IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2015-CA-00360-COA
IN THE MATTER OF THE ESTATE OF JAMES APPELLANTS
OLDRUM SMITH, JR., DECEASED: JAMES
OLDRUM SMITH, III AND PATRICK SMITH
v.
LELA SMITH FLOWERS AND LYN SMITH APPELLEES
DATE OF JUDGMENT: 01/16/2015
TRIAL JUDGE: HON. HOLLIS MCGEHEE
COURT FROM WHICH APPEALED: WARREN COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANTS: WILLIAM R. STRIEBECK
DAVID RYAN LYNCH
ATTORNEYS FOR APPELLEES: DAVID M. SESSUMS
RONALD C. MORTON
ROBERT ANTHONY FISCHER
NATURE OF THE CASE: CIVIL - WILLS, TRUSTS, AND ESTATES
TRIAL COURT DISPOSITION: MOTION FOR CONSTRUCTION OF
CODICIL GRANTED IN FAVOR OF
APPELLEES
DISPOSITION: REVERSED AND REMANDED: 10/04/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE GRIFFIS, P.J., BARNES AND CARLTON, JJ.
GRIFFIS, P.J., FOR THE COURT:
¶1. This appeal comes from the probate of the estate of James Oldrum Smith Jr. As part
of the probate of the estate, a disputed issue arose as to the interpretation of a codicil that
would impact the transfer of stock owned by the decedent in three corporations. The Warren
County Chancery Court determined that the codicil was not ambiguous and did not allow for
the consideration of extrinsic evidence. The appellants disagree and filed a timely appeal.
We find reversible error and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
¶2. James Oldrum Smith Jr. (“Big J.O.”) was a successful businessman who lived in
Warren County, Mississippi. He died on August 24, 2006. At the time of his death, he was
survived by three children: James Oldrum Smith III (“Little J.O.”), Patrick Raymond Smith,
and Lela Smith Flowers. Big J.O. also had one child that predeceased him, Jinx Peterson
Smith. Jinx left three surviving children: Jinx Peterson Smith Jr., Christopher Stanton Smith,
and Patricia Stafford Smith.
¶3. On September 8, 2006, the Estate of J.O. Smith Jr. was opened in the chancery court.
The last will and testament of Big J.O., dated November 10, 1987, was admitted to probate.
In addition, the three codicils executed by Big J.O. were admitted to probate: codicil 1 dated
November 8, 1988; codicil 2 dated July 27, 2005; and codicil 3 dated December 12, 2005.
At the time in controversy here, Harry Kenneth Lefoldt Jr. was the administrator of the estate.
¶4. The controversy before this Court concerns the interpretation of codicil 3. Big J.O.
did not obtain the assistance of a lawyer in the preparation or execution of codicil 3. It was
titled “Codicil #3 to the Will of J.O. Smith, Jr. which Will is dated November 10, 1987.” It
read:
J.O. Smith, III will receive in the event of my death 41% of the shares that I
own in Big River Shipbuilders, Inc., Vicksburg Plant Food, Inc. and Yazoo
River Towing, Inc.
Patrick Smith and Lela Smith Flowers will receive 39% of the stock that I own
in Big River Shipbuilders, Inc. and Vicksburg Plant Food; and 29% of the
stock of Yazoo River Towing, Inc. divided equally.
2
¶5. Big J.O. died on August 24, 2006. As of the date of his death, these companies had
the following shareholder ownership:
Shareholder Shares % Owned
Big River Shipbuilders Estate of J.O. Smith Jr. 80 80%
J.O. Smith III 10 10%
Jinx Smith (Estate) 10 10%
Vicksburg Plant Food Estate of J.O. Smith Jr. 800 80%
J.O. Smith III 100 10%
Jinx Smith (Estate) 100 10%
Yazoo River Towing Estate of J.O. Smith Jr. 3,483 69%
J.O. Smith III 500 10%
Jinx Smith (Estate) 500 10%
Teresia White 517 11%
¶6. On December 2, 2012, Lyn Smith, Jinx’s widow, filed a motion for construction of
the codicil. This motion sought a determination of whether the codicil constituted a direct
bequest, or whether the assets listed in the codicil went to the residual estate. On September
7, 2011, the chancellor ruled that the codicil was unambiguous and constituted a direct
bequest of the assets to the named beneficiaries.
¶7. On August 13, 2014, Little J.O. filed a “Motion for Construction of 3[rd] Codicil.”1
In this motion, Little J.O. argued that, in codicil 3, Big J.O. intended for Little J.O. to receive
41% of the shares of each corporation and not just 40% of the shares owned by Big J.O.
Little J.O. also argued that Big J.O. did not intend for any of the shares to be left to his
grandchildren.
1
At the time this motion was filed, there were eighteen attorneys listed in the
certificate of service. This is to note the extent of the prior matters considered and the
complexity of the estate.
3
¶8. On February 28, 2014, Administrator Lefoldt filed a response to Little J.O.’s motion.
This response did not take a position, but asked the chancellor for a decision and a certified
final judgment under Mississippi Rule of Civil Procedure 54(b), so he could take the
appropriate action.
¶9. On March 4, 2014, Patrick joined Little J.O.’s motion and attached the court’s earlier
September 7, 2011 judgment and the December 2, 2010 motion for construction of the
codicil filed by Christy Noah, as the guardian of the estate of Jinx Peterson Smith, and
Christopher Stanton Smith.
¶10. On March 7, 2014, Trustmark Bank filed a “Memo on Practical and Legal Issues
Related to Codicil 3.” Trustmark argued that the distribution of shares did not make sense
without the inclusion of extrinsic evidence.
¶11. The chancellor held a hearing on November 14, 2014. Counsel appeared and were
given an opportunity to examine witnesses. Then, on January 16, 2015, the chancellor
executed a memorandum opinion and order and Rule 54(b) judgment. The chancellor ruled
that codicil 3 was unambiguous and allocated the shares as follows:2
# of shares
# of shares owned by
Company Outstanding J.O. Smith Jr. J.O. Smith III Lela Patrick Residue
Big River
Shipbuilders 100 80 32.8 15.6 15.6 16
Vicksburg Plant
Food 1,000 800 328 156 156 160
2
This chart only reflects this distribution of Big J.O.’s shares to Little J.O., Lela, and
Patrick. It does not include the shares owned by Little J.O. and Jinx’s estate prior to Big
J.O.’s death.
4
Yazoo River
Towing 5,000 3,483 1,428.03 725 725 604.97
The chancellor also certified the judgment under Rule 54(b). Little J.O. and Patrick appeal.3
STANDARD OF REVIEW
¶12. “A chancellor’s factual findings will not be disturbed if supported by substantial
evidence, but if an erroneous legal standard is applied, appellate review is de novo.” In re
Estate of Black, 135 So. 3d 181, 182-83 (¶4) (Miss. Ct. App. 2013) (citing In re Estate of
Langston, 57 So. 3d 618, 619-20 (¶6) (Miss. 2011)). Further, “[w]hen reviewing a
chancellor’s legal findings, particularly involving the interpretation or construction of a will,
this Court will apply a de novo standard of review.” In re Estate of Saucier, 908 So. 2d 883,
886 (¶5) (Miss. Ct. App. 2005) (quoting In re Last Will & Testament of Carney, 758 So. 2d
1017, 1019 (¶8) (Miss. 2000)).
ANALYSIS
¶13. The issue for this Court is whether the chancellor improperly excluded extrinsic
evidence of Big J.O.’s intent in construing the codicil. Little J.O. and Patrick argue that the
codicil contained a latent ambiguity. Lela argues there was no ambiguity.
¶14. “A trial court begins its review [by] looking first within the ‘four corners’ of the
document at issue. If there exists no ambiguity within the writing, then further analysis is
proscribed.” Estate of Regan v. Estate of LeBlanc, 179 So. 3d 1155, 1159 (¶12) (Miss. Ct.
App. 2015) (quoting DeJean v. DeJean, 982 So. 2d 443, 448 (¶10) (Miss. Ct. App. 2007)).
3
While Lyn Smith and Lela Smith Flowers are both appellees in the action, Lyn filed
a “confession of appeal” on November 25, 2015, in which she confessed that the chancellor
had erred. Therefore, only Lela argues in favor of the chancellor’s decision on appeal.
5
“Parol evidence may only be considered if the language of the will itself can be construed
to result in more than one interpretation as to the disposition of property.” Id. at (¶13)
(quoting Black, 135 So. 3d at 183 (¶5)). Therefore, we must first determine if an ambiguity
exits.
¶15. There is a “patent ambiguity” where a will or codicil is ambiguous on its face. Robert
A. Weems, Wills and Administration of Estates in Mississippi § 9:9 (3d ed. 2003). Here, the
codicil indicates the names of the companies, the percentage of distribution of each company,
and the beneficiaries. We agree with the chancellor that there is no patent ambiguity.
¶16. However, a latent ambiguity occurs if the testator’s intent remains uncertain when the
language of the will is applied to the external facts. Id. Little J.O. and Patrick point to the
third bequest in the codicil to demonstrate the latent ambiguity. There, the codicil purports
to bequeath 29% of the Yazoo River Towing shares without the qualifying language of
“shares that I own” that is in the first two bequests. This omission, according to Little J.O.
and Patrick, constitutes a latent ambiguity, which required the chancellor to consider the
parol evidence presented at the hearing. We agree.
¶17. When we consider the words used in the codicil along with the external facts, we
conclude that Big J.O.’s intent in the codicil is unclear. At the time the codicil was executed
and as of Big J.O.’s death, the companies’ corporate ownership was as follows:
Big River Shipbuilders Shareholder Shares % Owned
Estate of J.O. Smith Jr. 80 80%
J.O. Smith III 10 10%
Jinx Smith (Estate) 10 10%
Vicksburg Plant Food Estate of J.O. Smith Jr. 800 80%
6
J.O. Smith III 100 10%
Jinx Smith (Estate) 100 10%
Yazoo River Towing Estate of J.O. Smith Jr. 3,483 69%
J.O. Smith III 500 10%
Jinx Smith (Estate) 500 10%
Teresia White 517 11%
¶18. If we apply the codicil’s language according to the two different interpretations, two
different distributions occur. Under Lela’s interpretation, the ownership would be as
follows:
Shareholder Shares % Owned
Big River Shipbuilders J.O. Smith III 42.8 42%
Jinx Smith (Estate) 10 10%
Patrick Smith 15.6 16%
Lela Smith Flowers 15.6 16%
Estate of J.O. Smith Jr. 16 16%
Vicksburg Plant Food J.O. Smith III 428 43%
Jinx Smith (Estate) 100 10%
Patrick Smith 156 15%
Lela Smith Flowers 156 16%
Estate of J.O. Smith Jr. 160 16%
Yazoo River Towing J.O. Smith III 1,928.03 39%
Jinx Smith (Estate) 500 10%
Patrick Smith 505.035 10%
Lela Smith Flowers 505.035 10%
Teresia White 517 11%
Estate of J.O. Smith Jr. 1,044.9 20%
It seems illogical that Big J.O. would execute a codicil to bequeath his shares in his
companies and intend to leave a portion to his residual estate or his predeceased children’s
heirs and not include them in the codicil.
¶19. Under Little J.O. and Patrick’s interpretation, the ownership would be as follows:
7
Shareholder Shares % Owned
Big River Shipbuilders J.O. Smith III 51 51%
Jinx Smith (Estate) 10 10%
Patrick Smith 19.5 20%
Lela Smith Flowers 19.5 19%
Vicksburg Plant Food J.O. Smith III 510 51%
Jinx Smith (Estate) 100 10%
Patrick Smith 195 19.5%
Lela Smith Flowers 195 19.5%
Yazoo River Towing J.O. Smith III 2,540 51%
Jinx Smith (Estate) 500 10%
Patrick Smith 722 14%
Lela Smith Flowers 722 14%
Teresia White 517 11%
Under this interpretation, Little J.O. would have 51% of each of the corporations, giving him
a controlling stake in each company. It would also give the remaining shares in each
corporation to Patrick and Lela without leaving any remaining shares to the residual estate.
¶20. Based on these different interpretations, bequest three could either mean that Big J.O.
intended to convey the shares he owned, or that he intended distribution of the total
percentage of the company. “An ambiguity is defined as a susceptibility to two reasonable
interpretations.” Dalton v. Cellular S. Inc., 20 So. 3d 1227, 1232 (¶10) (Miss. 2009) (quoting
Am. Guar. & Liab. Ins. v. 1906 Co., 129 F.3d 802, 811-12 (5th Cir. 1997)). Though the
inconsistent language appears only in the third bequest, the effect of the two interpretations
renders the entire codicil ambiguous.
¶21. “[I]f an examination of the will shows the testator’s intention to be unclear, the court
will examine the facts and circumstances surrounding the testator at the time of making the
will, and extrinsic evidence may be admissible to ascertain the testator’s intention.” 9 Jeffrey
8
Jackson & Mary Miller, Encyclopedia of Mississippi Law § 75:88 (2002). Because there are
two reasonable interpretations, the codicil is ambiguous, and the chancellor should have
considered the extrinsic evidence. Therefore, this Court reverses the decision of the
chancellor and remands this case for further proceedings.
¶22. THE JUDGMENT OF THE WARREN COUNTY CHANCERY COURT IS
REVERSED, AND THIS CASE IS REMANDED FOR FURTHER PROCEEDINGS
CONSISTENT WITH THIS OPINION. ALL COSTS OF THIS APPEAL ARE
ASSESSED TO LELA SMITH FLOWERS.
LEE, C.J., BARNES, ISHEE AND CARLTON, JJ., CONCUR. WILSON, J,
CONCURS IN PART AND IN THE RESULT WITHOUT SEPARATE WRITTEN
OPINION. IRVING, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION.
FAIR, JAMES AND GREENLEE, JJ., NOT PARTICIPATING.
IRVING, P.J., DISSENTING:
¶23. The majority reverses and remands this case to the Chancery Court of Warren County
because it finds that the chancery court erred in finding no ambiguity in codicil 3 to the last
will and testament of J.O. Smith Jr. I agree with the chancellor that codicil 3 is
unambiguous. Therefore, I respectfully dissent. Rather than reversing and remanding this
case, I would affirm the chancellor’s finding that codicil 3 is unambiguous but would modify
the judgment to correct the chancellor’s allocation of the shares of Yazoo River Towing,
because I find that the chancellor erred in making the mathematical calculations.
¶24. Codicil 3 reads as follows:
J.O. Smith III will receive in the event of my death 41% of the shares that I
own in Big River Shipbuilders, Inc., Vicksburg Plant Food, Inc. and Yazoo
River Towing, Inc.
Patrick Smith and Lela Smith Fowers will receive 39% of the stock that I own
in Big River Shipbuilders, Inc., and Vicksburg Plant Food; and 29% of the
9
stock4 of Yazoo River Towing, Inc., divided equally.
(Emphasis and footnote added). The majority finds ambiguity because the third
bequest—that specifies that twenty-nine percent of the stock of Yazoo River Towing is to
be divided equally between Patrick and Lela—does not include the language “that I own” to
describe the stock being bequeathed. The majority concludes that the absence of this
language in one of the three bequests made in codicil 3 evidences a latent ambiguity, because
it is susceptible to two reasonable interpretations: either (1) that Big J.O. intended to convey
to Lela and Patrick twenty-nine percent of the stock that he owned in Yazoo River Towing,
or (2) that Big J.O. intended to convey to Lela and Patrick twenty-nine percent of the total
stock of Yazoo River Towing. I agree that the bequest is susceptible to two interpretations.
However, it is my view that the bequest is susceptible to only one reasonable
interpretation—that in codicil 3, Big J.O. was bequeathing—in each bequest—only
percentages of the percentage of stock that he owned, not percentages of all the stock of
Yazoo River Towing.
¶25. The facts indicate that at the time of Big J.O.’s death, the division of ownership in
Yazoo River Towing’s 5,000 outstanding shares was as follows:
Shareholder Shares % Owned
Big J.O. 3,483 69%
Little J.O. 500 10%
Estate of Jinx Smith 500 10%
Teresia White 517 11%
Big J.O. did not own one hundred percent of the stock of Yazoo River Towing; rather, he
4
Note that the phrase “that I own” is missing here.
10
owned sixty-nine percent of it. Sixty-nine percent of Yazoo River Towing’s stock equates
to 3,483 shares. Thus, Big J.O. could not have intended to bequeath twenty-nine percent of
5,000 shares in Yazoo River Towing to Patrick and Lela, because he did not own 5,000
shares. One simply cannot give away what one does not own.
¶26. The chancellor clearly manifested the same belief, as he maintains throughout his
judgment that codicil 3 reflects Big J.O.’s unambiguous intent to leave twenty-nine percent
of the stock he owned in Yazoo River Towing to Patrick and Lela:
[Big J.O.] left the stock he owned to his three surviving children in the
percentages stated. The effect of [Big J.O.’s] bequests of the specified
percentages of the stock he owned in Big River Shipbuilders, Inc., Vicksburg
Plant Food, Inc. and Yazoo River Towing, Inc. is that a portion of the
corporate stock owned by [Big J.O.] passes through the residuary clause of the
Will.
The Court has construed Codicil #3 as written and signed by [Big J.O.] in plain
and unambiguous language that he left the corporate stock he owned to each
of his three living children in the percentages set forth above.
The Court, giving effect to the plain, clear and simple language in Codicil #3
to the Last Will and Testament of [Big J.O.], hereby concludes and enters as
its Final Judgment that [Big J.O.] left the stock he owned in Big River
Shipbuilders, Inc., Vicksburg Plant Food, Inc. and Yazoo River Towing, Inc.
to his three surviving children, [Little J.O.], [Patrick,] and [Lela], in the
percentages stated in Codicil # 3. The effect of [Big J.O.’s] bequests of the
specified percentages of the stock he owned in Big River Shipbuilders, Inc.,
Vicksburg Plant Food, Inc. and Yazoo River Towing, Inc. is that a portion of
the corporate stock owned by [Big J.O.] passes through the residuary clause
of [Big J.O.’s] Last Will and Testament.
(Emphasis added). Further, the chancellor implies in a footnote of his order that the phrase
“that I own” is unnecessary and he would not read it into what Big J.O. wrote, as its absence
did not diminish his finding that Big J.O. intended to bequeath twenty-nine percent of the
11
shares he owned to Patrick and Lela. I agree with the chancellor that Big J.O.’s failure to
include this qualifying language in the bequest at issue is hardly a fatal flaw rendering the
entire codicil ambiguous.
¶27. Unfortunately, however, the chancellor used the wrong numbers when calculating the
amount of shares of Yazoo River Towing to be divided. In footnote one of his judgment, the
chancellor states: “Codicil 3 leaves 29% ‘of the stock of Yazoo River Towing’ to Lela and
Patrick, divided equally, or 14.5% of the 5,000 outstanding shares of Yazoo River Towing.”
Applying these numbers would result in the following division:
Shareholder Shares
Little J.O. 1,428.03
Lela 725
Patrick 725
Residue 605.97
According to this calculation, Big J.O. would be devising forty-one percent—1,428.03
shares—of his 3,483 shares to Little J.O. and twenty-nine percent—1,450 shares—of the
5,000 outstanding shares to Lela and Patrick, which amounts to each receiving 725 shares.
This result is wholly incompatible with the rest of the chancellor’s order, in which he clearly
finds that Big J.O. intended to convey forty-one percent of the shares he owned in Yazoo
River Towing to Little J.O., and twenty-nine percent of the shares he owned in Yazoo River
Towing to Lela and Patrick, to be divided equally. When contrasted with the rest of the
judgment’s language, it is apparent that the chancellor simply applied the wrong number to
his calculations, and that his true intent was to divide between Patrick and Lela twenty-nine
percent of the shares of Yazoo River Towing owned by Big J.O. Such a calculation would
12
have resulted in the following:
Shareholder Shares
Little J.O. 1,428.03
Lela 505
Patrick 505
Residue 1045.97
There is absolutely no language in the remainder of the chancellor’s judgment to support the
finding that he interpreted codicil 3 to bequeath to Lela and Patrick twenty-nine percent of
the outstanding shares in Yazoo River Towing. The fact that this single footnote uses the
number of outstanding shares, which is at odds with at least three other instances where the
chancellor uses the number of shares owned by Big J.O., clearly denotes a mathematical error
and not an intent on the chancellor’s part to allocate twenty-nine percent of 5,000 shares to
Patrick and Lela.
¶28. Notwithstanding the chancellor’s error in calculation, he was correct in holding that
codicil 3 is unambiguous. As stated, the majority maintains that the omission of “that I own”
in the third bequest of codicil 3 gives rise to two reasonable interpretations and thus
constitutes a latent ambiguity; however, this is simply not the case:
An “ambiguous” word or phrase is one capable of more than one meaning
when viewed objectively by a reasonably intelligent person who has examined
the context of the entire integrated agreement and who is cognizant of the
customs, practices, usages and terminology as generally understood in the
particular trade or business.
Dalton v. Cellular S. Inc., 20 So. 3d 1227, 1232 (¶10) (Miss. 2009) (emphasis added). The
context of codicil 3, in its entirety, evidences a clear intent by Big J.O. to devise percentages
of shares that he owned in each of the three companies in all three of his bequests. In two
13
of the three bequests, he expressly stated this intent. It would be illogical to find that because
Big J.O. omitted “that I own” in the third bequest, he must have suddenly altered his desire
from bequeathing shares that he owned to bequeathing total shares outstanding. Further, it
would be inconsistent to conclude that Big J.O. intended to convey twenty-nine percent of
the total shares outstanding in Yazoo River Towing to Patrick and Lela, when his previous
statement expressly conveyed forty-one percent of the shares that he owned in Yazoo River
Towing to Little J.O. The context of codicil 3 compels the conclusion that Big J.O.
bequeathed to Patrick and Lela twenty-nine percent of the shares that he owned in Yazoo
River Towing—not twenty-nine percent of the outstanding shares of Yazoo River
Towing—because only a bequest of a percentage of the percentage of the shares that Big
J.O. owned is consistent with all of the other bequests that he made in codicil 3. And while
it is true that Big J.O. owned more than twenty-nine percent of the 5,000 shares of Yazoo
River Towing, it would indeed be unusual terminology and usage for him to speak of
bequeathing a percentage of the entire shares of Yazoo River Towing when he did not own
all of the shares. Thus, when considering the entire context of codicil 3, there is no
ambiguity, and it is evident that the chancellor merely applied the wrong numbers when
making his calculations.
¶29. For the reasons stated, I dissent. I would affirm the chancellor’s judgment as modified
to correct the chancellor’s apparent miscalculation.
14