Opinion
No. 6-090 / 05-0977
Filed March 29, 2006
Appeal from the Iowa District Court for Scott County, David E. Schoenthaler, Judge.
An executor appeals the district court decision rejecting the probate final report based on an objection by appellee. REVERSED AND REMANDED.
Joseph C. Creen of Bush, Motto, Creen Koury, P.L.C., Davenport, for appellant.
Mary Virginia Maloney, Sterling, Illinois, pro se.
Considered by Huitink, P.J., and Vaitheswaran, J., and Beeghly, S.J.
Senior Judge assigned by order pursuant to Iowa Code section 602.9206 (2005).
I. Background Facts Proceedings
Marguerite Condon executed a will in 1989 which made specific bequests to five charities. She also made a bequest of $10,000, to be divided by the five children of her deceased brother, Gregory Mowry. In addition, the will stated:
I give and bequeath the sum of $10,000 to my niece and nephew, who are the children of my deceased sister, MARY ANN PARSONS, namely CHARLES PARSONS and VIRGINIA MALONEY, share and share alike; and in the event either of my niece or nephew predecease me, then the share of the one so dying shall go to the survivor.
Marguerite's son, Robert Condon, was made the residual beneficiary of the will.
Charles died in 1992. During the months of June and July 1996, Marguerite wrote checks to the specific beneficiaries under the will, except for Charles, for the amount specified in the will. In the memo portion of the checks, she wrote "will payment." One of the checks was written to Mary Virginia Maloney for $5,000. Robert testified Marguerite made these payments because "she wanted to have the satisfaction of knowing that she gave the money to the people she wanted to receive it."
Marguerite died on January 22, 2003. Robert was appointed as the executor of her estate. As the executor, Robert took the position that the specific beneficiaries had already been paid in 1996 the amount they would have received under the will, except that Mary was owed $5,000, which represented Charles's share. The charitable beneficiaries and Mary Caldron, one of the children of Gregory, signed receipts and waivers, agreeing they were owed no additional sums. The other children of Gregory neither signed the waivers nor objected. The executor filed a final probate report which provided, "it appears that the devisees and beneficiaries shown in the Last Will Testament have received their share of the bequest that was provided in the Last Will Testament when the decedent made an advance payment in 1996. . . ."
Mary objected to the final report. She claimed that Marguerite's will did not provide for advancements, and that the 1996 payments should not be considered as the payments that were due under the will because the 1996 payments were in fact gifts. A hearing on the final report was held.
The district court did not approve the final report and ordered the executor to file a revised report. The court determined that although Marguerite may have intended the 1996 payments to be charged against the bequests in her will, the language of the will did not make any reference to advancements. The court concluded the $5,000 check to Mary must be considered a gift, and that she was entitled to $10,000 from the estate under the terms of the will. The court stated:
To allow the check to be considered as an advancement without any reference in the Will to possible advancements would be tantamount to treating the check as a codicil to the Will without proper execution and attestation required by Iowa law.
The executor filed a motion to reconsider. The motion raises for the first time the doctrine of satisfaction. The district court discussed two cases, Heileman v. Dakan, 221 Iowa 344, 233 N.W. 542 (1930) and Rodgers v. Reinking, 205 Iowa 1311, 217 N.W. 441 (1928), and found they were distinguishable on the facts. The court denied the motion to reconsider. The executor now appeals.
II. Standard of Review
This case was tried in equity. See Iowa Code § 633.33 (2005). Our review is therefore de novo. Iowa R. App. P. 6.4. In equity cases, especially when considering the credibility of witnesses, we give weight to the fact findings of the district court, but are not bound by them. Iowa R. App. P. 6.14(6)( g).
III. Advancements
Generally, the rules concerning advancements apply only when a person dies intestate. See Iowa Code § 633.224; Harper v. Coad, 191 N.W.2d 682, 687 (Iowa 1971). When a decedent has a will, the language of the will controls the disposition of the estate. In re Estate of Francis, 204 Iowa 1237, 1242, 212 N.W. 306, 308 (1927). Whether advancements will be charged against a beneficiary's share depends upon the language of the will. In re Estate of Morgan, 225 Iowa 746, 747, 281 N.W. 346, 347 (1938). Marguerite's will did not provide that advance payments would be charged against a beneficiary's share. Therefore, the doctrine of advancements does not apply.
IV. Ademption by Satisfaction
The executor raises the alternative theory of ademption by satisfaction. As noted above, the law regarding advancements generally only applies in cases of intestacy, "but the doctrine of ademption [by satisfaction], though strictly speaking applying only to personal property or to legacies, is resorted to to carry out the apparent or presumed intention of a testator. . . ." In re Estate of Mikkelsen, 202 Iowa 842, 846, 211 N.W. 254, 255 (1926). The term "ademption" generally applies to a specific legacy, while "satisfaction" is applied when the legacy is general. In re Estate of Keeler, 225 Iowa 1349, 1354, 282 N.W. 362, 365 (1938). A legacy is the testamentary disposition of personal property. Iowa Code § 633.3(25).
The doctrine of ademption by satisfaction is explained as follows:
When a general legacy is given of a sum of money without regard to any particular fund, and thereafter testator pays this legacy to the legatee or advances him even a small sum with intent to discharge the legacy or to substitute the advancement for the bequest, the legacy is satisfied, or, as it is sometimes said, adeemed. When the amount of the advancement or gift is smaller than the legacy, the satisfaction is held complete, not for the reason that the smaller sum is regarded as payment of the larger, but by reason of the intent of the testator to substitute the smaller for the larger, and to reduce the amount of the general legacy. The doctrine of satisfaction depends very largely, if not altogether, upon the intent of the testator.
In re Estate of Brown, 139 Iowa 219, 225-26, 117 N.W. 260, 262-63 (1908).
"[A]pplication of the doctrine of satisfaction of legacies ultimately depends upon evidence of the decedent's intent at the time the lifetime gift is made." 1 Sheldon F. Kurtz, Kurtz on Iowa Estates § 15.26, at 615 (3d ed. 1995). See also 13 Julie L. Pulkrabek Gary J. Schmit, Iowa Practice — Probate § 11:115, at 422 (2005) ("Whether a payment made by testator to a legatee after the making of the will amounted to a satisfaction of the legacy depends upon the intent of the testator in making the payment."). The doctrine of satisfaction depends upon the intention of the testator, as inferred from his or her acts. Keeler, 225 Iowa at 1354, 282 N.W. at 365.
It is not essential that the decedent's will specifically provides for satisfaction based on intervivos gifts. Rodgers, 205 Iowa at 1317, 217 N.W.at 444. The court should consider all the facts and surrounding circumstances to determine the intent of the testator. Id. at 1317-18, 217 N.W. at 444. A party may show through extrinsic evidence that the testator intended a payment to be considered as satisfaction for a bequest. In re Estate of Youngerman, 136 Iowa 488, 492, 114 N.W. 7, 9 (1907).
"Since proof of a decedent's intent is frequently difficult, the Iowa courts have adhered to two presumptions in applying the doctrine." Kurtz on Iowa Estates § 15.26, at 615. In the first instance, when the testator is a parent or stands in loco parentis to the legatee, a subsequent gift to the legatee is presumed to be in satisfaction of the legacy. Heileman, 211 Iowa at 345, 233 N.W. at 543.
On the other hand, where the testator is a stranger to the legatee, such a presumption does not arise. Youngerman, 136 Iowa at 492-93, 114 N.W. at 9. A party may still show that satisfaction was intended, however, by clear proof that satisfaction was intended. Id. at 493, 114 N.W. at 9; 97 C.J.S. Wills, § 1767, at 470 (2001) (noting that where a presumption does not arise, "the burden is on the one claiming that the testator intended a satisfaction of the legacy to prove such intention, and the evidence must be clear and convincing"). The intention to satisfy a legacy may be shown if the benefit subsequently conveyed is the same or so far identical in character as to be ejusdem generis. Youngerman, 136 Iowa at 493, 114 N.W. at 9; Iowa Practice — Probate, § 11:115, at 423. The intention has also been shown where there was a receipt attached to the will showing satisfaction of the legacy. See Heileman, 211 Iowa at 347-48, 233 N.W. at 544.
Since Marguerite and Mary did not have a parent-child relationship, there is no presumption that Marguerite intended the 1996 payment to be a satisfaction of the legacy in her will. We consider all the facts and surrounding circumstances to determine Marguerite's intent. See Rodgers, 205 Iowa at 1317, 217 N.W. at 444. The executor may show, through extrinsic evidence, that Marguerite intended to satisfy the legacy. See Youngerman, 136 Iowa at 493, 114 N.W. at 9. On this issue we consider the notation of "will payment" on the checks and Robert's testimony as to Marguerite's intent. We also note that the payments made by Marguerite were for the precise amount of the specific bequests in her will. On our de novo review, we find clear evidence that Marguerite intended the 1996 payments to be in satisfaction of the bequests she made in her will. We find the factual differences ascribed to the cases concerning the doctrine of satisfaction by the district court do not overcome the application of that doctrine to the facts in this case.
Based on the doctrine of satisfaction, we reverse that portion of the district court opinion which determined Mary was entitled to $10,000 from the estate. The bequest of $5,000 to Mary has been satisfied. Mary is still entitled to receive the $5,000 which represented the share of her brother, Charles, because this bequest has not been satisfied.
V. Final Report
The executor argues that the district court should have approved the final report. Based on our conclusions above, we determine the final report correctly provided, "it appears that the devisees and beneficiaries shown in the Last Will Testament have received their share of the bequest that was provided in the Last Will Testament when the decedent made an advance payment in 1996. . . ." The final report notes that Mary is still entitled to $5,000, which represents the share of Charles. We conclude the final report should be approved.
VI. Other Issues
Mary has raised some procedural issues regarding this appeal. The supreme court considered these issues in considering Mary's motion to dismiss, and denied the motion. We conclude these issues have already been addressed and we do not consider them further.
We reverse the decision of the district court and remand for an order approving the final report.