                  IN THE COURT OF APPEALS OF TENNESSEE
                               AT JACKSON
                                    August 29, 2000 Session

                   JERRY WORRELL, ET AL. v. ANN WORRELL

                  Direct Appeal from the Circuit Court for Crockett County
                             No. 2619     L. T. Lafferty, Judge



                    No. W1999-01786-COA-R3-CV - Filed October 10, 2000


This appeal arises from a dispute over insurance proceeds between Nephews, as remaindermen of
their Aunt’s life estate, and their Aunt, as the life tenant of certain property. The trial court awarded
the Aunt sole rights to insurance proceeds obtained after the destruction of that property to the
exclusion of the Nephews. The Nephews appeal that ruling as well as the trial court’s omission of
certain hearsay testimony, and its failure to award them declaratory judgment. We affirm the rulings
of the trial court.

   Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed; and
                                       Remanded

DAVID R. FARMER , J., delivered the opinion of the court, in which ALAN E. HIGHERS and HOLLY K.
LILLARD, J.J., joined.

G. Griffin Boyte, Humboldt, Tennessee, for the appellants, Jerry Worrell, Herbert Worrell and
Bobby Sutton.

W. Douglas Sweet, Angela R. Merideth and Clinton J. Simpson, Memphis, Tennessee, for the
appellee, Ann Worrell.

                                              OPINION

        In 1991, Ann Worrell’s husband, Glen Worrell, died. In his will, Mr. Worrell bequeathed
to his wife a life estate in all of his real estate, with the remainder to pass to his nephews, Jerry
Worrell, Herbert Worrell, and Bobby Sutton. These nephews filed suit against Mrs. Worrell
contesting their uncle’s will in several areas not made clear by the record. This suit was eventually
settled by the parties. Mrs. Worrell then settled into the home she had shared with her deceased
husband, and this matter would have gone no further had nature not intervened.

      In 1999, a tornado destroyed this house and several outbuildings on the property. Mrs.
Worrell had insured this property through Allstate Insurance in 1998 by the issuance of a policy
solely in her name. Mrs. Worrell consistently paid the full premiums on this policy with her own
funds. As per the policy terms, Mrs. Worrell was paid over $56,000 by Allstate Insurance for the
damages sustained to the home and the surrounding area after the tornado struck. When Mrs.
Worrell expressed a desire to not rebuild her home but instead move elsewhere using the insurance
proceeds, Glen Worrell’s nephews, as the remaindermen of Mrs. Worrell’s life estate, filed suit.
These plaintiffs demanded that the insurance proceeds only be used for construction of a new
residence to replace the destroyed home and sought a declaratory judgment against Mrs. Worrell.

        At trial, the plaintiffs argued that it was the responsibility of a life tenant to insure the
property in which she held a life tenancy for the benefit of both herself and any remaindermen.
Additionally, the plaintiffs sought to introduce the statements made by Mr. Bobby McLean, a lawyer
involved in the settlement of the lawsuit concerning Glen Worrell’s will. The plaintiffs stated that
Mr. McLean, acting as Mrs. Worrell’s attorney, had made several statements which suggested that
Mrs. Worrell would insure the property for their benefit. The plaintiffs argued that Mr. McLean
assured them that if there were any losses, Mrs. Worrell would use any insurance money to either
repair the damage or place the funds in an escrow account for use by the remaindermen upon her
death. The trial court ruled this testimony as inadmissible hearsay. In addition, the trial court found
that Mrs. Worrell had no responsibility to insure the property for the benefit of the plaintiffs and was
entitled to keep all of the insurance proceeds. As such, the court denied the plaintiffs’ petition for
declaratory judgment. The plaintiffs then filed this appeal.

        The issues presented by the appellants, as we perceive them, are as follows:

        1.      Is a life tenant of real estate under a duty to insure improvements for casualty loss for
                the benefit of the remaindermen?

        2.      If a life tenant insures property improvements for the full value and there is a total
                loss, is the life tenant entitled to retain all the insurance proceeds to the exclusion of
                the remaindermen?

        3.      Was the trial testimony of the plaintiffs of Mr. McLean’s statements properly rejected
                as inadmissible hearsay?

        4.      Did the trial court err in dismissing the plaintiffs’ petition for declaratory judgment?

To the extent that the issues involve questions of fact, our review of the trial court’s ruling is de novo
with a presumption of correctness. See Tenn. R. App. P. 13(d). Accordingly, we may not reverse
the court’s factual findings unless they are contrary to the preponderance of the evidence. See, e.g.,
Randolph v. Randolph, 937 S.W.2d 815, 819 (Tenn. 1996); Tenn R. App. P. 13(d). With respect
to the court’s legal conclusions, however, our review is de novo with no presumption of correctness.
See, e.g., Bell ex rel. Snyder v. Icard, Merrill, Cullis, Timm, Furen and Ginsburg, P.A., 986
S.W.2d 550, 554 (Tenn. 1999); Tenn. R. App. P. 13(d).



                                                   -2-
                                   Rights of Remaindermen to Insurance Proceeds

         In Tennessee, it has been clearly established that

         [ t] h e re is n o le g a l o b lig a tio n o n th e p a r t o f [ a ] lif e te n a n t to ta k           e o u t in s u ra n     ce o n
         t h e in t e r e s t o f t h e r e m a in d e r m a n , a n d in s u r a n c e ta k e n o u t b y th        e lif e te n a n t   m u st b e
         s h o w n to h a v e b e e n s tip u la te d o r in te n d e d to c o v e r th e in te r e s t              o f th e
         r e m a in d e r m a n , a n d , u n le s s s u c h fa c t a p p e a r s , i t w i l l b e tr e a t e d    a s a c o n tra c t   fo r
         p e r s o n a l in d e m n ity to th e lif e te n a n t, a n d h e w ill b e e n title d to               th e p ro c e e d s    to th e
         e x c lu s io n o f th e re m a in d e rm a n .

Bennett v. Featherstone, 7 1 S . W . 5 8 9 , 5 9 0 ( T e n n . 1 9 0 2 ) . The plaintiffs have presented no
compelling reason to change this policy, and, upon review, we cannot discern one. As such, we
answer the first two issues raised by the plaintiffs as follows. First, a life tenant is under no duty
to insure improvements for the benefit of any remaindermen. Second, if a life tenant insures
improvements for full value, the life tenant may retain all insurance proceeds to the exclusion of
any remaindermen.

                                                             Hearsay Testimony

        The Tennessee Rules of Evidence define hearsay as “a statement, other than one made by
the declarant while testifying at trial or hearing, offered in evidence to prove the truth of the
matter asserted.” Tenn. R. Evid. 801(c). Under these rules, hearsay may be admitted if it meets
one of several exceptions, depending on the availability of the declarant. See Tenn. R. Evid. 803,
804. The plaintiffs did not articulate any specific hearsay exception under which Mr. McLean’s
testimony could be admitted. It is thus necessary for the court to examine the hearsay exceptions
under the Tennessee Rules of Evidence to see if any can be applied to this case.

        Upon examination, it is clear that two exceptions could possibly apply in this case.1
The first possible hearsay exception is Rule 803(1.2)(D). This rule states “[a] statement offered
against a party that is . . . (D) a statement by an agent or servant concerning a matter within the
scope of the agency or employment made during the existence of the relationship under
circumstances qualifying the statement as one against the declarant's interest regardless of
declarant's availability.” Tenn. R. Evid. 803(1.2)(D) (emphasis added). The record does not
present any evidence that the statement by Mr. McLean, as the declarant, would be against his
interests. Indeed, we are hard pressed to discover how Mr. McLean could have any interest in
Mrs. Worrell’s future plans to purchase insurance. As such, it is clear he could make no
statement against his own interests during the settlement conference. Thus, it is clear that this
exception does not apply.


         1
          The Tennessee Ru les of Evidence have d ifferent exceptions to hearsa y if the declarant is un available. See
Tenn. R. Evid. 804. No evidence has been presented by the plaintiffs that Mr. McLean was unavailable to testify and
none is included in the record. As such, this court will not consider any of the hearsay exceptions under Rule 804.

                                                                            -3-
         Under the second possible hearsay exception, the statements of Mr. McLean could
possibly be admitted under rule 803(1.2)(C). That rule states, “[a] statement offered against a
party that is . . . (C) a statement by a person authorized by the party to make a statement
concerning the subject” may be admitted. Tenn. R. Evid. 803(1.2)(C). The evidence presented
at trial was that Mr. McLean represented Mrs. Worrell during the negotiations to settle the will
contest brought by the plaintiffs.2 Mr. McLean operated as her “agent[] and [had] prima facie
authority to speak for [her] through pleadings and negotiations.” Simmons v. O’Charley’s, Inc.,
914 S.W.2d 895, 902 (Tenn. Ct. App. 1995). Thus, Mr. McLean’s statements should have been
admitted if he made the statements while operating within the scope of his authority.

         Authority is defined as “[t]he lawful delegation of power by one person to another. . .
[the] agent . . . [can] affect legal relations of [the] principal by acts done in accordance with [the]
principal’s manifestations of consent to [the] agent.” Black’s Law Dictionary 121 (5th ed. 1979).
It is clear from this defination that an agent can only bind the principal when acting within the
principal’s “manifestations of consent.” Id. Thus, a determination of what authority Mrs.
Worrell gave Mr. McLean to settle the will contest, would determine if she was bound by his
statements. If she was bound by his statements, then Rule 803(1.2)(C) would apply and Mr.
McLean’s testimony was improperly excluded.

       What was the scope of Mr. McLean’s authority? Upon our review of the record, we are
unable to ascertain the answer to this question. Nothing in the record provides details about the
settlement negotiations during which Mr. McLean’s statements were made. As such, we are
unable even to speculate what authority Mrs. Worrell provided her attorney. This inability to
determine the scope of Mr. McLean’s authority and thus the admissibility of his statements, does,
by necessity, turn our attention to a related matter.

                                                                 Declaratory Judgment

                  In Tennessee, “ [ i ] t m a y b e s t a t e d a s a g e n e r a l r u l e , t h a t t h e b u r d e n o f p r o o f i s u p o n t h e
 p l a i n t i f f t o s h o w t h a t c o n d i t i o n s e x i s t t o j u s t i f y t h e c o u r t i n e x e r c is in g i ts d i s c r e t i o n a r y p o w e r s to
 g r a n t d e c l a r a t o r y r e l i e f p u r s u a n t t o t h e d e c l a r a t o r y j u d g m e n t s t a t u t e .” Blake v. Plus Mark, Inc.,
952 S.W.2d 413, 417 (Tenn. 1997) (citations omitted). If the plaintiffs fail to meet this burden,
then they are not entitled to declaratory relief. “ T h e p l e a d i n g p a r t y h a s t h e b u r d e n o f p r o v i n g t h a t
t h e c o n t r o v e r s y i s j u s t i c i a b l e a n d o f e s t a b l i s h i n g t h e f a c t s n e e d t o b r i n g a n a c t i o n . ” Id. a t 4 1 6 - 1 7 .
“ [ A ] n a p p li c a n t f o r a d e c l a r a to r y j u d g m e n t h a s t h e b u r d e n o f s h o w i n g th a t p r e s e n t j u s t i c ia b le
c o n tr o v e r s y e x is t s , a n d if t h i s f a c t i s n o t s h o w n t h e n a c a u s e o f a c t i o n f o r d e c l a r a to r y r e li e f i s n o t
e s t a b l i s h e d . ” Id. a t 4 1 7 ( c i t a t i o n s o m i t t e d ) .




             2
           Mrs. Worrell clearly testified during the trial that she was represented by Mr. McClain. While she presented
a post trial affidavit stating that this statement was incorrect, this affidavit was not evidence at trial and, thus cannot be
considere d by this cour t.

                                                                                   -4-
                T h e p la in t i f f s ’ h a v e f a il e d in th i s c a s e to m e e t t h e b u rd e n o f p r o o f r e q u ir e d f o r a
d e c la r a to r y ju d g m e n t. W ith o u t c o n c lu s iv e p ro o f in th e re c o r d , it is im p o s s ib le fo r th is c o u rt to
d e te r m in e th e e x te n t o f M r . M c L e a n ’ s a u th o r ity to b in d M r s . W o r r e ll. I f M r . M c L e a n h a d n o
a u t h o r i t y t o b i n d M r s . W o r r e l l i n t h i s m a t t e r , t h e n R u l e 803(1.2)(C) w o u l d n o t a p p l y . I f M r .
M c L e a n ’ s s ta t e m e n t s a r e e x c l u d e d , i t i s c le a r f o r th e r e a s o n s a l r e a d y d i s c u s s e d a b o v e t h a t M r s .
W o r r e ll i s e n ti t l e d to u s e th e in s u r a n c e p r o c e e d s a s s h e d e s i r e s . A s t h e p la in t i f f s h a v e f a il e d to
m e e t t h e i r b u r d e n o f p r o o f i n t h i s c a s e , w e m u s t f i n d t h a t the trial court acted within its “sound
discretion” in its dismissal of the plaintiffs’ petition. As such, we find that the trial court did not
err in dismissing the plaintiffs’ petition for declaratory judgment.

                                                                      Conclusion

        Based on the foregoing conclusions, the judgment of the trial court is affirmed. Costs on
appeal are assessed against the appellants, Jerry Worrell, Herbert Worrell, and Bobby Sutton, and
their surety, for which execution may issue if necessary.


                                                                                      ___________________________________
                                                                                      DAVID R. FARMER, JUDGE




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