Lance Leavell and Christy Leavell v. Jerry Gentry and Jimmy Bowden

2021 Ark. App. 412, 636 S.W.3d 794

• Court: Court of Appeals of Arkansas
• Decided: October 27, 2021
• Status: Published

Opinion

Cite as 2021 Ark. App. 412 Elizabeth Perry I attest to the accuracy and ARKANSAS COURT OF APPEALS integrity of this document DIVISION IV 2023.07.13 11:22:09 -05'00' No. CV-20-609 2023.003.20244 Opinion Delivered October 27, 2021 LANCE LEAVELL AND CHRISTY LEAVELL APPELLANTS APPEAL FROM THE POPE COUNTY CIRCUIT COURT [NO. 58CV-19-389] V. HONORABLE KEN D. COKER, JR., JERRY GENTRY AND JIMMY JUDGE BOWDEN APPELLEES AFFIRMED

PHILLIP T. WHITEAKER, Judge

Appellants Christy and Lance Leavell appeal an order of the Pope County Circuit

Court granting summary judgment in favor of appellees Jerry Gentry and Jimmy Bowden

and voiding two deeds procured by Lance. On appeal, Lance argues that the circuit court

erred in finding that the transfer of real property was invalid. We find no error and affirm.

I. Factual Background

The parties in this appeal are related, and the property at issue was once owned by

the parties’ common ancestors, Sibyl and Lawrence Bowden. Lawrence and Sibyl were the

parents of two daughters, Jerry Bowden and Beverly Leavell, and one son, Jimmy. Lance is

Beverly’s son. During their lifetimes and marriage, Lawrence and Sibyl acquired and owned

real estate, including a house in Russellville and the family farm. In 2001, Lawrence and Sibyl executed the Lawrence and Sibyl Bowden Living Trust,

which they declared to be a revocable living trust. 1 They funded the trust estate with their

real estate interests. Pertinent to this appeal, Lawrence and Sibyl deeded both the house in

Russellville and the family farm to the trust by warranty deed on December 17, 2001.

In creating the trust, Lawrence and Sibyl appointed themselves as acting co-trustees

of the trust and nominated all three of their children as successor co-trustees in the event of

Lawrence and Sibyl’s deaths. 2 Lawrence and Sibyl afforded themselves and successor co-

trustees certain powers as set out in section VI of the trust as follows:

The Co-Trustees, and the Successor Co-Trustees, in order to administer and manage this Trust and the property of the Trust Estate, shall have all the rights, duties, powers, and privileges, as set forth in this Trust instrument, and in addition thereto, all the applicable powers enumerated in the laws of the State of Arkansas given to trustees, Living Trusts, executors of estates, and administrators in the administration of decedent’s estates. In addition thereto, the Co-Trustees, or the Successor Co-Trustees, may sell, rent, lease, or encumber all or any part of the property, real or personal, in the Trust Estate, which in the sole discretion of the Co- Trustees, or Successor Trustee, is needed in a wise and financially prudent manner to provide for the needs of LAWRENCE J. BOWDEN and SIBYL L. BOWDEN, and to fulfill the intents and provisions of this Trust for the care and benefit of LAWRENCE J. BOWDEN and SIBYL L. BOWDEN or any subsequent beneficiaries of this Trust after their deaths, taking into consideration the income and financial benefits that the foregoing persons are currently receiving or are entitled to receive from any source.

(Emphasis in original.)

1 Section XII of the trust declared itself to be “a revocable living trust” that “may be modified, changed, or rescinded at any time by its makers and creators, Lawrence J. Bowden and Sibyl L. Bowden.” It did not, however, specify a manner of revocation.

2 A 2013 amendment modified the terms of the trust to remove Beverly as a successor co-trustee, leaving appellants Jerry and Jimmy as the successor co-trustees.

2 Concerning the use of the trust estate, Lawrence and Sibyl directed that the trust

estate was to be used first for their benefit during their lifetimes and second for the

distribution to future beneficiaries on their deaths. During Lawrence’s and Sibyl’s lives, all

income derived from the property in the trust estate was to be used for their welfare and

financial expenses. The trust directed that the co-trustees—and later, the successor co-

trustees—“shall keep in mind at all times their desires when this trust was created, not only

to provide for their needs but to as much as possible protect the funds and property in the

trust estate for the distribution and benefit of the future beneficiaries of the trust after their

deaths.” Finally, the trust ordered that the co-trustees and later the successor co-trustees,

“while seeing that the immediate financial needs and care needs of LAWRENCE J.

BOWDEN and SIBYL L. BOWDEN are adequately met, shall take all reasonable and

prudent measures possible to protect the trust estate in order to fulfill their future distribution

wishes and desires in this trust as are hereinafter set forth.” 3

Section VIII of the trust is of particular importance to the issues raised in this appeal.

It states:

No part of the trust estate, including the principal, interest, income, or property involved therein, shall be at any time pledged, assigned, transferred, sold, or in any manner whatsoever anticipated, charged, or encumbered by the maker and creator of this trust in her personal name, or by any beneficiary of this trust; or be in any manner liable in the possession of the co-trustees, or the successor

3 Section XI of the trust established the distribution of the trust estate on Lawrence’s and Sibyl’s deaths. Originally, the property of the trust, excepting certain listed items of personal property, was to be distributed equally among Jerry, Jimmy, and Beverly. A 2013 amendment, mentioned above in footnote 2, changed the distribution of trust assets on Lawrence’s and Sibyl’s deaths so that Jerry and her heirs would receive a one-third interest; Jimmy and his heirs would receive a one-third interest; and Beverly’s children––Lance and his two siblings––would each receive a one-ninth interest.

3 co-trustees, for the debts, contracts, obligations, voluntary or involuntary of the makers and creators of this trust or of any beneficiary of this trust.

In 2005, Lawrence and Sybil modified section VI, the “powers of trustees”

paragraph. In this amendment, they permitted the co-trustees to “sell, rent, lease, or

encumber all or any part of the property, real or personal, in the Trust Estate, which in the

sole discretion of the Co-Trustees, or Successor Trustee, is desired by Lawrence J. Bowden and

Sibyl L. Bowden, needed in a wise and financially prudent manner to provide for the needs

of Lawrence J. Bowden and Sibyl L. Bowden, or to fulfill the intents and provisions of this

Trust for the care and benefit of Lawrence J. Bowden and Sibyl L. Bowden.” (Emphasis

added to reflect amendments.)

In 2014, Sibyl, as the “surviving spouse of Lawrence J. Bowden, a single person,”

deeded the Russellville house to Lance and his wife, reserving a life estate in herself. In

2017, Sibyl deeded the farm parcel to Lance. Sibyl executed both deeds in her individual

name and not in her capacity as trustee.

II. Procedural Background

In July 2019, Jerry and Jimmy filed a complaint against Lance, alleging that the 2014

and 2017 transfers of the two parcels to Lance were invalid. 4 Specifically, they contended

that at the time of the purported transfers, fee-simple title to both parcels of real estate was

held by the trust and not by Sibyl in her individual capacity; as such, Sibyl had no interest

4 Sibyl passed away sometime between the 2017 transfer and the filing of the instant lawsuit.

4 in the property to convey. Jerry and Jimmy further cited section VIII of the trust, which

prohibited the trustee from transferring property belonging to the trust in her individual

name. Accordingly, Jerry and Jimmy sought a judgment quieting title in the real property

in the name of the Lawrence and Sibyl Bowden Living Trust.

Lance answered and denied that the deeds should be set aside, arguing that Sibyl

retained the authority during her life to transfer the real property administered by the trust.

Lance also asserted that Sibyl had made transfers of other property to Jerry and Jimmy, which

they had accepted, so they were estopped from challenging transfers such as the ones at issue

in the instant case.

Jerry and Jimmy subsequently filed a motion for summary judgment, contending that

the unambiguous language in the trust precluded the transfer of the two tracts in Sibyl’s

individual name. Lance responded with his own motion for summary judgment, agreeing

that there were no disputed questions of fact but arguing that Jerry and Jimmy were not

entitled to judgment as a matter of law. According to Lance, the trust documents did not

prohibit the transfer of trust property but actually authorized the transfer. Section VIII, he

contended, was nothing more than a spendthrift clause that prohibited creditors from

asserting an interest in trust property. Lance also cited section VI, which permitted Sibyl, as

trustee, to sell trust property, and section VII, which allowed Sibyl to modify the trust at

any time.

After a hearing, the circuit court entered an order granting Jerry and Jimmy’s motion

for summary judgment. Lance filed a motion pursuant to Arkansas Rule of Civil Procedure

52(b) seeking additional findings of facts and conclusions of law. The circuit court obliged

5 Lance’s request with a detailed order setting forth the undisputed facts of the case. The court

concluded that the terms of the trust were unambiguous and that the purpose of the trust

was to provide for the welfare and financial expense of Sibyl Bowden during her lifetime

and to protect the funds and property of the trust for distribution to Sibyl’s beneficiaries

after her death, as much as possible. The court also concluded that section VIII of the trust

explicitly prohibited Sibyl, as creator of the trust, from transfers of trust property in her

personal name. Concerning the deeds issued to Lance, the court concluded that Sibyl had

signed the deeds in her personal name in derogation of the explicit requirements of section

VIII and that Lance procured the deeds from Sibyl without consideration. Accordingly, the

court declared the two deeds to be of no effect, and fee-simple title to the real property was

vested in the Lawrence and Sibyl Bowden Living Trust for subsequent disposition by the

trustees in accordance with the terms thereof. Lance timely appealed.

III. Standard of Review and Construction of Trusts

A court may grant summary judgment only when there are no genuine issues of

material fact to be litigated, and the moving party is entitled to judgment as a matter of law.

Cannady v. St. Vincent Infirmary Med. Ctr., 2012 Ark. 369, 423 S.W.3d 548. In an appeal of

a summary-judgment motion, we ordinarily examine the record to determine if genuine

issues of material fact exist. May v. Akers-Lang, 2012 Ark. 7, 386 S.W.3d 378. Here, the

parties filed cross-motions for summary judgment, essentially agreeing that no material facts

remained. When the parties agree on the facts, we simply determine whether the appellee

was entitled to judgment as a matter of law. Hobbs v. Jones, 2012 Ark. 293, 412 S.W.3d 844.

In determining the issues of law presented, our standard of review is de novo. State v. Cassell,

6 2013 Ark. 221, at 4–5, 427 S.W.3d 663, 666; Baker v. Dir., 2017 Ark. App. 593, 534 S.W.3d

742.

A court construing a trust applies the same rules applicable to the construction of a

will, and the paramount principle in the interpretation of wills is that the intention of the

testator, or trust settlor, governs. Fisher v. Boling, 2019 Ark. App. 225, at 2, 575 S.W.3d 592,

594. The settlor’s intention is to be determined from viewing the four corners of the

instrument considering the language used and giving meaning to all its provisions whenever

possible. Id. When the purpose of a trust is ascertained, that purpose will take precedence

over all other canons of construction. Wisener v. Burns, 345 Ark. 84, 44 S.W.3d 289 (2001);

Carmody v. Betts, 104 Ark. App. 84, 289 S.W.3d 174 (2008).

IV. Discussion

On appeal, Lance agrees that there were no factual issues in dispute in this case;

however, he contends that the circuit court erred in its construction and interpretation of

the trust. He raises three general arguments: (1) the trust gave Sibyl the power to remove

property from the trust; (2) the circuit court erroneously interpreted section VIII; and (3) a

trustee’s failure to sign a deed as trustee does not invalidate the deed. We find no merit in

any of Lance’s arguments.

First, Lance takes the position that the trust granted Sibyl the authority to remove

property from the trust. In support of this contention, he cites to two sections of the trust.

He argues that section XII (“Power to Modify the Trust”) makes it “clear that [Sibyl] . . .

had the clear intent that she would be able to change any portion of the trust, revoke the

trust, and retain complete control over the trust property.” He also argues that section VI,

7 as amended in 2005, gave Sibyl the discretionary authority, as a co-trustee, to “sell, rent,

lease, or encumber all or any part of the property, real or personal, in the trust estate” so

long as the transaction was her desire and was needed in a wise and financially prudent

manner to provide for her needs or to fulfill the intents and provisions of the trust for her

care and benefit.

We do not disagree that Sibyl could remove property from the trust. Here, Sibyl

created a revocable trust. In so doing, she clearly retained the right to revoke and to modify

the trust. When the settlor of a trust retains a power to revoke, the settlor may revoke the

trust in part, thus allowing withdrawal of some of, rather than all, the property from the

trust, if that is all the settlor wishes to do. Restatement (Third) of Trusts § 63. Sibyl,

however, created a trust that did not provide a method by which the settlor could revoke

or modify. Arkansas Code Annotated section 28-73-602(c)(2)(B) (Repl. 2012) provides that

when the terms of the trust do not provide a method to revoke or amend a revocable trust,

the settlor may revoke or amend the trust by any method manifesting clear and convincing

evidence of the settlor’s intent. The question, then, is what constitutes clear and convincing

evidence of a settlor’s intent to modify a trust.

Our court addressed this question in Garrett v. Neece, 2019 Ark. App. 178, 574

S.W.3d 686. In Garrett, the settlor had reserved the right to revoke her trust at any time,

executed a quitclaim deed to a tract of property to her son, then amended the trust

document to except that tract from the trust property; she further evidenced her intent

when she created a subsequent trust that made no reference to that tract. We found such

actions to constitute clear and convincing evidence of the settlor’s intent to modify her trust.

8 Did Sibyl clearly and convincingly manifest evidence of her intent to modify the

trust when she deeded the properties to Lance? The circuit court answered this question in

the negative, finding that there was no clear and convincing evidence that she intended to

modify the trust:

The record reflects multiple occasions[5] when the Decedent exercised that specific understanding of how to both amend the trust and make transfers of trust property in the manner and form required by the trust, and a consistent track record of doing so on every occasion up and until the procurement of the deeds in question by the Defendants which are in specific derogation of the unambiguous restrictions of section VIII.

....

The court specifically finds that the deeds procured by the defendants in this case do not constitute “clear and convincing evidence” of Ms. Bowden’s intent to revoke or amend her trust by virtue of their execution. To the contrary, the Court finds that the record in this case, if anything, evidences the exact opposite, i.e. that the Decedent knew very well how to effect amendments to her trust documents and to make transfers of trust property pursuant to the requirements and stated intent of her trust related thereto, and did so routinely in every instance up until the procurement of the deeds in question.

In his brief, Lance does not directly address the circuit court’s finding that the record

was devoid of clear and convincing evidence that Sibyl intended to modify or revoke the

trust by deeding the properties to Lance. Instead, he asserts that Sibyl intended to give herself

authority to remove property from the trust “and do with it as she saw fit.” We disagree.

While section VI of the trust did grant authority to sell or dispose of trust property as Sibyl

5 Lance submitted an affidavit in support of his response to Jerry and Jimmy’s summary-judgment motion to which he attached copies of other deeds executed by Sibyl after the creation of the trust in 2001. These deeds, however, reflected that Sibyl and her husband had executed those deeds as co-trustees of the trust, granting the property to themselves as individuals and then, in their individual names, deeded the property to others.

9 desired or needed, that authority was granted to Sibyl in her capacity as co-trustee, and not

to Sibyl individually. We conclude that the circuit court properly interpreted and applied

section 28-73-602(c)(2)(B)’s requirement that a settlor may revoke or amend a revocable

trust––when that trust does not provide a method for doing so––in some manner that

manifests clear and convincing evidence of the settlor’s intent. Accordingly, we affirm on

this point.

Lance’s second argument is that the circuit court misinterpreted section VIII. For

ease of reference, we set out section VIII again:

No part of the Trust estate, including the principal, interest, income, or property involved therein, shall be at any time pledged, assigned, transferred, sold, or in any manner whatsoever anticipated, charged, or encumbered by the maker and creator of this Trust in her personal name, or by any beneficiary of this trust; or be in any manner liable in the possession of the co-trustees, or the successor co-trustees, for the debts, contracts, obligations, voluntary or involuntary of the makers and creators of this Trust or of any beneficiary of this Trust.

On appeal, Lance argues that section VIII was nothing more than a simple spendthrift

provision and that the court failed to give effect to its purpose. Lance contends that the

court should have given equal import to the part of the paragraph after the semicolon, which

he claims is intended to do nothing more than protect the trust’s assets from claims by

creditors. According to Lance, this paragraph was not intended to place a restraint on how

Sibyl could dispose of trust property.

We decline to address the merits of Lance’s argument because, although he raised

the spendthrift issue in his motion for summary judgment, he failed to obtain a specific

ruling on it from the circuit court. Here, the circuit court made specific findings concerning

section VIII. It found that section VIII was included in the trust in its initial version and was

10 carried over verbatim in each subsequent amendment. The circuit court found that the

terms of the trust were unambiguous, specifically as they relate to “alleged attempted pre-

emptive transfers of trust property to, or attempts to procure trust assets by, certain individual

trust beneficiaries which are otherwise in derogation of the specific stated intent of the trust

and specific beneficiary allocations called for by the trust.” The court, however, never made

a ruling on the specific argument that section VIII is a spendthrift provision. It is an

appellant’s responsibility to obtain a ruling to preserve an issue for appeal. Valentine v. White

Cnty. Med. Ctr., 2020 Ark. App. 565, 615 S.W.3d 729 (citing Miller v. Ark. Dep’t of Fin. &

Admin., 2012 Ark. 165, 401 S.W.3d 466). Because the circuit court did not specifically rule

on this issue, we are precluded from addressing the merits of Lance’s argument.

In his third and final point, Lance argues that “a trustee’s failure to sign a deed as

trustee does not invalidate the deed.” In support of this contention, he cites two cases that

he claims address the validity of a document that conveys an interest in trust property if the

trustee did not sign the document in his or her representative capacity: Oliver v. Culpepper,

209 Ark. 326, 190 S.W.2d 457 (1945), and Preferred Medical Associates, LLC v. Abraham

Family Trust, 2017 Ark. App. 260, 520 S.W.3d 710.

In Oliver, our supreme court considered an appeal of a quiet-title action. Factually, a

mother’s will devised all of her real property to her invalid daughter and appointed her son

as guardian and trustee of the daughter’s person and estate. The will granted full control and

management of the property to the son, giving him the ability to sell the property as he

deemed to be in the daughter’s best interest. The son engaged in numerous transactions

involving the real estate; one of those conveyances, however, was not made in his

11 representative capacity as trustee, which resulted in a suit to quiet title. On appeal, our

supreme court considered “the effect of a conveyance by a trustee which makes no reference

to the power to sell conferred by the instrument which created the trust.” 209 Ark. at 334,

190 S.W.2d at 461. The court held that a “grantor is understood in equity to engage with

his grantee to make his conveyance as effectual as he has power to make it; and it should be

assumed that he acted by virtue of whatsoever right enabled him to discharge his full

undertaking, and his act will be so referred.” Id., 190 S.W.2d at 462 (emphasis added).

In Preferred Medical Associates, our court heard an appeal in a breach-of-contract case.

Factually, the plaintiffs/appellees served as trustees, but they sued the defendants in their

individual capacities. As part of their defense, the defendants/appellants argued that it was

excused from performing under the contract because the plaintiffs had signed the contract

without identifying themselves as trustees. Citing Oliver, we held that “our law assumes that

persons in the [plaintiff’s] position have acted in accordance with their status as trustees,

even if that status is not disclosed.” Id. at 4, 520 S.W.3d at 714.

We find neither case to be dispositive of the issue presented by this appeal. Here, the

issue on appeal is the validity of a transfer of trust property undertaken in contravention of

the express terms of the trust. Sibyl created a trust containing language that expressly

restricted and limited her power to transfer trust property in her personal name. Under that

plain language, we agree with the circuit court’s ruling that the deeds were in explicit

derogation of section VIII. Under our standard of review, we affirm the court’s grant of

Jerry and Jimmy’s motion for summary judgment.

Affirmed.

12 HIXSON and BROWN, JJ., agree.

James, House, Downing & Lueken, P.A., by: Richard C. Downing and Zachary D.

Wilson, Jr., for appellants.

Streett Law Firm, P.A., by: James A. Street; and Brian G. Brooks, Attorney at Law,

PLLC, by: Brian G. Brooks, for appellees.