Samford v. FIRST ALA. BANK OF MONTGOMERY

Citation: 431 So. 2d 146Docket: 81-475, 81-475-A

Court: Supreme Court of Alabama; March 31, 1983; Alabama; State Supreme Court

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John Bennett Samford appealed a Circuit Court order from Lee County, Alabama, which approved the distribution of the estates of Millard Westcott Samford and Gwendolyn Bell Samford by the First Alabama Bank of Montgomery. Millard Samford died on August 29, 1969, leaving a will that provided for the payment of debts and distributed his estate's residue equally between his wife and a trust for their four children, granting them access to their shares at age thirty-one, except for one incompetent child.

Gwendolyn served as executrix and trustee until her death in 1974, after which the Bank took over these roles. Millard's estate included several properties, with the residue divided between Gwendolyn and the trust. In September 1974, their son, John Samford, sought a partial distribution of his trust share to secure a $250,000 loan. Gwendolyn agreed to a partial distribution, contingent on equal distributions to all children, leading to an agreement where each child received an undivided half interest in one property while Gwendolyn retained her interest.

John received an interest in the Wright's Mill Road property, and the agreement included indemnification for Gwendolyn against potential trustee liabilities. On the same day, John borrowed $250,000, with Gwendolyn mortgaging the Wright's Mill Road property to secure the loan, without incurring liability for repayment. Additionally, John’s business partner, Michael Danner, agreed to convey interests in certain properties to Gwendolyn and John in the event of foreclosure.

Gwendolyn Bell Samford passed away on December 3, 1974, shortly after executing a mortgage. Her will designated the Bank as trustee for her four children, managing the estate as a single trust, with each child to receive their share at age thirty-five. The Bank paid estate and ad valorem taxes on the property, including her interest in Wright's Mill Road. On September 9, 1975, John Samford and Danner entered an agreement where John would indemnify Danner from personal liability on loans, and Danner transferred his interest in their business, American Country Clubs, Inc., to John. Following business failure, the First National Bank of Birmingham foreclosed on the mortgage securing the Wright's Mill Road property, which was sold for $290,757.48.

In 1977, the Bank proposed a distribution plan for Mrs. Samford's estate, which John continually objected to, preventing any actual distribution. On January 15, 1981, the Bank sought final settlement, proposing to distribute the mother's half-interest in the property already held by each child. The Bank valued John's lost interest in Wright's Mill Road at $125,000. The estates were moved from Probate to Circuit Court, where joint hearings occurred. The trial court approved the distribution plan but asked for an updated version for Mrs. Samford's estate. John's objections to the new plan, claiming it lacked evidential support and misinterpreted his mother's will, were overruled after a hearing. His motion for a new trial was denied, leading him to appeal, which the court affirmed.

The scope of review indicates that when evidence is undisputed, the Supreme Court evaluates it de novo without presuming correctness of the trial court's legal application. In the case at hand, the trial court's findings were based on undisputed facts. Appellant John Samford argues that Mrs. Samford's mortgage of her property interest to benefit him constituted a gift, thus not deductible from his inheritance. The court disagrees, stating that a gift requires clear intent to relinquish all dominion over the property, which was absent since Mrs. Samford retained an equity of redemption. Consequently, her mortgage did not qualify as a gift. 

John Samford also claims that the mortgage benefit should not be considered a satisfaction of his legacy, as he was a legatee of a general legacy, and ademption applies only to specific legacies. Although correct, the court previously determined no gift occurred, meaning the equity of redemption remained part of the estate at Mrs. Samford's death, negating satisfaction.

Lastly, John Samford contends that the court improperly included the mother's property interest in the estate's distributable assets, valuing it at $125,000, which he claims was an abuse of discretion by the Bank. Although he cites valid legal principles regarding will construction, the court finds these principles do not apply under the present circumstances. The doctrine of retention applies here, meaning any debt owed by a legatee to the testator is included in the estate's assets, allowing for a set-off against the legatee's share.

In *Kling v. Goodman*, the court addressed the situation involving John Samford, who received a partial distribution of property contrary to his father's will, with his mother acting as executrix and trustee. Although the benefit he received from his mother’s mortgage on her half-interest in the property was not an actual indebtedness, it created equitable considerations. John accepted these benefits while aware of the potential foreclosure risk. His mother retained an equity of redemption in her half-interest at her death, which could have been gifted to him outright but was not. The court concluded that John Samford, having accepted the benefits under these circumstances, cannot contest the Bank's distribution of assets based on his implied agreement. Consequently, the trial court's order affirming the Bank's updated distribution plan was upheld. Justices Maddox, Jones, Beatty, and Adams concurred, while Chief Justice Torbert recused himself.