JOHN ROBERT MATHIAS; TRUSTEE OF THE JOSEPH V. MARTIN TRUST; LYNNE JANE MATHIAS; JOHN ROBERT MATHIAS, HER HUSBAND; ROXANNE JO MARTIN; JOHN GROVER MARTIN; AND ELIZABETH MARTIN, HIS WIFE v. LILLIAN G. MARTIN, INDIVIDUALLY AND LILLIAN G. MARTIN, ADMINISTRATRIX OF THE ESTATE OF JOSEPH V. MARTIN, DECEASED
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RENDERED: OCTOBER 6, 2000; 2:00 p.m.
TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-000381-MR
JOHN ROBERT MATHIAS; TRUSTEE OF
THE JOSEPH V. MARTIN TRUST; LYNNE
JANE MATHIAS; JOHN ROBERT MATHIAS,
HER HUSBAND; ROXANNE JO MARTIN;
JOHN GROVER MARTIN; AND ELIZABETH
MARTIN, HIS WIFE
v.
APPELLANTS
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE JOHN R. ADAMS, JUDGE
ACTION NO. 97-CI-02790
LILLIAN G. MARTIN, INDIVIDUALLY AND
LILLIAN G. MARTIN, ADMINISTRATRIX
OF THE ESTATE OF JOSEPH V. MARTIN,
DECEASED
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
BARBER, JOHNSON AND SCHRODER, JUDGES.
BARBER, JUDGE: This is an appeal from a judgment of the Fayette
Circuit Court setting aside transfers of property to a trust by
Joseph V. Martin (Joe), immediately prior to his marriage to
Lillian G. Martin, as a fraud on dower.
Appellants are the
trustee of the Joseph V. Martin Trust, and Joe’s three children
from a previous marriage and their spouses.
Appellees are
Lillian G. Martin, individually, and as administratrix of Joe’s
estate.
Joe and Lillian were married on May 18, 1985.
Joe’s fourth marriage.
It was
He had three adult children from a
previous marriage, Lynne Jane Mathias, Roxanne Jo Martin and John
Grover Martin.
The day before the wedding, Joe’s children came
to town and accompanied him to the office of attorney Jonathan
Buckley, where he executed a trust agreement naming himself and
his son-in-law, John Robert Mathias (Lynne’s husband) as cotrustees.
By deed executed May 17, 1985, Joe conveyed real
estate known as the Highcroft Farm to the trust.
According to
the Fayette County Property Valuation Administrator, the farm had
a fair market value of $764,400.00 as of January 1, 1985.
farm represented the bulk of Joe’s assets.
The
The trust agreement
provided for net income to be distributed to Joe during his
lifetime, and for undistributed income and corpus to be
distributed to Joe’s children after his death.
On the night of May 17, 1985, Lillian was informed Joe
had signed the trust agreement, but Lillian did not see the
document at that time.
The same evening Lillian informed Joe
that she had been advised by her attorneys not to sign the draft
of a prenuptial agreement also prepared by attorney Jonathan
Buckley.
The next morning, prior to the marriage ceremony, Joe
signed an addendum to the trust, prepared by daughter Lynne, “to
add all of J.V. Martin’s things into the Trust.”
Joe and Lillian lived together on the farm until Joe’s
death on April 2, 1997. Lillian qualified as administratrix of
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Joe’s estate on July 31, 1997.
She filed an action in Fayette
Circuit Court on August 11, 1997.
Cross-motions for summary
judgment were filed – Lillian contending that the transfers to
the trust constituted a fraud on dower and the trustee/children
contending that the action was barred by the statute of
limitations and/or laches. According to the defendants’
supporting memorandum, Lillian had consulted an attorney, Natalie
Wilson, about the trust shortly after the marriage.
Attorney
Wilson had contacted Attorney Buckley within thirty days of the
marriage suggesting Joe had committed a fraud on Lillian by the
conveyance.
An opinion and order was entered December 16, 1998.
The court found:
(1) This is an action by the Plaintiff
against the Defendants alleging that they,
along with her deceased husband, Joseph V.
Martin, perpetrated a “fraud on the dower”.
The parties have taken considerable proof in
this case and therefore the facts are
essentially undisputed. The issue before
this Court is whether “as a matter of law”
the Plaintiffs are entitled to a finding by
this Court that the facts constitute “a fraud
on the dower”.
The pertinent facts not in dispute make it
clear that on the eve of the marriage to
Lillian Martin, Joseph Martin and his
children by a previous marriage, engaged in
certain activities in attempting to structure
his estate and to place all of his property
in a “trust”. Various parties defendant have
testified in deposition that the purpose of
this transfer of property was so that he
could pass all of his property to his
children upon his death. It is also clear
that Lillian knew of his actions, did not
acquiesce in or approve his actions, but
married Joseph the next day. The couple
lived as husband and wife for some twelve
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years prior to Mr. Martin’s death in April of
1997.
* * *
This court finds based upon the facts and the
law that will be discussed following that she
is entitled to that relief and therefore,
SUSTAINS the Plaintiff’s motion.
* * *
The Court also finds that even though Lillian
Martin may have been aware of these transfers
and attempted transfers prior to her marriage
to Mr. Martin that does not defeat her claim
for a statutory interest. See Anderson v.
Anderson, Ky., [sic] App., 583 S.W.2d 504
(1979).
The most compelling law supporting the
position of Mrs. Martin is found in the
Supreme Court case of Harris v. Rock, [Ky.,]
799 S.W.2d 10 (1990), and in citing Martin v.
Martin, [282 Ky. 411] 138 S.W.2d 509 (1940)
says as follows:
We held that a widow is entitled to dower in
property that her intended husband disposed
of shortly before their marriage in an
attempt to defeat a claim by his intended
wife to dower.
Therefore, the fact that Mrs. Martin knew
about the transfers prior to her marriage to
Mr. Martin does not defeat her claim and is
stated in the Anderson, Supra, decision, “a
man is presumed to intend the natural
consequences of his acts, and where the
effect of his acts were to disinherit his
wife from such a substantial portion of his
estate as the case here, it would be
unreasonable to infer that the gift to the
children was made without an intention to
disinherit the wife. Where only one
reasonable inference may be drawn from the
indisputable fact, Summary Judgment is
proper. [Emphasis original.]
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The court declined to rule on other issues concerning
standing to set aside the marriage and taxes.
The court directed
the plaintiff to prepare a judgment in conformity with the
court’s findings.
On December 22, 1998 defendants filed a CR
59.05 motion to alter, amend or vacate and/or for reconsideration
of the opinion and order, contending that there was no fraud,
that summary judgment was inappropriate because there was a
material issue of fact regarding Joe’s intent in executing the
trust, that the court had failed to consider laches, unclean
hands and equitable estoppel.
The judgment, entered February 1,
1999, set aside all transfers and purported transfers of real and
personal property to the Joseph V. Martin Trust as a fraud upon
the dower rights of Lillian G. Martin.
The trial court denied
defendants’ motion for summary judgment on grounds of laches,
“unclean hands”, and equitable estoppel.
On January 29, 1999 an
order was entered denying defendants’ motion to alter, amend or
vacate.
On February 11, 1998 an order was entered that the
“Highcroft Farm [bank] account,” is an estate asset, to be
administered accordingly.
Notice of Appeal from the February 1,
1999 judgment and the January 29, 1999 and February 11, 1999
orders was filed on February 19, 1999.
On appeal, appellants contend that:
(1) No fraud
on dower was committed, because Lillian knew of the
conveyance of the farm to the trust before marriage;
(2)
The claim of fraud on dower is barred by the statute of
limitations; (3) The claim of fraud on dower is barred by
laches;
(4) There was a genuine issue of intent to
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defraud, making summary judgment inappropriate; and (5)
There were genuine issues for trial regarding the equitable
defenses of estoppel and unclean hands, making summary
judgment inappropriate.
In support of their argument that there was no fraud on
dower, appellants rely upon Cheshire v. Payne, 55 Ky. 618 (16 B.
Mon. 618) (1855).
There, the husband and wife sought to set
aside a deed executed by the wife before the marriage in
consideration of promises by her father and brother that her
father would convey other property to her.
noncompliance by the father and brother.
Plaintiffs alleged
The husband was
informed of the deed shortly before the marriage ceremony.
The
court held that in order to render such a disposition of property
fraudulent against the husband, in derogation of his marital
rights, the transfer must be made pending a treaty, in
contemplation of marriage, and without the knowledge of the
intended husband.
The court noted that had the husband not been
made aware of the conveyance before the marriage, it may have
been valid, nevertheless, because there was adequate
consideration, the deed was recorded before the marriage and
there was no ill motive or prejudice.
Appellants also rely upon Murray v. Murray, 90 Ky. 1,
13 S.W. 244 (1890), which held that a conveyance upon the eve of
marriage must be made without the wife’s consent or knowledge to
be considered a fraud upon the wife’s marital rights.
Appellants
also cite Smith v. Erwin, 26 Ky. L. Rptr. 760, 82 S.W. 411
(1904), and Anderson v. Anderson, 194 Ky. 763, 240 S.W. 1061
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(1922), for essentially the same proposition.
Appellants contend
that the rule of law in these cases has not been modified; we
disagree.
In Rowe v. Ratliff, 268 Ky. 217, 104 S.W.2d 437 (1937),
the husband made a trade for the purchase of two tracts of land
before his marriage; however, the trade was not consummated until
after the marriage.
When the deed was tendered to the husband,
he refused to sign it, and announced for the first time that he
wanted the deed made to his mother.
and executed to the mother.
Another deed was prepared
That deed was recorded.
The
consideration shown in that deed was one dollar, although the
husband had actually paid $4,000.00 for the two tracts of land.
The husband and wife took immediate possession of the land and
lived on it until the husband’s death.
Judgment was entered for
the widow in an action to set aside the deed to the mother.
The
court stated that the wife “at the time when the deed was made,
had a potential right of dower in whatever lands her husband may
have owned, which consummated into a right of dower at his death.
This interest in said land cannot be taken from her without her
consent.”
Id. at 438.
There is no power on earth given to a husband
by the exercise of which the inchoate right
of dower of his wife could be taken from her
without her consent. The right of dower has
been recognized to be so sacred to the wife,
even the potential right of dower, that the
husband, or a prospective husband, cannot
convey his real estate or even his personal
property or give it to others for the purpose
of taking from her rights. The only way that
the wife can lose her dower is to either sell
it, forfeit it, or die and leave it.
Id. at 439.
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Three years later, Martin v. Martin, 282 Ky. 411, 138
S.W.2d 509 (1940), dealt with the issue of whether or not a man,
in contemplation of marriage, could prevent an intended wife from
obtaining an interest in personal property by making a gift which
would prevent his widow from asserting her marital rights in the
property in the hands of a donee.
Martin involved transfers of
bank deposits to the husband’s sister prior to the marriage.
In
discussing whether or not there was a distinction between
conveyances of real estate and personal property, the court noted
that “a wife after marriage acquires an interest . . . [in real
estate] in the way of inchoate dower of which she cannot be
divested by any act of her husband . . . .”
added).
Id. at 514 (emphasis
The court determined that the distinction between real
and personal property was not a sound and rational one, and held
that:
[A] man may not make a voluntary transfer of
either his real or personal estate with the
intent to prevent his wife, or intended wife,
from sharing in such property at his death
and that the wife, on the husband’s death,
may assert her marital rights in such
property in the hands of the donee. (Emphasis
added).
Id. at 515.
In Anderson v. Anderson, Ky. App., 583 S.W.2d 504
(1979), the widow elected to renounce the will and take her
statutory share of her husband’s estate.
During the marriage,
the decedent had transferred approximately $47,000.00 into bank
accounts held in joint tenancy with his children from a previous
marriage.
The widow sought to bring the $47,000.00 into the
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estate, alleging that the transaction had defrauded her of her
marital rights.
The children contended that the inter vivos
transfers were made in good faith, with no intent to defraud, and
that the widow had known of the transfers at the time they were
made.
This Court rejected authority from other jurisdictions
holding that a person may dispose of his property during his
lifetime as he sees fit so long as the disposition was not solely
to defeat the spouse’s marital rights.
The court explained that
those decisions did not reflect the law “as it stands” in this
Commonwealth, and followed Martin, supra.
The court held that:
A man is presumed to intend the natural
consequences of his acts, and where the
effect of his acts is to disinherit his wife
from such a substantial portion of his estate
as was the case here, it would be
unreasonable to infer that the gift to the
children was made without an intention to
disinherit the wife. Where only one
reasonable inference may be drawn from the
undisputed facts, summary judgment is proper.
Anderson, at 505.
The trial court found Harris v. Rock, Ky., 799 S.W.2d
10 (1990), to be compelling authority in support of Lillian’s
position.
There the issue was whether deposits by a husband into
accounts jointly held with his children defeated the widow’s
right under KRS 392.020 to receive half of his surplus personalty
upon his death.
During the course of the marriage, the husband
had acquired numerous certificates of deposit; each bore only two
names -- either the husband’s and the name of one of his seven
children from a prior marriage, or the husband’s and the wife’s.
At the time of death, there was approximately $20,000.00 in each
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of these joint accounts.
The widow filed an action to recover
her dower interest in one-half of the personalty, including the
money in the various joint accounts.
Our Supreme Court cited Martin, supra, for the rule
that a widow was entitled to dower in property that her
intended husband disposed of shortly before their marriage,
in an attempt to defeat her claim to dower.
The court
explained that KRS 391.315 provides that funds deposited into
a joint account belong to the survivor as against the estate
of the decedent, upon death of the other party to the
account; however, there is a limitation necessarily implied
in law.
If the party who deposited the funds was not legally
entitled to dispose of them in such a manner, then the
survivor does not become the owner of the funds in the
account upon the death of the other party.
The court held
that:
[I]t has long been the law of Kentucky by
virtue of KRS 392.020 that a husband has no
legal right to dispose of more than one-half
of his property with intent to defeat a dower
claim by his widow . . . .
. . . .
Absent an agreement of the parties, a
disposition of property with the intent to
defeat the right of dower creates a
presumption of fraud upon the surviving
spouse. (Emphasis added).
Harris, at 12.
The court concluded that the deposit of
approximately seven-eighths of the personal estate into a joint
account with his children left no doubt of the decedent’s intent
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to defeat his wife’s dower interest and raised a presumption of
fraud which was not rebutted.
As noted in the dissent, there was
no finding in Harris that any of this was done surreptitiously or
within intent to defraud or without the wife’s knowledge and
consent.
We agree with the trial court that the fact Lillian
knew about the transfers does not defeat her claim.
Joe
could not take Lillian’s dower right from her without her
consent.
Lillian did not release her potential right of
dower, and the (purported) conveyance of property into the
trust on the eve of marriage did not extinguish her inchoate
interest in Joe’s property.
Lillian is entitled to assert
her marital interest in the property in the hands of the
donees.
We disagree that Lillian’s claim is barred by the
statute of limitations or laches.
As noted in the authority
cited above, the right of dower is not consummate and does
not become a chose in action until the husband dies.
Only by
outliving her husband, did Lillian’s inchoate interest ripen
into a right of dower.
We are not persuaded by appellants’ argument that there
was a genuine issue for trial regarding the intent to defraud.
The trial court found that the “pertinent facts, not in dispute”
were that on the eve of his marriage to Lillian, Joe and his
children, by a previous marriage, “engaged in certain activities
in attempting to structure his estate and to place all of his
property in a ‘trust’.”
(Emphasis added).
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The court found that
various party defendants had testified that the purpose of this
transfer was “so that he could pass all of his property to his
children upon his death.”
In Anderson, 583 S.W.2d at 505, this court stated that:
Appellants insist that the transfers [of
$47,000 into bank accounts held in joint
tenancy with children from a previous
marriage] may be set aside only upon a
showing that the motive for the transaction
was to defeat . . . [the wife’s] marital
right to a statutory share in the property.
We are convinced that such a motive must be
inferred from the circumstances of this case.
(Emphasis added).
Here, Joe attempted to transfer all of his property to
a trust.
The intent and purpose of one performing an act may be
established by his acts and deeds.
Id.
Where the effect of the
decedent’s acts was to disinherit his wife from such a
substantial portion of his estate, “it would be unreasonable to
infer that the gift to the children was made without an intention
to disinherit the wife.
Where only one reasonable inference may
be drawn from the undisputed facts, summary judgment is proper.”
Id.
(Emphasis added).
Appellants also argue that there were genuine issues
for trial regarding “unclean hands” and equitable estoppel.
Appellants provide ample authority explaining these doctrines,
but do not persuade us that the trial erred in this regard.
Appellants do not explain how they, as the parties claiming the
estoppel, may have been prejudiced by any action on Lillian’s
part.
Instead, appellants assert that Joe had no way of knowing
Lillian’s “intentions and desires” regarding his assets.
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It is
uncontroverted that Joe married Lillian after she had refused to
sign the antenuptial agreement.
Moreover, the nature of an
inchoate dower interest is a far cry from any
desire.”
“intention or
As stated in Rowe, supra, at 439, “The right of dower
has been recognized to be so sacred to the wife, even the
potential right of dower, that the husband, or a prospective
husband, cannot convey his real estate or even his personal
property or give it to others for the purpose of taking from her
rights.”
We affirm.
JOHNSON, JUDGE, CONCURS.
SCHRODER, JUDGE, DISSENTING: I believe the wife’s
knowledge of the conveyance before marriage is a bar to a claim
of fraud on dower.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
David L. Bole
Louisville, Kentucky 40202
J. Robert Lyons, Jr.
Lexington, Kentucky 40588
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