Opinion
No. C2-01-368.
Filed August 28, 2001.
Appeal from the District Court, Ramsey County, File No. P7-98-5422.
John D. Hirte, Murnane, Conlin, White Brandt, P.A., (for respondent)
John G. Westrick, Tammy L. Merkins, Westrick McDowall-Nix, PLLP, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
After appellant Vaciela Manos unsuccessfully challenged a will, the district court denied her posttrial motion for attorney fees and expenses and granted the personal representative's motion to convert a devise assigned to Manos so that it could become subject to a pro-rata share of the estate's administrative expenses. Because converting the devise carries out the decedent's intent, we affirm the district court's granting of the motion to convert the devise. Because Manos is eligible for attorney fees and expenses under Minn. Stat. § 524.3-720 (2000), we reverse the district court's denial of her motion for attorney fees, and remand for a determination of whether Manos challenged the will in good faith.
FACTS
Eighty-three year old Lillian Sima died on March 21, 1998. Sima never married, was childless, and had no close relatives. She made a will on July 21, 1990, in which she nominated Vaciela Manos, her first cousin once-removed and godchild, as personal representative, bequeathed 120 shares of Northern States Power Company stock to Manos, and left the rest of her property in equal shares to several organizations and relatives, including Manos.
Sima made a new will on December 13, 1995. In the new will, Sima nominated her lawyer, James J. Boyd, as personal representative, gave Manos nothing, and left most of her estate, valued at approximately $500,000, to Catholic churches and charities. Sima also gave Paul A. Cernohous $50,000, intending for him to use that money to pay for an education to become a Catholic priest, but making clear in the will that he was to receive the money whether or not he became a priest. In 1997, in exchange for $500, Cernohous assigned the entire devise to Manos.
On April 21, 1998, soon after Sima's death, Boyd petitioned the court to admit the 1995 will into probate and appoint him personal representative. On May 4, 1998, Manos petitioned the probate court to admit the 1990 will into probate and appoint her personal representative. Manos objected to the 1995 will and to Boyd's personal-representative appointment, contending that Sima was incompetent and unduly influenced by Boyd at the time she executed the 1995 will. After a bench trial in May 2000, the court found that Sima was competent and not unduly influenced at the time she drafted the 1995 will. Manos is not appealing that decision.
Post-trial, the district court denied Manos' motion for $29,425 in attorney fees and $6,412.91 in expenses, finding Manos ineligible for attorney fees under Minn. Stat. § 524.3-720 (2000) because the will nominating her as personal representative was never admitted to probate. The court granted Boyd's post-trial motion asking to convert Cernohous's devise to a residual devise so that the devise would be subject to a pro-rata share of the estate's administrative expenses. Manos appeals, contending that the court abused its discretion in denying her attorney fees and in converting the devise.
DECISION
Manos contends she is entitled to attorney fees under Minnesota's Uniform Probate Code, which provides that
[a]ny personal representative or person nominated as personal representative who defends or prosecutes any proceeding in good faith, whether successful or not, * * * is entitled to receive from the estate necessary expenses * * * including reasonable attorneys' fees incurred.
Minn. Stat. § 524.3-720 (2000). To recover reasonable attorney fees under this statute, Manos must be a "personal representative or person nominated as a personal representative," and must have undertaken the will proceeding in good faith. The statute does not require will challenges to be successful, nor does it require the action to have actually benefited the estate. See id.; In re Estate of Evenson, 505 N.W.2d 90, 92 (Minn.App. 1993).
Generally this court will not reverse a district court's denial of attorney fees absent an abuse of discretion. In re Estate of Van Den Boom, 590 N.W.2d 350, 354 (Minn.App. 1999), review denied (Minn. May 26, 1999). But application of a statute to undisputed facts presents a question of law, which this court reviews de novo. A.J. Chromy Constr. Co. v. Commercial Mech. Servs., Inc., 260 N.W.2d 579, 582 (Minn. 1977).
Manos satisfies the statute's requirement that only a personal representative or a person nominated as a personal representative be able to collect attorney fees after prosecuting or defending a will proceeding. The statute not only allows personal representatives to recover attorney fees, but also specifically allows "nominated" personal representatives to recover, whether or not the will in which they are nominated is admitted to probate. By including "nominated" personal representatives as well as personal representatives, the statute contemplates persons who have been nominated as personal representatives in wills that have not been admitted to probate prosecuting or defending will contests and recovering the expenses of that litigation, so long as they act in good faith. See Evenson, 505 N.W.2d at 92 (deciding that an unsuccessful personal representative defending or prosecuting an action in good faith may recover attorney fees and expenses because "[r]ecovery of costs and attorney fees in will contests must not depend upon whether the will is found to be valid after litigation").
The Uniform Probate Code's commentary to the section that became Minn. Stat. § 524.3-720 (2000) points out that as a fiduciary for the estate's successors, a person named as personal representative in a will that has not yet been probated is an interested person who may contest a will. See Unif. Probate Code § 3-720 cmt. (amended 1993), 8 U.L.A. 184 (1997). The comment notes that this observation applies "to the case where the named executor of one instrument seeks to contest the probate of another instrument." Id. Even if a will is challenged before it is admitted to probate, a nominated personal representative has a duty to defend a seemingly valid will in a contest and to collect attorney fees incurred in that effort. See In re Estate of Killen, 937 P.2d 1375, 1380 (Ariz.Ct.App. 1996) (holding that a nominated personal representative who unsuccessfully defended a will was entitled to attorney fees).
The public policy underlying this statute "recognize[s] that an estate * * * is benefited when genuine controversies as to the validity or construction of a will are litigated and finally determined." In Re Estate of Flaherty, 484 N.W.2d 515, 518 (N.D. 1992) (citation omitted). The statute allows a personal representative, as a fiduciary acting on behalf of the estate, to, in good faith, pursue appropriate legal proceedings without having to risk personal financial loss by underwriting the proceeding's expenses. Id.; see also In re Healy's Estate, 247 Minn. 205, 209, 76 N.W.2d 677, 680 (1956) (stating that a personal representative is under a duty to ensure that the estate's assets are not diverted from the course the testator prescribes).
Manos is only able to recover attorney fees as a nominated personal representative under Minn. Stat. § 524.3-720 if she challenged the will in good faith and if the requested attorney fees are reasonable. The district court determined that the fees are reasonable and the will's personal representative does not challenge that determination on appeal.
Whether a person challenging a will is acting in good faith is a question of fact. See Evenson, 505 N.W.2d at 91 (reviewing district court's finding of good faith under clearly-erroneous standard); see also In re Estate of Herbert, 979 P.2d 1133, 1135 (Haw. 1999) (stating that the existence of good faith under this section is a fact question for a trial court to consider); In re Estate of Olson, 479 N.W.2d 610, 614 (Iowa Ct.App. 1991) (same). In this case, the district court, finding Manos ineligible for attorney fees under the statute, did not reach the issue of good faith. Manos asks this court to make this finding based on the record before it, but this factual determination is for the district court.
II
Manos also contends that the district court erred in converting a $50,000 devise included in the 1995 will into a residual devise. In the 1995 will, Sima gave her friend Paul A. Cernohous $50,000 to become a Catholic priest and stated that if, however, * * * Cernohous decides not to become an ordained Catholic priest or should otherwise decide not to continue with his seminary education and training for such vocation, then and in any event he shall still be entitled to such bequest or unused monetary portion of such bequest.
Traditionally, a "devise" disposed of real property, while a "bequest" disposed of personal property other than money and a "legacy" was the proper term for a clause disposing of money. See Bryan A. Garner, A Dictionary of Modern Legal Usage 273 (2d ed. 1995). The Uniform Probate Code, however, erases any distinction between the terms. See Minn. Stat. § 524.1-201(10) (2000) (defining "devise" to mean a "testamentary disposition of real or personal property"). For consistency's sake, we use the statutory term "devise" unless quoting the will, which uses "bequest."
In 1997, in exchange for $500, Cernohous assigned the entire devise to Manos. After the trial, Boyd, as the 1995 will's personal representative, petitioned the district court to convert the devise into a residual devise so that the $50,000 would be subject to a pro rata share of the estate's administrative expenses. Over Manos's objection, the district court agreed to convert the devise.
"`Abatement' is the reduction of testamentary legacies because estate assets are insufficient to pay debts and other legacies." In re Estate of Mason, 947 P.2d 886, 888 n. 3 (Ariz.Ct.App. 1997) (citation omitted). In the absence of testamentary intent, Minnesota law requires that gifts abate in the following order: "(1) property not disposed of by the will; (2) residuary devises; (3) general devises; (4) specific devises." Minn. Stat. § 524-3.902(a) (2000).
A "specific" devise is a gift of a particular portion of the estate, such as securities, land, or an item of personal property, which can be differentiated from the rest of the decedent's property. 6 Page on the Law of Wills § 48.3, at 11-15 (William J. Bowe Douglas H. Parker eds., rev. ed. 1961). A "general" devise may be satisfied out of any of the estate's assets and does not describe any specific property. Id. § 48.2, at 7-11.
While the parties label the will's devise to Cernohous a "specific" devise, gifts of an amount of money payable from the testator's estate are actually general devises. See id. The 1995 will's only other devise, which leaves "the rest and residue of [Sima's] estate," to several charities, is a residuary devise. The "residue" is "[t]he part of a decedent's estate remaining after all debts, expenses, taxes, and specific devises have been satisfied." Black's Law Dictionary 569 (7th ed. 1999).
The parties incorrectly state that the court converted the devise into a general devise. The personal representative, Boyd, petitioned the court to change the devise to a residual devise and the court complied, stating that the devise was subject to the estate's administrative expenses along with the other devises. Had the court converted the devise to a general devise instead of a residual devise, the devise would not be subject to abatement unless the estate's expenses exceeded the amount of the will's residue because residual devises abate first, followed by general devises and last, specific devises.
Unless the will directs otherwise, abatement within each classification is pro-rata. William M. McGovern, Jr. et al., Wills, Trusts and Estates § 10.2, at 407 (1988). But under Minnesota law, if the order of abatement defeats the testamentary plan or the devise's express or implied purpose, the devises abate as "necessary to give effect to the intention of the testator." Minn. Stat. § 524.3-902(b) (2000). If a general or specific devise is converted to a residual devise, the converted devise will be subject to a pro rata share of estate expenses because estate expenses are first deducted from the estate's residue and then from other devises.
The district court converted the $50,000 general devise to a residual devise, finding that Sima's testamentary intent was destroyed because Manos, the female holder of the devise, cannot become a Catholic priest. Manos argues that the district court erred because Sima left Cernohous $50,000 whether or not he chose to become a priest and thus, it is irrelevant that she cannot become a Catholic priest. Manos contends that since Cernohous assigned the devise to her, she steps into his shoes and inherits the money. See State ex rel. Southwell v. Chamberland, 361 N.W.2d 814, 818 (Minn. 1985) (stating that a valid assignment operates to vest in the assignee the same right, title, or interest that the assignor had in the item assigned).
Manos further argues that the statute does not apply to this situation because Sima's intent that Cernohous inherit the devise was defeated by Cernohous's action in selling Manos the devise rather than by the order of abatement. But the Uniform Probate Code's comment to this section makes clear that the statute is designed to give consideration to the testator's purpose. See Unif. Probate Code § 3-902 cmt. (amended 1993), 8 U.L.A. 268 (1997). A court may decide to change the order of abatement to give effect to the testator's intent or to protect persons who were closely related to the testator because the testator likely wished for those persons to inherit before others. Manos was not closely related to Sima and, in the 1995 will, Sima clearly intended that Manos inherit nothing. Because Sima's intent to leave her money to charity rather than to Manos is better served by changing the general devise to a residual devise so that it is subject to administrative expenses, we affirm the conversion.