Estate of Sabbs v. Cole

ESTATE OF James SABBS v. Bernice COLE

CA 96-461                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                       Division III and IV
                Opinion delivered April 30, 1997


1.   Gifts -- inter vivos gift -- requirements. -- In order for an inter
     vivos gift to transpire, it must be proven by clear and
     convincing evidence that (1) the donor was of sound mind; (2)
     an actual delivery of the property took place; (3) the donor
     clearly intended to make an immediate, present, and final
     gift; (4) the donor unconditionally released all future
     dominion and control over the property; and (5) the donee
     accepted the gift.

2.   Appeal & error -- chancery cases -- standard of review. -- Although the
     appellate court hears chancery cases de novo, the test on
     review is not whether there was clear and convincing evidence
     to support the trial judge's findings, but whether the
     appellate court can say the judge was clearly wrong, i.e.,
     whether the findings of the trial judge were clearly
     erroneous. 

3.   Appeal & error -- chancery cases -- deference to chancellor on issue of
     credibility of interested parties. -- Where the pivotal issue in a
     chancery case is the credibility of interested parties whose
     testimony was in direct conflict, the appellate court defers
     to the chancellor's judgment.

4.   Deeds -- reservation of life estate -- grantor's retention of possession
     and control of property not inconsistent with delivery. -- When a deed
     reserves a life estate in the grantor, there is no requirement
     that the instrument pass beyond the grantor's control and
     dominion; the fact that the deed is found among the effects of
     the grantor at his death raises no presumption against
     delivery, and the grantor's retention of possession and
     control over the property conveyed is not inconsistent with
     delivery.

5.   Deeds -- deed found in decedent's safe-deposit box was analogous to life
     estate -- retention of possession and control not inconsistent with
     delivery. -- Where, although the deed in question was found in
     the decedent's safe-deposit box and did not specifically
     reserve a life estate in the decedent, the chancellor found
     there was an agreement that the decedent would live on the
     property during his lifetime, the appellate court concluded
     that it was analagous to a life estate, for which there is no
     requirement that a deed pass beyond the grantor's control, and
     the grantor's retention of possession and control over the
     property is not inconsistent with delivery.

6.   Deeds -- chancellor did not err in dismissing appellants' complaint
     regarding disputed property. -- Where the chancellor heard
     conflicting testimony from several witnesses (including the
     decedent's former wife, a woman who had a courtship with the
     decedent, and appellant's nephew) about the circumstances
     surrounding the decedent's execution of the deed giving
     property to appellee, the decedent's oldest daughter; where
     there was no evidence that decedent was of unsound mind; where
     there was evidence that the deed was prepared by an attorney,
     signed by the decedent, and mailed to appellee by certified
     mail; where the decedent's former wife testifed that the
     decedent had told her that appellee owned the property and
     that he gave her a deed; where the woman with whom the
     decedent had a courtship said that the decedent had
     voluntarily executed the deed; where there was evidence that
     appellee paid property taxes and was listed as co-insured on
     the property; and where, given appellee's testimony that her
     father gave her the property, it could not be seriously
     contended that appellee refused the gift, the appellate court,
     recognizing that the testimony was in dispute, but giving
     deference to the chancellor's opportunity to judge the
     credibility of the interested parties, could not say that the
     chancellor erred in dismissing appellants' complaint regarding
     the disputed property.

7.   Jurisdiction -- effect of decree upon land -- in rem proceeding -- action
     must be brought in county where land is situated. -- If the effect of
     a decree is to reach and operate upon land, then it is a
     proceeding in rem, and a local action and must be brought in
     the county where the land is situated.


     Appeal from Pulaski Chancery Court; Robin Mays, Chancellor;
affirmed.
     Ogles Law Firm, P.A., by: John Ogles, for appellants.
     Walker, Campbell, Ivory, Dunklin & Davis, by: Sheila F.
Campbell, for appellee.

     Margaret Meads, Judge.
     This is an appeal from an order of the Pulaski County Chancery
Court that dismissed appellants' amended complaint to quiet title. 
Appellants, Paris Sabbs and Betty Frazier, are the co-
administrators of the estate of James Sabbs.  Appellee Bernice Cole
is the decedent's oldest daughter.
     In an amended complaint, appellants alleged that at the time
of his death, the decedent James Sabbs possessed certain property
on Valentine Road, North Little Rock, and other property located in
Lonoke County, and that appellee's claim of ownership of these
properties is invalid.  
     At trial, appellant Paris Sabbs contended the Valentine Road
property was an asset of the estate.  He testified that the reason
his father put the deed in appellee's name was to protect the
property from an impending third marriage; that if the marriage did
not work out the deed would be put back in his name; and if he died
appellee would share the property with her siblings.  He said he
first discovered a problem with removing appellee's name from the
deed around 1987, and he was present in 1992 when his father
requested the property be changed back to his name, but appellee
refused.  
     He testified further that his father kept up the premises,
paid for repairs, paid the property taxes and insurance, and always
acted like the owner.  He also testified that he did not consider
his father to need assistance in taking care of his business
affairs, and he was happy his father was able to look after his own
affairs.  He said his father told him he did not sue appellee when
she refused to remove her name from the deed, because he believed
she would eventually do the right thing and deed the property back
to him or share the property with her siblings upon his death. 
     Appellant Betty Sabbs Frazier testified that she saw the deed
in 1992 with appellee's name on it and asked her father why he had
done this.  He said he thought appellee would deed it back to him,
and he trusted her.  She said she asked him if he wanted her to get
legal help and he said, "No."  
     Irma Aaron, who had a courtship with James Sabbs, testified
that he told her that he put the property in appellee's name so
nobody would take his property, but they weren't getting along, and
he had asked for the property back.
     The decedent's nephew testified that he lived with the
decedent for six months in 1989, paid rent to him, and was not
aware of any dispute between him and appellee.  He said the
decedent never mentioned any problem in regard to the property, but
he had damaged the property to make it hard on the children.  He
also testified that his uncle took care of his affairs "real good,"
and he never saw anyone exert any influence on him or cause him to
do something he did not want to do.
     Elouise Garrett, who married James Sabbs in January 1973 and
subsequently divorced him, testified that he told her appellee
owned the Valentine Road property and that he had given her a deed. 
She said that during the time she was married to him, appellee
visited her father practically every weekend, and he never
indicated he did not want appellee to have the property.  She
further testified she was not aware of any dispute between appellee
and her father concerning the property, and he told her he had
deeded the house to appellee and "it was hers."
     Appellee testified that her father deeded her the property on
Valentine Road.  She said he called her at work, told her he had
something he wanted to give her, and he would come by and pick her
up.  When he arrived, he said he was giving her his property on
Valentine Road because she would not share in any of his other
property.  They went to a law office where the deed was already
prepared, and he signed it.  Later the deed was mailed to appellee
by certified mail, and she recorded it.  Appellee testified that
she held the recorded deed for awhile and later gave it to her
father because he was executor of her will and the documents would
be together.  Her father returned the deed to her in 1985, and she
returned it to him in 1990 when she married Aldolphus Cole.  The
deed and appellee's will were in the decedent's safe deposit box
when he died.  
     Appellee testified her father did not request that she deed
the property back to him; did not discuss it with her in the
presence of her brothers and sisters; and that her father was
present when appellee Paris Sabbs asked her to return the deed. 
She said her father did not agree with Paris's request and denied
that her father asked her to remove her name from the deed.  
     Appellee testified further that the agreement with her father
was that he could continue to live there, maintain the property,
and collect the rent as long as he lived, and she considered him to
have a life estate.  She testified further that she has maintained
insurance on the property, paid the real estate taxes, and
collected the rents.  Appellee admitted not claiming the property
as an asset when she tried to obtain a bank loan and not listing it
as an asset when she was divorced.
     Documentary evidence included appellee's 1989-1992 Federal
Income Tax Schedule A, which showed no rental income or
depreciation deduction on the property; real estate tax receipts
for 1989-1992 reflecting that appellee paid the property tax;
application for property insurance listing the deceased and
appellee as the insureds on the Valentine Road property; a
declarations page from the policy addressed to appellee; the
decedent's 1988 income-tax return showing he declared the rents as
income; and lists of expenses of the decedent allegedly for repairs
to the property.
     In an order entered January 8, 1996, the chancellor found that
the witnesses gave conflicting testimony regarding the decedent's
statements; that she did not place much weight on alleged
statements made by the deceased to the witnesses; that Irma Aaron
and Elouise Garrett were credible witnesses; that the most telling
testimony was that of the decedent's nephew; and that neither Paris
Sabbs nor appellee were credible witnesses.  The chancellor
considered it significant that the decedent took no action, after
a discussion regarding the property, to set aside the conveyance. 
Most important no attempt was made to reclaim the property, and
there was nothing in writing to show that the decedent intended a
disposition which conflicted with the deed.  The chancellor held
further that although appellee was not particularly credible, it
appeared that she and her father had an agreement that he would
live on the property during his lifetime, as she had testified,
because that is, in fact, what happened.
     The chancellor held that appellants failed to prove the
decedent intended a different disposition of his property than the
recorded deed and dismissed the complaint.
     On appeal, appellants argue the trial court erred in
dismissing the complaint.  Specifically, appellants contend that
the decedent neither intended nor completed delivery of the deed to
the Valentine Road property, and that title was not transferred
because he retained possession and control of the property,
retained the rental income, and paid taxes on the property. 
Appellants also argue that the decedent did not make a gift of the
Lonoke property to appellee.
     In order for an inter vivos gift to transpire, it must be
proven by clear and convincing evidence that (1) the donor was of
sound mind; (2) an actual delivery of the property took place; (3)
the donor clearly intended to make an immediate, present, and final
gift; (4) the donor unconditionally released all future dominion
and control over the property; and (5) the donee accepted the gift. 
Wright v. Union National Bank, 307 Ark. 301, 819 S.W.2d 698 (1991). 
Although we hear chancery cases de novo, the test on review is not
whether there is clear and convincing evidence to support the trial
judge's findings, but whether we can say the judge was clearly
wrong; whether the findings of the trial judge are clearly
erroneous.  Akin v. First National Bank, 25 Ark. App. 341, 758 S.W.2d 14 (1988).  In addition, where the pivotal issue is
credibility of interested parties whose testimony is in direct
conflict, we defer to the chancellor's judgment.  Rector-Phillips-
Morse, Inc. v. Huntsman Farms, Inc., 267 Ark. 767, 590 S.W.2d 317
(Ark. App. 1979).  Finally, when a deed reserves a life estate in
the grantor, there is no requirement that the instrument pass
beyond the grantor's control and dominion, and the fact that the
deed is found among the effects of the grantor at his death raises
no presumption against delivery, and the grantor's retention of
possession and control over the property conveyed is not
inconsistent with delivery.  Grimmett v. Estate of Beasley, 29 Ark.
App. 88, 777 S.W.2d 588 (1989).
     Here, the chancellor heard conflicting testimony of several
witnesses.  The chancellor found Elouise Garrett and Irma Aaron to
be credible witnesses.  Ms. Garrett testified that she was not
aware of any dispute between appellee and her father, and Ms. Aaron
testified that the decedent voluntarily executed the deed giving
the property to appellee, and although he said he wanted it back,
she never saw appellee "over there for him to ask her."  The
chancellor also relied on the testimony of appellant's nephew that
the decedent did not mention any problems with the property or
appellee.  
     Moreover, there is no evidence that the decedent was of
unsound mind.  Indeed, Paris Sabbs testified that the decedent was
able to take care of his own business affairs.  Further, there was
evidence that the deed was prepared by an attorney, signed by the
decedent, and mailed to appellee by certified mail.  Although the
deed was found in the decedent's safe-deposit box and did not
specifically reserve a life estate in the decedent, the chancellor
found there was an agreement that the decedent would live on the
property during his lifetime.  We think this is analagous to a life
estate, and as we have already stated, in the case of a life estate
there is no requirement that a deed pass beyond the grantor's
control, and the grantor's retention of possession and control over
the property is not inconsistent with delivery.  Moreover, Ms.
Garrett testified the decedent told her appellee owned the property
and that he gave her a deed, and Ms. Aaron said he voluntarily
executed the deed.    
     Finally, there is evidence that appellee paid the 1989-1992
property taxes and was listed as a co-insured on the property, and
given appellee's testimony that her father gave her the property,
we do not think it can be seriously contended that appellee refused
the gift of the property.
     Recognizing that the testimony was in dispute, but giving
deference to the chancellor's opportunity to judge the credibility
of the interested parties, we cannot say the chancellor erred in
dismissing appellants' complaint as to the Valentine Road property.
     One other matter remains for our discussion.  Appellants also
alleged that the decedent owned certain lands in Lonoke County; on
appeal they argue that the decedent did not make a gift of this
property to appellee and that it should be included in the estate
for distribution to his heirs.  Suffice it to say, if the effect of
a decree is to reach and operate upon the land itself, then it is
a proceeding in rem and a local action and must be brought in the
county where the land is situated.  Dowdle v. Byrd, 201 Ark. 775,
147 S.W.2d 343 (1941).  
     Affirmed.
     Stroud, Rogers, and Bird, JJ., agree.
     Pittman, J., dissents.
     Cooper, J., not participating.


              John Mauzy Pittman, Judge, dissents.


     I respectfully dissent because I disagree with the result
reached by the prevailing judges.  
     In the order of dismissal the judge stated:  
     This case is a good example of the reason for the hearsay
     rule.  Assuming the veracity of the sworn witnesses
     (which will be discussed later), most gave conflicting
     testimony regarding statements made by the deceased.  In
     many instances, it appeared to the court that the
     deceased was less than candid, telling the witnesses
     whatever was expedient.  The hearsay rule assumes that
     since the declarant is not under oath, he may not be
     making truthful statements.  Therefore, the statements
     should be excluded.  Each side freely allowed testimony
     about statements given by the deceased.  However, the
     court has not placed much weight on alleged statements
     made by the deceased to the witnesses.

     * * * *

     It is clear that the deceased's children were fighting
     over the property.  That fact does not mean the deceased
     intend [sic] any other result for the property than the
     conveyance to defendant.  Both parties agree that a
     discussion occurred between the deceased, Paris Sabbs and
     the defendant [appellee] in 1992.  The account is simply
     different.  Neither the plaintiff, Paris Sabbs, nor the
     defendant, Bernice Cole presented as credible witnesses,
     and they both had vested interests in the outcome of the
     trial.  The significant thing to the court is that the
     deceased took no action after his discussion until his
     death in 1993 to set aside the conveyance.  Even if he
     had intended another result, his failure to act after
     that discussion, at the very least, indicates an
     acquiescence to the deposition [disposition].  His
     failure to act cannot now be transferred to
     representatives of his estate when he clearly had the
     opportunity to act and chose not to.

     * * * *

     The deceased deeded the Valentine property to the
     defendant on September 8, 1972, and filed the deed of
     record.  The plaintiff continually argues that the
     defendant did not prove that she owned the property.  The
     burden of proof is not on the defendant, since she is the
     record title holder.

     The Arkansas Dead Man's Statute was repealed when the Revised
Uniform Rules of Evidence were adopted in 1976.  Since its repeal,
courts determine the admissibility and proof of the deceased's
words and dealings on the basis of its relevance and reliability,
just as the admissibility of all unprivileged evidence is
determined.  The chancellor's comment that the decedent's
statements should be excluded as hearsay is incorrect.
     I believe the chancellor's focus on the 1993 discussion is
misplaced.  The focus should have been on Sabbs's intent to make
the gift at the time of the grant as the delivery of a deed is not
valid unless the grantor intended to pass title immediately. 
Johnson v. Ramsey, 307 Ark. 4, 817 S.W.2d 200 (1991).
     Additional factors that evidence that appellee did not receive
the property as a gift are as follows:  
     After the deed was recorded, it was returned to the residence
of James Sabbs.  Appellee did not list the property as an asset in
a mortgage application for her current residence nor designate the
property as an asset in her 1978 divorce.  Appellee did not claim
any appreciation for the property nor report any rental income from
the property on her income tax returns.  The property was insured
in the names of appellee and her father.  Appellee testified that
she received the rent from the property; however, the only rental
receipts in the record that were signed by the appellee were dated
after Mr. Sabbs's death.  Although appellee testified that the
rental income was for her personal use, she testified that she
never withdrew monies from the joint account in which the rental
income was deposited.  Appellee could only produce 1991 and 1992
real estate tax receipts and 1989 through 1992 income tax returns
showing payment of real estate taxes.
     An asserted gift, whether causa mortis or inter vivos, must be
established by evidence which is "clear and convincing."  Boling v.
Gibson, 266 Ark. 310, 584 S.W.2d 14 (1979); Smith v. Clark, 219
Ark. 751, 244 S.W.2d 776 (1952); Lehman v. Broyles, 155 Ark. 593,
245 S.W. 24 (1922); Lowe v. Hart, 93 Ark. 548, 125 S.W. 1030
(1910).  The required elements for an effective inter vivos gift,
which must be proven by clear and convincing evidence, are that the
donor knew and understood the effect of his act and intended that
effect; that the donor made actual delivery to the donee; that the
donor intended to pass title immediately; and the donee accepted
the gift.  O'Flarity v. O'Flarity, 42 Ark. App. 5, 852 S.W.2d 150
(1993).
     In Bennett v. Miles, 212 Ark. 273, 205 S.W.2d 451 (1947), we
said:  
     In the more recent case of Baugh v. Howze, 211 Ark. 222,
     199 S.W.2d 940 [(1947)], we said:  "To constitute a valid
     gift inter vivos, certain essential elements must be
     present, these include actual delivery of the subject-
     matter of the gift to the donee or to some one as agent
     or trustee for the donee, with a clear intent to make an
     immediate present and final gift beyond recall, and at
     the same time unconditionally releasing all future
     dominion and control by the donor over the property so
     delivered."

     When these well-settled rules are applied to the facts of this
case, I find that two of the essential elements necessary to a
valid gift are absent in that Sabbs did not give the deed to
appellee with the intention at the time of passing title to her and
that appellee did not accept the gift as her own, but only as agent
for Sabbs, or as a trustee, and therefore, there was no valid gift
inter vivos.
     The existence of a confidential relationship between the
parties raises a rebuttable presumption that the gift was obtained
by undue influence or other improper means.  The burden is on the
alleged donee to rebut this presumption and to establish that the
claimed gift was fairly and properly made to him.  Mohr v. Hampton,
238 Ark. 393, 382 S.W.2d 6 (1964); Burns v. Lucich, 6 Ark. App. 37,
638 S.W.2d 263 (1982).
     I do not believe the appellee has met the burden of proof
necessary to establish the asserted gift inter vivos by the
required standard of clear and convincing evidence.  I believe that
the chancellor's decision is clearly against the preponderance of
the evidence and should be reversed.