Case Title: Noland v. Noland

Citation: 

Docket Number: 96-1555

State: arkansas

Court: Arkansas Supreme Court

Date: 1997-12-04T00:00:00Z

Document:
Jerry G. NOLAND and Anita Delores Shaver,
Trustees of the Wesley E. Noland Irrevocable
Trust, and Jerry G. Noland, Anita Delores
Shaver, and Helen Lorraine Hooten,
Beneficiaries of the Wesley E. Noland
Irrevocable Trust v. Claude Noland

96-1555                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered December 4, 1997


1.   Trusts -- presumption of undue influence -- proponents' burden. -- For
     purposes of its analysis of the settlor's mental capacity and
     free agency, the supreme court assumed, as the trial court had
     found, that at least one of the appellants procured the
     settlor's trust and that all of the appellants benefitted from
     this procurement; with this assumption, a presumption that the
     trust was the result of undue influence arose under case law,
     and the burden of proof then shifted to the proponents of the
     trust to prove beyond a reasonable doubt that the settlor had
     both the mental capacity and freedom of will to render the
     trust legally valid.

2.   Appeal & error -- review of chancellor's findings -- deference accorded in
     judging witness credibility. -- Deference is generally accorded to
     the superior position of the chancellor to judge the
     credibility of the witnesses.

3.   Wills -- mental capacity -- test for determining. -- Generally, the
     test for determining mental capacity provides that sound mind
     and disposing memory, constituting testamentary capacity, is
     (a) the ability on the part of the testator to retain in
     memory without prompting the extent and condition of property
     to be disposed of; (b) to comprehend to whom he is giving it;
     and (c) to realize the deserts and relations to him of those
     whom he excludes from his will; testamentary capacity means
     that the testator must be able to retain in his mind, without
     prompting, the extent and condition of his property, to
     comprehend to whom he is giving it, and relations of those
     entitled to his bounty.

4.   Wills -- mental capacity -- testator may execute will during lucid
     interval. -- Complete sanity in the medical sense is not
     required if the power to think rationally existed at the time
     the will was made; despite any mental impairment, the testator
     may execute a will if he is experiencing a lucid interval; the
     time to look at a testator's mental capacity is at the time
     the will is executed; however, proof may be taken as to the
     testator's condition both before and after the will's
     execution as being relevant to his condition at the time the
     will was executed. 

5.   Wills -- testamentary capacity -- age not necessarily inconsistent with. -
     - Mere age is not necessarily inconsistent with testamentary
     capacity. 

6.   Trusts -- mental capacity -- trial court clearly erred in finding that
     appellants failed to establish soundness of mind. -- Where the
     videotape of the settlor's execution of his trust and deed
     depicted a man who essentially knew what he was doing in
     signing the documents, and where there was a complete absence
     of proof that the settlor was not lucid at the time he signed
     the trust and deed, the supreme court concluded that the trial
     court clearly erred in finding that appellants failed to
     establish soundness of mind beyond a reasonable doubt.

7.   Trusts -- undue influence -- requisite proof to establish. -- Questions
     of undue influence and mental capacity are so closely
     interwoven that they are sometimes considered together; the
     influence that the law condemns is not the legitimate
     influence that springs from natural affection, but the malign
     influence that results from fear, coercion, or any other cause
     that deprives the testator of his free agency in the
     disposition of his property.

8.   Trusts -- free agency -- requirement for showing. -- For appellants to
     prove free agency, they were required to show that the settlor
     executed the trust and deed without fear or coercion or any
     intimidation that would have deprived him of free agency.

9.   Appeal & error -- when finding is clearly erroneous. -- A finding is
     clearly erroneous when, although there is evidence to support
     it, the appellate court, after reviewing the entire evidence,
     is left with the definite and firm conviction that a mistake
     has been committed.  

10.  Trusts -- free agency -- trial court clearly erred in finding settlor did
     not act freely -- reversed and remanded. -- The supreme court, having
     viewed a videotape of the settlor signing the trust and deed
     in a lawyer's office, stated that it could discover nothing
     that affected his freedom to act in the office and that the
     settlor appeared to know what he wanted to accomplish; the
     appellate court concluded that the trial court clearly erred
     in its finding that the settlor did not act freely and with
     sound mind when he signed the deed and trust; the matter was
     reversed and remanded.


     Appeal from Benton Chancery Court; Donald R. Huffman, Judge;
reversed and remanded; Arkansas Court of Appeals reversed.
     Lingle Law Firm, by: James G. Lingle, for appellants.
     Davis & Watson, P.A., by: Charles E. Davis, for appellee.

     Robert L. Brown, Justice.
     This case raises two issues: (1) whether the trial court erred
in shifting the burden of proof to appellants Jerry G. Noland,
Anita Delores Shaver, and Helen Lorraine Hooton in an undue-
influence case for the reason that they were beneficiaries of a
trust and procured its creation; and (2) if so, whether the
appellants proved beyond a reasonable doubt that the settlor of the
trust, Wesley E. Noland, was of sound mind and free of undue
influence when he created the trust.  The trial court found that
Wesley Noland was of unsound mind and not a free agent when he
executed the trust.  Because we conclude that the trial court
clearly erred in its finding, we reverse the court's order and
remand for appropriate orders to be entered.
     On January 21, 1974, Wesley E. Noland, and his wife, Elsie
Noland, established by deed a joint tenancy with right of
survivorship in eighty-five acres of farmland (the farm) located in
Benton County.  Under the joint tenancy, Wesley Noland, Elsie
Noland, Jerry Noland, and Claude Noland each held an undivided
interest in the farm.  Subsequent to Elsie Noland's death in June
1990, Wesley Noland, Jerry Noland, and Claude Noland each held an
undivided one-third interest in the remaining eighty-two-and-one-
half acres.
     On September 27, 1991, at the age of 86, Wesley Noland created
the Wesley E. Noland Irrevocable Trust and named Jerry Noland and
one of his two daughters, appellant Anita Shaver, as trustees. 
Wesley Noland funded the trust by deeding his undivided one-third
interest in the farm to the trust and by conveying all of his
personal property located in his residence on the farm to the
trust.  That same day, Jerry Noland also deeded his undivided one-
third interest in the farm to the trust.  The trust instrument
provided that the trust would care for Wesley Noland for the
balance of his life, and upon his death, the remainder of the trust
property was to be distributed, in equal shares, to Jerry Noland,
Anita Shaver, and his remaining daughter, appellant Helen Hooton
subject to Claude Noland's life estate in part of the property. 
The trust provided that in the event Wesley Noland predeceased
Claude Noland, Claude Noland would receive a life estate in the
residence, barn, and corral located on the farm.  The effect of the
trust's creation and the two deeds on Jerry Noland was that his
undivided one-third interest in the farm with right of survivorship
to the whole was converted into a two-ninths interest in fee, as a
beneficiary of the trust.  Anita Shaver and the remaining daughter,
Helen Hooton, would also be beneficiaries of a two-ninths interest
in the farm, subject to the two life estates.  Wesley Noland died
on August 12, 1992.
     On January 29, 1993, Claude Noland filed a petition to set
aside the trust and warranty deed executed by his father.  The
petition alleged that Wesley Noland lacked the mental capacity to
execute the trust and warranty deed and that he was unduly
influenced by Jerry Noland and Anita Shaver because they caused the
trust and warranty deed to be prepared and took their father to an
attorney for the purpose of signing the documents.  The petition
also alleged that the conveyance was invalid because his father
only owned an undivided one-third interest in the farm as a joint
tenant with right of survivorship and that he could not destroy the
joint tenancy.  
     On September 20, 1994, after hearing a considerable amount of
conflicting testimony on the subject of undue influence and Wesley
Noland's mental capacity, the trial court issued its order.  The
court found that Jerry Noland caused the irrevocable trust and deed
to be prepared and, because of this, the burden shifted to the
appellants to prove beyond a reasonable doubt that Wesley Noland
had the mental capacity and free will to execute the trust and
warranty deed.  The court then stated:
          Though the testimony is in considerable dispute,
     there is certainly evidence to indicate that Wesley's
     physical strength and mental condition were such as to
     put folks who knew him on notice that he had some
     problems both mentally and physically.
          The Court is of the opinion that the defendants
     Jerry Noland and Anita Shaver are fine people, fine
     citizens and probably did not set out to procure the
     making of the trust and warranty deed, but in my opinion,
     in view of the law cited above, it must be found that the
     defendants did not carry their burden of proof by showing
     beyond a reasonable doubt that Wesley had both such
     mental capacity and such freedom of will and action as
     are requisite to render the trust and warranty deed
     legally valid.
The court concluded that the trust and warranty deed executed by
Wesley Noland should be set aside.
     The Court of Appeals affirmed the trial court's order by a tie
vote.  Noland v. Noland, 55 Ark. App. 232, 934 S.W.2d 940 (1996). 
We granted appellants' petition to review pursuant to Ark. Sup. Ct.
R. 1-2(e)(i).

                       I. Mental Capacity
     Because we reverse this case on the basis of Wesley Noland's
mental capacity and free agency, we need not address the issue of
whether the burden of proof was improperly shifted to the
appellants.  We assume for purposes of this analysis, as the trial
court found, that at least one of the appellants, Jerry Noland,
procured the Wesley E. Noland Trust and that the appellants all
benefitted from this procurement.  With this assumption, a
presumption that the trust was the result of undue influence arises
under our caselaw and the burden of proof then shifts to the
proponents of the trust to prove beyond a reasonable doubt that
Wesley Noland had both the mental capacity and freedom of will to
render the trust legally valid.  See Looney v. Estate of Wade; 310
Ark. 708,