Case Title: McCollum v. McCollum

Citation: 

Docket Number: 

State: arkansas

Court: Arkansas Supreme Court

Date: 1997-05-27T00:00:00Z

Document:
Berchie Marion McCOLLUM and Charles Miles
McCollum v. Calvin McCOLLUM, et al.

96-1301                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered May 27, 1997


1.   Trusts -- testamentary trusts -- powers of trustee to sell
     testamentary property. -- A trustee holding a power to sell
     has discretion not only as to whether or not to sell the trust
     property but as to the mode and terms of the sale, as well;
     before a sale will be cancelled for inadequate price, the
     price must be grossly inadequate, evidenced by bad faith, or
     so low as to shock the conscience of the court; generally, a
     trustee's duty to his trust and to his beneficiaries in
     administering the trust is to exercise the care and skill a
     man of ordinary prudence would exercise in dealing with his
     own property in the light of the situation existing at the
     time; the conduct of the trustee is not to be judged by
     hindsight knowledge of subsequently developed facts and
     circumstances; it is presumed that a trustee has acted in good
     faith, and the burden of proof rests upon those who question
     his actions and seek to establish a breach of trust.

2.   Trusts -- testamentary trust providing for only one
     beneficiary who also has right to dispose of property free of
     trust in her will -- true intention of testator will be
     determined by construing trust language in its ordinary sense.
     -- Where a testamentary trust provides in plain and ordinary
     language that only one beneficiary is named and the trust
     gives that beneficiary the right to dispose of the property
     free of the trust in her will, the supreme court will construe
     the words and sentences in their ordinary sense to arrive at
     the true intention of the testator.

3.   Appeal & error -- case generally becomes moot when judgment
     would have no practical legal effect -- Unless an exception
     exists, a case becomes moot when any judgment rendered would
     have no practical legal effect upon a then existing legal
     controversy.

4.   Property -- standing -- one has no standing to raise issue
     regarding property in which he has no interest. -- One has no
     standing to raise an issue regarding property in which he has
     no interest.

5.   Trusts -- sale of trust property upheld -- husband's will
     provided beneficiary with authority to dispose of farm. --   
     Where appellant failed to prove that $400,000 or $1000 per
     acre sale price for the trust property was grossly inadequate
     or so low as to shock the conscience of the court; where the
     decedent's will provided his wife, the sole beneficiary of the
     trust, with the authority to dispose of the farm in the manner
     she did; and where it was clear that the testator's intent was
     to provide his wife with the authority to dispose of the
     marital trust property during her lifetime and upon her death,
     and she did so, neither appellant ever had any legal or
     equitable interest in the marital trust or in its main asset,
     the farm; the decision of the chancery court was affirmed. 


     Appeal from Arkansas Chancery Court; Russell Rogers,
Chancellor; affirmed.
     Norman M. Smith, for appellants.
     J.W. Green, for appellees.

     Tom Glaze, Justice.
     This case involves the interpretation of a testamentary trust. 
On January 29, 1985, Lester McCollum died testate with his wife,
Gertie, a son, appellant Berchie McCollum, and a daughter, appellee
Earnestine Owen, named as co-executors of his will.  In addition to
Gertie, Berchie, and Earnestine, Lester was survived by two other
children, Charles McCollum and appellee Calvin McCollum.  
     In his will, Lester established the Lester Marion McCollum
Marital Trust, and its main asset was a 400 acre farm located in
Arkansas County.  Lester's widow, Gertie, was named both the
trustee and the sole beneficiary of the Marital Trust.  In addition
to receiving all the statutory powers of a trustee under Act 153 of
1961, now Ark. Code Ann.  28-69-301--304 (1987 and Supp. 1995),
Gertie was given title to the farm with the right to distribute to
herself all of the net income of the trust and the absolute right
to determine whether the farm should be sold.  Gertie was also
given the authority to appoint by her own will the entire remaining
principal, free of the Marital Trust or any other trust.  
     Lester's will further provided that if Gertie failed to
survive him or failed to appoint the balance of the trust property
or if any of her appointments failed, the balance of the property
from the Marital Trust would become property of the Lester Marion
McCollum Family Trust with Earnestine and Berchie named as co-
trustees.  Under the Family Trust, Lester's surviving children or
their children or unmarried spouse became contingent remaindermen. 

     The dispute in this case arises from events beginning on
July 3, 1989, when Gertie executed and delivered a trustee's deed,
conveying the farm to Calvin and Earnestine as tenants in common
for $400,000.  Calvin and Earnestine gave Gertie four $100,000
promissory notes, two of which were executed by Calvin and two by
Earnestine.  On the same date, Calvin and his wife together and
Earnestine executed and delivered to Gertie mortgages to secure
payment of their respective notes with installment payments to
begin on July 3, 1990.  Earnestine's mortgage and the trustee's
deed were subsequently amended to replace Earnestine with the Allen
Robert Owen, Jr. Family Trust.  
     On April 29, 1993, Gertie executed her will in which she
memorialized the fact that she had previously forgiven Calvin and
the Owen trust one $100,000 note each.  Further, she executed on
the same date an assignment of mortgage and note to transfer to
herself, individually, the remaining notes from Calvin and the Owen
trust with accompanying mortgages.  Additionally, Gertie executed
release deeds to each Calvin and the Owen trust by which Gertie
forgave any and all remaining indebtedness created by their
respective promissory notes and mortgages.  These documents were
filed of record on May 4, 1993.
     Gertie died on August 18, 1994, and in her will, Gertie
appointed any remaining notes and indebtedness owed to the Marital
Trust to Calvin and the Owen trust, should the four notes be
determined still in existence and enforceable.  Berchie filed a
petition to contest Gertie's will in probate court, but he later
dismissed it with prejudice on November 2, 1995.  
     On February 7, 1996, Berchie filed the present action in
chancery court against appellees Calvin, Calvin's wife, Earnestine
and Karolyn Owen as trustees of the Owen trust, and the Owen trust. 
In his complaint, Berchie alleged Gertie breached her fiduciary
duty as trustee when she sold the farm and forgave Calvin's and the
Owen trust's notes.  Berchie requested an accounting, and
imposition of a constructive trust for an undivided interest in the
farm and a share of its rents and profits since the sale.  The
complaint was subsequently amended to join Lester's great-grandson,
Charles Miles McCollum, as a plaintiff.  Following a hearing on the
matter and without comment, the trial court entered an order in
favor of Calvin, his wife, Earnestine, and the Owen trust.  From
that order comes this appeal.  Because great-grandson Charles Miles
makes no claim or argument separate from that of Berchie, we refer
to the appellants as Berchie only for easier reading.
     On appeal, Berchie argues that Gertie's action in divesting
the Martial Trust of its primary asset was fraud per se, and
constituted self-dealing and a repudiation of the trust.  Berchie
criticizes Gertie's sale of the farm for $400,000, which he
contends was an inadequate price.  He asserts Gertie sold the farm
to Earnestine because Gertie lived with Earnestine and Earnestine
exercised undue influence over Gertie.  Further, Berchie argues
that because the appellees knew of Gertie's breach, Earnestine, as
executor of Gertie's will, attempted to conceal the fact that their
notes and mortgages had been forgiven by filing a delayed inventory
of Gertie's property.  Berchie's arguments are without merit.
     As the appellees note, Berchie was aware of every transaction
concerning the trust and farm as it occurred either by actual
knowledge in his position as co-executor of Lester's estate or by
constructive knowledge because each deed and mortgage had been duly
recorded.  Of particular note, Berchie testified that he was
present when Gertie sold the farm for $400,000 to Calvin and
Earnestine on July 3, 1989, and he offered no objection.  Berchie
also was aware on July 3, 1989 that Gertie was forgiving his 1987
loan of $100,000 and that she intended to forgive two of the
$100,000 notes signed by Calvin and Earnestine.  Berchie now
contends that the $400,000 is an inadequate price for the farm, but
his contention is baseless.  First, we mention the case of Gregory
v. Moose, 266 Ark. 926,