Whitney Stegall v. Dottie Lou Pryor, Benton M. Mason Jr., Hugh Burton Mason - Concurring ( 1997 )

WHITNEY STEGALL, )
) Rutherford County Probate
Plaintiff/Appellee ) No Case Number
)
VS. ) Appeal No. 01A01-9704-PB-00147
)
DOTTIE LOU PRYOR, BENTON M. )
MASON, JR., HUGH BURTON
MASON, WILLIAM E. MASON, JR.,
TAYLOR S. MASON, and
)
)
)
FILED
BOB S. MASON, ) October 3, 1997
)
Defendants/Appellees ) Cecil W. Crowson
) Appellate Court Clerk
KIRKLAND A. MASON, TIMOTHY A. )
MASON, JILL MASON QUIGG, )
EDWARD C. MASON, and )
CHRISTOPHER C. MASON, )
)
Defendants/Appellants )
IN THE COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION AT NASHVILLE
APPEAL FROM THE PROBATE COURT OF RUTHERFORD COUNTY
AT MURFREESBORO, TENNESSEE
HON. TOM E. GRAY, CHANCELLOR, 18TH JUDICIAL DISTRICT AT GALLATIN,
SITTING BY INTERCHANGE
Darrell L. West Richard F. LaRoche, Sr.
144 Second Avenue, North 107 North Maple Street
The Pilcher Building, Suite 300 Murfreesboro, TN 37133-1648
Nashville, TN 37201 and
and Jerry Scott
Dan E. Huffstutter John Kea
144 Second Avenue, North Scott & Kea
The Pilcher Building, Suite 333 P. O. Box 1216
Nashville, TN 37201 Murfreesboro, TN 37133-1216
ATTORNEYS FOR ATTORNEYS FOR
DEFENDANTS/APPELLANTS DOTTIE LOU PRYOR, ET. AL.,
DEFENDANTS/APPELLEES
Val Sanford
Julie C. Murphy
Gullett, Sanford, Robinson & Martin
230 Fourth Avenue North, 3rd Floor
P. O. Box 198888
Nashville, TN 37219-8888
ATTORNEYS FOR
WHITNEY STEGALL,
ADMINISTRATOR C.T.A. OF
THE ESTATE OF V. R. MASON
PLAINTIFF/APPELLEE
AFFIRMED AND REMANDED
WILLIAM H. INMAN, SENIOR JUDGE
CONCUR:
HENRY F. TODD, PRESIDING JUDGE, MIDDLE SECTION
WILLIAM C. KOCH, JR., JUDGE
WHITNEY STEGALL, )
) Rutherford County Probate
Plaintiff/Appellee ) No Case Number
)
VS. ) Appeal No. 01A01-9704-PB-00147
)
DOTTIE LOU PRYOR, BENTON M. )
MASON, JR., HUGH BURTON )
MASON, WILLIAM E. MASON, JR., )
TAYLOR S. MASON, and )
BOB S. MASON, )
)
Defendants/Appellees )
)
KIRKLAND A. MASON, TIMOTHY A. )
MASON, JILL MASON QUIGG, )
EDWARD C. MASON, and )
CHRISTOPHER C. MASON, )
)
Defendants/Appellants )
OPINION
V. R. Mason died testate on October 29, 1995. The executor, Richard F.
LaRoche, Jr., propounded the will for probate; in the ease of language it provided for the
payment of debts and taxes and created a trust for a family cemetery, with the
remainder to pass under the laws of intestate succession.
The decedent’s heirs are the children and grandchildren of his father’s siblings.
Reference the caption of this Opinion: Dottie Lou Pryor; Benton M. Mason, Jr.; Hugh
Burton Mason; William E. Mason, Jr.; Taylor S. Mason; Dirkland A. Mason; Timothy A.
Mason; Jill Mason Quigg; Edward C. Mason; and Christopher C. Mason.
As tenants in common, the appellants own 21 percent of the estate per stirpes; the
appellees own 79 percent per stirpes.
The decedent owned two tracts of real property, consisting of a 1.6 acre tract and
a 160 acre tract. The post-mortem appraisal of the larger tract, with attendant death tax
consequences, brought about the admitted insolvency of the estate since the personal
property was not sufficient to pay the estate and inheritance taxes.
Compelled by this circumstance, the executor filed a recitative petition in the
Probate Court alleging that both tracts of the real estate should be sold. The executor
then resigned, and Whitney Stegall was appointed Administrator C.T.A.
2
By Order entered on July 16, 1996 the court found and decreed that the
personalty was insufficient to pay the costs of administration and the taxes and directed
the Administrator C.T.A. to sell the 1.6 acre tract; to establish and endow the private
cemetery; and, after investigation, to report his recommendation relative to the
disposition of the 160 acre tract.1
On August 5, 1996 a Limited Power of Attorney2 was executed by all of the heirs,
naming Mr. Stegall as their attorney in fact “to act for us . . . in any and all business,
financial, legal and other matters that affect that certain parcel of real property . . . of
160.74 acres.”
The Power of Attorney specifically authorized Mr. Stegall (1) to borrow the
necessary funds with which to pay estate and inheritance taxes, (2) to execute a
mortgage on the real estate as security for the payment of the loan, and (3) to sell the
real estate
“upon such terms as said attorney may deem proper subject to our said
attorney utilizing the following methods of offering the real property for
sale: (a) from the date hereof [August 5, 1996] until September 30, 1996
solicit offers to sell [sic] the real property from private developers and all
other interested persons, employing such private and public forums as our
said attorney may deem appropriate to sell the real property; (b) from
October 1, 1996 until April, 1997 utilized [sic] the professional services of
a real estate broker by entering into a real estate listing contract, and
finally if necessary to sell the real estate; (c) after April 1, 1997 sell the
real estate by absolute auction; (4) . . . ; (5) . . . ; (6) To allow any of the
undersigned the right to match any offer to purchase the real property
which our attorney in fact would propose to accept, subject to said
undersigned individual’s right of refusal being limited to ten calendar days
from the date our said attorney in fact notifies us of the offer to purchase
the real property [emphases added].”
The Power of Attorney then provides that it “may not be terminated except by
. . . a majority of the undesigned giving said attorney written notice of termination.”
The prescribed procedures were followed by Mr. Stegall, as attorney-in-fact, who
employed a real estate agent, the Parks Group, to sell the property. Offers were
received, one of which was from Weston Retail Properties. Mr. Stegall, as Administrator
C.T.A., filed a motion seeking the approval of the Court “to execute a purchase and sale
1
To advise the court wh eth er the tract m ight advanta geously be sold at priva te s ale or b y a
public, judicial sale.
2
Although in the record, the transcripts do not reflect that it was formally introduced in
evidence. The parties treat it as having been introduced and considered by the Court. So will we.
3
agreement.” We note the careful language employed; approval of a sale is not sought.
On November 13, 1996, the Court entered an Order 3 directing the Administrator
C.T.A. to execute the purchase and sale agreement and to require an increase in the
amount of earnest money. Although not incorporated in the Order, the Chancellor
directed Mr. Stegall to give notice to the heirs and to honor the ten day period
mentioned in the Power of Attorney.
The heirs were appropriately notified by Mr. Stegall, acting in his dual capacity.
On November 14, 1996 [the day following the judicial direction to the
Administrator C.T.A. to execute the Purchase and Sale Agreement], the appellants
tendered an offer identical to the Weston offer to the real estate agent. This action was
followed by the delivery of an instrument dated November 18, 1996 executed by the
appellees [excepting Bob S. Mason] owning 66 percent of the interest, which purported
to terminate the Power of Attorney. 4
In his capacity as Administrator C.T.A. Mr. Stegall, on December 10, 1996 filed
another motion in the Probate Court reciting that none of the heirs was financially able
to make a bona fide matching order and should not be allowed to ‘speculate’ because
time was of the essence, and that he was in receipt of another offer for the tract which
should be accepted and approved. This offer from Pirtle, which was his second offer,
was $2,591,000.00; the offer from Weston was $2,566,700.00, the latter allegedly
matched by the appellant heirs pursuant to the provision of the Power of Attorney.
A plenary hearing was had on this motion. The Administrator C.T.A.
recommended that the Pirtle offer be approved; the appellant heirs objected, insisting
that since they had ‘matched’ the Weston offer and had tendered earnest money, no
further offers or bids could be considered.
The trial court thereafter rendered a judgment reiterating that the estate was
insolvent; that the Administrator C.T.A. had brought the property ‘back into the estate’;
that when the heirs matched the Weston offer the matter was thereupon reopened; and
3
A hearing was held on the m otio n giving ris e to this Order, but the re is no transcript of it in
the record. In accordance with established law, we therefore treat this Order as having been entered
pursuant to and fully supported by the evidence.
4
If the Power of Attorney was properly terminated, as urged by the appellees, the appellants’
case must fail for that reason. But the issue is not crucial to a resolution of the case.
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that the best interests of the estate must be considered, which required the
consummation of the sale to Pirtle, whose offer was the best and highest received.
The five ‘appellant heirs’ appeal, and present these issues for review en haec
verba:
1. Whether the Purchaser Heirs had a contractual right to
purchase the real property which is the subject of this action
on terms approved by the trial court on November 5, 1996,
by virtue of the Purchaser Heirs’ exercise of a right of first
refusal purchase option previously granted and agreed to by
the all of the heirs of V. R. Mason, which right of refusal was
reaffirmed by the trial court on November 5, 1996.
2. Whether the trial court erred in holding that the Purchaser
Heirs’ exercise of their right of first refusal purchase option,
pursuant to the trial court’s November 5, 1996 ruling, had
the effect of opening up the subject property to purchase
offers from third parties.
3. Whether the trial court erred in holding that the Purchaser
Heirs’ right of first refusal was lost by virtue of a purported
revocation of a Limited Power of Attorney which contained
the right of first refusal, which revocation was executed by
some of the other heirs after the Purchaser Heirs had
executed their right of first refusal purchase option.
4. Whether the trial court erred (i) in finding that the Purchaser
Heirs were “speculating” in their purchase of the subject real
property; and (ii) in refusing to permit a sale to the
Purchaser Heirs on the basis of such perceived speculation.
At the outset, we observe that although the appellants filed no motion or other
pleading, we deduce from the entire record, including argument, that the relief they seek
is specific performance, i.e., that the Administrator C.T.A. should judicially be required
to convey the 160 acres to them, and that they should be allowed to purchase the
property.
Our review is de novo on the record of the trial court, accompanied with a
presumption of correctness unless the evidence otherwise preponderates. RULE 13(d)
Tenn. R. App. P. There is no presumption of the correctness of the decision of the trial
court on a question of law. NCNB Nat’l Bank v. Thrailkill, 856 S.W.2d 150 (Tenn. Ct.
App. 1993).
The thrust of the appellants’ argument is that when they ‘matched’ the Weston
offer the matter was at an end and the attorney-in-fact should be directed to convey the
property to them.
5
It is not disputed that they ‘matched’ the Weston offer to the extent they tendered
the required earnest money; 5 neither is it disputed that the Administrator C.T.A. was
authorized to execute the Purchase and Sale agreement, but no agreement was in fact
executed; neither is it disputed that the trial judge orally instructed the Administrator
C.T.A. to advise the heirs in accordance with the ten day provision of the Power of
Attorney. So far as the record reveals, the appellants made no attempt to match the
Pirtle offer.
We agree with the argument that it is a fundamental rule of property law that real
property passes directly to heirs at law or to devisees. Crook v. Crook, 345 S.W.2d 679(Tenn. 1961). But there are exceptions to this rule, one being that the real estate is
subject to the debts of the decedent if the personal property is insufficient to pay them.
The personal representative may sell the real estate to pay estate obligations if
authorized by the will, and if not, he must institute legal proceedings to accomplish that
purpose. Crook, supra.
Our view of the case does not require us to consider the implications inherent in
the language “brought back into the estate.” We are content to hold that when the
estate was adjudicated to be insolvent, essentially by agreement of the parties, it
remained at all times and for all purposes subject to the jurisdiction of the Probate Court.
Tenn. Code Ann. § 30-2-402, et seq. Moreover, we note that the Order of November
13, 1996 merely authorized the Administrator C.T.A. to execute an agreement; it did not
authorize him to approve a sale. The heirs were allowed to submit a matching offer, but
this fact did not vest in them an inalienable right. Any sale remained subject to judicial
approval, and even then, an approved sale is not complete until it has been confirmed
by the court which ordered the sale. Tenn. Marble & Brick Co. v. Young, 163 S.W.2d
71 (Tenn. 1942).
We struggle with the implied issue of whether the Power of Attorney is
enforceable. The estate had been adjudicated insolvent, and the heirs had no right to
interfere with or oust the jurisdiction of the Court, which was concerned with the sale of
5
There was unre butted testimony offered that the purch aser heirs - the appellants - were
m erely speculating, and could not arrange the requisite financing. The Court so found. We do not
dwell on this issue since it is presently irrelevant to a resolution of the case. Obviously, if they did not
have the requisite funds or cred it worthiness they could not, and thus d id not, match the offer.
6
the land and not the title interests of the heirs. But our resolution need not rest on the
nebulous validity of the Power of Attorney; to the contrary, we may assume its validity
at least to the extent it does not infringe upon the prerogative of the Probate Court to
deal with insolvent estates.
The language of the Power of Attorney is interesting. The attorney-in-fact is
authorized “to allow any of the undersigned to match any offer,” which we interpret to
mean that discretion is reposed in him to allow any heir to match an offer which he
would propose to accept. Even so, we reiterate that the authority of the Administrator
C.T.A. is absolutely subject to the superior right of the Probate Court.
As we have heretofore observed, there is no evidence in this record that the
appellants ‘matched’ the offer of Pirtle which was, prima facie, the highest offer, and
analysis proved it to be the highest and best offer. The Administrator C.T.A. was clearly
obligated to present all three offers to the Court; he could not, as attorney-in-fact, bind
the estate to the acceptance of any offer. In neither capacity could he usurp the
authority of the Probate Court.
It should be noted that the Power of Attorney granted no right of first refusal as
that term is commonly understood. The language employed - “to allow any of the
undersigned the right to match any offer” - does not give a right to purchase, and no
Order was entered so providing.
Finally, the granting of specific performance lies within the sound discretion of the
Court under the peculiar facts, T. J. Moss Tie Co. v. Hill, 235 S.W.2d 587 (Tenn. 1951);
Johnson v. Browder, 207 S.W.2d 1 (Tenn. 1947), and the appellants offered no
evidence whatever upon this point. While the issue of specific performance was never
directly propounded to the Probate Court, the thrust of the appellants’ argument on
appeal is directed to this issue. We find no abuse of discretion on the part of the trial
court in declining to hold that the appellants had a contractual right to purchase the
property.
The judgment is affirmed at the costs of the appellants.
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________________________________
William H. Inman, Senior Judge
CONCUR:
______________________________________
Henry F. Todd, Presiding Judge, Middle Section
______________________________________
William C. Koch, Jr., Judge
8