Case Title: In Re Estate of Egy

Citation: 205 Kan. 303, 469 P.2d 319

Docket Number: 45,631

State: kansas

Court: Kansas Supreme Court

Date: 1970-05-09T00:00:00Z

Document:
205 Kan. 303 (1970)
469 P.2d 319
In the Matter of the Estate of Louise A. Egy, Deceased.
FLORENCE BESSMER; J.C. SUDERMAN, Executor of the Estate of Louise A. Egy, Deceased; J.C. SUDERMAN, Executor of the Estate of Charles Bessmer, Deceased; and BETHEL DEACONESS HOSPITAL ASSOCIATION, Appellees,
v.
THE HERTZLER RESEARCH FOUNDATION OF HALSTEAD, KANSAS, Appellant.
No. 45,631

Supreme Court of Kansas.
Opinion filed May 9, 1970.
Arthur N. Turner, of Branine, Ice, Turner and Ice, of Newton, argued the cause and was on the brief for the appellant.
Arnold C. Nye, of Nye and Nye, of Newton, argued the cause and was on the brief for Florence Bessmer, appellee.
George A. Robb, of Somers and Robb, of Newton, argued the cause and was on the brief for Bethel Deaconess Hospital Association, appellee.
The firm of Speir, Stroberg and Sizemore was on the brief for J.C. Suderman, Executor of the Estate of Louise A. Egy and J.C. Suderman, Executor of the Estate of Charles Bessmer, appellee.
The opinion of the court was delivered by
HATCHER, C.:
This is an action to construe a will insofar as it concerns the disposition of income earned following the death of the testatrix.
Louise A. Egy died on July 20, 1966. Her last will and testament *304 was admitted to probate and the estate is now under administration.
The will contains the usual introductory clause relating to payment of debts and expenses of administration. It then provides for two specific bequests which are not important here. Life estates were then provided in language as follows:
The provision for disposition of the property after the life estate reads:
Charitable bequests were made to certain charities including the appellant. Those named and the amounts are not material to this controversy.
The will then nominated an executor with power as follows:
Charles W. Bessmer, the brother of the decedent, was 87 years of age at the time of the death of the testatrix and he passed away on January 19, 1967, some six months following the death of the testatrix. Florence Bessmer, sister of the decedent, was 89 years of age at the time of the death of the testatrix and is still living.
All of the income from the estate received by the executor has been co-mingled in one common account with other assets and all payments made by the executor have been paid from this one common account. A $15,000 partial distribution has been paid to Florence Bessmer.
Most of the assets of the estate consist of personal property in the form of corporate stocks and bonds.
Florence Bessmer filed a petition in the probate court in which *305 she claimed she was entitled to the income from the estate from the date of the death of the testatrix. She requested that the executor be directed to file a proper accounting of income and that he be directed to convert certain assets into cash for the purpose of making distribution of the income.
The petitioner based her claim on the provisions of the Revised Uniform Principal and Income Act, and further:
The Hertzler Research Foundation of Halstead, Kansas, filed a written defense to the petition in which it alleged:
The Bethel Deaconess Hospital Association, a legatee under the will of Charles W. Bessmer, adopted the contentions of the petitioner. The matter was transferred to the district court for trial.
The trial concluded that the Revised Uniform Principal and Income Act has application to the administration of the estate and that the act was not invalid for any of the reasons stated. It also concluded:
The trial court further concluded:
The Hertzler Research Foundation of Halstead, Kansas has appealed.
The appellant contends that the Revised Uniform Principal and Income Act (K.S.A. 1968 Supp. 58-901, et seq.) does not have application to the administration of the estate of Louise A. Egy because (1) the will empowered the executor to make disposition of the income, (2) the act applies only to trusts and (3) if the Act was meant to apply it is unconstitutional and void for the numerous reasons stated.
The appellant further contends:
The appellant makes some twelve separate contentions as to why the trial court erred in not applying the income accruing after the death of the testatrix to the payment of debts and administration expenses. We believe the issues can be reduced to two simple questions: (1) Does the will in question contain its own provisions for payment of debts and administrative expenses contrary to the rules set forth in the Revised Uniform Principal and Income Act and the general laws of Kansas? If not, (2) does *307 the rule for payment of debts and expenses as provided by the Revised Uniform Principal and Income Act coincide with the general substantive law of the state?
K.S.A. 1969 Supp. 58-914 provides in part:
We have stated that "a rule to which all others must yield is that a testator's intention will prevail if not contrary to settled rules of positive law or in violation of public policy." (In re Estate of Works, 168 Kan. 539, 213 P.2d 998. See, also In re Estate of Dees, 180 Kan. 772, 308 P.2d 90.)
If the will does designate the funds from which the debts and expenses of administration are to be paid, the designation will be recognized. However, we cannot find any such designation or inference in the will. We find nothing in Paragraph Fourth which indicates any such designation. Appellant suggests:
We would suggest that broad powers to manage an estate and collect income is one thing, the disposition of the income is quite another.
Executors are frequently given broad powers in the management of estates during the administration. This is quite important where the assets consist chiefly of stocks and bonds. However, it is rare, indeed, when the executor is given the power to designate the recipient of the testator's bounty. We made this distinction in In re Estate of Cline, 170 Kan. 496, 503, 227 P.2d 157, where we stated:
We must conclude that the will does not designate the assets from which the debts and expenses are to be paid and we must, *308 therefore, look to the statutory law or the general substantive law of this state for the answer.
The revised Uniform Principal and Income Act (K.S.A. 1969 Supp. 58-904a) provides:
This would dispose of the controversy but for the appellant's contention that the Act applies only to trusts created by wills and that the Act is otherwise unconstitutional for numerous reasons.
We next consider the trial court's conclusion that the general law of Kansas provides that debts and administration expenses are to be paid from principal as distinguished from income, and further provides that a life tenant is entitled to income from the date of the death of the testatrix. If the conclusion is correct, we need not consider appellant's claimed invalidity of the Revised Uniform Principal and Interest Act as the same result would be reached regardless.
We must approve the general rule as announced in 70 A.L.R. 637, which reads:
In considering the application of income, it should matter not whether the property is placed in trust for the benefit of the life tenant or whether the life tenant is trusted with the preservation of the property for the benefit of the remaindermen.
The reason for the above rule is frequently declared to be that the life tenant ranks first in the consideration of the testator, and a contrary construction would take from the life tenant a portion of the income, add it to the corpus, and thus, at the expense of the life tenant, swell the estate of the remainderman, who, presumably, *309 stands second to the life tenant in the consideration of the testator. The reason is particularly applicable in the case before us where the funeral expenses and expenses incurred in administration alone amounted to $46,592.64.
Kansas has a statute giving an executor or administrator the right to possession of all property of the decedent, except homestead and allowances to the surviving spouse and children, during the course of administration. It reads:
In the case of In re Estate of Cline, supra, this court in dealing with income from the sale of gravel which accrued after the death of the testator, stated:
It was held that the proceeds from the sale of sand was income belonging to appellee and not personal property which was subject to the payment of debts.
In Gossard v. Condon, 105 Kan. 714, 185 Pac. 1048, in considering the disposition of income where a bequest was made for maintenance and education, this court stated:
We conclude that aside from the application of the Revised *310 Uniform Principal and Income Act that the general substantive law of Kansas supports the proposition that the income from date of death of Louise A. Egy belongs to the life tenants and is not personal property to be used by the executor to discharge debts and expenses.
The judgment is affirmed.
APPROVED BY THE COURT.