the
building which testator rented to another tenant. Upon the death of testator the legatee claimed
the use and occupancy of the building for 10 years as provided in the will. The Trial Court
denied the claim of the legatee. This Court reversed and said:
While not occupied by the same tenant, 801 West Fifth
Avenue existed in the same form from the date of the
execution of the will up to the death of the testator and
answered the description of the subject matter of the devise
by whoever and whether or not occupied at that time, and
the devise is not to be defeated upon the theory of an
ademption because of a mere change in occupancy between
the date of the execution of the will and the death of the
testator. Wiggins v. Cheatham, 143 Tenn. 406, 225 S. W.
1040, 13 A. L. R. 169.
[4] We are further of opinion it was the intention of the
testator that complainant should have the use of said
property for a period of ten years from the date of testator’s
death without paying any rent provided he should pay the
taxes and keep said property in good repair and use it with-
out interruption as a place in which to conduct his business.
In State ex rel Burrow v. Cothern, 21 Tenn. App., 113 S.W.2d 81, (1938), the will
provided in part:
Figuring what I have at present $2,680.00 on land notes ---
I want Lassie Burrow to have $500 out of that land money
when collected.
This Court found that the “land note” had been transferred to Wilson Cothern in trust to
collect and satisfy testamentary bequests, and not to Wilson Cothern for his own use. Such
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transfer was held not to effect an ademption, and Wilson Cothern was required to pay the bequest
out of the proceeds of the note.
In recent unpublished opinions, this Court has held that ademption did not occur where
the will directed the executors to sell a farm and divide the proceeds among specified legatees,
and, prior to death, the testator sold the farm on credit and took a trust deed and notes to secure
the purchase price. This Court held the legatees entitled to the purchase price when paid.
In another recent unpublished opinion, this Court has held that the conveyance of the
property to a revocable trust did not adeem the specific testamentary gift of the property because
it remained within the control of the testator by the power to revoke the trust.
No published or unpublished Tennessee Authority is cited or found which is contrary to
the above.
A number of published authorities declared an ademption, but they are distinguishable
from the present case.
In Ford v. Cottrell, 141 Tenn. 169, 207 S.W. 734 (1918), Testator bequeathed to a sister
the rents from specific realty during her life, but sold the realty before testators death. The
Supreme Court held that the bequest was adeemed. No such circumstances are shown in the
present case.
In American Trust and Banking Co. v. Belfour, 138 Tenn. 385, 198 S.W. 70 (1917), the
will directed that two specified life insurance policies would provide educational expenses and
a trust fund for his daughter. Prior to the death of testator, the daughter’s education was
completed and testator surrendered the two specified policies in exchange for their cash
surrender value which he added to his existing savings account which was subsequently invested
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in real estate mortgage notes which he held at his death. Thus, the testator, by his successive acts
twice changed the character of the specified bequest, thereby indicating his intent to terminate
the bequest for the benefit of his daughter. Such events did not occur in the present case.
So far as the record of the present case shows, the home in Atlanta was mortgaged when
the will made. If this be true, the devise was not a devise of a fee, but an equity, which survived
the foreclosure sale in the form of the surplus deposited in court. Even if the mortgage was
executed by testator, this was not a complete divestment and loss of control of the property,
because a mortgager retains the power to vacate the mortgage by satisfaction of the debt and the
right to receive any proceeds of the sale of the security in excess of the debt. Thus, the mortgage
diminished, but did not extinguish the interest of the deceased in the devised property. There is
no evidence that testator committed any act which could be interpreted as an expression of his
intention to cancel the devise of the home.
In the present case, the foreclosure, which is relied upon for ademption, was not instituted
or carried out by testator, but by the holder of the indebtedness. Testator’s only contribution to
the foreclosure was his inability or failure to pay the debt which cannot be presumed to be a
voluntary act; and there is no evidence that it was deliberate or voluntary.
The circumstances just discussed are perfectly consonant with those of Rhodes v. Kebke
wherein the Supreme Court observed that:
“What he really meant, -- was to give her such interest in
the Kebke Housefurnishing Co. As he might have at the
time of his death. The unpaid notes with share of stock
as collateral represented his interest in the business at that
time.”
The foregoing quotation may be paraphrased for application to the present case as
follows:
What he really meant was to give her whatever interest
he might have in the home at the time of his death. The
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surplus proceeds derived from the foreclosure was due him
at the time of his death and represented his entire interest
in the house at that time.
In Tipton v. Tipton, 41 Tenn. (1 Cold.) 252, (1860), testator bequeathed to his widow
three specified notes, but thereafter sold one of the notes to his son, taking the son’s note in
payment. The Supreme Court held that the bequest to the wife was adeemed “pro tanto,” that
is, to the extent of the note sold to the son. No such circumstances are shown in the present case.
In Donahue v. Lea, 31 Tenn. (1 Swan) 119, 55 Am Dec. 725 (1851), the Supreme Court
held that, where land was specifically devised, but thereafter the testator entered into an
enforceable contract to sell the land to a third party, the devise was adeemed. No such
circumstances are shown in the present case.
In Price v. Johnson, Tenn. App. 1977, 563 S.W.2d 188, this Court held that a specific
bequest of stock was adeemed by testator’s transfer of the stock to a third party in exchange for
a 10% cash payment and installment note. No such circumstances are shown in the present case.
In Newman v. Profitt, 59 Tenn. App. 397, 440 S.W.2d 827 (1968), testator willed his
farm to his two sons, George and James, subject to a life estate in their mother. Thereafter, the
father and mother conveyed the same land to the same two sons with the limitation that, if
George should predecease the parents, his share of the land would revert to the parents. George
predeceased his parents. No such circumstances are shown in the present case.
In Bedford v. Bedford, 38 Tenn. App. 370, 274 S.W.2d 528 (1955), deceased devised
life estates in specific property to three beneficiaries and thereafter deeded to one of the
beneficiaries a part of the land. This Court held that the deed resulted in a ‘pro tanto’ (partial)
ademption (satisfaction) of the devise to the deviser who received the deed, but did not adeem
the devise of the remainder of the land to the other devisee. No such circumstances are shown
in the present case.
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Appellant cites Prichard on Wills 5th Edition, 1994, § 486 for its insistence that a
material change in the subject matter of a legacy results in an ademption. However, neither
Prichard nor appellant cites any Tennessee authority holding that a foreclosure resulting in
surplus proceeds is such a change in identity as to justify an inference that the deceased intended
to render a part of his will ineffective. It is true that the complete obliteration of the property
mentioned in the will leaving no identifiable residue even by the act of a third party, may result
in ademption, but there is no evidence that such occurred in this case.
If, in the present case, the proceeds of the foreclosure sale had been insufficient to satisfy
the debt, leaving no excess proceeds due the testator, there would have been an ademption by
extinction. Such are not the facts of the present case.
Appellee cites unpublished opinions which have been examined and found to be
distinguishable on the facts.
Appellant cites McGhee v. McGhee, R.I. 1980, 413 A2d 72, wherein the testator
bequeathed to her grandchildren all money on deposit in any bank, but before her death, her
attorney-in-fact withdrew all money in the banks and invested it in bonds. The appellate court
held that the bequest of bank accounts was adeemed and said:
At the outset, we recognize that the instant case concerns
specifically the concept of ademption by extinction, a legal
consequence that may attend a variety of circumstances
occasioned either by operation of law or by the actions of a
testator himself or through his guardian, conservator, or
agent. Gardner v. McNeal, 117 Md. 27, 82 A. 988 (1911);
In Re Wright, 7 N.Y.2d. 365, 165 N.E.2d 561, 197 N.Y. S2d
711 (1960). In particular, a testamentary gift of specific real
or personal property may be adeemed - fail completely to
pass as prescribed in the testator’s will - when the particular
article devised or bequeathed no longer exists as part of the
testator’s estate at the moment of his death because of its
prior consumption, loss, destruction, substantial change,
sale, or other alienation subsequent to the execution of the
will. In consequence, neither the gift, its proceeds, nor
similar substitute passes to the beneficiary, and this claim to
the legacy is thereby barred.
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The petitioner improperly relies upon the case of Morse v.
Converse, 80 N. H. 24, 113 A. 214 (1921). In that case the
testatrix voluntarily placed her property into the hands of a
conservator to care for and use for her support. The
conservator purchased a Liberty bond out of bank deposits
bequeathed in the testatrix’s will, and the legacies were not
adeemed thereby. But, contrary to the case at bar, the
testatrix in Morse neither knew about nor consented to the
conservator’s acts; therefore, the court explained, the change
“furnishes no evidence of an intentional revocation by her.”
The quoted statement was made in the context of a change of identity by the authorized
act of the agent of the testator. The quoted opinion recognizes a distinction between a
conversion of the nature of the devised property by the act of the testator or the authorized act
of testator and the act of a third person without the consent of the testator.
Appellant cites In Re Celentano’s Estate, 213 N.Y.S.2d 1019 (Sur. 1961), a decision of
a county surrogate (trial) court, holding that the condemnation of the devised property adeemed
the devise. No Tennessee authority has recognized an ademption under these circumstances.
` Appellant also cites In Re Seavers Will, 91 N.Y.S.2d 47, 195 Misc. 475 (Sur. 1949), a
county surrogate (trial) court decision in which testator devised property to a nephew for life with
residue to his children. The trial court held that the devise was adeemed by the condemnation
of the property before the death of testator. The same situation does not exist in the present case
and there is no evidence that the rule of absolute ademption by act of a third party has been
adopted in Tennessee.
While not directly applicable to the facts of the present case, it appears to this Court that
the present state of Tennessee law would recognize ademption where, without consent of the
testator, the property specifically devised is completely removed from the ownership and control
of the testator without an identifiable residue of the property would not be subject to the
ademption. In the case of condemnation the proceeds represented by an uncashed check or a
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separate identifiable deposit would probably not be adeemed. Also, if a house is destroyed by
fire, an uncashed insurance check or separate bank account probably would not be adeemed.
In the light of published Tennessee authority, discussed above, this Court is not inclined
to follow the authorities from other states relied upon by appellant. Where the testator deals with
his property in such manner as to clearly terminate a devise or bequest, that devise or bequest is
adeemed. Where the action of a third party is relied upon for ademption, such action must be
with the authority or consent of the testator or, if not, must result in the obliteration of any
identifiable residue which might be identified, and subjected to the devise or bequest.
From all of the above, this Court concludes that the devise of testator’s home in Atlanta
to Ms. Meredith Klank was not adeemed by the foreclosure sale and that the testator’s interest
in said home represented by the $55,745.07 now in the custody of the Probate Court, is due to
Ms. Meredith Klank.
The judgment of the Probate Court is affirmed. Costs of this appeal are assessed against
the appellant. The cause is remanded to the Trial Court for further necessary proceedings.
AFFIRMED AND REMANDED.
___________________________________
HENRY F. TODD
PRESIDING JUDGE, MIDDLE SECTION
CONCUR:
____________________________
SAMUEL L. LEWIS, JUDGE
____________________________
WILLIAM C. KOCH, JR., JUDGE
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