PER CURIAM.
This case concerns the disposition of assets formerly owned by Carlton J. Leix (Carlton) and his wife, Viola Leix. After Viola's death, Carlton transferred the assets so that they were jointly owned with their granddaughter, respondent-appellee Melady A. Perry. Petitioner-appellant, Carlton E. Leix (appellant), the son of Carlton and Viola, contended that the transfers violated his parents' agreement to execute mutual wills. Appellant appeals as of right the judgment granting summary disposition pursuant to MCR 2.116(I)(1) in favor of Melady and her husband, respondent-appellee Jeffrey Perry (hereafter referred to jointly as "respondents"), on the ground that the agreement to execute mutual wills did not restrict Carlton from making the transfers. We affirm.
Carlton and Viola had two children, appellant and Arletta Cady. Cady. Arletta was the deceased mother of Melady and petitioner Melinda Triplett. On September 30, 1982, Carlton and Viola executed identical wills, a revocable-trust agreement, and an agreement to execute mutual wills. The wills, trust, and agreement for mutual wills reflected an estate plan that called for establishing a trust for the benefit of Melady for life, with the remainder to the issue of Carlton and Viola. Viola died on December 11, 1983.
Carlton executed amendments of the trust in July 1988 and October 2000.
In 2006, Melady became Carlton's guardian and conservator. Carlton died in July 2008. At the time of Carlton's death, nearly all the assets were titled jointly in his and Melady's names or named Melady as the beneficiary. After Carlton's death, Melady received the money from the annuities and placed some of it in certificates of deposit in her name and in the name of her husband.
Appellant and Melinda brought this action in the probate court, requesting that the court impose a constructive trust on certain assets in the control of respondents. They alleged that Carlton transferred the assets in violation of his and Viola's 1982 agreement to execute mutual wills. They filed a motion for summary disposition pursuant to MCR 2.116(C)(10) and, in support thereof, submitted the deposition transcripts of (1) Michael James,
Following a hearing on the motion, the trial court found the agreement to execute mutual wills to be valid and binding, that nothing in the agreement put any restrictions on what the surviving party could do with the parties' assets, and that Carlton's transfer of assets during his lifetime and his amendment of the trust did not constitute a breach of the agreement.
Summary disposition pursuant to MCR 2.116(I)(1) is appropriate if "the pleadings show that a party is entitled to judgment as a matter of law, or if the affidavits or other proofs show that there is no genuine issue of material fact. . . ." This Court reviews de novo a trial court's decision on a motion for summary disposition. Maiden v. Rozwood, 461 Mich. 109, 118, 597 N.W.2d 817 (1999).
The parties do not dispute the trial court's determination that Carlton and Viola's agreement to execute mutual wills is valid and that they agreed not to revoke the wills that they executed. The agreement stated, in pertinent part:
The parties also do not dispute that after Viola's death, Carlton transferred money in various accounts so that Melady became a joint owner or beneficiary, and thereby upon Carlton's death she received the assets directly, rather than as a lifetime beneficiary of a trust. One of the effects of the transfers was to divest the trust of assets that the contingent trust beneficiaries might have received upon Melady's death.
The issue presented is whether an agreement to execute mutual wills limits a surviving spouse's ability to dispose of the assets that the parties held jointly as he or she chooses.
However, upon the death of one of the parties, the agreement (not the will) is irrevocable. Id. at 669, 31 N.W.2d 836. "Upon the death of one party to a contract
As presented, the issue whether Carlton's transfer of assets breached his agreement with Viola involves two considerations: (1) whether assets that are held jointly by the contracting parties are subject to an agreement to make mutual wills and (2) to what extent does an agreement to make mutual wills restrict the surviving spouse's ability to transfer assets.
Respondents contend that In re Van-Conett Estate, 262 Mich.App. 660, 687 N.W.2d 167 (2004), controls this case and establishes that "jointly held assets are not subject to an agreement to make mutual wills." In VanConett Estate, Herbert and Ila VanConett (a married couple) and Florence VanConett owned real property as joint tenants with full rights of survivorship. Id. at 667, 687 N.W.2d 167. After Florence's death, Herbert and Ila continued to hold the property as joint tenants with full rights of survivorship. Id. This Court determined that Herbert's and Ila's wills revealed a clear expression of their intent to enter into a contract to dispose of their property in the manner expressed in their wills and that the surviving spouse's will would become irrevocable after the first spouse's death. Id. at 664-665, 687 N.W.2d 167. After Ila's death, Herbert transferred the real property to the defendants. After Herbert's death, his estate brought an action to recover the property. This Court held that his estate lacked standing to seek return of the real property to the estate because the property was not covered by the couple's contact to make a will:
In other words, "the estate did not have standing to bring a cause of action concerning the real property because the real property passes outside the VanConetts' wills." Id. at 662, 687 N.W.2d 167.
For example, in Schondelmayer, Charles and Cathrin Schondelmayer jointly held title to real property as tenants by the entirety. Schondelmayer, 320 Mich. at 568, 31 N.W.2d 721. The Court determined that they agreed to execute and did execute a joint and mutual will. The will stated that the survivor would pay the funeral expenses and just debts and "`thereafter become the sole owner of any and all property owned by either or both of them. The said survivor shall live as he or she has been accustomed, using so much of the income or principal as may be necessary for his or her comfort of [sic] convenience.'" Id. at 571, 31 N.W.2d 721. The will then specified that each of the Schondelmayers' three sons was to receive a specific farm. Id. at 568, 571, 31 N.W.2d 721. Corna Schondelmayer, the plaintiff, was to receive real estate that included the home farm and the balance of the estate after certain costs. After Charles's death, the relationship between Cathrin and the plaintiff deteriorated. Cathrin claimed that she had the right to dispose of the property, including the home farm, by will and also stated that she intended to sell it. Id. at 573, 31 N.W.2d 721. The plaintiff sought specific performance of his parents' agreement to make a joint and mutual will and an injunction restraining Cathrin from disposing of the property in violation of the terms of the joint mutual will. The Court concluded that Charles and Cathrin had agreed that the will of the survivor would dispose of the estate in accordance with the terms of their joint and mutual will and that the agreement became irrevocable upon Charles's death. Id. at 571-572, 575, 31 N.W.2d 721. The Court affirmed the trial court's grant of injunctive relief, concluding that the property that Charles and Cathrin held jointly at the time of Charles's death was subject to the parties' agreement to execute a mutual will. See also Getchell v. Tinker, 291 Mich. 267, 289 N.W. 156 (1939) (involving an agreement to devise specified real property that the contracting parties owned jointly).
Respondents' contention that the agreement to make mutual wills did not apply to the assets that were jointly held by Carlton and Viola, and which therefore passed to Carlton after Viola's death, is unpersuasive. It is difficult to reconcile the statement in VanConett Estate, 262 Mich.App. at 668, 687 N.W.2d 167, that property that passed instantly at the death of the contracting party would not be covered by the couple's contract to make a will, with the Supreme Court's holdings in the cases cited earlier. We therefore conclude that the holding in VanConett Estate should be limited to the particular circumstances in that case, in which the contract to make a will was within the wills themselves.
In regard to whether an agreement to make mutual wills restricts the surviving spouse's ability to dispose of assets absent express limitations in the agreement, Michigan caselaw is not well developed. Appellant relies on Schondelmayer, 320 Mich. 565, 31 N.W.2d 721, Getchell, 291 Mich. 267, 289 N.W. 156, and Carmichael v. Carmichael, 72 Mich. 76, 40 N.W. 173 (1888). However, those cases involved agreements to convey specific property. Appellant does not claim that the agreement in this case contained language designating specific property or language prohibiting the surviving spouse from transferring assets. Rather, appellant asserts, "A corollary of the rule that the surviving co-maker of an agreement to
The uncertainty in the law is reflected in an order that the Supreme Court entered when it initially granted leave to appeal in VanConett Estate. The order directed the parties to address, in part,
The directive to consult secondary authority suggests that the Court believed that the issue was unsettled in Michigan.
Courts in other jurisdictions have differing views concerning whether the surviving party to a contract to make mutual wills is limited in the right to dispose of property after the death of the first party. See Anno: Right of party to joint or mutual will, made pursuant to agreement as to disposition of property at death, to dispose of such property during life, 85 A.L.R.3d 8; 79 Am Jur 2d, Wills, §§ 687-688, pp. 736-738; 97 CJS, Wills, § 2056, pp. 659-661. Some jurisdictions allow the surviving spouse in that circumstance to use the property for support and ordinary expenditures, but not to give away considerable portions of it or make gifts that defeat the purpose of the agreement:
Conversely, in other jurisdictions,
Section 17 of the ALR annotation collects cases that address the surviving spouse's authority to dispose of property when the agreement or will leaves to designated beneficiaries property that the survivor may own at the time of the survivor's death or contains similar provisions. The annotation states in § 17[a] that such provisions "have been construed by some courts as indicating a desire on the part of the testators to give the survivor full authority to dispose of the property during the survivor's lifetime." 85 A.L.R.3d, pp. 50-51. Section 17[b] of the annotation collects cases taking a more limited view as well, including those "[h]olding that the survivor could dispose of the property only for such things as necessities or reasonable needs" and rejecting claims "that the survivor was given full power of disposition by the provision in a joint or mutual will which left to the beneficiary, at the survivor's death, only that property which the survivor might own at his death, or the like." Id. at 52.
As quoted in Murphy v. Glenn, another treatise states:
In Murphy, 964 P.2d at 586, the court cited eight cases from other jurisdictions as supporting
In re Chayka Estate, 47 Wis.2d 102, 176 N.W.2d 561 (1970), provides an example of a court invalidating inter vivos transfers of property to avoid commitments made in a mutual will on the basis that the transfers breached the covenant of good faith that accompanies every contract. As indicated in the syllabus of the Wisconsin Supreme Court, a husband and wife executed a joint, mutual, and reciprocal will in which they bequeathed to each other all their real and personal property and provided that "after the decease of both of us, the
Similarly, in In re Erickson Estate, 363 Ill.App.3d 279, 299 Ill.Dec. 372, 841 N.E.2d 1104 (2006), the court invalidated transfers as being violative of the implied duty to act in good faith and contrary to the purpose of a joint and mutual will. The husband and wife executed a joint and mutual will in which each bequeathed to the survivor the entire estate "as the survivor's property absolutely," and after the survivor's death, to specified children in specified amounts. Id. at 280, 299 Ill.Dec. 372, 841 N.E.2d 1104. The husband died first. Five days before the wife's death, she conveyed three tracts of real property, each for $10, to two daughters and a grandson. A son filed a complaint to have the parcels returned to the estate. The defendants argued that the agreement gave the property to the survivor absolutely and that she was free to dispose of it as she saw fit as long as she did not revoke the joint and mutual will. After noting that the contract
In contrast, the approach adopted in Ohms v. Church of the Nazarene, Weiser, Idaho, Inc., 64 Idaho 262, 130 P.2d 679 (1942), focused on enforcing the terms of agreements to make wills as they are written. In that case, the husband and wife made mutual, reciprocal, and concurrent wills in which each bequeathed to the survivor all real and personal property owned at the time of his or her death, and in the event that the spouse predeceased the testator, to the husband's children and grandchildren. The husband and wife also executed a mutual contract in which they agreed that all property owned by the last one dying should go to the husband's children and grandchildren. After the husband died, the wife made other wills that conflicted with the agreement. After being advised that she could not will the challenged property to the church, she revoked the inconsistent wills and instead deeded the property to the church. After the wife's death, her husband's children and grandchildren brought an action to set aside the deed on the basis that the transfer violated the purpose and intent of the couple's contract. The Idaho Supreme Court recognized that there were decisions supporting the view that the transfer was invalid as a subterfuge, but ultimately concluded, "It is better to give effect to the contract as made by the parties than attempt construction by implication or insertion by inference." Id. at 682. "If it was
We reject appellant's invitation to recognize implied limitations on the transfer of assets by the surviving spouse in the case of an agreement to make mutual wills. With respect to other contracts, this Court has explained:
These principles apply to a contract to make a mutual will. Appellant acknowledges that the contract does not expressly limit the parties from transferring assets. Unlike some other jurisdictions, "Michigan does not recognize a cause of action for breach of the implied covenant of good faith and fair dealing." Dykema Gossett PLLC v. Ajluni, 273 Mich.App. 1, 13, 730 N.W.2d 29 (2006) (citations and quotation marks omitted), vacated in part on other grounds 480 Mich. 913, 739 N.W.2d 629 (2007). Regardless of whether the transfers were made for the purpose of avoiding the testamentary disposition, the agreement did not restrict Carlton from disposing of the assets as he saw fit.
Affirmed.