Court Opinion

ID: 3005661
Source: CourtListenerOpinion
Date Created: 2015-09-29 22:07:10.241147+00
Date Added: 2024-06-11T15:03:01.450947
License: Public Domain

September 29 2015

                                     DA 15-0131
                                                                                  Case Number: DA 15-0131

            IN THE SUPREME COURT OF THE STATE OF MONTANA

                                    2015 MT 282

IN RE THE MATTER OF THE ESTATE OF

AUGUST J. SCHREIBER,

         Deceased.

APPEAL FROM:      District Court of the Fifth Judicial District,
                  In and For the County of Beaverhead, Cause No. DP 13-5298
                  Honorable Loren Tucker, Presiding Judge

COUNSEL OF RECORD:

           For Appellant:

                  Thomas R. Scott, Attorney at Law, Dillon, Montana

           For Appellee:

                  Jaime Harlicker, self-represented, Three Forks, Montana

                  Brittany Watkins, self-represented, Dillon, Montana

                                               Submitted on Briefs: August 5, 2015
                                                          Decided: September 29, 2015

Filed:

                  __________________________________________
                                    Clerk
Justice Patricia Cotter delivered the Opinion of the Court.

¶1     August Schreiber died testate on September 30, 2013. His will appointed his

grandson, John Watkins, personal representative. The will devised three lots and five

certificates of deposit to Schreiber’s granddaughter, Jaime Harlicker, and the children of

Schreiber’s grandson, Donald Watkins.          The personal representative was also the

residuary beneficiary of the will. Between the time Schreiber executed his will and the

date of his death, he sold the lots and certificates of deposit. In his capacity as personal

representative, John Watkins traced the proceeds from the sale of the lots and the

certificates of deposit using the “first in, first out” accounting method, and concluded that

Schreiber had spent all the proceeds of the sales prior to the date of his death.

¶2     The personal representative filed a final accounting and petition for distribution

with the Fifth Judicial District Court, Beaverhead County, that called for Jaime Harlicker

and the children of Donald Watkins to receive nothing, and the residuary beneficiary to

receive the net distributable estate. The named beneficiaries objected to the personal

representative’s methods and conclusions. The District Court denied the final accounting

and petition for distribution, finding that the personal representative breached his

fiduciary duty by interpreting the will to benefit himself at the expense of other

beneficiaries. The personal representative appealed. We affirm in part, reverse in part,

and remand to the District Court for issuance of an amended order in accordance with

this Opinion.

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                                          ISSUES

¶3     We restate the issues on appeal as follows:

¶4     Did the District Court err in concluding that the devise of the lots and the

certificates of deposit had not been adeemed and the named beneficiaries were thus

entitled to a distribution amounting to the value of the lots and the certificates of deposit?

¶5     Did the District Court err when it rejected the final accounting submitted by the

personal representative?

                  FACTUAL AND PROCEDURAL BACKGROUND

¶6     August J. Schreiber of Beaverhead County died testate on September 30, 2013.

His Last Will and Testament and the First Codicil to Last Will and Testament

(collectively the “Will”) were admitted to informal probate on October 10, 2013. In

accordance with Schreiber’s Will, his grandson, John Watkins (hereafter “John” or the

“personal representative”), was appointed personal representative.          John is also the

residuary beneficiary under his grandfather’s Will.

¶7     Paragraph 12 of Schreiber’s Will provides, in relevant part:

       I hereby give, devise and bequeath unto JAMIE HARLICKER and to the
       children of DONALD WATKINS who shall have survived me the
       following described property:

       (d)    Those three (3) lots held by me in the Schreiber Amended
              Subdivision, and in the event of sale or disposition of said lots, or
              any or [sic] them, any receipts, payments, proceeds, certificates,
              deposits, income or accounts as a result of or arising out of the sale
              or disposition of said lots, or any of them.

       (e)    Those certain five (5) certificates of deposit now held by me and in
              my name in NMBA, along with any income and accumulations
              therein.

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       (f)    Any future certificates of deposit, or other accounts that I may
              purchase, obtain or maintain or obtain in or with NMBA, along with
              any and all income and proceeds thereof.

       The above described property shall be divided into two (2) equal parts, with
       one part or one-half (1/2) thereof distributed to JAMIE HARLICKER and
       the second part or remaining one-half (1/2) thereof divided equally among
       the children of DONALD WATKINS who shall survive me.

¶8     Schreiber executed his Last Will and Testament on January 27, 2003, and the First

Codicil to Last Will and Testament on November 5, 2004. In 2005, Schreiber sold the

three lots referenced in paragraph 12(d) for $20,000 each. In 2007, Schreiber cashed the

NMBA certificates of deposit (“CDs”) referenced in paragraph 12(e). The personal

representative estimates the CDs had a total value between $51,989.52 and $59,987.91.1

According to the personal representative’s calculations, from 2005 until the time of his

death, Schreiber spent a total of $301,392.74. Using the “first in, first out” (“FIFO”)

accounting method, the personal representative traced the proceeds of the lots and the

CDs, determined that all funds from the lots and CDs had been consumed by Schreiber

prior to his death, and concluded that no money remained to be distributed to the named

beneficiaries. As a result, the net distributable estate of $111,110.332 would pass to John

1
   NMBA was dissolved prior to 2007 and the CDs were transferred to Bank of America. The
total value of the CDs can only be estimated because Bank of America could not produce records
of the CDs. The personal representative arrived at the approximate value of the CDs by using a
1099-INT statement issued by Bank of America during tax year 2006. The statement showed
Schreiber received interest income of $2,729.45 on the CDs that year. The personal
representative used interest rates from local banks during 2006 to estimate the value of the CDs
based on the interest income they generated.
2
     In the final accounting, the personal representative incorrectly reported that the net
distributable estate is $138,115.39. He reached the correct calculation of $111,110.33 in his
reply brief.

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himself, as the residuary beneficiary. John prepared a final accounting reflecting this

conclusion and filed it with the District Court on August 27, 2014.

    ¶9    The District Court held a hearing on the final accounting and petition for

    distribution on September 30, 2014.         The only attendants other than the personal

    representative and his attorney were Jaime Harlicker,3 a granddaughter of the decedent,

    and Brittany Watkins, a great-granddaughter of the decedent.          Jaime and Brittany

    objected to the personal representative’s conclusion that the named beneficiaries were to

    receive nothing under paragraph 12 of the decedent’s Will. Specifically, they objected

    to the personal representative’s use of the FIFO method of tracing proceeds.

    ¶10 The District Court found that the personal representative failed to show Schrieber

    intended ademption of the devises of the lots and the CDs, and that a personal

    representative breaches his fiduciary duty by interpreting a will to benefit himself at the

    expense of other beneficiaries. The District Court denied the final accounting and

    petition for distribution and directed the personal representative to file an amended

    accounting with a proposed distribution that provides Jaime and the children of Donald

    Watkins with the value of the three lots and the five CDs. The personal representative

    filed a timely appeal. Additional facts will be discussed as necessary in the following

    analysis.

3
     Jaime’s name was incorrectly spelled “Jamie” in the Will.

                                                  5
                               STANDARD OF REVIEW

¶11    The interpretation and construction of a will presents a question of law, which we

review for correctness. In re Estate of Ayers, 2007 MT 155, ¶ 12, 338 Mont. 12, 161
P.3d 833.

                                      DISCUSSION

¶12    Did the District Court err in concluding that the devises of the lots and the
       certificates of deposit had not been adeemed and the named beneficiaries were
       thus entitled to a distribution amounting to the value of the lots and the
       certificates of deposit?

¶13    Paragraph 12 of Schreiber’s Will specifically devises the lots and the CDs to

Jaime Harlicker and the children of Donald Watkins. But neither the lots nor the CDs

remained in Schreiber’s estate on the date of his death, which raises the question of

whether the devises were adeemed. Ademption is “[t]he destruction or extinction of a

testamentary gift by reason of a bequeathed asset’s ceasing to be part of the estate at the

time of the testator’s death.” Black’s Law Dictionary 47 (Bryan A. Garner ed., 10th ed.

2014). At common law, a specific devise of property was adeemed or extinguished if the

property was not part of the estate on the date of the decedent’s death. Title 72, chapter

2, MCA, Annotations, Official Comments at 613 (2012). However, under the Uniform

Probate Code, Montana allows for the nonademption of some specific devises. Section

72-2-616, MCA provides:

       (1) A specific devisee has the right to the specifically devised property in
       the testator’s estate at death and: . . .
       (f) unless the facts and circumstances indicate that ademption of the devise
       was intended by the testator or ademption of the devise is consistent with
       the testator’s manifested plan of distribution, the value of the specifically
       devised property to the extent the specifically devised property is not in the

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       testator’s estate at death and its value or its replacement is not covered by
       subsections (1)(a) through (1)(e).

This section “creates a mild presumption against ademption by extinction, imposing on

the party claiming that an ademption has occurred the burden of establishing that the facts

and circumstances indicate that ademption of the devise was intended by the testator or

that ademption of the devise is consistent with the testator’s manifested plan of

distribution.” Holtz v. Deisz, 2003 MT 132, ¶ 35, 316 Mont. 77, 68 P.3d 828 (citing

Official Comments to § 72-2-616, MCA).

¶14    The District Court correctly concluded that Schreiber did not intend ademption of

his specific devise of the lots. After devising the lots to Jaime Harlicker and the children

of Donald Watkins, Schreiber explicitly acknowledged the possibility that the lots may

not be part of his estate on the date of his death. His Will provides that “in the event of

sale or disposition of said lots, or any of them, any receipts, payments, proceeds,

certificates, deposits, income or accounts as a result of or arising out of the sale or

disposition of said lots, or any of them” are devised to the named beneficiaries. Such a

provision only reinforces the existing “mild presumption” against ademption.

¶15    The personal representative, as the party claiming the devise of the lots was

adeemed, bore the burden of establishing that the testator intended ademption or that

ademption is consistent with the testator’s plan of distribution. He did not meet that

burden. John maintains that the proceeds from the sale of the lots must be traceable in

order to be distributable. But the Will insists on no such tracing requirement; it simply

devises to the named beneficiaries “any receipts, payments, proceeds, certificates,

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deposits, income or accounts” that arise from the sale of the lots. As the District Court

noted, by insisting on tracing the proceeds of the sales, John effectively interpreted this

provision out of the Will.

¶16    The words of a writing are to be given their primary and general meaning, unless a

technical meaning was used and understood.          Section 1-4-107, MCA.        Although

“proceeds” does have a technical meaning in some instances—for example, in the

bankruptcy code and Article 9 of the Uniform Commercial Code—its primary and

general meaning is simply “the profits or returns from a sale.” Webster’s Unabridged

Dictionary 1542 (2d ed. 2001). Schreiber’s sale of the lots in 2005 resulted in proceeds

of $60,000, which he devised to the named beneficiaries in his Will. The District Court

correctly concluded that Schreiber did not intend ademption, so the proceeds of the sale

of the lots are to be distributed to Jaime and the children of Donald Watkins, regardless

of whether the original funds can be traced through Schreiber’s accounts using the FIFO

or any other method.

¶17    However, the language in Schreiber’s Will devising the CDs differs from the

language devising the lots. Regarding the CDs, Schreiber simply devised “[t]hose certain

five (5) certificates of deposit now held by me and in my name in NMBA, along with any

income and accumulations therein.” The five NMBA CDs were no longer in existence

on the date of Schreiber’s death, and the Will makes no reference to proceeds from these

CDs. It is also notable that Schreiber held CDs in other banks but did not devise them or

designate them as a back-up to the NMBA CDs. Following “the bedrock principle of

honoring the intent of the testator,” Holtz, ¶ 23, it is clear that Schreiber intended

                                            8
ademption of the devise of the CDs. Accordingly, the devise of the five NMBA CDs is

adeemed.    Section 72-2-616, MCA; Title 72, chapter 2, MCA, Annotations, Official

Comments at 613 (2012).         The District Court incorrectly ordered the personal

representative to distribute to the named beneficiaries the value of those CDs.

¶18     Did the District Court err when it rejected the final accounting submitted by the
        personal representative?

¶19     The District Court denied the personal representative’s final accounting and

petition for distribution and instructed the personal representative to file an amended

accounting that provides distribution to Jaime and the children of Donald Watkins

equivalent to the value of the lots and CDs. Although the District Court incorrectly

concluded that the devise of the CDs had not been adeemed, it did not err in rejecting the

final accounting. We affirm the District Court’s rejection of the final accounting and

remand with instructions to the District Court to order the personal representative to file

an amended accounting that distributes the value of the lots but not the value of the CDs

to the named beneficiaries. The amended accounting should also clarify the fate of

certain items of property Schreiber held in joint tenancy with rights of survivorship with

John.

¶20     Under the Uniform Probate Code, the term “joint tenants with the right of

survivorship” “includes co-owners of property held under circumstances that entitle one

or more to the whole of the property on the death of the other or others . . . .” Section

72-1-103(27), MCA. We have held that “[o]rdinarily, upon the death of one joint tenant,

the decedent’s ownership interest ceases and the jointly-held property immediately passes

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to the surviving joint tenant as a matter of law.” In re Estate of Garland, 279 Mont. 269,

271, 928 P.2d 928, 930 (1996) (citing Vogele v. Estate of Schock, 229 Mont. 259, 263,

745 P.2d 1138, 1140 (1987)). Thus, any property Schreiber held in joint tenancy passed

immediately to the joint tenant upon his death and should not have been included in the

distributable estate.

¶21    The record reflects that John and Schreiber held a checking account and some

silver in joint tenancy at the time of Schreiber’s death. The fate of this property was not

clear from the final accounting. In the “Assets on Hand at Date of Death” section of the

final accounting, John included $38,974.64 from the joint checking account.           Also

included was 1,247 ounces of silver valued at $27,005.03 that Schreiber held in a safe

deposit box in joint tenancy with John. Then in the “Cash Disbursements” section of the

final accounting, John reported that the $38,974.64 from the checking account had been

disbursed to him as joint tenant. The value of the silver was not accounted for under

“Cash Disbursements” but was erroneously included in the net distributable estate. John

now argues that the District Court erred when it failed to exclude the safe deposit box and

checking account from the distributable estate.        After several misstatements and

miscalculations, the personal representative reached the correct conclusion in his reply

brief that the net distributable estate should exclude both the value of the checking

account and the value of the silver, both of which should be disbursed to him as joint

tenant. The amended accounting should reflect disbursements of property held in joint

tenancy and a net distributable estate of $111,110.33, not $138,115.39, as appeared in the

final accounting.

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¶22 The District Court did not err when it denied the final accounting and petition for

distribution because the accounting contained errors. An amended accounting should

distribute to Jaime Harlicker and the children of Donald Watkins the value of the three

lots but not that of the five certificates of deposit, and should exclude from the

distributable estate the value of property held in joint tenancy with John.

                                     CONCLUSION

¶23    For the foregoing reasons, we affirm in part and reverse in part the District Court’s

February 12, 2015 Order and remand to the District Court for issuance of an amended

order in accordance with this Opinion.

                                                 /S/ PATRICIA COTTER

We Concur:

/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ LAURIE McKINNON

Justice Jim Rice, concurring.

¶24    I concur with the Court’s holdings, but I reach those conclusions via slightly

different reasoning.

¶25    Schreiber devised the lots, as well as any receipts, proceeds or deposits arising out

of the sale or disposition of the lots, to a grandchild and great grandchildren. The Court

sees the proceeds provision as having the effect of “reinforc[ing]” the presumption

                                            11
against ademption, Opinion, ¶ 14, but I consider the proceeds to be, not merely an

enhancement of the devise of the lots, but a specific devise itself to which the

anti-ademption statute must be applied. In other words, had Schreiber’s Will simply

stated, “I give the proceeds of the sale of my lots” to the devisees, the proceeds would

clearly stand on their own as a specific devise. That is the same situation that developed

here, following the sale of the lots, and I believe the proceeds should be analyzed in that

way.

¶26    John took the position that the proceeds of the lots had to be traceable for the

devise to be valid. The Court rejects this position, reasoning that the Will imposed no

tracing requirement and that “by insisting on tracing the proceeds of the sale, John

effectively interpreted this provision [regarding proceeds] out of the Will.” Opinion,

¶ 15. I also reject John’s position that the proceeds had to be traceable for the devise to

be valid, but I would not go so far as to say that tracing itself was inappropriate merely

because the Will imposed no such requirement. Rather, I believe the effort to trace the

proceeds was an appropriate tool in gathering evidence and making a determination from

“the facts and circumstances” whether “ademption of the devise was intended by”

Schreiber or was “consistent with [Schreiber’s] manifested plan of distribution.”

Section 72-2-616(1)(f), MCA.      Had the proceeds been traceable and found to be

preserved intact, the case against ademption would have been strengthened to a certainty.

Here, while the proceeds could not be traced, that fact alone, in my view, did not

overcome the presumption against ademption, given that sufficient other cash monies

were held by the Estate to permit distribution of “the value of the specifically devised

                                            12
property.” Section 72-2-616(1)(f), MCA. Again, the specifically devised property for

this analysis is, not the lots, but the proceeds.

                                                    /S/ JIM RICE

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