MACKEY (BETTY), ET AL. CAMPBELL VS. HINSON (GREG), ET AL.
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RENDERED: DECEMBER 4, 2009; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-002328-MR
BETTY MACKEY; EMERY JAY YELTON II;
CAROLYN HINSON; AND BRENDA FRALEY
v.
APPELLANTS
APPEAL FROM CAMPBELL CIRCUIT COURT
HONORABLE JULIE REINHARDT WARD, JUDGE
ACTION NO. 08-CI-00661
GREG HINSON/CHARLES A. YELTON,
CO-EXECUTORS OF THE ESTATE OF DIANNE
HILL, DECEASED; THE SUSAN G. KOMEN
BREAST CANCER FOUNDATION, INC.;
AMERICAN CANCER SOCIETY, INC.; THE
ARTHRITIS FOUNDATION, INC., NATIONAL
HEADQUARTERS; AND EASTERN KENTUCKY
UNIVERSITY FOUNDATION, INC.
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: LAMBERT AND TAYLOR, JUDGES; HENRY,1 SENIOR JUDGE.
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Senior Judge Michael L. Henry sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
LAMBERT, JUDGE: This is a will contest over a portion of the residuary estate
of Dianne Hill. For the reasons stated herein, we affirm the judgment of the
Campbell Circuit Court.
Born in 1943, Hill executed a will on September 23, 2005. Upon her
death from lung cancer on September 29, 2007, Hill’s will was admitted to probate
in Campbell District Court on October 5, 2007. Pursuant to the terms of the will,
Appellees Charles A. Yelton and Greg Hinson were appointed co-executors.
Hill was never married and had no children. Her parents predeceased
her. Hill’s only living heirs at the time of both her will execution and her death
were her first cousins and appellants herein, Betty Mackey, Emery Jay Yelton II,
Carolyn Hinson, and Brenda Fraley [hereinafter “the heirs”]. In her will, Hill
made specific cash bequests to friends and family, including cash bequests to each
appellant, totaling $101,500, as well as specific in-kind gifts of personal property
appraised at a total value of $16,850.
After making the cash bequests and in-kind gifts of personal property,
Hill directed as follows:
All the rest and residue of my property which I may own
or have the right to dispose of at the time of my death,
both real and personal, of every kind and description and
wheresoever situated (my “RESIDUARY ESTATE”), I
give absolutely and forever as follows:
(a)
One-fourth to be divided between the Susan G.
Komen Breast Cancer Foundation at Dallas, Texas,
to be used for breast cancer research, but not to
exceed $50,000, and any excess of said one-fourth
over $50,000 to National Headquarters of the
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American Cancer Society, Inc. at Atlanta, Georgia,
to be used for cancer research, but not to exceed
$100,000;
(b)
One-fourth to the National Headquarters Arthritis
Foundation at Atlanta, Georgia, to be used for
arthritis research, but not to exceed $100,000, and
any excess of said one-fourth over $100,000 to be
added to the residuary bequest to Eastern
Kentucky University at Richmond, Kentucky,
under paragraph [c] below.
(c)
One-half to Eastern Kentucky University
Foundation . . . as an endowment under the name
of “Dianne Hill Scholarship Fund” with income
only applied to scholarships to be allocated to
students from Bracken, Campbell, Mason, and
Pendleton Counties in Kentucky who have
achieved a minimum cumulative grade point
average of 2.75 over the previous two school
years.
At the time of her death, the value of Hill’s residuary estate was estimated to
exceed $1,640,000. Thus, one-fourth of Hill’s residuary estate was well over the
$150,000 specifically designated in paragraph (a) above.
On April 21, 2008, the co-executors of Hill’s estate filed a declaration
of rights and fiduciary instructions action in Campbell Circuit Court. In this
action, the co-executors sought guidance from the court as to the distribution of
approximately $260,000, or 16 percent, of Hill’s total residuary estate. The coexecutors claimed the will was unambiguous as to the question of Hill’s intent to
distribute her entire estate, including the entirety of her residuary estate to the four
named charities, but was ambiguous as to which charity or charities were entitled
to the undesignated portion of the residuary estate. The co-executors contended
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that since Eastern Kentucky University was the only residuary beneficiary without
a dollar limitation on its bequest, Eastern Kentucky University should be entitled to
the entire undesignated portion of the residuary estate.
On May 16, 2008, Hill’s heirs filed an answer to the co-executors’
declaration of rights action, claiming that Hill was partially intestate. Because
approximately 16 percent of Hill’s estate was not bequeathed to any specific party
in Hill’s will, the heirs argued that the approximately $260,000 in undesignated
funds should pass to them as Hill’s sole heirs via the intestacy laws. The Susan G.
Komen Breast Cancer Foundation, Inc. also filed an answer and counterclaim to
the co-executors’ declaration of rights action, claiming that it was entitled to a
portion of the approximately $260,000 in undesignated funds as a named residual
beneficiary of Hill’s estate.
After considering the legal arguments and evidence submitted by all
participating parties, the trial court entered a final order of summary judgment
distributing the undesignated residuum on October 28, 2008. This order was later
amended on November 25, 2008. In its final summary judgment order, as
amended, the trial court found Hill’s will to be unambiguous as to the following
determinations: (1) Hill intended to distribute her entire estate; and (2) Hill
intended to distribute any undesignated portion of her estate according to the
language set forth in the will’s residuary clause. Based on these legal conclusions,
the trial court apportioned the undesignated portion (approximately $260,000) of
Hill’s estate pursuant to the terms of the residuary clause set forth in her will. In
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other words, the trial court filtered the money through the residuary clause a
second time in order to complete the distribution of Hill’s estate.
Thus, one-fourth (approximately $65,000) of the disputed amount was
distributed--$50,000 to the Susan G. Komen Breast Cancer Foundation and the
remainder (approximately $15,000) to the American Cancer Society. One-fourth
not exceeding $100,000 (approximately $65,000) was distributed to the Arthritis
Foundation. Finally, one-half (approximately $130,000) was distributed to Eastern
Kentucky University. From this order, the heirs appeal as a matter of right to this
Court.
The heirs’ sole argument on appeal is that the trial court erred as a
matter of law in failing to find Hill partially intestate with respect to the
approximately $260,000 undesignated portion of Hill’s estate. We agree with the
trial court that Hill’s will was unambiguous in its direction that all undesignated
portions of Hill’s estate shall be distributed pursuant to the residuary clause
therein. We therefore find no error in the trial court’s finding of no partial
intestacy.
As wills are interpreted under the same standards as contracts are
interpreted, we shall apply the de novo standard of review to this case. Compare
Dils v. Richey, 431 S.W.2d 497, 498 (Ky. 1968), and Ratcliff v. Higgins, 851
S.W.2d 455, 457 (Ky. 1993), with Abney v. Nationwide Mutual Ins. Co., 215
S.W.3d 699, 703 (Ky. 2006).
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The very making of a will creates the presumption that the testator did
not intend for any portion of his or her estate to pass intestate. Sigmon v. Moore’s
Adm’r, 297 Ky. 525, 180 S.W.2d 420, 422 (1944). “[I]f a will is susceptible of two
interpretations, one disposing of property and the other not, that construction
disposing of all property will be favored.” Id. The presumption against intestacy
is even stronger when a will contains a residuary clause. Lester’s Adm’r v. Jones,
300 Ky. 534, 189 S.W.2d 728, 730 (1945). In the absence of contrary direction in
the will, residuary clauses shall be construed “liberally so as to pass all of the
testator’s estate which is not otherwise disposed of and any exclusion from its
operation must be plainly and unequivocally manifested by the will.” Sigmon, 180
S.W.2d at 422. See also Breckinridge v. Breckinridge’s Ex’rs, 264 Ky. 82, 94
S.W.2d 283, 288 (1936); Andrew’s Ex’x v. Spruill, 271 Ky. 516, 112 S.W.2d 402,
408 (1937); Clay v. Security Trust Co., 252 S.W.2d 906, 907-08 (Ky. 1952).
We agree with the trial court that the residuary clause set forth in
Hill’s will unambiguously manifested Hill’s intent to distribute all of her property,
including property which was not otherwise disposed of or anticipated by Hill at
the time of her will execution. In fact, the very purpose of a residuary clause is to
dispose of such unanticipated or forgotten property. See Chrisman v. Allman, 302
Ky. 144, 194 S.W.2d 175, 176 (1946) (“It is true also that one of the functions of a
residuary clause is to dispose of such property as the testator may have forgotten or
have been ignorant of its ownership.”); Ward v. Curry’s Ex’r, 297 Ky. 420, 180
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S.W.2d 305, 311 (1944) (the balance of all undesignated property in an estate is
disposed of by the residuary clause).
Extending as far back as 1909, a long line of cases establish that
property not otherwise disposed of in wills such as Hill’s shall pass via the
residuary clause. In Deppen’s Trustee v. Deppen, 132 Ky. 755, 117 S.W. 352
(1909), the testatrix declared that the total value of her estate was $10,000 and that
she wished for the estate to be equally divided between her two children with
$5,000 going to each child. Id. at 353. At the time of her death, the testatrix’s
estate was worth considerably more than $10,000, leaving a substantial amount of
money not specifically distributed by the will. Id. In construing this will, the
Court held:
[A] cardinal rule of construction is that in making a will
the testator is presumed to intend to dispose of his entire
estate, and though he may make a mistake in his estimate
of the extent or value of his estate, that is not itself a
ground for setting aside his will or disregarding his
intention. It frequently occurs that devises cannot be
paid in full, and where the testator’s estate is in stocks or
other securities, he is quite liable to mistake its value.
We may safely say that, where there is a general
description showing that the testator intended to dispose
of his entire estate, words of quantity will not control.
Id. at 354.
We find this case analogous to the facts set forth in Deppen, supra, in
that not only is there a general description showing that Hill intended to dispose of
her entire residuary estate, but also Hill further included percentages in the
residuary clause that amounted to a 100 percent distribution of the residuum. The
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fact that the monetary caps set forth in subsection (a) of this clause are not in
coherence with the one-quarter allocation directed in that subsection shall,
according to the holding set forth in Deppen, supra, not control this case.
In any event, even if we were to presume that an outright omission
was committed by either Hill or her attorney in the drafting of Hill’s will, we hold
that the residuary clause contained therein operated to save the undesignated
portion of Hill’s estate from intestacy. Authority for this holding is found in Ward
v. Curry’s Ex’r, supra. In that case, the testatrix revoked a specific bequest made
in her will by codicil but forgot or neglected to redistribute the revoked bequest in
that same document. 180 S.W.2d at 308. The Court held that since the will
contained a residuary clause, the omitted portion of the testatrix’s estate naturally
passed to the residuary beneficiaries. Id. at 311. See also Lester’s Adm’r v. Jones,
189 S.W.2d at 730 (undesignated remainder interest in monetary bequest passed to
residuary beneficiaries); Sigmon v. Moore’s Adm’r, 180 S.W.2d at 422 (balance of
estate not specifically disposed of passed to residuary beneficiaries); Settle v.
Vercamp, 485 S.W.2d 251, 253-54 (Ky. 1972)(where will granted life estate in
property but did not designate remaindermen and life tenant predeceased testator
and will contained residuary clause, legacy did not lapse but became part of
testator's estate to which residuary clause of will was applicable).
In the case at bar, the heirs concede both the presence of a residuary
clause in Hill’s will and Hill’s likely intent to dispose of the entirety of her
property. In fact, it is apparent that in any case Hill did not intend to pass any
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portion of the residuum to her heirs since they are not named as residuary
beneficiaries but rather were each bequeathed cash gifts by Hill in the will.
However, the heirs cite Pimpel v. Pimpel, 253 S.W.2d 613 (Ky. 1952), and
Robinson v. Von Spreckelsen, 287 Ky. 705, 155 S.W.2d 30 (1941), as authority for
their argument that even if unintended, intestacy is mandated “when the fact
becomes apparent that some part of the estate was not disposed of [in the will].”
Pimpel, 253 S.W.2d at 614.
While we agree with the general rule set forth in Pimpel, supra, and
Robinson, supra, that the “presumption [against intestacy] cannot be applied to
supply a disposition which was not made or intended,” there is no such
circumstance in this case. Pimpel, 253 S.W.2d at 614. In both Pimpel, supra, and
Robinson, supra, the testator’s will contained no residuary clause and hence, there
was no express or implied disposition in the testator’s will for property not
specifically bequeathed. Id. In contrast, the will in this case contained a residuary
clause which manifestly expressed Hill’s intent to distribute all of her property and
operated to effectuate an actual distribution of all of Hill’s property not otherwise
disposed of in the will.
The heirs further argue, and the trial court found, that no extrinsic
evidence was necessary to determine the distribution of property directed by Hill’s
will. We agree. The will contained a residuary clause which unambiguously set
forth Hill’s intent to distribute the entirety of her estate, including property which
was not otherwise specifically disposed of in the will. The fact that the distribution
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section of the residuary clause either inadvertently omitted a named beneficiary for
the remainder interest set forth in subsection (a) of that article or incorrectly
calculated the size Hill’s estate is without effect.
To be sure, we are guided by this Court’s holdings in Belew v. Sharp,
696 S.W.2d 788 (Ky. App. 1985), and Conley v. Brewer, 666 S.W.2d 751 (Ky.
App. 1983). In Belew v. Sharp, this Court held that a lapsed bequest located in the
residuum itself did not render the entire residuary clause invalid or ineffective in its
operation or purpose “unless, of course, there is only one beneficiary named in the
residuum.” 696 S.W.2d at 791. As support for its holding, the Belew Court cited
KRS 394.500, which provides: “Unless a contrary intention appears from the will,
real or personal estate, comprised in a devise or bequest incapable of taking effect,
shall be included in the residuary devise contained in the will.” In Conley v.
Brewer, this Court also cited KRS 394.500 as authority for its holding that revoked
portions of a testatrix’s will, including a portion of the residuary clause, passed to
the remaining residuary devisees and not to the heirs at law of the testatrix. 666
S.W.2d at 754.
We therefore hold that a miscalculation or omission, if any, which
resulted in a portion of Hill’s estate, including a portion of Hill’s residuary estate,
going undesignated in her will did not result in intestacy as to this undesignated
portion. Rather, this contingency was expressly and manifestly provided for by the
general and manifest language of total distribution set forth in the will’s residuary
clause. Accordingly, the heirs’ argument that Hill died partially intestate is
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without merit and must be rejected. As established by over a century of precedent,
the very purpose and function of the residuary clause is to account for
miscalculations or omissions such as the one that was made in this case.
For these reasons, we affirm the Campbell Circuit Court’s order, as
amended, holding that Hill was not partially intestate at the time of her death.
ALL CONCUR.
BRIEF FOR APPELLANTS:
Mark Schumacher
Brooksville, Kentucky
BRIEF FOR APPELLEES,
CHARLES A. YELTON AND GREG
HINSON, CO-EXECUTORS OF
ESTATE OF DIANNE HILL:
Michael A. Clark
Brooksville, Kentucky
Robert G. Zweigart
Maysville, Kentucky
BRIEF FOR APPELLEE, THE
SUSAN G. KOMEN BREAST
CANCER FOUNDATION, INC.:
Joseph E. Conley, Jr.
Florence, Kentucky
BRIEFS FOR APPELLEES,
AMERICAN CANCER SOCIETY,
INC.; THE ARTHRITIS
FOUNDATION, INC., NATIONAL
HEADQUARTERS; AND EASTERN
KENTUCKY UNIVERSITY
FOUNDATION, INC.:
None.
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