Wells v. Dickens

162 S.E.2d 552 (1968) 274 N.C. 203

Josie M. WELLS, Guardian of Redmond S. Wells
v.
Lillian Kent DICKENS; Paul V. Parks, Jr.; and the Planters National Bank & Trust Company and Lillian Kent Dickens, Ancillary and Co-Executors of the Estate of Pearl K. Wells.

No. 277.

Supreme Court of North Carolina.

August 23, 1968.

Poyner, Geraghty, Hartsfield & Townsend, and William R. Allen, III, Raleigh, for plaintiff appellant.

Battle, Winslow, Scott & Wiley, and F. E. Winslow, Rocky Mount, for defendants appellees.

SHARP, Justice.

Assuming the truth of plaintiff's allegations, the first question presented by this appeal is: Does the will of testatrix impose upon plaintiff the obligation to choose between a one-third interest in fee in the Cobb Farm and the fee in the onethird undivided interest in the property devised to him in Item 8 of testatrix' will?

The complaint alleges: (1) Wells conveyed the Cobb Farm to testatrix by deed of gift. Before and at the time of the conveyance she agreed with him that she would hold the land for the benefit of Wells' three children, subject to her use of it during her lifetime, and that she would devise the farm to the three children share and share alike. (2) In breach of the trust, testatrix devised the Cobb Farm to defendants Dickens and Parks.

At this stage in the litigation no evidence tending to prove the allegations has been offered, and the alleged trust is denied. The complaint, however, alleges the creation of a valid express trust. "When the grantee in a deed, conveying the legal title to land, promises, at or before so acquiring the legal title, to hold it for the benefit of a third person, or declares that he will hold the land in trust for such third person, a valid, express trust is thereby created though the deed contains no provision with reference to any right of such third person. * * * Such trust may be established by parol evidence which is clear, strong, and convincing." Colwell Electric Co. v. KaleBarnwell Realty & Construction Co., 267 N.C. 714, 719, 148 S.E.2d 856, 859-860. An agreement that a third-party beneficiary shall have land at the death of the promisor implies his promise to devise or convey the property so as to effectuate the contract between the promisor and the promisee. Ledingham v. Bayless, 218 Md. 108, 145 A.2d 434, and the authorities cited therein at 116, 145 A.2d at 439.

The record evidence offered by defendant, and the facts found by the court establish that testatrix devised to defendants the Cobb Farm and to plaintiff, a one-third interest in fee in all the North Carolina farm property included in the corpus of the Pearl K. Wells Trust over which she had the power of appointment. Had she not exercised her power, at the time of her death, the one-third interest in the property, which she devised to plaintiff in fee, would have vested in defendant Bank as trustee for plaintiff for life, remainder in fee to plaintiff's heirs at law. Testatrix, however, had an unlimited power of appointment; she could have devised the property to defendants, to her estate, to any persons or institutions of her choice. First National Bank of Nevada v. Wells, 267 N.C. 276, 148 S.E.2d 119.

The doctrine of equitable election, as applied to wills, has been stated many times in our decisions. In Haley v. Pickelsimer, 261 N.C. 293, 302, 134 S.E.2d 697, 704 it is said:

"In Elmore v. Byrd, 180 N.C. 120, 122, 104 S.E. 162, 163, Walker, J., in a statement often quoted in subsequent decisions, says: ``An election, in equity, is a choice which a party is compelled to make between the acceptance of a benefit under a written instrument, and the retention of some property already his own, which is attempted to be disposed of in favor of a third party by virtue of the same paper. The doctrine rests upon the principle that a person claiming under any document shall not interfere by title paramount to prevent another part of the same document from having effect according to its construction; he cannot accept and reject the same writing.' (Our italics). In Lamb v. Lamb, 226 N.C. 662, 665, 40 S.E.2d 29, 31, Seawell, J., in accord with prior cited cases, states: ``The doctrine of election, as applied to wills, is based on the principle that a person cannot take benefits under the will and at the same time reject its adverse or onerous provisions; cannot, at the same time, hold under the will and against it. (Citations). The intent to put the beneficiary to an election must clearly appear from the will. (Citations). The propriety of this rule especially appears where, in derogation of a property right, the will purports to dispose of property belonging to the beneficiary and, inferentially, to bequeath or devise other property in lieu of it.' (Our italics). Thus, as stated in Honeycutt v. Citizens National Bank [in Gastonia] 242 N.C. 734, 744, 89 S.E.2d 598, 606; ``An election is required only when the will confronts a beneficiary with a choice between two benefits which are inconsistent with each other.'"

Nothing else appearing, when a testator purports "to devise specific property, not owned by him, to a person other than the true owner, and provides other benefits for the owner of such specific property, such beneficiary is put to his election. Sandlin v. Weaver, 240 N.C. 703, 83 S.E.2d 806; Wachovia Bank & Trust Co. v. Burrus, 230 N.C. 592, 55 S.E.2d 183. Even so, if it appears that the testator erroneously considered the specific property so devised to be his own, no election is required. Byrd v. Patterson, supra [229 N.C. 156, 48 S.E.2d 45]; Benton v. Alexander, 224 N.C. 800, 32 S.E.2d 584, 156 A.L.R. 814; Elmore v. Byrd, 180 N. C. 120, 104 S.E. 162." Honeycutt v. Citizens National Bank [in Gastonia] 242 N.C. 734, 744, 89 S.E.2d 598, 606. Accord, Lovett v. Stone, 239 N.C. 206, 79 S.E.2d 479, 60 A.L.R. 2d 780.

Plaintiff's allegations that testatrix held the Cobb Farm, which she devised to defendants, in trust for plaintiff, his brother, and his sister, establish that testatrix attempted to devise specific property to others than the true owners. When she devised to plaintiff a fee in other property, of which she could have deprived him entirely and in which he would have taken only an equitable life estate had she not exercised her power, testatrix provided for him, the owner of the specific property she purported to devise to defendants, a substitute benefit. (Plaintiff's brother and sister, however, took no new estate by testatrix' appointment; she devised them the same estate they would have taken under the Pearl K. Wells Trust had she not exercised her power.)

Under plaintiff's allegations, testatrix could not have considered the Cobb Farm as her own, for he avers that she entered into an express contract with Wells to devise the Cobb Farm to his three children. Obviously, therefore, in devising trust property to defendants in fee simple, free from the trust and in contradiction of its terms, she repudiated the trust. Sandlin v. Weaver, 240 N.C. 703, 83 S.E.2d 806.

The circumstances attending the devise of the Cobb Farm to defendants and of plaintiff's share in the remainder of the Pearl K. Wells Trust to him in fee do not appear upon the face of the will but, when they are known, the terms of the will clearly reveal testatrix' intention to put plaintiff to an election. Although it is always desirable that a testator spell out his intention to put a devisee to an election, this is not required when the nature of his dispositions manifests that intent. See Wilson v. Safe Deposit & Trust Co., 183 Md. 245, 37 A.2d 321, 152 A.L.R. 892.

The doctrine of election can be enforced against persons under disability, Earnhardt v. Clement, 137 N.C. 91, 49 S.E. 49, McQueen v. McQueen, 55 N.C. 16, Robertson v. Stephens, 36 N.C. 247. The will required plaintiff to elect between the one-third interest he claims in the Cobb Farm and the property which testatrix devised him in Item 8 of her will. Thus the answer to the first question is YES.

The second question presented is: Has plaintiff made a binding election to take a fee simple interest in the property which testatrix devised him in lieu of a one-third interest in the Cobb Farm?

The trial judge found as a fact that plaintiff had accepted the fee testatrix devised to him. He held as a matter of law that in so doing plaintiff had made his election and estopped himself from asserting any claim to the Cobb Farm. If plaintiff were competent, his dealings with the devised property (as conducted by his guardian) would imply his election to accept the devise, 97 C.J.S. Wills § 1272 (1957), and support the court's findings of fact:

(1) In the action for a declaratory judgment, which plaintiff (by his guardian, Josie M. Wells), Alice Wells Romanek, and William M. Wells, Jr., instituted on 5 October 1964 against defendant Bank as trustee under the Pearl K. Wells Trust and as ancillary administrator of Wells' estate in North Carolina, defendant Bank and defendant Dickens as co-executors of testatrix' estate in North Carolina, defendant Dickens individually et al., plaintiff made specific allegations as to his rights under testatrix' will. He sought a judicial decree that under Item 8 he acquired his share of the property therein devised in fee, freed of the R. S. Wells Trust. He thereby evidenced an intention to take under the Item-8 devise if the court decided in accordance with plaintiff's contentions. 97 C.J.S. Wills § 1276 (1957); 57 Am.Jur. Wills § 1542 (1948). Plaintiff prevailed in that action when this Court construed the will in accordance with his position. Wells v. Planters National Bank & Trust Co., supra. Had plaintiff lost, the unsuccessful assertion of his claim would not have amounted "to a conclusive election for or against it, the theory being that where such a claim is proven groundless it is conclusively shown that the beneficiary was not in possession of two inconsistent rights and hence was under no duty to make an election. * * *" 57 Am.Jur. Wills § 1542 (1948). Extended discussion of the effect of plaintiff's participation in the action is unwarranted in view of his incompetency. See, however, Annot., Election by beneficiary to take under or against will as predicable upon initiation of, or participation in, court proceedings, 166 A. L.R. 316, 330-332 (1947) and Annot., 93 A.L.R. 2d 8, 43-45 (1964).

(2) In Wells v. Planters National Bank & Trust Co., supra, plaintiff, his brother, and his sister sought a decree that they were entitled to the whole of the rents which accrued from the trust property during the year of testatrix' death. The decision was that the rents from the property be apportioned between testatrix' personal representatives and the remaindermen, that is, plaintiff, his brother, and his sister. Doubtlessly, these rents have been paid to the remaindermen. When the beneficiary chooses to accept one of two inconsistent benefits, such choice is tantamount to the rejection of the other. Wachovia Bank & Trust Co. v. Burrus, 230 N.C. 592, 55 S.E.2d 183.

(3) On 20 April 1965, the personal representatives instituted an action in Wake County to recover from plaintiff the pro rata part of the federal-estate tax attributable to the property he received under Item 8 of testatrix' will. A judgment— which this Court upheld on 11 May 1966 in First National Bank of Nevada v. Wells, 267 N.C. 276, 148 S.E.2d 119—was rendered against plaintiff for his proportionate share of the tax, $21,956.72 with interest from varying dates on sums making up that total. We take judicial notice of our records in prior interrelated actions, Haley v. Pickelsimer, supra. The record in that case shows no contention by plaintiff that he had not accepted the Item-8 devise.

Thus, were plaintiff competent, the answer to the second question would be YES, and the ruling of the court that plaintiff was estopped to claim an interest in the Cobb Farm would be sustained. Plaintiff, however, is an incompetent, and his guardian could not make an election for him without the direction and approval of the judge of the Superior Court. This she has not obtained; the answer to the second question, therefore, must be NO. Weeks v. Weeks, 77 N.C. 421; Flippin v. Banner, 55 N.C. 450; McQueen v. McQueen, supra. See Price v. Price, 133 N.C. 494, 510, 45 S.E. 855, 860. "[T]here is no dissent from the proposition that in the absence of express statutory authority, the guardian or committee of an incompetent cannot make an election in behalf of the ward to take under or against the will of a deceased person. * * * The election in behalf of the infant or incompetent must be made by or with the consent of a court having jurisdiction of the ward's estate. * * *" 25 Am.Jur. Guardian and Ward § 104 (1940); 97 C.J.S. Wills § 1247 (1957); 5 Page, Wills § 47.18 (BoweParker rev. ed. 1962); Gardner, Wills § 174 (1903); 1 Jarman, Wills ch. XVI § VII, p. 554 (6th ed. 1910); Pritchard, Wills and Administration § 754 (1894); Thompson, Law of Wills § 477 (2d ed. 1936); 2 Underhill, Law of Wills § 737 (1900); Annot., Election on behalf of incompetent to take under or against will, 147 A.L.R. 336 (1943) supplementing 74 A.L.R. 452 (1931).

When an election is required of one under disability, upon the petition of his guardian, or other interested party, the judge will hear such evidence as will enable him to determine which election is in the ward's best interest. If he deems it necessary, the judge may appoint a special master to take an account, hear evidence, and report his findings and recommendations to the court. After he has ascertained the facts, explored the consequences to the ward of the alternative choices, and determined which choice is in the ward's best interest, the judge will make appropriate findings of fact and enter an order directing the guardian what election to make.

In Flippin v. Banner, supra, an election was required of an infant whether he would claim under or against a will. Battle, J., speaking for the Court, said, "As to the defendant Robert W. George, who is an infant, there must be a reference to the master, to enquire and ascertain the value of both interests, and then the Court will direct what election shall be made for him." Id. at 455. In McQueen v. McQueen, supra at 20, the same judge said, "That the parties who are required to elect in this case are infants, will not prevent an election from being decreed. * * * The Court will in such cases refer it to the master to enquire and ascertain the value of both interests, and then direct what election shall be made." In Weeks v. Weeks, supra at 424, Rodman, J., for the Court, said: "In case any of the parties put to an election are under a disability, the court will order a reference to ascertain what is to their advantage, and if an account be necessary for that purpose, will order one."

Until plaintiff brought this action the court had no knowledge that he claimed any interest in the Cobb Farm. His guardian has apparently preceded upon the assumption that no election was required of her ward, and that he could take both a fee in his share of the trust property and one-third of the Cobb Farm if he could establish his claim. He cannot. Noyes v. Noyes, 233 Mass. 55, 123 N.E. 395. He must elect, but he cannot elect until the validity of his claim to the Cobb Farm is established. At the present time he has no estate in the Cobb Farm. According to the records in the office of the Register of Deeds of Wilson County, testatrix owned in fee simple the land, which she devised to defendants. Plaintiff now has nothing but a mere claim that he is one of the three beneficiaries of a parol trust—a claim which he will be required to establish by evidence which is clear, strong, and convincing, and which might be defeated when brought to trial. To put the donee of a benefit under a will to an election, two things are essential: the testator must give property of his own and he must profess to dispose of property belonging to the donee. Haley v. Pickelsimer, supra; Lamb v. Lamb, 226 N.C. 662, 40 S.E.2d 29; Elmore v. Byrd, 180 N.C. 120, 104 S.E. 162.

In Haley v. Pickelsimer, supra, this Court held that a minor plaintiff's unsuccessful prior action to establish rights based on an alleged contract for her benefit between testator and her mother constituted neither a dissent from the will nor a forfeiture of the bequest made to her therein. Accord, Langan Realty Co. v. Dixon, 46 S.D. 170, 191 N.W. 444.

In Lamar v. McLaren, 107 Ga. 591, 34 S.E. 116, the testator devised stock in a number of drugstores to certain individuals and directed his executors to operate the stores for five years after his death and to distribute the profits annually among his legatees. Henry J. Lamar, one of the executors and legatees claimed to have been a partner in the businesses and entitled to a one-third interest therein. The executors sought the direction of the court, inter alia, whether the said Henry J. Lamar was "put to his election to choose either under said will or against said will, or whether the fact of said alleged ownership by him and claim by him constituted a case for election under said will." Id. at 592, 34 S.E. at 116. (Emphasis added.) The trial court declined to permit Henry J. Lamar to submit evidence to establish his interest as a partner in the businesses and decreed that he be put to his election whether he would claim under the will, as a legatee, or against the will as a partner. Upon appeal, the Supreme Court held that the will clearly manifested the testator's intent to dispose of the entire drug business which he had conducted and that Henry J. Lamar could not occupy the position of both surviving partner and legatee. The other legatees, however, denied that he had an interest in the businesses. The court said: "* * * Until this issue had been passed upon and it had been adjudicated that he in fact had an interest in such business, he should not have been called upon to make an election. Unless he owned an interest in the property which the testator affected to dispose of, the principle of election did not apply. For, in order to put the donee of a benefit under a will to an election, two things are essential: first, the testator must give property of his own; second, he must profess to dispose of property belonging to his donee. * * * (Devisee) must have legal title to both benefits and have the right to enforce either at his election. * * * Now, if Henry J. Lamar, Jr. were required to elect between his legacy under the will and his mere claim to an interest in the business of H. J. Lamar & Sons (that is, between his legacy and a lawsuit) and he should elect to take his claim, or the court should force him so to elect, and he should, upon a subsequent trial for the enforcement of his claimed partnership interest, fail, for any reason, to establish the same, then there would be no one to compensate, as in such event there would be no defeated or disappointed legatees, but, on the contrary, the other legatees would get the very property he claimed. Inasmuch, therefore, if Henry J. Lamar, Jr. does not in fact own an interest in the business of H. J. Lamar & Sons, one of the essentials of an election is wanting and the rule is inapplicable, we direct that he be not called upon to make an election until after there has been in this case an adjudication of the question whether or not he is in fact the owner of an interest in the property of the business of H. J. Lamar & Sons, disposed of by the will, and then only in the event this issue is determined in his favor." Id. at 604-605, 34 S.E. at 121. Accord, Rieves v. Smith, 184 Ga. 657, 192 S.E. 372, 112 A.L.R. 368.

In Holliday v. Pope, 205 Ga. 301, 53 S.E.2d 350, the plaintiff alleged that the testatrix contracted to devise him certain real estate in consideration of his agreement to make his home with her and render her such assistance as she required. The testatrix devised the specific property, which the plaintiff alleged she had agreed to give him, to the defendant, and gave the plaintiff other property. In plaintiff's suit against the devisee and executor for specific performance of the testatrix' alleged contract, he contended that the plaintiff could not maintain the action because he had "not renounced his legacy under the will." Relying upon Lamar v. McLaren, supra, the court said: "The petitioner now has a lawsuit, a mere claim, which might be defeated when brought to trial * * *." The decision was that he would be required to elect "only when by a judgment of the court the petitioner acquires legal title to the property which he seeks; and by the very act of praying for and obtaining such a decree of title the petitioner will have thereby made an election to renounce his legacy under the will * * *. [T]he petitioner is not required to make an election at this time, and the election to take the title by specific performance of the contract when that is an accomplished fact will deny to him any right or title in the property given him under the will." Id. at 311-312, 53 S.E.2d at 357. (Italics ours.)

A different conclusion was reached in Elmore v. Covington, 180 Tenn. 128, 172 S.W.2d 809, wherein the court said that claimant-devisees "will not be permitted to bargain with a dead man"; that they must elect between accepting the devise and prosecuting a suit for damage for breach of contract to make a will.

In our opinion, the Georgia court, in Holliday v. Pope, supra, has found the correct solution to the problem which arises when a beneficiary is required to elect between a devise or bequest and property devised to a third person to which he has an unadjudicated claim. The devisee-claimant is not required to elect until his claim has been adjudicated in his favor, but, when this has been done, "obtaining such a decree of title" constitutes his election to take the property for which he sued. This is also the solution suggested by the author of Annot., Necessity of election between will and contract by testator to leave property at death, 152 A.L.R. 898 (1944), wherein it is said: "* * * In the ordinary noncontract case, where the devisee is required to elect merely as between his own property and that which the will offers in exchange, a fair choice is presented, for it is plain that he will receive either one or the other. But, if, in the case of a contract claimant who has not actually received or accepted what the will offers, the doctrine of election is to be so applied as to require him to reject wholly and finally the provisions of the will before seeking to establish the contract— that is, if he is required to choose in advance between a meager certainty and the expense and uncertainties of litigation founded on parol evidence—a fair choice is not presented. As so applied, the ``equitable' doctrine of election may become inequitable; it has the merit of discouraging litigation, but not the merit of encouraging honorable dealing. Armed with a doctrine extended to that point, a testator may easily drive a hard bargain in avoidance of his contracts.

"It should be sufficient that the claimant is not permitted to take both under the will and against it, and that in arriving at a solution of his problem no substantial injury is occasioned to other distributees. The matter might be dealt with in a manner analogous to that permitted in the case of contracts claimed to be subject to a right of rescission. If the will and the claimed contract are irreconcilable and the claimant takes under the will, he abandons the contract; but if he attempts to establish the alleged contract (as a rescinder attempting to establish fraud) and fails therein, he should be permitted to take what the will gives him, with or without an imposition of equitable terms." Id. at 898-899. See statement of Ruffin, J., in Dunlap v. Ingram, 57 N.C. 178, 188.

Since plaintiff has not made a binding election, and since he must elect between the fee devised him in Item 8 and the interest he claims in the Cobb Farm (assuming he is able to establish that claim), plaintiff's guardian must obtain the court's direction as to which choice she will make. It follows that she must secure the consent of the court to continue the prosecution of this action further, for, if she obtains a judgment establishing the trust which she has alleged, the election is made. If she loses, however, plaintiff will still retain the devise.

In order to decree the election which the guardian shall make, the court must determine, as a question of fact, which choice is in her ward's best interest. Necessarily, therefore, the judge must consider the relative value of plaintiff's interest in the two properties and the income therefrom, as well as any other relevant factors which may bear upon the question. See Annot., Factors considered in making election for incompetent to take under or against will, 3 A.L.R. 3d 6 (1965). Inter alia, pertinent consideration here would include plaintiff's chances of obtaining a judgment establishing the trust he has alleged; the cost of the litigation; the effect of such a judgment upon plaintiff's liability for State inheritance and federal-estate taxes—liabilities which have heretofore been established for the devised property; and the financial consequences of incorporating the Item-8 property into the corpus of the R. S. Wells Trust. To evaluate plaintiff's claim to the Cobb Farm, the judge must inquire into the evidence upon which plaintiff will rely to establish the allegations of the complaint in this action.

The judgment of the Superior Court will be vacated and the case remanded for proceedings in accordance with this opinion. Any statements in Price v. Price, 133 N.C. 494, 510, 45 S.E. 855, 860, which may seem to conflict with the conclusion which we have reached, were not necessary to the decision of that case. In Price, the jury's verdict established that the testator's will complied with his contract to devise property in suit. Therefore, no question of election was involved. See comment on Price in Annot., 152 A.L.R. 898, 901 (1944).

Alice Wells Romanek and William M. Wells, Jr., as pointed out by defendants, were not made parties to this action. In the event the court should authorize plaintiff to proceed with this action, it would appear desirable that they be made parties to the end that the individual defendant's title to the Cobb Farm may be adjudicated in one suit. Allred v. Smith, 135 N.C. 443, 47 S.E. 597, 65 L.R.A. 924; Annot., Privity between co-tenants for purposes of doctrine of res judicata, 169 A.L.R. 179 (1947); 1 McIntosh, N.C. Practice and Procedure § 643 (2d ed. 1956).

The costs of this appeal will be divided equally between plaintiff and the individual defendants. Upon the allegations of the complaint, we perceive no theory upon which the executors of Pearl K. Wells are proper parties to this action. "Title to land of decedents does not vest in their executors but in their heirs-at-law or devisees." Hinkle v. Walker, 213 N.C. 657, 658, 197 S.E. 129. See Parker v. Porter, 208 N.C. 31, 179 S.E. 28; Williams v. Hooks, 200 N.C. 419, 157 S.E. 65.

Reversed and remanded.

BRANCH and HUSKINS, JJ., took no part in the consideration or decision of this case.