Title: In Re Estate of Barclay

State: kansas

Issuer: Kansas Supreme Court

Document:

215 Kan. 129 (1974)
523 P.2d 376
In the Matter of the Estate of Blanche Barclay, Deceased.
(MARY HELEN DIMAGGIO and JOSEPH H. KEEFER, Appellants,
v.
EDWARD H. POWERS, Individually and as Executor of the Estate of Blanche Barclay, RICHARD C. KEEFER and JAMES KEEFER, Appellees.)
No. 47,336

Supreme Court of Kansas.
Opinion filed June 15, 1974.
John F. Steineger, Jr., of Steineger & Reid, of Kansas City, argued the cause, and Reid F. Holbrook, of the same firm, and Max Von Erdmannsdorf and Wayne P. Kuhlman, of Von Erdmannsdorf & Kuhlman, of Kansas City, Missouri, were with him on the brief for the appellants.
Robert E. Fabian, of McAnany, Van Cleave & Phillips, of Kansas City, argued the cause, and Edward H. Powers, Sr., of Kansas City, was with him on the brief for appellee, Edward H. Powers, Sr.
*130 Charles S. Schnider, of Schnider, Shamberg & May, of Kansas City, was on the brief for appellee, Richard C. Keefer.
Bill D. Robinson, Jr., of Kansas City, was on the brief, for appellee, James Keefer.
The opinion of the court was delivered by
KAUL, J.:
This action was brought to contest the validity of the will and codicil of Blanche Barclay, deceased. The controversy stems from the fact that the attorney who was the scrivener of the will and codicil was named as a beneficiary  a circumstance which frequently gives rise to such litigation. The sole question presented is whether the appellee Edward H. Powers, Sr., is the principal beneficiary in the will within the meaning of K.S.A. 59-605.
Mrs. Barclay had been a client of Mr. Powers for many years prior to her death on March 21, 1972. At the time of her death the next of kin of Mrs. Barclay consisted of three nephews: Richard C. Keefer; James E. Keefer, and Joseph H. Keefer; and one niece, Mary Helen DiMaggio. The will in question was drafted by Mr. Powers and executed in his office by Mrs. Barclay on May 19, 1969. Specific bequests were made to each of Mrs. Barclay's nephews and her niece. Several grandnephews were also recipients of specific bequests. A long time friend of testatrix, Lela Stockwood, was devised a parcel of real estate. Mr. Powers was named residuary legatee and nominated executor of the will.
On May 19, 1971, a codicil to the 1969 will was drafted by Mr. Powers and executed by Mrs. Barclay. The codicil confirmed and ratified the 1969 will in every respect except insofar as any part of said will was inconsistent with the codicil. In general the codicil deleted the specific bequests made to the grandnephews and made adjustments with respect to other specific bequests. In some instances property devised in the will had been sold prior to the execution of the codicil. The bequest to Lela Stockwood was changed from a specific devise of real estate to a bequest of $3,000.00 in cash.
Following the death of Mrs. Barclay petitions for the probate of the will and codicil and for the appointment of a special administrator were filed on March 23, 1972. The will and codicil were admitted to probate on April 26, 1972. Appraisers were appointed and on June 2, 1972, an inventory and appraisement of the assets of the estate were filed. On October 27, 1972, Mary Helen DiMaggio and Joseph H. Keefer, appellants herein, filed their petitions to *131 set aside and vacate the order admitting the will and codicil to probate. On November 16, 1972, Federal estate taxes in the amount of $130,753.15 were paid to the Internal Revenue Service. The record indicates that appellants also filed an appeal from the order of the probate court admitting the will and codicil to probate. Both matters were certified to the district court for trial and consolidated on a stipulation that issues therein were identical. On affidavits filed first by appellant DiMaggio and later by appellant Joseph H. Keefer, the matter was reassigned from one division to another and was finally assigned to division No. 4 of the district court for trial.
In their petition appellants alleged that the total appraised value of the estate amounted to approximately $628,994.75. They further alleged that Mr. Powers was a confidential and legal adviser of the testatrix; that he was the beneficiary of the residuum estate; that the value of the residuum far exceeded the dollar value of any devise and bequest to any other heirs-at-law; and exceeded the total value of all devises and bequests to all other heirs and strangers combined.
Appellants further alleged that the last will and codicil of deceased were invalid under the provisions of K.S.A. 59-605 in that Mr. Powers prepared the will and codicil naming himself the principal beneficiary to the detriment of the heirs-at-law of Blanche Barclay; that there was no affirmative showing that the testatrix had read or knew the contents of her will or that she had independent advice with reference thereto; and that the probate court was without jurisdiction to admit the will and codicil to probate.
In pretrial proceedings the trial court narrowed the issue to be determined to the sole question whether Mr. Powers was the principal beneficiary, reserving the question of independent advice. In this posture the case came on for trial on May 11, 1973. The facts presented to the trial court were essentially undisputed.
The inventory and appraisement were submitted in evidence before the trial court. The specific bequests according to the appraisement amounted to the total sum of $291,167.00. The appraised value of each specific bequest is as follows:
*132 Subtracting the total of the specific bequests from the appraised value of the estate left a gross residue of $326,337.19, or approximately fifty-four percent of the gross estate. Appellants contended before the trial court and now on appeal that the gross residue is the figure to be used in determining whether Mr. Powers is the principal beneficiary. Mr. Powers and the other appellees, on the other hand, contend that under the express directions of the will all taxes and costs of administration are to be paid from the assets of the residue and that the proper measurement for ascertaining the principal beneficiary in this case is the remaining or net residue. At the trial, Mr. Powers presented a recapitulation of the estimated expenses chargeable to the estate including $130,753.15 Federal estate taxes, which had been paid, and estimated Kansas inheritance taxes amounting to $39,992.47. The grand total of expenses, estimated and paid, amounted to $246,692.12 leaving a net residue to Mr. Powers of $79,645.47. At the time of trial a claim against the estate in the amount of $47,500.00 had been allowed by the probate court and was pending on appeal in the district court. If the claim were finally allowed it would have reduced the residue to $32,147.07, as found by the trial court. On oral argument we were informed that the matter has been settled by compromise on a fifty percent basis, thus the residue amounted to $56,902.07 under the Powers's recapitulation. However, Mr. Powers points out that the costs of this appeal will further reduce the residue.
The record discloses that at the trial below counsel for appellants stated that he did not dispute the figures reflected in the recapitulation presented by Mr. Powers.
The trial court found in substance that Mr. Powers was the residuary legatee and that the residual estate must be determined on final distribution, rather than by calculating the value of the residual estate on the date of death without consideration of taxes and costs of administration. In rejecting the theory advanced by appellants the trial court stated:
Appellants specify two points of error on appeal. They first contend the trial court erred as a mater of law in finding that Mr. *133 Powers as residuary beneficiary is not a "principal beneficiary" within the meaning of K.S.A. 59-605.
The statute, in essentially its present form, was enacted in 1907.
It reads:
The trial court interpreted the statute to mean that the question of sole or principal beneficiary should be determined first and if the scrivener proves to be the sole or principal beneficiary then the further questions of testator's knowledge and independent advice must be resolved. We agree with the trial court's interpretation of the statute in this regard and find it to be in harmony with what was said concerning the statute in Stunkel v. Stahlhut, 128 Kan. 383, 277 Pac. 1023:
To the same effect it was pointed out in Kelty v. Burgess, 84 Kan. 678, 115 Pac. 583, that where the confidential adviser was not shown to be the principal beneficiary of the will determination of what constitutes independent advice was unnecessary. The Kelty opinion further points out that the statute points to "the" principal beneficiary rather than to one of the principal beneficiaries.
In other words, the force of the statute does not come into play unless it is made to appear that the scrivener or the person who prepared the will was the confidential agent or legal adviser of the testator and is the sole or principal beneficiary in the will.
At this point, we pause to observe that in the instant case any claims of fraud or undue influence were abandoned by appellants in the court below.
K.S.A. 59-605 has been considered by this court in several cases, the most helpful of which is Kelty v. Burgess, supra. In Kelty the *134 action was brought to set aside the will of George W. Parker. As in the instant case, the will was written in the office and under the direction of Mr. Parker's attorney and confidential adviser, H.C. Burgess, who was also described as a "time-tried friend." Out of a gross estate of $14,500.00 Mr. Burgess was the receipient of a specific bequest in the amount of $2,000.00. The testator's niece was given the residue amounting to $10,200.00. The trial court found the niece was the principal beneficiary and, thus, Mr. Burgess could not be. In affirming the trial court's decision on appeal this court interpreted the statute and provided some guidelines for identifying the principal beneficiary in a will in this language:
In Klose v. Collins, 137 Kan. 321, 20 P.2d 494, the testator's estate was bequeathed to two beneficiaries, share and share alike. In considering the application of the statute in such a situation the court stated:
References to the term "principal beneficiary" appearing in Kansas cases are summarized in 1 Bartlett's Kansas Probate Law and Practice [Rev. Ed.], Testamentary Power, § 390, wherein the author states:
Applying the foregoing to the instant case, whether the Power's bequest be $79,000.00 or $56,000.00 he cannot be considered the principal beneficiary in view of the fact that the specific bequests to Richard and James Keefer have been established at $144,000.00 and $105,000.00, respectively.
Concerning appellants' argument that for purposes of measuring the Power's bequest in terms of principal beneficiary the gross, rather than the net residue, should be considered  we must look to the directions of the will pertaining to residue. Appellants' argument in this regard is related to and will be discussed with their second point on appeal which they base on the premise of their claim that the executor had discretionary power to determine the size of the residuary estate. Appellants claim:
In considering appellants arguments a closer examination of Mrs. Barclay's will becomes necessary.
The will is comprised of twenty articles  the first of which contains the usual directions to the executor concerning expenses of last illness and burial arrangements. Articles Two to Ten, inclusive, set out the specific bequests. Article Eleven provides that seven parcels of real estate described therein should become a part of the residue and disposed of along with the remainder of the residue of testator's estate; article Twelve provides in the same manner for the disposition of certain items of personal property listed therein. Article Thirteen restates that property listed in articles Eleven and Twelve "shall not be subject to specific bequests" and, further, that any property owned at time of death and not made the subject of specific bequests, shall become a part of the residue. Article Fourteen protects against errors in the description of real estate. Article Fifteen provides for possession, care and responsibility for all real estate to be in the executor until the estate is closed when possession is to be delivered to the specific devisees.
The Sixteenth and Seventeenth articles deal with the lapsing of specific bequests, the payment of estate and inheritance taxes, the order of appropriation of assets, if necessary, for the payment of *136 taxes and expenses and the bequest of the residuary estate. These articles are the crux of the lawsuit and are quoted in full:
A careful reading of the foregoing articles clearly reveals the intention of the testatrix to exonerate to every extent practicable and possible the specific bequests from any burden of estate and inheritance taxes. It is true that in article Sixteen authority to sell any real estate was given to the executor, but it was clearly limited by the reservation inserted by the testatrix in the same article.
In article Seventeen power of sale is also conferred upon the executor, but here again the power extended must be read together with the reservations and reasons expressed for the conference of such power.
The concluding paragraph of article Seventeen, in which the gift of the residuum to Mr. Powers is actually set forth, the intentions of the testatrix concerning the residuum are explicitly stated. It is made clear that the testatrix was giving only the residuum remaining after the satisfaction of specific bequests and payment of all taxes, claims and costs of administration. The only qualification being that the properties listed in articles Eleven and Twelve, although bearing the burden of residue in all other respects, were not to be the subject of specific bequests. In other words, this remaining residue constituted the bequest to Powers and not the gross residue as contended by appellants. The residue given is defined and established by the terms of the will itself. The right, stemming from the power to sell, to invade property included in the specific bequests, is contingent upon the exhaustion of the residue at which point the executor was empowered to sell in conformity with equitable management of the estate. The exercise of discretion with respect to the power of sale does not devolve upon the executor unless and until it became necessary to dispose of property to meet the obligations enumerated. If the residuum becomes insufficient to pay estate and inheritance taxes, the executor is empowered to charge specific bequests on a percentage basis, and if the particular specific devisee fails to pay such tax, the executor *138 is authorized to sell such real estate specifically devised, deduct the percentage of taxes burdened thereon and remit the balance to the particular specific devisee. These provisions and directions to the executor appear in the final paragraph of article Seventeen. The executor has no discretionary power of sale under the will to sell real estate not in the residue unless it is necessary to pay taxes and claims. The executor has no alternative but to pay all claims against the estate out of the residue unless and until the residue becomes insufficient to meet those demands.
In this case the will specifies the items to be paid from the residue; if it had not done so the order of appropriation of property for the payment of debts and claims provided for in K.S.A. 1973 Supp. 59-1405 would control. The result reached, except for the payment of inheritance taxes, would be the same. (In re Estate of West, 203 Kan. 404, 454 P.2d 462.)
The language pertaining to residue employed in the instant will conforms with the generally accepted definition of the term set forth in 57 Am. Jur., Wills, § 1415, as follows:
See, also, 6 Page on Wills (Bowe-Parker [Revision]), Lapsed and Void Devises and Legacies, § 50.16, pp. 93-95.
While this court has not precisely defined the term "residue"; references made to the meaning of the term in the case of In re Estate of West, supra, are in harmony with the foregoing definition.
Since the bequest to Mr. Powers was the remainder of the residue  a sum substantially less than two of the specific bequests  he cannot be said to be the principal beneficiary under the facts and applicable law.
The judgment is affirmed.