Court Opinion

ID: 883632
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:32:26.30112+00
Date Added: 2024-06-11T09:10:02.497875
License: Public Domain

NO.    94-601
           IN THE SUPREME COURT OF THE STATE OF MONTANA
                                  1995

APPEAL FROM:   District Court of the Fourth Judicial District,
               In and for the County of Missoula,
               The Honorable Edward McLean, Judge presiding.

COUNSEL OF RECORD:
          For Appellant:
               Terry Wallace, Attorney at Law, Missoula, Montana
          For Respondent:
               Martin S. King; Worden,      Thane & Haines, Missoula,
               Montana

                                  Submitted on Briefs:     June 1, 1995
                                                Decided:   3uly 6, 1995
Filed:
Justice W. William Leaphart delivered the Opinion of the Court.

     Kenneth    Firebaugh,   one of the decedent's two sons,     appeals
from the decision of the District Court holding that debts Kenneth
owed to his deceased mother were to be offset against his share of
her estate,    despite the fact that the debts had been previously
discharged in bankruptcy.      John Firebaugh cross appeals. We affirm
in part, reverse in part and remand.
     Winifred Mills      Firebaugh died on November 25,         1991 in
Missoula, Montana.    She left a will dated April 24, 1984.     Winifred
Firebaugh was survived by two sons; John Firebaugh of Missoula and
Kenneth Firebaugh of Kalispell.      The two sons are named as the co-
personal representatives and are the sole heirs and beneficiaries
under her will.     The value of Winifred's estate at the time of her
death was $151,427.71.       Of that sum, approximately $62,111.54   was
equally distributed to John and Kenneth from an Edward D. Jones
account and approximately $9,292.19 was used to satisfy estate
expenses.
     In May of 1989,     Kenneth sold his l/4 undivided interest in
some Kansas real estate to his mother for $42,000.       His mother paid
Kenneth in cash.     After receipt of the cash, Kenneth purchased a
condominium in California and filed a homestead exemption on that
property.      The District Court concluded that the sales price of
$42,000 was clearly excessive;       that the l/4 interest only had a
value of $30,475.
     At the time of her death, Winifred's son John was indebted to
Winifred in the sum of $26,000.          Her son Kenneth was indebted to
                                     2
her in the sum of $68,695.       However,    in August of 1989, Kenneth
filed a petition in bankruptcy under Chapter 7 in the Eastern
District of California.     In that proceeding, Kenneth listed his
mother as an unsecured creditor in the sum of $55,395.          Kenneth
received a discharge in bankruptcy on January 12, 1990.       Winifred,
who   was   Kenneth's   single     largest     creditor,   received   no
distributions from that bankruptcy proceeding.
      Sometime in 1991, Winifred met with Edward D. Jones account
executive Scott Wilson to discuss the distribution of her Edward D.
Jones account upon her death.     At the time of that discussion, she
prepared a note which stated: "On my death, John to have top
$57,000 - rest divided equally."        The District Court found that
this note evidenced her desire that the pre-bankruptcy debt of
Kenneth be considered for the purpose of calculating her sons'
respective shares of the estate.
      Winifred's last will and testament provides,         in part, as
follows:
      If either of my two sons are indebted to me at the time
      of my death, I forgive such debt or debts and direct my
      personal    representatives     not   to   collect    such
      indebtedness, but to cancel and return any evidences
      thereof to my son or sons having his indebtedness
      canceled. If, at the time of my death, either of my sons
      are indebted to me, but not in equal amounts, or if one
      of my sons is indebted to me and the other is not, I
      direct my personal representatives to pay to my son who
      is not indebted the same amount of money as the amount of
      indebtedness of my other son that was forgiven; or if one
      son is indebted to me to a lesser extent than the other,
      an   amount of     money   sufficient to equalize      the
      indebtedness of my other son forgiven under this
      provision, taking into consideration any indebtedness of
      each son forgiven.    It is my intention that each of my
      sons be treated equally.

                                    3
     The District Court concluded that, based on the provisions of
the will, since Kenneth was indebted in a greater amount than John,
the difference between the two debts would be paid to John.      With
John indebted in the amount of $26,000 and Kenneth indebted in the
amount of $68,695, the difference was $42,695.    Accordingly,   from
the $112,023 (the value of the estate less the Kansas property
valued at $30,475) the first $42,695 was to be distributed to John
leaving a balance of $69,328.52 to be divided equally.
     John contends that under 5 72-2-501, MCA (1991), his mother's
intent to treat her sons equally is controlling and thus the
District Court's decision to offset the debt of Kenneth should be
affirmed.   Appellant Kenneth contends that, under the provisions of
§ 72-3-912, MCA, the court should have treated his debt as having
been discharged.   Section 72-3-912, MCA, provides as follows:
     The amount of a noncontingent indebtedness of a successor
     to the estate if due, or its present value if not due,
     shall be offset against the successor's interest; but the
     successor has the benefit of any defense which would be
     available to him in a direct proceeding for recovery of
     the debt.

Standard of Review:
     In determining whether the provisions of the will or § 72-3-
912, MCA, control distribution of the estate, the District Court
was making a legal conclusion.   "[Wle review conclusions of law to

determine whether the district court's interpretation of the law is
correct."   In re Marriage of Barnard (1994), 254 Mont. 103, 106,
870 P.2d 91, 93.

                                  4
Issue:
      Whether, in light of Winifred Firebaugh's testamentary intent
to treat her sons equally, her son Kenneth's share under the will
may be offset by his indebtedness to his mother even though a
portion of said indebtedness has been discharged in bankruptcy?

Discussion:
         Kenneth and John each rely upon statutory provisions in effect
at the time of their mother's death in 1991.                Kenneth invokes § 72-
3-912, MCA,     and contends that his discharge in bankruptcy would
constitute a valid defense to any attempt by the estate to recover
the   debt.    John relies on § 72-2-501, MCA (1991), (which has since
been repealed) for the proposition that the testatrix's intent is
controlling.
          Kenneth is    correct in        claiming    that his discharge in
bankruptcy qualifies as a valid defense under § 72-3-912,                     MCA.

However, as the District Court observed, to ignore Kenneth's pre-
bankruptcy      debt   of $55,395 would thwart              the clear intent of
Winifred as reflected in her will.
         At the time Winifred made her will, the law provided that her
intent, as       expressed in     her will,        would be the controlling
consideration.         That   statutory    provision,       although   repealed   in
1993, remained in effect at the time of her death in 1991.                 We must
thus assume that Winifred died believing that her intent would be
the   controlling      consideration.         Her intent,    as expressed in the
four corners of her will, is clearly to treat her two sons equally.

                                          5
If Kenneth's debt of $55,395 is not offset against his share,
Winifred's intent is subverted.                    Faced with a conflict between §
72-3-912,       MCA,     and the terms of the will,               we determine that
Winifred's clear intent controls. That is, " [iln construing a will
the paramount rule is that the testator's intent gathered from the
words of the will governs the interpretation of the will."                         State
v.     Keller     (1977),     173      Mont.   523,    526,    568 P.2d    166, 168.
Similarly,      in Matter of Estate of Ellison (19901, 243 Mont. 258,
260,     792 P.2d 5, 6, we held: "[Tlhat intention of a testator, as
expressed in            his    Will,     controls      the    legal   effect of      his
disposition."
       Given the clear language of the second paragraph of her will,
there is no question but that Winifred intended the sons' shares of
her estate be adjusted to reflect monies that the sons had received
from her as loans during her lifetime. We hold that as of the time
of Winifred's death in November 1991,                    testamentary     intent   takes
precedence over the provisions of § 72-3-912, MCA.

                                        Cross Aooeal:
Issue:
        Whether        the    District Court erred in refusing to order
disposition of an interest in real property owned by the estate but
located in the State of Kansas?
        With regard to Winifred's interest in real estate located in
Kansas,     the District Court concluded that Kenneth should not be
able to share equally in property that he transferred to his mother

                                               6
at an inflated price.           However,       the District Court declined to
order disposition of the Kansas property, instead, deferring to the
jurisdiction of the Kansas court in an ancillary probate.                   John
Firebaugh     cross   appeals contending that under Montana law the
District Court should be directed to order distribution of the
Kansas property in conformity with its Findings                     of Fact and
Conclusions of Law and Order dated August, 29, 1994.
        We affirm the District Court's refusal to order distribution
of the Kansas property.          However, in doing so,       we note that the
District Court was in error in concluding that Kenneth should not
be allowed to share equally in                 the Kansas property since he
transferred that property to his mother at an inflated price.
Kenneth sold his share of the property to his mother in May of
1989,    some two years six months before her death in November of
1991.     There is nothing in the record indicating that Winifred
objected to the sales price at the time of the purchase or during
the subsequent two and one-half years of her life.                  Nor did she
seek to       challenge   the     transaction in        Kenneth's     bankruptcy
proceeding.     Accordingly, there is no basis for the District Court
to determine that Kenneth's share of the estate is (or should be)
subject to an offset as a result of that transaction.
        Affirmed.

                                           7
We concur.

             Justices

                        8
Justice James C. Nelson specially concurs and dissents as follows:

      I   respectfully dissent from our decision on the issue on

appeal and concur with our decision on the issue on cross-appeal.

Section 72-11-304, MCA, (1991), provides that extrinsic evidence is

inadmissible in the construction of a will unless there is some

alleged mistake or imperfection in the writing, unless the validity
of the will is in dispute, or unless it is necessary to explain the

circumstances under which the will was made or to which it relates,

to explain an extrinsic ambiguity or to establish illegality or

fraud.       None of those exceptions are raised here.   Winifred's   will

is clear and unambiguous, and there is no need to delve into what
her supposed intention was in making her will.

      Winifred's will provides at paragraph Second:

         If either of my two sons are indebted to me at the time
         of my death, I forgive such debt or debts and direct my
         personal    representatives   not    to   collect    such
         indebtedness, but to cancel and return any evidences
         thereof to my son or sons having his indebtedness
         cancelled. If, at the time of my death, either of my
         sons are indebted to me, but not in equal amounts, or if
         one of my sons is indebted to me and the other is not, I
         direct my personal representatives to pay to my son who
         is not indebted to me the same amount of money as the
         amount of indebtedness of my other son that was forgiven;
         or if one son is indebted to me to a lesser extent than
         the other, an amount of money sufficient to equalize the
         indebtedness of my other son forgiven under this
         provision, taking into consideration any indebtedness of
         each son forgiven.    It is my intention that each of my
         sons be treated equally. [Emphasis added.1

         As the language quoted from her will clearly states, Winifred
provided that a son's debts were to be offset against his share of

her estate, if and to the extent that son was indebted to her at

the   time   of her death.   In point of fact, Kenneth was not indebted

                                      9
to Winifred at the time of her death.               His debt to her had been

discharged in bankruptcy--a proceeding in which she was listed as
the principle creditor for the debts offset here, but in which she

did not file a creditor's claim.

      Section 72-11-307, MCA (1991),             requires that all parts of a

will are to be construed in relation to each other                so' as to, if

possible,     form    one    consistent        whole.    BY     improperly   and

unnecessarily attempting to divine Winifred's intention in order to

achieve     what   appears   to be a more equitable result in the

distribution of her estate, we have simply written out of her will
that language which conditions her direction that her sons be

treated equally on the provision that one or the other of her sons

be indebted to her at the time of her death.
     I cannot agree in that approach.             It is not the prerogative of

this or of any other court to rewrite the clear and unambiguous

provisions     of a decedent's will simply because               of a judicial

perception of inequity in the distribution of the                    testatrix'

estate.      Accordingly,     on the issue on appeal,            I, respectfully

dissent.

Justice Karla M. Gray concurs in                foregoing dis    nt and special
concurrence.

                                          10
                                           July 6, 1995

                                  CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:

Kenneth M. Fiebaugh
432 E. Idaho #218
Kalispell, MT 59901

Terry Wallace
Attorney At Law
P.O. Box 4763
Missoula, MT 59806-47@

Martin S. King, Esq.
Worden, Thane & Haines
P.O. Box 4747
Missoula, MT 59807

                                                     ED SMITH
                                                     CLERK OF THE SUPREME COURT
                                                     STATE OF MONTANA