Lead Opinion
[¡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.,
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.
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,
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,
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,
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,
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,
The law’s tendency is to limit rather than expand all constructive liens. Seay,
We have found only one reported Arkansas case involving an equitable lien on property held by the entirety or funds
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,
We have looked for cases from other jurisdictions on point. The entire-ties/equitable hen issue, however, seems rarely litigated. In In re Hope,
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,
[[Image here]]
The parties’ undisputed, court-approved, and partly consummated agreement about their realty subjected their rent houses,
Concurrence Opinion
Judge, concurring.
I agree that this case must be affirmed, however, I cannot agree that we have to affirm for a reason not contemplated by the trial | ¡judge, or that the trial judge made any error whatsoever. Somewhat lost in both the majority’s and dissent’s opinions is a key fact — this case was a probate court proceeding. The fact that the parties or their guardians contemplated divorce is little more than a red herring.
Pursuant to Arkansas Code Annotated section 18-6CM26 (Repl.2003), a tenancy by the entirety may be dissolved by a sale ordered by the probate court. This is exactly what the December 4, 2007 probate court order accomplished in this case. This order was not appealed.
I submit that our evaluation of the effect of that order should be guided by Rucks v. Taylor,
The December 4, 2007 order reduced the obligations of the parties to convey respective deeds and pay certain sums. The transaction involving the marital home was completed prior to John Healy’s death. The obligation imposed by the December 4, 2007 probate court order on the guardian of Thelma Healy to pay $40,000 to John was not. It is |inaxiomatic that litigants have a right to rely on a final order.
Notes
. I cannot agree that Killgo v. James,
. As our supreme court stated in Tuchfeld v. Hamilton,
There has been an error in the administration of this estate which apparently escaped notice until detected by a careful title examiner. Such errors should not occur, but they do occur, and the fear of such errors has caused many estates to be sacrificed through the apprehension that the purchaser at a probate sale would acquire a defective title. To remove this fear and to prevent the sacrifice of estates which must be sold under orders of the probate court, Act 263 was passed at the 1919 session of the General Assembly entitled "An Act to Render Conclusive Judgments and Decrees of the Probate Court in Guardian’s and Administrator’s Sale." This Act appears as § 6257, Pope's Digest, and reads as follows: "In all guardian’s sales heretofore or hereafter made, the finding and recital in the judgment or decree of the probate court authorizing and ordering any such sale that the guardian or administrator was duly and legally appointed and qualified; that the sale was conducted according to law; and that the facts set forth in the petition entitled the said guardian or administrator to make the said sale, shall be conclusive and binding on all parties having or claiming an interest in the said sale, save upon direct appeal to the circuit court made in such cases as are now provided by law; and such finding and judgment or decree of the probate court shall not be open to collateral attack save for fraud or duress.”
Dissenting Opinion
dissenting.
The majority’s characterization of this appeal as “a dispute about assets between the respective descendants of an older couple in a second marriage” reveals the fundamental flaw in the majority’s conception of this case. The |,, descendants are “parties” to this case only in their capacity as representatives of the “older couple.” Neither Troy nor Diane have any legally recognized interest as individuals in this matter. The question before us is whether Thelma Healy’s survivorship interest in the couple’s estates by the entirety in the real property at issue was dissolved by the voluntary action of Thelma Healy and John Healy. The majority finds correctly that nothing in the record can support the conclusion that Thelma’s survivorship interest was dissolved prior to John’s death. Additionally, the record directly contradicts the application of the doctrine of equitable liens. Accordingly, we should reverse.
An estate by the entirety is peculiar to marriage and entails the right of survivor-ship; the right of survivorship to the whole can only be dissolved in a divorce proceeding, by death, or by the voluntary action of both parties. Lowe v. Morrison,
A tenancy by the entirety is not terminated merely by an agreement for the sale of a marital home at a future date. Therefore, Thelma’s survivorship interest in the couple’s estate placed full ownership of the properties in Thelma when John died. The majority’s conception that the dispute is between the heirs, arising from their respective contingent or anticipated inheritances, misleads the majority into finding an equitable lien. However, the doctrine of | ^equitable liens has no application to this case.
As the majority recognizes, the circuit court appointed John and Troy as co-guardians of Thelma’s estate after finding Thelma incapable of caring for her person or estate. The order specifically found that Thelma was “incompetent by reason of being diagnosed with dementia of the Alzheimer’s type with behavioral disturbance and psychosis.” The medical documentation cites that Thelma was subject to hallucinations and violent episodes.
The court appointed Troy as sole guardian of Thelma’s person. In guardianship cases, the court shall appoint as guardian of an incapacitated person “the one most suitable who is willing to serve.” Ark.Code Ann. § 28-65 — 204(b) (Repl.2004). In making its determination, the court shall give due regard to the “relationship by blood or marriage to the person for whom guardianship is sought.” Ark.Code Ann. § 28-65-204(b)(4). Martin v. Decker,
Arkansas Code Annotated section 28-65 — 301(b)(1) lists the duties of the guardian of the estate as follows:
It shall be the duty of the guardian of the estate:
hs(A) To exercise due care to protect and preserve it;
(B) To invest it and apply it as provided in this chapter;
(C) To account for it faithfully;
(D) To perform all other duties required of him or her by law; and
(E) At the termination of the guardianship, to deliver the assets of the ward to the persons entitled to them.
Ark.Code Ann. § 28-65-301(b)(l) (Repl. 2004).
Therefore, on January 10, 2007, when the circuit court’s order appointing John as a co-guardian of Thelma’s estate was filed, a specific legal duty was imposed upon John to guard the assets of Thelma’s estate for her continued care. An order entered April 29, 2008, appointed Troy as the sole guardian of the estate of Thelma following John’s death. According to the record, at the time of John’s death, he was still a co-guardian of Thelma’s estate with all the attending duties imposed upon him by law.
In September of 2007, approximately four months prior to John’s death, he filed for a divorce from Thelma. The record is unclear as to the grounds for the divorce or whether Thelma was institutionalized as a result of her mental state. However, when considering the equities of this case, which we must do to apply an equitable lien, we must also take into account the duty of a spouse who seeks to dissolve the marriage because of a permanent mental condition of his or her partner. When a trial court grants a divorce based upon the ground that one spouse is incurably insane, the spouse granted the divorce is required to provide for the care and maintenance of the defendant spouse for so long as he or she may |14Iive. Ark.Code Ann. § 9-12-301(b)(6)(B)(i) (Repl.2008). In addition, the trial court will retain jurisdiction of the parties for the purpose of making such further orders as equity may require to enforce the provisions of the decree requiring the plaintiff to furnish funds for such care and maintenance. Ark.Code Ann. § 9 — 12—301 (b)(6)(B)(ii) (Repl.2008); see Wood v. Wright,
Thelma was judicially decreed unable to care for herself or her affairs. Her condition rendered her vulnerable, and John was judicially charged with the duty to protect and preserve her estate for her future care. Statutory law and equitable principles protect spouses in Thelma’s position because of their inability to care for themselves. In this case, the trial court
Despite John’s equitable and legal duties owed to Thelma, the majority reasons that “Thelma’s estate has been unjustly enriched based upon the happenstance of John’s death and her guardian’s refusal to comply with the agreed order.” The majority claims that Thelma’s Restate is unjustly enriched because John’s death prevented the dissolution of the tenancy by the entirety, and, if the tenancy had been dissolved prior to his death, John’s heirs would have an interest in the disputed assets. In fact and in law, John’s heirs had no legally cognizable interest in John and Thelma’s tenancy by the entirety. At the time John died, he had a duty to protect and preserve Thelma’s tenancy by the entirety for her future care.
In discussing their novel application of the doctrine of equitable liens to these facts, the majority claims that “[tjhis 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’ ” and that John’s death equates to an accident that unjustly enriched his ward’s estate. That premise is untenable when John unquestionably was required to protect and preserve Thelma’s estate, including the tenancy by the entirety, for her benefit. Although the majority agrees that no legal basis exists for a termination of the tenancy by the entirety under these facts, they fail to explain how “general considerations of right and justice,” require the imposition of a lien on Thelma’s estate. If anything, the obligation or duty to be enforced under these circumstances would be John’s duty as co-guardian to protect and preserve Thelma’s estate for her continued care.
The concurring opinion relies upon the probate court’s authority to sell real property held by the entirety “when it shall appear to the court from legal evidence that the interest of the other owner ... would be advanced thereby and that the interest of the incompetent person would not be injuriously affected.” Ark.Code Ann. § 18-60-146 (Repl.2003). The concurring opinion further relies upon Rucks v. Taylor,
Accordingly, I dissent.
VAUGHT, C.J., PITTMAN and GLADWIN, JJ., agree.