In re Succession Angus

333 So.3d 555

SUCCESSION OF Evlyn Northington Farris ANGUS

No. 54,180-CA

Court of Appeal of Louisiana, Second Circuit.

Judgment rendered January 12, 2022

WEEMS, SCHIMPF, HAINES, SHEMWELL & MOORE, APLC, By: Kyle A. Moore, Shreveport, Counsel for Appellants, Laura Giacalone and Jane Angus

COOK, YANCEY, KING & GALLOWAY, APLC, By: William L. Hearne, Joseph B. Odom, Shreveport, James A. Davis, Counsel for Appellee, Ronald G. Angus

Before STONE, THOMPSON, and HUNTER, JJ.

THOMPSON, J.

This appeal arises from a dispute over the validity of a transfer on death designation form for a brokerage account, which was supplied by the brokerage company and signed by two Louisiana domiciliaries. Evlyn and Ronald G. Angus had been married for many years when the brokerage company managing one of their brokerage accounts created a transfer on death beneficiary form, which they signed. The form in dispute designated one of their daughters and their granddaughter from one of their other children as the beneficiaries of the account. Ronald Angus signed the preprinted acknowledgment contained on the form, which stated that he was not the beneficiary. The account consisted of community funds.

After Mrs. Angus's death, Mr. Angus, as the executor of her estate and the residual legatee, filed a petition to have one-half of the brokerage account declared his portion of their community property and to name himself as the owner of the other one-half of the account as his wife's residual legatee. Trial was held, and the district court found that the transfer on death designation form for the specific brokerage account in question was invalid under Louisiana law, refusing to expand Louisiana's limited itemized list of accounts and assets that may be transferred without probate. For the foregoing reasons, the judgment of the district court is affirmed.

FACTS

Evlyn Northington Farris Angus ("Mrs. Angus") was born in 1934 and married Ronald G. Angus ("Mr. Angus") on August 17, 1957. During their long and happy marriage, they had three children, namely Jane Northington Angus ("Jane"), Diann Holgate Angus ("Diann"), and Ronald G. Angus, Jr., all of whom survived Evlyn. Laura Giacalone ("Laura") is Jane's daughter and is therefore Mr. and Mrs. Angus's granddaughter. Laura and her mother, Jane, will collectively be referred to herein as "defendants."

Mrs. Angus died testate on September 20, 2019. On October 11, 2019, Mr. Angus filed a petition to file and execute military testamentary and for confirmation of independent executor. The record reflects that Mrs. Angus had a last will and testament prepared and she signed it on January 25, 2010. Her will left specific bequests of $10,000 to each of her three children and left the remainder of her estate to Mr. Angus, as her universal legatee, which is sometimes referred to as residual legatee.¹ Mr. Angus was appointed the executor of Mrs. Angus's estate and letters to that effect were issued to him on October 14, 2019.

One of Mrs. Angus's assets was a brokerage account with John Hancock Signature Services, Inc. ("John Hancock") that had a balance of $135,741.41 at the time of her death (the "Hancock Account"). Although the Hancock Account was listed by John Hancock as only in Mrs. Angus's name, it is undisputedly a part of Mr. and Mrs. Angus's community estate. The Hancock Account was originally established in 1985 with the Tucker Anthony bank and was transferred to John Hancock on January 2, 1989. On May 7, 2009, when Mrs. Angus was 75 years old and domiciled in Louisiana, John Hancock sent out a transfer on death ("TOD") beneficiary designation form for the Hancock Account (the "TOD Form"). Mrs. Angus filled in the names of the beneficiaries and executed the TOD Form, naming Diann as 50% beneficiary and Laura as 50% beneficiary of the account. Laura's mother, Jane, was named as Laura's custodian because Laura was underage at the time.

The TOD Form required the signature and consent of the account owner's spouse in order for someone other than the spouse to be named beneficiary. Mr. Angus, 76 years old at the time, also signed the TOD Form, consenting to the beneficiary designation. The TOD Form included a boilerplate choice of law provision in small font, which read "the Agreement shall be construed, administered, and enforced according to the laws of the Commonwealth of Massachusetts, except as superceded [sic] by federal law or statute." The TOD Form was prepared by John Hancock and presented to Mr. and Mrs. Angus for their signature. There is nothing in the record to suggest Mr. or Mrs. Angus requested the TOD Form from John Hancock or that any contemporaneous estate planning was being considered in which the Hancock Account or its TOD Form provisions played a part. To the contrary, Mrs. Angus, executed a last will and testament eight months later, in which there was no mention of any intention to exclude the Hancock Account from residue of her estate in favor of her husband.

On January 14, 2020, the trial court issued a partial judgment of possession and an amended partial judgment of possession, in which it ordered that movable assets in the Hancock Account and other accounts will continue under the administration of Evlyn F. Angus and Ronald G. Angus. Mr. Angus filed a rule to show cause for determination of rights to certain succession assets, arguing that he is entitled to the proceeds of the accounts still under administration. Defendants filed an exception of unauthorized use of summary proceedings, exception of improper cumulation of actions, exception of no right of action, and exception of nonjoinder of a party under Article 641. Thereafter, Mr. Angus filed a petition for declaratory judgment and other relief on March 9, 2020, curing the defendants’ exception of improper cumulation of actions, unauthorized use of summary proceedings, and exception of nonjoinder.

A bench trial on this matter occurred on October 2, 2020. Diann agreed with her father that Mrs. Angus's will should control the distribution of the estate and made no claim for 50% of the John Hancock Account identified on the TOD Form. Diann testified that Mrs. Angus wrote her a letter, stating that Diann was to file the TOD Form and get the money "transferred immediately after we die." Mrs. Angus stated that Diann would need both of their death certificates. It was clear to Diann from her conversations with her mother and from her mother's correspondence that Mr. Angus was to retain control of the funds in the Hancock Account (and every other asset excluding the specific legacies to each of the three children) during his lifetime.

In its written opinion, the trial court specifically found that the Hancock Account was a part of Mr. and Mrs. Angus's community estate but noted that its ruling was not based on the status of the account as a part of the community. The court found that the TOD Form was not a valid inter vivos or mortis causa donation because it did not meet the valid form requirements, and Mrs. Angus's subsequent will would have revoked it. The court noted that La. C.C. art. 1968 provides that the cause of an obligation is unlawful when the enforcement of the obligation would produce a result prohibited by law or against public policy. The court held that because Louisiana law does not expressly authorize TOD transfers as valid nonprobate transfers, the enforcement of the TOD Form would produce a result prohibited by law or public policy. Thus, the court found the form signed by Mr. and Mrs. Angus was invalid, and Laura was not entitled to receive any proceeds as the beneficiary of those funds.

In a judgment dated January 15, 2021, the trial court held the TOD Form invalid under the laws of the State of Louisiana and declared Mr. Angus the rightful owner of the Hancock Account. The judgment placed Mr. Angus in possession of the Hancock Account and ordered John Hancock to pay the entirety of the proceeds of the Hancock Account to Mr. Angus. This appeal by defendants followed.

ASSIGNMENTS OF ERROR

Defendants asserts two assignments of error, namely:

First Assignment of Error: The trial court erred as a matter of law by finding the decedent's TOD beneficiary designation of her brokerage account with John Hancock was unlawful and violated Louisiana public policy.

Second Assignment of Error: The trial court erred as a matter of law by denying the defendants-appellants’ exception of no cause of action and estoppel and allowing the plaintiff-appellee to maintain an action to nullify the TOD beneficiary designation under Louisiana law, when the contract contained a choice of law provision making Massachusetts law applicable to the contract.

DISCUSSION

First Assignment of Error: The trial court erred as a matter of law by finding the decedent's TOD beneficiary designation of her brokerage account with John Hancock was unlawful and violated Louisiana public policy.

Defendants argue that the trial court erred in finding that without a specific statute from the Louisiana legislature approving TOD beneficiary designations for brokerage accounts, those contracts contain an "unlawful cause" and are a nullity under Louisiana public policy. Defendants contend that the trial court ignored the numerous laws in Louisiana that allow the nonprobate transfer of various assets by contractual arrangements.

Under Louisiana law, formation of a valid and enforceable contract requires capacity, consent, a certain object, and a lawful cause. In re Succession of Rhodes , 40,469 (La. App. 2 Cir. 12/30/05), 918 So. 2d 626, writ denied , 06-0440 (La. 5/26/06), 930 So. 2d 23. An obligation cannot exist without a lawful cause. La. C.C. art. 1966. The cause of an obligation is unlawful when the enforcement of the obligation would produce a result prohibited by law or against public policy. La. C.C. art. 1968. A contract is absolutely null when it violates a rule of public order, as when the object of a contract is illicit or immoral. Baker v. Maclay Prop. Co. ,...