Harbur v. O'Neal , 2014 Ark. App. LEXIS 163 ( 2014 )

Cite as 2014 Ark. App. 119
ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-13-603
JEANNE SIMPSON HARBUR Opinion Delivered February 19, 2014
APPELLANT
APPEAL FROM THE CRITTENDEN
COUNTY CIRCUIT COURT
V. [NO. PR-2012-47]
HONORABLE LARRY B. BOLING,
SARAH SHELTON O’NEAL and JOHN JUDGE
CARTER SHELTON
APPELLEES AFFIRMED
ROBERT J. GLADWIN, Chief Judge
Appellant Jeanne Simpson Harbur appeals the March 14, 2013 declaratory judgment
of the Crittenden County Circuit Court in favor of appellees Sarah Shelton O’Neal and John
Carter Shelton (“Carter”). Jeanne argues that the circuit court failed to accommodate her
hearing disability; improperly shifted the burden of proof to her related to undue influence
regarding the trust amendments; erred in invalidating the May 2, 2011 trust amendment;
erred in failing to recognize the handwritten documents from August 2011 as valid trust
amendments; and committed reversible error in its assessment of her credibility in failing to
address her hearing disability.1 We affirm.
The basis of this appeal is the Josephine Young Simpson Revocable Trust that was
executed on March 6, 2004, by Josephine Young Simpson. Mrs. Simpson had two
1
Because of the close connection, this last point on appeal will be addressed within
the discussion of Jeanne’s first point on appeal.
Cite as 2014 Ark. App. 119
daughters, Sarah Ann “Sally” Simpson Shelton and Jeanne. On February 2, 2011, Sally
passed away unexpectedly. Immediately upon the death of Sally, her husband, David
Shelton, and daughter, appellee Sarah, asked Mrs. Simpson to sign over to them certain HH
bonds, which had been purchased by Mrs. Simpson and had both Mrs. Simpson’s and Sally’s
names on them. Mrs. Simpson chose not to sign over the bonds at that time, and according
to Jeanne, when David learned that Mrs. Simpson would not sign the bonds, he tried to
change her mind, and a confrontation ensued.
Mrs. Simpson executed a power of attorney (“POA”) on May 2, 2011, which allowed
Jeanne to sign checks paying Mrs. Simpson’s bills. Also on May 2, 2011, Mrs. Simpson
signed a purported amendment to the trust that provided that, rather than Jeanne and Sally
acting as co-trustees in the event of Mrs. Simpson’s death or inability to continue serving,
Jeanne alone would serve as trustee. It is undisputed that both the POA and the May 2, 2011
trust amendment were typed by Jeanne. The POA and trust amendment were witnessed and
notarized by employees of Broadway Health Care (“BHC”), the nursing home where Mrs.
Simpson resided.
In June 2011, Carter went to BHC with Martha Hunt, an employee of Fidelity
National Bank, to supervise Mrs. Simpson signing over the HH bonds. According to Ms.
Hunt, Mrs. Simpson told Ms. Hunt that she wanted the proceeds of the bonds to be
deposited into her checking account. At some point after the funds were deposited into Mrs.
Simpson’s account, the value of the bonds was disbursed by two checks to Sarah and Carter,
but neither admit to being the one who gave the checks to Mrs. Simpson to sign.
2
Cite as 2014 Ark. App. 119
At Jeanne’s next visit with her mother in early August 2011, she reviewed her
mother’s financial statements with her. Jeanne said that it was brought to Mrs. Simpson’s
attention that the checks had been written and that her signature appeared on them.
Although she was insistent that she had not signed the checks, there is no dispute that it is
Mrs. Simpson’s signature on the checks and that Mrs. Simpson could not see very well.
On August 9, 2011, after Jeanne had returned to Missouri, Mrs. Simpson handwrote
two documents, purporting to create a holographic will in which she stated that she wished
that all her assets be given to Jeanne. On November 11, 2011, Mrs. Simpson signed a trust
amendment that was typed by Jeanne but contained the exact words handwritten by Mrs.
Simpson in the August 2011 documents.
Mrs. Simpson passed away in Crittenden County, Arkansas, on February 8, 2012.
After Mrs. Simpson’s death, Sarah filed her request to probate a will that Mrs. Simpson had
executed in 2004, and to appoint Sarah as personal representative of Mrs. Simpson’s estate.
Sarah and Carter then filed a petition for declaratory judgment requesting that the circuit
court strike the purported May and November 2011 trust amendments.
The petition for declaratory judgment proceeded to trial. The circuit court
determined that because of the existence of the POA and because Jeanne had been helping
her mother with her finances, a confidential relationship existed, which shifted the burden
of proof to Jeanne to prove beyond a reasonable doubt that Mrs. Simpson had the mental
capacity and free will to execute the 2011 trust amendments. The circuit court found that
3
Cite as 2014 Ark. App. 119
Jeanne failed to do so in its letter ruling dated January 10, 2013, and formalized in the March
14, 2013 declaratory judgment. A timely notice of appeal was filed on April 11, 2013.
I. Failure to Accommodate Jeanne’s Hearing Disability and Effect on Credibility
Appellant’s first issue of whether the circuit court failed to accommodate her alleged
hearing disability was not raised in the circuit court and will not be considered. In Arkansas,
it is a well-settled rule that issues not raised or ruled on in the circuit court will not be
considered for the first time on appeal. Parker v. Advanced Portable X-Ray, LLC, 2014 Ark.
App. 11, __ S.W.3d __. At no time did Jeanne or her counsel complain that Jeanne’s
hearing was so poor that she needed accommodation by the circuit court. In giving her
testimony, she was responsive to the questions put to her by attorneys on both sides. The
testimony indicates that on the few occasions where Jeanne complained that she had some
difficulty hearing the question, the question was repeated and answered by her. This is a
common practice in court proceedings, and it appears that everyone involved provided the
relief requested by Jeanne.
Appellant also argues that she might not have been able to follow the testimony of
others as they testified, which would have made her unable to effectively interact with her
counsel regarding the testimony being given by others. If that occurred, the problem was
not brought to the attention of the circuit court so that the circuit court had an opportunity
to address the situation. Jeanne even acknowledges her inaction with respect to this issue in
her brief. Accordingly, this issue is not preserved for this court’s review.
4
Cite as 2014 Ark. App. 119
Likewise, in her final point on appeal, Jeanne submits that the circuit court’s silence
on the issue of her obvious hearing disability negatively affected the circuit court’s assessment
of her credibility. She argues that some remedy is required to protect her due- process rights.
We note that there is no evidence that Jeanne’s alleged hearing disability had any effect on
the circuit court’s assessment of her credibility, but as with the previous discussion in this
point, this issue was not raised in the circuit court and will not be addressed. Parker, supra.
II. Burden of Proof Shifted to Jeanne Regarding Undue Influence
The capacity required to create, amend, revoke, or add property to a revocable trust
is the same as that required to make a will. Ark. Code Ann. § 28-73-601 (Repl. 2012).
“The test to determine whether a will is the product of undue influence is the same for a
trust that takes effect, in part, at death.” Medlock v. Mitchell, 95 Ark. App. 132, 136, 234
S.W.3d 901, 905 (2006). Ordinarily, the party challenging the validity of a will is required
to prove by a preponderance of the evidence that the testator lacked mental capacity or was
unduly influenced at the time the will was executed. Bell v. Hutchins, 100 Ark. App. 308,
268 S.W.3d 358 (2007). But in a case where a beneficiary procures the making of a will, a
rebuttable presumption of undue influence arises that places on the beneficiary the burden
of proving beyond a reasonable doubt that the testator enjoyed both required mental capacity
and freedom of will. Pyle v. Sayers, 72 Ark. App. 207, 34 S.W.3d 786 (2000).
Jeanne claims that, regarding the May 2, 2011 trust amendment, no evidence was
offered by anyone that suggested that Mrs. Simpson was mentally incompetent at the time
the amendment was signed. She notes that the mental capacity of the maker of a trust or
5
Cite as 2014 Ark. App. 119
deed is presumed and it falls to the contestants to prove incapacity by a preponderance of the
evidence. Rose v. Dunn, 284 Ark. 42, 679 S.W.2d 180 (1984). Jeanne argues that the
presence of the presumption of undue influence does not negate the presumption of mental
capacity. Id.
The requisite level of mental capacity to create a trust is defined as having “sufficient
mental capacity to retain in his memory, without promptings, the extent and condition of
his property, and to comprehend how he is disposing of it, and to whom.” Rose, 284 Ark.
at 46, 679 S.W.2d at 182. The definition of “undue influence”, on the other hand, is
influence “such as results from fear, coercion, or any other cause that deprives the testator
of his free agency in the disposition of his property.” Rose, 284 Ark. at 45, 679 S.W.2d at
182.
Jeanne notes that Carter admitted that Mrs. Simpson’s mental capacity was excellent
in May 2011, and that Sarah testified she did not start to wonder about her grandmother’s
mental capacity until October 2011. Accordingly, Jeanne claims that there is no basis for a
finding that Mrs. Simpson was not mentally capable of executing the May 2011 trust
amendment.
Jeanne submits that leaves only undue influence as a means available to Sarah and
Carter to invalidate the May 2011 trust. Jeanne acknowledges that, because of the rebuttable
presumption, she had the burden of moving forward and producing evidence to rebut this
presumption. But she claims that the burden of proving the undue influence by the
preponderance of the evidence remained on Sarah and Carter, see Rose, supra, and she
6
Cite as 2014 Ark. App. 119
maintains that no evidence was offered that, in May 2011, Mrs. Simpson was either in fear
of Jeanne or felt coerced by her in any way. To the contrary, Sarah and Carter testified that
their grandmother felt Jeanne was “a bit of a flake” and that she did not count on her and
would roll her eyes when talking about Jeanne. She maintains that this is hardly the way one
would expect her to speak about someone of whom she was afraid.
Jeanne argues that there can be no undue influence without evidence of malign intent.
She maintains that Sarah and Carter rely simply on the belief that the burden to disprove
undue influence beyond a reasonable doubt is so high that no evidence to support the circuit
court’s finding is required—basically asking the court to deem it an irrebutable presumption.
Jeanne notes that even if the court chooses to believe that Jeanne engaged in a course of
conduct designed to cause her mother to leave all of her assets to her, that still does not
support a finding of undue influence.
We hold that the circuit court did not improperly shift the burden of proof to Jeanne
on this issue. Where a beneficiary procures the making of a trust, a rebuttable presumption
of undue influence arises and the burden of proof then shifts to the proponents of the trust
to prove beyond a reasonable doubt that the trustor had both the mental capacity and
freedom of will to render the trust legally valid. Pyle, supra. The same rebuttable
presumption of undue influence arises when the beneficiary has a fiduciary and/or
confidential relationship with the maker of a will or trust such as the relationship between
a person who holds power of attorney and the grantor of that power. Medlock, supra.
7
Cite as 2014 Ark. App. 119
First, the circuit court found that there was a confidential relationship between Jeanne
and Mrs. Simpson based on Jeanne’s testimony that (1) beginning in 2004, she supervised
Mrs. Simpson’s financial affairs; (2) Mrs. Simpson had limited vision and could see and read
only large- size print and writing; (3) Jeanne drafted the trust dated March 6, 2004, for Mrs.
Simpson’s signature; (4) Jeanne drafted her will dated April 8, 2004, for Mrs. Simpson’s
signature; and (5) Jeanne’s management and supervisory control of Mrs. Simpson’s financial
affairs increased after Mrs. Simpson broke her hip in 2009 and entered BHC. Because of this
confidential relationship between Jeanne and Mrs. Simpson, a rebuttable presumption of
undue influence arose, which shifted the burden of proof to Jeanne to prove that Mrs.
Simpson had both the mental capacity and freedom of will when she executed the two trust
amendments. Medlock, supra.
The circuit court also found that there was a fiduciary relationship between Jeanne
and Mrs. Simpson, with Jeanne owing a fiduciary duty to Mrs. Simpson by reason of the
durable POA dated May 2, 2011, which was executed by Mrs. Simpson and appointed
Jeanne as her attorney in fact, and because of the supervisory control that Jeanne had over
Mrs. Simpson’s financial affairs. That fiduciary relationship also gave rise to a rebuttable
presumption of undue influence by Jeanne over Mrs. Simpson, which also shifted the burden
of proof to Jeanne to prove that Mrs. Simpson had both the mental capacity and freedom of
will when she executed the two trust amendments. Medlock, supra.
Regarding procurement of the trust amendments, Jeanne testified that after her sister
Sally’s death, she discussed with Mrs. Simpson changes to be made to the trust, and that Mrs.
8
Cite as 2014 Ark. App. 119
Simpson requested that Jeanne prepare an amendment to the trust that would make Jeanne
the sole trustee upon Mrs. Simpson’s death and Jeanne’s daughter, Katherine Wessling, the
successor trustee in the event Jeanne was unable or unwilling to serve as trustee. Jeanne
prepared and typed the first trust amendment and presented it to Mrs. Simpson for her
signature, which she signed on May 2, 2011.
In its extensive letter opinion, the circuit court found that Jeanne procured the first
trust amendment dated May 2, 2011, based on the facts that Jeanne had performed every step
of obtaining information, preparing the document, producing the document, and finalizing
the document, and had also benefitted from the amendment. Because Jeanne procured this
trust amendment, a rebuttable presumption of undue influence arose and the burden of proof
then shifted to Jeanne to prove beyond a reasonable doubt that Mrs. Simpson had both the
mental capacity and freedom of will at the time she executed the trust amendment. Pyle,
supra.
Jeanne testified that she also prepared for Mrs. Simpson’s signature the second trust
amendment dated November 11, 2011. This trust amendment made Jeanne the sole
beneficiary of the trust upon Mrs. Simpson’s death, and made Jeanne’s children sole
beneficiaries of the trust if Jeanne did not survive Mrs. Simpson. The circuit court found
that Jeanne procured the second trust amendment based on the facts that Jeanne performed
every step of obtaining information, making decisions on information received, preparing the
document, producing the document, and finalizing the document as the second trust
amendment, and that Jeanne and her child benefitted from the second trust amendment. We
9
Cite as 2014 Ark. App. 119
hold that the circuit court’s ruling shifting the burden of proof to Jeanne with regard to the
two amendments to the trust is supported by overwhelming evidence—including but not
limited to Jeanne’s own testimony.
III. Invalidity of May 2, 2011 Amendment
In bench trials, the standard of review on appeal is not whether there is substantial
evidence to support the finding of the court, but whether the judge’s findings were clearly
erroneous or clearly against the weight of the preponderance of the evidence. Baptist Health
v. Murphy, 2010 Ark. 358, 373 S.W.3d 269. A finding is clearly erroneous when, although
there is evidence to support it, the reviewing court is left with the firm conviction that a
mistake has been committed. Machen v. Machen, 2011 Ark. 531, 385 S.W.3d 278. The
appellate court will reverse a probate court’s determination on the questions of mental
capacity and undue influence only if they are clearly erroneous, giving due deference to the
superior position of the trial court judge to determine the credibility of the witnesses and the
weight to be accorded their testimony. Simpson v. Simpson, 2014 Ark. App. 80, __ S.W.3d
__; Pyle, supra. Whether a trust was procured by undue influence is a question of fact for the
trier of fact. Medlock, supra. Undue influence on a testator may be inferred from the facts
and circumstances. Simpson, supra.
Jeanne claims that in this case, the credibility of the witnesses was the basis of the
circuit court’s decision to invalidate the May 2, 2011 trust amendment. The circuit court
found that where the testimony of Jeanne or her four disinterested witnesses differed from
what she describes as the self-serving testimony of Sarah and Carter, Sarah’s and Carter’s
10
Cite as 2014 Ark. App. 119
testimony was more credible. Jeanne claims, however, that the testimony of appellees
actually conflicts with the circuit court’s findings on this point.
By their own admission, Sarah and Carter testified that any concerns they had with
Mrs. Simpson’s mental capacity did not begin until October 2011, which, Jeanne notes, was
after Mrs. Simpson told Sarah that she and Carter “had gotten everything from her that they
were going to get.” Jeanne claims that they actually avoided offering any such evidence to
prove Mrs. Simpson was incompetent because the circuit court might have reasoned that
when they had Mrs. Simpson sign over the bonds in June, they were taking advantage of
someone with competency issues. Accordingly, Jeanne maintains that the circuit court’s
finding that Mrs. Simpson lacked mental capacity and/or freedom of will to amend her trust
on May 2, 2011, must rely only on the belief that she lacked the freedom of will to amend.
Sarah and Carter submitted to the circuit court the durable POA that was signed on
May 2, 2011, by Mrs. Simpson. The witnesses to the durable POA and the witnesses to the
May 2, 2011 trust amendment were the same. The circuit court relied on the POA as
evidence to establish a confidential relationship existed between Mrs. Simpson and Jeanne,
and further that this relationship was the reason the circuit court shifted the evidentiary
burden to Jeanne. Jeanne argues that it is logically inconsistent for the circuit court to
conclude that Mrs. Simpson was acting of her own free will in signing a document which
gave Jeanne the authority to handle her financial affairs and at the exact same time find that
Jeanne was unduly influencing Mrs. Simpson into signing a trust amendment that did not
transfer any assets or benefit Jeanne in any material way. She urges that acceptance by the
11
Cite as 2014 Ark. App. 119
circuit court of the validity of the durable POA should have estopped the circuit court from
finding that the May 2, 2011 trust amendment is invalid.
Based upon the previously discussed finding that there was a fiduciary and confidential
relationship between Jeanne and Mrs. Simpson, and that Jeanne procured the two
amendments to the trust, the burden of proof shifted to Jeanne to prove beyond a reasonable
doubt that Mrs. Simpson had both the mental capacity and freedom of will at the time she
executed the amendments to her trust. The circuit court found that not only had Jeanne
failed to overcome the rebuttable presumption of undue influence and failed to meet the
burden of proof, but also that there was sufficient evidence before it for the circuit court to
find that Jeanne exerted undue influence over Mrs. Simpson in the execution of the two
trust amendments even in the absence of a presumption of undue influence.
Evidence indicates that each of Jeanne’s visits with Mrs. Simpson in 2011 coincided
with Jeanne obtaining information to prepare or obtain Mrs. Simpson’s signature on
documents to change the distribution of the assets of the trust following Mrs. Simpson’s
death, each benefitting Jeanne and/or her children. Additionally, after Sally’s death in
February 2011, there were several occasions where Jeanne’s influence on Mrs. Simpson’s
decision to amend her trust was obvious or could at least be inferred by the circuit
court—including evidence that every expression of frustration or concern with Sarah and
Carter’s side of the family made by Mrs. Simpson coincided with Jeanne’s visits.
It was right after Jeanne’s August 2, 2011 visit that Mrs. Simpson wrote out the two
holographic wills declaring that “the Shelton family has already received their share of my
12
Cite as 2014 Ark. App. 119
assets,” and giving all of her assets to Jeanne. There was no evidence presented that Sarah,
Carter, or the Shelton family had received any of Mrs. Simpson’s assets, other than the
$57,000 from the HH Bonds, which had been in the joint names of Sally and Mrs. Simpson,
far less than one-half of Mrs. Simpson’s estate. Evidence supports that Mrs. Simpson did not
understand the extent of her wealth when she wrote out the two proposed holographic wills.
Additionally, Mrs. Simpson attempted to make a will with the two holographic documents,
but Jeanne decided instead to amend the trust, not a will.
Evidence supports the circuit court’s conclusion that Mrs. Simpson’s relationships with
Sally, David, Sarah, and Carter were strong and positive prior to Sally’s death and the
initiation of an increased, focused influence by Jeanne. Sally visited Mrs. Simpson at BHC
at least three times a day, every day, feeding her three meals, washing her clothes, changing
diapers, accompanying her on trips to the doctor, and participating with her in activities at
BHC. Sarah had a close relationship with Mrs. Simpson until after Sally’s death. Several
witnesses, including Jeanne and her witnesses, testified that Carter had a very loving
relationship with Mrs. Simpson and that she held him in high regard.
Conversely, Jeanne played no role in the personal care of Mrs. Simpson, merely
handling the financial affairs. Prior to Sally’s death, Jeanne would visit her mother three to
four times a year, staying only one night. All of the personal care for Mrs. Simpson was left
to the supervision of Sally and her immediate family. Jeanne did not relieve Sally from the
care of her mother long enough for Sally to attend her son’s wedding in Kansas City. Even
after Sally’s death, Jeanne’s role in the care of Mrs. Simpson remained related to her financial
13
Cite as 2014 Ark. App. 119
affairs. Moreover, evidence indicates that Jeanne kept Sarah off of the list at BHC for
individuals authorized to obtain information concerning Mrs. Simpson, preventing Sarah
from obtaining information and providing adequate care for Mrs. Simpson.
The circuit court reviewed all of the testimony and other evidence in this case and
issued a comprehensive letter opinion, including ten pages of findings fact and conclusions
of law on which the opinion was based. We find no error in the circuit court’s finding that
Jeanne failed to rebut the presumption of undue influence, nor proved beyond a reasonable
doubt that Mrs. Simpson had both the mental capacity and freedom of will at the time she
executed the alleged May 2, 2011 trust amendment.
IV. Failure to Recognize the Handwritten August 2011 Documents as Trust Amendments
Finally, we find no merit in Jeanne’s lengthy argument in support of her assertion that
the circuit court erred in failing to recognize the two August 2011 documents written by
Mrs. Simpson as trust amendments. The parties stipulated that the two handwritten
documents were not controlling as to the disposition of the assets at issue in this case, and this
particular issue was not raised at trial and will not be considered by this court. Parker, supra.
Affirmed.
VAUGHT and HIXSON , JJ., agree.
Jeannie Harbur, pro se appellant.
Durrett and Coleman, by: Chadd L. Durrett, Jr., for appellees.
14