Appeal by plaintiffs from judgment entered 18 September 1998
by Judge Quentin T. Sumner in Halifax County Superior Court. Heard
in the Court of Appeals 14 September 1999.
Nicholls & Crampton, P.A., by W. Sidney Aldridge, for
plaintiff-appellant Branch Funeral Homes, Inc.
Kilpatrick Stockton, by Carl W. Hibbert, for plaintiff-
appellant, Susan Howell.
Poyner & Spruill, L.L.P., by Charles T. Lane and Gregory S.
Camp, for defendant-appellee Faris Sykes.
MARTIN, Judge.
Susan H. Branch died on 30 September 1995, leaving a will
which was admitted to probate in Halifax County, North Carolina.
Watson N. Sherrod, Jr., qualified as executor under the will. At
the time of her death, Mrs. Branch was the owner of all of the
outstanding shares of stock of Branch Funeral Homes, Inc., (BFHI),
a corporation which operated funeral homes in Enfield, Roanoke
Rapids and Scotland Neck. On 30 September 1995, Faris Sykes, Jr.,
was employed by BFHI as manager of funeral home operations. The primary beneficiaries of Mrs. Branch's will were
her
nieces, Susan Pope Howell and Dayne Carlton Howell. Mrs. Branch
devised several parcels of real estate used by BFHI, as well as
several other parcels of real estate, to Susan Howell; she devised
a farm and several houses, apartments and lots to Dayne Carlton
Howell. In Article Three of her will, Mrs. Branch provided:
I hereby will, give, bequeath and devise
to my niece, Susan Pope Howell, all shares of
stock in Branch Funeral Homes, Inc., subject
to the oral agreement made by me with Faris
Sykes, Jr., as follows: That the said Branch
Funeral Homes, Inc. shall pay unto Faris
Sykes, Jr., for the remainder of his natural
life, the amount of annual salary he is
currently receiving at the time of my death,
and the amount of life insurance premiums upon
his life which are currently being paid at the
time of my death. This devise in this Article
is subject to compliance with the aforesaid
agreement.
By Article Nine of the will, Mrs. Branch bequeathed Dayne Carlton
Howell stock and securities in Sprint United Telephone and
Telegraph Company in an amount equal to $650,000 in value, and, in
Article Ten, directed that the remainder, if any, of her Sprint
United Telephone stock be given to the two nieces in equal shares.
After making other specific devises and bequests to family members,
friends, employees, and her church, Mrs. Branch provided, in
Article Sixteen, that her residuary estate be divided equally
between Susan Howell and Dayne Carlton Howell.
Susan Howell and BFHI brought this action seeking a
declaratory judgment pursuant to G.S. § 1-253 et seq. determining
their rights under Article Three of the will. Plaintiffs contended
the language making the bequest subject to the requirement that
BFHI pay a salary and benefits to Faris Sykes, Jr., isunenforceable and void, and that Susan Howell should receive the
stock of BFHI free of any charge, encumbrance or condition.
Defendants answered, joining in the prayer for a declaratory
judgment; defendant Sykes contended the language of Article Three
created a legacy in his favor and a charge upon the shares of stock
bequeathed to Susan Howell.
The trial court granted summary judgment in favor of defendant
Sykes, declaring that the language of Article Three:
imposes a charge upon any shares of stock of
Plaintiff Branch Funeral Homes, Inc. taken by
Plaintiff Susan Pope Howell thereunder for the
continuing payment to Defendant Faris Sykes,
for the remainder of his natural life, of the
amount of the annual salary he was receiving
from [Plaintiff] Branch Funeral Homes, Inc. at
the time of the death of Susan H. Branch on
September 30, 1995, and of the amount of life
insurance premiums upon his life which were
being paid at the time of the death of Susan
H. Branch on September 30, 1995.
Plaintiffs appealed.
Summary judgment is proper "if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to
any material fact and that any party is entitled to a judgment as
a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (1990).
There are no disputed issues of material fact in this case,
plaintiffs' assignments of error to the entry of summary judgment
in favor of defendant Sykes are based upon issues of law, rather
than the existence of any genuine issues of material fact. Thus,
this case is an appropriate one for application of Rule 56.
Kessing v. National Mortgage Corp., 278 N.C. 523, 180 S.E.2d 823(1971) (summary judgment rule applicable where controversy involves
only a question of law arising on undisputed facts);
Early v.Bowen, 116 N.C. App. 206, 447 S.E.2d 167 (1994),
disc. review
denied, 339 N.C. 611, 454 S.E.2d 249 (1995) (summary judgment is
appropriate in a declaratory judgment action where no facts are in
dispute and a party is entitled to judgment as a matter of law).
In interpreting the will provision at issue in this case, as
in construing any will, the primary duty of the court is to
determine the intent of the testatrix and to give effect to that
intent if it is not in contravention of established law or public
policy.
Joyner v. Duncan, 299 N.C. 565, 264 S.E.2d 76 (1980);
Early v. Bowen,
supra. The intent of the testatrix is determined
from a consideration of the entire instrument,
id.; and the court
should search for a meaning which would uphold the will in its
entirety, rather than one which would nullify any part of the will
or bequest, if such a meaning is consistent with the law and the
intent of the testatrix.
Johnson v. Salsbury, 232 N.C. 432, 61
S.E.2d 327 (1950). Where a devise or bequest would be invalid or
unlawful under one construction, but would be valid under a
different interpretation, the latter must prevail because it is
presumed the testatrix intended a valid disposition of her
property.
Poindexter v. Wachovia Bank & Trust Co., 258 N.C. 371,
128 S.E.2d 867 (1963).
A consideration of Mrs. Branch's will in its entirety clearly
reveals her intent in providing for the disposition of her estate. The primary objects of her bounty were her two nieces, Susan Howell
and Dayne Carlton Howell, and she intended to provide for them on
essentially equal terms. In addition, she made provisions for
other relatives, friends, her church, for her personal employees,
and for those employees of BFHI who had been so employed for more
than 180 days at the time of her death. Consistent with these
provisions, it is obvious that by the language contained in Article
Three of her will, Mrs. Branch intended to provide support for
defendant Sykes for the remainder of his life and to fasten such
support to the bequest of stock in BFHI to plaintiff Howell. Thus,
the issue for decision is whether Mrs. Branch's intent, as clearly
expressed in Article III, may be given effect without contravening
law or public policy.
Plaintiffs vigorously argue the condition placed upon the
bequest of BFHI stock is unlawful and violates public policy
because it requires BFHI to pay Sykes, even though he is no longer
employed, and the corporation receives no benefit in return for the
payment. Citing well-established statutory and decisional law,
plaintiffs contend that to satisfy the condition, Susan Howell, as
the sole shareholder and presumably a director of BFHI, must vote
to cause the corporation to make the payments to Sykes and, in so
doing, violate her fiduciary duty as a director to act in the best
interests of the corporation and its creditors.
See N.C. Gen.
Stat. § 55-8-30 (General Standards for Directors);
Underwood v.
Stafford, 270 N.C. 700, 155 S.E.2d 211 (1967);
McIver v. Young
Hardware Co., 144 N.C. 478, 57 S.E. 169 (1907);
Meiselman v.Meiselman, 58 N.C. App. 758, 295 S.E.2d 249 (1982),
modified and
affirmed, 309 N.C. 279, 307 S.E.2d 551 (1983) (directors occupy
fiduciary relation in respect to shareholders and creditors).
Plaintiffs also argue that the condition of payment to Sykes
is not a valid condition subsequent, a breach of which would defeat
the devise, (1) because it does not contain a clear and unambiguous
expression of termination of the devise upon a breach of the
condition,
see Station Associates, Inc. v. Dare County, 350 N.C.
367, 513 S.E.2d 789,
reh'g denied, 350 N.C. 600, ___ S.E.2d ___
(1999), and (2) because the condition is contrary to law and public
policy for the reasons previously argued. Conditions subsequent
are not favored and are strictly construed; there must be clear and
unambiguous indication of intent of forfeiture of the estate
granted upon a breach of the condition.
See Lassiter v. Jones, 215
N.C. 298, 1 S.E.2d 845 (1939);
Hall v. Quinn, 190 N.C. 326, 130
S.E. 18 (1925). We need not decide whether the language used by
Mrs. Branch was sufficient to create a valid condition subsequent,
however, because the trial court did not interpret Article Three as
such and made no order that the bequest of stock to Susan Howell
would be forfeited in the event she failed to make the required
payments to Sykes.
Plaintiffs' arguments with respect to a potential conflict
between the duties owed by Susan Howell and other directors to BHFI
and its creditors, and the obligation to cause the corporation to
make payments to Sykes in accordance with Article Three, would have
merit had the trial court interpreted Article Three to require thatBFHI provide lifetime support and benefits to Sykes, as such an
interpretation would have placed an impermissible restraint upon
BFHI's directors and would be arguably
ultra vires.
See Moore v.
Keystone Macaroni Mfg. Co., 370 Pa. 172, 87 A.2d 295 (1952).
(corporation's voluntary payments for past services to former
employee, which it had no legal duty to pay, were
ultra vires and
illegal). However, in this case, the trial court imposed no such
duty upon BFHI and, following the rule that a court should search
for a meaning which would give effect to, rather than nullify, the
intent of the testator, construed Article Three as “impos[ing] a
charge” upon the shares bequeathed to Susan Howell for the payments
to Sykes.
“The question of a charge usually arises where the testator
devises property to one who, under the terms of the will, is
directed to make payments to, or to support, another.” Wiggins,
Wills and Administration of Estates in North Carolina, (2d Ed.) §
142. “A provision in a will that a devisee shall support a named
person is perfectly reasonable and consistent with the policy of
the law, and is constantly upheld.”
Moore v. Tilley, 15 N.C. App.
378, 381, 190 S.E.2d 243, 246,
cert. denied, 282 N.C. 153, 191
S.E.2d 758 (1972). In most cases, such provisions for support are
construed as constituting an equitable charge upon the property
with the property standing as security for the support provision.
Id. We believe such a construction is particularly apt where there
is no clear provision for forfeiture in the event of noncompliance.
In ascertaining the testatrix's intent, it is permissible forthe trial court to supply, or even reject, words or ph
rases used in
the will in order to effectuate that intent.
Entwistle v.
Covington, 250 N.C. 315, 108 S.E.2d 603 (1959);
Coppedge v.
Coppedge, 234 N.C. 173, 66 S.E.2d 777,
reh'g denied, 234 N.C. 747,
67 S.E.2d 463 (1951). “In performing the office of construction,
the Court may reject, supply or transpose words and phrases in
order to ascertain the correct meaning and to prevent the real
intention of the testator from being rendered aborted by his inept
use of language.”
Sutton v. Quinerly, 231 N.C. 669, 679, 58 S.E.2d
709, 715-16 (1950) (quoting
Gordon v. Ehringhaus, 190 N.C. 147,
150, 129 S.E. 187, 189 (1925)). In Article Three of her will, Mrs.
Branch recited that she had made an oral agreement with Sykes that
BFHI would pay his salary and insurance premium, and that her
devise of the corporation's stock was subject to compliance with
that agreement. As the sole shareholder of BFHI, it is apparent
that Mrs. Branch considered herself and the corporation to be the
same, and that the corporation's obligation of support for Sykes as
agreed to by her was her obligation as well. She made her bequest
of stock to Susan Howell “subject to” her agreement, clearly
indicating her intent that the stock stand as security for the
obligation. In order to give effect to her clear intent, it was
appropriate for the trial court to construe the language as
imposing upon Susan Howell, as sole shareholder of BFHI as a result
of the bequest, the same obligation of support as Mrs. Branch had
imposed upon herself. Thus, the provision is properly construed as
a charge upon the shares taken by Susan Howell to make the requiredpayments, and Sykes would be entitled to enforce his rights to such
payments against the shares in the event of nonpayment.
The judgment of the trial court is affirmed.
Affirmed.
Chief Judge EAGLES and Judge LEWIS concur.
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