Michael R. Smith v. Maggie Mae, LP

225 So. 3d 1243, 2016 WL 1739061, 2016 Miss. App. LEXIS 267
CourtCourt of Appeals of Mississippi
DecidedMay 3, 2016
Docket2014-CA-00875-COA
StatusPublished
Cited by2 cases

This text of 225 So. 3d 1243 (Michael R. Smith v. Maggie Mae, LP) is published on Counsel Stack Legal Research, covering Court of Appeals of Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michael R. Smith v. Maggie Mae, LP, 225 So. 3d 1243, 2016 WL 1739061, 2016 Miss. App. LEXIS 267 (Mich. Ct. App. 2016).

Opinion

GRIFFIS, P.J.,

for the Court:

¶ 1. Through a conservatorship proceeding, the parties have presented a dispute over the ownership of a limited partnership, a trust, and certain assets. The Rankin County Chancery Court ruled that David R. Smith held a valid general-partner interest in Maggie Mae L.P., that Maggie Legett Smith (“Maggie”) never *1245 ceased to serve as managing general partner of Maggie Mae L.P. and that David, as her conservator, could act on her behalf in his fiduciary capacity as managing general partner of Maggie Mae L.P. Michael R. Smith, individually and as trustee of the Maggie Legett Smith Irrevocable Trust (the “Trust”) appeals. Finding error, we reverse the judgment of the chancellor. We render a judgment finding Michael became the general partner of Maggie Mae L.P. on February 1, 2002, when Maggie’s conservatorship was established, and we remand for further proceedings consistent with this opinion.

FACTS

1. The Trust

¶ 2. On November 20, 2000, Maggie created the Trust. Maggie included her sons, Michael and David in the trust agreement. The trust agreement named Maggie as the trustor, Michael as the trustee, and Michael and David as the primary beneficiaries. As trustee, Michael had the discretion to distribute the income and principal.

2. Maggie Mae L.P.

¶ 3. On November 22, 2000, Maggie and the Trust executed the Limited Partnership Agreement (the “LPA”) of Maggie Mae L.P. Michael signed the LPA for the Trust. The LPA established the ownership of the Trust as follows: “[t]he Partners desire that Maggie Legett Smith be the sole General Partner and that all of the other Partners be Limited Partners.” Schedule B to the LPA indicated the partnership interest as follows:

Maggie Legett Smith General Partner 33 1/3%
Maggie Legett Smith Limited Partner 33 1/3%
Michael R. Smith, Trustee Limited Partner 33 1/3%
TOTAL 100%

3.Transfers of Partnership Interests and Assets

¶ 4. On December 29, 2000, Maggie executed a transfer of a portion of her general-partnership interest. The transfer conveyed 1/3 of 1% to David as a new general partner.

¶ 5. On Janúary 31, 2001, David, representing himself as a general partner, sold a parcel of land (identified as “the Nissan property”) owned by Maggie Mae L.P. to the Mississippi Economic Impact Authority for $186,000. A warranty deed from Maggie Mae L.P., signed by “David Smith, General Partner,” was executed and dated January 31, 2001. David did not deposit the sale proceeds into a Maggie Mae L.P. bank account, and the proceeds have not been distributed according to the LPA.

¶ 6. On September 19, 2001, David, as a general partner, entered into a contract for the sale of a second parcel of land (identified as “the Chisholm property”) owned by Maggie Mae L.P. David signed a contract with Charles Chisholm to sell the land for $32,000. The parties, however, did not immediately execute the contract.

PROCEDURAL HISTORY

¶7. On January 4, 2002, David filed a petition to establish a conservatorship of Maggie in the chancery court. The petition was joined by Maggie, and her grandsons, Nathan B. Smith and Alan L. Smith. It included affidavits from two doctors who concluded that Maggie had slight physical incapacities, but suffered from moderate dementia and short-term memory loss. The chancellor granted the petition and ordered the conservatorship on February 1, 2002. David was appointed conservator, and letters of conservatorship were issued on February 19, 2002.

*1246 ¶ 8. On February 28, 2002, as conservator, David filed a petition to sell property and asked for the chancery court’s approval of the s'ale of the Chisholm property. The petition included a legal description of the property, attached an appraisal of the property that valued it at $27,000, and asked the chancery court to ratify a contract for the sale of the property at a price of $32,000.

¶ 9. The petition indicated that Maggie did not own the property in her individual capacity. Instead, it stated that the property was owned by “Maggie Mae L.P.” The petition further explained that Maggie “was a general partner/’ and she owned an “equitable interest as a limited partner in the Limited Partnership [of] 66 l/3%.” The other owners were “Maggie Legett Smith Irrevocable Trust 33 1/3% [and] David B. Smith l/3%.” The petition also stated that the beneficiaries of the Trust were David and Michael.. On March 1, 2002, the chancellor entered an order that granted the petition and approved the sale of the property.

¶ 10.- On August 9,2002, as conservator, David filed a petition for authority to remove Michael as the trustee of the Trust. David álso requested that the chancery court order Michael to provide an accounting of the Trust’s financial activity and appoint a certified'public’accountant to serve as the trustee or co-trustee.

¶11.. Also, on August 9, 2002, as conservator, David filed a petition for authority to remove Michael as the trustee of the Miss Eva Elisee Legett Irrevocable Trust (Eva Trust). This petition also asked that the chancery court order Michael to provide an accounting of the Eva Trust’s financial activity and appoint a certified public accountant to .serve as the trustee or co-trustee.

¶ 12.,. On April 21, 2003, Michael, as the trustee of the Trust filed a complaint in the chancery court for the turnover of funds and for the determination of partnership interest. Michael asked the chancery court to determine the general and limited partners of Maggie Mae L.P., confirm’ that he is the “managing general partner” of Maggie Mae L.P., and require David to turn over proceeds from any sales of property owned by Maggie Mae L.P.' He also asked for other relief against David for his actions in the transfer of property under the conservatorship.

¶ 13. On May 7, 2003, the chancellor consolidated all of the cases. According to the record, the parties filed additional pleadings through June 11,2003. On February 22, 2008, Michael filed a suggestion of bankruptcy that advised the chancery court that he had filed a Chapter 13 bankruptcy proceeding on January 8, 2008, and the automatic stay was in effect. .

¶ 14. ’ Maggie died ■ .on February 22, 2011. The bankruptcy ease eventually concluded, and the bankruptcy court remanded , several issues .to the chancery court.

¶15. The trial was scheduled for May 21; 2014. On that'day, the parties and their counsel appeared and made arguments to the chancellor. The chancellor ended the hearing with an oral ruling.

¶ 16. On June 16, 2014, the chancellor entered a seven page “Amended Judgment.” The amended judgment was not a final judgment. Instead, the chancellor determined that a special master should be appointed and deferred ruling on twelve “issues.” The chancery court did, however, rule:

[T]he relief sought by Michael ... of a declaration that David ... was not a *1247

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225 So. 3d 1243, 2016 WL 1739061, 2016 Miss. App. LEXIS 267, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michael-r-smith-v-maggie-mae-lp-missctapp-2016.