COE V. HAYS 614 A.2d 576 (1992) CASE BRIEF

COE V. HAYS

614 A.2d 576 (1992)

NATURE OF THE CASE: Coe et al (P), residuary legatees, appealed a decision which reversed a judgment in their favor and found that the realty left to them in the residuary clause of a will had been equitably converted to personalty pursuant to an executory contract of sale at the time of the testator's death and, accordingly, passed to Hays (D), the beneficiary.

FACTS: Gail executed his Last Will and Testament. D was to get all of his personal property, including but not limited to all furniture and fixtures, any motor vehicles and any monies which Gail may have at the time of my death. D also got a life estate in a residential home, containing 8 acres. Eight years after the will was executed, Gail entered into a contract to sell certain real property he owned for $100,000.00. By his will, D, was granted a life estate in that property and, because it was not otherwise bequeathed, the remainder would have passed under the residuary clause. The buyers having paid $1000.00 down, settlement was scheduled on or before June 1, 1988, when the balance was to be paid. The contract required Gail to convey good and marketable title and to pay one-half of the transfer tax and one-half of the State stamps, pro-rated to the date of settlement. All other costs were to be paid by the purchasers. Prior to settlement, Gail and the buyers executed an addendum to the contract. It stated, '[b]ecause a title problem has arisen and a complete survey is necessary, we hereby extend this contract until a good and marketable title can be transferred.' Gail died on June 19, 1988, before the sale was finalized. D settled on the property in accordance with her powers as the appointed personal representative. She showed the proceeds from the real estate sale being distributed to her as personalty under the doctrine of equitable conversion. The decedent's children and residuary legatees, Ps filed exceptions to the account. Ps alleged that the proceeds of the real estate sale should be treated as realty, rather than as personalty, and distributed to them. The trial court found the doctrine of equitable conversion inapplicable. the court opined that equitable conversion did not occur 'because of the cloud [on the title] that existed at that time.' D appealed to the Court of Special Appeals. The court held that, because the contract was executed before Gail's death, although not settled until afterward, the doctrine of equitable conversion did apply to pass the proceeds of the sale. This appeal resulted.

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