LAURIE D. FARROW APPELLANT
SHEILA FULLER, ASADMINISTRATRIX OF THE ESTATE OF RICHARD BLOCH, DECEASED, AND AUTUMN BREEZE RESTAURANT, INC. APPELLEES
FROM THE CARROLL COUNTY CIRCUIT COURT, WESTERN DISTRICT [NO.
08PR-15-13] HONORABLE SCOTT JACKSON, JUDGE
Matthews, Campbell, Rhoads, McClure & Thompson, P.A., by:
Sarah L. Waddoups, for appellant.
MARK KLAPPENBACH, Judge
Laurie D. Farrow filed a petition in probate court to have
certain real property removed from the estate of Richard
Bloch, deceased, her former partner. Farrow alleged that
these two properties passed to her as a joint tenant with
rights of survivorship upon Bloch's death. The trial
court granted Farrow's request as to one piece of
property but converted her ownership interest in the other
property to a tenant in common with the estate. Farrow now
appeals, and we affirm in part and reverse and remand in
and Bloch were romantic partners for thirty-five years, and
while they had a child together, they never married. Their
relationship ended in 2012, and litigation was initiated
regarding the operation of a restaurant the parties owned,
Autumn Breeze, and the division of assets. The litigation
resulted in a settlement agreement. Bloch married Sheila
Fuller on January 1, 2015, and on March 6, 2015, Bloch died
intestate. Fuller was appointed as the personal
representative of his estate. Farrow filed a petition to have
the restaurant property and a house removed from the estate.
She argued that the two properties were jointly purchased by
her and Bloch with the deeds naming them "joint tenants
with the right of survivorship." Farrow claimed that the
settlement agreement did not change the ownership of the
properties, and thus, they passed to her at Bloch's
settlement agreement, signed by Farrow and Bloch on April 18,
2013, stated that they remained joint owners of the house and
restaurant property. They agreed that Bloch would be entitled
to sole possession of the house. Bloch was to pay Farrow $30,
000 as consideration for Farrow's shares in the
restaurant corporation, Autumn Breeze, Inc., and Farrow
agreed to vacate the house fifty-six days after receipt of
this payment. Bloch was to make the mortgage payments on the
house, and the parties were to continue to list the house for
sale. Farrow was entitled to one-half of the net profits only
if the house sold for an amount greater than $400, 000. The
agreement provided that Bloch would make yearly attempts to
refinance the mortgage in his sole name beginning in May
2014. If Bloch was successful in refinancing the mortgage,
Farrow would release her interest in the property via a
quitclaim deed and would not be entitled to any profits of a
the restaurant property, the settlement agreement provided
that Bloch would have sole and exclusive use of the real
estate in exchange for the payment of one dollar per year as
rent. The agreement stated that on or before May 1, 2023,
Bloch would list the property for sale for the sum of not
less than $335, 000. Upon the sale of the property, all
profits after costs of the sale were to be equally divided
between the parties. Among other things, the settlement
agreement also divided personal property and set out the
parties' obligations to pay the utilities and keep the
final hearing, Farrow testified that the parties
intentionally chose to not change the ownership of the
properties from joint tenants with right of survivorship to a
tenancy in common; instead, they left it the way it was to
protect themselves until the properties sold. She said that
both she and Bloch were represented by attorneys when they
negotiated and entered into the settlement agreement. Since
that time, the properties had not been sold, and the mortgage
had not been refinanced. Farrow thought that the mortgage
balance was around $320, 000 at the time of the settlement
agreement. Fuller argued that the estate should be entitled
to Bloch's rights under the settlement agreement because
it stated that it "shall inure to the benefits of, and
shall be binding upon, the heirs, legal representatives,
successors and permitted assigns of the parties hereto."
Fuller also claimed that the estate was insolvent without the
properties and that the equities of the case and the changed
circumstances of the parties supported the imposition of a
constructive trust in favor of the estate.
trial court found that the settlement agreement stated the
parties' intentions with respect to dissolution but was
only partially performed, and no documents modifying property
ownership or responsibility had been executed. With respect
to the house, the trial court found that "based upon the
mortgage indebtedness and the estate's inability to
assume any responsibility for the mortgage, it is not
possible to attempt to carry out the terms of the Settlement
Agreement and the petitioner's petition to remove the
real property from the estate should be granted." With
respect to the restaurant property, the court found that
"the property is not mortgaged and the intent of the
Settlement Agreement was clear that Farrow and Bloch [would]
share an equal interest in the division of this parcel,
therefore the petitioner's petition to remove the real
property is denied. To carry out the intent of this order,
the ownership interest in the warranty deed to the . . .
property shall be converted to a tenancy in common."
Farrow appeals from this order. The estate has not filed a
brief on appeal.
cases are reviewed de novo on the record; however, the
decision of the probate court will not be reversed unless
clearly erroneous. Estate of Adair v. Adair, 2013
Ark.App. 290, 427 S.W.3d 733. A finding is clearly erroneous
when, although there is evidence to support it, the appellate
court is left, on the entire evidence, with the firm
conviction that a mistake has been committed. Id.
Our appellate courts defer to the trial court's
evaluation of witness credibility. Id.
argues that the trial court erred in converting a joint
tenancy to a tenancy in common and in disposing of two
identically titled properties in different ways when title to
both properties passed to her as the surviving joint tenant.
We agree. A joint tenancy with right of survivorship may be
created in real property by conveyance to two or more
persons, regardless of their relationship to each other. Ark.
Code Ann. § 18-12-106(a) (Repl. 2015); Brissett v.
Sykes, 313 Ark. 515, 855 S.W.2d 330 (1993). Both deeds
at issue here conveyed the properties to Bloch and Farrow
"as joint tenants with right of survivorship." When
a joint tenant dies and is survived by other joint tenants,
title to the real estate passes by operation of law to the
survivor or survivors. See Gladson v. Gladson, 304
Ark. 156, 800 S.W.2d 709 (1990). Title to property held in
joint tenancy takes precedence over the claim of a devisee,
legatee, or heir. Id. An heir is not entitled to
inherit interests terminated by the intestate's death.
See Ark. Code Ann. § 28-9-206(a) (Repl. 2012).
In Tripp v. C.L. Miller, 82 Ark.App. 236, 105 S.W.3d
804 (2003), we held that it was error to reform a deed to
reflect that the appellant and decedent owned property as
tenants in common where the deed unambiguously created a
joint tenancy with right of survivorship.
contends that the settlement agreement did not convert
ownership of the properties to a tenancy in common. She
argues that the plain language of the agreement did nothing
to convert or terminate the joint tenancy with right of
survivorship but instead anticipated the joint tenancy
remaining in place until the properties were refinanced or
sold. Farrow contends that the terms of the agreement and the
fact that no new deeds had been executed, despite the fact
that both parties were represented by attorneys, strongly
indicates that no change in ownership was intended until
later. We agree.
supreme court has held that the issue of whether a settlement
agreement changes a tenancy by the entirety into a tenancy in
common turns on the construction of the language in the
settlement agreement. Killgo v. James, 236 Ark. 537,
367 S.W.2d 228 (1963). Like a joint tenancy with right of
survivorship, an estate by the entirety, which is peculiar to
marriage, entails the right of survivorship. See Lowe v.
Morrison, 289 Ark. 459, 711 S.W.2d 833 (1986). The
property settlement agreement in Killgo provided
that upon the parties' divorce, the husband would have
possession of the parties' home "until such time as
the parties to this case may agree on a sales price."
236 Ark. at 538, 367 S.W.2d at 229. The proceeds of a sale
were first to be used to reimburse the husband for mortgage
payments and then to be equally divided. When the husband
died before the property was sold, his heirs brought a suit
for partition on the theory that the settlement agreement
converted the tenancy by the entirety into a tenancy ...