Opinion
No. 5-014 / 04-0342
Filed April 13, 2005
Appeal from the Iowa District Court for Lyon County, Frank B. Nelson, Judge.
Appellants challenge the amount of a judgment entered against the Kruse estate and in favor of the Willms estate. AFFIRMED.
Michael Jacobsma of Klay, Veldhuizen, Bindner, De Jong Jacobsma, P.L.C., Orange City, for appellant.
Joseph Feller of Koopman, Kennedy Feller, Sibley, for appellee.
Heard by Zimmer, P.J., and Miller and Hecht, JJ.
Appellants, William Gene Kruse and Myrna Metzger, co-executors of the Estate of Rose A. Kruse, appeal challenging the amount of the judgment entered against Rose's estate and in favor of the Estate of Christina Willms. The judgment was based on a finding that Rose, while serving as Christina's attorney-in-fact had engaged in self-dealing. Appellee, Frontier Bank of Rock Rapids, Iowa, Executor of the Estate of Christina Willms, asks that the judgment be affirmed. Finding no error, we affirm.
Christina had executed a power of attorney naming Rose's husband William M. Kruse as her attorney-in-fact and if he were not available to serve Rose was named to serve. The Kruse and Willms families were close friends. William died on February 8, 1991 and Rose took control of Christina's assets, including Christina's life estate in 108.5 acres of Lyon County, Iowa farmland which Rose rented to herself for what Christina's estate claims was less than a fair rental. In addition to managing Christina's financial affairs, Rose assumed some responsibility for Christina's personal affairs and kept certain records outlining what she did for Christina.
Rose died January 3, 1998. After Rose died Christina's conservator, First Bank and Trust, filed the claim that is the subject of this appeal in Rose's estate, contending Rose had engaged in self-dealing and Christina suffered damages. Rose's estate filed a counterclaim seeking compensation for services Rose had rendered Christina. Christina died on December 12, 2000, and Frontier Bank of Rock Rapids was appointed executor of Christina's estate and substituted as claimant.
The matter came on for trial in October of 2003. The parties agreed Rose was in a confidential relationship with Christina from February 8, 1991 to January 3, 1998. The district court found that Rose, while in that relationship, engaged in self-dealing that was detrimental to Christina in that Christina had not received a fair rental from the farmland in which she held a life estate. Christina's estate was awarded damages. The court also awarded Rose's estate money for certain expenditures Rose made on Christina's behalf.
Rose's executors on appeal contend that (1) the district court did not properly consider the evidence in awarding Christina's estate damages, and (2) there should have been additional compensation awarded to compensate for the services Rose provided Christina.
Claims in probate are triable at law. In re Estate of Crabtree, 550 N.W.2d 168, 170 (Iowa 1996); In re Estate of Voelker, 252 N.W.2d 400, 402 (Iowa 1977). Consequently, we review for correction of errors of law. Iowa R. App. P. 6.4. We are bound by the trial court's findings of fact provided they are supported by substantial evidence. Voelker, 252 N.W.2d at 402. Evidence is substantial for purposes of sustaining a finding of fact when a reasonable mind would accept it as adequate to reach a conclusion. Land O'Lakes, Inc. v. Hanig, 610 N.W.2d 518, 522 (Iowa 2000). Evidence is not insubstantial simply because it may support contrary inferences. In re Estate of Bayer, 574 N.W.2d 667, 670 (Iowa 1998).
DAMAGES AS A RESULT OF ROSE'S SELF-DEALING.
The district court found that from 1991 through 1998 Rose rented Christina's farmland and paid fifty dollars per acre except for 1993 when less than fifty dollars per acre was paid. The district court determined Christina's damage to be the difference between the amount of rent Rose actually paid and rent of $100 an acre. The difference was $56,661. The computation had been supplied as an exhibit and the court found the accuracy of the figures on the exhibit was not disputed. In addition, Christina's estate was awarded interest, making the total amount of the judgment $79,034.
In determining a fair rental value the district court relied on the testimony of Kevin Klaassen, noting his testimony was not countered by opposing testimony. Klaassen was called by Christina's estate to give an opinion as to the amount of rent that Rose should have paid. Rose's executors contend that the district court erred in accepting this testimony. They argue Klaassen's testimony was general and did not compare the leases Rose negotiated with any other specific leases. Rose's executors further contend they provided the court with information of comparable leases. In making this argument they point to the fact Rose rented her own land across the road from Christina's for sixty-five dollars an acre, contending this supports their argument the district court should have computed the lost rental using sixty-five dollars per acre rather than $100 per acre.
Kevin Klaassen is a real estate broker and auctioneer in Sibley, Iowa. He testified and provided a written opinion, entered as an exhibit, as to his estimate of the most likely fair rental value for the property for the years 1991 through 1998. He indicated it could vary anywhere from ninety dollars to $110 per acre. He said that although higher and lower rents were occurring during that time period his estimate seemed to be an average. He testified it was his opinion based on his experience in the area and that in forming his opinion he had considered schedules of rent published yearly by Iowa State University. He stated that when giving an appraisal of fair market value it is his procedure to get actual comparisons. He stated that he uses courthouse records and keeps track of sales, he looks at types of soil and quality of the land, and compares land of similar nature in arriving at a fair value. He further testified that in analyzing rentals he looks at leases and that in determining the quality of soil in this case he used the Lyon County soil survey. Klaassen admitted that in comparing rents to the Willms property, he did not look at a specific lease or a specific piece of land. He testified that he farms ground in the area, including a farm about four miles away from the land in question.
Harlan D. Klaassen also testified. He stated that he rented the land in question from Rose for the crop years 1997 and from Rose's estate for the crop year 1998, paying $110 per acre in advance for each of the crop years. He testified he had rented the land from Christina's conservatorship for the 1999 crop year, paying $115 per acre.
We conclude substantial evidence supports the district court's decision to set the value of renting Christina's land at $100 per acre.
DAMAGES ON ROSE'S CLAIM FOR SERVICES.
Rose's executors sought to show that Rose provided a number of services for Christina. They produced and entered into evidence written notes kept by Rose which, through the efforts of Rose's son and co-executor, William, assisted by a certified public accountant, purported to show that from 1980 through 1997 Rose spent 3,377 hours doing housekeeping, shopping, errands, and similar things for Christina. They sought eight dollars per hour for such services, total hourly pay of $27,016. In addition the executors sought expenses of $620 for Rose doing Christina's laundry, ten dollars for each of sixty-two times, and expenses of $560 for meals, twenty dollars for each of twenty-eight times. This portion of their claim for services thus totaled $28,196. They also sought reimbursement, at standard Internal Revenue Service mileage rates for the years in question, for 17,287 miles they claimed Rose to have driven for Christina, a mileage claim of $4,446.24.
Christina was born February 25, 1901.
Attorney Dan DeKoter, attorney for both Rose and Christina at relevant times, testified that on occasions Rose would raise the question with him of not being paid anything by Christina, his consistent response was that because Christina was competent Rose should discuss it with Christina, and that on one occasion Rose told him she was reluctant to do so.
The district court found there was no dispute that Rose provided services to Christina for many years and the issue was whether or not the services were gratuitous. The court found this was not a case of a closely related family member providing services to another family member, but noted there was an extremely close relationship between the Willms and Kruse families, and that the Willms family had even gifted farm land to the Kruse family in the early 1980s. The court found there was a reasonable basis to award out-of-pocket expenses and awarded Rose's estate $5,626 which it found to be the out-of-pocket expenses Rose incurred for laundry, meals, and mileage. This award was later modified to add $2,668 in interest. Rose's executors contend that the record supported their entire claim and it should not have been limited to out-of-pocket expenses.
Christina's executor does not challenge on appeal the award of the $5,626 and $2,668.
An established rule is that where one person performs services for another which are known to and accepted by the latter, the law implies a promise to pay therefore. In re Holta's Estate, 246 Iowa 527, 531, 68 N.W.2d 314, 317 (1955); see also Patterson v. Patterson's Estate, 189 N.W.2d 601, 605 (Iowa 1971).
Courts have recognized a distinction between proof of the fact that damages have been sustained and proof of the amount of those damages. Patterson, 189 N.W.2d at 605. If it is speculative and uncertain whether damages have been sustained, recovery is denied. Id. If the uncertainty lies only in the amount of damages, recovery may be had if there is proof of a reasonable basis from which the amount can be inferred or approximated. Id.; Orkin Exterminating Co., Inc. v. Burnett, 160 N.W.2d 427, 430 (Iowa 1968).
While ordinarily, where one person performs services for another which are known to and accepted by him, the law implies a promise to pay for the services, where it is shown that the claimant and the person served are members of the same family and the services are such as are usually performed by one member of a family for another, a presumption ordinarily arises that the services are gratuitous. Patterson, 189 N.W.2d at 604. In such a case, before the claimant can recover, in the absence of an express promise to pay, it must be shown that the services were rendered under the mutual expectation that payment would be made therefore. Id. The presumption of gratuity only arises when the family relation is shown. Id.; Holta's Estate, 246 Iowa at 531, 68 N.W.2d at 317; In re Talty's Estate, 232 Iowa 280, 283, 5 N.W.2d 584, 586 (1942). Where there is no blood relationship, the presumption of gratuity is less strong. Patterson, 189 N.W.2d at 604.
The presumption of gratuity due to the family relation arises because of the reciprocal character of family duties and services.
. . . [W]here the services are so disproportionate as not to be reciprocal the presumption of gratuity does not apply, and the one who has performed the greater service will be entitled to recover.
Talty's Estate, 232 Iowa at 287, 5 N.W.2d at 588 (citations omitted).
Rose's executors argue that they showed there was an implied promise to pay, Christina knew Rose was providing services to her, and Rose's record keeping shows she expected to be reimbursed for her expenses, as well as services. They further contend the lack of blood relationship provides a lower presumption of gratuity, and the presumption of gratuity was rebutted by evidence of disproportionality of services. Rose's executors argue that Christina's executor waived its claim that Rose's services were gratuitous because of the family relationship by not pleading the claim as a special defense. They also assert the trial court erred in not awarding damages for Rose's services, contending they provided reasonable proof of the amount of such damages.
It is clear from the record there was a very close relationship between the families. The Kruses helped the Willmses come to America. The Willmses had gifted farm land to the Kruses just before Rose began helping Christina. Throughout the record, Christina is referred to as a "dear loved one" and "Aunt Christina" by William Kruse. The families were related by marriage. It is obvious the relationship was closer than many blood relationships. In her deposition, Christina remarked that Rose never asked her for money for her services and "she didn't want nothing."
Rose was a meticulous record keeper. However we cannot conclude her record keeping was for the purpose of reimbursement. Her calendar entries included everything she did and even included the high and low temperatures for the day. This appears to us to be a daily diary, not a list of services for which she was expecting payment.
The evidence shows that Christina had a lifetime trust in which she placed assets, and Rose's family requested and received fees for services as trustees. Rose thus knew how to seek and secure compensation to which she believed she was entitled for her services. The fact Rose did not follow her attorney's admonitions to discuss with Christina any desire to be compensated for time and expenses for which her executors now have sought compensation does not in and of itself prevent establishment of the executors' claim. It is, however, some additional evidence that Rose did not in fact expect to be compensated.
We find no merit in the argument Christina's executor had to plead Rose's services were gratuitous as a special defense. The cases cited by Rose's executors all relate to old Iowa Code sections that have since been repealed. See In re Hunt's Estate, 256 Iowa 1076, 1084, 129 N.W.2d 618, 623 (1964) (relating to Iowa Code section 635.57 (1962)); Talty's Estate, 232 Iowa at 283, 5 N.W.2d at 586 (relating to Iowa Code sections 11961 and 11209 (1939)).
Terse as the district court's findings are, we conclude substantial evidence in the record supports those findings. The court properly applied the applicable law in its decision. For us to find contrary to the district court, the evidence contrary to its findings would have to be so overwhelming that we would be required to reach a contrary conclusion as a matter of law. Because substantial evidence supports the court's findings and it properly applied the law, we affirm the judgment of the district court.