                            NO. COA13-1209

                    NORTH CAROLINA COURT OF APPEALS

                        Filed:   5 August 2014

EARL WAYNE FORTNER and HENRY
FORTNER, Co-Administrators
of the Estate of Johnnie H.
Fortner, Sr.,
     Plaintiffs,


    v.                                   Swain County
                                         No. 11 CVS 137

JONATHAN A. HORNBUCKLE and
LYNDA HORNBUCKLE FORTNER,
     Defendants and
     Third Party Plaintiffs

    v.

EARL WAYNE FORTNER and HENRY
FORTNER,
     Third Party Defendants


    Appeal by defendants from judgment entered 8 April 2013 by

Judge James U. Downs in Swain County Superior Court.        Heard in

the Court of Appeals 20 February 2014.

    Moody & Brigham, PLLC,        by   Fred   H.   Moody,   Jr.,   for
    plaintiffs-appellees.

    McGuire, Wood & Bissette, P.A., by Mary E. Euler, Joseph P.
    McGuire, and Starling B. Underwood III, for defendants-
    appellants.


    DAVIS, Judge.
                                              -2-


       Jonathan A. Hornbuckle                (“Jonathan”) and Lynda Hornbuckle

Fortner (“Lynda”)              (collectively        “Defendants”) appeal       from the

trial court’s entry of judgment upon a jury verdict awarding

Earl        Wayne    Fortner      (“Earl”)      and      Henry      Fortner   (“Henry”)

(collectively “Plaintiffs”), co-administrators of the Estate of

Johnnie H. Fortner, Sr. (“the Estate”), an apportioned share of

the    Estate’s        estate     tax    liability.        On       appeal,   Defendants

contend that the trial court erred by (1) denying their motion

for     a    directed      verdict;      and    (2)     failing      to   appropriately

instruct the jury.              After careful review, we vacate the judgment

and remand for a new trial.

                                       Factual Background

       Lynda        and    Johnnie      H.    Fortner,     Sr.      (“Johnnie”)     lived

together and held themselves out to the public as husband and

wife — although they were not actually married — from 1976 until

1988 and then from 1998 until Johnnie’s death on 23 January

2007.        Johnnie died intestate and two of his sons, Earl and

Henry, were appointed as co-administrators of the Estate.                              At

the time of his death, Johnnie owned a number of parcels of real

property,       five      of   which    are    pertinent       to   the   present   case.

Also, in 2005, Johnnie and Lynda opened a joint checking account

(“the Joint Checking Account”) with a right of survivorship at

the     State       Employees’       Credit     Union     in     Bryson    City,    North

Carolina.
                                    -3-


    In     August   and   October   of    2006,   Johnnie    executed    three

general warranty deeds to Jonathan, Lynda’s son, encompassing

(1) a 154-acre tract known as the “Round Hill Property”; (2) an

11.14-acre tract known as “Conley’s Creek Property”; and (3) a

2.95-acre tract known as the “Macktown Property.”                Johnnie also

executed two general warranty deeds to Lynda for a 14.74-acre

tract known as the “Galbraith Creek Property” and a 9.3-acre

tract known as the “Shoal Creek Property.”

    In October of 2006, Johnnie placed all five deeds in a

manila envelope, which he handed to Lynda while the two of them

were alone in his office.           He then instructed her to “take

[them] home, put [them] up and keep [her] mouth shut.”                    Lynda

took the deeds home and placed them in a dresser drawer in her

bedroom.    On 23 January 2007, Johnnie died intestate.              The five

deeds were recorded in the Jackson and Swain County Register of

Deeds offices on 5 February 2007.

    Plaintiffs      subsequently    filed   an    action    in   Swain   County

Superior Court on 7 June 2011 alleging, in pertinent part, as

follows:

            4. That during his lifetime, Johnnie H.
            Fortner, Sr. executed five (5) certain deeds
            purporting to convey real property located
            in   Swain   and  Jackson   Counties,   North
            Carolina,   to    the   Defendants    without
            consideration.

            . . . .
                    -4-


7. That the fair market values of said
tracts or parcels of land were require[d] to
be included in the gross estate of Johnnie
H. Fortner, Sr. for purposes of estate . . .
taxes.

8. That the Plaintiffs have paid or will pay
from the assets of the Estate of Johnnie H.
Fortner, Sr., estate . . . taxes upon the
gross taxable Estate of Johnnie H. Fortner,
Sr., including taxes attributable to the
parcels of real property herein described.

9. That    the   Plaintiffs,  as   personal
representatives of the Estate of Johnnie H.
Fortner, Sr., are entitled to recover from
the Defendants an apportioned share of the
estate . . . taxes paid by the Estate of
Johnnie H. Fortner, Sr., which share shall
be an amount which bears the same ratio to
the total tax paid as the value of such
tracts or parcels of land bear to the
taxable estate.

10. That the Plaintiffs are also entitled to
recover from the Defendants an apportioned
share of any and all interest and penalty on
the estate . . . taxes paid by the Estate of
Johnnie H. Fortner, Sr.

11. That at the time of the death of Johnnie
H. Fortner, Sr., he and the Defendant, Lynda
Hornbuckle Fortner, as joint tenants with
right   of    survivorship,  owned   account
#3003309 at the State Employees Credit
Union, Bryson City, N.C.

12. That at the time of the death of Johnnie
H. Fortner, Sr., said account had a balance
of $249,121.63.

13. That, to the information and belief of
the Plaintiffs, all of the funds included in
said account had been contributed to said
account from the funds of Johnnie H.
Fortner, Sr.
                                -5-


         14. That, to the information and belief of
         the Plaintiffs, the assets of the Estate of
         Johnnie H. Fortner, Sr. are not sufficient
         to pay the debts of said estate.

         15. That the Plaintiffs are entitled to
         recover of the Defendant, Lynda Hornbuckle
         Fortner, the sum of $249,121.63 to be used
         solely for the payment of debts of the
         Estate of Johnnie H. Fortner, Sr., which are
         not payable from the other assets of the
         Estate.

         16. That, alternatively, if the Plaintiffs
         are   not   able  to  recover  the   sum   of
         $249,121.63    from  the   Defendant    Lynda
         Hornbuckle Fortner, said sum was required to
         be included in the gross estate of Johnnie
         H. Fortner, Sr. for purposes of estate . . .
         taxes and the Plaintiffs have paid or will
         pay from the assets of the Estate of Johnnie
         H. Fortner, Sr. estate . . . taxes upon the
         gross taxable estate of Johnnie H. Fortner,
         Sr. including taxes attributable to the bank
         account hereinabove referred to and are
         entitled to recover from the Defendant Lynda
         Hornbuckle Fortner an apportioned share of
         the estate . . . taxes paid by the Estate of
         Johnnie H. Fortner, Sr., which share shall
         be an amount which bears the same ratio to
         the total tax paid as the value of said
         account bears to the taxable estate and are
         entitled to recover from the Defendant,
         Lynda Hornbuckle Fortner an apportioned
         share of any and all interest and penalty on
         the estate . . . taxes paid by the Estate of
         Johnnie H. Fortner, Sr.

    Defendants filed an answer, counterclaim, and third-party

complaint1 on 17 August 2011.     With regard to the five deeded


1
  The counterclaim (brought against Earl and Henry in their
capacities as co-administrators of the Estate) and the third-
party complaint (brought against Earl and Henry individually)
both alleged a breach of fiduciary duty resulting from their
                                  -6-


properties, Defendants asserted that the transfers to Lynda and

Jonathan constituted completed gifts and that as a result (1)

the five properties were not properly includable in the Estate

for   purposes   of    calculating   its   tax     liability;   and   (2)

Plaintiffs were therefore not entitled to recover an apportioned

share of the Estate’s tax liability from Defendants attributable

to those properties.     Defendants also contended that the Estate

should not be permitted to use any funds in the Joint Checking

Account to pay the debts of the Estate.

      A jury trial was held in Swain County Superior Court on 6

March 2013.   The jury returned a verdict in favor of Plaintiffs,

responding to the issues on the verdict sheet as follows:

          WE, THE JURY, AS       OUR    UNANIMOUS    VERDICT,
          ANSWER AS FOLLOWS:

          1. Are the Plaintiffs as representatives of
          the estate of Johnnie H. Fortner, Sr.
          entitled to an apportioned share of the
          federal and state estate taxes and interest
          on the asset referred to as:

              Round Hill Property            Answer:   yes

                 1a.   If so, what amount?       $541,275.69

          2. Conley's Creek Property         Answer:   yes

                 2a.   If so, what amount?       $58,210.18

          3. Macktown Property               Answer:   yes



alleged overstatement of the tax liability owed by the Estate
and failure to sell real property to produce sufficient funds to
pay the debts of the Estate.
                                          -7-


                   3a.   If so, what amount?                $23,968.90

           4. Galbraith Creek Property                Answer:      yes

                   4a.   If so, what amount?            $128,273.12

           5. Paul Cooper/                            Answer:      yes
              Shoal Creek Property

                   5a.   If so, what amount?            $129,853.48

           6. What amount, if any, are the Plaintiffs
           as representatives of the estate of Johnnie
           H. Fortner, Sr. entitled to recover from the
           joint account with right of Survivorship at
           the State Employees Credit Union having an
           approximate balance of $248,322.00 at the
           time of Mr. Fortner, Sr.'s death?

           ANSWER:       $248,322.00 = 100%

           7. If none, what is the amount of the
           apportioned share of the federal and state
           estate    taxes   and   interest   that  is
           attributable to the State Employees Credit
           Union   account  that   the  Plaintiffs, as
           representatives of the Estate of Johnnie H.
           Fortner, Sr., are entitled to recover from
           Lynda Hornbuckle Fortner?

           ANSWER:                                      .

    Defendants filed a timely notice of appeal to this Court.

                                          Analysis

I. Denial of Motion for Directed Verdict

    Defendants initially argue that the trial court erred in

denying   their    motion    for    a     directed    verdict      based    on   their

contention    that   the    transfer       of   the    five     deeded     properties

constituted    a   completed       gift    such   that       the   Estate    was   not
                                      -8-


entitled     to    an   apportioned    share     of    its   tax   liability

attributable to these properties.           We disagree.

      In reviewing the denial of a motion for a directed verdict,

we examine

            whether the evidence, taken in the light
            most favorable to the non-moving party, is
            sufficient as a matter of law to be
            submitted to the jury.     In determining the
            sufficiency of the evidence to withstand a
            motion for a directed verdict, all of the
            evidence which supports the non-movant's
            claim must be taken as true and considered
            in the light most favorable to the non-
            movant. The non-movant is given the benefit
            of every reasonable inference which may
            legitimately be drawn from the evidence,
            resolving   contradictions,   conflicts,  and
            inconsistencies in the non-movant's favor.
            A motion for directed verdict should be
            denied if more than a scintilla of evidence
            supports each element of the non-moving
            party's claim.

Trantham v. Michael L. Martin, Inc., ___ N.C. App. ___, ___, 745

S.E.2d 327, 331 (2013) (internal citations, quotation marks, and

brackets omitted).

      The elements required to show the valid delivery of a deed

in the form of a completed gift are “(1) an intention by the

grantor to give the instrument legal effect according to its

purport and tenor; (2) evidence of that intention by some word

or   act   which   discloses   that   the    grantor   put   the   instrument

beyond his legal control; and (3) acquiescence by the grantees

in such intention.”        Penninger v. Barrier, 29 N.C. App. 312,
                                            -9-


315, 224 S.E.2d 245, 247, disc. review denied, 290 N.C. 552, 226

S.E.2d 511 (1976) (emphasis omitted).

       “A   clear and unmistakable intention on the part of the

donor to make a gift of his property is an essential requisite

of a gift inter vivos.               The intention may be inferred from the

relation      of    the     parties        and        from    all     the   facts      and

circumstances.”          McLean v. McLean, 323 N.C. 543, 550, 374 S.E.2d

376,    381    (1988)      (citation,       quotation        marks,     brackets,      and

ellipses omitted).

       Therefore, if the intent of the grantor is not to actually

part with title to the property at issue but rather to retain an

interest      in   it,    there      can   be    no    completed      transfer   of    the

property.      Accordingly, where evidence is introduced that calls

into question the intention of the grantor, an issue of fact

exists for resolution by the jury and the entry of a directed

verdict on that issue is improper.                      See Lerner Shops of N.C.,

Inc. v. Rosenthal, 225 N.C. 316, 320, 34 S.E.2d 206, 208-09

(1945) (“There must be an intention of the grantor to pass the

deed from his possession and beyond his control, and he must

actually do so with the intent that it shall be taken by the

grantee or by someone for him.                       Both the intent and act are

necessary     for   a     valid   delivery.           Whether    such    existed      is   a

question      of   fact    to   be    found     by    the    jury.”     (citation      and

quotation marks omitted and emphasis added)).
                                          -10-


       We    find    instructive      our    decision        in    Penninger.         In

Penninger, the decedent, approximately three years prior to his

death,       executed      three    deeds        conveying        property    to     the

defendants.         Penninger, 29 N.C. App. at 314-15, 224 S.E.2d at

246.        The decedent, without informing the defendants of the

existence      of    these   deeds,       instructed    his       attorney    to    keep

possession of them and to deliver the deeds to the defendants

after his death.          Id. at 314, 224 S.E.2d at 246.

       The plaintiff, the decedent’s next of kin and heir at law,

filed an action to have the deeds declared null and void on the

ground that the decedent “never at any time prior to his death

released control over either of said deeds . . . and said deeds

were never, in contemplation of law, delivered to the grantees

or to anyone else for the use and benefit of the grantees with

the    intention     at    said    time    that    title     should    pass    as   the

instruments become effective as a conveyance.”                      Id. at 313, 224

S.E.2d at 246.

       The decedent’s attorney — who had drafted the deeds and

then kept them in his possession at the decedent’s direction —

testified that had the decedent ever requested that he modify

the deeds, “I imagine I would have but I don't know. . . . I did

whatever he instructed me to do” and that “I would have done

what he wanted with these deeds to comply with his wishes.”                          Id.

at 314, 224 S.E.2d at 246.
                                          -11-


       This   Court      emphasized      in   Penninger    that   the   dispositive

factor for whether a completed transfer of a deed has occurred

is the intention of the grantor at the time of the execution of

the deeds.         Id.    at 315, 224 S.E.2d at 247.                Applying this

principle, we held that the testimony by the decedent’s attorney

“would certainly justify a reasonable inference that the grantor

retained ultimate control over the deeds until his death.                         So

long   as     a   deed    is    within    the    control   and    subject   to   the

authority of the grantor there is no delivery, without which

there can be no deed.”                Id.       (citation and quotation marks

omitted).

       In the present case, Lynda testified, in pertinent part, as

follows:

              Q. Okay.         And when did you first see those
              deeds?

              A. I'm going to have to think here just a
              minute because all this is running together.
              I got these deeds — he gave me these deeds —
              we were at the office and it was in October.

              Q. Was it October 25, the date that's on
              those latest deeds?

              A. I'm pretty sure it was.

              Q. And how did he give you those deeds?

              A. They were in a manilla [sic] folder, just
              stuck in it.

              Q. And he handed it to you?

              A. He handed it to me from — he was sitting
                    -12-


in his chair and they were to the side of
him. He pulled it out that way.

Q. And he may've said something to you, and
I don't want to ask you what he said, but he
may've said something to you?

A. He said — yeah, he said a few words.

Q. And what did you do with the envelope and
the deeds?

A. I looked at them and seen what they were
and I just — we were standing up, we was
getting ready to go out of the office. And
I just pitched them — the file over to my
desk. And when we got to the door, he asked
me a question and I said, it's right there
on the desk.   And I was instructed to get
it, take it home, put it up and keep my
mouth shut.

Q. And did you do that?

A. I done that.

Q. Where did you put         the   manilla   [sic]
envelope and the deeds?

A. I put them in a dresser drawer in the
bedroom.

. . . .

Q. Ms. Fortner, let me ask you this: If on
October the 26th, or sometime after that,
Johnny [sic] Fortner had asked you to go
bring him that manilla [sic] envelope with
those deeds in it, would you have done that?

     MS. EULER: Objection.

     THE COURT: Overruled.

     BY THE WITNESS: (Resuming)

A. Yeah, I would have.
                                       -13-



    We    are      satisfied    that    sufficient    evidence      existed     to

support the denial of Defendants’ motion for a directed verdict.

Lynda’s testimony creates a reasonable inference that Johnnie

lacked the intent to           fully relinquish      control of the deeded

properties at the time he handed the deeds to                      her —   a   key

element of the delivery of a deed by a donor.

    This conclusion is also supported by evidence presented by

Plaintiffs    at    trial    tending    to    show   that    Johnnie   did     not

substantially alter his control and use of the deeded properties

at issue after handing the deeds to Lynda.                    He continued to

reside on the Galbraith Creek Property and to receive rental

income from the Round Hill Property, the Macktown Property, and

the Shoal Creek Property — just as he had before handing the

deeds    to   Lynda.        Lynda   also      testified     that   Johnnie     was

considering making improvements to the Conley’s Creek Property.

    This evidence was sufficient to raise a question for the

jury as to whether Johnnie intended to retain control over the

properties at issue.        “There must be an intention of the grantor

to pass the deed from his possession and beyond his control, and

he must actually do so, with the intent that it shall be taken

by grantee or some one for him.            Both the intent and the act are

necessary to the valid delivery.                Whether such existed is a

question of fact to be found by the jury.”                Huddleston v. Hardy,
                                                 -14-


164 N.C. 210, 212-13, 80 S.E. 158, 159 (1913) (citation and

quotation marks omitted).

       Defendants              contend    that     Johnnie’s       donative          intent      was

established          by    the    fact     that    he    gave    the    deeds      directly       to

Lynda, one of the donees, instead of to a third party.                                   However,

in     Huddleston,              the     Supreme     Court        emphasized            that     “the

controlling test of delivery is the intention of the grantor to

part with the deed and put it beyond his control, and that this

intent is an issue of fact, to be passed on by a jury.”                                       Id. at

213,   80    S.E.         at    160   (emphasis      added).        Therefore          while     the

giving      of   a    deed       from     the    donor   directly        to    the     donee     may

constitute       some          evidence    of     donative      intent       for   a    completed

gift, it does not establish as a matter of law that a completed

gift did, in fact, occur where evidence also exists tending to

show that the donor did not intend to put the deed beyond his

legal control.

       We    also         reject      Defendants’        argument       that       evidence       of

Johnnie’s        subsequent             actions     regarding          the     properties         is

irrelevant to his intent at the time he handed the deeds to

Lynda.       We believe such actions could properly be used by the

jury to ascertain Johnnie’s intent at the time he gave Lynda the

deeds.      The weight to be given this evidence was for the jury to

decide.          Accordingly,              the     trial        court        properly         denied

Defendants’ motion for a directed verdict.
                                -15-


II. Jury Instructions

    Defendants next make a series of arguments challenging the

trial court’s jury instructions.

         On appeal, this Court considers a jury
         charge contextually and in its entirety.
         The charge will be held to be sufficient if
         it presents the law of the case in such
         manner as to leave no reasonable cause to
         believe the jury was misled or misinformed.
         The party asserting error bears the burden
         of showing that the jury was misled or that
         the verdict was affected by an omitted
         instruction.     Under such a standard of
         review, it is not enough for the appealing
         party to show that error occurred in the
         jury   instructions;  rather, it   must  be
         demonstrated that such error was likely, in
         light of the entire charge, to mislead the
         jury.

Hammel v. USF Dugan, Inc., 178 N.C. App. 344, 347, 631 S.E.2d

174, 177 (2006) (citations and quotation marks omitted).

    Our Supreme Court has stated that “jury instructions should

be as clear as practicable[.]”         Swink v. Weintraub, 195 N.C.

App. 133, 157, 672 S.E.2d 53, 69 (2009) (citation and quotation

marks omitted), disc. review denied, 363 N.C. 812, 693 S.E.2d

352 (2010).   This is because

         [t]he chief purposes to be attained or
         accomplished by the court in its charge to
         the jury are clarification of the issues,
         elimination   of  extraneous   matters,   and
         declaration and explanation of the law
         arising on the evidence in the case.    These
         are   essential  in   cases   requiring   the
         intervention of a jury. The jury should see
         the issues stripped of all redundant and
         confusing matters, and in as clear a light
                              -16-


         as   practicable.       The   chief   object
         contemplated in the charge is to explain the
         law of the case, to point out the essentials
         to be proved on the one side and on the
         other, and to bring into view the relation
         of the particular evidence adduced to the
         particular issue involved.

Stern Fish Co. v. Snowden, 233 N.C. 269, 271, 63 S.E.2d 557, 559

(1951) (internal citations and quotation marks omitted).

    Defendants   contend   that    the   trial   court    committed

reversible error in its jury instructions both as to the deeded

properties and as to the Joint Checking Account.         We address

each of their arguments in turn.

    A. Deeded Properties

    The trial court’s instructions to the jury with regard to

the deeded properties consisted of the following:

               Members of the jury, there are a number
         of issues you'll be called upon to consider,
         and let's look at the first five.     They're
         broken down in five prospective tracts of
         land that were deeds signed by Mr. Fortner,
         Sr., to Lynda Fortner for her and/or
         Jonathan Hornbuckle.      And the principles
         that I give you with regard to what the
         plaintiff must prove by the greater weight
         of the evidence will apply on each of these
         tracts.    I'm not going to go over all of
         them, the same five times. You'd run me off
         if I did that.     I'm not going to run that
         risk.    But you will consider each of these
         tracts separate and apart, one from the
         other. If you answer one or more a certain
         way, that does not bind you to answer the
         remainder of them a certain way.          The
         contrary is true.

              Now, on each of these issues the burden
                    -17-


of proof is upon the plaintiffs, the
Fortners, as administrators of the father's
estate, to satisfy from the evidence and by
its greater weight that you should answer
that issue in their favor.

     The issue essentially states as to each
tract:     Are     the     plaintiffs,    as
representatives of the estate of John H.
Fortner, Sr., entitled to an apportioned
share of the federal and state estate taxes
and interest on the asset referred to as —
and it goes down to each one, each one of
those properties.

     The plaintiff says and contends that
Mr.   Fortner   executed   those  deeds  and
transferred the property by doing so but yet
retained the interest in the land and each
tract of land, each, some or all of them.
And the defendants, on the other hand, say
and contend — the defendants on the other
hand say that he did not retain the interest
but rather that they received it as a gift
from him, that he did not retain control and
ownership of the property.

     Now, transferring real estate or any
asset, more specifically here real estate,
but retaining ownership of that property may
consists   [sic]    of  control,   possession,
living   or   occupying    the   property   in
question, deriving and collecting for his
individual benefit any income that the
property produced and any other facts and
circumstances    that  you   find   from   the
evidence to the extent of by its greater
weight that may give rise to the contention
that he retained ownership of the property
albeit he'd given deeds for it.

     On the other hand, with regard to the
defendant's contentions, that if he had
transferred the property and not retained
ownership of it, that he had given title to
it. A gift means that Mr. Fortner intended
to give up all his ownership and control of
                    -18-


the property immediately, not contingent.
And intent is a mental attitude seldom
proven by what's called direct evidence, the
evidence of an eyewitness. Intent is proven
by circumstances which it may be inferred.
And every person regardless of what they've
done is presumed to have intended the
natural and probable consequences of their
voluntary actions as opposed to involuntary.

     And furthermore, the defendants contend
that    Mr.    Fortner    actually    or  he
constructively transferred the property in
the form of a gift.       An actual delivery
occurs when there is a direct transfer to
another   of    ownership   or   control  of
something. And constructive delivery occurs
when, although there is no actual delivery
ownership   and   control  of   something is
indirectly transferred.

     Therefore, as to each of those issues
on the numerical, 1, 2, 3, 4 and 5 parts of
it, if you find from the evidence and by its
greater weight, and the plaintiffs have
satisfied you to that extent considering
each of them separate and apart, one from
the other, that Mr. Fortner, Sr. transferred
that deed or those deeds, as the case may
be, to the property yet retained ownership,
control and/or possession of the property,
and that he intended to do so, and did not
intend to convey it as a gift either
actually or constructively, then it would be
your duty to answer that issue yes, in favor
of the administrators of the estate and
against the recipients of the property, the
defendants.

     On the other hand, if you fail to so
find those things and the plaintiffs have
not satisfied you by the greater weight of
the evidence to that extent, then — or you
cannot say what the truth is, then you would
answer that issue against the party who has
the burden of proof or otherwise answering
it no, then it'd be in favor of the
                    -19-


recipients of the property and against the
administrators of the estate.

     To the extent that you answer any of
them no, then you don't consider the
subparts of 1(a), 2(a), 3(a), 4(a) or 5(a).
But if you've answered those issues yes,
that   the  estate  is   entitled  to  some
apportioned share of the federal and state
taxes for those — and interest on those
properties, then it will be your duty to
determine what that amount of taxes — what
is the amount of those taxes.       And the
burden is again upon the representatives of
the estate to satisfy you that, first of
all, taxes are due and, second, in what
amount.

      And I think as the lawyers have
explained to you in their final arguments if
you decide that no, the estate is not
entitled to any apportioned estate taxes,
that they were gifts, then the estate bears
the burden of paying for the gift tax.    If
you find that there is some apportioned
share    due,  then   it    would   be   the
responsibility of the recipients of the
property to contribute whatever amount you
insert on that blank space.     And you have
the various testimonies to consider pro or
con on these issues.    It's for you to say
what credibility to give them and what
weight to give them if you deem them to be
believable by the greater weight of the
evidence.

     So the Court charges as to any of the
first — of the five issues, primary issues,
and to the extent that the representatives
of the estate have satisfied you that taxes
are due, estate taxes are due, and the
amount of those taxes, then you will insert
that amount in a dollars and cents response,
not yes or no, but a dollar and cents
response as to issue 1(a), 2(a), 3(a), 4(a)
or 5(a), one, some, or all of them as the
case may be. On the other hand — and it'll
                                            -20-


              be in some substantial amount in accordance
              with what the plaintiffs contend the taxes
              are.

                   On the other hand, if you're not so
              satisfied or you cannot say what the truth
              is, even on that issue, then you may answer
              at some substantially lesser amount in
              accordance with what the defendant's [sic]
              contend.

      We     are     concerned       by     the        lack       of     clarity        in    these

instructions.          Much    of    the     confusion            arose       from     the    trial

court’s simultaneous and condensed discussion of the doctrines

of    completed      gifts     (requested          by       Defendants)          and     retained

interests (requested by Plaintiffs) — two related yet distinct

legal doctrines.           See Edwards v. Hardin, 113 N.C. App. 613, 616,

439 S.E.2d 808, 810 (1994) (“It is misleading to embody in one

issue two propositions as to which the jury might give different

responses.”          (citation       and    quotation           marks      omitted)),         disc.

review     improvidently       allowed,          339       N.C.    607,       453    S.E.2d     166

(1995).

      As     discussed      above,    in     order         to     show    a     completed     gift

through      the    delivery   of     a    deed,       a    party        must    show    “(1)    an

intention by the grantor to give the instrument legal effect

according      to    its    purport        and    tenor;          (2)     evidence       of   that

intention by some word or act which discloses that the grantor

put    the     instrument        beyond          his       legal         control;       and     (3)
                                 -21-


acquiescence by the grantees in such intention.”           Penninger, 29

N.C. App. at 315, 224 S.E.2d at 247 (emphasis omitted).

    With regard to the doctrine of retained interests, both

parties agree that the most relevant provision of law applying

this principle in the context of apportionment of federal estate

taxes is 26 C.F.R. § 20.2036-1(a)(3)(i), a tax code regulation

promulgated under the authority of 26 U.S.C. § 2036.             The test

for determining whether an interest in property was retained by

the donor is whether before his death the decedent retained or

reserved   “[t]he   use,   possession,   right   to    income,   or   other

enjoyment of the transferred property.”          26 C.F.R. § 20.2036-

1(a)(3)(i) (2013).    If so, the property in question is properly

includable in the decedent’s gross estate for the purpose of

calculating federal estate tax liability.        Id.

    The United States Tax Court has held that

           [a]s used in section 2036(a)(1), the term
           "enjoyment" has been described as synonymous
           with substantial present economic benefit.
           Regulations additionally provide that use,
           possession,   right   to  income,   or   other
           enjoyment    of   transferred   property    is
           considered   as   having  been   retained   or
           reserved   to the extent that       the use,
           possession, right to the income, or other
           enjoyment is to be applied toward the
           discharge of a legal obligation of the
           decedent, or otherwise for his pecuniary
           benefit.   Moreover, possession or enjoyment
           of transferred property is retained for
           purposes of section 2036(a)(1) where there
           is an express or implied understanding to
           that effect among the parties at the time of
                                    -22-


            the transfer, even if the retained interest
            is not legally enforceable.   The existence
            or nonexistence of such an understanding is
            determined from all of the facts and
            circumstances surrounding both the transfer
            itself and the     subsequent use of the
            property.

Estate of Strangi v. Comm'r, 85 T.C.M. (CCH) 1331, 1336 (2003)

(internal   citations   and   quotation     marks      omitted),   aff'd,   417

F.3d 468 (5th Cir. 2005).

    Therefore,     while   the     doctrines      of   completed   gifts    and

retained interests are not unrelated, they each have distinct

elements and required separate consideration by the jury.                   We

believe that the trial court’s instructions failed to properly

explain these principles to the jurors in a manner sufficient to

allow them to understand these concepts and properly apply them

to the facts of this case.

    The confusion engendered by the jury instructions was then

compounded by the manner in which the issues were listed on the

verdict   sheet.    This   Court    has    held   with    regard   to   verdict

sheets that

            [t]he   form  and   the   number  of  issues
            submitted to the jury is within the trial
            court's discretion.     However, the issues
            should be formulated so as to present
            separately the determinative issues of fact
            arising on the pleadings and evidence.    It
            is misleading to embody in one issue two
            propositions as to which the jury might give
            different responses.
                                           -23-


Godfrey v. Res-Care, Inc., 165 N.C. App. 68, 80, 598 S.E.2d 396,

404-05 (internal citations and quotation marks omitted), disc.

review denied, 359 N.C. 67, 604 S.E.2d 310 (2004).

       The legal issues raised by the facts and claims for relief

in this case required the jury to decide a number of sub-issues

before making the ultimate determination of what amounts, if

any, Plaintiffs were entitled to recover as an apportioned share

of the tax liability attributable to each of the five deeded

properties.         However, instead of setting out these sub-issues,

the verdict sheet instead simply asked the jury to decide — as

to each of the five properties — the ultimate issue of whether

Plaintiffs were entitled to an apportioned share of the estate

tax liability as to that property and, if so, in what amount.

As a result, the likelihood of jury confusion was unacceptably

high.       Furthermore, we have no way of knowing the precise basis

upon    which    the      jury    reached   its     verdict    as   to    the   deeded

properties.

       In    sum,    we    conclude    that       Defendants   have      sufficiently

demonstrated        that    the    trial     court’s    jury    instructions       and

verdict sheet were “likely, in light of the entire charge, to

mislead the jury.”          See Hammel, 178 N.C. App. at 347, 631 S.E.2d

at 177 (citation and quotation marks omitted).                      Accordingly, we

must remand this action for a new trial.                  See Edwards, 113 N.C.

App. at 616, 439 S.E.2d at 810 (remanding for new trial where
                                          -24-


“[t]he ambiguity of the manner in which the instructions were

set forth and the uncertainty of the verdict rendered [were]

indisputable”).

      B. Joint Checking Account

      Defendants’ final argument is that the trial court erred in

failing   to    submit      to    the    jury     the    issue    of    whether    funds

contained      in   the    Joint       Checking    Account       were   necessary     to

satisfy the claims against the Estate.                    We agree that the trial

court’s     instructions          on     this     issue     likewise       constituted

reversible error, thereby necessitating a new trial.

      N.C. Gen. Stat. § 28A-15-10 provides that administrators of

an estate can only access funds in a joint deposit account with

a right of survivorship in order to satisfy the claims against

an   estate     once      all    other    assets    of    the     estate    have    been

exhausted.

              When needed to satisfy claims against a
              decedent's estate, assets may be acquired by
              a personal representative or collector from
              the following sources:

              . . . .

                    (3) Joint deposit accounts with right
                    of survivorship created by decedent
                    pursuant to the provisions of G.S. 41-
                    2.1 or otherwise . . . .

              . . . .

              Such assets shall be acquired solely for the
              purpose of satisfying such claims, however,
              and shall not be available for distribution
                                   -25-


           to heirs or devisees.

N.C. Gen. Stat. § 28A-15-10(a) (2013) (emphasis added).

     Defendants argue that had the jury properly been instructed

that the Joint Checking Account could only be accessed as a

source of funds by the Estate as a last resort, it could have

reasonably concluded either that none of these funds, or that

merely some limited portion of these funds, were actually needed

to satisfy the claims against the Estate.           Defendants further

assert that evidence was presented at trial establishing that

other assets did, in fact, exist in the Estate that could have

been used to satisfy its tax obligations without resort to the

funds in the Joint Checking Account.

     The question of whether the Estate was entitled to recover

funds from the Joint Checking Account was listed as Issue No. 6

on   the   verdict   sheet   and   the    trial   court’s   instructions

pertaining to that issue stated as follows:

                 Regardless of how you answer the issues
           1 through 5 and subparts, you will go and
           consider issue number 6 which states:     What
           amount, if any, are the plaintiffs, as
           representatives    of   the  estate    of  Mr.
           Fortner, Sr., entitled to recover from the
           joint    account    [with]   the    right   of
           survivorship of the State Employees' Credit
           Union having an approximate value or balance
           of $248,322 at the time of Mr. Fortner,
           Sr.'s death. The burden of proof, again, is
           upon the representatives of the estate to
           satisfy you from the evidence by its greater
           weight that the estate is the owner or has
           the right to claim some portion of that
                              -26-


         account, and in turn, pay taxes on it.

              But the defendants, on the other hand,
         say and contend that the total of it or a
         great portion of it was a gift or it had
         already been established and owned by the
         defendant,    Lynda    Hornbuckle   Fortner.
         Therefore, the Court charges if you find
         from the evidence by its greater weight that
         the plaintiffs have satisfied you to that
         extent that some portion or all of that
         joint account with right of survivorship was
         retained by Mr. Fortner's estate at the time
         of his death, then it would be for you to
         say what that amount is in the answer
         provided.

              At the top it says, what amount, if
         any. The plaintiffs say and contend it's a
         substantial amount, if not all of it.     The
         defendants    say    and  contend    it's   a
         substantially lessor [sic] amount, if any of
         it. But if you fail to so find or have a —
         cannot say what the truth is as to what that
         issue is, then you'll answer in some
         substantially    lessor  [sic]    amount   in
         accordance with what the defendants suggest,
         even to the sum of none.

              Now, if you answered in any amount then
         that ends the lawsuit, or at least that ends
         the issues. Only if you say that there was
         none in that account that was attributable
         to Mr. Fortner's estate, then you'll go and
         consider issue number 7 . . . .2

2
  The trial court then proceeded to separately instruct the jury
on the issue denominated on the verdict sheet as Issue No. 7,
which asked the jury to decide — assuming it determined that
Plaintiffs were not entitled to any of the funds in the Joint
Checking Account under Issue No. 6 — the following issue: “If
none, what is the amount of the apportioned share of the federal
and state estate taxes and interest that is attributable to the
State Employees’ Credit Union account that the Plaintiffs, as
representatives of the Estate of Johnnie H. Fortner, Sr., are
entitled to recover from Lynda Hornbuckle Fortner?” The manner
in which Issue No. 6 and Issue No. 7 were presented to the jury
                                         -27-



      It   is    clear   from    the     above-quoted       portion     of    the   jury

instructions that the trial court failed to direct the jury to

determine     whether    the    funds      contained      in   the    Joint    Checking

Account    were    actually     needed      to    satisfy      claims   against        the

Estate.       Plaintiffs       concede     that     the   trial      court    erred     in

failing to so instruct the jury but argue that the error was

cured by the trial court’s insertion of language in the third

paragraph of the judgment stating that with regard to the sum of

$248,322.00 awarded by the jury to Plaintiffs in its verdict as

to Issue No. 6, “said sum shall be used solely for the purpose

of satisfying claims against the Estate of Johnnie H. Fortner,

Sr.   which     exceed   all    of   the    other    assets     of    the     Estate    of

Johnnie H. Fortner, Sr. . . .”

      We are unpersuaded by Plaintiff’s argument.                       The question

of whether the Estate needed all, or some portion of, the funds

in the Joint Checking Account in order to satisfy claims against

the Estate was a factual issue for the jury.                      In the absence of

an instruction on this point, the jury would have felt no need

to first determine whether the remaining assets of the Estate

were sufficient to satisfy all claims against the Estate — as



as separate and distinct issues, each asking the jury to
determine whether or not Plaintiffs were entitled to recover
funds from the Joint Checking Account, also likely served to
confuse the jury.
                                     -28-


required    by    N.C.   Gen.   Stat.   §   28A-15-10   —   before    deciding

whether Plaintiffs were entitled to recover any or all of the

funds contained in the Joint Checking Account.              Accordingly, we

conclude that the trial court’s failure to instruct the jury on

this issue constituted prejudicial error and likewise requires a

new trial.

                                     Conclusion

      For the reasons stated above, we hold that the trial court

did   not   err    in    denying   Defendants’    motion    for   a   directed

verdict.     However, we conclude that the trial court committed

prejudicial error in its instructions to the jury.                Therefore,

we remand this matter for a new trial.

      NEW TRIAL.

      Judges CALABRIA and STROUD concur.
