Sally B. Herrington v. James F. Bodman, Jr.
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IN THE SUPREME COURT OF MISSISSIPPI
NO. 92-CA-01005-SCT
IN THE MATTER OF THE ESTATE OF JAMES F. BODMAN, DECEASED: SALLY B.
HERRINGTON
v.
JAMES F. BODMAN, JR.
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANT:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
8/24/92
HON. SEBE DALE, JR.
FORREST COUNTY CHANCERY COURT
M. MCINTOSH FORSYTH
ROBERT T. JACKSON
CIVIL - WILLS, TRUSTS AND ESTATES
AFFIRMED - 4/25/96
5/9/96
6/20/96
BEFORE DAN M. LEE, C.J., BANKS AND ROBERTS, JJ.
BANKS, JUSTICE, FOR THE COURT:
¶1. Here we are asked to consider whether a conservator violated her fiduciary duty by sharing a joint
tenancy with a right of survivorship with her ward. We conclude that, while there is no per se violation, she
did violate her fiduciary duty to the estate in the instant case by depleting the funds from three of the four
accounts within the estate for the care of the ward without seeking court permission, while maintaining the
funds held within the joint account that she shared with the ward.
I.
¶2. On July 3, 1978, James F. Bodman, Sr. created a joint tenancy with rights of survivorship between
himself and his daughter, Sally B. Herrington through the establishment of a joint certificate of deposit
account at First Magnolia Federal Savings and Loan Association. This account was later renewed on April
3, 1981. By 1987, the decedent, James F. Bodman, Sr. had become ill and a conservatorship was
established September 25, 1987, with his daughter, Sally B. Herrington serving as conservator of his estate.
¶3. An inventory calculated the value of the money estate to be $56,500 consisting of four certificates of
deposit with the Magnolia Federal Savings Bank. One of these certificates was the joint certificate of
deposit account shared by the conservator, Herrington and the decedent in the amount of $42,500. The
other three accounts were payable on death to James F. Bodman, Jr., or his children, Paige Bodman and
Bhrett Bodman, but were later transferred by the ward and the conservator and made payable on death to
the account of the conservator Sally B. Herrington. These accounts were eventually closed and used by
Herrington to pay for the expenses of the ward's estate. However, Herrington, as conservator of the estate
spent very little from the account she shared with her ward. Rather, the account was allowed to increase in
value to the amount of $48,762.33, which Herrington withdrew and transferred to her own account after
the fourth and final accounting to the court.
¶4. The decedent wrote a will on November 18, 1987, which bequeathed the funds in his joint checking
accounts and certificates of deposit to all of his children to be shared equally. The will also stated that the
accounts with rights of survivorship were established for purposes of convenience only and not for the
purpose of establishing an ownership interest in the funds by way of survivorship. It provided that the
decedent wanted his children to share the responsibility for the administration of his estate and appointed
each of them co-executors of his will.
¶5. James F. Bodman, Sr. died on February 23, 1991, and Herrington petitioned to have his will probated
in May of 1991. By the time the will had been probated, however, Herrington, as conservator of the
Bodman estate, had already presented her fourth and final accounting in the conservatorship to the
chancellor on March 11, 1991.
¶6. An order for probate was entered by Chancellor Patterson on May 6, 1991, appointing Herrington as
executor. Upon motion of James F. Bodman, Jr., a further order was entered by Chancellor Robert Taylor
on June 21, 1991, appointing James F. Bodman, Jr. co-executor of the Bodman estate in accordance with
the will of the decedent. Thereafter, James F. Bodman, Jr. petitioned the Chancery Court to have
Herrington removed as co-executor alleging that she maintained a conflict of interest while acting as both
fiduciary of the estate and co-owner of a joint account with her ward. He further requested that she account
for and present to the estate all funds withdrawn from the estate.
¶7. The court responded to this petition by removing both Herrington and James F. Bodman, Jr. as coexecutor and appointed F. Marvin Morris, III, the County Probate Administrator, as Administrator of the
estate. In its memorandum opinion, the court declared null and void the fourth and final accounting of the
conservatorship, the closing of the conservatorship, the discharge of Herrington as the conservator of the
estate, and the adjudication of ownership in Herrington of the joint certificate of deposit. The court then
distinguished the instant case from this Court's previous decisions involving joint tenancies such as Strange
v. Strange, 548 So. 2d 1323 (Miss. 1989), by stating that it had not been able to find a case decided by
this Court "where the joint tenant . . . occupied a fiduciary relationship by law . . . with her joint tenant"
James F. Bodman, Sr.
¶8. Basing its decision on Dowdy v. Jordan, 128 Ga.App. 200, 196 S.E.2d 160 (Ga. 1973), the court
held that Herrington had violated her fiduciary duty and determined that the joint certificate account shared
between the ward and her should be made a part of the property of the ward in its entirety and dealt with as
part of the estate. The court also directed her to restore to the estate the $48,762.33 withdrawn by her as
conservator under the order of March 11, 1991, together with interest thereon at the rate which would have
accrued from the date of withdrawal to the date of restoration. From this judgment, the appellant appeals to
this Court asserting the following issues:
A) WHETHER THE JOINT TENANCY SHARED BETWEEN HERRINGTON AND THE
DECEDENT WAS SEVERED BY THE DECEDENT'S WILL; AND
B) WHETHER HERRINGTON VIOLATED HER FIDUCIARY DUTY AS CONSERVATOR
BY SHARING A JOINT TENANCY WITH THE RIGHTS OF SURVIVORSHIP WITH HER
WARD.
II.
a.
¶9. Herrington asserts that the trial court committed error in holding that the joint tenancy shared between
Herrington and her late father, James F. Bodman, Sr. was severed by her father's last will and testament.
Herrington relies on the cases of Bishop v. U.S., 338 F. Supp. 1336, 1343 (N.D. Miss. 1970), reh.
denied, 41 F.2d 649 (5th Cir. 1972), cert. denied, 409 U.S. 878 (1972); Strange v. Strange, 548 So.
2d at 1328, and Stamper v. Edwards, 607 So. 2d 1141 (Miss. 1992), which all stand for the proposition
that a joint tenancy with rights of survivorship cannot be severed by a contrary disposition in a will.
¶10. Whether a joint tenancy can be severed by a will and whether the appellant violated her fiduciary duty
as a conservator are questions of law, which command a relatively broad standard of review by this Court.
It is a well-settled principle that the Supreme Court is the "ultimate expositor of the law of this state." UHSQualicare, Inc. v. Gulf Coast Community Hospital, Inc. 525 So. 2d 746, 754 (Miss. 1987).
Therefore, this Court conducts a de novo review on questions of law. Id.; C.E. Tucker v. Hinds County,
Mississippi, and Mississippi Power & Light Company, 558 So. 2d 869, 872 (Miss. 1990).
¶11. Bodman contends that decedent's will, which divides the account between both of his children, should
control the disposition of the account. He bases this contention on the notion that the intent of the testator
must be carried out where that intent is known. The cases which are cited by the appellee as authority for
this contention, however, can all be distinguished from the instant case in that none of them involve a dispute
as to whether a joint tenancy should be severed by a contrary disposition of property in a subsequent will.
¶12. It is a well-settled proposition that a "subsequent will does not destroy [a] joint tenancy and does not
terminate that tenancy and divest the corpus of it into the estate of the testator." Strange at 1328. This
Court in Strange stated that "chaos would result in banking, commerce and financing . . ." if wills made
subsequent to the creation of a right to survivorship were allowed to sever joint tenancies. Id. at 1326.
There is no dispute in the present case as to the creation of the joint tenancy with rights of survivorship
through the establishment of a joint account at First Magnolia Federal Savings and Loan Association on July
3, 1978, and its renewal on April 3, 1981. Furthermore, there is no evidence that James F. Bodman, Sr.
was incompetent or unduly influenced to establish this account. Following this Court's previous holdings,
Herrington's right to survivorship is unaffected by the decedent's will.
¶13. Bodman also argues that the joint tenancy should be severed because it was established only for the
ward's convenience. The making of a subsequent will by the decedent was offered as evidence that the joint
tenancy was not created with the "clear intention" to create a right of survivorship. This argument fails also
because a court may not consider such parol or extrinsic evidence to give the joint tenancy a meaning other
than that apparent from its language. Cooper v. Crabb, 587 So. 2d 236, 242 (Miss. 1991) (where this
Court held that a chancery court erred in relying on parol or extrinsic evidence in determining that
documents creating a joint tenancy in certificates of deposit were created solely for the decedent's
convenience and did not control over the provisions of a will). Thus, Herrington's claim to the account
survives Bodman's assertion that the decedent's will severs the joint tenancy with its rights to survivorship.
b.
¶14. If the validity of the joint tenancy was the sole issue before this Court, Herrington's claim would
prevail. However, the lower court was correct in finding that Herrington's position as the conservator of her
joint tenant's estate differentiates the instant case from other cases cited by the appellant which state that the
joint tenancy cannot be severed by a subsequent will. In reaching this conclusion, the lower court stated that
it "kn[ew] of no pronouncement of law in this State determinative of the precise factual circumstance before
it here" and relied upon the Georgia Supreme Court's decision in Dowdy v. Jordan, 128 Ga.App. at 200.
The court in Dowdy held that where a guardian is a joint tenant with his ward with rights of survivorship as
to savings accounts, he occupies a conflict-of-interest position and violates his fiduciary duty because he
stands to gain personally by preserving the savings accounts and taking the balance as the survivor. Id. at
208.
¶15. The court in Dowdy further stated that "the validity of the claim standing alone is irrelevant when a
breach of fiduciary duty is found, and the fact that the . . . [guardian's joint tenancy] predated the inception
of the trust does not relieve him of fiduciary duties in regard to the subject matter of the trust to which he
asserts an individual claim." Id. at 209. The court expressed that where a trustee finds that he has a
property or other interest which conflicts with that of the trust beneficiaries, he has a duty to refuse the trust,
resign, or remove the conflicting personal interest. Id.
¶16. Other jurisdictions have adopted a similar rationale to that espoused in Dowdy. In Fielder v. Howell,
Kan.App.2d 565, 631 P.2d 249 (Kan.Ct.App. 1981), the Kansas Court of Appeals factually distinguished
its case from Dowdy and held that "when the estate of the ward is in no way diminished and the apparent
conflict of interest does not manifest itself by controlling the guardian's actions, it would seem unduly harsh
to make an example of a loyal fiduciary because of a potential, yet unrealized, conflict." Id. at 567. Thus, the
court in Fielder, endorsed a "case-by-case approach" to the determination of "whether the beneficiary of
the trust is actually harmed or the trustee is rewarded . . ." by his position which yields conflicting interests.
Id.
¶17. Herrington has cited Goldman v. Rubin, 292 Md. 693, 441 A.2d 713 (Md. 1982) as authority for
her assertion that "a fiduciary is not always precluded from positions which allow the possibility of selfdealing with trust property." The situation in Goldman involves an instance where a conflict-of-interest
arose from the position of personal representatives of an estate who were also the directors of a closed
corporation that had the task of selling stock from the estate to the corporation. The court in Goldman
analyzed the rules of self-dealing as applicable to fiduciary loyalty. Citing Hughes v. McDaniel, 202 Md.
626, 632, 98 A.2d 1, 4 (1953), the court in Goldman stated that a "trustee is prohibited from placing
himself in any position where his self-interest will or may conflict with his duties as trustee, or from using the
advantage of his position to gain any benefit for himself at the expense of the beneficiary of the trust."
Goldman, 292 Md. at 705.
¶18. The court in Goldman analyzed this rule as applied to a fiduciary who is both the buyer and the seller
in a particular transaction involving his ward's estate. However, the court also stated that where self-dealing
is involved, the law does not automatically declare the sale to be "fraudulent in fact" or "absolutely void"
unless a party in interest objects to the transaction. Id. at 706. The plaintiff must show that there was an
actual violation of the trustee's fiduciary duty. Id. at 713. Furthermore, this rule prohibiting self-dealing
"does not apply if the purchase is made to protect the interests of the beneficiaries, or if the beneficiaries
validly consent, or if they are guilty of laches. . . ." Id. at 706. After stating that the burden of proof initially
lies with the person who challenges the conduct of the trustee, the court remanded the case back to the
lower court for an adjudication under the proper rules pronounced in its holding. Id. at 715. Therefore, the
court in Goldman acknowledged that the fiduciary owed a duty to the beneficiaries of the estate while
endorsing a case-by-case approach to determine whether the trustee violated this fiduciary duty.
¶19. Section 93-13-259 Miss. Code Ann. (1972) states that the duties, powers and responsibilities of the
conservator are the same as a guardian of a minor. Section 93-13-38 Miss. Code Ann. (1972) states, in
pertinent part, that the duty of the guardian of wards is to "improve the estate committed to his charge, and
to apply so much of the income, profit or body thereof as may be necessary for the comfortable
maintenance and support of the ward and of his family . . . after obtaining an order of the court fixing the
amount."
¶20. Although this Court has not directly addressed the issue of a violation of fiduciary duty by a
conservator maintaining a joint tenancy with the ward, this Court has analyzed the duty of conservators to
marshall the assets of the ward for the purpose of protecting the ward's estate. In Estate of Holloway v.
Holloway, 631 So. 2d 127 (Miss. 1993), this Court held that Lee Holloway, the executor of his father's
estate, violated his fiduciary duty to the estate by allowing the decedent's interest in a joint certificate of
deposit, within his possession, to dissipate without protest or legal action to protect the assets of the estate.
Id. at 135. The Court stated that "[o]ne who is in a fiduciary relationship, as is an executor, owes the
fiduciary a high duty of care." Id.
¶21. Thus, it would seem that fiduciaries like executors, guardians and conservators have a duty to marshall
the assets of the decedent in order to protect these assets. This theory, however, may not hold true for
ordinary joint tenancies where the ward is still living. This Court in Matter of Estate of Atkins v. Sartin,
422 So. 2d 754 (Miss. 1982), relied on Howard v. Imes, 90 So. 2d 818 (Ala. 1956), and held that before
a conservator may withdraw funds from an account held jointly by the ward with another, during the life of
either, a court order finding that a certain amount is required for necessities must be obtained. Matter of
Estate of Atkins v. Sartin, at 757. This holding was based on the premise that "a guardian cannot
exercise a purely personal elective right of his ward." Id. at 756. The "conservator is not the alter ego of the
joint depositor and during the life of the depositor the conservator does not have authority to withdraw all
of the account funds unless specific sums are needed for his ward's necessities." Id.
¶22. In another case, Conservatorship of Kendrick v. Hancock Bank, 537 So. 2d 888 (Miss. 1989),
this Court held that joint tenancies created while the ward was mentally incapacitated and subject to undue
influence but predating the conservatorship were subject to being marshalled by the conservator, but those
created prior to the period of incapacity were not. Id. at 891.
¶23. From these two cases, it is clear that a conservator is not required to marshall ordinary joint tenancies.
It follows that ownership of a joint tenancy is not necessarily inconsistent with trusteeship.
¶24. Here, however, a conflict was created by the terms of the will and the actions of the conservator in
utilizing only certain assets to meet the necessities of the ward. The terms of the will created a dispute as to
the ownership of the joint account based upon the intent of the ward with regard to the creation and
disposition of the account, which a trustee may have been called upon to resolve. See Estate of Holloway,
631 So. 2d at 127. Herrington spent all of the funds from three of the four accounts within the ward's estate
on expenses related to the care of her ward, James F. Bodman, Sr., while saving the money held within the
joint account she shared with her ward. The requirement that funds be utilized for necessities presents the
issue of whether the conservator should have applied to the court for permission to invade these accounts.
¶25. Atkins dictates that a court order is required before invading a joint tenancy. A logical corollary to this
mandate is the requirement that the conservator in the instant case obtain court permission before invading
the accounts designated by the ward to be given to his son and grandchildren upon his death. In both cases,
the ward has expressed his intent in giving another an interest in an account in which he presently maintains
an interest. It follows that the conservator has violated her fiduciary duty by neglecting the intent of the ward
and unlawfully invading the beneficiaries' accounts.
¶26. As a consequence of the breach of fiduciary duty, the chancellor has decreed that joint account be
made a part of the estate. Under the circumstances here presented, that remedy is well within the discretion
of the court of equity.
¶27. For the foregoing reasons, the judgment of the chancery court is affirmed.
¶28. AFFIRMED.
PRATHER AND SULLIVAN, P.JJ., McRAE, ROBERTS, SMITH AND MILLS, JJ.,
CONCUR. LEE, C.J., CONCURS IN RESULT ONLY. PITTMAN, J., NOT PARTICIPATING.
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