                                 Cite as 2015 Ark. App. 628

                 ARKANSAS COURT OF APPEALS
                                       DIVISION I
                                      No. CV-15-236


IN THE MATTER OF THE ESTATE                      Opinion Delivered   NOVEMBER 4, 2015
OF FREDDIE E. HYDE, DECEASED
                                                 APPEAL FROM THE WHITE
MICHELLE TREAT, EXECUTRIX OF                     COUNTY CIRCUIT COURT
THE ESTATE OF FREDDIE E. HYDE,                   [NO. PR-2014-66-1]
DECEASED
     APPELLANT/CROSS-APPELLEE                    HONORABLE TOM HUGHES,
                                                 JUDGE
V.

JERRY HYDE                                       REVERSED ON DIRECT APPEAL;
     APPELLEE/CROSS-APPELLANT                    AFFIRMED ON CROSS-APPEAL



                              DAVID M. GLOVER, Judge

       This appeal and cross-appeal arise from an October 17, 2014 order entered by the

White County Circuit Court in a pending probate case involving the estate of Freddie Hyde,

who is deceased. Appellant Michelle Treat is the Executrix of his estate. The pertinent

issues before the trial court were whether certain real property located in Pulaski County was

properly part of Mr. Hyde’s estate, and whether Mr. Hyde’s change of beneficiary on his life-

insurance policy to his son, Jason Scott Hyde, was effective, entitling Jason to the life

insurance proceeds. The trial court concluded the real property was not part of the estate

because the trustee’s deed was null and void, thereby leaving the property in a family trust,

but that Jason Hyde was entitled to his father’s life-insurance proceeds as beneficiary of the

policy. In her direct appeal, the executrix contends the trial court erred in ruling that the

September 12, 2013 trustee’s deed was null and void. On cross-appeal, Freddie’s widow,
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Jerry, contends 1) the trial court erred in not finding the change of beneficiary on the life

insurance policy violated the trial court’s restraining order, and 2) the change of beneficiary

violated Mr. Hyde’s duties as trustee of the family trust. We reverse on direct appeal and

affirm on cross-appeal.

       Jerry and Freddie Hyde married in 1980. They both had children from other

marriages, but no children were born of their marriage. On June 23, 2008, they executed

the Hyde Family Revocable Trust. At the time, they deeded their marital home to the trust

and placed other marital assets into the trust. The trust was subsequently amended to address

concerns that are not pertinent to this appeal.

       On August 19, 2013, Mrs. Hyde filed a complaint for separate maintenance in the

Pulaski County Circuit Court. In contemplation of the divorce action, she transferred

several hundred thousand dollars from joint bank accounts, including at least one account

that was held in the trust, and put those funds in her personal name to the exclusion of

Mr. Hyde. On August 21, 2013, the Pulaski County Circuit Court issued its standard

restraining order. On September 12, 2013, Mr. Hyde executed and filed a trustee’s deed

purporting to convey to himself, as an individual, the marital home then held by the trust.

On September 18, 2013, Mr. Hyde filed for divorce.

       On February 23, 2014, Mr. Hyde died while the divorce action was pending.

Mr. Hyde was living in White County at the time, and his will was admitted to probate in

the White County Circuit Court. On March 14, 2014, as part of the probate proceedings,

Mrs. Hyde filed her objection to the appointment of personal representative and several


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motions for relief, asking the court, inter alia, to set aside the trustee’s deed and to set aside

the change-in-beneficiary designation on the New York Life insurance policy.

       On July 16, 2014, a hearing was held on Mrs. Hyde’s objections and requests for

relief. At that hearing, the trial court heard testimony from the attorney who had drafted the

trust documents and from Mrs. Hyde. Following the hearing, the trial court entered its

order, portions of which are the subject of this appeal and cross-appeal.

       As her sole point on direct appeal, the executrix contends that the trial court erred in

concluding that the September 12, 2013 trustee’s deed, conveying the marital home to

Mr. Hyde, individually, was null and void. We agree.

       The cardinal rule in construing a trust instrument is that the intention of the settlor

must be ascertained. Bailey v. Delta Trust & Bank, 359 Ark. 424, 198 S.W.3d 506 (2004).

In construing a trust, we apply the same rules applicable to the construction of wills. Id. The

paramount principle in the interpretation of wills is that the intent of the testator (or the

settlor, in the case of a trust) governs. Id. This intention is to be determined by viewing the

four corners of the instrument, considering the language used, and giving meaning to all of

its provisions, whenever possible. Id. This court will construe the words and sentences used

in a will or trust in their ordinary sense in order to arrive at the testator’s true intention. Id.

In order to determine the intentions of the testator, consideration must be given to every part

of the will. Id. Extrinsic evidence may be received on the issue of the testator’s intent only if

the terms of the will are ambiguous. Id. The determination of whether there is an ambiguity

is a matter of law. Id. Absent a finding of ambiguity by the court, testimony about the


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settlor’s intent should not be considered. Id. Collateral evidence will be considered only

when there is uncertainty about the testator’s intentions from looking at the language of the

instrument. Thinn v. Parks, 79 Ark. App. 20, 83 S.W.3d 430 (2002). Absent a finding of

ambiguity by the court, a witness’s testimony about his or her understanding of the settlor’s

intent, including the attorney who drafted the trust, should not be considered. Id.

       In support of her position, the executrix cites Arkansas Code Annotated section 28-

73-815(a)(1) and (a)(2), explaining that under that section, a trustee may exercise all powers

conferred by the trust’s terms over all trust property. She then relies upon pertinent portions

of the trust in arguing that Mr. Hyde had the power under the terms of the trust to execute

the trustee’s deed and convey the marital home to himself.

                                       Trust Provisions

       The executrix relies upon the following trust provisions to support her argument:

       1.04   Grantor Ownership Interests. Unless noted otherwise on an attached schedule (to
              be denoted as Exhibit “A”) with the character ascribed thereto, the property
              comprising the original Trust and any other property subsequently transferred
              to the Trust will be treated as if each Grantor has an undivided one-half (½)
              interest therein. Any interest received by a Grantor that is disproportionate
              and received from the other Grantor will be considered a gift from one
              Grantor to the other. All trust income payable or principal amount
              distributable to either of them will have the same character as the property
              producing the income.

(Emphasis added.) Exhibit “A” to the trust—Grantor Ownership Interest Schedule—

provides as follows:

              The following property shall be deemed to be owned 100% by Grantor
       Freddie E. Hyde’s Separate Share of the Hyde Family Revocable Trust, and upon the
       death of Freddie E. Hyde, provided Jerry L. Hyde survives Freddie E. Hyde ( . . . )


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      100% of said property shall be distributed in accordance with the terms and conditions
      of Section 2.05:

             1.     Lot 8, Block 1, Chevaux Court, Phase 2, an Addition to the City of
                    Little Rock, Pulaski County, Arkansas.

      The introductory portion of Article II and section 2.01 of the trust provide that:

      [t]he Trustee will hold, manage, invest and reinvest the assets of the Trust, collect the
      income thereof, and will dispose of the net income and principal pursuant to the
      terms and conditions as hereinafter set forth in this Article II.

             2.01   Income and Principal Distributions. During the lifetime of each
                    Grantor, the Trustee shall pay to each Grantor his or her entire
                    respective share of the annual net income of the Trust on demand. In
                    addition, during the joint lifetimes of the Grantors, each Grantor may
                    at any time during his or her lifetime withdraw all or any part of the
                    income and principal of his or her interest, free of trust, by delivering
                    an instrument in writing duly signed by him or her to the Trustee
                    describing the property or portion thereof desired to be withdrawn.
                    Upon receipt of any such withdrawal request, the Trustee shall
                    thereupon convey and deliver to the withdrawing Grantor, free of
                    trust, the property described in the instrument.

       The introductory portion of Article III and section 3.03 of the trust provides as
follows:

            Except as otherwise provided below, the Trustee(s) will have the following
      powers with respect to the Trust and any trust created hereunder, to be exercised as
      the Trustee(s), in his/her/its sole discretion, and without approval of any court
      determines to be in the best interests of the beneficiaries:

                                            ....

             3.03   To sell any property of the Trust for cash or on credit at public or
                    private sale, to exchange any property of the Trust for other property,
                    to grant options to purchase or acquire any property of the Trust and
                    to determine the prices and terms of sales, exchanges and options.

      Section 5.01 (amended in 2010) provides in pertinent part:



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              5.01   Trustees. The Grantors, Freddie E. Hyde and Jerry L. Hyde, shall serve
                     as the initial Trustees of this Revocable Trust. While Freddie and Jerry
                     are both able and willing, they shall serve jointly and severally and
                     either shall have full authority for the Trust without the consent,
                     notice, or joinder of the other, to act independently in performing
                     transactions on behalf of the Trust. This authority shall extend to all
                     powers granted to the Trustees under the Trustees Powers hereof and
                     shall include the right to contract for and in behalf of the Trust and to
                     execute, negotiate, and compromise such instruments as may be
                     necessary to carry out the purposes and intents of the Trust.

                                The October 17, 2014 Order

       In the portion of the order dealing with the trustee’s deed, the trial court summarized

relevant paragraphs, reasoning as follows:

       6.     Section 1.04 of the trust provided that, unless noted otherwise, property
              transferred to the Trust will be treated as if each Grantor had a one-half (½)
              interest therein.

       7.     The Hyde Family Revocable Trust provided that Jerry L. Hyde and Freddie
              E. Hyde were collectively the Trustee of the Hyde Family Revocable Trust.

       8.     Section 2.01 of the Trust provides that during the joint lifetime of the
              Grantors, each Grantor may at any time during his or her lifetime withdraw
              all or any part of the income and principal of his or her interest, free of Trust,
              by delivering an instrument in writing duly signed by him or her to the
              Trustee describing the property or portion thereof withdrawn.

       9.     Section 2.01 of the Trust requires that upon receipt of any such withdrawal
              request, the Trustee shall thereupon convey and deliver to the withdrawing
              Grantor, free of Trust, the property described in the instrument.

       10.    Freddie E. Hyde never delivered an instrument in writing duly signed by him
              to the Trustee describing the real estate referred to in paragraph 5 hereinabove
              nor any interest in said real property as property to be withdrawn from the
              Hyde Family Revocable Trust.

       11.    The Trustee never conveyed any interest in the real property described in
              paragraph 5 hereinabove to Freddie E. Hyde.


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       12.     The deed titled, Trustee’s Deed, dated September 12, 2013, and recorded on
               September 12, 2013, was executed not by the Trustee, but only by Freddie E.
               Hyde. At the time Freddie E. Hyde executed the deed the real property was
               an asset of the Hyde Family Revocable Trust. The deed is null and void. The
               real estate is an asset of the Hyde Family Revocable Trust.

       The executrix challenges the trial court’s order by arguing that: 1) Section 5.01

contradicts the trial court’s finding that Jerry and Freddie were collectively the Trustee;

2) Section 1.04 and Schedule A support the position that Jerry did not have only a one-half

interest in the house; and 3) the trustee’s deed constitutes the required written instrument

described in Section 2.01 that was delivered from the grantor of the trust (Freddie) to the

trustee (Freddie), requesting 100% withdrawal of the real estate in question. We conclude

that many of her challenges are valid.

       It is undisputed the trust was created for estate-planning purposes. However, while

the trial court did not specifically determine that pertinent language within the trust was

ambiguous, we can infer it did because the court allowed testimony both from the attorney

who drafted the document and from Mrs. Hyde concerning the grantors’ intent. Such

extrinsic evidence should not be considered absent a finding of ambiguity. Bailey, supra.

Regardless, our review of the four corners of the trust instrument convinces us that the

trust is ambiguous concerning the Hydes’ intent with respect to pertinent provisions.

Furthermore, our review of the trust instrument and the extrinsic evidence presented to the

trial court convinces us that the trial court erred in concluding that the trustee’s deed was null

and void.




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       We begin with paragraph 6 of the October 17, 2014 order in which the trial court

summarized section 1.04 as providing that property transferred to the trust was to be treated

as if each grantor had a one-half (½) interest therein. Although paragraph 6 mentions “unless

noted otherwise,” the order never addresses Exhibit A to the trust. As we have previously

set forth in the pertinent trust provisions, Exhibit A “noted otherwise.” Specifically, Exhibit

A provided the real property at issue here “shall be deemed to be owned 100% by Grantor

Freddie E. Hyde’s Separate Share of the Hyde Family Revocable Trust[.]”

       Paragraph 7 of the trial court’s order provides that Mr. and Mrs. Hyde were

“collectively” the Trustee, i.e., they had to act in concert. There is language in the trust that

definitely supports this finding. However, in examining the four corners of the trust

instrument, we have also found language indicating the parties intended for each of them to

be able to act separately and independently. For example, the introductory paragraph

preceding section 3.03 of the trust contains language that the “Trustee(s)” will have powers

to be exercised “as the Trustee(s), in his/her/its sole discretion.” Section 3.03 provides that

one of those powers is to “sell any property of the Trust for cash or on credit at public or

private sale[.]” Similarly, section 5.01 is entitled “Trustees” and provides in part that, while

able, Mr. and Mrs. Hyde

       shall serve jointly and severally and either shall have full authority for the Trust
       without the consent, notice, or joinder of the other, to act independently in
       performing transactions on behalf of the Trust. This authority shall extend to all
       powers granted to the Trustees under the Trustees Powers hereof and shall include
       the right to contract for and in behalf of the Trust and to execute, negotiate, and
       compromise such instruments as may be necessary to carry out the purposes and
       intents of the Trust.


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       As discussed previously, we conclude, at a minimum, that the trust language is

ambiguous concerning the Hydes’ intent in this regard. Because the language is ambiguous,

we turn to the testimony presented by the drafting attorney and Mrs. Hyde. Mr. Hyde, of

course, is deceased and was not available to testify.

       The attorney testified he did not believe the intent of section 5.01 was to allow one

trustee to remove the property from the trust. He considered section 5.01 as specifying

“how a trustee or trustees are to act with primarily ministerial type decisions, whether it

required both signatures, both trustees, or if it just required one signature.” He candidly

acknowledged on cross-examination that the trustee’s powers are addressed in Section 3 of

the trust, and that section 5.01 gives either party the ability to act on behalf of the trust with

regard to the trustee’s powers in Section 3; “[r]eading 3.03 by itself, I guess you could make

the argument that a single trustee has the power to sell property by themselves since 3.03 says

to sell any property of the trust for cash or on credit.” He further explained he would

“disagree that 5.01 deals with all of the powers of the trust, and [he] would not have just one

trustee sign.”

       Mrs. Hyde’s testimony is perhaps the most revealing regarding the Hydes’ intent. She,

too, candidly acknowledged that after she had filed her complaint for separate maintenance

and “[i]n contemplation of the divorce action, [she] actually secured hundreds of thousands

of dollars from bank accounts that were jointly owned by [her and her husband, including]

one account that was in the name of the trust, and put them in [her] own personal name,”




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taking them “to the exclusion of [her] husband.” She clearly thought that the terms of the

trust entitled her to do so.

       Our review of the trust instrument and the extrinsic evidence presented to the trial

court convinces us that, under section 5.01, Mr. Hyde, severally, had “full authority for the

Trust without the consent, notice, or joinder of the other, to act independently in

performing transactions on behalf of the Trust,” including “the right to contract for and in

behalf of the Trust and to execute, negotiate, and compromise such instruments as may be

necessary to carry out the purposes and intents of the Trust”; that pursuant to section 3.03,

he had the power to “sell any property of the Trust for cash or on credit at public or private

sale . . . .”; and that pursuant to Exhibit A of the trust, he was deemed to own 100% of the

property at issue here.

       We also conclude section 2.01 of the trust does not provide an avenue to affirm the

trial court because it provides that “each Grantor may at any time during his or her lifetime

withdraw all or any part of the income and principal of his or her interest, free of trust, by

delivering an instrument in writing duly signed by him or her to the Trustee describing the

property or portion thereof desired to be withdrawn.” This section of the trust does not

provide a right of refusal. The trust language provides, “[u]pon receipt of any such

withdrawal request, the Trustee shall thereupon convey and deliver to the withdrawing

Grantor, free of trust, the property described in the instrument.” Paragraphs 10, 11, and 12

of the October 17, 2014 order are based upon the trial court’s determination that the Hydes

had to act collectively as one trustee. Because we reach a different conclusion based on our


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review of the trust instrument and the testimony, we find error in the trial court’s conclusion

that the trustee’s deed executed by Mr. Hyde was null and void.

       We reverse the trial court’s conclusion in that regard, and conclude instead that the

trustee’s deed was valid and transferred the real property out of the trust and to Mr. Hyde,

individually, making that property part of his estate. For the same reason, because we

conclude that the trust instrument authorized Mr. Hyde to execute the trustee’s deed in

the manner that he did, we find no violation of his fiduciary duties under the trust.

Furthermore, we agree with the executrix that a contempt proceeding would have been the

appropriate action to take by Mrs. Hyde if she wanted to rely upon the restraining order in

challenging Mr. Hyde’s actions.

       The cross-appeal by Mrs. Hyde challenges the trial court’s ruling with respect to the

life-insurance policy, contending 1) that the trial court erred in not finding the change of

beneficiary to violate the trial court’s restraining order, and 2) that the trial court erred in not

finding the change of beneficiary violated Mr. Hyde’s duties as trustee. We find no error.

       The October 17, 2014 order provided in pertinent part:

       13.     Freddie E. Hyde purchased New York Life Insurance Policy No. . . . on his
               life prior to June 23, 2008. He changed the policy beneficiary on June 28,
               2008, to the Hyde Family Revocable Trust, Freddie E. Hyde and Jerry L.
               Hyde, Co-trustees, or successors. Ownership of this policy was never placed
               in the Hyde Family Revocable Trust. Ownership of the policy remained in
               Freddie E. Hyde at the time of his death.

       14.     Freddie E. Hyde and Jerry L. Hyde remained husband and wife until the death
               of Freddie E. Hyde on February 23, 2014.

       15.     Freddie E. Hyde, subsequent to June 23, 2008, designated his son, Jason Scott
               Hyde, as beneficiary of the New York Life Insurance policy.

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       16.     Jason Scott Hyde, as beneficiary of the New York Life Insurance Policy, is
               entitled to all policy proceeds of New York Life Insurance Policy No. . . .

       The pertinent portion of the restraining order provides that:

       [e]ach party is hereby enjoined and restrained from selling, encumbering, mortgaging,
       contracting to sell, or otherwise disposing of, or removing from the jurisdiction of this
       Court, any of the property belonging to the parties, except in the ordinary course of
       business, or except by agreement of the parties, or except by the further Orders of the
       Court.

Ownership of the life insurance policy was never placed in the trust; instead, its ownership

remained in Mr. Hyde at the time of his death, and he retained the power to change the

beneficiary of the policy. There was no vested interest in the proceeds of the life insurance

policy as long as Mr. Hyde was alive. Dinwiddie v. Metropolitan Life Ins. Co., 204 Ark. 677,

163 S.W.2d 525 (1942). Consequently, as owner of the policy, he had the power to change

the beneficiary, and, in doing so, he did not dispose of any property belonging “to the

parties,” he did not violate the terms of the restraining order, and he did not violate his

fiduciary duties as trustee.

       Reversed on direct appeal; affirmed on cross-appeal.

       WHITEAKER and BROWN, JJ., agree.

       Rice & Adams, by: Brian K. Woodruff, for appellant.

       Williams & Anderson PLC, by: Philip E. Kaplan, for appellee.




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