Opinion
No. 77-842
Decided September 21, 1978.
Daughter of decedent appealed trial court's construction of will relative to certain promissory notes executed by her and payable to the testator.
Affirmed
1. LIMITATION OF ACTIONS — Promissory Note — Acceleration Clause — Default in Interest Payments — Holder — Not Accelerate — Statute Not Run. Where a promissory note contains an acceleration clause allowing the holder to accelerate payment upon default of the interest payments, but upon such default the holder chooses not to do so, then, the default in payment of interest does not precipitate a claim so as to initiate the running of the applicable statute of limitations.
2. WILLS — Construction of Will — Determination — Testator's Intent — Consideration — Circumstances — When Will Drafted. Although a will speaks as of the time of the testator's death, this rule applies to the operation of the will and not to its construction; consequently, in order to determine testator's intent relative to provision concerning disposition of note owed to estate by one of his daughters, the will must be construed in light of the circumstances present at the time of the will's execution.
3. Construction of Will — Forgiveness of Note — Clear and Unambiguous — — Applicable — Only One Note — Not Second Debt. When will provisions are plain and unambiguous, those provisions control, and thus where will provision concerning the forgiveness of note owed by one of the testator's daughters specified that the daughter had borrowed $21,800, that provision applied only to note for that amount and not to a second note for $10,000 also payable to the testator by that daughter.
4. Calculation of Advancements — To Devisee — Forgiven at Death — Treated — Repayment Made — Estate — Distribution to All Beneficiaries. Unless the testator clearly indicates to the contrary, in calculating advancements to a devisee whether in the form of a gift or a loan which is forgiven at death, the advancement must be treated as if repayment thereof had been made to the estate for distribution among all of the named beneficiaries.
Appeal from the District Court of Routt County, Honorable Don Lorenz, Judge.
C. Elwood Bradley, Hibbard King, Peter P. King, for the Estate of Clarence W. Light executrix-appellee.
Simons Iuppa, Barney Iuppa, for devisee-appellant.
Sharp Black, P.C., Thomas R. Sharp, Mary Jane Simmons, for devisees-appellees.
Audrey Light Temple seeks this review of the trial court's interpretation of the will of Clarence W. Light and its judgment relative to her liability upon certain promissory notes. We affirm.
The record reflects that the testator executed a will in August of 1970. In paragraph 4 he transferred the remainder of his estate "equally" between his five daughters subject to the provision that "my daughter, Audrey Light Temple, has borrowed $21,800.00 which shall be deducted from her share of my estate. If she owes more than her share, the note shall be considered paid . . . ." to the extent of any excess over the amount of her share.
The note referred to in the will was dated April 18, 1970. Interest was payable semi-annually, starting October 18, 1970, and the principal balance was due April 18, 1973. The note also provided that, in the event of any default in interest payments, the entire principal was immediately due and payable at the option of the holder.
Temple executed a second note payable to the testator in August of 1973 for $10,000. As of the date of death in 1974, no interest or principal had been paid or demanded on either note.
[1] Temple first contends that collection of the $21,800 note was barred by the six-year statute of limitations, § 13-80-110(1), C.R.S. 1973. However, for purposes of the statute of limitations, default in payment of interest does not precipitate a claim on the note even though the note contains an acceleration clause where, as here, the holder may elect whether to accelerate payment and chooses not to do so. First National Bank v. Park, 37 Colo. 303, 86 P. 106 (1906); Buckman v. Hill Military Academy, 182 Or. 661, 189 P.2d 575 (1948). Thus, the statute of limitations did not begin to run on October 18, 1970, but on the date the note was due, April 18, 1973.
Temple next contends that paragraph 4 should be construed to refer to both notes with the result that both are discharged if the balance due thereon exceeds her share of the estate.
[2,3] We recognize that the will speaks as of the time of the testator's death. Estate of Nicholson, 104 Colo. 561, 93 P.2d 880 (1939). However, this rule applies to the operation of the will and not to its construction. Heinneman v. Colorado College, 150 Colo. 515, 374 P.2d 695 (1962). Thus, in order to determine the testator's intent relative to the above quoted provision, it must be construed in light of the circumstances present at the time of the will's execution. First National Bank v. Denver U.S. National Bank, 409 F.2d 108 (10th Cir. 1969). And, when the will provisions are plain and unambiguous, those provisions control. Pitman v. Colorado National Bank, 113 Colo. 373, 158 P.2d 186 (1945). Guided by these principles, we conclude that paragraph 4 refers only to the $21,800 note and must be so limited.
If the note is not included as an asset in the inventory of the estate, the balance due exceeds Temple's distributive share of the estate. Conversely, if the note is included as an asset in the inventory, the balance due does not exceed Temple's distributive share. Temple therefore contends that the trial court erred in ruling that the $21,800 note plus interest must be included as an asset in the inventory. However, we agree with the trial court's conclusion.
[4] Unless the testator clearly indicates to the contrary, in calculating advancements to a devisee whether in the form of a gift or a loan which is forgiven at death, the advancement must be treated as if repayment thereof had been made to the estate for distribution among all of the named beneficiaries. Howe v. Howe, 184 Mass. 34, 67 N.E. 639 (1903); see Annot., 165 A.L.R. 899. This rule is predicated upon the intent expressed in the residuary clause to divide the estate "equally" among the beneficiaries. See In re Est. of Laughlin's Estate, 354 Pa. 43, 46 A.2d 477 (1946).
Judgment affirmed.
JUDGE ENOCH and JUDGE STERNBERG concur.