Case Title: In Re Estate of Snyder

Citation: 199 Kan. 487, 430 P.2d 212

Docket Number: 44,986

State: kansas

Court: Kansas Supreme Court

Date: 1967-07-12T00:00:00Z

Document:
199 Kan. 487 (1967)
430 P.2d 212
In the Matter of the Estate of D.E. Snyder, Deceased.
(DANNY SNYDER and ROBERT SNYDER, Appellants,
v.
T.D. HAMPSON, Executor under the Last Will of D.E. Snyder, Deceased, and MAY SNYDER, Appellees.)
No. 44,986

Supreme Court of Kansas.
Opinion filed July 12, 1967.
Robert V. Talkington, of Iola, argued the cause, and Ben L. Humphreys, of Girard, and J.D. Conderman, of Iola, were with him on the briefs for the appellants.
Douglas Hudson, of Fort Scott, argued the cause, and Robert O. Karr, of Girard, and Douglas G. Hudson and David Mullies, both of Fort Scott, were with him on the briefs for the appellees.
The opinion of the court was delivered by
KAUL, J.:
The question presented in this appeal is whether or not a specific devise of real estate was adeemed in testator's lifetime.
D.E. Snyder, sometimes referred to as testator or deceased, purchased an 840 acre ranch situated in the northern part of Crawford County on March 27, 1950. Mr. Snyder and his wife, May, moved *488 onto the ranch in 1952 and resided there until 1959. On November 25, 1953, D.E. Snyder executed his will containing the specific devise in question pursuant to the terms of which the ranch was devised to his two nephews Danny Snyder and Robert Snyder, appellants herein, subject to certain conditions and limitations.
On September 30, 1959, D.E. Snyder and wife, May, entered into an agreement with Roy King Company, Ltd., a corporation, for the sale of the ranch for the sum of $63,000.00. The agreement, referred to hereafter as the King agreement or contract, designated the Girard National Bank as escrow agent and provided for the payment of $1,000 upon the execution of the contract, receipt of which was acknowledged; $1,500 on November 15, 1959; $2,500 on April 1, 1960; and $2,500 semiannually thereafter on October 1 and April 1 of each year for six years. It was further provided that at the end of six years, on April 1, 1966, the King Company should pay such additional amounts as necessary to make a total principal payment on the contract of $20,000, and then the King Company should execute a note and mortgage on the real estate for the balance of $43,000. The note and mortgage were to bear interest at the rate of five percent, payable semiannually and the principal was payable in 15 years, with the privilege of paying any or all of the principal at that time.
The contract further provided that Snyders were to pay the 1959 taxes and that thereafter the King Company was to regularly and seasonably pay all taxes and assessments becoming due on said premises and should keep the improvements on said premises insured for a sum of not less than $12,000, the policy to be placed in escrow. Snyders agreed to transfer all insurance then held by them on the improvements to the King Company who was to pay the pro rata volume of the same. It was further agreed Snyders would execute a warranty deed and deposit it together with the abstract of title in escrow.
The agreement further provided that in case King Company failed to make the payments provided for in a period longer than six months or failed to pay the taxes or supply insurance then the warranty deed and abstract were to be returned to Snyders and all payments made under the terms of the contract would be considered as rent and King Company was to immediately surrender possession to Snyders.
A part of the prefatory paragraph of the agreement reads as follows:
"(describing it.)" (Emphasis supplied.)
On April 14, 1961, Roy King Company, Ltd., assigned to Donald G. Rutherford and his wife, Marihta Rutherford, all of its right, title and interest in the Snyder contract and to the real estate described therein for the total sum of $74,250.00. On the same date an agreement, entitled contract of sale of real estate, was entered into between the Snyders and the Rutherfords for the total sum of $57,481.58, which was designated as the balance due Snyders in the assignment agreement between King Company and Rutherfords.
The contract between Snyders and Rutherfords, hereafter referred to as the Rutherford contract, provided generally for payments and the execution of a note and mortgage as had been provided for in the King Company contract. In the Rutherford contract it was announced that sellers (Snyders) agree to sell, convey and warrant unto buyers (Rutherfords) the real estate in question. Forfeiture in the Rutherford contract was changed from that provided for in the King contract in that a grace period of one year instead of six months was established. Escrow requirements as to both parties were detailed. Possession was transferred to Rutherfords as follows:
On December 7, 1964, D.E. Snyder died. On that date the balance due on the Rutherford contract amounted to $49,458.96, which was reduced by a payment of Rutherfords to $43,000.00 on March 21, 1966. On December 18, 1964, May Snyder was appointed administratrix of the estate of D.E. Snyder. In November of 1965 the will in question was discovered and admitted to probate on December 27, 1965. T.D. Hampson, who was nominated in the will, was appointed executor.
The executor filed a petition for final settlement of the estate in which the ademption of the specific devise to the appellants was recognized. The appellants filed written defenses to the petition for final settlement asserting claims to the unpaid balance of the principal under the contract of sale to King Company and asking that the 840 acre ranch be assigned to Danny Snyder and Robert *490 Snyder subject to such contract of sale. The appellants made no claim to any cows or interest in any cows owned by the deceased at the time of his death.
On March 3, 1966, the probate court denied the executor's claim of ademption and assigned the 840 acre ranch to the two nephews, appellants herein, subject to the Rutherford contract and further ruled that the proceeds of the sale thereof, both principal and interest, paid since the death of the testator should be distributed one-half to Danny Snyder and one-half to Robert Snyder, and that the testator's one-half interest in the note of the Rutherfords should be assigned to the two nephews, the result being that May Snyder, the widow, would own one-half thereof and each nephew one-fourth. From this ruling of the probate court May Snyder appealed to the district court.
In March of 1966, the Rutherfords having made the required payments demanded and received the deed from the escrow agent.
On September 27, 1966, the district court heard the matter on a stipulation of facts and reversed the ruling of the probate court by holding that an ademption of the specific bequest to appellants had been effected at the time of the death of D.E. Snyder, and modified the probate court's order of distribution accordingly. The two nephews, Danny Snyder and Robert Snyder, thereupon perfected this appeal.
The provisions of the will of D.E. Snyder pertinent to our consideration read as follows:
The facts related, some of which will be further detailed in the course of this opinion, set the stage for our discussion.
We shall first examine the general nature of the common law doctrine of ademption and how it has been applied in this jurisdiction. The term is explained and defined in 6 Page on Wills (Bowe-Parker Revision), Ademption, § 54.1, pp. 241, 242:
In the instant case we are concerned with what has been denominated as ademption by extinction. In Kansas the application of the common law doctrine was limited by statute in 1868 (G.S. 1868, Ch. 117, Sec. 33, [G.S. 1935, 22-236 and 22-237]). The statutes referred to barred the working of the ademption unless the testator by the instrument in question was wholly divested of an interest in the property previously devised with the execution provided for in 22-237, supra; that if the provisions of the instrument by which alteration of the testator's estate is made, are wholly inconsistent with the terms and nature of such previous specific bequests, a revocation still resulted. The statutes referred to were repealed in 1939 (Laws of 1939, Ch. 180, Sec. 280). Since then there has been no statutory control as to the application of the doctrine of ademption in this state.
*492 In considering the effect of the statutes on the application of the common law doctrine, where a conveyance was made of previously devised property, in Willoughby v. Watson, 114 Kan. 82, 216 Pac. 1095 (1923), this court stated:
In the Willoughby case a conveyance of real estate previously devised and the receipt of a mortgage and note therefore was held to defeat the devise on the grounds that such conveyance was so inconsistent with the devise as to work an ademption within the provision of the statutes then in effect.
In the case of In re Estate of Hill, 162 Kan. 385, 176 P.2d 515 (1947), this court defines the term ademption as follows:
In a later case, in In re Estate of Chevalier, 167 Kan. 67, 204 P.2d 748 (1949), it was held:
A definitive statement of the doctrine and the terms of its application, which we believe fairly describes the viewpoint adopted in this jurisdiction, is found in Atkinson on Wills (2d Ed.), Ademption, § 134, p. 741:
*493 In this jurisdiction the cardinal rule that a will speaks from the time of the testator's death unless it plainly shows a contrary intention, and is to be construed as operating according to the conditions and circumstances, has been adhered to consistently. See Reetz v. Sims, 177 Kan. 143, 276 P.2d 368; In re Estate of Works, 168 Kan. 539, 213 P.2d 998; and Purl v. Purl, 108 Kan. 673, 197 Pac. 185. It follows, therefore, that the question of whether or not a disposition by a testator of the subject matter of a specific bequest has worked an ademption of the bequest must be determined in the light of facts and circumstances existing at the time of testator's death.
In the instant case at the time of testator's death we find the following facts existing with respect to testator's interest in the ranch.
1. A bilateral agreement between Snyders and King Company for the sale and purchase had been executed on September 30, 1959, which was later affirmed by reference and supplanted by the bilateral contract of sale between Snyders and Rutherfords on April 14, 1961.
2. Instruments had been executed and deposited in escrow as provided for in Section 4 of the Rutherford contract as follows:
(All of such instruments were dated and executed on April 14, 1961, the date of the Rutherford contract.)
3. Snyders had received $13,541.04 on the purchase price.
4. Snyders had dispersed of their Hereford herd, retaining only five cows and six or seven calves.
5. Possession of the ranch had been given to the King Company in October 1959 when Snyders moved to their home south of Girard, Rutherfords succeeded the King Company in possession of the ranch October 1961.
The specific question then presented for our determination is whether or not, under the facts and circumstances related, the interest of D.E. Snyder in the ranch was altered or disposed of at the time of his death to such an extent as to work an ademption of the specific devise to appellants; their rights to the proceeds of the sale being determined thereby.
The appellants claim the contract here was only an executory contract to sell in the future; that at the time of testator's death his interest therein was still that of real property, and, therefore the contract was insufficient to operate a revocation of the devise by the application of the doctrine of ademption. Appellees, on the other hand, contend that even though the Rutherford contract is considered an executory contract at the time of D.E. Snyder's death, nevertheless his interest in the real estate in question had undergone such a substantial change that the previous devise thereof must be considered adeemed.
The effect of an executory contract to sell and convey real estate on the interest of the vendor therein at his death with respect to the disposition of the proceeds of the sale has often been a subject of judicial examination. Problems in connection therewith have been resolved with some difficulty in this state, as well as in most jurisdictions. The problem has necessitated determination not only where the ademption of a specific bequest was at issue, but even more frequently where it was necessary to determine whether a vendor's interest was that of personalty or realty in order to resolve questions of succession in both testate and intestate estates.
The general rule is set out in 57 Am. Jur., Wills, § 1586, p. 1087, as follows:
The application of the rule in terms of what the text writer describes as the orthodox rule is set out in Atkinson on Wills (2d Ed.), Ademption, § 134, pp. 744, 745, as follows:
While particular distinction have been made depending upon the terms and nature of the contract involved, we believe the decisions of this court on the subject are substantially in accord with the general rule.
The appellants rely principally on the case of Pickens v. Campbell, 104 Kan. 425, 179 Pac. 343, to support their position. Ademption was not involved in the Pickens case. The question there was whether the interest of deceased in certain Kansas real state was wrongfully inventoried as real estate rather than personal property in the assets of his estate. The Pickens controversy was reviewed by this court in two appeals (Pickens v. Campbell, 98 Kan. 518, 159 Pac. 21, and Pickens v. Campbell, 104 Kan. 425.) Both opinions must be examined to understand the nature of the controversy. The action was initiated by two collateral heirs (Pickens and Schutt) of one Fensky, a California resident, who owned Kansas real estate, which he had contracted to sell prior to his death. The action was brought to set aside the final settlement of the Kansas ancillary administration on the grounds that Campbell, a Kansas lawyer who had been appointed administrator in Kansas, had fraudulently inventoried the property as real estate rather than personal property. In the first appeal, perfected by Campbell, a judgment of the trial court overruling a demurrer to the petition on the grounds that it stated a cause of action based on extrinsic fraud was affirmed by this court. The case was then tried and resulted in a judgment for defendant Campbell from which plaintiffs Pickens and Schutt appealed. The trial court's judgment was premised on the proposition that the contracts involved were to effect a future rather than a present sale. The judgment was affirmed. (104 Kan. 518.)
*496 Appellants claim the contracts in Pickens were so similar to that in the case at bar as to be determinative of the issue here. We cannot agree with the position taken by the appellants. It is true that the language contained in the Pickens contracts  agrees to sell and convey  was similar to language used in the case at bar in the Rutherford contract where Snyders, as sellers, "hereby agree to sell, convey and warrant." However, in the King contract the parties state that they have this day sold the following described real estate and then agree to execute a deed and deposit the same together with other instruments in escrow. In Pickens the deeds were withheld by the vendor, Fensky, not to be delivered until payment in full had been received, and upon default the contracts were subject to immediate termination.
The Pickens contracts were described in the opinion as follows:
It was further stated:
A careful analysis of the opinions in the two Pickens appeals leads to the conclusion that the court found Campbell, a Kansas lawyer, not guilty of fraud, as administrator, in inventorying the property as real estate rather than personal property, because the contracts were little more than options with nominal down payments, subject to immediate termination upon any default by the buyers. In other words, we believe the final decision in Pickens was reached on the premise that so little change or alteration had been effected in the deceased's interest in the property that it was not fraud on the part of Campbell to inventory it as realty rather than personalty.
We have examined the cases cited by both parties and in our research examined many others in which this court has delineated various factors to be considered in determining whether or not the interest of a deceased in real property had been so altered by an executory contract of sale as to effect a conversion from realty *497 to personalty. The most recent case in which the problem was considered is that of In re Estate of Taylor, 185 Kan. 523, 345 P.2d 1028. In the Taylor case the will of testatrix (Maggie Taylor) directed:
A year and nine months prior to her death, Mrs. Taylor, executed an instrument denominated "Option Contract" to sell the Elmwood street property. The sale price under the option contract was $4,065.45, approximately $1,500 of which had been paid at the time of the death of Mrs. Taylor.
This court held the option agreement to be in fact an executory contract of sale and in the opinion the status of the interest of the decedent in real property, under an executory contract of sale at the time of death, was discussed in depth. There it was stated:
..............
Similar cases in which real property, under an executory contract of sale, has been held to have been converted into personalty and the proceeds distributed as assets of decedent's estate are: Courtney v. Woodworth, 9 Kan. (2d Ed.) [*]443, where a purchaser was given a title-bond, put in possession, and time not made of essence, it was held the vendor may treat the bond as an equitable mortgage. The same result was obtained in Chambers v. Anderson, 51 Kan. 385, 32 Pac. 1098, where a contract and deed were deposited in escrow.
In Jones v. Hollister, 51 Kan. 310, 32 Pac. 1115, the vendor received part of the purchase price and took a promissory note for deferred payments, put vendee in possession and, time not being the essence of the contract, it was held the entire equitable estate passed to vendee or his assigns.
A contract, closely akin to those considered here, was the subject of examination in Gilmore v. Gilmore, 60 Kan. 606, 57 Pac. 505. There the contract provided that the deed, notes and mortgage were to be deposited in escrow until notes were reduced to a fixed amount, the vendor dying prior thereto, it was held:
Similar holdings are to be found in Williams v. Osage County, 84 Kan. 508, 114 Pac. 858; Gordon v. Munn, 87 Kan. 624, 125 Pac. 1; Gault v. Hurd, 103 Kan. 51, 172 Pac. 1011; Yost v. Guinn, 106 Kan. 465, 188 Pac. 427; Neal v. Owings, 108 Kan. 73, 194 Pac. 324; Gamer v. Piper, 125 Kan. 395, 264 Pac. 1071; In re Estate of Elliott, 174 Kan. 252, 255 P.2d 645; Farrell v. The Federal Land Bank of Wichita, 175 Kan. 786, 267 P.2d 497.
The cases cited are not intended to represent a complete collection of Kansas cases on the subject. However, they portray a consistent attitude in this jurisdiction from which the conclusion may be drawn that where a contract of sale provides for the execution and deposit of a deed in escrow, a transfer of possession, a substantial down payment, and where time is not made of essence, the *499 interest of vendor is converted from realty to personalty, as of his death, and the proceeds distributed accordingly. While all of the elements are not to be found in all of the cases cited, we find those which we have mentioned to be of persuasive significance and the most frequently considered.
Some of the cases in which a contrary conclusion was obtained are: Douglas Co. v. Union Pac. Ry. Co. E.D., 5 Kan. (2d Ed.) [*]615; Brown v. Thomas, Sheriff, 37 Kan. 282, 15 Pac. 211; Aigler v. Land Co., 51 Kan. 718, 33 Pac. 593; Pickens v. Campbell, 104 Kan. 425, 179 Pac. 343; Kansas Power Co. v. Smith County Comm'rs, 122 Kan. 252, 251 Pac. 1114; Johnson v. Kroeker, 130 Kan. 620, 287 Pac. 241.
In many of the cases last cited the contract in question was held to be merely an option. In some a deed was not executed or if so then not deposited in escrow but withheld by vendor. In none of them are all of the elements previously mentioned found to be in existence on the death of a decedent.
A careful analysis of the decisions which we have cited leads to the conclusion that the issue to be resolved rests, not so much on whether or not the contract is to be classified as an option, one for sale in the future or one for present sale, but rather on the proposition whether the provisions of the contract and the performance had in connection therewith, prior to the vendor's death, effect such an alteration or substantial change in vendor's interest as to convert it from one of realty to personalty.
In the instant case the King contract, the King assignment to Rutherfords, confirmed and referred to in the Rutherford contract, and the Rutherford contract itself, are all to be considered in our determination. As we have indicated, some language is to be found in the King contract indicating an intention of the parties that the land in question had been sold. We have not, however, reached our conclusion on a basis of the tense used in the contract but rather on the alteration and substantial change wrought in the interest of D.E. Snyder at the time of his death. There is no express provision making time the essence in either the King or Rutherford contracts.
In Russell v. Ferrell, 181 Kan. 259, 311 P.2d 347, it was held:
*500 Under the Rutherford contract the deed was executed, documentary stamps attached and deposited in escrow along with vendees' executed promissory note and mortgage. The vendees had long been in possession at the time of vendor's death. A forfeiture grace period of one year was provided for, interest on past due payments was increased from five to eight percent, a provision which proscribes any inference that time was of the essence. The Rutherford contract contained bilateral agreements which clearly subjected the contract to specific performance.
For the reasons stated we hold the Rutherford contract and the related facts and circumstances to have so substantially changed the interest of D.E. Snyder in the real estate in question at the time of his death so as to work an ademption of the specific bequests in question.
The appellants complain as to a number of the trial court's findings of fact. We have examined appellants' contentions in this regard and their arguments in support thereof in the light of the record. While some of the findings appear to be superfluous or immaterial they cannot be said to derogate the correctness of the trial court's judgment. It is therefore affirmed.