In The Matter of the Estate of Nellie Ellis, Charles W. Moore. v. Clyde Green

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

July 9, 2001 Session

IN THE MATTER OF THE ESTATE OF NELLIE K. ELLIS

CHARLES W. MOORE, ET AL. v. CLYDE GREEN, ET AL.

An Appeal from the Circuit Court for Davidson County

No. 99P-1461 Frank Clement, Jr., Judge

No. M2000-01516-COA-R3-CV - Filed April 15, 2002

This case involves the interpretation of a remainder interest granted in a will. The decedent’s

husband bequeathed to the decedent a life estate in stock in a family-owned business, with the

remainder to go 50% to his “living heirs” and 50% to “some deserving person in the music

department at Belmont College.” After her husband’s death, the decedent purchased the remainder

interest in the stock from all of the remaindermen. By virtue of this purchase, the decedent presumed

that she owned the stock outright. At her death, her will included a bequest of the stock. Her heirs

brought this declaratory judgment action, seeking a declaration that the decedent did not own the

stock at her death. They argued that the decedent’s purchase of the remainder interest in the stock

was invalid because the remaindermen did not own a vested interest in the stock at the time of the

husband’s death. The trial court found that the case was barred by the statute of limitations and that

the decedent had, in fact, acquired 100% ownership in the stock. The heirs now appeal. We affirm,

finding that the remaindermen in the husband’s will acquired a vested, transmissible remainder

interest in the stock at the husband’s death.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is Affirmed

HOLLY K. LILLARD, J., delivered the opinion of the court, in which ALAN E. HIGHERS, J., and DAVID

R. FARMER , J., joined.

Homer R. Ayers, Goodlettsville, Tennessee, for the appellants Charles W. Moore and Linda Moore

Maggart as executrix for the estate of William Herschel Moore, a/k/a Herschel Moore, deceased.

Grant W. Smith, Goodlettsville, Tennessee, for the appellants Ray Swing, Juanita Swing Sircy,

Jeanne Swing Pennington, and James Edward Swing.

William H. Lassiter, Jr., of Lassiter, Tidwell & Hildebrand, PLLC, Nashville, Tennessee, for the

appellee, Clyde Green.

William L. Harbison of Sherrard & Roe, PLC, Nashville, Tennessee, for the appellee, First American

National Bank.

OPINION

This case involves the interpretation of the remainder interest granted in a holographic will.

Clarence E. Ellis (“Clarence”) and Nellie K. Ellis (“Nellie”) were husband and wife. On July 1,

1986, at age eighty-five, Clarence died leaving a holographic will dated March 21, 1970. The will

provided in pertinent part:

I . . . Bequeath all my personal and real property if any to my wife Nellie K. Ellis for

her lifetime to be used for her comfort and lively hood [sic] and at her death one half

the remainder to my living heirs and the other half to be put in trust in the First

American National Bank of Nashville for some deserving person in the music

department of Belmont College of Nashville Tenn.

(Emphasis in original). Thus, he devised all of his property in a life estate to Nellie, and 50% of the

remainder to his “living heirs” and the other 50% to “some deserving person . . . of Belmont

College.” The principal asset of Clarence’s estate was his 100% stock ownership in Ellis Funeral

Home, Inc., a Tennessee corporation.1

On August 27, 1986, Nellie filed a petition to probate Clarence’s holographic will. On

September 18, 1986, she filed an application for a year’s support and a petition for an elective share

in the estate. Rather than pursue her two motions, however, Nellie obtained “Receipt and Waiver

of Accounting” forms signed by each of the remaindermen who were living at the time of Clarence’s

death – his then-living heirs2 and a Vice President of Belmont College on behalf of the “deserving

person.” In those waivers, each remainderman accepted a payment of $2,500 in exchange for his

share in Clarence’s estate. The waiver stated that the “payment represents . . . [t]he final and

complete payment to which I am entitled. I will no longer have any claim against the estate as an

heir, beneficiary or claimant. I hereby waive notice of the final accounting and direct the clerk to

pass the account without my presence.” On September 16, 1988, the probate court entered an order

closing the estate of Clarence Ellis.

Until December 31, 1988, Nellie was the sole owner of the real property on which the funeral

home was located on Nolensville Road in Nashville, Tennessee, and she leased the land to the

1

At the time of its incorporation in 1972, the stock in the company was owned 60% by Clarence Ellis and 40%

by W. E. Neal, Jr. In 1980, Neal sold his shares back to the corporation, and Clarence then became the sole shareholder

in the com pan y at tha t time.

2

Clarence’s only heirs at the time of his death were U ral A . Ellis, Ivy Ellis H olt, Leslie R. Ellis, and W.

Raym ond E llis, who w ere his three brothers and sister.

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funeral home for the operation of the business.3 On January 1, 1989, Nellie executed a warranty

deed and installment note (“note and deed”), selling the Nolensville Road property to the corporation

for $260,000, to be paid to her by the corporation in installments of $1,871.13 per month for thirty

years.4

On January 6, 1989, Nellie executed her Last Will and Testament. Believing that she owned

outright the stock in the funeral home from her husband’s estate, she bequeathed the stock in fee

simple “to my friend, Clyde Green,” who was president and manager of the funeral home at all

pertinent times. Regarding the debt owed to Nellie by the corporation on the note and deed, Nellie’s

will provided that “the remaining installments on the said note are to be cancelled and forgiven.”5

The rest and residue of her estate was bequeathed to the children of Mamie Moore and Ada Kemper

Swing, Nellie’s two sisters, namely: Charles W. Moore, Linda Moore Maggart (as executrix for the

estate of William Herschel Moore), Jeanne S. Pennington, Juanita Swing Sircy, Ray Swing, and

James E. Swing.6 Nellie’s will provided that all of Nellie’s legal debts, including the estate taxes,

were to be paid from her residual estate.

On March 13, 1998, the First American National Bank (“First American”), as Nellie’s

conservator, filed a petition for approval of purchase of real estate in probate court, requesting that

the court approve the purchase by Ellis Funeral Home, Inc., of a house and lot on Grandview Avenue

in Nashville, Tennessee, for $50,000. On April 9, 1998, the probate court approved that sale, based

on First American’s representation that Nellie was the sole owner of Ellis Funeral Home, Inc.

On May 28, 1999, Nellie died at age ninety-four. On September 3, 1999, Clyde Green filed

a petition to probate her Last Will and Testament. Though the plaintiffs contested the will, that

contest is not at issue in this appeal.

On April 10, 2000, Nellie’s living heirs (collectively “plaintiffs”) filed in the probate court

below a complaint for declaratory judgment and rescission, cancellation, and/or reformation of the

note and deeds for the Nolensville Road property and the Grandview Avenue property. The

complaint named as defendants Clyde Green, the unknown living heirs of Clarence E. Ellis, the

undesignated “deserving” person at Belmont College, Ellis Funeral Home, Inc., and the First

3

Nellie and Clarence Ellis also maintained a residential apartment on that premises behind the funeral home.

4

The appellants infer that this transaction was undu ly influenced by N ellie’s attorney and form er conservator,

Walter S. C lark. T he ev idence ind icating und ue influen ce is clea rly insu fficient, and this argum ent is w ithou t merit.

5

Actually, Nellie bequ eathe d a life estate in the installm ents to her sister, Mam ie M oore. Ho wever, M am ie

pred eceased N ellie, so the deb t was canc eled u nde r the terms of N ellie’s w ill.

6

Though her sister, Mamie Moore, was to share in the residuary, Mam ie predeceased Nellie. Mamie’s share,

therefore, was to go to her ow n children und er the term s of N ellie’s w ill.

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American National Bank.7 The plaintiffs asserted that Nellie never owned the stock in Ellis Funeral

Home, Inc., through her husband’s estate because the will bequeathed to her only a life estate in the

stock. At her death, the plaintiffs claimed, the stock was owned 50% by Clarence’s unknown living

heirs at the time of Nellie’s death and 50% by the unknown “deserving person” at Belmont College.

In making this claim, the plaintiffs alleged that “the payments by Nellie K. Ellis to Belmont College

did not satisfy the requirements of the Will of Clarence E. Ellis, since the gift was to become

effective at the termination of the life estate of Nellie K. Ellis and was to a ‘. . . deserving person .

. .’, which has yet to be identified, and not to Belmont College.” The complaint further alleged that

“the payments made by Nellie K. Ellis to the brothers and sister of Clarence E. Ellis did not satisfy

the requirements of the Will of Clarence E. Ellis, since the gift was to become effective at the

termination of the life estate of Nellie K. Ellis and was to the ‘living heirs’ of Clarence E. Ellis,

which could only be identified at the moment of death of Nellie K. Ellis.” In essence, the plaintiffs

alleged that the interests of the remaindermen in Clarence’s will were not vested and, therefore, not

transferable at the time of Clarence’s death.

In the complaint, the plaintiffs sought several forms of relief. First, they sought declaratory

relief, asking the trial court to determine the ownership of the stock in Ellis Funeral Home, Inc., and

to vest ownership of the stock in the rightful parties. If the trial court concluded that Nellie did not

own stock in the Ellis Funeral Home, Inc., the plaintiffs reasoned, this would remove the stock from

the total asset value of the estate, thereby reducing the estate taxes to be assessed against the

plaintiffs’ residuary share of the estate.8 Moreover, because the note and deeds pertaining to the

Nolensville Road property and the Grandview Avenue property were executed by Nellie based on

the mistaken belief that she owned outright the stock in the funeral home, the plaintiffs argued that

the deeds should be revoked, rescinded, or reformed so as to vest ownership and title to those

properties in Nellie K. Ellis or her heirs. Finally, the plaintiffs sought damages from First American

for its alleged negligence in failing to determine at an early date the ownership of the stock in Ellis

Funeral Home, Inc., and for its alleged mishandling of Nellie’s affairs during her conservatorship.

On April 14, 2000, defendant Clyde Green filed a motion under Tennessee Rule of Civil

Procedure 12.02(6) to dismiss the complaint for failure to state a claim upon which relief could be

granted. On May 25, 2000, after a hearing on the motion, the trial court granted the motion to

dismiss, stating:

Taking as true, for purposes of this motion, the allegations in the complaint for

declaratory judgment filed by [the appellants], the Court finds that granting the relief

7

The complaint initially listed W. E. Neal, Jr., as a defendant, claiming that he owned 40% of the stock in Ellis

Funeral Home, Inc. As we have indicated, however, it was discovered that Neal sold his stock back to the corporation

in 1980, and that Clarence owned 100% of the stock in the funeral home at the time of his death. Consequently, the

plaintiffs abando ned their claim against that original defenda nt. See sup ra, note 1.

8

Alternatively, the plaintiffs alleged that the additional taxes due based on the erroneous inclusion of the stock

in Nellie’s estate sho uld be p aid by F irst American N ational Bank because o f their negligent misrep resentations.

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sought would require the Court to reopen the estate of Clarence Ellis and find that the

distributions made in the estate of Clarence Ellis were improper. Mr. Ellis’ estate

was closed over ten years ago . . . with all persons having an interest in that estate

waiving their rights in favor of Nellie K. Ellis. Therefore, the claims in the

complaint, as a matter of law, are barred by the applicable statute of limitations. In

addition, the gravamen of the complaint is that parties other than Nellie K. Ellis may

have some interest in the stock of Ellis Funeral Home, Inc. As a matter of law,

because all persons interested in the estate of Clarence Ellis waived their rights in

favor of Nellie K. Ellis, she became the sole owner of Ellis Funeral Home, Inc.

Accordingly, the complaint fails to state a claim on which relief can be granted.

Thus, the trial court dismissed the plaintiffs’ complaint based on the applicable statute of limitations,

as well as the finding that Nellie became the sole owner of the stock in Ellis Funeral Home, Inc.,

after the other persons interested in Clarence’s estate waived their rights in her favor. The plaintiffs

now appeal that order.

The pertinent facts on appeal are undisputed, and therefore the questions presented in this

appeal are purely legal. Consequently, we review the trial court’s decision de novo. See State v.

Levandowski, 955 S.W.2d 603, 604 (Tenn. 1997); Ridings v. Ralph M. Parsons Co., 914 S.W.2d

79, 80 (Tenn. 1996). In considering a motion to dismiss for failure to state a claim, a court must

“construe the complaint liberally in favor of the plaintiff[s], taking all of the allegations of fact

therein as true.” Randolph v. Dominion Bank, 826 S.W.2d 477, 478 (Tenn. Ct. App. 1991). A

motion to dismiss under Rule 12.02(6) “tests the legal sufficiency of a complaint; it admits the truth

of all relevant and material allegations, ‘but asserts that such facts do not constitute a cause of action

as a matter of law.’” Riggs v. Burson, 941 S.W.2d 44, 47 (Tenn. 1997) (quoting Pursell v. First

American Nat’l Bank, 937 S.W.2d 838, 840 (Tenn. 1996)); see Humphries v. West End Terrace,

Inc., 795 S.W.2d 128, 130 (Tenn. Ct. App. 1990). However, “inferences to be drawn from the facts

or the legal conclusions set forth in a complaint are not required to be taken as true.” Riggs, 941

S.W.2d at 47-48.

The trial court based its decision on two alternative grounds, the applicable statute of

limitations and the legal disposition of the estate of Clarence Ellis. We first address the trial court’s

determination that Nellie owned 100% of the stock in Ellis Funeral Home, Inc., through the estate

of her husband.

The plaintiffs argue on appeal that the “Receipt and Waiver of Accounting” forms signed by

the remaindermen named in Clarence’s will were invalid, because the clear language of Clarence’s

will indicates that the remainder interest was contingent until Nellie’s death. Additionally, the

plaintiffs contend that the bequest to “some deserving person in the music department of Belmont

College” was not made to Belmont College itself, but to a person at the College, who could have

been virtually anyone associated with the music department of the College, such as a student,

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professor, secretary, or janitorial employee. As such, the plaintiffs argue that Belmont College had

no authority to transfer of interest.

In response, the defendants argue that the remainder interest granted in Clarence’s will

vested in the remaindermen at Clarence’s death. They assert that the bequest to the “living heirs”

vested under the Tennessee class doctrine, which was modified by Tennessee Code Annotated § 32-

3-104:

Where a bequest, devise, conveyance, transfer or gift is made to a class of persons

subject to fluctuation by increase or diminution of its number in consequence of

future births or deaths, and the time of payment, distribution, vestiture or enjoyment

is fixed at a subsequent period or on the happening of a future event, and any

member of such class shall die before the arrival of such period or the happening of

such event, and shall have issue surviving when such period arrives or such event

happens, such issue shall take the share of the property which the member so dying

would take if living, unless a clear intention to the contrary is manifested by the will,

deed or other instrument.

Tenn. Code Ann. § 32-3-104 (2001). Under that statute, “a class takes a vested, transmissible interest

in the remainder, unless the will unquestionably discloses [the] testator’s intention that the interest

remain contingent until the date of distribution.” Nicholson v. Nicholson, 496 S.W.2d 477, 479

(Tenn. 1973). Further, the defendants argue that the bequest to “some deserving person in the music

department of Belmont College” vested in Belmont College because it was a “discretionary charitable

gift” given to the College to choose, at its discretion, a charitable beneficiary. See Tenn. Code Ann.§

35-13-105.9

The defendants maintain that leaving such discretion with Belmont College granted the

College itself a vested, transmissible interest at the testator’s death. Thus, because each of the named

remaindermen had a vested interest in the funeral home stock at Clarence’s death, the defendants

conclude, then the signed waiver forms validly transferred the remainder interest in the stock back

to the estate. After execution of the waiver forms, Nellie, the only heir of Clarence’s estate, had both

the life estate and the remainder. At that point, defendants argue, the remainder estate merged with

the life estate, resulting in Nellie owning 100% of the stock as a matter of law.

9

Discretion ary C haritable G ifts.- When the donor makes a discretionary charitable gift the following

provision s app ly:

(1) The person to w hom discretion is given shall ch oose the charitable beneficiaries and charitable

purposes within a reasonable time after having accepted the duty to select the beneficiaries or

purposes of th e discretionary charitable gift.

Ten n. Co de A nn. § 35-13-105 (1) (2 001 ).

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The issue then becomes whether the remainder interest granted in Clarence’s will was a

vested, transmissible interest, so that each signed “Receipt and Waiver of Accounting” form effected

a transfer of the remainder interest back to the estate. In Nicholson, noted above, the testator’s will

granted a life estate to his wife in certain stock and granted the reminder interest to two named

individuals. The will provided that if the two named individuals predeceased the wife, the remainder

would pass “to my heirs at law.” Nicholson, 496 S.W.2d at 478. Of course, the two named

individuals predeceased the wife. Prior to their deaths, the company purchased all rights and interests

in the testator’s stock from all of the remaindermen – the two named individuals as well as all of the

testator’s then-living heirs. Id. At the wife’s death, the testator husband’s then-living heirs, who

were apparently not living at the time of the testator’s death, sought to claim an interest in the stock,

arguing that all remainder interests in the stock during the wife’s lifetime were contingent until the

wife’s death, and therefore were not transmissible until the wife’s death.

In Nicholson, the Tennessee Supreme Court held that the husband’s will granted in the

remaindermen an interest that vested at the testator’s death. The Court explained:

Prior to the enactment of [Tennessee Code Annotated § 32-3-104], Tennessee courts

supported the so-called “Tennessee Class Doctrine,” which held that remainder gifts

to a fluctuating class of persons remained contingent until the time set in the will for

distribution or payment of the gift. That doctrine has been significantly modified by

[Tennessee Code Annotated § 32-3-104]. Tennessee case law since passage of the

statute in 1929 has held that such a class takes a vested, transmissible interest in the

remainder, unless the will unquestionably discloses [the] testator’s intention that the

interest remain contingent until the date of distribution.

Id. at 479 (citations omitted). Based on the language in the statute and the ensuing case law, the

Court determined that the provision in the will directing “that said stock be distributed to my heirs

at law at the date of death of my said wife” reflected an intention that the stock vest in those heirs who

were alive at his own death, and that the clause “merely sets the time for possession . . . at the time

of the widow’s death.” Id. The Court also found that “neither this isolated clause nor the will as a

whole manifests a clear intention on testator’s behalf to postpone the vesting of the interest until the

wife’s death.” Id. The Court concluded that, where the language in a will implies “two different

results with equal force, . . . in such cases of doubt, Tennessee courts have always broken the

deadlock in favor of vested interests.” Id. at 479-80 (citations omitted).

The plaintiffs assert that Nicholson is not controlling here because “a clear intention to the

contrary is manifested by the will” in this case. Clarence’s will bequests to Nellie a life estate, and

“at her death one half the remainder to my living heirs . . . .” The plaintiffs argue that the phrases

“living heirs” and “at her death” indicate that Clarence intended the remainder of his estate to become

vested at the termination of the life estate – at Nellie’s death.

While the plaintiffs’ interpretation of the will is plausible, where the language in a will is

ambigous, the Nicholson Court indicated a clear preference for interpreting such an instrument in a

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manner consistent with a finding that the testator intended the remainder interest to vest at his death.

Id.; see also Huggins v. United States, 684 F.2d 417, 421 (6th Cir. 1982) (finding that the remainder

interest vested at testator’s death and deferring to the rule that Tennessee favors a construction that

will effect a quick vesting). In Clarence’s will, we conclude that the use of the phrase “living heirs”

means heirs living at Clarence’s death, and the phrase “at her death” “merely sets the time for

possession.” Nicholson, 496 S.W.2d at 479. Likewise, the grant of a remainder interest to “some

deserving person in the music department of Belmont College” was also vested and transmissible.

The plaintiffs also argue that the remainder interest granted to “some deserving person in the

music department of Belmont College” was not effectively transferred to Nellie. The plaintiffs argue

that the waiver form signed by the Belmont College representative on behalf of “some deserving

person” was ineffective to transfer any interest back to the estate, because the remainder interest

belonged to an unknown person and not to the College itself. They argue that the waiver amounted

“to something akin to a quitclaim deed. Clarence E. Ellis never gave any interest in his estate to

Belmont College.” They also argue that Tennessee Code Annotated § 35-13-105, relating to

discretionary charitable gifts, does not apply in this situation because the bequest was made to a

“deserving person,” not a charity.

In construing this provision, we must strive to interpret the will in a manner that effectuates

the intention of the testator. Id., 496 S.W.2d at 479. In determining the testator’s intent, we must

look to the “manifest language of the entire will.” Martindale v. Union Planters Nat’l Bank, No.

02A01-9502-CH-00030, 1996 Tenn. App. LEXIS 298, at *8 (Tenn. Ct. App. May 21, 1996). In

considering Clarence’s bequest to the “deserving person,” we must conclude that the language

manifests an intent to give the remainder interest to a person designated by Belmont College.

Clarence’s will in effect grants Belmont College a remainder interest to hold in trust and distribute

at its discretion.10 Accordingly, at Clarence’s death, Belmont College had a vested, transmissible

remainder interest, and therefore could accept $2,500 in cash to hold in trust for the “deserving

person” in exchange for its remainder interest in 50% of the funeral home stock.11

Because all of the remaindermen named in Clarence’s will validly transferred their remainder

interest back to the estate, Nellie received that interest as Clarence’s wife and sole heir. After the

transfer of the remainder interests, then, Nellie held both a life estate and a remainder interest in the

stock in Ellis Funeral Home, Inc., and those interests merged and she held the property in fee simple

as a matter of law.12 See Davis v. Winsett, 1991 Tenn. App. LEXIS 904, at *5-*6 (Tenn. Ct. App.

10

The defendants note that, although Clarence’s will designated First American as the trustee for this interest,

First Am erican formally declined to serve in this capacity and Belmont College assumed that responsibility. This fact

does not affect our conclusion on this issue.

11

The plain tiffs do not allege th at Belmo nt Co llege im properly adm inistered the trust.

12

The plaintiffs do not allege that applying the merger d octrin e w ould defeat the testator’s in tent. See

Browning v. Browning, 132 S.W .2d 359, 361 (Tenn. Ct. App . 1939).

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1991) (recognizing that “when the holder of a life estate in property also purchases a vested remainder

in the property, merger takes place and that person becomes the holder of the fee simple in the

property”). Accordingly, we affirm the trial court’s conclusion that Nellie owned outright the funeral

home stock at the time of her death.

Our holding makes it unnecessary for us to address the issues of whether the plaintiffs had

standing or whether their claims were brought within the applicable statute of limitations.

Furthermore, our holding necessarily disposes of the plaintiffs’ claims relating to the proper

disposition of the parcels of real estate, because Nellie had the actual authority to negotiate contracts

relating to that property. Thus, we will not address those issues further in this appeal.

The decision of the trial court is affirmed. Costs are taxed to the appellants, Charles W.

Moore, Linda Moore Maggart as executrix for the estate of William Herschel Moore, a/k/a Herschel

Moore, deceased, Ray Swing, Juanita Swing Sircy, Jeanne Swing Pennington, and James Edward

Swing, and their sureties, for which execution may issue if necessary.

___________________________________

HOLLY K. LILLARD, JUDGE

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