IN RE ESTATE OF FOSTER HUME, III,)
                                 )
THE UNIVERSITY OF THE SOUTH, )
                                 )
      Plaintiff/Appellant,       )
                                 )          Probate Court Davidson County
                                 )          No. 98293
VS.                              )
                                 )          Appeal No.
                                 )          01A01-9609-PB-00432
MEREDITH KLANK,                  )
                                 )
      Defendant/Appellee.        )
                                                              FILED
                  IN THE COURT OF APPEALS OF TENNESSEE            March 5, 1997

                        MIDDLE SECTION AT NASHVILLE           Cecil W. Crowson
                                                             Appellate Court Clerk

          APPEAL FROM PROBATE COURT OF DAVIDSON COUNTY

                             AT NASHVILLE, TENNESSEE


                 HONORABLE FRANK G. CLEMENT, JR., JUDGE


J. Richard Lodge, Jr. (#2833)
E. Clifton Knowles (#5889)
BASS, BERRY & SIMS PLC
2700 First American Center
Nashville, Tennessee 37238-2700
ATTORNEYS FOR PLAINTIFF/APPELLANT


Norman Gillis
1201 16th Avenue South
Nashville, Tennessee 37212

John Drummond
P.O. Box 41385
Nashville, Tennessee 37204
ATTORNEYS FOR DEFENDANT/APPELLEE


                        AFFIRMED AND REMANDED.



                                  HENRY F. TODD
                                  PRESIDING JUDGE, MIDDLE SECTION


CONCUR:
SAMUEL L. LEWIS, JUDGE
WILLIAM C. KOCH, JR., JUDGE
IN RE ESTATE OF FOSTER HUME, III,)
                                 )
THE UNIVERSITY OF THE SOUTH, )
                                 )
      Plaintiff/Appellant,       )
                                 )                     Probate Court Davidson County
                                 )                     No. 98293
VS.                              )
                                 )                     Appeal No.
                                 )                     01A01-9609-PB-00432
MEREDITH KLANK,                  )
                                 )
      Defendant/Appellee.        )


                                         OPINION


       The University of the South, residuary legatee under the will of Foster Hume, deceased,

has appealed from the judgment of the Probate Court holding that a specific devise to Meredith

Klank was not extinguished by ademption and therefore the subject of the specific devise did not

become a part of the residuary estate.



       Appellee presents a preliminary issue regarding the initiation of this appeal by the

University of the South.



       As residuary legatee, the University of the South was the only person or entity with any

interest in the ademption of the devise of Meredith Klank. On August 26, 1994, the University

filed a motion for leave to intervene to protect its interests. The motion was overruled by a

special probate judge, but the University continued to participate in the proceedings, particularly

in resistance to efforts of Meredith Klank to require the University to refund to the estate the

proceeds of the foreclosure which had been paid to the University. This litigation continued

before the newly elected regular Probate Judge who, on March 4, 1996, signed an order requiring

said proceeds to be paid to Ms. Klank.



       There was no compliance with the conditions set out in T.R.C.P. Rule 58 for the “entry”

of an order, but the order was filed and placed on the minutes of the Probate Court. On April 15,


                                               -2-
the University moved for relief under T.R.C.P. Rule 60.02. On June 6, 1996, the Probate Court

granted the relief and re-entered the judgment on the same date, June 6, 1996. The grant of relief

was not strictly necessary because the March 4, 1996, order had never been effectively entered

prior to June 6, 1996. However, the grant of relief was appropriate under Rule 60.02(s), “any

other reason justifying relief from operation of the judgment. The notice of appeal, filed on June

17, 1996, was filed within 30 days after entry of judgment and was therefore timely.



        Appellant states that the issue on appeal is: “Was the bequest of Defendant’s house in

Atlanta to Ms. Meredith Klank adeemed by the foreclosure and sale of the house prior to

decedent’s death?”



        On August 1, 1990, the testator executed his will specifically devising his residence in

Atlanta, Georgia to Meredith Klank. On October 1, 1991, six weeks prior to the death of

testator, on November 12, 1991, the house devised to Ms. Klank was sold at a foreclosure sale

which satisfied the secured debt and produced a surplus of $59,200.07, which the foreclosing

creditor tendered to a Georgia Court accompanied by an interpleader suit. The Georgia Court

ordered that, after payment of $3,455.00 costs and fees, the $55,745.07 balance be paid to the

executrix of the estate.



        The executrix tendered to the Probate Court her final accounting indicating that the

excess proceeds of the foreclosure had not been distributed. The Probate Court ordered the

executrix to pay the excess proceeds with prejudgment interest to Ms. Klank. The University

appealed.



        The University insists that the devise to Ms. Klank was adeemed by the foreclosure and

sale.




                                               -3-
       The most recent opinion of the Tennessee Supreme Court on ademption is Rhodes v.

Kebke, 179 Tenn. 480, 167 S.W.2d 345 (1943). In that case, the will, executed on July 3, 1935,

contained the following provision:

                  “To my sister, Mrs. Ruby Rhodes Kebke, of Memphis,
               Tennessee, I hereby give, devise and bequeath all the capital
               stock owned by me at the time of my death in Kebke House-
               furnishing Co., a corporation, now doing business in
               Memphis, Tennessee.”



       On December 15, 1935, the testator agreed to sell to Ruby Rhodes Kebke, 28 shares of

Kebke Housefurnishing Co. for $23,000. Testator caused the stock to be registered in the name

of Ruby Rhodes Kebke who endorsed the stock certificate in blank and delivered it to testator

to secure her five notes covering the purchase price. The first two notes were paid to the testator.

The remaining three notes and certificate were in the possession of the testator at his death. The

legatee sued the executrix to recover the certificates and cancel the endorsement and unpaid

notes. The Trial Court overruled a demurrer (motion to dismiss for failure to state a claim for

which relief can be granted.) The Supreme Court affirmed and said:

                   What he really meant, as gathered from the entire will
                and the situation of the parties, was to give her such interest
                in the Kebke Housefurnishing Co. as he might have at the
                time of his death. The unpaid notes with shares of stock
                attached as collateral, and held by him at the time of his
                death, represented his interest in the business at that time.
                While not a legal interest, it was an equitable interest, and
                ought to pass to the beneficiary under the terms of the will
                and the unpaid notes be canceled and discharged.


                In Wiggins v. Cheatham, 143 Tenn. 406, 225 S.W. 1040, 13 ALR 169 (1920), the

will, executed on October 28, 1916, devised to Wiggins and Gholsom “my entire whiskey

business conducted at 1221-1223 Market Street, Chattanooga, Tenn.” Prior to the decease of

the testator, adverse legislation forced the closure of the store and removal of the stock of

whiskey to a public warehouse in Louisville, Kentucky, which issued negotiable warehouse

receipts therefor. Testator pledged the receipts to a bank to secure a loan which he paid, and the

receipts were returned to him. He later pledged part of the receipts to secure a $3,000 loan which

he paid, and the receipts were returned to him. He later pledged part of the receipts to secure

                                                -4-
another $3,000 loan which was not paid before his death. The testator intended to resume his

whiskey business in Chattanooga, using the whiskey stored in Louisville, but was unable to do

so before his death. The Trial Court held that the bequest of the whiskey business had not been

adeemed. The Court of Appeals affirmed. Upon review by certiorari, the Supreme Court

affirmed and said:

                  We do not think that the fact that the testator was not
               actually engaged in business at the time of his death can be
               said to destroy the specific character of the property
               intended to be bequeathed in his will. That part of the
               specific property bequeathed, and which remained unsold,
               was in existence at the time of the testator’s death, and was
               subject to identification. This, we think, was sufficient to
               bring it within the rule of a specific legacy, and it is enforce-
               able as such.


       In Baldwin v. Davidson, 37 Tenn. App. 606, 267 S.W.2d 756 (1954), testator bequeathed

to his sister his share of a partnership, but made no dispensation of his other property. Before

his death, he joined his partners in converting the partnership into a corporation. This Court held

that the legacy was not adeemed and said:

                  A specific legacy is adeemed if the thing given has been
               lost, or disposed of by the testator, or if its condition has
               been so changed that it no longer remains in specie. The
               governing principle is “that the subject of the gift is
               annihilated or its condition so altered that nothing remains
               to which the terms of the bequest can apply.” Pritchard on
               Wills (2nd Ed.), Sec. 462, pp. 479-480.

                 The thing given, the subject of this legacy, was J. D.
               Baldwin’s share or interest in the business and property of
               the partnership J. D. Baldwin & Company. There was a
               shift of one of the partners and later a change to corporate
               form; but these were changes in name or form only, not
               changes in the nature or character of the business.

                 There was no change in the substance or essential nature
               nature of Baldwin’s share or interest in the business. His
               shares of stock in J. D. Baldwin & Company, Inc., merely
               evidence his interest in the corporate business, which in turn
               represent his share in the partnership J. D. Baldwin &
               Company; and the real nature and identity of the thing given,
               the subject of the legacy, has been substantially preserved.

                  So this legacy was not adeemed by these formal and
               nominal changes in the personnel of the partnership and
               from partnership to corporate form. Wiggins v. Cheatham,
               143 Tenn. 406, 225 S.W. 1040, 13 A.L.R. 169.

                                               -5-
       In Lane v. Lane, 22 Tenn. App. 339, 120 S.W.2d 993 (1938), a will executed on

December 17, 1933, provided:

               “I desire to bequeath to my brother G. G. Lane the
               restaurant he is now operating at 801 West Fifth Avenue
               and that he have the same to use as his business for a period
               of ten years, but in the event he vacates said property, I
               desire the same to go to my son, Jack, but I desire my
               brother, G. G. Lane to have said property for ten years
               without paying any rent, providing he pays the taxes and
               keeps said property in good repair.”



       Prior to testator’s death, the legatee ceased to operate the restaurant and vacated the

building which testator rented to another tenant. Upon the death of testator the legatee claimed

the use and occupancy of the building for 10 years as provided in the will. The Trial Court

denied the claim of the legatee. This Court reversed and said:

                  While not occupied by the same tenant, 801 West Fifth
               Avenue existed in the same form from the date of the
               execution of the will up to the death of the testator and
               answered the description of the subject matter of the devise
               by whoever and whether or not occupied at that time, and
               the devise is not to be defeated upon the theory of an
               ademption because of a mere change in occupancy between
               the date of the execution of the will and the death of the
               testator. Wiggins v. Cheatham, 143 Tenn. 406, 225 S. W.
               1040, 13 A. L. R. 169.

                  [4] We are further of opinion it was the intention of the
               testator that complainant should have the use of said
               property for a period of ten years from the date of testator’s
               death without paying any rent provided he should pay the
               taxes and keep said property in good repair and use it with-
               out interruption as a place in which to conduct his business.


       In State ex rel Burrow v. Cothern, 21 Tenn. App., 113 S.W.2d 81, (1938), the will

provided in part:

                 Figuring what I have at present $2,680.00 on land notes ---
               I want Lassie Burrow to have $500 out of that land money
               when collected.


       This Court found that the “land note” had been transferred to Wilson Cothern in trust to

collect and satisfy testamentary bequests, and not to Wilson Cothern for his own use. Such




                                              -6-
transfer was held not to effect an ademption, and Wilson Cothern was required to pay the bequest

out of the proceeds of the note.



       In recent unpublished opinions, this Court has held that ademption did not occur where

the will directed the executors to sell a farm and divide the proceeds among specified legatees,

and, prior to death, the testator sold the farm on credit and took a trust deed and notes to secure

the purchase price. This Court held the legatees entitled to the purchase price when paid.



       In another recent unpublished opinion, this Court has held that the conveyance of the

property to a revocable trust did not adeem the specific testamentary gift of the property because

it remained within the control of the testator by the power to revoke the trust.



       No published or unpublished Tennessee Authority is cited or found which is contrary to

the above.



       A number of published authorities declared an ademption, but they are distinguishable

from the present case.



       In Ford v. Cottrell, 141 Tenn. 169, 207 S.W. 734 (1918), Testator bequeathed to a sister

the rents from specific realty during her life, but sold the realty before testators death. The

Supreme Court held that the bequest was adeemed. No such circumstances are shown in the

present case.



       In American Trust and Banking Co. v. Belfour, 138 Tenn. 385, 198 S.W. 70 (1917), the

will directed that two specified life insurance policies would provide educational expenses and

a trust fund for his daughter. Prior to the death of testator, the daughter’s education was

completed and testator surrendered the two specified policies in exchange for their cash

surrender value which he added to his existing savings account which was subsequently invested



                                               -7-
in real estate mortgage notes which he held at his death. Thus, the testator, by his successive acts

twice changed the character of the specified bequest, thereby indicating his intent to terminate

the bequest for the benefit of his daughter. Such events did not occur in the present case.



        So far as the record of the present case shows, the home in Atlanta was mortgaged when

the will made. If this be true, the devise was not a devise of a fee, but an equity, which survived

the foreclosure sale in the form of the surplus deposited in court. Even if the mortgage was

executed by testator, this was not a complete divestment and loss of control of the property,

because a mortgager retains the power to vacate the mortgage by satisfaction of the debt and the

right to receive any proceeds of the sale of the security in excess of the debt. Thus, the mortgage

diminished, but did not extinguish the interest of the deceased in the devised property. There is

no evidence that testator committed any act which could be interpreted as an expression of his

intention to cancel the devise of the home.



        In the present case, the foreclosure, which is relied upon for ademption, was not instituted

or carried out by testator, but by the holder of the indebtedness. Testator’s only contribution to

the foreclosure was his inability or failure to pay the debt which cannot be presumed to be a

voluntary act; and there is no evidence that it was deliberate or voluntary.



        The circumstances just discussed are perfectly consonant with those of Rhodes v. Kebke

wherein the Supreme Court observed that:

                “What he really meant, -- was to give her such interest in
                the Kebke Housefurnishing Co. As he might have at the
                time of his death. The unpaid notes with share of stock
                as collateral represented his interest in the business at that
                time.”



        The foregoing quotation may be paraphrased for application to the present case as

follows:

                  What he really meant was to give her whatever interest
                he might have in the home at the time of his death. The

                                                -8-
               surplus proceeds derived from the foreclosure was due him
               at the time of his death and represented his entire interest
               in the house at that time.



       In Tipton v. Tipton, 41 Tenn. (1 Cold.) 252, (1860), testator bequeathed to his widow

three specified notes, but thereafter sold one of the notes to his son, taking the son’s note in

payment. The Supreme Court held that the bequest to the wife was adeemed “pro tanto,” that

is, to the extent of the note sold to the son. No such circumstances are shown in the present case.


       In Donahue v. Lea, 31 Tenn. (1 Swan) 119, 55 Am Dec. 725 (1851), the Supreme Court

held that, where land was specifically devised, but thereafter the testator entered into an

enforceable contract to sell the land to a third party, the devise was adeemed. No such

circumstances are shown in the present case.



       In Price v. Johnson, Tenn. App. 1977, 563 S.W.2d 188, this Court held that a specific

bequest of stock was adeemed by testator’s transfer of the stock to a third party in exchange for

a 10% cash payment and installment note. No such circumstances are shown in the present case.



       In Newman v. Profitt, 59 Tenn. App. 397, 440 S.W.2d 827 (1968), testator willed his

farm to his two sons, George and James, subject to a life estate in their mother. Thereafter, the

father and mother conveyed the same land to the same two sons with the limitation that, if

George should predecease the parents, his share of the land would revert to the parents. George

predeceased his parents. No such circumstances are shown in the present case.



       In Bedford v. Bedford, 38 Tenn. App. 370, 274 S.W.2d 528 (1955), deceased devised

life estates in specific property to three beneficiaries and thereafter deeded to one of the

beneficiaries a part of the land. This Court held that the deed resulted in a ‘pro tanto’ (partial)

ademption (satisfaction) of the devise to the deviser who received the deed, but did not adeem

the devise of the remainder of the land to the other devisee. No such circumstances are shown

in the present case.

                                               -9-
       Appellant cites Prichard on Wills 5th Edition, 1994, § 486 for its insistence that a

material change in the subject matter of a legacy results in an ademption. However, neither

Prichard nor appellant cites any Tennessee authority holding that a foreclosure resulting in

surplus proceeds is such a change in identity as to justify an inference that the deceased intended

to render a part of his will ineffective. It is true that the complete obliteration of the property

mentioned in the will leaving no identifiable residue even by the act of a third party, may result

in ademption, but there is no evidence that such occurred in this case.



       If, in the present case, the proceeds of the foreclosure sale had been insufficient to satisfy

the debt, leaving no excess proceeds due the testator, there would have been an ademption by

extinction. Such are not the facts of the present case.



       Appellee cites unpublished opinions which have been examined and found to be

distinguishable on the facts.



       Appellant cites McGhee v. McGhee, R.I. 1980, 413 A2d 72, wherein the testator

bequeathed to her grandchildren all money on deposit in any bank, but before her death, her

attorney-in-fact withdrew all money in the banks and invested it in bonds. The appellate court

held that the bequest of bank accounts was adeemed and said:

                  At the outset, we recognize that the instant case concerns
               specifically the concept of ademption by extinction, a legal
               consequence that may attend a variety of circumstances
               occasioned either by operation of law or by the actions of a
               testator himself or through his guardian, conservator, or
               agent. Gardner v. McNeal, 117 Md. 27, 82 A. 988 (1911);
               In Re Wright, 7 N.Y.2d. 365, 165 N.E.2d 561, 197 N.Y. S2d
               711 (1960). In particular, a testamentary gift of specific real
               or personal property may be adeemed - fail completely to
               pass as prescribed in the testator’s will - when the particular
               article devised or bequeathed no longer exists as part of the
               testator’s estate at the moment of his death because of its
               prior consumption, loss, destruction, substantial change,
               sale, or other alienation subsequent to the execution of the
               will. In consequence, neither the gift, its proceeds, nor
               similar substitute passes to the beneficiary, and this claim to
               the legacy is thereby barred.



                                               -10-
                   The petitioner improperly relies upon the case of Morse v.
                Converse, 80 N. H. 24, 113 A. 214 (1921). In that case the
                testatrix voluntarily placed her property into the hands of a
                conservator to care for and use for her support. The
                conservator purchased a Liberty bond out of bank deposits
                bequeathed in the testatrix’s will, and the legacies were not
                adeemed thereby. But, contrary to the case at bar, the
                testatrix in Morse neither knew about nor consented to the
                conservator’s acts; therefore, the court explained, the change
                “furnishes no evidence of an intentional revocation by her.”



       The quoted statement was made in the context of a change of identity by the authorized

act of the agent of the testator. The quoted opinion recognizes a distinction between a

conversion of the nature of the devised property by the act of the testator or the authorized act

of testator and the act of a third person without the consent of the testator.



       Appellant cites In Re Celentano’s Estate, 213 N.Y.S.2d 1019 (Sur. 1961), a decision of

a county surrogate (trial) court, holding that the condemnation of the devised property adeemed

the devise. No Tennessee authority has recognized an ademption under these circumstances.



`      Appellant also cites In Re Seavers Will, 91 N.Y.S.2d 47, 195 Misc. 475 (Sur. 1949), a

county surrogate (trial) court decision in which testator devised property to a nephew for life with

residue to his children. The trial court held that the devise was adeemed by the condemnation

of the property before the death of testator. The same situation does not exist in the present case

and there is no evidence that the rule of absolute ademption by act of a third party has been

adopted in Tennessee.



        While not directly applicable to the facts of the present case, it appears to this Court that

the present state of Tennessee law would recognize ademption where, without consent of the

testator, the property specifically devised is completely removed from the ownership and control

of the testator without an identifiable residue of the property would not be subject to the

ademption. In the case of condemnation the proceeds represented by an uncashed check or a




                                                -11-
separate identifiable deposit would probably not be adeemed. Also, if a house is destroyed by

fire, an uncashed insurance check or separate bank account probably would not be adeemed.



       In the light of published Tennessee authority, discussed above, this Court is not inclined

to follow the authorities from other states relied upon by appellant. Where the testator deals with

his property in such manner as to clearly terminate a devise or bequest, that devise or bequest is

adeemed. Where the action of a third party is relied upon for ademption, such action must be

with the authority or consent of the testator or, if not, must result in the obliteration of any

identifiable residue which might be identified, and subjected to the devise or bequest.



       From all of the above, this Court concludes that the devise of testator’s home in Atlanta

to Ms. Meredith Klank was not adeemed by the foreclosure sale and that the testator’s interest

in said home represented by the $55,745.07 now in the custody of the Probate Court, is due to

Ms. Meredith Klank.



       The judgment of the Probate Court is affirmed. Costs of this appeal are assessed against

the appellant. The cause is remanded to the Trial Court for further necessary proceedings.


                           AFFIRMED AND REMANDED.


                                               ___________________________________
                                               HENRY F. TODD
                                               PRESIDING JUDGE, MIDDLE SECTION



CONCUR:


____________________________
SAMUEL L. LEWIS, JUDGE


____________________________
WILLIAM C. KOCH, JR., JUDGE




                                               -12-
