Norma Simpson, Individually and next of kin of J. W. Simpson v. Faye Fowler

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
Assigned on Briefs August 2, 2012
NORMA SIMPSON, individually and next of kin of J.W. Simpson
v. FAYE FOWLER, ET AL.
Direct Appeal from the Chancery Court for Obion County
No. 28,448 W. Michael Maloan, Chancellor
No. W2011-02112-COA-R3-CV - Filed August 28, 2012
This is an appeal from the trial court’s order, setting aside certain transfers by decedent to
Appellant. Decedent and Appellee were married, but had been separated for over twenty
years. Before his death, Decedent transferred certain property to his paramour, the Appellant
herein. When Decedent died, Appellee, his surviving, but estranged spouse petitioned the
court to set aside the transfers to Appellant under Tennessee Code Annotated Section 31-1-
105. The trial court made certain findings from the bench, but the trial court did not
incorporate these oral findings into its order as required under Tennessee Rule of Civil
Procedure 52.01, and specifically made no finding that Decedent acted fraudulently or with
intent to deprive Appellee of her share of the estate as required for application of Tennessee
Code Annotated Section 31-1-105. Accordingly, we vacate and remand to the trial court for
further proceedings.
Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Chancery Court Vacated
and Remanded
J. S TEVEN S TAFFORD, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.
Charles S. Kelly, Sr., Dyersburg, Tennessee, for the appellant, Faye Fowler.
Bruce S. Conley, Union City, Tennessee, for the appellee, Norma Simpson.
OPINION
Appellee Norma Simpson and J.W. Simpson (“Decedent”) were married on May 17,
1951. In October of 1967, the Simpsons were divorced but reconciled after eight months.
The Simpsons married again in June of 1968 and they lived together until about 1990, when
they again separated. At that time, Ms. Simpson moved into her mother’s home, and Mr.
Simpson remained in the marital residence. Although the Simpsons did not reconcile, neither
filed for divorce. Mr. Simpson did not support Ms. Simpson after their final separation,
except that Ms. Simpson continued her health insurance coverage under Mr. Simpson’s
policy.
In 1992 or 1993, Mr. Simpson began a relationship with Appellant Faye Fowler. Mr.
Simpson and Ms. Fowler never lived together, but were involved until Mr. Fowler’s death
on February 11, 2010. Mr. Simpson died intestate. During his relationship with Ms. Fowler,
sometime in 2005, Mr. Simpson changed the ownership of his bank account at First State
Bank to a joint account with right of survivorship with Ms. Fowler. Both Ms. Simpson and
Ms. Fowler testified that neither of them had written checks on this account during their
respective relationships with Mr. Simpson. Ms. Fowler testified that she neither deposited,
nor withdrew any funds from this account, and that she thought that the account funds were
comprised of Mr. Simpson’s pension and social security benefits. At the time of Mr.
Simpson’s death, the checking account had a balance of approximately $28,000. Mr.
Simpson also changed the beneficiary on both his MetLife Company, and Minnesota Life
Insurance Company life insurance policies to Ms. Fowler. The total benefit under both
policies was approximately $8,500. The insurance policies and the bank account totaling
approximately $36,500 are the disputed assets in this lawsuit.
On February 11, 2010, Ms. Simpson, individually and as next-of-kin of J.W. Simpson
filed a complaint and application for restraining order against Ms. Fowler, seeking to set
aside Decedent’s transfer of the First State Bank account funds, and the proceeds of the two
life insurance policies to Ms. Fowler. On February 25, 2010, the trial court granted Ms.
Simpson’s request for a temporary injunction, enjoining Ms. Fowler from using or
transferring any of the disputed funds. On March 10, 2010, Ms. Fowler filed her answer and
counter-complaint, seeking attorney’s fees and costs on the ground that Ms. Simpson’s
lawsuit was frivolous.
On May 17, 2011, the trial court conducted a bench trial. Following the trial, the court
held that the transfers to Ms. Fowler should be set aside under Tennessee Code Annotated
Section 31-1-105. On June 9, 2011, the trial court entered an order, which reads, in its
entirety, as follows:
This cause is before the Court on the 17th day of May
2011, on the Complaint of the Plaintiff, the Answer and
Counter-Complaint of the Defendant, the Answer to the
Counter-Complaint, the testimony of the parties and other
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witnesses, and from a consideration of the record and applicable
authorities.
It satisfactorily appears to the Court that Tennessee Code
31-1-105 is applicable to the facts and issues in this litigation,
and that the transfers of J.W. Simpson to Faye Fowler should be
set aside.
IT IS, THEREFORE, ORDERED BY THE COURT that
all transfers to Faye Fowler by J.W. Simpson, including the
survivorship account at First State Bank, the change of
beneficiary of policies at MetLife Company and Minnesota Life
Insurance Company are all set aside, and the funds from these
transfers are to be paid into the office of the Chancery Court
Clerk pending the administration of the Estate of J.W. Simpson.
Ms. Fowler filed a timely notice of appeal from this order. However, upon review of
the record, this Court determined that the June 9 order was not final as it did not adjudicate
Ms. Simpson’s request for treble damages or Ms. Fowler’s counter-complaint. In response
to our show cause order of March 1, 2012, the Appellant supplemented the appellate record
with an order, which was filed in the trial court on March 27, 2012. This order states, in
pertinent part, that Ms. Simpson’s “request for treble damages and [Ms. Fowler’s] counter-
complaint are both dismissed.” The order now appears final for purposes of this appeal as
all claims have been adjudicated.
The sole issue presented for review is whether the trial court erred in setting aside the
transactions made by Decedent to Ms. Fowler.
Because this case was tried by the court sitting without a jury, we review the case de
novo upon the record with a presumption of correctness of the findings of fact by the trial
court. Unless the evidence preponderates against the findings, we must affirm, absent error
of law. See Tenn. R. App. P. 13(d). However, “if the trial judge has not made a specific
finding of fact on a particular matter, we will review the record to determine where the
preponderance of the evidence lies without employing a presumption of correctness.” Forrest
Construction Co., L.L.C. v. Laughlin, 337 S.W.3d 211, 220 (Tenn. App. Ct. 2009) (citing
Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997)).
In the instant case, the trial court made the following, relevant comments from the
bench:
And the case law in support of that statute [i.e., Tenn. Code
Ann. 31-1-105] make[s] it clear that you don’t actually have to
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prove a fraudulent intent on the part of Mr. Simpson in this case,
but you look at the total factors from our case law as to whether
or not those conveyances were fraudulent and for the purpose of
defeating Mrs. Simpson in this case of her elective share and
widow’s rights.
So we have to look more at the effect of the transfer than
the purpose and intent of Mr. Simpson.
The court then proceeds to consider certain factors, including:
The numerous factors which the Court [has] to consider are, was
the transfer made without consideration. And Ms. Fowler was
very clear that. . .this was Mr. Simpson’s money, and she did not
put any money into the account. . . .
Number 2: the size of the transfer in relationship to the
total assets of Mr. Simpson. The proof in this case is this is the
bulk of his estate, so this was virtually all of the transfer of his
estate to Ms. Fowler.
Number 3: the time of the transfer and the death of the
donor spouse: This transfer was made in 2005. Mr. Simpson
died in the year 2010. Number 4: the relationship which existed
between the husband and the wife a the time of the transfer, and
they had been estranged for twenty years, without dispute.
Number 5: the source of which the property came from.
Again, it’s without dispute that Mr. Simpson contributed all the
money to this account and that Ms. Fowler did not contribute
any.
The court then concluded:
Now, taking all these factors into consideration, they
preponderate in favor of the plaintiff in this case in that this
transfer in effect—the effect of it did deprive Mrs. Simpson of
her statutory rights as a surviving widow of Mr. Simpson.
There are two problems with these proposed findings. First, none of them are
incorporated into the trial court’s order, see supra. Second, the trial court appears to
misapprehend the relevant law pertaining to Tennessee Code Annotated Section 31-1-105.
The trial court found that the effect of the transfer to deprive Ms. Simpson of her share of the
estate is sufficient to set the transfer aside under the statute. However, we hold that the
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statute requires that the trial court must also determine whether Mr. Simpson possessed the
intent to deprive Ms. Simpson of her share of the estate as well. We will address each of
these points of error.
“Findings” not Incorporated into Final Order
It is well settled that a court speaks through its orders. Palmer v. Palmer, 562 S.W.2d
833, 837 (Tenn. Ct. App. 1977). In Cunningham v. Cunningham, No.
W2006–02685–COA–R3–CV, 2008 WL 2521425 (Tenn. Ct. App. June 25, 2008), this
Court explained:
A judgment must be reduced to writing in order to be valid. It is
inchoate, and has no force whatever, until it has been reduced to
writing and entered on the minutes of the court, and is
completely within the power of the judge or Chancellor. A judge
may modify, reverse, or make any other change in his judgment
that he may deem proper, until it is entered on the minutes, and
he may then change, modify, vacate or amend it during that
term, unless the term continues longer than thirty days after the
entry of the judgment, and then until the end of the thirty days.
Cunningham, 2008 WL 2521425, at *5 (citing Broadway Motor Co ., Inc. v. Fire Ins. Co.,
12 Tenn. App. 278, 280 (1930)). Consequently, “[w]e do not review the court's oral
statements, unless incorporated in a decree, but review the court's order and judgments for
that is how a court speaks.” Id. Moreover, it is well settled that, in bench trials, courts must
make findings of fact and conclusions of law to support their rulings. Rule 52.01 of the
Tennessee Rules of Civil Procedure provides, in pertinent part:
In all actions tried upon the facts without a jury, the court shall
find the facts specially and shall state separately its conclusions
of law and direct the entry of the appropriate judgment. The
findings of a master, to the extent that the court adopts them,
shall be considered as the findings of the court. If an opinion or
memorandum of decision is filed, it will be sufficient if the
findings of fact and conclusions of law appear therein.
Id. Prior to July 1, 2009, trial courts were only required to make specific findings of fact and
conclusions of law “upon request made by any party prior to the entry of judgment.” See
Poole v. Union Planters Bank N.A., No. W2009–01507–COA–R3–CV, 337 S.W.3d 771,
791 (Tenn. Ct. App. 2010) (noting the amendment). However, the current version of Rule
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52.01 requires the court to make these findings regardless of a request by either party. Id.
This Court has previously held that the General Assembly's decision to require
findings of fact and conclusions of law is “not a mere technicality.” In re K.H., No.
W2008–01144–COA–R3–PT, 2009 WL 1362314, at *8 (Tenn. Ct. App. May 15, 2009).
Instead, the requirement serves the important purpose of “facilitat[ing] appellate review and
promot[ing] the just and speedy resolution of appeals.” Id.; White v. Moody, 171 S.W.3d
187, 191 (Tenn. Ct. App. 2004); Bruce v. Bruce, 801 S.W.2d 102, 104 (Tenn. Ct . App.
1990). “Without such findings and conclusions, this court is left to wonder on what basis the
court reached its ultimate decision .” In re K.H., 2009 WL 1362314, at *8 (quoting In re
M.E.W., No. M2003–01739–COA–R3–PT, 2004 WL 865840, at *19 (Tenn. Ct. App. April
21, 2004)).
Generally, the appropriate remedy when a trial court fails to make appropriate findings
of fact and conclusions of law pursuant to Rule 52.01 is to “vacate the trial court's judgment
and remand the cause to the trial court for written findings of fact and conclusions of law.”
Lake v. Haynes, No. W2010–00294–COA–R3–CV, 2011 WL 2361563, at * 1 (Tenn. Ct.
App. June 9, 2011). However, this Court has previously held, that when faced with a trial
court's failure to make specific findings, the appellate courts may “soldier on” when the case
involves only a clear legal issue, Burse v. Hicks, No. W2007–02848–COA–R3–CV, 2008
WL 4414718, at *2 (Tenn. Ct. App. Sept. 30, 2008), or when the court's decision is “readily
ascertainable.” Burgess v. Kone, Inc., No. M2007–0259–COA–R3–CV, 2008 WL 2796409,
at * (Tenn. Ct. App. July 18, 2008). Unfortunately, that is not possible in this case.
Although the trial court’s statements from the bench provide guidance as to its thought
process, we conclude that the court misconstrued the relevant case law concerning Tennessee
Code Annotated Section 31-1-105. Specifically, the court did not make a definite finding
that Mr. Simpson intended to commit fraud or to otherwise deprive Ms. Simpson of her share
of his estate. Although we have attempted to “ soldier on ” in an effort to resolve this matter
we have determined that, based on the unique facts of this case, we should not be the initial
decision-maker on whether Mr. Simpson possessed the requisite intent required by the
statute. See Alsip v. Johnson City Med. Ctr., No. E2004-00831-COA-R9-CV, 2005 WL
1536192, at *7 (Tenn. Ct. App. June 30, 2005) (describing this Court as “an error-correcting
intermediate appellate court”).
No Finding of Fraud or Intent to Deprive Ms. Simpson of her Elective Share
Tennessee Code Annotated Section 31-1-105 provides:
Any conveyance made fraudulently to children or others, with
an intent to defeat the surviving spouse of the surviving spouse's
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distributive or elective share, is, at the election of the surviving
spouse, includable in the decedent's net estate under §
31-4-101(b), and voidable to the extent the other assets in the
decedent's net estate are insufficient to fund and pay the elective
share amount payable to the surviving spouse under §
31-4-101(c).
Cases that have previously dealt with this issue make it clear that the gravamen of this
action is whether the decedent spouse intended to practice fraud on the surviving spouse. In
Finley v. Finley, 726 S.W.2d 923 (Tenn. Ct. App. 1986) the Court set forth the following
factors to be considered in determining if a conveyance has been made with fraudulent intent.
These factors include: (1) the consideration given for the transfer, (2) the size of the transfer
in relation to the decedent’s total estate, (3) the time between the transfer and the transferor's
death, (4) the relations which existed between the spouses at the time of the transfer, (5) the
source from which the property came, (6) whether the transfer was illusory, and (7) whether
the surviving spouse was adequately provided for in the will. Id. at 924.
In Warren v. Compton, 626 S.W.2d 12 (Tenn. Ct. App. 1981), this Court dealt with
the same issue, and stated:
However, we do not limit our considerations to those factors
alone. Circumstances which establish fraudulent intent are as
varied as the ingenuity of the human mind may devise. All facts
and circumstances surrounding the transfer must be considered.
Id. at 17. Furthermore, as stated in Sherrill v. Mallicote, 417 S.W.2d 798 (Tenn. Ct. App.
1967): “In cases of this type there can be no fixed rule of determining when a transfer or gift
is fraudulent . . . each case must be determined on its own facts and circumstances.” Id. at
802.
As set out in its ruling from the bench, the trial court held that the case law
interpreting Tennessee Code Annotated Section 31-1-105 “make[s] it clear that you don’t
actually have to prove a fraudulent intent. . .but you look at the total factors from our case
law as to whether or not those conveyances were fraudulent, and for purposes of defeating
[the surviving spouse] of her elective share and widow’s rights.” This statement indicates
a misapprehension of the relevant law. In order to set aside a conveyance under Tennessee
Code Annotated Section 31-1-105, there must be a finding of fraud or intent to defeat the
surviving spouse’s elective share. In fact, this inquiry is the gravamen of the case. Although
the trial court must find fraud or intent to defeat, the trial court is correct that the factors it
may consider are quite varied. Those factors, however, must support a finding of fraud or
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intent on the part of the decedent spouse and the trial court must make this finding. Here, the
trial court looked only to the “effect” of the transfers, but did not go further and determine
whether the “effect” of the transfers established the required statutory intent. In so doing,
it appears that the trial court relied upon a portion of this Court’s opinion in Sherrill v.
Mallicote, 417 S.W.2d 798 (Tenn. Ct. App. 1967), wherein we stated, in relevant part, that:
Intention and purpose are not necessarily the controlling factors
in determining whether a transfer is fraudulent. One must take
into consideration the effect of the transfer. In other words, if
the properties transferred prior to death are of such a quantity in
relation to the total estate as the widow is substantially deprived
of that which she would otherwise take under our statutes, then
from such a transfer fraud may be presumed under certain
conditions and circumstances.
Id. at 803. While the effect of the transfer is certainly a relevant consideration, even if the
effect of the disputed transfer is to deprive the surviving spouse of his or her share of the
estate, the court must still find that the decedent’s intent was to do so. See id. (setting aside
the conveyance because the facts showed that the “transfer was made with the fraudulent
intent to defeat the widow of her distributive share”).
This interpretation is supported by Warren v. Compton, which discusses the
application of the statues in effect prior to the enactment of Tennessee Code Annotated
Section 31-1-105:
The courts of Tennessee have interpreted the foregoing
statutes to apply only to conveyances made by the husband with
the actual intent to defeat the widow of her dower interest in the
land conveyed, which intent may be inferred from
circumstantial evidence. Hughes’ Lessee v. Shaw[,] 8 Tenn.
323 [(Tenn. 1872)]. The lack of full consideration standing
alone is not sufficient evidence to infer an intention to defraud.
McIntosh v. Ladd[,] 20 Tenn. 459 [(Tenn. 1840)].
Warren, 626 S.W.2d at 15–16 (emphasis added); see also Pritchard on the Law of Wills and
Administration of Estates, Chapter 20-24, § 835 n.32 (2009) (“Intent to defraud surviving
spouse must be clear, though it need not be expressly stated.”) (citing Hughes’ Lessee v.
Shaw, 48 Tenn. 323, 1827 WL 672 (Tenn. 1827)). The Warren court noted that the statute
has been “drastically changed since its enactment[,]” but that the requirement of
intentionality remains the same:
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Obviously, the statute has been drastically changed since
its enactment in 1784. It now applies to the surviving spouse
instead of to the widow, and it applies to the rights of the
surviving spouse in a distributive or elective share in the entire
estate of the deceased spouse. There is, however, one aspect of
the statute that has remained constant, namely, before the statute
is applicable the transfer of property must have been made
fraudulently with an intent to defeat the rights of the
complaining spouse. Case law under the prior statutes on the
issue of what is a fraudulent transfer with an intent to defeat the
rights of the complaining spouse will govern.
Warren, 626 S.W.2d at 16. One such case is Hughes’ Lessee v. Shaw, wherein the
Tennessee Supreme Court inferred that the decedent intended to defraud his surviving spouse
by giving all his property to his son, based not on any proof as to the decedent’s state of mind
at the time of the transfer, but as to the circumstances surrounding and effect of the transfer:
Now the fact of her being defeated of dower is
conclusively demonstrated by this proof; for, the son getting all,
she can get none. Is not the intent fraudulently to defeat her right
shown as conclusively? Must he not have intended that she
should get none, when he conveyed all to another? and must it
not have been done fraudulently as to her, as it occurred without
the presence of necessity, being without any valuable
consideration, and when he knew it would deprive his wife of
that provision for her support which the law provides for her?
There can be but one answer to these inquiries.
Hughes’ Lessee, 1827 WL 672, at *3. Relying on Hughes’ Lessee and other cases, the
Warren court held that:
[T]he only time the statute is applicable is where there is a
fraudulent transfer with the intent to deprive the
surviving-spouse of his or her share of the estate of the
donor-spouse. If a transfer is in fact illusory,1 that is one factor
1
“The word ‘illusory’ is defined in Black's Law Dictionary, page 918, 3rd Edition (1933), as
‘deceiving by false appearances; nominal as distinguished from substantial.’ As used in defining a transfer
(continued...)
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to consider in determining the intent of the donor-spouse, but
the intent to defeat the rights of the surviving-spouse must be
found to exist at the time of the transfer in order to make the
statute applicable.
Warren, 626 S.W.2d at 17 (emphasis added).
Accordingly, under a proper application of Tennessee Code Annotated Section
31-1-105, the trial court should consider the objective factors as set forth in Finley, as well
as any other relevant considerations, to determine whether the decedent in fact intended to
commit fraud or intentionally deny the surviving spouse of his or her share of the estate. See
Finley v. Finley, 726 S.W.2d 923, 925 (Tenn. Ct. App. 1986) (noting that the court should
consider whether the facts supporting each factor “may be taken as an indication of fraud”).
Consequently, the court may rely upon the effect of the transfer, but must actually find that
the effect of the transfer supports a finding of intent to deprive on the part of the decedent
spouse. Here, the trial court makes no such finding. Rather, the court simply concluded that
because the “effect” of the transfer was to deprive Ms. Simpson of her widow’s share of the
estate, that finding was sufficient to set aside the transfers. While it may be true that the
transfers worked to deprive Ms. Simpson of her widow’s share, without a finding of intent
to accomplish this result on the part of Mr. Simpson, the fact that the transfer lessened Ms.
Simpson’s share of the Decedent’s estate is not sufficient to set aside the transfers under
Tennessee Code Annotated Section 31-1-105. See McClure v. Stegall, 729 S.W.2d 263(Tenn. Ct. App. 1987) (holding that the surviving spouse failed to prove that the decedent
intended to deprive her of her distributive share by placing over $150,000.00 in certificates
of deposit in the decedent’s mother’s name). Because the trial court did not make a specific
finding of fraud or intent to deprive, it is impossible for this Court to review the trial court’s
order in any meaningful way.
Our holding here does not preclude the trial court from allowing the parties to offer
more, or different, evidence. Although we concede that the trial court may reach the same
conclusion, it is required to make specific findings of fact and conclusions of law in its order,
including (if the same outcome is reached) a finding that Mr. Simpson’s intent, in making
the transfers to Ms. Fowler, were for purposes of fraud or were made with intent to deprive
Ms. Simpson of her share of the estate.
1
(...continued)
of property we treat the word as meaning that the transferor retained such elements of ownership and control
over the property as renders the purported transfer deceptive, incomplete and misleading-a pretended transfer
rather than a real transfer.” Warren, 626 S.W.2d at 19.
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For the foregoing reasons, we vacate the trial court’s order and remand for further
proceedings as may be necessary and are consistent with this opinion. Costs of this appeal
are assessed one-half to the Appellant, Faye Fowler, and her surety, and one-half to the
Appellee, Norma Simpson, for which execution may issue if necessary.
________________________________
J. STEVEN STAFFORD, JUDGE
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