Ames Davis, Administrator of the Estate of Mary Reeves v. W. Terry Davis

Citation: Not availableDocket: M2003-02447-COA-R3-CV

Court: Court of Appeals of Tennessee; December 16, 2004; Tennessee; State Appellate Court

Original Court Document: View Document

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Ames Davis, as Administrator of Mary Reeves Davis's estate, appealed a decision from the Probate Court regarding a claim for reimbursement by W. Terry Davis, the decedent's husband. The case centers on payments made by W. Terry Davis for the healthcare and support of Mary Reeves Davis, which were intended to preserve her trust property. The trial court ruled that these payments, which would have been the responsibility of the trustee had there been sufficient assets, were valid claims against Mary Reeves Davis's estate. The court noted that the estate was the successor-in-interest to the trust's remaining assets. 

Mary Reeves Davis, widow of country music performer Jim Reeves, had significant assets inherited from him. After his death, she married W. Terry Davis, who sold her real and personal property for a total of $7.3 million and established an irrevocable trust to fund her needs. He also changed her individual bank account to a joint account and subsequently withdrew the entire balance. Legal disputes arose over the trust's validity and her competency, during which time payments for her expenses were made by her husband. The court ultimately affirmed the trial court's decision, validating W. Terry Davis's claim for reimbursement against Mary Reeves Davis's estate for the payments he made.

Husband incurred $75,077.78 in expenses between August 1996 and December 1997 from his business account, covering mortgage, insurance, taxes on Wife's property, and her medical and personal expenses. Following a November 4, 1997 court order, a conservator was appointed for Wife, and her property was sold to fund a Trust. After Wife's death on November 11, 1999, legal proceedings arose concerning the Trust's assets, with Husband claiming that some assets should pass directly to him. The trial court ruled that the Trust's assets belonged to Wife's Estate, a decision upheld by the appellate court on June 17, 2004.

On August 21, 2000, Husband filed a claim against Wife’s Estate for the $75,077.78 he had paid, arguing that these payments were necessary due to Wife's limited income while waiting for the sale proceeds of her assets to be placed in the Trust. He provided an itemized list and documentation of his payments, asserting that he acted to protect Wife’s assets and fulfill her needs, thereby benefiting the Trust. 

Wife's Estate contested the claim, citing established law that prohibits reimbursement claims between spouses for voluntary payments and arguing that the Trust was not liable for the payments as the property had not been transferred to it. They contended that Husband was responsible for Wife’s personal expenses and that he was also a Trust beneficiary, making it equitable for the Trust to retain the benefits of his payments. Additionally, they claimed Husband's payments were likely made from Wife's bank account, which he had access to after being added as a signatory. The hearing on Husband's claim took place on August 6, 2003, where the Trustee, Young, acknowledged that the expenses were ones the Trust would have covered but for legal challenges to the Trust's validity, yet he did not agree to reimburse Husband.

The Probate Court ruled that payments made by Husband on behalf of Wife were expenses that would have been covered by the Trust, which was challenged legally. Although Tennessee law generally states that voluntary payments by one spouse do not entitle them to reimbursement from the other spouse’s estate, the Court determined that the existence of the Trust altered the nature of Husband’s payments from spousal support to protection of Trust property. The Court noted that Husband should have submitted a claim against the Trust, as it was responsible for Wife's expenses, but he believed he would inherit 50% of the Trust upon her death. Consequently, had the Trust paid the $75,077.78 in expenses, the assets of Wife's Estate would have been lower. The Probate Court found insufficient evidence to prove that Husband used Wife's assets to make the payments. Thus, it allowed Husband’s claim against Wife’s Estate for the full amount, which is now being appealed by the Estate. Wife’s Estate argues that Husband's payments came from her account, which he converted using a power of attorney, and that the Estate should not be liable for these payments since proceeds from the sale of her real property would benefit the Trust, of which Husband was a beneficiary. The Estate also contends that it is not liable for payments made for Wife's healthcare under Tennessee law. Husband counters that his payments preserved Trust property value, warranting reimbursement. The appellate review will be de novo, with factual findings presumed correct unless evidence suggests otherwise, while legal conclusions are reviewed without such presumption. The appellate court will give significant deference to the trial court's determinations of credibility due to its firsthand observation of witnesses.

In Long v. Tri-Con Ind. Ltd., the trial court's credibility determinations regarding evidence are inferred from how it resolves testimony conflicts. The Wife’s Estate contends that Husband's claim against it should be rejected since the funds for expenses were drawn from an account solely in the Wife's name at SunTrust Bank. Evidence presented included bank statements showing that the account was solely in the Wife's name until it was converted to a joint account with a zero balance in June 1996. The burden of proof for an affirmative defense lies with the party asserting it, which in this case was the Wife’s Estate. The trial court concluded that the evidence was insufficient to support the claim that Husband used his power of attorney to access Wife's funds for her expenses.

The Wife’s Estate also argued that, under Tennessee law, a spouse cannot recover for voluntary payments made for the other spouse’s benefit. There exists a presumption that benefits given by close relatives, such as spouses, are gratuitous, indicating no obligation for reimbursement. However, the Probate Court considered the payments in the context of a Trust established to cover the Wife’s personal and healthcare needs. Testimony indicated that had the Trust not been legally challenged, these payments would have been covered by Trust assets. The Probate Court found that Husband’s payments were for a separate legal entity (the Trust), thus overcoming the presumption of gratuitousness. The evidence supported the Probate Court's findings. Lastly, the Wife’s Estate argued against the claim on the basis that it is not inequitable for the Trust, of which Husband is a beneficiary, to retain the benefits of his payments.

Husband claimed that a portion of the Trust's corpus should be allocated to him instead of Wife’s Estate. If successful, Wife’s Estate could argue that Husband's payments benefiting the Trust were ultimately for his own advantage. However, the Probate Court determined that the Trust's terms reflected Wife’s intention to support both herself and her husband during her lifetime, with assets passing to her probate estate upon her death. The court ruled that the Trust's corpus belonged to Wife’s Estate, a decision affirmed on appeal (Arnold v. Davis, No. M2003-00620-COA-R3-CV, Tenn. Ct. App. June 17, 2004). Consequently, the argument from Wife’s Estate was rendered invalid. The Probate Court's allowance of Husband's claim for $75,077.78 against the Estate was upheld, and the trial court's decision was affirmed. Costs of the appeal are to be borne by Appellant, Ames Davis, as Administrator of the Estate of Mary Reeves Davis.