In Re: Estate of James E. Miller
E2016-01047-COA-R3-CV
| Tenn. Ct. App. | Jun 29, 2017Background
- James E. Miller (decedent) and Vickie Miller (widow) incorporated Jim Miller Excavating Co., Inc. in April 1990; charter authorized 1,000 shares. A stock certificate dated April 30, 1990, was issued to “Jim Miller and Vicky Miller JTROS.”
- Incorporator/secretary Patrick Grant prepared the charter and signed the certificate; he avowed he issued the shares JTROS to provide survivorship protection. Vickie Miller also swore the shares were issued JTROS and never transferred.
- Corporate bylaws produced in discovery state the board consists of one director — “its sole shareholder, James E. Miller,” and the bylaws are signed as adopted by the board but the signature block is blank.
- Decedent’s daughter (appellant Mechelle Miller) contended the certificate was defective (lacked two required officer signatures under Tenn. Code Ann. § 48-16-206) and that Decedent was the sole shareholder; she submitted an affidavit (Pritchard) recounting Decedent’s statements that he alone owned the shares (the trial court did not rely on that affidavit as it may be hearsay).
- Probate court granted widow summary judgment holding the incorporator’s and widow’s affidavits and the certificate showed an intent to issue shares JTROS; appellate court found genuine dispute of material fact about intent and vacated summary judgment.
Issues
| Issue | Plaintiff's Argument (Miller daughters) | Defendant's Argument (Vickie Miller) | Held |
|---|---|---|---|
| Whether the 1,000 shares were owned by Jim and Vickie as joint tenants with right of survivorship | Certificate is defective and bylaws + Decedent’s statements show Decedent was sole shareholder | Certificate, incorporator’s affidavit, and widow’s affidavit evidence intent to create survivorship ownership despite technical defect | Summary judgment vacated — genuine issue of material fact exists as to intent of issuers; trial required |
| Whether a stock certificate lacking two officer signatures is fatal to proving ownership | Two-signature requirement invalidates the certificate as conclusive proof | Two-signature rule is not dispositive; certificate and extrinsic evidence may be considered to show intent | Two-signature defect does not preclude using the certificate as evidence of intent; not determinative on summary judgment |
| Whether extrinsic evidence (affidavits/bylaws) may establish type of ownership | Bylaws stating sole shareholder favor daughters; hearsay affidavit inadmissible | Incorporator and widow affidavits are admissible and demonstrate intent for JTROS | Extrinsic evidence is admissible to show intent; bylaws create a genuine factual dispute; Pritchard affidavit excluded as hearsay |
| Whether summary judgment was appropriate | Material factual disputes exist about intent and ownership | No genuine dispute; evidence overwhelmingly shows JTROS issuance | Summary judgment inappropriate; case remanded for trial |
Key Cases Cited
- Merchants & Planters Bank v. Myers, 644 S.W.2d 683 (Tenn. Ct. App. 1982) (adopting contract approach to joint ownership and treating intent to create survivorship as decisive)
- Lowry v. Lowry, 541 S.W.2d 128 (Tenn. 1976) (supporting abandonment of strict common-law four unities for joint ownership)
- Griffin v. Prince, 632 S.W.2d 532 (Tenn. 1982) (permits use of extrinsic evidence to determine spouses’ intent to create tenancy by entirety or survivorship interests)
- Catt v. Catt, 866 S.W.2d 570 (Tenn. Ct. App. 1993) (spouses may hold personal property as tenants by the entirety; words on instrument can create survivorship)
- Parker v. Bethel Hotel Co., 34 S.W. 209 (Tenn. 1896) (formal certificate delivery/signature not always required to effect a valid transfer of stock)