NOT DESIGNATED FOR PUBLICATION

ARKANSAS COURT OF APPEALS

LARRY D. VAUGHT, JUDGE

DIVISION I

CA 00-1226

September 5, 2001

MELBA LAIRD AN APPEAL FROM SALINE COUNTY

APPELLANT PROBATE COURT

No. 99-273-1

V.

HONORABLE ROBERT GARRETT,

SANDRA SHELLNUT, Executrix of PROBATE JUDGE

Estate of DON MCMANN, Deceased

APPELLEE REVERSED AND REMANDED

This case presents an issue of subject-matter jurisdiction that arose prior to the implementation of Amendment 80, which consolidates the jurisdiction of circuit, chancery, probate, and juvenile courts. The appellant, Melba Laird, appeals from the Saline County Probate Court's order admitting one will of the decedent Don McMann and denying admission of a later will. Because the court's order amounted to enforcement of a contract not to alter, amend, or change the first will, we hold that the probate court lacked subject-matter jurisdiction and reverse and remand. Because this case will be retried after July 1, 2001, the effective date ofAmendment 80, the trial judge can address all issues in accordance with its provisions.

Appellant is Mr. McMann's sister. Appellee Sandra Shellnut is his step-daughter from his marriage to Dixie McMann. On June 23, 1995, Mr. McMann and his wife Dixie McMann executed identical wills that left everything to the survivor of them and, after both were deceased, everything to appellee and her husband Alfred Shellnut. The McManns never had any mutual children. The couple's property consisted of a joint account with Merrill Lynch containing investments valued at $980,000 as of January 1998. They also owned real estate that they deeded to appellee and her husband after reserving a life estate for themselves. At some point after they executed the 1995 will, the McManns retitled their Merrill Lynch account and placed it jointly in their names and in appellee's name. Unknown to Mrs. McMann, Mr. McMann also had a separate investment account containing approximately $50,000 that he held jointly with appellant. On January 29, 1998, Mr. McMann and appellee signed documents to equally divide their Merrill Lynch account, and they placed half the money in an account under Mr. McMann's name and placed the other half in an account solely in the name of appellee and Alfred Shellnut. Appellee was authorized to handle this transaction because Mrs. McMann had previously given her a power of attorney to handle all of her affairs. Mrs. McMann died on February 2, 1998. After his wife's death, Mr. McMann moved in with appellant and her family. In April 1998, Mr.McMann added appellant's name to his Merrill Lynch account as a joint tenant with right of survivorship.

In July 1998, Mr. McMann executed a will that revoked his prior wills and contained terms different from those in his 1995 will, leaving the residue of his estate to appellant. He died on June 5, 1999. On July 14, 1999, appellee filed a petition to probate Mr. McMann's 1995 will and for appointment of an executor. Appellee was appointed personal representative of the estate on August 6, 1999, pursuant to the 1995 will. On November 3, 1999, appellant filed a will contest, alleging that the 1998 will was the decedent's last will and that it revoked the 1995 will. On December 3, 1999, appellee filed a response to the petition to contest the will and argued that the 1995 reciprocal wills contained a contract not to revoke by means of subsequent will or by any act whatsoever. Appellee further argued that the 1998 will is violative of the covenant and contract entered into by the McManns. The portion of the 1995 will that gives rise to this controversy is the fifth paragraph, which reads:

I declare that this Will is executed contemporaneously with a Will of similar testamentary plan executed by my said wife, DIXIE McMANN, and I declare that my said wife and I have agreed that we shall not alter, amend or change ourwills or do any act or suffer any omission which will have the effect of defeating the testamentary plan stated in our wills, except by mutual agreement at the time when both of us are alive.

The trial court found that the 1995 reciprocal wills were contractually reciprocal wills containing an agreement not to alter, amend, or change the wills or do any act that would defeat the testamentary plan unless by mutual agreement during the time both parties were alive. The 1995 will was admitted to probate, and appellee was appointed as executrix.

Appellant argues three points for reversal: 1) that the probate court lacked jurisdiction to grant equitable relief and specifically enforce a contract to make a will; 2) that the probate court was clearly erroneous in finding that a contract to make a will existed; and 3) alternatively, that the probate court was clearly erroneous in its finding that a contract existed and in not finding that it was terminated by Don and Dixie McMann's mutual agreement when they divided the Merrill Lynch investment account in half.

Jurisdiction of Probate Court

Although appellant raises the subject-matter jurisdiction issue for the first time on appeal, subject-matter jurisdiction can be raised at any time. Dent v. Wright, 322Ark. 256, 909 S.W.2d 302 (1995). This court reviews probate cases de novo; an order of a probate court will not be reversed unless clearly erroneous. Guess v. Going, 62 Ark. App. 19, 966 S.W.2d 930 (1998). Prior to July 1, 2001, the probate court was a court of special and limited jurisdiction, and it had only such jurisdiction and powers as are expressly conferred by statute or the constitution, or necessarily incidental thereto. Id. A probate court's jurisdiction extended only to heirs, distributees or devisees, beneficiaries, and claimants against an estate. Id. A probate court lacked jurisdiction to determine contests over property rights and titles between a personal representative and third parties or strangers to the estate. Id. Additionally, while a probate court may apply equitable principles, it lacks jurisdiction to grant equitable relief. Id.

On the date this case was tried, the probate court's jurisdiction was established by Arkansas Constitution art. 7, § 34 and implementing statutes. Pursuant to Ark. Code Ann. § 28-1-104(a) (1987), the probate court has jurisdiction over the administration, settlement, and distribution of estates ofdecedents and the probate of wills. Additionally, Ark. Code Ann. § 28-40-116(a) provides:

If, after a petition for the probate of a will or for the appointment of a general personal representative has been filed and before that petition has been heard, a petition for the probate of a will of the decedent not theretofore presented for probate, is filed, the court shall hear both petitions together and determine what instruments, if any, should be admitted to probate or whether the decedent died intestate.

Probate courts also have concurrent jurisdiction with other courts for the restoration of lost wills and for the construction of wills when incident to the administration of an estate. Ark. Code Ann. § 28-1-104(a)(6) (1987).

Appellant argues that the trial court found that the 1995 will was valid based solely on a contract to make a will and that, pursuant to Janes v. Rogers, 224 Ark. 116, 271 S.W.2d 930 (1954), courts of equity are the only courts that have jurisdiction to specifically enforce a contract. There is no doubt that the probate court has jurisdiction over will contests; however, when the issue arises of whether a contract to make a will or a contract not to amend or alter a will is valid and binding, that issue is for chancery courts to decide. It has long been the law in Arkansas that jurisdiction to determine the construction of a contract tomake a will lies within courts of equity. Allen v. First Nat'l Bank of Batesville, 230 Ark. 201, 321 S.W.2d 750 (1959). See also Janes v. Rogers, supra. The supreme court's analysis of this issue is set forth in Allen, supra, with this quotation from 43 A.L.R. at page 1024:

The statement is sometimes made that mutual wills executed in accordance with a contract are irrevocable, but this is true only to the extent that the provisions of such wills will be enforced by a court of equity. The general rule is that such wills are revocable as testamentary dispositions at any time although equity will enforce their provisions in certain cases in compelling specific performance of the contract. Therefore, a later will revoking a mutual one is admissible to probate though the testator violated his contract by executing it, and a reciprocal will which has been revoked, is not admissible though it may be enforced in equity.

Allen, 230 Ark. at 210-211, 321 S.W.2d at 755. The court further stated:

In dealing with the contractual feature of mutual wills, Bertal Sparks in his book, Contracts to Make Wills, at pages 112-113, has this to say:

`If the contract is thought of as a contract to pass property at death and the will thought of as a vehicle for passing the property much of the confusion and apparent conflict would disappear. The contract, not the will, gives the Promisee a right to the property and when litigation arises it is the contract that must always be established. Once the contractual right is established the interest of the Promisee is protected whether or not a will has been executed. When the will has beenexecuted, but subsequently revoked, it merely confuses the issue to talk of enforcing the will or holding that the will was irrevocable in equity. The will is not enforced and there is no such thing as a will that is irrevocable in equity or anywhere else.' (Emphasis supplied.)

Id. at 211, 321 S.W.2d at 755.

In the instant case, appellee relies on Gregory v. Estate of H.T. Gregory, 315 Ark. 187, 866 S.W.2d 379 (1993), for the proposition that the probate court has the authority to enforce reciprocal wills. In Gregory, the decedent and his first wife executed an agreement to make irrevocable reciprocal wills. The reciprocal wills were attached to the agreement, and provided that, after retaining a life estate for each of them, the residue of their estates was to be held in trust for their six children. The wife died first and Mr. Gregory later married the appellant. Mr. Gregory then executed a codicil to his first will giving the appellant a life interest in his home. Upon Mr. Gregory's death, the appellant elected to take against his estate as the surviving spouse; the supreme court affirmed the probate court's holding that a testamentary trust was created by the reciprocal wills, that the beneficiaries' rights vested at the time of thedecedent's death, and, therefore, their rights were superior to those of a surviving spouse.

Gregory was not about two competing wills, but rather a spouse electing to take against a will. The issue of probate court jurisdiction was not raised or addressed by the court and is distinguishable from the instant case. Because the appellee in this case relied on the contract to defeat the admission of a later will, Gregory does not apply. We agree with appellant that the probate court lacked the jurisdiction to enforce the contract.

Appellant also argues that the probate court lacked jurisdiction of this matter because appellee is not related to the decedent and is therefore a stranger to the estate and that, pursuant to Ark. Code Ann. § 28-1-104 and In re Estate of Tucker, 46 Ark. App. 322, 881 S.W.2d 226 (1994), probate courts do not have jurisdiction to resolve disputes as to property rights between personal representatives and persons claiming adversely to the estate. Appellant argues that persons who are not heirs, devisees, distributees, or beneficiaries of the estate are third persons and strangers within this rule. Because we have determined that the probate court lacked jurisdiction to hear the contract issue, we neednot address this issue. Nor is it necessary to address the remaining two issues. We reverse and remand with instructions for further proceedings consistent with this opinion.

Reversed and remanded.

Hart and Neal, JJ., agree.