# FILED
March 5, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk IN RE ESTATE OF FOSTER HUME, III,) ) THE UNIVERS ITY OF THE SO UTH, ) ) Plaintiff/Appellant, ) ) Probate Court Davidson County ) No. 98293 VS. ) ) Appeal No. ) 01A01-9609-PB-00432 MEREDITH KLANK, ) ) Defendant/Appellee. )

IN THE COURT OF AP PEALS OF

TENNESSEE MIDDLE SECT ION AT NASHV ILLE
APPEA L FROM P

ROBATE COUR

T OF DAVIDSON COUN TY AT NASHVILL E, TENNESSEE
HONORABL E FRANK G. CLEMENT , JR., JUDGE J. Richard Lodge, Jr. (#2833) E. Clifton Knowles (#5889) BAS S, BER RY & SIM S P LC 2700 First American Center Nashville, Tennessee 37238-2700 ATTORNEYS FOR PLAI NTIFF/APPEL

LANT
Norman G

illis 1201 16th A

venue Sou

th Nashville, Tennessee 37212 John Drummond P.O. Box 41385 Nashville, Tennessee 37204 ATTORNEYS FOR DEFENDANT/APPEL LEE 

### AFFIRMED AND REMANDED.

HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION
CONCUR: SAMUEL L . LEWIS, JUDGE WILL IAM C. KOCH, JR., JUDGE-2-

IN RE ESTATE OF FOSTER HUME, III,) ) THE UNIVERS ITY OF THE SO UTH, ) ) Plaintiff/Appellant, ) ) Probate Court Davidson County ) No. 98293 VS. ) ) Appeal No. ) 01A01-9609-PB-00432 MEREDITH KLANK, ) ) Defendant/Appellee. ) 

### O P I N I O N
The University of the South, residuar y leg atee under the will of Foster Hume, dece ased, has appealed from the judgment of the Proba

te Court ho lding tha

t a speci fic devi se to Meredith Klank was not extinguished by ade mption and therefore the subject of the specific devise did not become a part of the residuary estate.
Appellee p resen ts a preliminary issue regarding the initiation of this appeal by the University of the South.

As residuary

legatee, the University

of the South was the only person or e ntity with any interest in the ademption of the devise of Meredith Klank. On August 26, 1994, the Universi ty filed a motion forle av e t o i nt er ve ne to pr ot ec t i ts in te re st s. Th e m ot io n w as ov er ru le d b y a special probate judge, but the University continued to participate in the procee dings, particularly in resistance to efforts of Meredith Klank to require the Unive rsi ty to refund to the estate the proceeds of the foreclosure which had been pa id to the University. This litigation continued before the newly elected regular Probate Judge who, on March 4, 1996, signed an order requiring said proceeds to be paid to Ms. Klank.

There was no co mpliance with the c onditions s et out in T.R.C.P. Ru le 58 fo r t he “e nt ry” of an order, but the order was filed and placed on the minutes of the Probate Court. On April 15,-3-

the Universi

ty mo ved for r

elief un der T.R.C .P. Rule 60.02. On June 6, 1996, the Probate Court granted the relief and re-entered the judg ment on the same date, June 6, 1996. The grant of relief
was not strict

ly necessa

ry because the March 4, 1996, order had never bee n effectively

entered prior to June 6, 1996. However, the grant of relief wa s appropr iate under Rule 60.02(s), “any other reason justifying

relief from operation of

the judgment. The noticeof appeal, filed on June 17 , 1 99 6, wa s f

il ed wi th in 30 da ys a ft er en tr y of ju dg me nt an d w as th er efor e t im el y.
Appellant states tha t the issue o n appea l is: “Was the beque st of Def endant’ s house in Atlanta to Ms. Mer

edith Kla nk adee med by the foreclosure

and sale of the hou se prior

to de ce de nt’ s de at

h?”
On August 1, 1990, the testator executed his will specifically devising his reside

nce in Atlanta, Geor

gia to Mer edith Klan k. On Octo ber 1 , 1991 , six w eek s prior to the death of testator, on Novemb er 12, 19 91, the house devis ed to Ms. K lank wassold at a f

oreclos ure sale which satisfied the secured debt and produced a su rplus of $59,200.07, which the foreclosing credito r tender ed to a Georg

ia Court a ccompan ied by an inter pleader suit. The G

eorgia Court ordered that, after pay

ment of $3, 455.00 costs and fees, the $55,745.07 balance be paid to the executrix of the estate.

The executrix te

ndered t o the Proba

te Court he

r final a ccounting indica

ting th at th e
excess proceeds of the foreclosure had not been distributed. The Pro bate Court ordered the executrix to pay the excess proceeds with prejudg ment inter est to Ms. K

lank. The

Universi ty appealed.

The University insists that the devise to Ms. Klank was adeemed by the foreclosure and sale.-4- The most recent opinion of the Tennessee Supreme Court on ad emption is Rhodes v. Kebke , 179 Tenn. 480, 167 S.W.2d 345 (1943). In that case, the will, executed on July 3, 1935, contained the following provision:

“To my

sister, Mr s. Ruby

Rhodes Ke

bke, of Me

mphis, Tennessee, I he

reby g ive, devise and bequeath all the capital stock owned by me a

t the time of my death in KebkeHousefurnishing Co., a corporation, now doing business in Memphis, Tennessee.”

On December 15, 1935, the testator agreed to sell to Ruby Rhodes Kebke, 28 share s of Kebke Housefurnishing Co. for $23,000. Testator caused the stock to be regist ered in t he name of Ruby Rhodes Kebke who e ndorsed the stock certificate in blank and deliv ered it

to testator to secure her five notes covering the purchase price. The first two notes were paid to the testator. The remaining three

notes and certificate were in the possession of the testator at his death. The legatee sued the executrix to reco ver the certifi cates a nd canc el the endorseme nt and unp aid notes. The Trial Court

overruled a demurrer (motion to dismiss for failure to state a claim for which relief can be gra

nted.) The Supreme Court affirmed and said: What he re ally

meant, a s gathe

red fro m the entir

e will and the situation of

the part ies, was t o give her such interest in the Kebke Housefurnishing Co. as he might have at the time of his death. The unpaid notes with shares of stock attache d as colla

teral, a nd held by

him at the t

ime of his death, represented his interest in the business at that time. While not a legal interest, it was an equitable interest, and ought to p ass to the

benefic iary

under the terms of t

he will and the unpaid notes be canceled and dischar ged.
In Wiggins v. Cheatham , 143 Tenn. 406, 225 S.W. 1040, 13 ALR 169 (1920), the wil l, executed

on Octobe

r 28, 1916 , devised

to Wiggins and Gho lsom “my entire w hisk e y business conduc ted at 1221-1223 Market Street, Chattanooga, Tenn.” Prior to the decease of t he testator, adverse legislation forced the c losure of the store and removal of the stock of whiskey to a public warehou se in Louisville, Kentuck y, w hich issue d negot

iable wa rehouse receip ts therefor. Testator pledged the r eceipts to a bank

to secure a loan which he paid, and the receip ts were returned to him. He later pledge d part of

the rec eipts to secure a $3,000 loan which he paid, and the receipts were r etu rned to him. He later pledged part of the r eceipts to secure-5-

another $3,000 loa

n which wa s not p aid befo re his de ath. The

testator intended to resume

his whiskey business in Chattanooga, using the whiskey stored in Louisville, but

was unable to do
so before his death . The Tri al Court he ld that the b equest of

the whiske

y bu siness had not been adeemed. The Court of

Appeal s affirmed. Upon review by certiorari, the Supreme Court affirmed and said:

We do not think that the fact that the testator was not actually eng aged in business at the time of his death can be sa id to de st ro y th e s pe ci fi c c ha ra ct er of th e p ro pe rt y intended to be bequeathed in his will. That part of the specific property

bequeathed, and which remained unsold, was in existence at the time of the testator’s death, and was subject to identification. This, we think, was sufficient to bring it within the rule of a specific lega cy, and it is enforc eable as such. In Baldwin v. Davidson, 37 Tenn. App. 606, 267 S.W.2d 756 (1954), testator bequeathed to his sister hisshare of

a partne rship, but made no di spensati on of his other property . Before his death, he

joined hispartner s in conve rting the partne

rship into a

corpora tion. This Co

urt held that the legacy

was not adeemed and said: A specific legacy

is adeemed if the thing given has bee n lost, or disposed of by the testator, or if its condition has been so changed that it no longer r emains in specie. The gover ning principle is “

that the su

bject of the gif t is annihila ted or its c ondition so

altered that nothing rema

ins to which the terms of the bequest can apply .” Pritchard on Wills (2nd Ed.), Sec. 462, pp. 479-480. The thing given, the subject of this lega cy, was J. D. Baldwin’s share or interest in the business and property of the partnership J. D. Baldwin & Company . There was a shift of one of the partners and later a cha nge to corporate form; but t

hese we re changes in na

me or for m only , not changes in the nature or char acter of the business. There was no change in the substanc e or essential nature nature o f Baldw in’s shar e or inte rest in the business. His sh ar es of st oc k i n J . D . B al dw in & C om pa ny, Inc ., me re ly evidence his interest in the corporate business, which in turn represent hi s share in th e partnershi p J. D. Bald win & Company; and the rea

l nature and identity of the thing given, the subject of the legacy , has been substantially pre served. So this legacy w as not adeemed by these formal and nominal changes in the personnel of the partner ship and from partnership to corporate form. Wiggins v. Cheatham , 143 Tenn. 406, 225 S.W. 1040, 13 A.L.R. 169.-6- In Lane v. Lane , 22 Tenn. App. 339, 120 S.W.2d 993 (1938) , a will executed on December 17, 1933, provided:

“I desire to bequea

th to my brother G. G. L ane the restaurant he is now operating at 801 West Fifth Avenue and that he have the same to use as his business for a period of t en ye ars , bu t i n t he e ven t h e va cat es s aid pro per ty, I de si re th e s am e t o g o t o m y so n, Ja ck , b ut I de si re my brother , G. G. Lane to ha ve said pr

operty for ten y ears without paying a

ny rent, providing

he pays the taxes and keeps said property

in good repair.”

Prior to t estator’s de ath, the legatee ceased to ope rate the restaurant and vacate d the building which testator

rented to another tenant. Upon the death of testator the leg atee claimed the use an d occupa

ncy of the bui lding fo

r 10 years asprovided

in the will. The Tria

l C our t denied the claim of the legatee. This Court reve rsed and said: While not occupied by the same tena nt, 801 West Fifth Avenue existed in the same form from the date of the execution of the will up to the death of the testator and answered the description of the subject matter of the de vise by whoever

and whether or not occupied at that time, and the devise is not to be defeated upon the theory of an ademption because of a mere change in occupancy between the date of the execution of the will and the death of the testator. Wiggins v. Cheatham , 143 Tenn. 406, 225 S. W. 1040, 13 A. L. R. 169. [4] We are further of opinion it was the intention of the testator that complainant should have the use of said property for

a period of ten y ears from the date of testator’s death without paying

any rent pr

ovided he should pay the taxes and keep said propertyin good repair and use it without interr uption as a

place in which to c onduct hisbusiness.
In State ex re

l Burrow v. C

othern , 21 Tenn. Ap p., 113 S.W.2d 81 , (1938), the will provided in part: Figuring what I

have at present $2,680.00 on land notes --- I wa nt Las si e B ur ro w t o h av e $ 50 0 o ut of th at la nd mo ne y when collected.
This Court found that the “land note” had been tra nsferr ed to Wilson C othern in

trust to collect and satisfy testamenta

ry bequests, and not to Wilson Cothern for his own use. Such-7-

transfer was held not to effect

an ademptio n, and Wilso n Cothern was req uired to p ay

the beque st out of the proceeds of the note.

In recent unpublished

opinions, t

his Court has held that ademption did not occur where the will directed the executors to sell a farm and divide the proceeds among sp ecified legatees, and, prior to death, the testator sold the farm on credit and took a trust deed and notes to secure the purchase price. This Court held the legatees entitled to the purchase price when paid.

In another recent unpublished opinion, thi s Court has held that the convey ance of the propert y to a revo cable

trust did not adeem the specific testamentary gift of the propert

y because it remained within t

he contr ol of the te stator by

the powe r to revo ke the tr ust.

No published or unpublished Tennessee Authority is cited or foundwhich is c ontrary to the above.

A number of publishedauthoriti es decla red an a demption, but they

are distinguisha

ble from the present case.

In Ford v. Cot

trell , 141 Tenn. 169, 207 S.W. 734 (1918), Testator bequeathed to a sister the rents from specific realty during her life, but sold the realty bef ore testators death. The Supreme Court held that

th e bequest was adeemed. No such circ umstances are shown in the present case.

In American Trust

and Banking Co. v. Belfour , 138 Tenn. 385, 198 S.W. 70 (1917), the will directed that two specified life insurance policieswould provide educational expenses and
a trust fund

for his da

ughter . Prior to th

e death o f testato

r, th e daughter’s education was completedand testator surrend ered the two spec ified poli cies in exchange for their cash surrender value which he added to his existing savings account which was subsequently invested-8-

in real estate mortgage

notes which he held at his death. Thus, the testator, by h is succe ssive ac ts twice changed the chara

cter of the specified bequest, thereby indicating his intent

to termina

te the bequest for the benefit of his daughter. Such e vents did not occur in the present case.

So far as the record of the

present case shows, the home in Atlanta was mortga ged when the will made. If this be true, the devise was not a devise of a fee, but an equity , which survived the forecl osure sa

le in the f orm of the

surplus de

posit e d in court. Even if the mortgage wa s executed by testat or , t hi s w as no t a co mp le te di ve st me nt an d l os s o f c on tr ol of th e p ro pe rt y, because a mortgager reta

ins the power to

vacate the mortgage

by satisfaction of the de

bt and the right to rece ive an y proceeds of the sale o f the s ecurit y in exces s of th e debt . Thus , the m ortgage diminished, but did not extinguish the interest of the deceased in the devised property
. There is no evidence that testator committed any act which could be interpreted as an expr

ession of his intention to cancel the devise of the home.

In the present case, the foreclosure, which is relied upon for ademption, was not instituted
or carried out by

testator, but by the holder of the indebted ness. Te stator’sonly

contribu tion to t he foreclosure was his inability or failure to pay

the debt which cannot be presumed to b e a
vo lu nt ar y ac t; an d t he re is no ev id en ce th at it wa s d el ib er at e o r v ol un ta ry.

The circumst

ances ju st discussed are pe rfectly consonant

with those of Rhodes v. Kebke wherein the Supre

me Court ob served t

hat: “What he r

eally meant, - - was to g

ive her s uch inter

est in the Kebke Housefurnishing Co. As he might have at the time of his death. The unpaid notes with share of stock as collateral represented his interest in the business at that time.”

The foregoing quotation may be paraphrased for applicat ion t o the present case as follows: What he re ally meant wa s to give

her wha tever in terest he might have in the home at the time of his death. The-9- surplus pr

oceeds d erived f rom the fo

reclosu re was d ue him at the time

of his dea

th and re present ed his ent ire inter est in the house at that time.

In Tipton v. Tipton , 41 Tenn. (1 Cold.) 252, (1860), testator be queathed to his widow three specified notes, but thereafter sold one of the n otes to his s on, taking the son’snote in pay ment. The Supreme Court held that the bequest to the wife was adeemed “ pro tanto,” that is, to the extent of the note sold to the son. No such circumstances are shown in the prese nt case.
In Donahue v. Lea , 31 Tenn. (1 Swan) 119, 55 Am Dec. 725 (1851), the Supreme Court held that, where land was specifically devised, but thereafter the testator en tered into an enforc eable contract to sell the land to a third party , the devise was adeemed. No such circumstances are shown in the present ca se.

In Price v. Johnson , Tenn. App. 1977, 563 S.W.2d 188, this Court held that a specifi c bequest of stock was adeemed by testator’s transfer of the stock to a third par ty in exchange for
a 10% cash pay

ment and installment note. No such circumstances are shown in the present ca se.

In Newman v. Profitt , 59 Tenn. App. 397, 440 S.W.2d 827 (1968 ), testator willed his farm to his two so ns, Geor

ge and James, subje

ct to a lif e estate in their mother. Thereafter, the father and mothe

r convey ed the sa me land to

the sa me two son s with the l

imitation th at, if George should predecease the parents, his share of the la nd wou ld rev ert to the pa rents . George predeceased his parents. No such circ umstances are shown in the present case.

In Bedford v. Bedford

, 38 Tenn. App. 370, 274 S.W.2d 528 (1955), dece ased devi sed life estates in specific property to three beneficiaries and therea fter deeded t o one of the beneficiaries a part of the land. This Court held that the deed resulted in a ‘pro ta

nto’ (pa rtial) ademption (satisfaction) of the devise to the deviser who received the deed, but did not adeem the devise of the remainder of the land to the other devisee. No such circumstances are shown in the present case.-10- Appellant cites Prichard on Wills 5th Edition, 1994, § 486 for its ins istence that a material chang e in the subject matter of a legacy results in an ademption. However, neither Prichardnor appe

llant cite s any

Tenness ee autho

rity holding t

hat a foreclos ure res ulting in surplus proceeds is such a change in identity as to justify

an inference that the decea sed intended to render a part of his will ineffecti ve. I t is true th at the co mplete ob literatio n of the pr operty mentioned in the will leaving no identifiable residue even by the act of a third

party , may

result in ademption, but there is no evidence that such occurred in this case
.
If, in the present case, the proceeds of the f oreclosure sale had been insufficient to satisfy the debt, leaving no excess proceeds due the testator, the re w ould have been an ademption by extinction. Such are not the facts of the present case.
Appellee cites unpublis hed opinions which have been examined and found to be distingu ishable o n the facts.
Appellant cites McGhee v. McGhee , R.I. 1980, 413 A2d 72, wherein the testator bequeathed

to her grandchildren all money on deposit in any bank, but befor e her death, her attorney-in-f

act withdrew

all money

in the ban

ks and inve sted it in bo nds. The appellate court held that the bequest of bank accounts was adee med and said: At the outset, we recognize that the instant case conc erns specific ally

the conc ept of ad

emption by

extinction, a lega

l consequ ence tha

t may attend a variety of circumstance s occasioned either by

operation of law or by

the actions of a testator himself or through his guardian, conser vator, or agent. Gardner v. McNeal , 117 Md. 27 , 82 A. 988 (1911); In Re Wright , 7 N.Y.2d. 365, 165 N.E.2d 561, 197 N.Y. S2d 711 (1960 ). In

particular, a te stamenta

ry gift of specific real or personal property

may be adeemed - fail completely to pass as prescribed in the testator’s will - when the particula r article devised or bequeathed no longe r exists as part of the testator ’s estate

at the mome

nt of his de ath beca

use of its prior consumption, loss, destruction, substantial change, sale, or other alienation subsequent to the execution of the will. In consequence, ne ither the gift, its proceeds, nor similar substitute passes to the beneficiary , and this claim to the legacy

is thereby bar

red.-11- The petitioner improperly relies upon the case of Morse v. Converse , 80 N. H. 24, 113 A. 214 (1921). In that ca se the testatrix voluntarily placed her prope rty into the hands of a conservator to care for and use f or her support. The conserv ator pur

chased a Libe rty bond out of

bank dep osits bequea thed in the

testatri x’s will, an d the leg acies we re not adeemed thereby . But, contrary to the case at bar, the testatrix in Morse neither knew about nor consented to the conservator’s acts; therefore, the c ourt explained, the change “furnishes no evidence of an intentional revoca tion by her.”

The quoted statement was made in the context of a change of identity

by the authorized act of the agent of the testator. The quoted opinion re cognizes a di stinction between a conversion of

the natur e of the d evised pr operty by the act of the

testator or the authorized act of testator and the act of a third person without the consent of the testa tor.
Appellant cites In Re Cel

entano’s Estate , 213 N.Y.S.2d 1019 (Sur. 1961), a decision of
a county surrog ate (trial) court, holding that the condemnation of the devised property

adeemed the devis e. No Ten

nessee a uthority has rec ognized a

n adempti on under

these ci rcumstan ces.

` Appellant

also cite s In Re Sea ver s Wi ll , 91 N.Y.S.2d 47, 195 Misc. 475 (Sur. 1949), a county surrogate (trial) court decision in which testator devised property

to a nephew for

life with residue to his child

ren. The trial cou rt held that the devise was adeemed by the condemnation of the prope rty before the deat h of testat or. The s ame situa

tion does n ot exist

in the pre sent cas e and there is no evidence that the rule of absolute ademption by act of a third party

has b een adopted in Tennessee.

While not directly a

pplicabl e to the fac ts of the p resent c ase, it a

ppears t o this Court that the present state of Tennessee law would rec ognize ademption where, without consent of the testator, the property specifically devise d is completely removed f romthe ownership and control of the te stator without an id entifiab le residu e of the p roperty would not b e subjec t t o th e ademption. In the case of c ondemnation the proc eeds represented by an uncashed check or a-12-

separa te identif iable de posit would

probably notbe adeemed. Also, if a house is destroy ed by fire, an uncashed insurance check or separate bank account proba bly would not be adee

med.

In the light

of published Tennessee authority , discussed above, this Court is not inclined to follow the authorities from other states relied upon by appe llant. Where the testa

tor deal s with his property in such manne r as to clearly

terminate a devise or

bequest, that devi se or beque st is adeemed. Where the action of a third party is relied u pon fo r ademption, such action must be withthe authority or conse nt of the testator or, if not, must result in the obliteration of any identifia ble resid ue which might be identified, and sub

jected to the devis e or bequ est.

From all of the above, this Court concludes that thedevise of testator ’s home in

Atlanta to Ms. Meredith Klank was not adeemed by t he fore closure

sale and that the te stator’sinterest in said home represented by the $55,7 45.07 now

in the cus tody

of the Pro

bate Cour t, is due to Ms. Meredith Klank.

The judgmen

t of the Pr obate Court is af

firmed. C osts of thisappeal a re asse ssed ag ainst the appe llant. The

cause isremanded to the Tr ial Court f

or further nece ssary

procee dings. 

### AFFIRMED AND REMANDED.

___________________________________ HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION

CONCUR:

____________________________ SAMUEL L . LEWIS, JUDGE

____________________________ WILL IAM C. KOCH, JR., JUDGE