IN RE ESTATE OF WALTER L. BROWNLEE, SR. 2002 SD 142
Annotate this CaseIN RE ESTATE OF
WALTER L. BROWNLEE, SR.
[2002 SD 142]
South Dakota Supreme Court
Appeal from the Circuit Court of
The Third Judicial Circuit
Codington County, South Dakota
Hon. Ronald K Roehr, Judge
THOMAS J. LINNGREN of
Green, Schulz, Roby, Oviatt,
Cummings & Linngren
Watertown, South Dakota
Attorneys for appellee
F&M Bank.
J. DOUGLAS AUSTIN of
Austin, Hinderaker, Hopper, Strait
& Bratland
Watertown, South Dakota
Attorneys for appellee
Randy Brownlee.
TODD D. BOYD
GREGORY J. STOLTENBURG of
Gunderson, Evenson, Boyd,
Knight & Stoltenburg
Clear Lake, South Dakota
Attorneys for appellant Jeanie Weekley.
Considered on Briefs October 7, 2002
Opinion Filed 11/20/2002
#22288, #22289
SABERS, Justice
[¶2.] By notice of review, Randy Brownlee (Randy) appeals the trial court’s determination 3) that the testator attempted to gift certain business equipment to Randy but that the gift was ineffective due to failure of delivery, and 4) refusal to reopen the hearing for additional evidence.
[¶3.] We affirm Issues 3 and 4, and modify Issue 1. Because of our holding on Issue 1, we need not decide Issue 2.
FACTS[¶4.] Walter L. Brownlee (Walter) died testate on August 17, 1997. Walter executed his Last Will and Testament and a Revocable Trust Agreement on March 10, 1997. Three provisions of those documents are important:
Article I of the Will provides:
I direct that all federal estate taxes chargeable to my taxable estate, including any taxes arising from the transfer or receipt of assets which are not part of my probate estate, shall be paid from the balance of my estate remaining after complying with the hereinafter sections of my Will. Any South Dakota inheritance tax that is charged against a beneficiary shall be the obligation and responsibility of the individual as to the assets they are to receive.
Article III of the Will provides:
[d]uring my lifetime I have established a Trust for the benefit of individual parties and they are to receive those assets as set forth in the said Trust.
Walter’s Trust provides in part:
I direct that all inheritance tax, estate and other similar taxes of the United States, or any state thereof, assessed against my taxable estate or recipients thereof, whether passing by this Trust or otherwise, shall be charged to the principal of my Trust without reimbursement or contribution from any person.
[¶5.] The conflict between the provisions of the Will and Trust concerning the payment of estate and inheritance taxes are the heart of this dispute. The trial court found that the Will and Trust provisions were unambiguous and irreconcilable. He also determined that the Will provision controlled the apportionment of federal estate and state inheritance taxes.
1) intestate property;
2) property held in the residuary of the estate;
3) property that was not specifically devised;
4) property specifically devised;
5) the Trust, joint tenancy accounts and individual retirement accounts; and
6) multiple party bank accounts.
[¶8.] Three days before drafting his Will and Trust, Walter executed a Bill of Sale to Randy which described certain construction equipment. Walter left the Bill of Sale with his attorney for delivery to Randy after Walter died. Three of the items described in the Bill of Sale were certificates of title to vehicles which had already been transferred into Randy’s name. These three items were labeled exhibits A, B and C. The trial court held that they were effectively transferred to Randy, but that the remaining items in the Bill of Sale were an attempt to gift the property to Randy which failed due to lack of delivery.
[¶9.] Richard Bohls, the CPA for Walter and Randy, testified on behalf of Randy at the hearing. After Bohls was dismissed as a witness, counsel for Weekley cross-examined Randy on whether he had any gift tax returns to support his contention that some of the property had already been gifted to him. Randy’s counsel asked for a continuance so that Bohls could be recalled to testify as to three gift tax returns. However, these gift tax returns did not include property involved in this estate, but referred to other property which had previously been gifted to Randy and his family. The court refused to continue the proceeding but stated that if Bohls could be in court before the close of the proceeding, it would consider taking him out of order. Counsel for Weekley rested, the hearing was concluded and Bohls was not re-called. The next morning Randy found the gift tax returns although he had previously stated were unobtainable because they were “iced in.” Randy’s counsel filed a motion to reopen the hearing. The trial court entered findings of fact and conclusions of law denying the motion.
[¶10.] Weekley appeals two issues:
1. Whether the trial court erred in determining that the Will and Trust provisions regarding apportionment of taxes could not be reconciled and that the Will controls apportionment.
2. Whether the trial court erred in interpreting South Dakota’s abatement statute, SDCL 29A-3-902.
[¶11.] By notice of review, Randy appeals two issues:
3. Whether the trial court erred in determining that the Bill of Sale was an ineffective gift and that the construction equipment remained in the residuary estate.
4. Whether the trial court abused its discretion in denying Randy’s motion to reopen the hearing to allow him to present evidence of previous gifts from Walter to Randy and others.
[¶12.] We affirm the trial court on Issues 3 and 4, modify Issue 1, and need not decide Issue 2.
STANDARD OF REVIEW[¶13.] A trial court’s interpretation of a will is reviewed de novo. In re Estate of Klauzer, 2000 SD 7, ¶10, 604 NW2d 474, 477 (quoting Johnson v. Johnson, 291 NW2d 776, 778-779 (SD 1980)) (citation omitted). Likewise, we review the trial court’s reading of a statute de novo. Zoss v. Schaefers, 1999 SD 105, ¶6, 598 NW2d 550, 552 (quoting Satellite Cable Srvs. v. Northern Electric, 1998 SD 67, ¶5, 581 NW2d 478, 480).
[¶17.] “In determining whether testamentary language is ambiguous, we have stated: 'Language is ambiguous when it is reasonably capable of being understood in more than one sense.’” Klauzer, 2000 SD 7 at ¶10, 604 NW2d at 477 (quoting In re Estate of Jetter, 1997 SD 125, ¶20, 570 NW2d 26, 30-31) (citations omitted). The fact that parties disagree as to the interpretation of a will does not in itself make the document ambiguous. Jetter, 1997 SD 125 at ¶20, 570 NW2d at 31 (citation omitted).
[¶18.] The South Dakota probate code provides specific instruction for the apportionment of estate taxes. SDCL 29A-3-916. However, if the testator’s will provides a different method of apportionment, the will controls. SDCL 29A-3-916 (b). It is clear that Walter’s Will attempted to provide an alternative method of tax apportionment. Specifically, the Will provides that all of the taxes assessable against the estate are to be paid “from the balance of my estate remaining after complying with the hereinafter sections of my Will.” The dispute arises because the Trust provides, “all inheritance tax, estate and other similar taxes of the United States, or any state thereof, assessed against my taxable estate or recipients thereof, whether passing by this Trust or otherwise, shall be charged to the principal of my Trust.”
[¶19.] Weekley asserts that the provisions of the Will and Trust can be reconciled. She contends that the language “hereinafter sections of the Will” should lead the court to Article III of the Will which indicates that the Trust was also executed. Her argument is that Article III of the Will incorporates the Trust. Therefore, in her view, the clause “after complying with the hereinafter sections of my Will” embraces not only the terms of the Will but also those of the Trust. Under her interpretation, in order to comply with the “hereinafter sections of the Will,” the estate must fulfill all provisions, including the tax provision in the Trust, before apportioning taxes as instructed by the Will. The result would be that the Trust would be primarily responsible for all taxes.
[¶20.] SDCL 29A-2-510 provides,
[¶21.] Weekley’s assertion that the Court should look to the Trust as extrinsic evidence of Walter’s intent is equally unpersuasive. The Trust language contradicts the language in the Will and therefore cannot be considered as extrinsic evidence to prove Walter’s intent. As Weekley points out, extrinsic evidence is admissible to “identify the persons and property referred to in the will and to enable the Court to apply the words of the will to the matter to which it relates.” 80 AmJur2d Wills § 1115 (2002). However, we will not consider extrinsic evidence for the purpose of contradicting the unambiguous language of a will.
[¶25.] Under SDCL 29A-3-916, “[t]he terms of the will must be, 'specific, clear, and not susceptible of reasonable contrary interpretation’ to override equitable apportionment.” In re Estate of Siebrasse, 2002 SD 118, ¶16, 652 NW2d 384, 385 (“Siebrasse II” ) (quoting In re Estate of Kapala, 402 NW2d 150, 153 (MinnApp 1987)) (citations omitted). In Siebrasse II, we held that the language of the will must be clear to override equitable apportionment.[1] We further noted that “any ambiguity is to be resolved in favor of equitable apportionment.” Siebrasse II, 2002 SD 118 at ¶18, 652 NW2d at 388 (citations omitted). In the instant case, there are two thoroughly conflicting clauses within the testator’s estate plan, the Will and the Trust. These provisions, read together, make the issue of federal tax apportionment ambiguous and therefore Siebrasse II controls. Lacking clear indication of the testator’s intent, we hold that the federal estate taxes are to be equitably apportioned according to SDCL 29A-3-916.
[¶26.] In addition to the federal estate tax apportionment, Weekley appeals
the trial court’s determination of apportionment of South Dakota inheritance taxes. Weekley argues that the second sentence in Article I of the Will should
be read to mean that inheritance taxes were to be charged against the Trust.[2] She argues that Walter’s use of the word “beneficiary” in the sentence makes it clear
that he was referring to those who would take under the Trust. To support this argument, she asserts that Walter used the word “beneficiary” only once in the Will but used it several times in the Trust. The result of this argument would be that the language in the second sentence of the Will would apply only in the event that there are insufficient funds in the Trust to satisfy all state inheritance taxes.
construction equipment should be reviewed de novo because he asserts the trial court erred in applying gift law to the facts, rather than applying the law of contracts. We disagree. The appropriate standard of review of the trial court’s findings of fact is whether the trial court was clearly erroneous. Estate of Fiksdal, 388 NW2d 133, 135 (SD 1986) (citing Vaughn v. Eggleston, 334 NW2d 870 (SD 1983). The trial court did not err in applying gift law to the facts. Looking to the record, although the arguments at the hearing are not entirely clear, counsel for Randy did argue that the elements of a gift were present. If there was a contract between Randy and his father, it was not effectively raised, supported or argued by counsel at the hearing.
err in determining that the attempted transfer was an ineffective gift. Walter’s tax returns treat the equipment as a rental to Randy, and Randy did nothing to establish any records to support the argument that he owned the property. Randy relies primarily on his own testimony to prove that most of the property in dispute was given to him. But the court noted, “[c]onsidering his memory, manner while testifying, his interest in the outcome, his inability to provide specifics, and the reasonableness of his testimony in light of other evidence, the court finds he lacked credibility.”
equipment to it and left it with his attorney with instructions that it be passed to Randy after Walter’s death. It is well settled that in order to effectively gift property to another, there must be proof that the donor intended the gift, that the donor delivered the gift to the donee and that there was an acceptance of the gift. Fiksdal, 388 NW2d at 135. Randy bore the burden of proving each of these elements by clear and convincing evidence. Id. The court properly found that by leaving the Bill of Sale with his attorney, Walter retained control over the property and therefore it was never effectively delivered to Randy. The property represented by the Bill of Sale, except for the property represented in Exhibits A, B, and C, was owned by Walter at the time of his death and became part of the probate estate.
[¶35.]
WHETHER THE TRIAL COURT ABUSED ITS DISCRETION IN REFUSING TO REOPEN THE HEARING TO ALLOW RANDY TO PRESENT EVIDENCE OF PREVIOUS GIFTS FROM WALTER TO RANDY AND OTHERS.
[1] . In fairness to the bench and the bar in this case, they did not have the benefit
of Siebrasse II at the time of the arguments and decision below or the briefing on appeal.
[2] . The second sentence of Article I provides, “Any South Dakota inheritance tax that is charged against a beneficiary shall be the obligation and responsibility of the individual as to the assets they are to receive.”
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