LOUISE HOWELL V. DARRELL A. HERALD, ETC.
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AS MODIFIED : AUGUST 24, 2006
AS MODIFIED : FEBRUARY 24, 2006
RENDERED : FEBRUARY 23, 2006
TO BE PUBLISHED
'
Suprant Qlaurf of
2003-SC-000476-DG
[3DAET
LOUISE HOWELL
APPELLANT
ON APPEAL FROM THE COURT OF APPEALS
2002-CA-000387
FAYETTE CIRCUIT COURT NO. 98-CI-03686
V.
DARRELL A. HERALD, EXECUTOR OF
THE ESTATE OF JOHN R. TURNER
APPELLEE
OPINION OF THE COURT BY CHIEF JUSTICE LAMBERT
REVERSING AND REMANDING
This cause comes before the Court for review of the opinion of the Court
of Appeals wherein it adopted, verbatim, the Opinion and Judgment of the Trial Court
granting summary judgment to Appellee . We granted discretionary review, oral
argument was heard, and for the reasons herein stated, reverse the decision of the
Court of Appeals .
John Raymond Turner died in 1998, leaving most of his estate, valued at
approximately fifteen million dollars ($15,000,000), to a foundation created in his will .
The estate consisted of, among other things, real property in several Kentucky counties
and in Florida . In 1996, Turner contemplated transferring some of his real property to
his niece, Appellant, Louise Howell (Howell) . Turner spoke with George Fletcher
(Fletcher), his attorney, about executing deeds and putting them in a lockbox, so that
Howell would not know about the deeds until after Turner's death. However, Turner did
not authorize preparation of the deeds because he was advised that executing the
deeds would be a taxable transfer of ownership and he did not want to pay gift tax.
Additionally, Turner wanted to retain control over the property as long as he lived .
Attorney Fletcher suggested that a way around this would be to either add a codicil to
Turner's will, or to prepare and execute deeds to the property by means of a power of
attorney, waiting until close to Turner's death for the actual execution . Turner opted to
use the power of attorney means and decided to wait until he was closer to death to
proceed with gifting the property to Howell .
Approximately two years later Turner was diagnosed with terminal cancer .
On March 4, 1998, while in the hospital and literally on his deathbed, Turner received a
visit from Fletcher. Fletcher brought the power of attorney for Turner to sign, which he
did, making Fletcher his attorney-in-fact . At that time Turner requested that Fletcher
prepare deeds to Howell for certain properties . On March 6, 1998, Fletcher, as Turner's
attorney-in-fact, prepared and executed the deeds. By their terms, the deeds conveyed
the property to Howell, but retained a life estate in Turner. Fletcher retained
possession of the deeds. Turner died two days later on March 8, 1998 . After Turner's
death, Fletcher contacted Howell so that she could arrange to sign the certificates of
consideration on the deeds, thereby making them suitable for recordation . Until
contacted by Fletcher after Turner's death, Howell did not have any knowledge of the
existence of the deeds.
The executor of Turner's estate' offered to purchase some of the property
allegedly gifted to Howell. After the offer was rejected, the executor brought suit
claiming that the transfers had been procured by fraud . After two years of litigation that
suit was settled . Six months later, the executor filed the current suit claiming that the
transfer was legally insufficient because Turner did not deliver the deeds to Howell
while he was alive . As such, the executor contends that the property should have been
included in Turner's estate upon his death. The circuit court held for the executor
based upon a failure of delivery of the deeds, and the Court of Appeals affirmed,
adopting the circuit court's opinion as its own .
As the purported gift of real property to Howell was inter vivos, Turner's
will having contrary provisions, we will first address the requirements of a valid gift, for
unless the elements are satisfied, there is no need to consider any other elements that
may be peculiar to real property. An inter vivos gift is a "voluntary transfer of property
by one living person to another living person, without any valuable consideration, which
is perfected and becomes absolute during the lifetime of the parties ."2 In Gernert v.
Liberty Nat. Bank & Trust Co . of Louisville3 we enunciated the elements of a valid inter
vivos gift as follows : "(a) [t]hat there must be a competent donor; (b) an intention on his
part to make the gift; (c) a donee capable to take it; (d) the gift must be complete, with
nothing left undone; (e) the property must be delivered and go into effect at once, and
(f) the gift must be irrevocable ."a If any of the elements of the gift are absent or
incomplete, then the gift will fail. Furthermore, "since gifts of this character [intervivos]
' Dale Bryant died and was replaced by the current Appellee, Darrell Herald, as
executor of Turner's estate .
38 Am. Jur. 2d Gifts § 7 (2005).
3 284 Ky. 575,145 S.W.2d 522 (Ky. 1940).
.
Id . at 525.
3
[sic] furnish a ready means for the perpetration of fraud, the evidence necessary to
establish all of the essentials to complete them must be clear and convincing." 5 The
elements necessary for a valid inter vivos gift apply equally to gifts of personal property
and real property .s
In the case at bar, elements (a), (b), and (c) have been fulfilled . There
was deposition testimony by Turner's secretary of more than 20 years that Turner was
of sound mind when he executed the power of attorney. Additionally, Fletcher attested
to Turner's mental well being during the execution of the power of attorney, and there
was no evidence that he was not competent . Howell was a natural object of Turner's
affection, and there was ample evidence to establish that it was his wish to provide
these gifts to her. Furthermore, Howell was alive and well, and fully capable of taking
the gifts. With respect to element (b), the donor's intention, it is apparent from the
record that Turner cared deeply for his niece, and the testimony of several witnesses
buttressed this fact. Furthermore, the uncontroverted facts show that Turner sought
counsel to facilitate making his wish of gifting this property to Howell a reality. The
process may have been beset with legal complications, but we have no difficulty
concluding that Turner's intention was clear.
Now we turn to the more difficult and interesting issue in this appeal.
Throughout this litigation the effectiveness of the delivery of the gift has been contested
vociferously by the parties . In another context, it might be necessary to separately
analyze the Gernert elements supra, (d), (e), and (f), but under the facts presented
here, completeness, delivery, and irrevocability are so interwoven that separate
5 Hays' Adm'rs v. Patrick, 266 Ky. 713, 99 S .W.2d 805, 809 (Ky. 1936) (quoting Hale v.
Hale, 189 Ky. 171, 224 S.W. 1078, 1079 (Ky. 1920)).
See Leasor v . Bailey , 714 S .W.2d 156 (Ky. App. 1986) .
4
treatment of each would be repetitive. As such, whether there was the required delivery
will be treated as exemplary of the three contested elements and dispositive of the
case.
For a gift to be delivered, it must be shown that the owner parted with
dominion and control over the gift.' Delivery is defined in Black's Law Dictionary$ as
"the formal act of transferring or conveying something, such as a deed ; the giving or
yielding possession or control of something to another." While actual delivery of the gift
is preferred, constructive or symbolic delivery may be adequate depending on the facts
of the case .9 The distinction between symbolic and constructive delivery is occasionally
misunderstood . A clear explanation is as follows :
A delivery is symbolic, when instead of the thing itself, some
other object is handed over in its name and stead . A
delivery is constructive, when in place of actual manual
transfer the donor delivers to the donee the means of
obtaining possession and control of the subject matter, or in
some other manner relinquishes to the donee power and
dominion over it.10
Our case law has long recognized constructive delivery as a means of
gifting.' 1 In Kirby v. Hulette12 we recognized that, "it is not essential that there must be
an actual manual delivery of the deed to the grantee ." 3 The case at bar deals with
constructive delivery (no actual physical delivery to Howell), and symbolic delivery
Caryl A. Yzenbaard, Kentucky Intestacy, Wills and Probate § 6:11 (2004).
8 440 (7th ed . 1999).
(Ky.
9 Yzenbaard, supra ; at § 6:11 (citing Bryant's Adm'r v. Bryant, 269 S.W.2d 219
1954)) .
10
2 Thompson on Real Property § 13.04(a)(2)(i) (2d Thomas ed ., David A. Thomas ed .
2000) (citing Ray Andrews Brown, The Law of Personal Property 92 (3d ed ., Walter B .
Raushenbush ed. 1975)).
11 See Pavne v. Powell, 68 Ky. (5 Bush) 248 (1868).
174 Ky. 257, 192 S.W. 63 (Ky. 1917) .
12
Id. at 68 .
(using a deed as the means of conveyance). This opinion will focus on the lack of
actual physical delivery, and whether the facts of this case permit a finding of
constructive delivery.
The deed itself has not been questioned, nor has the procedure of using a
deed to gift real property been called into doubt. Symbolic delivery therefore does not
warrant a discussion, as it is uncontested that a deed is a proper means of conveying
real property .
Howell asserts that the intention of the grantor to presently transfer
ownership is the controlling factor in determining whether constructive delivery has
occurred . To this end, she cites several Kentucky cases dealing with the inter vivos
delivery of gifts. We agree with Appellant that when a gift is constructively delivered ;
the intent of the grantor to part with dominion and control is the ultimate factor in'
determining whether the gift was complete. This position is well articulated in the
following quotation from Tiffany on real property.
Accordingly, it is generally agreed that delivery does not
necessarily involve any manual transfer of the instrument,
and provided an intention is indicated that the deed shall
take effect, the fact that the grantor retains possession of
the instrument is immaterial .
Generally speaking, then, it may be said that a valid delivery
of a deed requires that either the grantor part with control
over the instrument, the right to recall it or alter any of its
provisions, or, if the grantor retains the instrument in his
possession, that he by word or deed disclose an
unmistakable intention to pass presently the interest
which the deed purports to convey and thus deprive himself
of control over that deed . 14
4 Herbert Thorndike Tiffany, The Law of Real Property § 1034 (2005) (emphasis
added) .
6
14
This position, which has been characterized as the "modern view"15, is a
moderation of the rigid dogma of gift law, and is an example of how some present day
courts have become more willing to recognize a gift, where formerly courts would not .
The above quoted passage is not unappealing, as it is sufficiently flexible to give effect
to grantors' intentions where their acts may have been atypical. Such an approach is
not unprecedented in Kentucky. 16
The vast majority of Kentucky cases on gifting were decided many years
ago . While the state of the law has evolved throughout the years, three Kentucky
cases are both illustrative as well as controlling of the case at bar. In Noffsinger v.
Noffsingerl' W .H . Noffsinger asked the court to set aside an instrument designated as
"A Deed of Conveyance", as not having been delivered to the grantee, his son. The
executed deed was kept in a common depository with other important papers, and was
accessible to the family. This Court held that it was "the intention of the grantor to vest
in his son a present interest in the land and to retain only a life estate", and that delivery
had in fact occurred . Instructive for the instant case, the Court said:
It is an elementary principle that a deed must be delivered in
order to become operative as a transfer of the ownership of
the land, but manual delivery by the grantor to the grantee is
not essential. It may be delivered to a third person with
intention that the grantee shall have the benefit of the deed
or it may be retained by the grantor and delivery be
consummated if the grantor expresses an intention that the
title shall pass and indicates by acts or words that he is
holding the instrument for the benefit of the grantee. The
controlling factor is the intention to make delivery, and this
intention may be inferred from the grantor's acts and words
and from the circumstances surrounding the execution of the
instrument.
_Id .
" See Noffsinger v. Noffsinger, 303 Ky. 344, 197 S.W.2d 785 (Ky. 1946).
17
Id.
18 Id. at 786-87 (citations omitted) .
15
Noffsinger has been characterized as a "common depository" case, and Appellee
contends that it is inapposite to the circumstances of this case. We disagree . The
common depository facet of Noffsinger is not what makes the case relevant here, but
rather this Court's conclusion that delivery could be sustained without a manual delivery
from the grantor to the grantee.
In Suilenger v. Baker" the Court upheld delivery where the grantor gave
deeds (in favor of his two nieces) to his good friend, the Postmaster, with instructions
for the friend to hold the deeds until the grantor's death . The grantor wanted to retain
control over the land as long as he lived, and upon his death the friend was to record
the deeds and put them in the hands of the nieces. The grantor told him that if he were
to die before the grantor, the grantor wanted the friend's wife to return the deeds to the
grantor. The only people who knew of the existence of the deeds were the friend, his
wife, and the grantor. The Appellee in Sullenger asked the Court to set aside the deeds
based on a lack of a valid delivery . Also, the Appellee argued that because the grantor
directed the friend to have his wife return the deeds if the friend were to die first, the
grantor had retained the power to revoke the deeds. In rejecting the Appellee's
argument, the Court held :
The general rule almost universally followed is that, when a
deed is delivered to a third person or depository with the
direction to the latter to hold the deed during the lifetime of
the grantor, and upon the latter's death to deliver it to the
grantee, and the grantor intended at the time of the delivery
to the third person or depository to part forever with all right
to recall or control the deed, such delivery is effectual and
valid and passes a present interest in the property, though
the enjoyment of it be postponed .2°
296 Ky. 240,176 S .W .2d 382 (Ky. 1943).
20 Id . at 383 (quoting Masons Guardian et . v.
al
Soaper, 232 Ky. 525, 23 S.W.2d 956,
(Ky. 1930).
957
8
While the requirement that in order to be effectual, a delivery
to a third person of a deed to be subsequently delivered to
the grantee must be under such circumstances as to deprive
the grantor of the right to recall, except for a violation by the
grantee of a condition, has been frequently stated in
unqualified terms, it seems to us that the controlling factor to
be considered in its application is the intention of the
grantor, and that the fact that he might have been able to
regain the physical possession of the instrument should not
affect the validity of the delivery if his intention at the time
was that the delivery should be irrevocable so far as the right
of the grantee to receive the title to the property, and
eventually its enjoyment, was concerned .21
Finally, in Moore v. Moore22 the grantor (J.M. Moore) requested Price, a
deputy county clerk and vice president of a local bank, to prepare deeds to the grantor's
son and granddaughters. The grantor signed and acknowledged the deeds, and
instructed Price to leave them at the bank and to deliver the deeds subsequent to the
grantor's death . At the time of the grantor's death, Price had already died . The deeds
were found in unsealed envelopes on a shelf in the bank vault, with the words "J.M.
Moore, deeds" written across the envelopes . In upholding delivery, the Court said :
The rule is well settled that a deed delivered to [a]
third person with directions to hold it during grantor's lifetime
and then deliver it to the grantee, is a valid delivery where
there is no reservation on the part of the grantor of any
control over the instrument. . . . A deed may be delivered to
take effect upon the grantor's death . If a grantor delivers a
deed to a third person absolutely as his deed, without
reservation and without intending to reserve any control over
the instrument, though this is not to be delivered to the
grantee till the death of the grantor, the deed when delivered
upon the grantor's death is valid, and takes effect from the
first delivery. The deed in such case passes a present
interest to be enjoyed in the future.23
21
_Id. at 384.
239 S.W .2d 987 (Ky. 1951).
22
Id. at 988 (citations omitted) .
These cases, coupled with many others, show a clear and persistent
pattern of this Court to balance the historical rigidity of delivery in gift law against the
more practical realization that in certain cases intent should control . We are under no
illusion that Kentucky case law is without conflict and that persuasive arguments can be
made on the other side of this debate. Furthermore, we recognize that "intention alone
will not constitute delivery. ,24
As the foregoing cases demonstrate, Kentucky law has not at all times
been consistent on what acts or conduct amount to delivery. Perhaps this is so
because the factual circumstances that arise vary so greatly . We are persuaded by the
facts of this case that delivery occurred . At the time of execution, the grantor was
bedfast and in extremis . He summoned his lawyer and gave directions as to the
preparation and execution of instruments of conveyance and retained unto himself a life
estate . Under the circumstances, it is difficult to identify what more the grantor could
have done to accomplish the inter vivos transfer of the property. While flawed acts of
an agent are normally attributable to the principal, to the extent Fletcher's acts may,
have been flawed by failure to make immediate physical delivery of the instruments,
Turner's demonstrated intent and his overt acts were sufficient to satisfy the gifting
requirements.
It is not insignificant that Turner retained a life estate. In Nuckols v.
Stone 25 this Court said "the fact the grantor reserves a life estate
to himself is given
effect as illustrating his intent that the deed should be operative as a present transfer of
24
Hardin v. Kazee, 238 Ky. 526, 38 S .W.2d 438, 439 (Ky. 1931) (quoting Justice v.
Peters, 168 Ky. 583, 182 S.W. 611, 613 (Ky. 1916)).
120 Ky. 631, 87 S.W. 799 (Ky. 1905).
10
title ." 26 The reservation of a life estate in a deed signifies that the grantor believes he
has parted with the land conveyed . It is an acknowledgement that the remainder
interest has been disposed of, for otherwise the retention of a life estate would be
unnecessary.
There can be no doubt that Fletcher had a fiduciary relationship with
Turner. A central aspect of that relationship was the duty Turner imposed upon
Fletcher to accomplish Turner's purpose in transferring ownership of the property to
Howell. Fletcher was without discretion to refrain or refuse to discharge the duty
imposed upon him. Thus, Turner's directions, accompanied by Fletcher's duty of
performance, effected delivery of the instruments .
Turner was bedfast and could not do for himself. Therefore he hired an
attorney, insured that the attorney had the authority to execute an instrument on his
behalf via a power of attorney, gave directions as to what the attorney-in-fact must do,
and by virtue of the relationship created, deprived the attorney-in-fact of authority to do
otherwise. The delay, while certainly not excessive, in discharging the duty of
notification and physical delivery did not change the circumstances of the task imposed
upon Fletcher by Turner. An unequivocal order to a fiduciary to make delivery is
delivery.
For the reasons stated herein, we reverse the Court of Appeals, and
remand to the trial court to enter judgment consistent with this opinion .
Cooper, Graves, Johnstone, Roach, Scott, and Wintersheimer, JJ.,
concur.
26
Id. at 802.
COUNSEL FOR APPELLANT:
Kif Harvard Skidmore
David T. Royse
STOLL, KEENON & PARK, LLP
300 West Vine Street, Suite 2100
Lexington, KY 40507
Richard E. Fitzpatrick
FITZPATRICK, OSBORNE, HEABERLIN,
AND OSBORNE
119 East Court Street
Prestonsburg, KY 41653
Robert F. Houlihan, Jr .
SAVAGE, ELLIOTT, HOULIHAN,
MOORE, MULLINS & ERDMANN, LLP
PNC Bank Plaza, Suite 810
200 West Vine Street
Lexington, KY 40507
COUNSEL FOR APPELLEE :
Richard C. Ward
Debra H. Dawahare
Mickey T. Webster
Karen J . Greenwell
La Toi Lampkin Mayo
WYATT, TARRANT & COMBS, LLP
250 West Main Street, Suite 1600
Lexington, KY 40507-1746
TO BE PUBLISHED
ixpreum Courf of ~.rufurkg
2003-SC-000476-DG
LOUISE HOWELL
V.
APPELLANT
ON APPEAL FROM THE COURT OF APPEALS
2002-CA-000387
FAYETTE CIRCUIT COURT NO. 98-CI-03686
DARRELL A. HERALD, EXECUTOR OF
THE ESTATE OF JOHN R. TURNER
APPELLEE
ORDER OF CORRECTION
The Opinion of the Court entered February 23, 2006, is hereby corrected
on its face by substitution of the attached pages 1 and 13 in lieu of the original pages 1
and 13 of the opinion . The purpose of this Order of Correction is to correct a
typographical error and does not affect the holding of the Opinion .
ENTERED : February 24, 2006.
~nPreme ~Iaarf of A~ttfuckg
2003-SC-000476-DG
LOUISE HOWELL
APPELLANT
ON APPEAL FROM THE COURT OF APPEALS
2002-CA-000387
FAYETTE CIRCUIT COURT NO. 98-CI-03686
V.
- DARRELL A. HERALD, EXECUTOR OF
THE ESTATE OF JOHN R. TURNER
APPELLEE
ORDER
The appellee's petition for rehearing is denied.
On the Court's own motion, the Opinion of the Court rendered herein on
February 23, 2006, and modified on February 24, 2006, is hereby modified on page 4.
Due to pagination, the originally rendered and modified Opinion shall be substituted with
the Opinion hereto attached . Said modification does not affect the holding .
All concur.
Entered : August 24, 2006.
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