Court Opinion

ID: 9901266
Source: CourtListenerOpinion
Date Created: 2023-11-21 16:06:56.186906+00
Date Added: 2024-06-11T09:21:34.677388
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 22-2008
                            Filed November 21, 2023

IN THE MATTER OF THE ESTATE OF JOYCE K. KOOIKER, Deceased.

LYLE KOOIKER,
     Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Sioux County, Jeffrey A. Neary,

Judge.

      Lyle Kooiker appeals the order modifying the portion of the special master’s

report addressing the valuation of farmland in the residue of his mother’s estate.

AFFIRMED.

      Philip J. De Koster of De Koster & De Koster, PLLC, Hull, for appellee

executor.

      Nathan J. Rockman and Brandon J. Krikke of DeKoter, Thole, Dawson,

Rockman & Krikke, P.L.C., Sibley, for appellees Nick Kooiker and Tricia Driesen.

      Colby M. Lessmann of Tigges, Bottaro & Lessmann, LLP, Sioux City, for

appellant.

      Heard by Tabor, P.J., and Badding and Chicchelly, JJ.
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CHICCHELLY, Judge.

       Lyle Kooiker appeals the order modifying the portion of the special master’s

report addressing the valuation of farmland in the residue of his mother’s estate.

Lyle argues that the special master’s recommendation to value the farmland based

on its appraised value at the date of death was not clearly erroneous and therefore

should have been fully adopted by the court. Because the district court correctly

determined that the farmland in the residuary of the estate should be valued at

date-of-distribution to honor the testator’s intent, we affirm.

       I. Background Facts and Proceedings.

       Joyce Kooiker had seven children with her husband, William. When she

died in December 2019, she had been preceded in death by William and one child.

       Joyce executed a will in 2005.1 Article I of her will directs the executor2 to

pay her debts from her estate. Article IV makes a separate bequest to one of the

surviving children and establishes a trust for his supplemental care, maintenance,

support, and education. And Article VI devises the residue of the estate between

the remaining five children, with a special provision for her son, Lyle:

       Because my son, Lyle D. Kooiker, whom I dearly love, is difficult to
       deal with at times, I request that my executors have my farmland
       appraised and that Lyle or his heirs at law if he should predecease
       me, shall receive farmland located immediately south of the farmland
       received by the Last Will and Testament from my late husband,
       William. This farmland shall be equal in value to Lyle’s one-fifth
       share of my estate residue. The balance of my farmland and all other
       assets shall go to my remaining 4 children and their heirs by right of
       representation, and I trust that they will divide and partition the

1 In July 2012, Joyce executed a codicil to her will, but the provisions are not

relevant to this appeal.
2 Although Joyce named four children executors of her estate, the court removed

them and appointed American Investment and Trust executor after the will was
admitted to probate.
                                          3

       farmland they have received from both my husband and me in a fair,
       equitable and friendly manner. If this cannot be accomplished then
       I direct that this farmland be sold at public auction with all of my
       children having a chance to bid on any of the separate parcels of
       farmland.

       This appeal involves construction of Article VI of Joyce’s will. Although it

requires an appraisal of the estate’s farmland, the will does not specify the date on

which it should be valued to distribute the residue. The executor filed an initial

report and inventory in July 2020, estimating the farmland’s value at $11,000 per

acre. An amended inventory filed in October 2020 listed the appraised value of

Lyle’s share of the farmland at $14,433 per acre at the time of Joyce’s death.

When Joyce’s children could not agree upon an equitable division of the farmland,

the balance was sold at public auction at an average price of $23,057 per acre.

       In March 2022, the executor moved the court to appoint a special master to

resolve disputes that hindered final settlement of the estate, including the valuation

of Lyle’s interest in the estate residue. It also asked the court to enter an order

stating that the bequest of farmland to Lyle was a residuary bequest. After a

hearing, the court held that Lyle’s bequest was a residuary bequest rather than

property specifically given to a beneficiary. It also appointed a special master to

investigate and make findings and recommendations to the court on seven issues,

including “the calculation to be utilized to determine the value per acre used to

determine Lyle Kooiker’s residuary distribution under the Will.”

       The special master filed a report in October 2022. Addressing the farmland,

the master recommended valuing Lyle’s share at $14,433 per acre, the value at

the date of Joyce’s death. Two beneficiaries objected to calculating Lyle’s share

of the farmland based on the appraised value of $14,433, arguing it would create
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an   inequitable   distribution.    The   court adopted      the   special   master’s

recommendations on six of the issues but found the objections to using the date-

of-death valuation persuasive. The court ordered Lyle’s share of the farmland “be

promptly appraised to determine the per acre valuation . . . as close to distribution

as feasible.” Lyle and two other beneficiaries moved the court to reconsider its

ruling. The court denied the motions, and Lyle appeals.

       II. Discussion.

       Lyle challenges the order modifying the portion of the special master’s

report addressing the proper valuation date to use for distribution of the farmland.

He contends the master’s recommendation was not clearly erroneous and thus

should have been fully adopted. Because this case was tried in equity, our review

is de novo. Iowa R. App. P. 6.907.

       The court is empowered to appoint a special master to decide any issues

not to be tried to a jury. Iowa R. Civ. P. 1.935. It can limit the master’s duties and

the issues addressed in the master’s report.3 Iowa R. Civ. P. 1.937. The actions

the court can take on the special master’s report are dictated by rules 1.904(1) and

1.942, which are construed together. See Nelson v. Barnick, 63 N.W.2d 911, 915

(Iowa 1954). These rules provide “a guide to be followed in the exercise of the

discretion vested in the [court], not a limitation upon [its] power.” Iowa Pub. Serv.

3 Iowa Rule of Civil Procedure 1.941 requires the master to file with the clerk “the

original exhibits, and any transcript of the proceedings and evidence, otherwise a
summary thereof, with a report on the matters submitted in the order of reference.”
The special master did not file any materials with his report, and the district court
determined that the special master’s findings and recommendations were a
summary as allowed under rule 1.941. Because the district court did not review or
consider any additional materials when it modified the special master’s report, we
do not consider those materials part of the record on appeal.
                                          5

Co. v. Sioux City, 107 N.W.2d 109, 112 (Iowa 1961) (quoting United States v. Twin

City Power Co., 248 F.2d 108, 112 (4th Cir. 1957) (addressing the federal

counterpart to our rules)).

       Rule 1.904(1) states that the master’s findings “shall be deemed those of

the court to the extent it adopts them.” Iowa R. Civ. P. 1.904(1). Rule 1.942 allows

the court the options of adopting, rejecting, or modifying the master’s report wholly

or in part or recommitting it with instructions. It also states that the court “shall

accept the master’s findings of fact unless clearly erroneous.” Iowa R. Civ. P.

1.942. A finding of fact is “clearly erroneous” if after reviewing the entire record,

the court “has a definite and firm conviction that a mistake has been committed.”

United States v. Or. State Med. Soc’y, 343 U.S. 326, 339 (1952) (citation omitted)

(interpreting the federal counterpart to our rules), noted in Nelson, 63 N.W.2d at

916.

       Because the duty of de novo review puts us in the same position as the

district court in reviewing the master’s report, we review the evidence as

summarized by the special master and determine whether the findings are clearly

erroneous. See Rowen v. LeMars Mut. Ins. Co., 347 N.W.2d 630, 634 (Iowa 1984).

Doing so requires construction of Joyce’s will and mindfulness of these rules:

               (1) the intent of the testator is the polestar and must prevail;
               (2) this intent, however, must be derived from (a) all of the
       language contained within the four corners of the will, (b) the scheme
       of distribution, (c) the surrounding circumstances at the time of the
       will’s execution and (d) the existing facts;
               (3) we resort to technical rules or canons of construction only
       when the will is ambiguous or conflicting or the testator’s intent is
       uncertain. In determining intent, the question is not what the testator
       meant to say, but rather what is the meaning of what the testator did
       say.
                                         6

In re Est. of Roethler, 801 N.W.2d 833, 842 (Iowa 2011).

      The special master recommended valuing Lyle’s share of the farmland at

$14,433 per acre, the amount of the retroactive appraisal listed in the

October 2020 amended inventory. Although the will does not specify when the

residual estate should be valued for distribution, the special master noted that the

IRS requires valuation for federal estate tax purposes using the date of death or

an alternate valuation six months from the date of death. The master determined

that the residual estate could have been distributed at the time of the October 2020

appraisal with the only outstanding issue being “what expenses would need to be

paid to arrive at the distributable estate.” Although the distribution occurred two

years later because of disagreements between Lyle and the other beneficiaries,

the special master noted that Joyce anticipated and planned for the disagreements

in her will. Because the only condition stated in the will for Lyle’s share of the

farmland was its appraisal, which was completed by October 2020, the special

master recommended using that appraisal to determine the residue’s value and

the number of acres Lyle would receive for his share:

      When the South farm (101.78 acres) is valued at $14,433.00 per
      acre, that result is $1,468,990. When added to the proceeds of the
      auction of the other farmland ($5,653,694.00) the total value of the
      estate is $7,122,684.74. This amount represents the gross estate,
      and, as described in the next section, costs and expenses, including
      capital gain, must be deducted from this amount before shares are
      determined. After the expenses are deducted, arriving at the net
      estate, that amount should be split five ways. Once that figure is
      determined, Lyle’s share of the South farm can be determined, based
      on a value of $14,433.00 per acre.

      We begin by noting that special master erred in finding that Lyle’s share of

the residual estate could have been distributed to him in October 2020. The
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residue of an estate is “what remains after the debts, expenses of administration,

legacies, and satisfaction of devises have been made.” Elkader Prod. Credit Ass’n

v. Eulberg, 251 N.W.2d 234, 239 (Iowa 1977). “The interest of the residuary

legatee could be determined only by a settlement of the estate and an

ascertainment thereby of what such residuary estate should consist of.” Wapello

Cnty. Sav. Bank v. Keokuk County, 229 N.W. 721, 722 (Iowa 1930). The deduction

for expenses had not yet been made when the special master filed his report.

       More importantly, the special master’s recommendation does not lead to an

equal distribution as specified by Joyce. The will provides that the residual estate

is to be split equally between five of the children with Lyle receiving his share in

farmland “equal in value to [his] one-fifth share.” Evidently, the value of the land

has climbed since the appraisal; parcels valued between $12,280 and $14,663 per

acre in October 2020 sold at auction for an average of $23,057 per acre. The

higher prices paid at auction increase the total value of the residual estate and,

correspondingly, Lyle’s share. Using the lower appraisal figure in converting his

share of the residue to farmland will result in Lyle receiving a greater number of

acres than he would receive using a recent appraisal. In other words, the method

recommended by the special master doubly benefits Lyle by increasing both his

overall share of the residue and the amount of farmland he can obtain from that

share. To reach a fair and equitable result, the court should value the assets using

similar appraisals, preferably near the date of distribution.       See 34 C.J.S.

Executors and Administrators § 637 (“Where there is a residuary distribution in

kind of the same security to various beneficiaries it makes no difference whether

the valuation date is the mean, closing, or opening price, provided the same
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method is used in all instances and the result is fair.” (emphasis added)); cf. King

v. Onthank, 871 A.2d 14, 17 (N.H. 2005) (concluding the date of distribution of the

trust assets was equitable to when no date was specified); Restatement (Second)

of Trusts § 347 cmt. h (Am. Law. Inst. 1959) (stating that when a trustee divides

the trust estate into fractional shares to convey in kind to the several beneficiaries,

“the trustee must make the division in accordance with the fair market value of the

property at the time of distribution” (emphasis added)).

       The district court correctly determined that the special master’s

recommendation to value the farmland based on its appraised value at the date of

death was erroneous. We affirm the order modifying the report to use a date-of-

distribution valuation, which honors Joyce’s intent.

       AFFIRMED.