Noland v. Noland

Jerry NOLAND and Anita Delores Shaver,
Trustees of the Wesley E. Noland Irrevocable
Trust, et al. v. Claude NOLAND

CA 95-167                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                             En Banc
               Opinion delivered December 11, 1996


1.   Trusts -- procurement of trust or testamentary instrument by
     beneficiary -- burden of proof. -- Where a beneficiary of a
     testamentary instrument actually drafts or procures it, the
     burden of proof shifts onto the proponent of the instrument;
     a proponent of a will who is a beneficiary and who drafted the
     will or caused it to be drafted must prove beyond a reasonable
     doubt that it was not the result of undue influence and that
     the testator had the mental capacity to make it; where a
     beneficiary procures the making of a will, it bears the burden
     of showing beyond a reasonable doubt that the testator had
     both mental capacity and such freedom of will and actions as
     are required to render a will legally valid. 

2.   Appeal & error -- equity appeals reviewed de novo -- when
     affirmed. -- Because the court of appeals reviews equity
     appeals de novo, the court will affirm a chancellor's decision
     if it is correct for any reason.

3.   Trusts -- chancellor's finding of procurement not in error --
     trial court's decision affirmed. -- Where a de novo review of
     the record showed that appellant arranged all of the meetings
     between his father and counsel regarding creating the trust,
     the trust documents were prepared by counsel selected by
     appellant and were delivered to him rather than to his father,
     the creator of the trust, the lawyer who drafted the trust
     documents explained them to appellant rather than to his
     father, and appellant then explained the trust documents to
     his father and appeared to have coached him regarding the
     documents before covertly arranging with his sister to take
     him to the lawyer's office where the documents were executed;
     the chancellor's finding of procurement and ruling that the
     burden shifted to appellants to prove beyond a reasonable
     doubt that their father was mentally competent and acted with
     free will when the trust was created and he executed the
     warranty deed conveying his joint interest into, was affirmed. 
     
4.   Trusts -- chancellor's ruling not clearly erroneous --
     considerable proof presented that decedent lacked mental
     capacity and was unduly influenced regarding trust and 
     related conveyance. -- Given the considerable proof that the
     decedent was unable to be trusted with even menial tasks
     around his house and farm, the chancellor's ruling that
     appellants failed to prove beyond a reasonable doubt that
     their father acted with the requisite mental capacity and
     without undue influence regarding the trust and related
     conveyance was not clearly erroneous.

5.   Appeal & error -- chancellor's decision that joint tenant
     cannot convey his interest to a stranger was in error -- error
     found harmless. -- Although the chancellor did err as a matter
     of law when he held that a joint tenant cannot convey his
     joint interest to a stranger to the joint tenancy, that error
     was harmless; Arkansas law does not prohibit a joint tenant
     from conveying his interest to a stranger, and such a
     conveyance does not require the assent of the other joint
     tenants; the practical effect of the purported conveyance in
     this instance would have been to dissolve the joint tenancy
     and create a tenancy in common between appellee and the trust;
     given the invalidity of the conveyance by the decedent to the
     trust, the chancellor's mistaken view of the law amounted to
     harmless error.


     Appeal from Benton Chancery Court; Donald R. Huffman,
Chancellor; affirmed.
     James G. Lingle, for appellants.
     Davis & Watson, P.A., by:  Charles E. Davis, for appellee.

     Wendell L. Griffen, Judge.
     This case involves a challenge to a chancellorþs decision that
the appellants procured a trust and related warranty deed from
Wesley E. Noland, deceased, and failed to prove beyond a reasonable
doubt that Noland possessed the requisite mental capacity and acted
without undue influence when he created the Wesley E. Noland
Irrevocable Trust and conveyed his one-third interest in a family
farm to it.  The chancellor also determined that a joint tenancy
with right of survivorship could not be destroyed by conveyance. 
Although we hold that the chancellor erred on the latter issue, his
error was harmless because his decision that appellants failed to
meet their burden of proof of mental capacity and lack of undue
influence concerning conveyances between Wesley Noland and the
Wesley E. Noland Irrevocable Trust was not clearly erroneous.  
Therefore, we affirm. 
     Wesley Noland and his wife Elsie had four children (daughters
Anita Shaver and Helen Hooton, and sons Jerry and Claude Noland). 
On January 21, 1974, Wesley Noland and Elsie Noland executed a deed
that created a joint tenancy with right of survivorship to their
eighty-two-and-one-half-acre family farm in themselves and their
sons (Jerry and Claude).  Apparently, this conveyance was made to
keep the husband of one of the daughters from becoming involved in
the family estate, and made in the belief that the sons would treat
their sisters equitably insofar as the farm was concerned.  Wesley
Noland is alleged to have later become concerned that Claude Noland
would not share the farm with his sisters.  Wesley Noland was told
by an attorney that the joint tenancy could not be dissolved
without the agreement of all the joint tenants, including Claude
Noland. 
     In August 1991 another lawyer concluded that a joint tenant
with a right of survivorship could convey his interest to a third
entity, thereby converting the joint tenancy with right of
survivorship into a tenancy in common.  Acting on this advice and
the encouragement of Jerry Noland and Anita Shaver (after the death
of Elsie Noland), Wesley Noland established the Wesley E. Noland
Irrevocable Trust on September 27, 1991.  Wesley Noland also
executed a warranty deed that transferred his one-third interest in
the farm to Jerry Noland and Anita Shaver as Trustees of the Trust
(which had as its beneficiaries Jerry Noland, Anita Shaver, and
Helen Hooton).  Jerry Noland then executed a warranty deed that
transferred his one-third interest into the Trust.  The Trust also
provided that Claude Noland (who lived with Wesley) would have a
life estate in the farm residence and lands, and an undivided one-
third interest in the remainder.  
     Claude Noland did not know about the Trust and related
conveyance until he went to pay taxes on the property after Wesley
Noland died.  He then brought suit to set aside the Trust and
related conveyance, arguing that Wesley Noland lacked mental
capacity to establish the Trust, and that the Trust and related
conveyance resulted from undue influence by Jerry Noland and Anita
Shaver.  Following a hearing on April 20, 1994, the chancellor held
that Jerry Noland had procured the Trust so that he had the burden
of proving beyond a reasonable doubt that Wesley Noland had mental
capacity and was not under undue influence concerning it and the
related conveyance.  The chancellor held that Jerry Noland failed
to meet that burden, so the conveyance was set aside.  He also
ruled that even if he held that the defendants had met their burden
on the mental capacity and undue influence issues, a joint tenancy
with right of survivorship cannot be destroyed by conveyance.
     Jerry Noland and Anita Shaver, Trustees of the Wesley E.
Noland Irrevocable Trust, and as beneficiaries with Helen Hooton,
have appealed the chancellorþs decision voiding the Trust and
related conveyance.  They argue that the chancellor erred by
holding that the Trustees had procured the Trust and warranty deed
from Wesley Noland, and that the chancellor erred by shifting the
burden of proof to them on the issues of lack of mental capacity
and undue influence regarding the Trust and related warranty deed
by Wesley Noland.  Appellants also argue that the chancellor
applied the incorrect legal standard for analyzing the mental
capacity issue.  Appellants finally argue that the chancellor erred
in holding that a joint tenant may not convey his interest to a
stranger and defeat the survivorship rights of other joint tenants
as to the conveyed interest.  
     Most of the abstract and record deals with the mental capacity
and undue influence issues, allegations by appellants that Claude
Noland was abusive toward Wesley Noland during his last years, and
Claude Nolandþs counter-allegations that appellants were not around
Wesley Noland enough to appreciate the extent of his alleged
incompetency.  The record certainly demonstrates that these
siblings appear to be living out hostilities and long-held
conflicts dating back many years.  Suffice it to say that the
chancellor had considerable conflicting proof concerning Wesley
Nolandþs mental state in 1991, the allegations of mistreatment and
verbal abuse by Claude Noland (which in some instances clearly
appear to have been substantiated by his own conduct and
testimony), and proof concerning tactics employed by Jerry Noland
and Anita Shaver concerning the creation of the Wesley E. Noland
Irrevocable Trust and the conveyance of Wesley Nolandþs one-third
joint interest in the farm into it. 
     However, the threshold issue is whether Jerry Noland procured
the Trust and warranty deed from Wesley Noland to the Trust.  In an
ordinary challenge to the validity of a will, the party contesting
its validity must prove by a preponderance of the evidence that the
testator lacked mental capacity or was unduly influenced at the
time the will was executed.  Baerlocker v. Highsmith, 292 Ark. 373,
730 S.W.2d 237 (1987).  This principle also applies to other
testamentary instruments.  However, where a beneficiary of a
testamentary instrument actually drafts or procures it, Arkansas
law applies a higher burden of proof and shifts the burden onto the
proponent of the instrument.  In Greenwood v. Wilson, 267 Ark. 68,
588 S.W.2d 701 (1979), the Arkansas Supreme Court held that a
proponent of a will who is a beneficiary and who drafted the will
or caused it to be drafted must prove beyond a reasonable doubt
that it was not the result of undue influence and that the testator
had the mental capacity to make it.  In Smith v. Welch, 268 Ark.
510, 597 S.W.2d 593 (1980), the supreme court again held that where
a beneficiary procures the making of a will, it bears the burden of
showing beyond a reasonable doubt that the testator had both mental
capacity and such freedom of will and actions as are required to
render a will legally valid.  See also Looney v. Estate of Wade,
310 Ark. 708, 839 S.W.2d 531 (1992).  
     Under the clearly erroneous standard of review, we are unable
to reverse the chancellorþs finding of procurement.  A de novo
review of the record shows that Jerry Noland arranged all of the
meetings between his father and counsel regarding creating the
Trust.  The trust documents were prepared by counsel selected by
Jerry and were delivered to Jerry rather than to Wesley Noland. 
The lawyer who drafted the trust documents explained them to Jerry
rather than to Wesley Noland.  Jerry, in turn, explained the Trust
documents to Wesley Noland and appears to have coached him
regarding the documents before covertly arranging with Anita Shaver
to take Wesley Noland to the lawyerþs office where the documents
were executed. 
     Because the Court of Appeals reviews equity appeals de novo,
we will affirm a chancellorþs decision if it is correct for any
reason.  Lyons v. Lyons, 13 Ark. App. 63, 679 S.W.2d 811 (1984). In
Park v. George, 282 Ark. 155, 667 S.W.2d 644 (1984), the Supreme
Court of Arkansas reversed a decision by a probate judge who
admitted a will to probate and held that the probate court erred in
placing the burden of proof regarding lack of mental capacity and
undue influence on the will contestants rather than its proponents. 
Hence, the chancellorþs ruling that the burden shifted to
appellants to prove beyond a reasonable doubt that Wesley Noland
was mentally competent and acted with free will when the Trust was
created and he executed the warranty deed conveying his joint
interest into it should be affirmed.  
     It is inconsequential that Jerry Nolandþs interest in the farm
was reduced from a one-third joint interest with right of
survivorship to a two-ninths interest as a tenant in common by the
trust and warranty deed.  The crucial factor is that he was a
beneficiary of an instrument that he caused to be drafted, whatever
his pro-rata interest happened to be and for whatever purposes he
may have procured its drafting.  Although Jerry Nolandþs pro-rata
interest in the family farm decreased from one-third to two-ninths
under the purported transactions, the two-ninths interest would
have been held as a tenant in common.  As such, Jerry Noland would
have attained an arguably preferable position because his two-
ninths interest did not depend upon the right of survivorship. 
Whether he outlived Wesley and Claude Noland or not, the purported
transactions meant that he had two-ninths of the land, and that he
and Anita Shavers would have controlling voice in its disposition
because of their positions as Trustees of the Wesley E. Noland
Irrevocable Trust, which would have owned two-thirds interest in
the land as tenant in common with Claude Noland.  When one
considers that Anita Shavers had no legal interest in the land and
no voice in its management under the joint tenancy arrangement that
Wesley Noland originally established with Jerry and Claude Noland,
it is undeniable that Jerry Noland and Anita Shavers were
beneficiaries of the warranty deed and trust instruments, both in
the legal and practical senses.
     We find no Arkansas authority that restricts the principle
that the proponent of a testamentary instrument who is a
beneficiary of that instrument must obtain a larger interest in
property than he would otherwise hold before the burden of proof
shifts regarding the mental capacity and free will of the testator. 
Rather, we understand the law to be that if the proponent is a
beneficiary, the duty to prove that the instrument was created free
of undue influence and by a person competent to do so shifts to the
benefiting proponent, and that the quantum of proof rises from
preponderance of the evidence to proof beyond a reasonable doubt on
those issues.
     We further hold that the chancellorþs finding that appellants
did not prove beyond a reasonable doubt that Wesley Noland
possessed mental capacity and acted without undue influence
regarding the Trust and related conveyance of his joint interest
was not clearly against the preponderance of the evidence.  There
is great disagreement between the parties concerning Wesley
Nolandþs capacity after his wife died in 1991, but it is not our
duty to decide this issue de novo.  We conduct a de novo review of
the record to determine whether the chancellorþs ruling on this
point is clearly against the preponderance of the evidence. 
Whatever Wesley Nolandþs mental state may have been in 1974, or
between 1974 and 1991 when the Trust was created and the challenged
conveyance took place, the controlling question is whether he
possessed mental capacity and acted without undue influence when
the Trust was created and he conveyed his joint interest into it in
September of 1991.  Given the considerable proof that Noland was
unable to be trusted with even menial tasks around his house and
farm, the chancellorþs ruling that appellants failed to prove
beyond a reasonable doubt that he acted with the requisite mental
capacity and without undue influence is not clearly erroneous.
     Although the chancellor did err as a matter of law when he
held that a joint tenant cannot convey his joint interest to a
stranger to the joint tenancy, that error was harmless.  Granted,
the conveyance of Wesley Nolandþs undivided one-third joint
interest to the Trust would have dissolved the survivorship rights
of his joint tenants as to that conveyed interest (assuming that
Noland was competent and acting of his own free will when he
conveyed his interest to the Trust).  Even so, Arkansas law does
not prohibit a joint tenant from conveying his interest to a
stranger, and we have not been cited to any authority holding that
such a conveyance requires the assent of the other joint tenants. 
Rather, had Noland acted with requisite competency and freedom of
will, his one-third joint interest in the farm would have been
conveyed to the Trustees as a tenancy in common pursuant to Ark.
Code Ann.  18-12-603 (Repl. 1987).  Given that Jerry Noland
conveyed his one-third interest in the farm to the Trust as well,
the effect of both transactions would have been that Claude Noland
would have held a life interest (pursuant to the other conveyances
and the original 1974 deed creating the joint tenancy) in the farm,
and his undivided one-third interest in the remainder.  That one-
third interest would not have been with right of survivorship,
however, because the unities of title, time, and interest would not
have been present between Claude Noland and the Trust.  The
practical effect of the purported conveyances in this instance
would have been to dissolve the joint tenancy and create a tenancy
in common between Claude Noland and the Trust.  Given the
invalidity of the conveyance by Wesley Noland to the Trust, the
chancellorþs mistaken view of the law amounts to harmless error.
     The chancellorþs decision is affirmed.
     Pittman and Rogers, JJ., agree.
     Robbins, Mayfield, and Stroud, JJ., dissent.
=================================================================
                John B. Robbins, Judge, dissents.


     I disagree with the prevailing opinion in two respects. 
First, I believe that the chancellor erred in shifting the burden
of proof from Claude Noland to the defendants.  Appellee Claude
Noland brought this action seeking to set aside Wesley Noland's
trust and warranty deed.  The appellants defended the action
contending that the trust and warranty deed were legitimate
expressions of Wesley Noland's intent.  Secondly, I do not believe
that the trial court held that a joint tenant cannot convey his
joint interest to a third party and by so doing dissolve the joint
tenancy.
     The chancellor found that Jerry Noland procured the trust
agreement and warranty deed.  This finding was not clearly
erroneous.  However, I disagree that the presumption requiring a
shifting of the burden of proof was applicable to the facts of this
case.  The general rule is set forth in 79 Am. Jur. 2d Wills  429,
p. 579, and is expressed as follows:

     Most of the authorities support the view that a
     presumption of undue influence arises upon a showing that
     one who drew the will, or was otherwise active directly
     in preparing it or procuring its execution, obtains under
     the will a substantial benefit, to which he has no
     natural claim, or a benefit which, in amount, is out of
     proportion to the amounts received by other persons
     having an equal claim to participate in the bounty of the
     testator.  (Emphasis added.)
Arkansas courts have recognized this rule of law since 1858. 
McDaniel v. Crosby, 19 Ark. 533 (1858).  In every instance,
however, where the burden of proof is shifted to the procurer of
the document to prove beyond a reasonable doubt that the testator
had both mental capacity and freedom of will at the time of
execution of the will the procurer gained a greater share of the
testator's estate by virtue of the will than the procurer would
have otherwise received.  Looney v. Estate of Wade, 310 Ark. 708,
809 S.W.2d 531 (1992) (procurer, unrelated to the testatrix, was
owner and administrator of the residential care center where the
testatrix lived); Park v. George, 282 Ark. 155, 667 S.W.2d 644
(1984) (procurers, lawyers who prepared the will, received a $7,000
fee at the time the will was signed and one of them was bequeathed
$10,000 under the will); Oliver v. Griffe, 8 Ark. App. 152, 649 S.W.2d 192 (1983) (although procurer was testator's daughter,
testator had disinherited her under an earlier will); Smith v.
Welch, 268 Ark. 510, 597 S.W.2d 593 (1980) (procurer was ex-wife of
testator, having divorced testator twenty years before will was
procured); Greenwood v. Wilson, 267 Ark. 68, 588 S.W.2d 701 (1979)
(procurer, testator's second wife, was devised the testator's
entire estate to the exclusion of testator's children); Short v.
Stephenson, 238 Ark. 1048, 386 S.W.2d 501 (1965) (procurer was only
a friend of the testator); Orr v. Love, 225 Ark. 505, 283 S.W.2d 667 (1955) (procurer was testator's daughter-in-law); McDaniel v.
Crosby, supra (procurer, an unrelated drinking buddy of testator,
was sole devisee to the exclusion of the testator's relatives).
     I submit that this factual element is a prerequisite to the
rule requiring a shifting of the burden of proof.  I further
submit that this circumstance is lacking in the case now before us.
     The only significant asset owned by Wesley Noland that is now
in dispute is his home, and an approximately 82-acre farm where it
sits.  Long before execution of the trust agreement and deed
involved in this appeal, Wesley Noland and his wife conveyed title
to their farm into a joint tenancy with their sons, Claude and
Jerry.  Consequently, at the time the subject documents were
executed, Wesley's farm was owned by three joint tenants, Wesley,
Claude and Jerry.  If Jerry had not procured the execution of the
trust agreement and warranty deed, he likely would have been
eventually the sole owner of the home and farm inasmuch as he was
the youngest of the joint tenants.  However, by virtue of the trust
agreement and warranty deed signed by Wesley Noland that Jerry
procured, and the warranty deed Jerry also executed conveying his
interest in the joint tenancy into the trust, Jerry's interest in
Wesley's home and farm was reduced to a two-ninths undivided
fractional remainder interest in the house and farm.  This
fractional interest was subject to Wesley's right to receive
support from the trust during his lifetime and Claude's right to
reside in the house and use the barn and corral for his lifetime. 
Rather than gaining or benefiting from this transaction, Jerry
actually gave up a very significant share of his father's home and
farm that he would have otherwise received.  Consequently, the
presumption requiring a shifting of the burden of proof to the
procurer of the documents was not applicable and the chancellor
erred in holding to the contrary.
     With regard to the issue of whether a joint tenant may legally
convey his interest and thus dissolve a joint tenancy, the
chancellor expressed doubt as to whether a joint tenant could do
so, however the chancellor clearly stated that "I do not reach that
issue."  Consequently, I do not think that this issue is properly
before us.
     I would reverse and remand this case with directions that the
chancellor decide the case with the proper burden of proof being on
appellee, who sought to set aside the trust agreement and warranty
deed.
     Mayfield and Stroud, JJ., join in this opinion.