Wedin v. Wedin

Paul Herbert WEDIN v. Irene Anne WEDIN

CA 96-236                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                       Division III and IV
                  Opinion delivered May 7, 1997


1.   Appeal & error -- de novo review of chancery cases. -- Chancery cases
     are reviewed de novo on appeal; the appellate court does not
     reverse the findings of the chancellor unless they are clearly
     against a preponderance of the evidence; if the chancellor
     reached the right result, the appellate court will affirm even
     if it disagrees with the court's reasoning.

2.   Contracts -- property settlement agreement -- ambiguity -- determination. -
     - The initial determination of the existence of an ambiguity
     rests with the court; if an ambiguity exists, then the true
     intention of the parties must be determined and the meaning of
     the term becomes a question of fact.

3.   Words & phrases -- "estate" defined. -- The term "estate" has been
     defined by a law dictionary as "the degree, quantity, nature,
     and extent of interest which a person has in real and personal
     property"; the standard dictionary definitions are similar: 
     "1. [a] landed property, usually of considerable size[;]  2.
     [t]he whole of one's possessions, esp. all of the property and
     debts left by a dead person[;]  3. Law[:] [t]he nature and
     extent of an owner's rights with respect to his property"; it
     has been said that the word "estate" does not impart a legal
     entity.
4.   Words & phrases -- "inherit" defined. -- The word "inherit" is not
     unambiguous; while a law dictionary gives as a definition, "to
     take by inheritance; to take as heir on death of an ancestor,"
     it notes that the word is also used in its popular sense as
     the equivalent of to take or receive; a general dictionary
     defines "inherit" as: "1. [t]o come into possession of;
     possess[;]  2. [t]o receive (property) from an ancestor or
     another person by legal succession or will." 

5.   Divorce -- property settlement agreement -- interpretation -- intention
     that appellant would share with appellee that which he received from his
     mother's property. -- The appellate court, considering the prior
     discussions of the parties when interpreting the terms of
     their property settlement agreement, concluded that it was
     reasonably clear that they meant that appellant would share
     with the appellee that which he received from his mother's
     property after her death.

6.   Contracts -- neither chancellor's nor appellate court's holding amounted
     to reformation of agreement -- appellee's interpretation conformed to
     intention of parties. -- The appellate court concluded that
     neither the chancellor's nor its own holding amounted to a
     reformation of the parties' agreement where the chancellor's
     finding was that appellant was estopped from contesting the
     appellee's interpretation of their agreement and the appellate
     court's holding was that appellee's interpretation conformed
     to the intention of the parties as manifested by their words
     and actions.


     Appeal from Baxter Chancery Court; Roger V. Logan, Chancellor;
affirmed.
     Street, Seay & Caldwell, P.L.L.C., by: Theresa L. Caldwell,
for appellant.
     Deborah A. Knox, for appellee.

     John E. Jennings, Judge.
     Paul and Irene Wedin were married in 1963 and separated in
July 1993.  In September 1993 appellant filed suit for divorce in
Baxter County Chancery Court.  On October 14 the parties signed a
property settlement agreement.  The agreement provided: "Appellant
will further divide with appellee any inheritance of personal
property he may receive in the future from the Estate of Lucretta
Wedin."  
     Lucretta Wedin, appellant's mother, died on October 25, 1993. 
On November 3, 1993, appellant was granted a divorce and the
property settlement agreement signed by the parties was approved. 
     In January 1995 the appellee filed a petition in chancery to
enforce the terms of the property settlement agreement and the
trial court held a hearing focusing on the parties' differing
interpretations of the clause at issue.  It was shown that Lucretta
Wedin had, on August 6, 1993, executed a trust agreement through
which she placed virtually all her assets in an inter vivos trust. 
In the trust indenture she named herself as a trustee.  Appellant
and his sister, Jacqueline Cathers-Collision, were named co-
trustees and were the sole beneficiaries of the trust.  Lucretta
Wedin's will, also dated August 6, 1993, left all her property to
the trust.  At her death the value of her property subject to
probate was $600.00.
     The appellee testified that during settlement discussions
appellant told her that he was going to give her half of what he
got from his mother.  Appellant told her that the estate was valued
at approximately $600,000.00 and that there would be about
$190,000.00 in estate taxes payable.  She testified that she had
worked as a secretary in a law office but did not seek legal advice
about the terms of the property settlement agreement.  She
testified that she was aware that some of Lucretta Wedin's property
was in trust and understood that that property was included in
appellant's inheritance.  
     Appellant testified that he did tell the appellee that he was
going to split everything he got from his mother with her.  He
conceded that he told her that the total would be approximately
$600,000.00 and that she would receive one-half of his one-half
share.  He received a little more than $200,000.00.  He testified
that appellee was aware that the trust existed.  
     He also testified however that he intended the clause to mean
that appellee would receive only a share of the property he
received through his mother's will.  He further testified that he
did not tell the appellee that the trust property would not be
included and that if she had a misunderstanding about the
agreement, he did nothing to correct it.  At the time of the
hearing appellant had paid appellee some $23,000.00 but took the
position that this was a gift and that he was obligated to pay no
more than half of the $600.00 he received through his mother's
will.
     The chancellor found that the phrase "The Estate of Lucretta
Wedin" was ambiguous.  The chancellor also found that appellant
stood in a confidential relationship to the appellee.  Relying on
our decision in Undem v. First National Bank, 46 Ark. App. 158, 879 S.W.2d 451 (1994), the chancellor held that appellant was estopped
to argue that the trust assets were not included in his agreement.
     On appeal to this court appellant contends that the chancellor
erred in holding that the language of the clause in question was
ambiguous, erred in finding that appellant had a duty to advise the
appellee as to the meaning of the clause, and erred in effectively
granting reformation of the agreement.  We find no error and
affirm.  Chancery cases are reviewed de novo on appeal.  Lyons v.
Lyons, 13 Ark. App. 63, 679 S.W.2d 811 (1984).  We do not reverse
the findings of the chancellor unless they are clearly against a
preponderance of the evidence.  Kunz v. Jarnigan, 25 Ark. App. 221,
756 S.W.2d 913 (1988).  If the chancellor reached the right result,
we will affirm even if we disagree with the court's reasoning. 
Durham v. Arkansas Dep't of Human Services, 322 Ark. 789, 912 S.W.2d 412 (1995).
     Appellant contends that the clause in the property settlement
agreement is unambiguous.  While he does not argue that the word
"estate" is unambiguous, he contends that the word "inheritance"
is.  He relies on Black's Law Dictionary which defines
"inheritance" as "property which descends to an heir on the
intestate death of another."  
     The initial determination of the existence of an ambiguity
rests with the court.  C. & A. Constr. Co. v. Benning Constr. Co.,
256 Ark. 621, 509 S.W.2d 302 (1974).  If an ambiguity exists, then
the true intention of the parties must be determined and the
meaning of the term becomes a question of fact.  See C. & A.
Constr. Co., supra; Jones v. Jones, 26 Ark. App. 1, 759 S.W.2d 42
(1988).  Black's Law Dictionary defines "estate" as "the degree,
quantity, nature, and extent of interest which a person has in real
and personal property."  Black's Law Dictionary 490 (5th ed. 1979). 
The standard dictionary definitions are similar:  "1. A landed
property, usually of considerable size.  2. The whole of one's
possessions, esp. all of the property and debts left by a dead
person.  3. Law.  The nature and extent of an owner's rights with
respect to his property."  American Heritage Dictionary 466 (2nd
College ed. 1982).  It has been said that "the word `estate' does
not impart a legal entity."  Hansen v. Stanton, 177 Wash. 257, 31 P.2d 903 (1934).
     Similarly, the word "inherit" is not unambiguous.  While
Black's gives as a definition, "to take by inheritance; to take as
heir on death of an ancestor," it notes that the word is also used
in its popular sense as the equivalent of to take or receive. 
Black's Law Dictionary 704 (5th ed. 1979).  The American Heritage
Dictionary defines inherit as:  "1. To come into possession of;
possess.  2. To receive (property) from an ancestor or another
person by legal succession or will."  
     When we consider the prior discussions of the parties it is
reasonably clear that they meant that appellant would share with
the appellee that which he received from his mother's property
after her death.
     We would reach the same conclusion under section 201 of the
Restatement (Second) of Contracts:  
          (2)  Where the parties have attached different
          meanings to a promise or agreement or a term
          thereof, it is interpreted in accordance with
          the meaning attached by one of them if at the
          time the agreement was made 

               (a)  That party did not know of any
          different meaning attached by the other, and
          the other knew the meaning attached by the
          first party.

Under our view of the case it is not necessary to consider the
question of estoppel or the chancellor's application of the
principles stated in our decision in Undem v. First National Bank,
supra.  Finally, we do not agree that either the chancellor's
holding, or our own, amounts to a reformation of the parties'
agreement.  The chancellor's holding was that appellant was
estopped from contesting the appellee's interpretation of their
agreement.  Our holding is that the appellee's interpretation
conforms to the intention of the parties, as manifested by their
words and actions.
     For the reasons stated the decision of the chancellor is
affirmed.
     Robbins, C.J., Bird, and Roaf, JJ., agree.
     Griffen and Neal, JJ., dissent.


              Wendell L. Griffen, Judge, dissents.

     I cannot join the majority in affirming the chancellorþs
decree that held the appellant ex-husband was estopped from
asserting that he was not obligated to pay his ex-wife half of the
sums that he received from a revocable trust that his mother
established before the parties divorced.  Having also considered
the law and the partiesþ arguments, I am firmly convinced that the
chancellorþs decree was clearly erroneous and that we should
reverse.  Therefore I dissent from the majority position and
opinion.
     Although the chancellor bottomed his ruling on Undem v. First
Nat'l Bank, 46 Ark. App. 158, 879 S.W.2d 451 (1994), he explicitly
relied upon a supposed þrelationship of trust and confidenceþ
between the parties in concluding that appellant misled appellee
when his attorney submitted a property settlement agreement in
which appellant agreed to þequally divide with Wife any inheritance
of personal property he may receive in the future from the Estate
of Lucretta Wedin.þ  (Emphasis added).  The chancellor concluded
that appellee (the wife) relied on appellantþs prior oral promises
to give her half of whatever he got from his mother and that
appellant had a duty to explain that the actual language of the
property settlement agreement prepared by his attorney and
forwarded to appellee after the divorce action was filed was
different from his earlier promise.  One can understand the
chancellorþs disapproval of what he considered appellantþs failure
to be forthright.  However, that disapproval of the failure to be
forthright neither justifies nor demands a finding that the parties
shared a þrelationship of trust and confidenceþ when all the
relevant facts indicate otherwise.  It also should not blind us to
the plain rules of law concerning contracts, division of property,
and inter vivos gifts that compel reversal.
     Contrary to the view that a relationship of trust and
confidence existed between appellant and appellee when the property
settlement agreement was prepared, submitted to appellee, and
executed, the agreement plainly  reads that on October 19, 1993,
the parties were separated and were contemplating a divorce action
in Baxter County, that their differences were irreconcilable, and
that each had either retained or been afforded the opportunity to
retain legal counsel in connection with drafting the agreement. 
Those facts have never been disputed by appellee who admitted that
she had the opportunity to consult counsel in connection with the
property settlement agreement.  Appellee declined to consult
counsel or even discuss the agreement with any of the twelve
lawyers in the law firm where she worked.  
     Moreover, the language that appellee relies upon is clearly
different from a promise to give her half of whatever appellant may
have received from his mother because it is limited to half of the
personal property inherited from his motherþs estate.  When the
agreement was submitted to appellee by appellantþs attorney,
appellee knew that appellantþs mother had created a trust and named
appellant as a beneficiary; however, she made no effort to obtain
a copy of the trust documents before signing the property
settlement agreement.  She did not inquire as to what property was
in the trust and did not consult counsel concerning any impact that
the trust had on the property settlement agreement.  She knew that
appellant had retained legal counsel and knew that she had already
rejected the language of a previous property settlement agreement
draft because she considered it different from what appellant had
orally promised her.  She knew that appellantþs lawyer did not
represent her, nor consult with her, that appellant had left her in
Texas, moved to Arkansas, and did not intend to reconcile with her. 
In short, there was no plausible reason for appellee or any other
person of ordinary insight to believe that the property settlement
agreement that appellee received from appellantþs lawyer in
contemplation of their divorce action arose from anything remotely
like a þrelationship of trust and confidence.þ
     The chancellorþs decision is tantamount to an award of damages
for the tort of deceit.  However, appellee is not entitled to tort
damages merely because her contract (the property settlement
agreement) differs from what appellant promised, especially when
she failed to exercise the reasonable diligence expected of anyone
negotiating a contract for what she thought amounted to more than
$100,000 by ascertaining whether the plainly different language of
the proposed agreement was consistent with the oral promise that
appellant made before his lawyer prepared the agreement.  Even
under a deceit theory, appelleeþs prospect for recovery would have
been problematic because of the requirement that any reliance on
her part be reasonable under the circumstances.  Medlock v. Burden,
321 Ark. 269, 900 S.W.2d 552 (1995) (citing Roach v. Concord Boat
Corp., 317 Ark. 474, 880 S.W.2d 305 (1994)); Godwin v. Hampton, 11
Ark. App. 205, 669 S.W.2d 12 (1984).  Of course, the chancellorþs
decision permits appellee to avoid these questions by construing
the parties to have been in a confidential and trusting
relationship when the evidence plainly shows that they were not.
     Although I do not read the majority opinion to hold that
divorcing parties enjoy a þrelationship of trust and confidenceþ as
a matter of law so that their oral promises to each other are
actionable upon breach, I see no difference between that unsound
proposition and the result reached by affirming the decree in this
case.  The majority purports to buttress its decision by reading
the words þfrom the Estate of Lucretta Wedinþ in the executed
property settlement agreement to be ambiguous.  The flaw in that
reasoning is that even the appellee recognizes that the chancellor
did not find the language ambiguous.  The appellee has vigorously
challenged the appellantþs contention that the chancellor found the
language in Paragraph 9 of the Joint Stipulation and Property
Settlement Agreement ambiguous.  Instead, appellee maintains that
she was defrauded and that the appellantþs allegedly deceptive
conduct justified holding that he was estopped from relying upon
the wording of the agreement.  I do not understand how the majority
is better situated to find an ambiguity in an agreement when the
party who challenges that agreement does not find it ambiguous.  I
also do not understand how the majority is able to affirm the
chancellorþs decision holding appellant estopped from relying upon
the agreement due to a purported ambiguity that the chancellor has
not found and which the party who contests the agreement does not
assert.
     Of course, it has long been the law in Arkansas that the
initial determination of whether an ambiguity exists in a contract
rests with the court as a matter of law.  If the court finds that
a contract term is ambiguous as a matter of law, then parol
evidence is admissible and the meaning of the disputed term becomes
a question of fact for the fact finder.  C. & A. Constr. Co., Inc.
v. Benning Constr. Co., 256 Ark. 621, 509 S.W.2d 302 (1974).  When
a technical term is used in a contract in a sense other than the
ordinary meaning of the word, testimony is admissible to explain
the meaning of the term and the question may be submitted to the
trier of fact to determine in what sense the term was used.     
Les-Bil, Inc. v. General Waterworks Corp., 256 Ark. 905, 511 S.W.2d 166 (1974).  Although the chancellor in this case did not find the
term þfrom the Estate of Lucretta Wedinþ in the property settlement
agreement ambiguous, he did observe that the term þestateþ is used
in a general sense to describe an interest in property so that when
the agreement referred to þthe Estate of Lucretta Wedinþ at
paragraph 9 it could have contemplated her property generally, her
trust estate only, her probated estate only, or both her trust and
probated estate.  However, appellee has never contended that she
was misled by the language of the agreement or that she signed it
in the mistaken belief that it conformed to what appellant had
orally promised.  Her sole contention is that appellant failed to
inform her that he changed his mind about what he would give her
and, therefore, willfully induced her to sign an agreement that she
would not have otherwise signed.  That contention is bottomed upon
the alleged þrelationship of trust and confidenceþ mentioned
previously, not an alleged ambiguity concerning the meaning of the
term þthe Estate of Lucretta Wedin.þ   
     If there was no relationship of trust and confidence between
the parties, then the effect of the chancellorþs decision and its
affirmance is to reform the property settlement agreement.  Again,
the established rules of contract law applicable to property
settlement agreements in divorce proceedings bar the way that the
majority seeks to travel.   The supreme court stated the standard
used for determining whether a party is entitled to reformation of
a written contract in McIntyre v. McIntyre, 241 Ark. 623, 410 S.W.2d 117 (1966):
We have consistently held that reformation of a
contractual agreement will not be granted except upon
clear, unequivocal and decisive evidence. [citations
omitted] In Corey v. The Mercantile Insurance Company of
America, 205 Ark. 546, 169 S.W.2d 655 (1943), we quoted
the applicable rule with approval, as follows:  þTo
entitle a party to reform a written instrument upon the
grounds of mistake, it is essential that the mistake be
mutual and common to both parties; in other words, it
must be found from the testimony that the instrument as
written does not express the contract of either of the
parties.  It is also necessary to prove such mutual
mistake by testimony which is clear and decisive before
a court of equity will add to or change by reformation
the solemn terms of a written instrument.þ

Id. at 626-27, 410 S.W.2d  at 119.  Here there is no proof that a
mutual mistake occurred.  As appellee has observed in her brief,
neither party contends that there was a mistake, and she did not
ask that the property settlement agreement be reformed.  
     It is self-evident that the parties enjoyed no þrelationship
of trust and confidenceþ so as to justify a holding that appellee
was justified in blindly trusting whatever agreement that
appellant's attorney tendered for her signature.  It is equally
plain that appellee has not contended that the written agreement
contains ambiguous language upon which she relied believing it to
be consistent with appellantþs oral promise to her before the
agreement was prepared.  The only remaining basis for affirming the
chancellorþs decision is to reform the agreement to mean what
neither party contends that they ever thought it meant.  That is
nothing short of imposing upon the parties a property disposition
that one party (appellant) clearly does not want, and the other
party (appellee) has not won through negotiation despite having
every opportunity to try to do so.   
     No matter what our view may be about appellantþs decision to
abandon his original position toward appellee, the fact remains
that appellant had the right to change his mind about what he
wanted to give appellee in the property settlement.  She had the
right to disagree with his changed position and reject the property
settlement agreement that reflected that changed position.  But
appellee has no right to acknowledge that the agreement she signed
was not misleading, acknowledge that neither party mistakenly
executed it, and acknowledge that she refused to seek any advice
about what it meant, yet be awarded a property settlement that she
refused to negotiate and which nobody else has ever determined she
otherwise has the right to obtain.  
     Despite appellee's disappointment about appellant's change of
mind, she has no right to receive anything that appellant obtained
by inheritance from his mother in a property settlement agreement
terminating their marriage, and appellant had no duty to give her
anything that his mother gave him.  Ark. Code Ann.  9-12-315
(Repl. 1993) prescribes how property is divided.  Sub-section
(a)(1)(A) provides that all marital property shall be divided one-
half to each party unless the court finds that division to be
inequitable.  Sub-section (b)(1) states that "marital property"
means all property acquired by either spouse subsequent to the
marriage except property acquired prior to marriage, or by gift, or
by bequest, or by devise, or by descent.  Whether the property that
appellant received upon his mother's death passed to him by
operation of her Will (by bequest), by virtue of the trust she
created (by gift or bequest), or as her heir (by descent), Arkansas
law plainly holds that it was not marital property to be divided
with appellee upon divorce.  Appellant was not obligated to share
it with appellee, and no court is authorized to take it from him to
satisfy a property settlement.  Perhaps this explains why appellee
has not attempted to have the property settlement agreement
declared void and has not asked the chancellor to divide the
marital property according to the statute.  
     The majority has cited no authority for the proposition that
property obtained by a spouse from his parent by gift, bequest, or
descent must be shared with the other spouse when they divorce. 
There was no proof that appellant ever put the property that he
obtained after his mother died in a joint account with appellee. 
Therefore, we have no basis for holding that appellee had a right
to anything.
     Appellee argues that we should endorse her contention because
appellant gave her $23,400.  Had the parties remained married and
appellant gave appellee that amount, what law holds that she would
be entitled to recover another part of appellant's inheritance? 
Appellee has cited none.  Neither does the majority.
     When did we abandon the test for inter vivos gifts that has
existed in Arkansas for most of this century?  According to our
law, the essential elements of an inter vivos gift include (1)
actual delivery of the subject matter by the donor to the donee or
the donee's agent, (2) clear intent to make an immediate, present,
and final gift beyond recall, (3) knowledge and understanding on
the part of the donor regarding the effect of his act, and (4)
actual acceptance of the property by the donee.  O'Flarity v.
O'Flarity, 42 Ark. App. 5, 852 S.W.2d 150 (1993).  Here appellant
did not make an immediate and unconditional gift to appellee.  He
did not make actual delivery of half of what he received from his
mother.  Appellee did not accept half of what appellant received
from his mother because he never gave it to her.  None of the well-
settled elements for an inter vivos gift have been proven by clear
and convincing evidence or otherwise.
     If voiding the agreement is warranted, we should reverse and
remand so that appellee can negotiate an agreement or receive an
equitable property settlement pursuant to Ark. Code Ann.  9-12-
315.  Absent grounds for voiding the agreement, (and I have found
none), we should not impose a property settlement upon appellant by
judicial fiat merely because we dislike his failure to be
forthright about changing his mind, or because he changed his mind
after talking with his lawyer. Appellant had the right to change
his mind and the right not to give appellee any part of what he
inherited from his mother; thus, appellee has not been wronged by
the change of mind, only disappointed.  Until now the law has not
treated disappointment as fraudulent concealment, deceit, or
misrepresentation.  Until now appellate courts have not disregarded
the plain language of Ark. Code Ann.  9-12-315 merely to soothe
the disappointment of a divorced party.  Until now we have not
ignored  the legal requirements for inter vivos gifts simply
because a putative donee is displeased that a putative donor
changed his mind.  This case is not the place to begin doing so.
     I would reverse.