Swaffar v. Swaffar

Eddie Linn SWAFFAR Jr. v. W.C. SWAFFAR,
Executor

96-751                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 10, 1997


1.   Estates -- distribution -- supreme court would not apply Ark. Code Ann. 
     28-52-106 to bar appellant's objections to certificates of deposit. --
     Where the record did not confirm that a document, which listed
     two certificates of deposit as items not included in the
     decedent's estate, was ever filed, the supreme court was left
     only with appellee's testimony that the document listing the
     certificates of deposit was indeed filed at some point during
     the probate proceedings; under such facts and circumstances,
     the appellate court would not apply Ark. Code Ann.  28-52-106
     to bar appellant's objections.  Second, Appellee contends that
     our review is barred because Appellant has not produced a
     record on appeal that demonstrates error.  We agree that the
     record is insufficient for our review, but, for the reasons
     discussed below, we do not agree that on these particular
     facts and issues the insufficiency is Appellant's fault.

2.   Appeal & error -- record insufficient for review -- not appellant's fault.
     -- Although the record was insufficient for review, the
     supreme court concluded that, on the particular facts and
     issues involved, the insufficiency was not appellant's fault.

3.   Gifts -- inter vivos -- burden of proof. -- Whoever claims that an
     inter vivos gift was made must prove it, regardless of who
     initiated the inquiry. 

4.   Gifts -- inter vivos -- elements of. -- The elements of an inter
     vivos gift, which must be proven by clear and convincing
     evidence, are that the donor be of sound mind, have the clear
     intent to make a gift beyond recall, have actually delivered
     the subject matter of the gift to the donee or the donee's
     agent, and at the same time have released all future dominion
     and control over the property delivered. 

5.   Gifts -- inter vivos -- appellee's burden to prove that certificate of
     deposit was gift to him -- matter reversed and remanded for further
     consideration. -- The supreme court held that it was appellee's
     burden to prove by clear and convincing evidence that the
     certificate of deposit bearing his name was a gift to him; to
     the extent that it shifted the burden of proof to appellant to
     prove the negative proposition that the certificate of deposit
     was not a gift, the probate court erred; the matter was
     reversed and remanded for further consideration under the
     appropriate standard of proof.  

6.   Estates -- probate court's application of erroneous standard of proof
     precluded review of ownership issue -- matter remanded for development of
     facts of ownership. -- Where the probate judge's application of
     an erroneous standard of proof precluded any meaningful review
     of appellant's argument that the evidence was insufficient to
     establish that either of two certificates of deposit were
     subject to the ownership of anyone other than the decedent,
     the supreme court remanded the matter for further development
     regarding the facts of ownership of the certificates of
     deposit.

7.   Estates -- appellant's failure to file objections to orders barred review
     of shop-rent issue. -- The supreme court held that appellant's
     failure to comply with Ark. Code Ann.  28-1-116(d) (1987) by
     filing written objections to orders concerning unpaid rent on
     the decedent's welding shop barred review of the issue.

8.   Attorney's fees -- supreme court affirmed probate judge's exercise of
     discretion in allowing. -- Where appellant did not file written
     objections to orders approving attorney's fees for a law firm,
     he could not appeal them pursuant to Ark. Code Ann.   28-1-
     116(d); in the absence of any proof that other fees were
     unreasonable or in violation of the relevant statute, the
     supreme court affirmed the probate judge's exercise of
     discretion in allowing the fees.

9.   Set-off -- probate courts cannot award fees for services rendered to
     individual beneficiaries -- probate court's denial of set-off claim
     affirmed. -- Probate courts do not have jurisdiction to award
     fees for services rendered to individual beneficiaries; the
     supreme court therefore affirmed the probate court's denial of
     appellant's claim for set-off against any claims due him from
     the estate for his attorney's fees incurred during the six-
     year-long history of the estate.


     Appeal from Faulkner Probate Court; Andre McNeil, Chancellor;
affirmed in part; reversed and remanded in part.
     J.R. Nash, for appellant.
     Barber, McCaskill, Jones & Hale, P.A., by: Richard C.
Kalkbrenner and Derek J. Edwards, for appellee.

     Donald L. Corbin, Justice.
     Appellant, Eddie Linn Swaffar Jr., appeals the order of the
Faulkner County Probate Court approving the final accounting and
denying his claim for set-off in the administration of the estate
of his father, Eddie Linn Swaffar Sr.  Appellee, W.C. Swaffar, is
Appellant's uncle and executor of the estate.  Our jurisdiction is
pursuant to Ark. Sup. Ct. R. 1-2(a)(16) (as amended by per curiam
July 15, 1996), as this case requires construction of a will. 
Appellant raises four points for reversal.  We find merit to the
first point and reverse and remand in part and affirm in part.
                  Facts and Procedural History
     The decedent, Eddie Linn Swaffar Sr., died testate on April 8,
1989, of cancer after having survived severe burns he incurred in
an accident at his welding shop in Conway, Arkansas.  The
decedent's will named as executor Appellee W.C. Swaffar, the
decedent's brother, and placed all property of the estate into a
trust for the benefit of the decedent's two sons, Appellant and a
minor named Brandon Heath Swaffar.  The will provided that the
elder son be the guardian of the minor son and that each son would
receive an equal share of the trust as follows:  Upon reaching age
30, each would receive one-fourth of the trust; at age 35, another
one-fourth; and at age 40, the remaining half of the trust.  The
will also provided that Appellant had the right to live in the
decedent's home and "shall maintain said home in good repair and
pay rent for the home and shop at $1,200.00 per month payable to
the Trust."  
     This case is marked by much conflict between Appellant and
Appellee.  The conflict existed almost from the very beginning when
Appellee sought to have his brother's will admitted to probate on
April 12, 1989.  No action was taken thereafter until September 11,
1989, when Appellant filed a petition to contest the will, to
remove Appellee as executor, and to demand an inventory.  The
conflict continued through the next six years, and there was much
activity in the case.  To recite all the activity would unduly
lengthen this opinion.  We do, however, mention some of these
actions as they become relevant to our discussion of the merits of
this appeal.
     In July 1995, Appellee filed a final accounting accompanied by
a petition for approval of the final accounting, final
distribution, and for discharge as personal representative. 
Appellant filed objections to the final accounting and asserted a
claim of set-off against any alleged debts against the estate. 
After a hearing on January 5, 1996, the probate court entered an
order denying Appellant's objections and claim for set-off and
approving the final accounting.  This appeal is from that order.
                     Certificates of Deposit
     Appellant's first point for reversal concerns two certificates
of deposit that Appellee listed on a document as items not included
in the estate.  Appellee admitted that his attorneys helped him
prepare this document and that it was filed at some point in the
probate proceedings.  This document was admitted as Appellant's
Exhibit One during the hearing on Appellant's objections to the
final accounting and lists one certificate of deposit at First
National Bank payable to W.C. Swaffar in the amount of $54,986.40. 
The document lists the other certificate of deposit as being at
First State Bank, payable to Brandon Swaffar or W.C. Swaffar in the
amount of $40,180.84.  The record does not disclose how or when
these certificates of deposit were purchased, although Appellant
alleges that they were purchased by Appellee with cash he obtained
from the decedent.  Of some significance to Appellant is the fact
that this document also lists a life insurance policy in the amount
of $10,000.00 with Brandon as beneficiary.  Also of significance to
Appellant is Appellee's testimony that the certificate of deposit
in Appellee's name was also in the name "Eddie Lynn Swaffar," but
failed to distinguish between the junior Swaffar or the senior
Swaffar.  Appellant argues these two facts are evidence that the
decedent intended to make equal cash gifts to his two sons
somewhere in the range of $50,000.00 each.
    Appellant objected to the final accounting on the basis that it
did not include these two certificates of deposit as property of
the estate.  Appellee testified at the January 1996 hearing that
the certificates of deposit were held jointly with rights of
survivorship in the names of the decedent and himself and Brandon
and himself, respectively.  As previously mentioned, Appellee
admitted that the certificate of deposit bearing his name and the
decedent's did not identify "Eddie Linn Swaffar" as either the
junior or the senior Swaffar.  On the basis of this testimony and
other evidence indicating that the decedent was a successful
businessman, the probate court ruled that the decedent purchased
the certificates of deposit intentionally the way he did and that
he would not substitute his judgment for the decedent's.  The
probate court said, "If he [the decedent] knew that a part of it
was going to Brandon, and a part of it was going to his brother,
that was his choice.  And absent any proof to the contrary why it
should not be, I'm leaving it there."  (Emphasis supplied.)  
     On appeal, Appellant contends the probate court's ruling is
contrary to the law and evidence presented.  Appellant's argument
in support of this contention is twofold.  First, he argues that it
was Appellee's burden to prove that the certificate of deposit
bearing Appellee's name was a gift from the decedent to Appellee. 
In support of this argument, Appellant relies on McDermott v.
McAdams, 268 Ark. 1031, 598 S.W.2d 427 (Ark. App. 1980).  Second,
Appellant argues that the proof presented by Appellee did not
establish that either certificate of deposit was a joint tenancy
and therefore subject to ownership by anyone other than the
decedent.  In support of this argument, Appellant relies on Jones
v. Robinson, 297 Ark. 580, 764 S.W.2d 610 (1989).
     Appellee responds that Appellant's argument is barred because
it was not timely raised below and because the record on appeal
does not demonstrate error.  First, Appellee contends that
Appellant is barred from raising this issue now according to Ark.
Code Ann.  28-52-106 (1987) because he did not file an objection
to the certificates of deposit until the final accounting. 
Appellee implies strongly that the document was filed as part of
the initial accounting, and, therefore, Appellant would have had to
file an objection within sixty days pursuant to section 28-52-106. 
The record, however, does not confirm that the document was filed
as part of or along with the initial account.  Likewise, the record
does not confirm that the document was filed with the initial
inventory or with any of the annual accountings.  In short, the
record does not disclose that the document was ever filed.  Thus,
we are left only with Appellee's testimony that the document
listing the certificates of deposit was indeed filed at some point
during the probate proceedings.  Under such facts and
circumstances, we will not apply section 28-52-106 to bar
Appellant's objections.  Second, Appellee contends that our review
is barred because Appellant has not produced a record on appeal
that demonstrates error.  We agree that the record is insufficient
for our review, but, for the reasons discussed below, we do not
agree that on these particular facts and issues the insufficiency
is Appellant's fault.
     We agree with Appellant's assertion that the probate judge's
ruling was contrary to the law.  The issue in McDermott was who
bore the burden of proof in probate proceedings when a beneficiary
claimed title to property as a gift that the executor claimed
belonged to the estate.  The McDermott court looked to the general
law of inter vivos gifts and concluded that "the common thread
seems to be that whoever claims the gift was made must prove it,
regardless who initiated the inquiry."  McDermott, 268 Ark. at
1040, 598 S.W.2d  at 432.  In so concluding, the McDermott court
relied on Bennett v. Miles, 212 Ark. 273, 205 S.W.2d 451 (1947),
which has facts remarkably similar to the facts of this case and
which held that an executor who did not list a certain bank account
as part of the estate bore the burden of proving that it had been
a gift from the decedent.  Like the McDermott court, the Bennett
court looked to the general law on inter vivos gifts, which
requires that the elements of an inter vivos gift be proven by
clear and convincing evidence.  The elements of an inter vivos gift
are that the donor be of sound mind, have the clear intent to make
a gift beyond recall, have actually delivered the subject matter of
the gift to the donee or the donee's agent, and at the same time
have released all future dominion and control over the property
delivered.  Bennett, 212 Ark. 273, 205 S.W.2d 451; Baugh v. Howze,
211 Ark. 222, 199 S.W.2d 940 (1947).
     Consistent with McDermott and Bennett, we agree with Appellant
that it was Appellee's burden to prove by clear and convincing
evidence that the certificate of deposit bearing his name was a
gift to him.  McDermott, 268 Ark. 1031, 598 S.W.2d 427.  The
probate judge stated that he was ruling for Appellee "absent any
proof to the contrary[.]"  To the extent that the probate court
shifted the burden of proof on this issue to Appellant to prove the
negative proposition that the certificate of deposit was not a
gift, the probate court erred.  See McDermott, 268 Ark. at 1040,
598 S.W.2d  at 432.  We must, therefore, reverse and remand this
case for further consideration under the appropriate standard of
proof.  
     On remand, we note that the burden of proof on the question of
whether the decedent meant to make a gift to his son Eddie Linn
Swaffar Jr. is on Appellant.  Likewise, the burden of proof on the
question of whether the decedent made a gift to Appellee or Brandon
lies with Appellee and Brandon respectively.
     The probate judge's application of an erroneous standard of
proof precludes any meaningful review of Appellant's remaining
argument that the evidence is insufficient to establish that either
of the two certificates of deposit were subject to the ownership of
anyone other than the decedent pursuant to Jones, 297 Ark. 580, 764 S.W.2d 610.  Jones held that the "designated in writing"
requirement of Ark. Stat Ann.  67-552 (Repl. 1980) be complied
with substantially.  Section 67-552, which governs titles to
accounts and certificates of deposits held in two or more names,
was amended significantly in 1983 and is currently codified as Ark.
Code Ann.  23-52-1005 (1987).  As there was no evidence of when
these particular certificates of deposit were issued, we cannot
determine which version of the statute applies to the facts of this
case.  Moreover, as neither the certificates of deposit nor any
other writing or bank record was admitted into evidence, the record
lacks sufficient evidence for the probate judge to have determined
who had title to these two certificates of deposit.  Because we
think the lack of evidence is due to the effect of the probate
court's application of an erroneous standard of proof, we remand
for further development as to the facts of ownership of these
certificates of deposit.
     Appellant also assigns as error the probate judge's decision
on unpaid rent to the estate, executor's fees, attorneys' fees, and
Appellant's claim for set-off.  We affirm these rulings for the
following reasons.
                       Unpaid Rent on Shop
     Appellant's second point for reversal concerns the $80,836.40
in accrued and unpaid rent on the decedent's welding shop that was
charged against Appellant in the final accounting.  Appellant's
failure to comply with Ark. Code Ann.  28-1-116(d) (1987) and file
written objections to the 1991 and 1993 orders concerning the rent
on the shop bars our review of this issue.
                 Executor's and Attorney's Fees
     As his third point for reversal, Appellant contends that the
trial court erred in approving the $69,884.45 in fees requested by
Appellee as executor and by his attorneys, Phil Stratton, who
originally represented Appellee but sought retirement during the
case, and the firm of Barber, McCaskill, Jones & Hale, which the
probate court allowed to be substituted as counsel for Appellee. 
     All fees paid to the Barber Firm were requested by petition
and approved by order of the probate court.  Appellant did not file
written objections to these orders.  Therefore, he cannot now
appeal them pursuant to section 28-1-116(d).  As for the other fees
paid to Mr. Stratton and Appellee, Appellant offers no evidence
that the fees are unreasonable or contrary to the amounts allowed
by statute, Ark. Code Ann.  28-48-108 (1987).  In the absence of
any proof that the fees are unreasonable or in violation of the
statute, we affirm the probate judge's exercise of discretion in
allowing these fees.  See Morris v. Cullipher, 306 Ark. 646, 816 S.W.2d 878 (1991).
                             Set-off
     Appellant filed a claim for set-off against any claims due him
from the estate for his attorney's fees incurred in the six-year-
long history of this estate.  Appellant's claim for set-off is
based primarily upon his efforts in Pulaski County Circuit Court to
obtain the return to the estate of the land valued at $361,500.00. 
Probate courts do not have jurisdiction to award fees for services
rendered to individual beneficiaries.  Paget v. Brogan, 67 Ark.
522, 55 S.W. 938 (1900).  We therefore affirm the probate court's
denial of Appellant's claim for set-off.
     For the reasons aforementioned, the part of the probate
court's order denying Appellant's request to include the two
certificates of deposit in the estate is reversed, and the case is
remanded for further development of this issue.  All remaining
parts of the probate court's order are affirmed.