Union Natl. Bank v. Smith

400 S.W.2d 652, 240 Ark. 354, 1966 Ark. LEXIS 1310
CourtSupreme Court of Arkansas
DecidedFebruary 28, 1966
Docket5-3726
StatusPublished
Cited by16 cases

This text of 400 S.W.2d 652 (Union Natl. Bank v. Smith) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Union Natl. Bank v. Smith, 400 S.W.2d 652, 240 Ark. 354, 1966 Ark. LEXIS 1310 (Ark. 1966).

Opinion

Oarleton Harris, Chief Justice.

On September 7, 1962, appellee, Dr. Frank C. Smith of Little Rock, established an inter vivos trust, naming the Union National Bank of Little Rock, appellant, as trustee, and specifically declaring the trust to he irrevocable. The doctor transferred and delivered certain promissory notes secured by real estate mortgages, and certain securities, to the trustee, as the original corpus of the trust. Under the provisions of the instrument, income is reserved to Dr. Smith, and upon his death, the income is to be paid to his wife, Abrielia, during her lifetime. Following the death of Dr. Smith and wife, income from the trust is to be paid to Dr. Smith’s daughter, Delores Brown, and her husband, James Brown, in equal shares for life. Upon the death of either Mr. or Mrs. Brown, the survivor is to receive all income for life. Upon the death of the survivor, under the terms of the instrument, the income is to he paid in equal shares to three named children of Mrs. Brown, and following the death of the last of the children, the trust will terminate, and the principal and income shall he paid to the First Pentecostal Church; if that church is not in existence at the time of the termination of the trust, the principal and income shall he paid to the United Pentecostal Church, St. Louis, Missouri.

On September 15, 1964, appellees (Dr. Smith and wife) instituted suit against appellant and the successive beneficiaries, seeking revocation of the instrument, alleging that the trust violated the rule against perpetuities,1 and further alleging that Dr. Smith was under the influence of narcotics at the time of the execution of the trust to such an extent that he did not understand the provisions thereof, and was mentally incompetent to execute the agreement. Appellant answered with a general denial, and asked that the complaint be dismissed. The case proceeded to trial, and at the conclusion of the evidence, the court held that Dr. Smith was mentally incompetent, did not have sufficient mental capacity to execute the trust agreement of September 7, 1962, and the trust agreement was voided, cancelled, and set aside. From the decree so entered, appellant brings this appeal.

First, let us review the applicable law in a situation of this nature. In Harris v. Harris, 236 Ark. 676, 370 S. W. 2d 121, a fairly recent case, the court reiterated the rule that has been expressed many times in the past:

“There is a presumption of law that every man is sane, fully competent and capable of understanding the nature and effect of his contracts. The burden of proving incompetency rested with the appellee, since he seeks to void the signing of these deeds. In Hunt v. Jones, 228 Ark. 544, 309 S. W. 2d 22, this court said:

“ ‘Since the sanity and mental capacity of Miss McCray to make the deeds in question is presumed, the burden rested on the appellants to show her mental incapacity to execute them by a preponderance of the evidence. Gibson v. Gibson, 156 Ark. 528, 246 S. W. 845. As this court said in Pledger v. Birkhead, 156 Ark. 443, 246 S. W. 510: “The familiar principles of law applicable to cases of this kind have often been announced by this court. If the maker of a deed, will, or other instrument has sufficient mental capacity to retain in his memory, without prompting, the extent and condition of his property, and to comprehend how he is disposing of it, and to whom, and upon what consideration, then he possesses sufficient mental capacity to execute such instrument. Sufficient mental ability to exercise a reasonable judgment concerning these matters in protecting his own interest in dealing with another is all the law requires. If a person has such mental capacity, then, in the absence of fraud, duress, or undue influence, mental weakness, whether produced by old age or through physical infirmities, will not invalidate an instrument executed by him.” [Citing cases] ’

“In the Hunt case, Miss McCray had executed two deeds, one in 1953 and one in 1954, which conveyed property owned by her. In 1954, at the age of 86, she died a few months after signing the last deed. Numerous collateral heirs attempted to have these deeds cancelled on the ground of her mental incompetency. Miss McCray also suffered from the disease of arteriosclerosis. Sometimes her mind was clear and at other times she was noisy, belligerent, and mentally confused. Her deeds were held valid.”

The court also said:

“The true test of Quincy’s competency in this case is what was his mental capacity or competency when he signed the deeds on March 28, 1961. No witness who observed him on that date testified that Quincy appeared incompetent then.* * * ”

With this firmly established rule in mind, let us proceed to examine the evidence. Amis Guthridge, a Little Rock attorney, testified that he had known Dr. Smith for approximately twenty years, and that the doctor called him with regard to preparing a trust agreement. Smith came to his office, brought with him notes concerning what he wanted the-trust to provide, and told Guthridge that he desired to have the trust officer of the Union National Bank named trustee. The doctor told Guthridge that he wanted to execute an irrevocable trust. The lawyer stated that he talked to Dr. Smith very seriously and very carefully about the finality of an irrevocable trust. However, the doctor had made up his mind, and he told Mr. Guthridge that the reason he wanted to establish this trust “was that there were so many malpractice suits wherein patients would sue doctors that it had gotten to the point where you could hardly prescribe aspirin for a patient until whereby you might be faced with a malpractice suit and he wanted to do it for that reason to protect what he had and also for the protection of his wife in the event he should pass away and I called Mr. Jerry Bowen and I remember very distinctly when I told him Dr. Smith wanted to make an irrevocable trust, he said, quote, ‘Amis, we do not like to make an irrevocable trust.’ ” According to the witness, this visit by Dr. Smith to the office was on Saturday, September 1, 1962. Tbe trust instrument was ready for execution on Friday, September 7, and Guthridge turned the trust agreement over to the doctor, and made an appointment with Bowen for Dr. and Mrs. Smith to meet with the former at some time during the day. Guthridge himself had an engagement in Fayetteville, and accordingly was not present at the bank when the trust instrument was discussed. The lawyer further testified that Dr. Smith appeared to fully understand how he was disposing of his property, and the matter was discussed fully. The doctor had several pages of handwritten notes, and a detailed account of all his properties. He appeared to know to whom he was transferring the property, their names, and their addresses. Guthridge stated that the doctor appeared in a state of urgency, very anxious that the matter be completed.

Mr. Guthridge stated that, much to his amazement, within a short number of days, Dr. Smith called and told the lawyer over the phone that he (Smith) was not getting from the trust what he had thought he would receive in the way of payments, and he desired that the instrument be changed. It appeared that Dr. Smith had been under the impression that he would get the principal payments as well as the interest payments from two particular promissory notes, and under the trust agreement, the doctor would only receive the interest.

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Cite This Page — Counsel Stack

Bluebook (online)
400 S.W.2d 652, 240 Ark. 354, 1966 Ark. LEXIS 1310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/union-natl-bank-v-smith-ark-1966.