Betty M. Hearne v. David Blaine Banks

DIVISION II

NOT DESIGNATED FOR PUBLICATION

ARKANSAS COURT OF APPEALS

CA00-396

December 20, 2000

BETTY M. HEARNE AN APPEAL FROM SEBASTIAN

APPELLANT COUNTY CHANCERY COURT

NO. 98-955 (II)

V.

HONORABLE HARRY A. FOLTZ

DAVID BLAINE BANKS CHANCERY JUDGE

APPELLEE

AFFIRMED

WENDELL L. GRIFFEN, Judge

Betty M. Hearne has appealed from a portion of the September 10, 1999, divorce decree entered by the Sebastian County Chancery Court between her daughter, Diane Banks, and appellee David Blaine Banks. In addition to granting an absolute divorce and awarding custody and child support, the chancellor found that appellant, appellee, and Diane Banks owned certain residential property as joint tenants with a right of survivorship. He ordered that the property be sold and the proceeds equally divided among the three joint tenants. On appeal, appellant challenges the portion of the decree finding that the grantees are joint tenants and ordering the sale of the property. We hold that the chancellor's decision is not clearly erroneous and affirm.

In mid-1996, after learning that her daughter and son-in-law were losing their home in California to foreclosure, appellant offered to buy them a house in Fort Smith, Arkansas. They accepted, and appellant purchased the house, located at 901 North 14th Street in Fort Smith, for $47,000. In addition, appellant gave her daughter $25,000 to place a new roof on the house and to have central heat and air installed. The original deed listed only appellee and Diane Banks, appellant's daughter, as the grantees. A substituted deed was recorded that listed the grantees of the property as "David Blaine Banks and Diane Lynn Banks, husband and wife, and Betty M. Hearne, joint tenants with right of survivorship." The couple placed the $25,000 that appellant gave them in a joint checking account and used $19,000 for the improvements. Two years later, Diane Banks filed for divorce. Appellant filed a motion to intervene in the divorce action on March 5, 1999, asking the court to impose an equitable lien on the property in the amount of approximately $72,000 to reimburse her for the purchase price of the house and the cost of improvements.

A hearing was held on June 29, 1999, and the portion of the chancellor's opinion relevant to this appeal provides:

That the parties acquired the following tract of real property with the intervenor during the marriage:

Lot 12, Block 98, original City of Fort Smith, Arkansas a/k/a 901 N. 14th Street, Fort Smith, Arkansas

The Court finds that the plaintiff, defendant and intervenor own this property as joint tenants with right of survivorship just as the deed states. This home is to be sold and the net proceeds equally divided between the three parties. The home is to be sold at private sale, but if it is not sold after one hundred and twenty (120) days then either party can motion this Court to have the home sold at public sale on the same terms. The Court makes this decision because the intervenor has failed to convince the Court that the Court should reform the deed and press an equitable lien on the sale proceeds of the home or impose a constructive trust. That the Court further finds no evidence of unjust enrichment. It is clear to the Court that the intervenor purchased the home for her daughter (i.e., plaintiff) and her son-in-law (i.e., defendant) as so many parents do, so that her daughter and grandchildren would have a nice home in which to raise the children. The intervenor placed the defendant's name on the deed because her daughter, the plaintiff, asked her to do sobecause the plaintiff thought it might help her troubled marriage. The intervenor agreed to place the defendant's name on the deed for this reason and the Court is convinced that she knew when she did so that she was giving the defendant a one-third (1/3) interest in the home. The Court finds it difficult to believe, as the intervenor argues, that anybody can be so naive as to believe that one can place a name on a deed without conveying any interest to that person. It is clear to the Court that what has happened in this case, as happens in so many divorce cases, is that the grantor, the intervenor, has no desire at this time for a divorced son-in-law to retain a gift made by the donor to him when the plaintiff and defendant were married and divorce was not contemplated. The gift was made however and the intervenor can not now have it set aside because, in hindsight, she wishes she had not made the gift in view of the parties becoming divorced. In making this decision, the Court further finds that there is no fraud committed by the defendant, no coercion and no agreement to do anything but accept the gift made to him by the intervenor. Finally, the Court finds no basis on which to make an unequal distribution of the property between the parties....

Appellant raises three issues on appeal: (1) whether the court erred in finding that she made a gift to her daughter and appellee; (2) whether the court erred in not reforming the deed and imposing an equitable lien in her favor; and, (3) whether the court erred in neither finding unjust enrichment nor imposing a constructive trust on the property. On appeal we review chancery cases de novo, but we will not reverse the chancellor's findings unless they are clearly erroneous or clearly against a preponderance of the evidence. Mikus v. Mikus, 64 Ark. App. 231, 981 S.W.2d 535 (1998).

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. Howard v. Weathers, 55 Ark. App. 121, 932 S.W.2d 349 (1996). In the instant case, there is no allegation that appellant was not of sound mind. Although a deed is inoperative unless there is a valid delivery, see Wilson v. McDaniel, 247 Ark. 1036, 449 S.W.2d 944 (1970), a presumption of a valid delivery attaches when a deed is recorded. See Corzine v. Forsythe, 263 Ark. 161, 563 S.W.2d 439 (1978). The record in this case reveals that appellee and his wife signed the deed, the deed was recorded, and moreover, that actual delivery of the property took place. Finally, appellee and his wife accepted the gift by moving into the home.

Thus, the only two requirements at issue are (a) whether appellant clearly intended to make an immediate, present, and final gift and (b) whether she unconditionally released all future dominion and control over the property. Appellant argues that she never intended the property to be a gift but intended to get her money back if it were ever sold. It is worth noting that when appellant purchased the property, the original deed listed David Blaine Banks and Diane Lynn Banks as the grantees. A substituted deed was executed later that included appellant as an additional grantee, and the three grantees were listed as joint tenants with right of survivorship.

Appellant's son, Daniel Lee Hearne, testified that he was involved with part of the closing but that he did not know how his mother's name was left off the first deed. Appellant stated that she purchased the property because she wanted her daughter and her grandchildren to have a place to live but that she never intended to give the property to Diane Banks or David Banks. She also testified that she told the Banks that because their house in California was the subject of foreclosure proceedings, she would buy them a house. When asked why she placed the Bankses' names on the deed, appellant responded, "[o]ne reason, they were having quite a bit of trouble and they thought if his name was on it, that wouldgive them a better chance to start a new life out here." Appellant testified that she did not consult anyone about preparing a deed and that having appellee's name on the deed meant nothing to her because she would not have given him anything. However, the following excerpt from appellant's testimony clearly indicates otherwise:

Question: Did you know what would happen if you passed away?

Answer: Well, my share was supposed to go to Diane.

Question: Diane and who?

Answer: Well, hopefully if they were gonna' make it that long, it woulda' been David I guess.

Appellant also argues that she did not make an inter vivos gift because she did not unconditionally release all future dominion and control over the property but retained title as a joint tenant. However, under the subject warranty deed, appellant retained only an undivided one-third interest in the property; the other two joint tenants each had an undivided one-third interest. Appellant admitted that the deed was prepared by an attorney; that she intended to place all three names on the deed; and that, in the event of her death, her interest would go to the other two joint tenants. Based on these facts, we cannot hold that the chancellor erred in finding that appellant intended to make an immediate, present, and final gift and that she released all control over all the property except for her one-third undivided interest.

Appellant argues for her second point that the chancery court erred in not reforming the deed and imposing an equitable lien in her favor. It is true that a court of equity may reform a deed or other written instrument in either of two cases: (1) where there is a mutual mistake, that is, where the deed does not express what was really intended by the parties thereto, and (2) where there has been a mistake of one party accompanied by fraud or otherinequitable conduct of the remaining parties. Mikus v. Mikus, supra. Here, however, we affirm the chancellor's finding that appellant intended to and did make an inter vivos gift of the property. Hence, we cannot conclude that either of the requisite conditions for reforming the deed was proved. Thus, appellant's argument must fail.

Appellant's final point is that the chancery court erred in not finding unjust enrichment nor imposing a constructive trust on the property. One is not unjustly enriched by receipt of that to which he is legally entitled. Smith v. Whitener, 42 Ark. App. 225, 856 S.W.2d 328 (1993). To find unjust enrichment, a party must have received something of value to which he is not entitled and which he should restore. Id. There must be some operative act, intent, or situation to make the enrichment unjust and compensable. Id. In the case at bar, appellant made a valid inter vivos gift to appellee. Appellee is legally entitled to his undivided one-third interest; hence, appellant's unjust enrichment argument must fail. The chancellor did not clearly err in rejecting it.

Affirmed.

Pittman, J., agrees.

Roaf, J., concurs.