Mary E. Lowe and Nancy F. Lowe v. Owen W. Beard and Bernard M. Beard

ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION

DIVISION II

CA05-567

February 1, 2006

MARY E. LOWE and AN APPEAL FROM LONOKE COUNTY

NANCY F. LOWE CIRCUIT COURT

APPELLANTS [No. CV 2004-33]

v. HONORABLE LANCE L. HANSHAW,

CIRCUIT JUDGE

OWEN W. BEARD and

BERNARD M. BEARD

APPELLEES AFFIRMED

Wendell L. Griffen, Judge

This is an appeal from the judgment of the Lonoke County Circuit Court, following a bench trial that involved differing views on the meaning of a written agreement concerning a family farm. The trial court found the agreement to be valid and binding on appellants, Mary Lowe and Nancy Lowe. Appellants raise three points for reversal. Finding no error, we affirm.

The parties stipulated to the following facts. Appellees Owen Beard and Bernard Beard are brothers, who, along with their sister, Joyce B. Lowe, now deceased, and their brother, Hays R. Beard, still living, jointly own various parcels of property from the estates of their parents, Walter K. Beard and Ester N. Beard. Appellants are Joyce's daughters and nieces of Owen, Hays, and Bernard.

The siblings operated their farm as a partnership. The original parties to that partnership were Alton, Joyce, Owen, Hays, and Bernard. After Alton's death in 1981, the surviving siblings revised their agreement on October 12, 1996. The agreement, as restated, recites that each original sibling inherited a 3/15 undivided interest in the estate assets. Following Alton's death in 1981, the surviving brothers, Hays, Owen, and Bernard, each purchased an equal share of Alton's share of the estate. This left each sibling having undivided ownership as follows: Joyce, 3/15; Hays, 4/15; Owen, 4/15; and Bernard, 4/15.

The agreement provided that upon the withdrawal of a sibling, the sibling or his or her personal representative in the case of death, shall sell his or her interest in the estate to the remaining siblings who are obligated to buy the interest to be transferred. The remaining siblings would purchase the selling sibling's share of the estate by paying to the selling sibling, or the heirs of the selling sibling, the proportionate fair market value of the partnership assets. The proportionate fair market value of the selling sibling's share would be determined under the agreement in one of two ways: by agreement of the siblings as to what was the fair market value or by an appraisal that could be requested by any siblings dissenting to the fair market value proposed by the other siblings. Joyce and all other parties were competent when the agreement was signed on October 12, 1996.

On August 24, 1998, Joyce executed a durable power of attorney naming Nancy and/or Mary as her lawful attorneys in order to transact all business and commercial transactions. On August 29, 1998, Nancy received a copy of the 1996 agreement and was aware of the conditions imposed by the agreement, including Paragraph 9, which stated that, if the siblings could not agree upon a fair market value, the dissenting individuals shall each name an appraiser to appraise the property.

On November 24, 2000, Joyce, Owen, Hays, and Bernard signed an addendum to the agreement setting the value of the land and buildings of the W.K. Beard estate at $135,000. The November 24, 2000, addendum provided that the agreement was to be governed by Arkansas law and was to be binding upon the siblings, their heirs, legal representatives, or assigns, who shall execute and deliver the legal documents necessary to carry out its provisions. The addendum also provided that the fair market value of the property was$135,000. The parties stipulated that the term "sibling" as used in the agreement and addendum has the common meaning of "brother or sister" and not subsequent heirs.

Joyce died on June 19, 2003. Owen and Bernard gave notice that they would exercise their rights to buy Joyce's share of their parents' estate under the terms of the agreement by paying to Mary and Nancy their mother's proportionate share of the estate for the price set by the addendum to the agreement. Despite the language in the agreement and the addendum stating that the agreement and valuations made thereunder are binding on the heirs of the siblings who signed the agreement, Mary and Nancy have demanded that the assets of the estate be reevaluated by appraisal and have refused to sell their mother's share at the proportionate price set by the addendum. Mary and Nancy admitted that the siblings signed the agreement setting the price at $135,000 but denied that this price was at fair market value. Mary and Nancy affirmatively assert that the fair market value of the property is $588,000, based on an appraisal by Frank Chudy.

Mary and Nancy assert that the doctrine of mutuality gives them standing to demand that the estate assets be revalued by an appraisal. Owen and Bernard deny that Mary and Nancy have standing to demand that the assets be revalued.

When Mary and Nancy would not comply with the agreement, Owen and Bernard filed the present suit, alleging breach of contract and seeking specific performance of the agreement. They also sought the appointment of a commissioner to convey the property if Mary and Nancy refused to comply. Mary and Nancy filed an answer alleging that the agreement was unenforceable because of the lack of mutuality in that they were not "siblings" and could not request a reappraisal, that Joyce lacked capacity to execute the addendum to the agreement, and that the fair market value of the property was $588,000.

After considering the parties' stipulations and additional testimony from Mary and Nancy, the trial court issued a letter opinion finding that there was a valid contract between the siblings and that all of the siblings were bound by the terms of the agreement. The trial court also found no proof of lack of mutuality. The trial court noted that it was compelling to the court that Mary and Nancy knew that their mother and uncles were meeting to discuss farm business but did not request a copy of the addendum or seek information as to what transpired. The trial court also found it significant that, between 2000 and Joyce's death in 2003, neither Mary nor Nancy complained that Joyce might have acted in an incompetent manner that could be detrimental to either of them. In the judgment that followed, the trial court ordered Owen and Bernard to deposit funds into the registry of the court representing Joyce's 3/15 interest in the assets of the W.K. Beard estate. The court also appointed the Lonoke County Circuit Clerk as commissioner to execute a deed to Owen and Bernard if Mary and Nancy failed to do so. This appeal followed.

In this appeal, Mary and Nancy raise three points: (1) that the trial court erred in not finding that the agreement and addendum were not binding due to lack of mutuality of obligations among the parties; (2) that the trial court erred in finding that there was no proof of lack of mutuality when Owen and Bernard denied contractual and equitable rights of Mary and Nancy to invoke the provisions of the agreement to seek a revaluation of the farm property; and (3) that the trial court erred in finding that Mary and Nancy knew in November 2000 that Owen and Bernard and their other siblings were meeting to discuss farm business, including the signing of the addendum to the agreement.

In bench trials, the standard of review is not whether there is any substantial evidence to support the finding of the court, but whether the judge's findings were clearly erroneous or clearly against the preponderance of the evidence. Reding v. Wagner, 350 Ark. 322, 86 S.W.3d 386 (2002). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a firm conviction that a mistake has been made. Chavers v. EPSCO, Inc., 352 Ark. 65, 98 S.W.3d 520 (2003).

We discuss the first two points relating to mutuality together. Appellants argue that, because they, as heirs, do not have the right to seek a revaluation of the property, the agreement lacks mutuality of obligations and is, therefore, unenforceable.

Mutuality does not require that the obligations of the promisor and the promisee be equal. Lindner v. Mid-Continent Petroleum Corp., 221 Ark. 241, 252 S.W.2d 631 (1952). It is enough that the duty unconditionally undertaken by each party be regarded by the law as a sufficient consideration for the other's promise. Id. In Lindner, the supreme court said:

Williston has pointed out that the use of the term "mutuality" in this connection "is likely to cause confusion and however limited is at best an unnecessary way of stating that there must be a valid consideration." Williston on Contracts, § 141. As we held in Johnson v. Johnson, 188 Ark. 992, 68 S.W.2d 465, the requirement of mutuality does not mean that the promisor's obligation must be exactly coextensive with that of the promisee. It is enough that the duty unconditionally undertaken by each party be regarded by the law as a sufficient consideration for the other's promise. Of course a promise which is merely illusory, such as an agreement to buy only what the promisor may choose to buy, falls short of being a consideration for the promisee's undertaking, and neither is bound. El Dorado Ice & Planing Mill Co. v. Kinard, 96 Ark. 184, 131 S.W. 460; Williston, § 104. If, however, each party's binding duty of performance amounts to a valuable consideration the courts do no insist that the bargain be precisely as favorable to one side as to the other.

Lindner, 221 Ark. at 243-44, 252 S.W.2d at 632.

It is important to remember that there are two distinct sets of rights and obligations at issue: first, the obligation of each sibling upon death or withdrawal from the partnership to sell his or her interest to the remaining siblings at an agreed upon price (Paragraph 7); second, the right of each sibling to seek a revaluation of the fair market value of the property (Paragraph 9). The parties stipulated that the term "sibling" means only the brothers and sisters and not children or other heirs. Therefore, the right granted in Paragraph 9 to each sibling to seek revaluation necessarily expires with that sibling's death. The rights and obligations granted under Paragraph 7 apply to both siblings and heirs, such as appellants. Those rights and obligations include the sale of the withdrawing/deceased sibling's interest to the other siblings.

Appellants argue that, when a sibling dies, his or her heirs should be allowed to negotiate a fair market value purchase of the property, including the right to seek a revaluation of the fair market price. However, that is not what the agreement or the addendum to that agreement provides. Only "siblings" are granted the right to seek revaluation of the property. The fact that portions of a contract may apply to one party but not to others has no bearing on the mutuality of the parties' obligations as long as consideration exists and all parties are bound to honor the contract. Dobbs v. Guenther, 846 S.W.2d 270 (Tenn. App. 1992). If the siblings had wanted the rights to be enjoyed by their heirs, they could have so provided. See Newberry v. McClaren, 264 Ark. 735, 575 S.W.2d 438 (1978). The Restatement of Contracts makes this point clear: "If the requirement of consideration is met, there is no additional requirement of ... `mutuality of obligation.'" Restatement (Second) of Contracts § 79 (1979). Therefore, just because appellants, as heirs, were not given the right to seek revaluation of the property does not mean that there was no consideration for their mother's promises in either the 1996 agreement or in the November 2000 addendum. We affirm on these points.

In their third point, appellants argue that the trial court erred in finding that they knew or should have known that their mother and uncles were meeting at a November 2000 family reunion to discuss farm business, including the signing of the addendum to the agreement. Mary testified that she realized that, during the reunion, her mother met alone with her brothers. She also testified that the siblings had used previous reunions to discuss family business. Both Mary and Nancy testified that they knew that they could use the power of attorney to conduct Joyce's business. Given this testimony and the stipulation that Nancy had received a copy of the agreement from her uncle Bernard in 1998 and was, therefore, aware of its provisions, we cannot say that the trial court's finding was clearly erroneous.

Affirmed.1

Pittman, C.J., and Crabtree, j., agree.

1 Appellants' addendum does not comply with Ark. R. Sup. Ct. 4-2(a)(8) concerning the contents of the addendum. Given that the parties stipulated to most of the facts necessary for a decision in this case, much of the addendum, such as the partnership tax returns, was unnecessary. We have pointed out that an abstract and addendum can be deficient for containing too much material, as well as too little. See American Transp. Corp. v. Exchange Capital Corp., 84 Ark. App. 28, 129 S.W.3d 312 (2003); Miller v. Hometown Propane Gas, Inc., 82 Ark. App. 82, 110 S.W.3d 304 (2003); Frigon v. Frigon, 81 Ark. App. 314, 101 S.W.3d 879 (2003).