Case Name: Troy BUTCHER, as guardian of Thelma Healy, Appellant, v. Diane BEATTY, as personal representative of John Healy's estate, Appellee
Court: Arkansas Court of Appeals
Jurisdiction: Arkansas
Decision Date: 2009-10-07
Citations: 345 S.W.3d 216
Docket Number: No. CA 08-1226
Parties: Troy BUTCHER, as guardian of Thelma Healy, Appellant, v. Diane BEATTY, as personal representative of John Healy’s estate, Appellee.
Judges: ROBBINS, KINARD, and GRUBER, JJ., agree.
Reporter: South Western Reporter Third Series
Volume: 345
Pages: 216–224

Head Matter:
2009 Ark. App. 662
Troy BUTCHER, as guardian of Thelma Healy, Appellant, v. Diane BEATTY, as personal representative of John Healy’s estate, Appellee.
No. CA 08-1226.
Court of Appeals of Arkansas.
Oct. 7, 2009.
Rehearing Denied Nov. 11, 2009.
Southern & Allen, by: Byron S. Southern, Little Rock, for appellant.
Phyllis J. Lemons, Malvern, for appel-lee.

Opinion:
D.P. MARSHALL, JR., Judge.
[¡This is a dispute about assets between the respective descendants of an older couple in a second marriage. The critical facts are undisputed, and we review the legal issues presented in this guardianship case de novo. Craven v. Fulton Sanitation Service, Inc., 361 Ark. 390, 392-93, 206 S.W.3d 842, 843 (2005).
I.
John and Thelma Healy both had children from their first marriages. The couple married each other in 1979 and held their assets jointly. Those assets included the marital home and two rent houses, all owned as tenants by the entirety. In late 2006, Thelma's son and grandson (appellant Butcher) petitioned to be named guardians of her estate and person. John agreed that Thelma was incapacitated, but he counterpetitioned to be her sole guardian. |2In early 2007, the probate division of the circuit court found that Thelma was incompetent due to the effects of Alzheimer's. The court appointed Butcher and John as co-guardians of her estate. The court also placed one-half of John and Thelma's liquid assets in a guardianship account solely for Thelma's benefit.
During the next year, the parties wrangled over what to do with the three homes. In September 2007, John filed a divorce complaint against Thelma in another case. The parties also squabbled about personal property, although they would eventually divide it by agreed order. In September 2007, they reached a preliminary agreement about the three homes. But this deal fell apart because the rent houses could not be sold for more than their appraised value.
In early December 2007, the parties finally settled all the real-property issues. The court entered an order reflecting the parties' agreement. John would pay Thelma $21,000.00 for her interest in the marital home, and in turn her co-guardians would convey her interest to John. Thelma would pay John $40,000.00 for his interest in the two rent houses, and he would convey his interest in that real property to her. The order required the parties to accomplish these transactions by 7 February 2008.
John sent his check for $21,000.00, and Butcher eventually executed and returned a fiduciary deed for the marital home. Apparently a sale was pending on one of the rent houses, and so consummation on the rent-house part of the agreement was delayed. John died unexpectedly on 24 January 2008. Butcher (now the sole guardian of his grandmother's Restate) refused to pay John's estate the $40,000.00 for the two rent houses. John's daughter (appellee Beatty, the personal representative of her father's estate) petitioned the court to make Butcher fulfill the parties' agreement and pay John's estate the $40,000.00. She pleaded no particular legal or equitable theories. With court approval, Butcher eventually sold the two rent houses for approximately $100,000.00.
The circuit court ordered "specific performance" of the parties' agreement. The court required Thelma (through her guardian) to pay John's estate the $40,000.00. As guardian of Thelma's estate, Butcher appeals.
II.
Butcher is correct: The circuit court's decision cannot be affirmed on its own terms.
As the surviving spouse, Thelma became the sole owner of the two rent houses by operation of law when John died. Robertson v. Robinson, 87 Ark. 367, 368, 112 S.W. 883, 883 (1908). The vesting of title in Thelma alone made performance of the parties' agreement about the rent houses impossible as a matter of fact and law. "[S]pecific performance would not lie where performance is impossible." Dennis v. Binz, 230 Ark. 1010, 1012, 328 S.W.2d 85, 87 (1959). In other words, the circuit court erred by granting specific performance because there was no mutuality of remedy. McIllwain v. Bank of Harrisburg, 18 Ark. App. 213, 221, 713 S.W.2d 469, 473-74 (1986). John was dead; he could not convey to Thelma what she already owned in return for the $40,000.00.
Butcher also argues that the parties' agreement did not convert their tenancies by the |4entirety in the rent houses into tenancies in common. Butcher is correct here too. The circuit court had authority under the controlling statute to terminate the entirety tenancies and order the properties' sale. Ark.Code Ann. § 18-60-426 (Repl.2003). But the parties' agreed order reflects an intent to convey the property within the next two months; it does not reflect an unequivocal intent to terminate the tenancies by the entirety immediately on the date that the order wás entered. Compare Rucks v. Taylor, 282 Ark. 200, 667 S.W.2d 365 (1984), with Killgo v. James, 236 Ark. 537, 367 S.W.2d 228 (1963).
We conclude, however, that this is a right result/wrong reason case. We hold that the rent houses were subject to an equitable lien in John's favor. This argument was not made below and is not made on appeal. But the hydraulic pressure from the judgment means that "[w]e will affirm the court's ruling if it is correct for any reason." Alexander v. Chapman, 299 Ark. 126, 130, 771 S.W.2d 744, 746 (1989); see also Russell v. Watson Chapel School District, 2009 Ark. 79, at 6 n. 2, 313 S.W.3d 1; Norman v. Norman, 347 Ark. 682, 685, 66 S.W.3d 635, 637 (2002).
Here, the probate division of the circuit court "reached the right result, even though it may have announced the wrong reason." Norman, supra. Thelma's estate owed John's estate $40,000.00 from the rent-house sale proceeds because the property (both the realty and then the sale proceeds) was subject to an equitable lien. The lien arose from the parties' agreed order and the resulting unjust enrichment to Thelma's estate from getting all the sale proceeds notwithstanding the parties' agreement.
"An equitable lien is a right to have a demand satisfied from a particular fund or | r,specific property." C.A.R. Transportation Brokerage Co. v. Seay, 369 Ark. 354, 361, 255 S.W.3d 445, 451 (2007). The lien may arise by implication from the parties' conduct and dealings or from an agreement. Ibid. This remedy "awards a nonpossessory interest in property to a party who has been prevented by fraud, accident, or mistake from securing that to which he was equitably entitled." Ibid.; see generally Howard W. Brill, Equity and the Restitutionary Remedies: Constructive Trust, Equitable Lien, and Subrogation, 1992 Ark. L. Notes 1, 7-9; Restatement (Third) of Restitution and Unjust Enrichment § 56 (Tentative Draft No. 6, 2008).
As Professor Brill has noted, Arkansas law on equitable liens is underdeveloped. Brill, supra, at 7. Seay's list of doctrinal categories (fraud, accident, or mistake) is illustrative, not exhaustive. The Seay court made this clear when it emphasized the many kinds of situations where this equitable remedy may be appropriate. The lien "may arise by implication out of general considerations of right and justice, where, as applied to the relations of the parties and the circumstances of their dealings, there is some obligation or duty to be enforced." Seay, 369 Ark. at 361, 255 S.W.3d at 451 (quotation omitted). Here, John's death two weeks before the conveyance deadline was the unexpected intervening event — the functional equivalent of an accident — that prevented the complete consummation of the parties' agreement.
The law's tendency is to limit rather than expand all constructive liens. Seay, 369 Ark. at 362, 255 S.W.3d at 451. In the absence of fraud, there must be no adequate remedy at law |fiand a basis for equitable relief. Ibid. There was no fraud here. John's estate has no adequate remedy at law, however, because of the legal effect of the tenancies by the entirety. And there is a basis for equitable relief. Thelma's estate has been unjustly enriched based on the happenstance of John's death and her guardian's refusal to comply with the agreed order. John and Thelma agreed to transfer property interests in exchange for money, and John performed his part of the agreement. All the conditions for imposing an equitable lien therefore exist.
We have found only one reported Arkansas case involving an equitable lien on property held by the entirety or funds derived from property held by the entirety. Warren v. Warren, 11 Ark. App. 58, 665 S.W.2d 909 (1984). Though the Warren court reversed the trial court's imposition of the lien, this precedent indirectly supports imposing one in this case. Mrs. Warren got an equitable lien for $3,200.00 on the proceeds of the sale of real property held with Mr. Warren as tenants by the entirety. This court reversed because there was no evidence of an agreement that Mrs. Warren was merely loaning her husband half of the purchase price of the property; she did not overcome the strong legal presumption that the advance was a gift. 11 Ark. App. at 60-61, 665 S.W.2d at 910-11.
The parties here admit their agreement. The circuit court, moreover, approved it by order. Warren does not hold that an equitable lien may never be imposed on property held as tenants by the entirety or on the sale proceeds from such property. That reasoning would have been an easy way to reverse the Warren judgment. Instead, the court assumed that l7entirety property and its sale proceeds could be subject to an equitable hen if the facts showed an agreement creating some obligation. Warren, 11 Ark. App. at 61, 665 S.W.2d at 911. That is precisely the situation in this case.
We have looked for cases from other jurisdictions on point. The entire-ties/equitable hen issue, however, seems rarely litigated. In In re Hope, 231 B.R. 403, 425-26 (Bankr.D.C.1999), a bankruptcy court held that the debtor's wife was entitled to an equitable lien on real property held as tenants by the entirety based on the spouses' agreements (similar to the ones in this case) dividing property. This decision is persuasive authority for imposing a hen in this case. Contrary authority exists. The New York Court of Appeals rejected an equitable hen in similar circumstances because no "wrongdoing" existed to support the hen. In re Estate of Violi, 65 N.Y.2d 392, 492 N.Y.S.2d 550, 482 N.E.2d 29, 32-33 (1985). The court did not hold that entireties property may never be subjected to an equitable hen. In any event, this New York case lacks persuasive power in Arkansas: our law is clear that wrongdoing is not required for imposing an equitable hen. Seay, supra.
We acknowledge the settled law that property agreements made in anticipation of divorce do not control entirety property if one spouse dies before entry of the decree. E.g., Ginsburg v. Ginsburg, 353 Ark. 816, 822, 120 S.W.3d 567, 570 (2003). For two reasons, that law does not govern here. First, John and Thelma were disposing of and dividing their property in the guardianship proceeding, not the divorce action. The probate division of the circuit court entered the agreed order, not the domestic relations division. Second, Thelma 18had been adjudicated incompetent. Under the statute, John could not get a divorce from Thelma until (among other things) she had been at some institution for three years based on her "incurable insanity" and John had provided for her care for the rest of her life. Ark.Code Ann. § 9-12-301(b)(6)(A)-(B) (Repl.2008). John and Thelma were not dividing property in anticipation of a divorce in the next several months. Cf. Ginsburg, supra. Thelma's mental incapacity had put the divorce case on hold for several years. They were dividing property in the guardianship instead of proceeding in the divorce case. This undisputed fact brings this case out from under the precedents where one spouse dies before an otherwise imminent decree can be entered.
The parties' undisputed, court-approved, and partly consummated agreement about their realty subjected their rent houses, and the sale proceeds from those houses, to an equitable lien to prevent unjust enrichment. The circuit court reached the correct result: Thelma's estate owes John's estate the $40,000.00. We therefore affirm the judgment.
ROBBINS, KINARD, and GRUBER, JJ., agree.
HART, J., concurs.
VAUGHT, C.J., PITTMAN, GLADWIN, and BAKER, JJ., dissent.