In re Margaret Mastny Revocable Trust
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In re Margaret Mastny R evocable Trust.
Lynnette Schellpeper et al., appellants and
cross-appellees, v. Ernie M astny, appellee
and cross-appellant, and Elkhorn Valley
Bank & Trust, Trustee, appellee.
In re Emil Mastny R evocable Trust.
Lynnette Schellpeper et al., appellants and
cross-appellees, v. Ernie M astny, appellee
and cross-appellant, and Elkhorn Valley
Bank & Trust, Trustee, appellee.
___N.W.2d___
Filed March 4, 2011.
Nos. S-10-431, S-10-432.
1. Judgments: Collateral Estoppel. The applicability of the doctrine of collateral
estoppel is a question of law.
2. Judgments: Appeal and Error. An appellate court reviews questions of law
independently of the lower court’s conclusion.
3. Trusts: Equity: Appeal and Error. Absent an equity question, an appellate
court reviews trust administration matters for error appearing on the record; but
where an equity question is presented, appellate review of that issue is de novo
on the record.
4. Trusts: Equity: Debtors and Creditors. A trustee’s right of retainer lies
in equity.
5. Appeal and Error. In a review de novo on the record, an appellate court reappraises the evidence as presented by the record and reaches its own independent
conclusions concerning the matters at issue.
6. Judgments: Collateral Estoppel. Under the doctrine of collateral estoppel, also
known as issue preclusion, an issue of ultimate fact that was determined by a
valid and final judgment cannot be litigated again between the same parties or
their privities in any future litigation.
7. ____: ____. Collateral estoppel is applicable where (1) an identical issue was
decided in a prior action, (2) the prior action resulted in a judgment on the merits
which was final, (3) the party against whom the doctrine is to be applied was
a party or was in privity with a party to the prior action, and (4) there was an
opportunity to fully and fairly litigate the issue in the prior action.
8. Trusts: Equity: Debtors and Creditors. The equitable remedy of retainer in the
context of trust administration is based upon the principle that if a testator leaves
property in trust and a beneficiary of the trust was indebted to the testator, the
interest of the beneficiary in the trust estate is subject to a charge for the amount
of his indebtedness, unless the testator manifested an intention to discharge the
debt, or manifested an intention that the beneficiary should be entitled to enjoy
his interest even though he should fail to pay his indebtedness.
9. Actions: Equity: Unjust Enrichment. An action in assumpsit for money had
and received may be brought where a party has received money which in equity
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and good conscience should be repaid to another. In such a circumstance, the law
implies a promise on the part of the person who received the money to reimburse
the payor in order to prevent unjust enrichment.
10. Actions: Proof. In order to maintain an action for money had and received, a
plaintiff must show that (1) the defendant received money, (2) the defendant
retained possession of the money, and (3) the defendant in justice and fairness
ought to pay the money to the plaintiff.
11. Limitations of Actions: Pleadings. The statute of limitations does not operate by
its own force as a bar, but, rather, operates as a defense to be pleaded by the party
relying upon it.
12. Limitations of Actions: Waiver. The benefit of the statute of limitations is
personal and, like any other personal privilege, may be waived and will be
unless pleaded.
Appeals from the County Court for Madison County: R ichard
W. K repela, Judge. Affirmed in part, and in part reversed and
remanded with directions.
David A. Domina and Anneliese M. Wright, of Domina Law
Group, P.C., L.L.O., for appellants.
Cassidy V. Chapman for appellee Ernie Mastny.
Heavican, C.J., Connolly, Gerrard, Stephan, McCormack,
and Miller-Lerman, JJ.
Stephan, J.
These consolidated appeals involve a dispute between three
sisters and their brother regarding assets held by trusts created by their now-deceased parents. The sisters alleged that
their brother was indebted to their parents at the time of the
parents’ deaths and that the trustee should be required to retain
the amount of the debt from the trust assets to be distributed
to their brother. The brother, who farmed with his parents,
denied that he was indebted to them. The county court for
Madison County concluded that there was insufficient evidence
of a debt and ordered the trustee to distribute the trust assets
in accordance with the terms of the trust instruments. The sisters appeal.
FACTS AND PROCEDURAL BACKGROUND
In 1993, Emil Mastny and Margaret Mastny, husband and
wife, created separate inter vivos revocable trusts. Emil was
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the settlor and original trustee of the Emil Mastny Revocable
Trust, and Margaret was the settlor and original trustee of the
Margaret Mastny Revocable Trust. The actual trust instruments are not included in our record. Elkhorn Valley Bank &
Trust is the successor trustee for both trusts and commenced
the trust administration proceedings which are the subject of
these appeals. Ernie Mastny, Lynnette Schellpeper, Merrily
Van Buren, and Lori Suchan are the adult children of Emil and
Margaret and the beneficiaries of the trusts. For most of his
adult life, Ernie participated with Emil in a farming operation
on approximately 700 acres of land owned by his parents and
located in Stanton County.
Margaret died testate on March 20, 2007. At the time of
her death, she was domiciled in Stanton County. Ernie and
Schellpeper were originally appointed as copersonal represent
atives of Margaret’s estate. Upon their resignations, Elkhorn
Valley Bank & Trust became the personal representative. An
inventory filed in the estate proceedings in the county court for
Stanton County on March 13, 2008, showed that at the time
of her death, Margaret owned certain personal property and an
undivided one-half interest in several parcels of real property in
Stanton County totaling approximately 700 acres.
On June 19, 2008, the county court entered an order formally
settling Margaret’s estate. In its order, the court noted that the
personal representative had sought instructions on how to treat
certain “‘notebooks’” that contained financial records kept
by Emil and Margaret. Specifically, the notebooks contained
entries stating that “loan[s]” had been made to their son, Ernie,
or noting that “Ernie owe[d]” them certain sums of money on
various dates. The court found that there was insufficient evidence to proceed against Ernie for any alleged indebtedness
and therefore instructed the personal representative to take no
further action with respect to the notebooks.
In June 2007, the trustee filed a “Petition for Trust
Administration” with respect to Margaret’s trust in the county
court for Madison County. The petition alleged that the trust
assets included the undivided one-half interest in real property
listed on the inventory previously filed in Margaret’s estate.
The trustee requested instruction from the court with regard
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to certain disputes with Ernie regarding farming operations on
the land during the 2007 crop year. Subsequently, the trustee
requested instructions regarding similar disputes involving the
2008 crop year. Most of these issues were resolved, and they
are not directly involved in these appeals.
In June 2008, the trustee filed a “Petition for Trust
Administration” with respect to Emil’s trust. The petition was
filed in the county court for Madison County and requested
instruction from the court on several issues, including whether
Ernie was indebted to his parents based upon the notebooks
referred to above. The petition alleged that Ernie had denied
any indebtedness. The petition refers to an accounting filed by
the trustee, but the accounting does not appear in the record
of the trust administration proceeding involving Emil’s trust.
On July 2, the three sisters filed an “Objection to Trustee’s
Accounting” in which they alleged that the accounting was
incomplete because it did not include Ernie’s indebtedness to
his parents as reflected in the notebooks.
On July 18, 2008, the court entered an order in the trust
administration proceeding involving Emil’s trust in which it
resolved some of the issues on which the trustee sought
instruction and set a hearing as to another of the issues. The
order specifically left open the question of whether Ernie
was indebted to his parents. A similar order was entered on
August 6 in the trust administration proceedings involving
Margaret’s trust.
Emil died on September 20, 2008. As we have noted, the
trust instruments are not included in the record, but the parties
generally agree that the assets in Margaret’s trust included onehalf of the approximately 700 acres of real estate and that the
assets in Emil’s trust included one-half of the same real estate.
According to a summary of trust terms which is included in
the record, each of the beneficiaries is to receive one tract of
the land in his or her own name and another tract is to be conveyed jointly to Ernie, Schellpeper, and Van Buren. Ernie was
given a right of first refusal in the event that any of the sisters
wished to sell their interests during his lifetime, and he was
also given a right to force a sale of any of the property subject
to certain conditions.
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The two trust administration proceedings were apparently
consolidated by the county court sometime between September
and November 2008. On November 7, the court conducted an
evidentiary hearing in both cases at which it considered several
pending matters. The court first considered a motion for partial summary judgment filed by Ernie on November 4 in the
case involving the administration of Margaret’s trust. In this
motion, Ernie sought to establish the preclusive effect of the
order entered in the probate proceedings for Margaret’s estate
in which the court found that the notebooks were insufficient to
establish a debt owed by Ernie to his parents. The court overruled the motion.
Next, the sisters testified and presented documentary evidence with regard to their claim that Ernie owed a debt to his
parents which should be deducted from his trust distribution.
The documentary evidence consisted primarily of the notebooks containing the parents’ handwritten financial records of
the farming operation. Generally, the notebooks show that Emil
and Margaret documented every expense paid in the farming
operation and allocated 50 percent of those expenses to themselves and 50 percent to Ernie. The notebooks also document
amounts Emil and Margaret paid for Ernie’s personal expenses
and allocate 100 percent of those amounts to Ernie. In addition,
the notebooks contain a number of entries indicating that Emil
and Margaret made a “loan” to Ernie and that they allocated
100 percent of that amount to Ernie. The notebooks credit
Ernie with 50 percent of the profit generated by the farming
operation and for any payments made on the farm’s behalf.
Generally, the notebooks treat Emil and Margaret’s dealings
with Ernie as a continuous account and carry forward from year
to year the overall running balance. According to the sisters’
interpretation of the notebooks, Ernie received $570,427.77
from his parents from 1998 through March 20, 2007, and was
indebted to them in that amount. The sisters testified that they
had found no documents indicating that Emil and Margaret had
forgiven any debt and had had no discussions with Emil and
Margaret to that effect.
In a jointly captioned order entered on December 3, 2008,
and filed in each trust administration proceeding, the county
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court found that the evidence had “raised [a] question about
whether or not there is a debt due from Ernie to Emil’s trust.”
The court further found that the trustee had not been provided
with “the necessary information to research” the claim, and it
therefore instructed the trustee to conduct an investigation. The
court reserved ruling on the issue of Ernie’s alleged indebtedness to the trust until a later date. The court ruled, however,
that any payments to Ernie in 2005 and 2006 listed in the
notebooks as a farm expense were not a loan and could not be
considered a trust asset.
After conducting further investigation as ordered by the
court, the trustee issued a jointly captioned report signed by
a trust officer and filed in each trust administration proceeding on September 24, 2009. The report included a detailed
examination of the notebooks and available financial records
maintained by Emil and Margaret during their lifetimes. The
trust officer stated that she was “advised” and “believe[d]” that
Emil, Margaret, and Ernie had an “oral partnership,” whereby
Emil and Margaret had provided all the funds necessary for the
farming operations on the real estate held by the trusts while
Ernie had provided the labor, and that Emil and Margaret
received 50 percent of the net income and Ernie received
the remaining 50 percent. The trust officer further noted that
apparently, “no written partnership agreement exists, and no
partnership income tax returns were filed.” The report summarizes entries in the notebooks designated as “loans” to Ernie,
but notes that the trustee was unable to find any promissory
notes evidencing debt owed by Ernie to either of his parents.
The trustee further reported that it was unable to find any documents showing the terms of payment or due date of any of the
loans referred to in the notebooks and that any such loans may
be subject to defenses based upon the statute of limitations or
the statute of frauds.
The county court conducted a second evidentiary hearing in
the consolidated cases on December 18, 2009. The parties stipulated that if called to testify, the trust officer who prepared the
report would testify as to its content, and that the court could
take judicial notice of the report. The testimony and exhibits
received at the prior hearing were reoffered and received. The
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court also received additional documentary evidence and the
transcript of Ernie’s deposition taken on May 21.
In his deposition, Ernie explained that he had farmed with
his parents since approximately 1975. During that time period,
the parties had a general agreement whereby Ernie provided
farm labor and his parents paid the bills. At the end of the year,
the parties split the net profit. Ernie admitted that the entries in
the notebooks were consistent with the parties’ farming operations, but stated that his parents never said a word to him about
his owing them money, and that he understood that the parties just “settled up” after each farming year and went on. He
understood that his share of the farming expenses was covered
by his labor, although he admitted that Emil also worked full
time on the farm until about 5 years prior to his death. Ernie
stated that he did not know the notebooks existed until after his
parents’ deaths and that he did not believe he owed his parents
any money. Ernie stated that he believed that any amounts
listed as “loans” to him in the notebooks were simply loans
against the “wages” he was earning for his labor.
Ernie admitted that during the time he was farming with
his parents, he had been convicted of three felonies and incarcerated on three occasions. The record does not disclose the
nature of his offenses, other than Ernie’s testimony that they
did not involve victimization of his parents.
In its final order, the county court determined that while the
evidence supported the conclusion that Ernie and his parents
farmed pursuant to an oral partnership, it was not clear how
the partnership actually worked. Noting the conflict between
the sisters’ testimony about Emil and Margaret’s meticulous
recordkeeping and Ernie’s testimony that at the end of each
year, he and his parents “basically settled up and moved on to
the next year,” the court concluded:
The evidence presented would generally show that
although ledgers or accountings of what Emil and
Margaret . . . thought Ernie . . . owed to them may have
been kept there is no evidence that Ernie . . . was ever told
that he owed Emil and Margaret . . . money or was confronted with the fact that he owed them money as based
on the ledgers. Additionally, although there would appear
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to be substantial amounts of money given to him and
called “loans”, there is insufficient evidence to show that
they were in fact loans or that they were not reimbursed
by labor or other means or that he was ever expected to
pay the money back. Furthermore, there were no terms
of payment or any sort of agreement to pay supported by
the evidence.
The court further noted that Emil and Margaret were astute
and intelligent people who could have documented any debt
owed them by Ernie through the use of promissory notes but
did not do so. And the court specifically found that there was
no evidence that Ernie had threatened, intimidated, or exerted
undue influence on his parents. Based upon these findings, the
court overruled the sisters’ objection to the trustee’s accounting, concluded that Ernie owed no debt to the trusts, and
ordered the trustee to administer the trusts as directed by the
trust documents.
ASSIGNMENTS OF ERROR
The sisters assign, restated and summarized, that the court
erred (1) in finding that there was insufficient evidence to prove
that Ernie owed a debt, to the trusts, that was a trust asset; (2)
if it found that the statute of limitations barred recovery; (3) in
finding that a partnership existed; and (4) in failing to tax to
Ernie costs and fees for their lawyer and the trustee’s lawyer.
In a cross-appeal, Ernie asserts, restated, that the court erred
in failing to find that his sisters’ arguments were barred by the
doctrine of collateral estoppel.
STANDARD OF REVIEW
[1,2] Ernie’s cross-appeal raises an issue of collateral estoppel. The applicability of the doctrine of collateral estoppel is a
question of law. An appellate court reviews questions of law
independently of the lower court’s conclusion.
See, Moyer v. Nebraska City Airport Auth., 265 Neb. 201, 655 N.W.2d 855
(2003); Henriksen v. Gleason, 263 Neb. 840, 643 N.W.2d 652 (2002).
D & S Realty v. Markel Ins. Co., 280 Neb. 567, 789 N.W.2d 1 (2010);
Nebraska Pub. Advocate v. Nebraska Pub. Serv. Comm., 279 Neb. 543, 779
N.W.2d 328 (2010).
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The standard of review for the appeal, however, is less
clear. As recently noted by the Court of Appeals, there is
some inconsistency in our case law regarding the appropriate
standard of review in appeals involving the administration of a
trust. We find that clarification of this issue is in order.
The Nebraska Uniform Trust Code, enacted in 2003, applies
to “all trusts created before, on, or after January 1, 2005,” and
to “all judicial proceedings concerning trusts commenced on or
after January 1, 2005.” According to Neb. Rev. Stat. § 30-3821
(Reissue 2008), appellate review under the Nebraska Uniform
Trust Code is governed by Neb. Rev. Stat. § 30-1601 (Reissue
2008). Section 30-1601, which is a part of the Nebraska
Probate Code, states general procedures for appealing cases
arising under the Nebraska Probate Code and the Nebraska
Uniform Trust Code and for superseding judgments during
the pendency of an appeal. But it does not specify a standard
of review.
Instead, that standard has been developed in our case law.
With respect to review of probate cases, our case law provides two slightly different but consistent articulations of the
standard to be applied. In some cases, we have stated very
generally that “[a]ppeals of matters arising under the Nebraska
Probate Code . . . are reviewed for error on the record.” And
in other cases, we have stated more specifically that “absent an
equity question, we review probate matters for error appearing
on the record.” Equity questions arising in appeals involving
the Nebraska Probate Code are reviewed de novo.
Our articulation of the standard of review of appeals involving trusts has been much less consistent. Beginning with In
In re Trust Created by Socha, 18 Neb. App. 471, 783 N.W.2d 800 (2010).
See Neb. Rev. Stat. § 30-38,110(a)(1) (Reissue 2008).
See § 30-38,110(a)(2).
See, e.g., In re Estate of Failla, 278 Neb. 770, 771, 773 N.W.2d 793,
794 (2009). Accord In re Estate of Dueck, 274 Neb. 89, 736 N.W.2d 720
(2007).
In re Estate of Hedke, 278 Neb. 727, 742, 775 N.W.2d 13, 27 (2009). See
In re Estate of Cooper, 275 Neb. 322, 746 N.W.2d 663 (2008).
See In re Estate of Everhart, 18 Neb. App. 413, 783 N.W.2d 1 (2010).
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re Zoellner Trust, decided in 1982, we have stated, rather
broadly, that all “[a]ppeals involving the administration of a
trust are equity matters and are reviewable in this court de
novo on the record.” In re Zoellner Trust was an appeal from
an order removing a trustee. But in arriving at the standard of
review, we relied on Scully v. Scully,10 which involved a bene
ficiary’s attempt to compel a trustee to deliver trust property. In
that case, this court stated: “It is elementary that appeal to this
court in an equity action such as that at bar is heard de novo
upon the record.”11
We have since applied the de novo on the record standard
in appeals involving various issues of trust administration,
including whether payment for a trustee’s service was proper,12
whether a trustee improperly transferred trust funds to himself,13 whether a settlor had revoked a trust prior to her death,14
the manner in which trust assets were to be distributed to
beneficiaries,15 and whether a trustee of a discretionary support trust could pay the beneficiary’s last-illness expenses after
her death.16
But in at least two other appeals involving trust administration, we applied the error on the record standard applicable
to probate appeals. In In re Loyal W. Sheen Family Trust,17 a
case involving removal of trustees which was decided before
the enactment of the Nebraska Uniform Trust Code, we
reviewed the order for error on the record, based upon the
former provision of the Nebraska Probate Code which gave
10
11
12
13
14
15
16
17
In re Zoellner Trust, 212 Neb. 674, 678, 325 N.W.2d 138, 141 (1982).
Scully v. Scully, 162 Neb. 368, 76 N.W.2d 239 (1956).
Id. at 373, 76 N.W.2d at 244.
In re Trust of Rosenberg, 273 Neb. 59, 727 N.W.2d 430 (2007).
In re Estate of Hedke, supra note 7.
In re Trust Created by Isvik, 274 Neb. 525, 741 N.W.2d 638 (2007).
In re Family Trust Created Under Akerlund Trust, 280 Neb. 89, 784
N.W.2d 110 (2010).
In re Trust Created by Hansen, 274 Neb. 199, 739 N.W.2d 170 (2007).
In re Loyal W. Sheen Family Trust, 263 Neb. 477, 640 N.W.2d 653
(2002).
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probate courts jurisdiction over trust administration proceedings.18 And in In re Trust of Hrnicek,19 we cited an error on
the record standard in a trust administration appeal in which
we recognized that retainer was a valid, equitable remedy
which could be utilized by a trustee to recover a beneficiary’s
indebtedness to a trust.
[3] In In re R.B. Plummer Memorial Loan Fund Trust,20
we recognized both the error on the record standard generally
applied to probate cases and the de novo on the record standard which we had applied to trust administration appeals. In
determining which of these standards to apply in that case, we
focused on the specific issue presented, which was whether the
doctrines of cy pres or deviation could be applied to use trust
income in a manner which was different from the testators’
intent. We determined that because cy pres and deviation were
equitable doctrines, our review was de novo on the record. We
now conclude that this issue-specific approach is preferable
and more consistent with our standard for appellate review
under the Nebraska Probate Code than simply labeling all trust
administration cases as equitable in nature and subject to a de
novo on the record standard of review. Accordingly, we hold
that absent an equity question, an appellate court reviews trust
administration matters for error appearing on the record; but
where an equity question is presented, appellate review of that
issue is de novo on the record.
[4,5] In this case, all of the sisters’ assignments of error
relate to the general question of whether the county court
erred in determining that the trustee should not exercise the
remedy of retainer with respect to Ernie’s alleged indebtedness to the trusts. In In re Trust of Hrnicek, we reaffirmed
that a trustee’s “right of retainer lies in equity.”21 Accordingly,
18
See Neb. Rev. Stat. § 30-2806 (Reissue 1995) (repealed by 2003 Neb.
Laws, L.B. 130, § 143).
19
In re Trust of Hrnicek, 280 Neb. 898, 792 N.W.2d 143 (2010).
20
In re R.B. Plummer Memorial Loan Fund Trust, 266 Neb. 1, 661 N.W.2d
307 (2003).
21
In re Trust of Hrnicek, supra note 19, 280 Neb. at 902, 792 N.W.2d at 146,
citing Fischer v. Wilhelm, 139 Neb. 583, 298 N.W. 126 (1941).
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because an equity issue is presented, our review is de novo
on the record. In a review de novo on the record, an appellate
court reappraises the evidence as presented by the record and
reaches its own independent conclusions concerning the matters at issue.22
ANALYSIS
Collateral Estoppel Does Not Apply
In his cross-appeal, Ernie contends that the issue of whether
the notebooks establish that he is indebted to his parents is
barred by the doctrine of collateral estoppel because it was
decided in Margaret’s estate proceedings that the notebooks
were insufficient evidence of his debt.
[6,7] Under the doctrine of collateral estoppel, also known
as issue preclusion, an issue of ultimate fact that was determined by a valid and final judgment cannot be litigated again
between the same parties or their privities in any future litigation.23 Collateral estoppel is applicable where (1) an identical issue was decided in a prior action, (2) the prior action
resulted in a judgment on the merits which was final, (3) the
party against whom the doctrine is to be applied was a party
or was in privity with a party to the prior action, and (4) there
was an opportunity to fully and fairly litigate the issue in the
prior action.24
Ernie argues that the issue of whether the notebooks established his indebtedness to his parents was presented during
Margaret’s estate proceedings and that because his sisters were
given notice in those proceedings, they had an opportunity to
fully litigate the issue, but they chose not to. He asserts that
the issue was finally decided because the probate judge ordered
that the notebooks were insufficient to establish an indebtedness to the estate and told the personal representative to take
no action on them.
22
In re Family Trust Created Under Akerlund Trust, supra note 15; In re
Estate of Hedke, supra note 7.
23
Amanda C. v. Case, 275 Neb. 757, 749 N.W.2d 429 (2008); Metcalf v.
Metcalf, 17 Neb. App. 138, 757 N.W.2d 124 (2008).
24
Amanda C. v. Case, supra note 23.
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We conclude that Ernie is incorrect. Collateral estoppel does
not apply here because the issue presented is not identical.
Whether the notebooks established an asset of Margaret’s estate
is a different issue from whether the notebooks established an
asset of her trust (or Emil’s trust). We further note that according to the record, the issue of Ernie’s indebtedness was not litigated in the estate proceedings because “the parties had agreed
that the notebook issues would be most properly litigated” in
the trust proceedings. Having once agreed to litigate the issues
in the trust proceedings, Ernie cannot now contend that it was
error for the court to allow him to do so.
Ernie’s Debt to Trusts
[8] The equitable remedy of retainer in the context of trust
administration is based upon the principle that
[i]f a testator leaves property in trust and a beneficiary
of the trust was indebted to the testator, the interest of
the beneficiary in the trust estate is subject to a charge
for the amount of his indebtedness, unless the testator
manifested an intention to discharge the debt, or manifested an intention that the beneficiary should be entitled
to enjoy his interest even though he should fail to pay
his indebtedness.25
As noted, we first recognized this remedy in our recent decision
in In re Trust of Hrnicek.26 In that case, the indebtedness consisted of a loan made by the settlor to one of his children who
was a cobeneficiary of his trust. The terms of the loan were
set forth in a promissory note, and after the settlor’s death, the
beneficiary acknowledged the debt in a settlement agreement
which was approved by the county court. When the beneficiary
subsequently defaulted on the debt, the trustee exercised the
remedy of retainer by applying for a contempt citation with
an alternative purge plan whereby either the beneficiary would
pay the amount due or the trustee would withhold that amount
from the beneficiary’s trust distribution. The county court
25
Restatement (Second) of Trusts § 251A at 634 (1959). See In re Trust of
Hrnicek, supra note 19.
26
In re Trust of Hrnicek, supra note 19.
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granted the application and authorized the trustee to withhold
funds to satisfy the indebtedness. We affirmed, concluding that
“the retainer of a distribution is a valid, equitable remedy available to trustees in situations such as this.”27
[9,10] Here, the trustee did not actively assert the remedy
of retainer, but, instead, requested instruction from the county
court regarding the existence of any indebtedness to which
the remedy could apply and indicated that it would abide by
the court’s determination. The sisters, as interested parties,
have taken the laboring oar in proving the existence of Ernie’s
debt to the trusts. They do so under a theory of assumpsit,
which we have characterized as an action for money had and
received. An action in assumpsit for money had and received
may be brought where a party has received money which in
equity and good conscience should be repaid to another.28 In
such a circumstance, the law implies a promise on the part of
the person who received the money to reimburse the payor
in order to prevent unjust enrichment.29 In order to maintain
an action for money had and received, a plaintiff must show
that (1) the defendant received money, (2) the defendant
retained possession of the money, and (3) the defendant in
justice and fairness ought to pay the money to the plaintiff.30
In the context of these appeals, the question is whether Ernie
would have been liable to his parents under this theory prior
to their deaths.
Resolution of this question necessarily involves an examination of the relationship between Ernie and his parents during
their lifetimes. That relationship had both business and personal aspects which were deeply intertwined within the fabric
of a family farming operation. Whether or not it was accurately
characterized by the trustee and the county court as an “oral
partnership,” the business relationship consisted of Emil and
Margaret providing land and operating capital for the farming
27
Id. at 902, 792 N.W.2d at 146.
Kissinger v. Genetic Eval. Ctr., 260 Neb. 431, 618 N.W.2d 429 (2000);
Fackler v. Genetzky, 257 Neb. 130, 595 N.W.2d 884 (1999).
29
Id.
30
Id.
28
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operation, Ernie providing labor, and the parties dividing the
net profits annually. Ernie lived on a parcel of land owned by
Emil, but each day, he went to his parents’ nearby home to do
chores, and he regularly ate at least one daily meal which was
prepared by Margaret. He assisted his parents with various
tasks, including caring for their house and yard and butchering
chickens. Ernie testified that his parents wanted him to continue the family farming operation after their deaths, and this
testimony is generally consistent with the trustee’s summary
of the provisions of the trust dealing with the distribution of
real property.
But it is also clear from the record that over the years, Emil
and Margaret transferred substantial sums of money directly
to Ernie through checks written by either Emil or Margaret
on their joint bank account. The canceled checks in the record
show that the memorandum line on these checks noted that
the transfer was either for “[f]arm [e]xpenses” or for a “loan.”
Entries in the notebooks generally correspond with the check
records. In addition, the record shows that Emil and Margaret
regularly made other payments to third parties, such as utility
companies, on Ernie’s behalf.
There is no evidence or contention that Ernie reimbursed his
parents for any of these payments during their lifetimes. Thus,
the first and second elements of assumpsit are established, and
we focus our de novo review of the record on the third element:
whether in justice and fairness Ernie was obligated to repay the
money he received from his parents.
We cannot conclude from this record that Ernie in justice
and fairness had an implied legal obligation to repay his parents either for payments they designated as “farm expenses”
or for payments they made on Ernie’s behalf to third parties.
These payments all appear to be related to the family farming
operation in which Ernie and his parents were engaged, and
there is no basis in the record to support a finding that both
Ernie and his parents expected Ernie to repay these amounts.
The evidence, viewed as a whole, is insufficient for us to conclude that Ernie was unjustly enriched by these payments so
as to create an implied promise of repayment under principles
of assumpsit.
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Nor do we find Ernie to be liable for the “farm expense”
or third-party payments under the sisters’ alternative theory of
“account stated.” Where parties have ongoing business dealings, failure of one party to object to an account rendered can
be evidence of the correctness of the amount shown as due, and
proof of an express promise to pay is not required.31 But here,
the existence of such an account cannot fairly be presumed, as
there was no evidence that Emil and Margaret ever presented
Ernie with the notebooks which are alleged to constitute the
account stated.
We reach a different conclusion with respect to the payments designated in the notebooks and on the canceled checks
as “loans.” The district court reasoned that the payments could
not be considered loans because of the absence of a promissory note or other contractual obligation to repay. But we have
recognized that in limited factual circumstances, this need not
be outcome determinative. In Cartney v. Olsen,32 the executor
of an estate sought to recover amounts which he claimed his
decedent had loaned to the defendants. The evidence included
a ledger sheet on which the decedent maker had written “‘loan
for car.’”33 There was conflicting evidence as to whether the
payment was intended as a loan or as a gift, and, as in this
case, there was no promissory note or other express contractual
obligation for repayment. Citing the principle that a “‘“loan of
money is the delivery by one party and the receipt by the other
party of a given sum of money, upon an agreement, express or
implied, to repay the sum loaned, with or without interest,”’”
we held that the evidence was sufficient to establish an implied
agreement to repay the sums advanced.34
Under the sisters’ assumpsit theory, the inquiry is whether
the payments to Ernie which were designated as “loans” by his
parents were made under circumstances where the law would
31
See John Deere Co. of Moline v. Ramacciotti Equip. Co., 181 Neb. 273,
147 N.W.2d 765 (1967).
32
Cartney v. Olson, 154 Neb. 546, 48 N.W.2d 653 (1951).
33
Id. at 548, 48 N.W.2d at 655.
34
Id. at 549, 48 N.W.2d at 655, quoting 38 C.J. Loan § 2 (1925).
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imply a promise to repay in order to prevent Ernie’s unjust
enrichment at the expense of his parents and their trusts. On
our de novo review, we conclude that they were. By entering
the payments in their records as “loans,” Emil and Margaret
clearly expressed their expectation of repayment. While Ernie
contends that his parents never communicated their expectation of repayment to him, the record shows otherwise. The
evidence includes the originals or photocopies of 101 canceled
checks written by Emil or Margaret on their joint checking
account from 1998 through 2005, each payable to “Ernie
Mastny.” The checks were written for whole dollar amounts
ranging from $120 to $30,000. The total amount of these
checks is $287,570. The word “loan” is written on the face of
each check, and there is a corresponding “loan” entry in the
notebooks for almost all of the checks. In light of the notation “loan” on the face of each check, Ernie’s endorsement
and negotiation of these checks establishes that he knew or
should have known the payments were intended as loans. The
record does not include gift tax returns or other evidence that
Emil and Margaret ever intended the payments as gifts, either
when they were made or at any subsequent time. Nor does the
record include income tax returns or other evidence to establish that the payments constituted wages, as Ernie suggests.
There simply is no persuasive evidence that Emil and Margaret
ever forgave any of these loans or that the loans were paid.
Ernie’s vague testimony that he and his parents “settled up”
after each year and somehow wiped the slate clean is refuted
by the fact that the loan amounts were carried forward on Emil
and Margaret’s records from year to year and by Schellpeper’s
testimony that from discussions with Emil and Margaret, she
understood that Ernie’s debt to them would be resolved through
their trusts. We conclude that Ernie is indebted to the trusts for
the $287,570 he received from his parents as “loans” from
1998 to 2005.
Statute of Limitations
The sisters assign that the trial court erred “when, and if, it
thought the statute of limitations bars recovery.” Neither the
2008 nor the 2009 order of the county court addressed whether
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the statute of limitations barred recovery of Ernie’s debt. Ernie
does not argue any statute of limitations issue in his appellate
brief or brief on cross-appeal.
[11,12] The statute of limitations does not operate by its
own force as a bar, but, rather, operates as a defense to be
pleaded by the party relying upon it.35 The benefit of the
statute of limitations is personal and, like any other personal
privilege, may be waived and will be unless pleaded.36 We
find no pleadings filed by Ernie in the trust administration
proceedings which include an affirmative allegation that any
debt owed to his parents was barred by the statute of limitations. Although he included an argument to this effect in a
brief filed in the county court, a brief is not a pleading.37 We
conclude that Ernie has waived any defense based upon the
statute of limitations.
CONCLUSION
For the reasons discussed, we conclude on de novo review
that the evidence is insufficient to establish that Ernie is
indebted to the trusts either for payments designated by his
parents as “farm expenses” or for payments made by his
parents to third parties on his behalf. But we conclude under
principles of assumpsit that Ernie is indebted to the trusts
for payments his parents made to him for which the record
shows a canceled check bearing the designation “loan.” Justice
and good conscience require that Ernie repay $287,570, the
amount of these loans, and equity authorizes the trustee to
exercise the remedy of retainer in order to recover the debt. We
therefore affirm the judgment of the county court in part, and
in part reverse. We further direct the county court on remand
to enter an order requiring the trustee to retain $143,785 from
any distribution to Ernie under Margaret’s trust and to retain
the same amount from any distribution to Ernie under Emil’s
35
In re Estate of Reading, 261 Neb. 897, 626 N.W.2d 595 (2001). See
Vielehr v. Malone, 158 Neb. 436, 63 N.W.2d 497 (1954).
36
In re Estate of Reading, supra note 35; State ex rel. Marsh v. Nebraska
St. Bd. of Agr., 217 Neb. 622, 350 N.W.2d 535 (1984).
37
See 4 C.J.S. Appeal and Error § 747 (2007).
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trust. Upon remand, the court may also consider an award
of costs and attorney fees under Neb. Rev. Stat. § 30-3893
(Reissue 2008).
Affirmed in part, and in part reversed
and remanded with directions.
Wright, J., not participating.
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