When is a Contract a Testamentary Instrument?

June 7, 2016 § 1 Comment

Rose Greer leased some farmland to Jene and David Nunnery in 2002 for 23 automatically-renewing one-year terms, concluding July 31, 2025. The lease included this clause:

In the event of the death of the Lessor [Greer], this lease agreement shall not terminate[;] rather the rights and obligations of Lessor shall immediately be transferred to Linda Ball, who will also have the right to receive payments hereunder.

On July 31, 2009, Greer executed a will leaving her estate to John Oaks. There was no mention of the Nunnery lease or its provision for Ball.

Greer died in 2010, and Oaks probated the will.

In 2013, Oaks filed an action against Ball to declare the lease void for the reason that it was testamentary in nature and did not meet the statutory requirements for a testamentary instrument. The chancellor ruled in favor of Ball, and denied the relief sought by Oaks. Oaks appealed.

In Estate of Greer: Oaks v. Ball, decided May 3, 2016, the COA reversed. Judge Griffis, writing for the 5-4 majority, analyzed the issue at length, but this portion of his opinion sums it up for our purposes:

¶11. Section 3 of the lease agreement assigns the lessor’s rights to Ball upon Greer’s death.In Buchanan v. Buchanan, 236 Miss. 751, 756, 112 So. 2d 224, 227 (1959), the Mississippi Supreme Court held:

[W]hen an instrument purports to be a deed and is in the words and form of a deed and is acknowledged as such, it should be construed to be testamentary in character and inoperative as a deed of conveyance when, and only when, it affirmatively and clearly appears from the language of the instrument itself, giving due consideration to all its provisions, that it was the intention of the person signing it that the instrument itself would have no effect until his death.

The supreme court further held:

Where an instrument, though in the form of a deed, contains its maker’s provision that it makes no present conveyance of an interest in land or otherwise directs that the interest to be conveyed vests in the grantee only upon the death of the grantor, such an instrument is regarded as testamentary in character and is enforceable only if made in compliance with our statute of wills.

Ford v. Hegwood, 485 So. 2d 1044, 1045 (Miss. 1986).

The decision goes on to analyze the instrument and concludes that, since it did not meet the requirements of a will, specifically sound and disposing mind, subscription, and attestation, the assignment was invalid.

For practitioners, this case points out a possible pitfall when you prepare similar instruments for your clients.

If you ever find yourself on the defending side of a lease like Greer’s, you can find a cogent argument in Judge Wilson’s dissenting opinion. Lee, Irving, and Fair joined. Greenlee did not participate. Judge Wilson distinguished the warranty deed in the Ford case relied on by the majority from the lease in this case.

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