Court: Supreme Court of Arkansas; March 21, 1955; Arkansas; State Supreme Court
The appeal involves the interpretation of the Will of Percy A. Shaw, who died on April 7, 1954. His Will, executed on March 11, 1943, names his widow, Bessie Corpier Shaw, as one of the primary beneficiaries, alongside his sister, Helen E. Shaw, and two daughters from a previous marriage, Norma Jean Shaw and Dorothy Elizabeth Shaw. Key provisions of the Will include:
1. Helen E. Shaw is appointed as the Sole Executrix.
2. Specific insurance policies are bequeathed to the widow.
3. Real estate in Lonoke County is allocated to daughter Norma Jean, while real estate in Pulaski County is given to daughter Dorothy Elizabeth.
4. A monetary gift of $500 is granted to sister Helen E. Shaw.
5. The business assets of Shaw Gas Plumbing Company are divided equally among Bessie, Dorothy, and Norma Jean, each receiving one-third, and are to be held in trust by Bessie, Helen, and a third trustee chosen from the testator's employees.
6. The Will includes directions regarding funeral expenses, trustee instructions, and the management and eventual liquidation of the business.
7. Any remaining real estate is to be shared equally among the widow and two daughters.
8. All personal property not associated with the business is bequeathed to Norma Jean, with a request for her to share with relatives and friends.
The total estate value is $78,435.80, comprising $41,964.64 in real property and $36,471.16 in personal property. The inventory details include various real estate holdings, personal effects, and business assets, highlighting the financial scope of the estate.
Item 6 of the Will allocates one-third of the Shaw Gas Plumbing Company to the appellant, the widow, and one-third to each daughter, while Item 12 designates all personal property unrelated to the Company to daughter Norma Jean. A critical issue arises regarding the classification of personal property valued at $7,219.79, detailed in Exhibit B, as either belonging to the Company or to Norma Jean. Helen E. Shaw, as administratrix, petitioned the Chancery Court for a determination on this matter. The listed items include cash accounts, stocks, and a vehicle registered under Percy A. Shaw’s name.
Bessie C. Shaw, the appellant, contended that these personal properties were connected to the Company and should be classified under Item 6, while the daughters argued for their classification under Item 12. After reviewing testimonies and evidence, the chancellor ruled that the items in question were not part of the Company and should go to Norma Jean. Bessie C. Shaw appealed this decision.
During the trial, the primary testimony came from Audry Daugherty, the Company’s bookkeeper, along with eighteen exhibits including company financial records. The appellant's argument emphasized that Percy Alan Shaw was the sole proprietor of the Company, which was not a legal entity, and that all financial activities, including personal accounts, were derived from the Company’s earnings. The Company maintained significant assets, including inventory and business-specific accounts, which further complicated the classification of the disputed items.
The appellant argues that the trial court erred in concluding that the items in Exhibit B were unrelated to the Shaw Gas Plumbing Company as outlined in Item 6 of the Will. However, after reviewing the record, the court disagrees, determining that, except for specified items, the personal property in Exhibit B was bequeathed to Norma Jean under Item 12 of the Will and was not connected to the Shaw Gas Plumbing Company.
The court emphasizes that Percy A. Shaw operated the business independently, maintaining separate records for personal and business financials. Although he was the sole owner and made profitable investments, the funds he withdrew for personal use and placed in his name were not considered part of the company’s assets. The existence of distinct bank accounts for both the company and personal finances supports this conclusion, indicating that Shaw viewed his personal and business finances as separate. Furthermore, ledger sheets introduced in the record show that the securities and bank accounts were held in Shaw’s name, not as company assets, reinforcing the notion that they were personal investments. The court concludes that funds withdrawn for personal purposes cannot be regarded as connected to the business operations.
Mr. Shaw effectively separated his personal profits from the Company business, despite all property being assessed under the Company's name. As the sole owner of both his personal investments and the Company, the name under which properties were assessed was financially inconsequential, since he was responsible for paying taxes. The appellant argues that interpreting wills requires discerning the testator's intention by examining the will as a whole, the specific language used, and the surrounding circumstances, referencing several cases. While these principles are acknowledged, it is emphasized that the court cannot create a will for Mr. Shaw. A relevant case, In Re Fricke’s Will, illustrates a similar situation where the court ruled that profits from a business, owned solely by the testator, were not directed to be segregated by an employee. The court noted that the testator had the right to manage business profits and that there was no directive to separate personal investments from business assets. Similarly, Mr. Shaw demonstrated clear intent to designate profits from the Shaw Gas Plumbing Company as his personal assets, as evidenced by maintaining a ledger for his investments that included personal items, such as an Oldsmobile, which were not related to the Company.
Percy A. Shaw clearly differentiated between business funds and personal withdrawals. Evidence, including financial records and testimony, indicates that when Shaw deemed surplus funds were available, he withdrew them from the company account and deposited them into personal accounts, made investments, and purchased stock, all under his name. This separation suggests his intent to keep these funds distinct from the company’s assets.
An amendment to include a $118 deposit in a savings account under Shaw’s name was agreed upon, presumed to relate to a previously listed company asset. This amount should be classified with the company’s assets and addressed in Item 6 of Shaw’s will rather than as personal property in Item 12. Additionally, the court identified two other items linked to the company: $1,279.88 in a Twin City Bank savings account and a Willys Jeep, indicating that funds from both were used for company-related expenses and operations.
The trial court's decree was upheld in most respects, but reversed regarding the specified items, directing the trial court to amend its decree accordingly. The Chief Justice disagreed with the classification of the Twin City Bank account as company-related, suggesting it should be treated as personal property, while three justices dissented on the affirmance.
