In re:  Estate of Robert W. Otto, a/k/a Robert William Otto and Robert Otto, Deceased.

In re:  Estate of Robert W. Otto, a/k/a Robert William Otto and Robert Otto, Deceased. A06-860, Court of Appeals Unpublished, May 15, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-860

 

In re:  Estate of Robert W. Otto,

a/k/a Robert William Otto

and Robert Otto, Deceased.

 

Filed May 15, 2007

Affirmed
Klaphake, Judge

 

Washington County District Court

File No. P7-03-5968

 

Michael C. Hager, 301 Fourth Avenue South, Suite 270, Minneapolis, MN  55415 (for appellant James Otto)

 

Gene E. Adkins, Hitchcock Law Firm, P.L.L.P., 1465 Arcade Street, St. Paul, MN  55106 (for respondent William Otto)

 

Catherine Wolff, 5435 Rice Lake Road, Duluth, MN  55803 (pro se respondent)

 

Michelle A. Cain, 455 Burlington Road, St. Paul, MN  55119 (nominated trustee of Robert W. Otto Education Trust)

 

            Considered and decided by Ross, Presiding Judge, Toussaint, Chief Judge, and Klaphake, Judge.

U N P U B L I S H E D   O P I N I O N

KLAPHAKE, Judge

            Appellant James Otto challenges the district court's determination that a devise in his father's will of a certificate of deposit was specific, that the devise was adeemed by extinction, and that the bonds purchased with the proceeds of the certificate should be placed in the residue of the estate.  Because the district court did not clearly err in finding that the devise to appellant is specific and because none of the exceptions to ademption that have been adopted by the Minnesota legislature apply here, we affirm.

FACTS

            The will at issue here was executed by Robert W. Otto in 1998.  Of particular importance to this appeal is the following paragraph:

I devise . . . one-half (1/2) of any Minnesota Power and Light Company common stock which I own at the time of my death and my two Certificates of Deposit, currently held by Piper Jaffray (Provident Bank Ohio Certificate of Deposit and Bankers Trust Co. Certificate of Deposit) to my son, JAMES OTTO [appellant herein].

 

At that time, the Provident Bank CD was valued at $25,000.

            Three months after execution of the will, the Provident Bank CD was called by the issuer and redeemed.  With the proceeds, other bonds were purchased, including a $15,000 municipal bond of Paynesville, Minnesota, and a $10,000 St. Paul HRA Care.  The bonds continued to be held in the Piper Jaffray investment account.

            Appellant's mother died in 2001; his father died in 2003, approximately five years after the Provident Bank CD was redeemed.  Appellant's brother, respondent William Otto, was appointed personal representative and distributed the following devises under the will:  $1,000 to one daughter; $86,006 in stocks and dividends to appellant; $122,443 in stocks and dividends to respondent and his wife; and $36,473 in stocks and dividends to another daughter and her husband.  In total, appellant received approximately $120,000 in probate and non-probate transfers from the estate.  At the time of the final account, the residue of the estate contained approximately $297,000 to fund an education trust for the great grandchildren.

            Respondent thereafter petitioned for an order of complete settlement and a decree of distribution, for a determination of disposition of personal property, and for interpretation of the devise to appellant.  Following a hearing, the district court found that the Provident Bank CD was a specific devise that adeemed by extinction and that the bonds purchased with the proceeds of the certificate were part of the residue of the estate.

D E C I S I O N

            A district court's "[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous."  Minn. R. Civ. P. 52.01.  Findings are "clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made."  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999).  "If there is reasonable evidence to support the district court's findings, we will not disturb them."  Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999).

            When construing a will, a court should "‘ascertain the actual intention of the testator as it appears from a full and complete consideration of the entire will when read in light of the surrounding circumstances at the time of the execution.'"  In re Estate of Zagar, 491 N.W.2d 915, 916 (Minn. App. 1992) (quoting Matter of Hartman, 347 N.W.2d 480, 482-83 (Minn. 1984)).  A specific devise occurs when a testator's intent is for the devisee to receive the specific item mentioned in the will, not merely a corresponding amount in value.  In re Estate of Lund, 633 N.W.2d 571, 573-74 (Minn. App. 2002).  A general or demonstrative devise, on the other hand, is a "money gift, made a charge on a specific fund and directed to be paid out of that fund, but payable at all events even if the fund fails."  Id.  Courts favor construing a devise as general rather than specific because of the potentially harsh results that can occur with a specific devise.  Id.

            Here, with the exception of a $1,000 devise to one of his daughters, the devises all refer to specific shares of common stock or certificates of deposit.  At the hearing, respondent confirmed that his parents "divided their property between their kids in kind rather than by percentages" and that "their basic plan was to divide some of their property between their children, and then . . . set up a trust for the education of their great grandchildren."  He agreed that the will "started out with the intent that [the devises] would all be even" and that his parents "wanted to treat their kids fairly equally," even though the value of the various stocks might fluctuate.

            Based on the language of the will and on the testimony given by respondent regarding his father's intent, the district court found that the devise of the Provident Bank CD was specific.  Because reasonable evidence supports this finding and because we are not left with a definite and firm conviction that a mistake has been made, we affirm the district court's finding as not clearly erroneous.

            Once a devise is found to be specific, it fails or is adeemed if the fund or property bequeathed is not in the estate at the time of the testator's death.  Lund, 633 N.W.2d at 573 (citing In re Douglas' Estate, 149 Minn. 276, 278, 183 N.W. 355, 356 (1921)).  By law, a "devise . . . that fails for any reason becomes part of the residue."  Minn. Stat. § 524.2-604 (2006).  The Minnesota legislature, however, has adopted certain exceptions to ademption of specific devises.  Minn. Stat. § 524.2-606(a), (b) (2006).

            The district court examined these statutory exceptions, but determined that none applied here.  In particular, the court explained:

Minn. Stat. §524.2-606(a) and (b) address the issue of non-ademption of specific devises.  Subsection (b) does not apply as neither [of the parents was] under a conservatorship, guardianship, or subject to durable power of attorney at the time the Provident CD was redeemed.

 

            Minn. Stat. §524.2-606(a) contains four subparts, none of which apply, in determining the right of an individual to receive a specific devise.  Minnesota has not adopted two additional subsections, which are contained as subsections 5 and 6 to the Uniform Probate Code (UPC).  Subsection 5 of the UPC provides as follows:

 

                       (5)  Any real property or tangible personal property owned by the testator at death which the testator acquired as a replacement for specifically devised real property or tangible personal property.

 

It is quite likely that had the Minnesota Legislature adopted subsection 5 of the UPC, this matter would not be before the Court.  [Appellant] would, pursuant to UPC §2-606(a)(5) be entitled to tangible personal property owned by [his father] at the time of his death which was "acquired as a replacement for specifically devised . . . tangible property."  The Court need not reach the issue of whether [appellant] would be entitled to proceeds acquired as a result of the additional infusion of money by [his father] to purchase the St. Paul HRA bond.  Rather, because Subsection 5 of the UPC has never been adopted in Minnesota, the Court is left with the language of Minn. Stat. §524.2-604(a), requiring that the devise become part of the residue of the estate.

 

The district court's analysis is legally sound.

            Appellant nevertheless argues that his father's intent should be given effect and that the devise should be distributed to him either as a general devise or as a specific devise without ademption under the UPC.  Appellant further argues that a change in the form of the property should not cause ademption and that extinction by ademption can be avoided if the form of the devise has not changed substantially.  Appellant admits that there are no Minnesota cases applying this type of a form-and-substance analysis to a specific devise.  As respondent counters, appellant's arguments are flawed because he relies on subsections of the UPC that have not been adopted in Minnesota and because he relies on dicta in Lund, 633 N.W.2d at 574, which cites to these subsections of the UPC that have not been adopted in Minnesota.[1]

            We therefore affirm the district court's decision.

            Affirmed.

 

[1]  Comments to the UPC indicate that subsections (a)(5) and (a)(6) were drafted to recognize the "intent" theory and to break away from the "identity" theory of ademption.  See Unif. Probate Code § 2-606 (1990 Rev. Art. II), 8 Pt. I U.L.A. 177 (1998) & 48-49 (Supp. 2006).  The Minnesota legislature clearly chose to continue to follow the identity theory when it amended Minn. Stat. § 524.2-606 (1992) and replaced it with a modified version of UPC § 2-606 that did not include subsections (a)(5) and (a)(6).  1994 Minn. Laws ch. 472, § 53.  Despite subsequent amendments to Minn. Stat. § 524.606, the legislature still has not adopted these subsections of the UPC.  See 1997 Minn. Laws ch. 9, § 8; 2004 Minn. Laws ch. 146, art. 3, § 41.