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Stone v. Washington Regional Medical Center

Supreme Court of Arkansas

March 16, 2017

JANE LIPSCOMB STONE, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF MADOLENE STONE, DECEASED; BENJAMIN HICKS STONE III; RUTH STONE JONES; MARGARET STONE COTTER; HARRIET STONE EVANS; PATRICIA MARTY STONE; EDWARD DURELL STONE III; MARIA FRANCESCA STONE; FIONA CAMBPELL STONE; AND MATTHEW WHELPLEY APPELLANTS
v.
WASHINGTON REGIONAL MEDICAL CENTER AND CITY OF FAYETTEVILLE, ARKANSAS APPELLEES

         APPEAL FROM THE WASHINGTON COUNTY CIRCUIT COURT [NO. CIV2014-1288-1] HONORABLE CRISTI BEAUMONT, JUDGE

          Ledbetter, Cogbill, Arnold & Harrison, LLP, by: R. Ray Fulmer, Victor L. Crowell, and Joseph Karl Luebke, for appellants.

          Thomas J. Olmstead and Andrew C. Cozart, for appellee Washington Regional Medical Center.

          Kit Williams and Blake Pennington, for appellee City of Fayetteville.

          JOHN DAN KEMP, Chief Justice

         Appellants Jane Lipscomb Stone, individually and as executrix of the estate of Madolene Stone, deceased; Benjamin Hicks Stone III; Ruth Stone Jones; Margaret Stone Cotter; Harriet Stone Evans; Patricia Marty Stone; Edward Durell Stone III; Maria Francesca Stone; Fiona Campbell Stone, and Matthew Whelpley ("Stone heirs") appeal two orders of the Washington County Circuit Court quieting title to Fayetteville property in Washington Regional Medical Center ("WRMC") and granting summary judgment in favor of WRMC. For reversal, the Stone heirs present six allegations of error. We affirm.

         I. Facts

         On September 8, 1906, Stephen K. Stone and Amanda Stone ("the Stones"), the original grantors, conveyed to the City of Fayetteville ("City") a block of property upon which to build a hospital. Their warranty deed ("the 1906 Deed") contained a reversionary clause in favor of the Stones or their heirs. This reversionary interest would trigger if the City failed to have a hospital constructed upon the property and in operation within four years from September 8, 1906, or if the property should at any time not be used and maintained for hospital purposes. The 1906 Deed further established a Board of Control to manage the hospital.

         The Stones amended their 1906 Deed by filing a second deed ("the 1909 Deed") on February 24, 1909. The 1909 Deed recited that its stated purpose was to revise "certain conditions providing for a reversion of the premises which may tend to retard the establishment and maintenance of said hospital." The 1909 Deed recognized the City's failure to adhere to the terms of the first deed and added a condition that if the hospital's location changed, the proceeds of the property would constitute a charitable trust for the maintenance of the hospital at a new location.

         In 1912, the hospital opened as Stone Hospital. In 1914, that hospital reorganized as Fayetteville City Hospital ("FCH") and operated as a charitable corporation. On April 30, 1914, the Washington County Circuit Court entered a decree approving certain articles of association of FCH, which was the successor to the Board of Control. These articles incorporated the terms of the 1909 Deed. From 1906 to 1978, the City owned and held legal title to the FCH property. In 1978, the City conveyed the property to FCH by resolution of the city council. In 1991, FCH conveyed the property by quitclaim deed back to the City, and FCH continued to operate the facility.

         In 2010, the City offered $172, 500 to WRMC for a one-acre piece of property to construct a roundabout to ease traffic congestion. Thomas J. Olmstead, WRMC's general counsel, responded by sending a memorandum to the City expressing a desire to acquire the property and offered to exchange the roundabout site for the trust property. WRMC and the City agreed to the land swap. The City conveyed the FCH property to WRMC, and WRMC conveyed an acre of its property to the City for the construction of the roundabout.

         On July 15, 2014, WRMC filed a petition to quiet title in the FCH property. In its petition, WRMC claimed to be the legal owner of the property after having acquired fee-simple title from the City by quitclaim deed and filed of record. WRMC alleged that it had been in continuous and exclusive possession and use of the property with no adverse occupants since October 13, 2013. The Stone heirs responded that title should be quieted in them because the City had failed to establish and operate the Stone Hospital pursuant to the terms of the charitable trust and that the City's actions constituted a rejection of the trust. The Stone heirs also asserted a counterclaim for breach of trust, sought to quiet title, and moved to dismiss WRMC's petition for failure to join indispensable parties. The circuit court denied the Stone heirs' motion to dismiss and found that the City was an indispensable party to the action.

         WRMC and the City moved for summary judgment. Following a hearing, the circuit court granted WRMC's motion for summary judgment, quieted title in WRMC, dismissed with prejudice the Stone heirs' counterclaim, granted the City's motion for summary judgment, and dismissed with prejudice the Stone heirs' cross-claim against the City. The circuit court ruled as a matter of law that the 1906 and 1909 Deeds were clear and unambiguous and that WRMC had satisfied the elements of a quiet-title action. Additionally, in its decree quieting title, the circuit court ruled that WRMC had acquired fee-simple title from the City and was the legal owner of the property; that WRMC had been in continuous and exclusive occupancy, possession, and control of the property since 2011; that the requisite statutory notices had been properly served; and that WRMC had met the requirements to quiet title pursuant to Arkansas Code Annotated sections 18-60-501 to -511 (Repl. 2015).

         The Stone heirs appealed the circuit court's orders to the court of appeals, which affirmed. Stone v. Washington Reg'l Med. Ctr., 2016 Ark.App. 236, 490 S.W.3d 669. The Stone heirs filed a petition for review, which we granted. When we grant a petition for review, we treat the appeal as if it had been originally filed in this court. Moore v. Moore, 2016 Ark. 105, 486 S.W.3d 766.

         II. Arguments

         On appeal, the Stone heirs present six allegations of error. We discuss them in tandem as (1) whether the language in the 1906 and 1909 Deeds created a trust property reverting back to the Stone heirs; (2) whether the Stone heirs had standing to assert any interest in the property; (3) whether WRMC met its burden of proof in its ...


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