Duncan v. Duncan, ___N.C.App. ___, ___ S.E.2d. ___, (2001), NO. COA00-1358, Filed: 6 November 2001

This opinion deals with a situation involving an agreement not to change a will. In 1997, Pagie Duncan executed a Will that left all of her property, real and personal, to her five children. It further provided that if "my Son, LAWRENCE C. DUNCAN, JR., shall not be living at the time of my death, then and in such an event, I will and devise the share of my estate which he would have received, had he survived me, unto his Wife, MILDRED H. DUNCAN, absolutely and in fee simple." At the same time she entered into an agreement with her five children promising not to alter or revoke the will in exchange for their agreement to contest the will or make claim on the estate. In 1998 Pagie executed a new will leaving all of her property to her four surviving children and revoking her prior will. Lawrence, obviously, predeceased his mother and his widow was the plaintiff in this action. Prior to Pagie’s death, one of her children conveyed all of her real estate to the four children that survived her under a power of attorney. The trial court ruled that Mildred was entitled to one-fifth of the estate and to a one-fifth interest in the lands conveyed pursuant to the power of attorney.

The Court of Appeals ruled that the contract was enforceable and therefore, Mildred was entitled to one-fifth of the estate. The Court of Appeals overruled the trial court on the issue of the land. The act of conveying the property was held not to be an alteration of the will and the land could be conveyed without violating the agreement. An agreement not to revoke or alter a will may be valid and enforceable. If so, it places a restriction on alienation in that a testator is limited in disposing property by will. Because of this, agreements not to revoke or alter a will are strictly construed. The Court states that "the agreement only precluded Pagie Duncan from revoking or altering her 1997 Will. The agreement did not restrict Pagie Duncan's ability to convey her property by deed after the 1997 Will. "[I]t must be presumed the parties intended what the language used clearly expresses, and the contract must be construed to mean what on its face it purports to mean." Hagler v. Hagler, 319 N.C. 287, 294, 354 S.E.2d 228, 234 (1987). Thus, under a strict construction of the language of the agreement, the deeding away of property did not breach the agreement not to revoke or alter the 1997 Will. The plaintiff contended that the conveyance of the property by deed to the four surviving children had the effect of revoking the 1997 Will because the property constituted the bulk of the estate. "Further, the purpose of the agreement would be destroyed if this conveyance is upheld."

In response, the Court cited N.C. Gen. Stat. Sec. 31-5.6 "which states in pertinent part: No conveyance . . . made or done subsequently to the execution of a will of, or relating to, any real or personal estate therein comprised, . . . shall prevent the operation of the will with respect to any estate or interest in such real or personal estate as the testator shall have power to dispose of by will at the time of his death." The Court of Appeals then concluded the statutory language meant that a conveyance doesn’t alter or revoke a will. The Court did not address the issue of destroying the "purpose of the agreement".

This case does not present any unexpected interpretation of the law as it deals with land or wills. What is interesting is that though the expectations of the plaintiff’s husband concerning the benefit of the agreement were clearly thwarted, the Court of Appeals chose not to contort the legal issues in order to provide the "benefit of the bargain". Clearly, if the decedent had found it necessary to sell the land to support herself, the facts would have been less compelling and there may well not have been a suit, much less an appeal. It should also be noted that the opinion recites that the power of attorney contained an express provision to make self-interested gifts and the Statutes authorize such a power, but does not discuss that authority as being in issue.

Fulcher v. Golden, ___N.C.App. ___, ___ S.E.2d. ___, (2001), NO. COA00-1474, Filed: 6 November 2001

In 1978, Gerald Linwood Fulcher, deceased, executed a deed to the defendant for property located in Carteret County. The defendant held the deed until 1979, when he moved the it to a safe deposit box owned by the deceased. In 1982, the defendant moved to Ohio, and left the deed in the safe deposit box. On June 2, 1999, the defendant returned to North Carolina to attend the funeral the deceased. He then went to the safe deposit box, removed the deed and recorded it with the Register of Deeds.

The plaintiffs are the only heirs of Gerald Linwood Fulcher and co-administrators of his estate. They filed a complaint on June 25, 1999 seeking to set aside the deed. The trial court found it to be a deed of gift, which was void pursuant to G.S. Sec. 47-26 for failure to record within two years. The trial court ordered the deed stricken from the public records and a copy of the judgment recorded in the Register of Deeds Office.

On these facts alone, there is nothing unexpected in this opinion. There is a twist in this case that may result in certain title problems being less insurable. The deed as recorded did not exhibit payment of revenue stamps, but here was a standard recital of consideration and the instrument was executed under seal. The defendant contended that the plaintiffs failed to overcome the presumptions created by the recital of consideration in the deed and the execution of the deed under seal. The Court of Appeals pointed out that these presumptions are rebuttable, citing Westmoreland v. Lowe, 225 N.C. 553, 35 S.E.2d 613, (1945) and Patterson v. Wachovia Bank & Trust Co., 68 N.C. App. 609, 315 S.E.2d 781, (1984). The trial court made findings based on the defendants testimony. "Defendant testified that decedent was like a father to him. Defendant further testified that he did not actually pay decedent ten dollars at the time the Deed was delivered to him, but gave decedent other money over the years. Defendant also testified that the Register of Deeds informed him that if there was any value paid for the property that he would need to pay revenue stamps. Defendant testified that he indicated to them that there were no revenue stamps to be paid." The Court observes that love and affection of a family member is sufficient consideration to support a deed (and by implication to overcome the statute), but the defendant was not related to the grantor and cases subsequent to Jones v. Saunders, clearly do not support this implication. It appears from the opinion that all of the crucial evidence resulting in a verdict for the plaintiff came straight out of the mouth of the defendant. As a result, the Court of Appeals affirmed the trial court’s finding that the deed was void.

This presents an interesting conundrum. The common law doctrine creates a presumption of validity of the deed resulting from the recital of consideration. Yet, NCGS Sec. 47-26 provides that a gift deed that is not recorded within two years of its making is void. It would seem that instruments like the one giving rise to this litigation are for all practical purposes, voidable in spite of the statutory language since judicial intervention will be required in order to overcome the presumption of validity. When this decision is read in its entirety, it would appear that only a conveyance reciting that it was a deed of gift and not reciting any consideration may be void ab initio under the statute.

It is not uncommon for careful title examiners to report finding deeds that are recorded more than two years after their execution, reciting consideration but not bearing evidence of the payment of revenue stamps (now termed an excise tax). If they were of sufficient age and the title revealed that there was little or no likelihood of a challenge to the validity of the deed, title would likely have been insurable. Since gift deeds recorded more than two years after their execution are termed void in the statute, title insurers will likely begin requiring substantive evidence of the actual payment of consideration before agreeing to insure such property.

A report out of the General Assembly indicates that the House and Senate have adopted the Conference Report on HB253, Certain Manufactured Homes Real Property, and the Bill will be presented to the Governor for his signature. For those following this legislation with interest, we will cover this bill in next month’s article when we have the chaptered bill available.