Opinion
No. 5-626 / 04-0800
Filed October 26, 2005
Appeal from the Iowa District Court for Boone County, David R. Danilson, Judge.
An estate beneficiary appeals from a district court declaratory judgment ruling that declared a testamentary bequest was the product of an oral compensation agreement between the beneficiary and the decedent. AFFIRMED.
Stephen Howell and Nathan E. Levin of Newbrough, Johnston, Brewer, Maddux Howell, L.L.P., Ames, for appellant.
Michael Lewis, Huxley, for appellee.
Heard by Zimmer, P.J., and Miller and Vaitheswaran, JJ.
Ronald Carlson, a beneficiary under the will of decedent Dale Sheldahl, and executor of Sheldahl's estate, appeals from a district court declaratory judgment ruling in favor of the residual beneficiaries of Sheldahl's estate. Carlson asserts the district court erred in concluding Sheldahl's testamentary bequest to Carlson was the result of an oral compensation agreement entered into by Carlson and Sheldahl. We affirm the district court.
I. Background Facts and Proceedings.
This matter comes to us following a remand to the district court. In our prior decision, we summarized the facts and proceedings of this case as follows:
Ronald Carlson first began working for Dale Sheldahl while still in high school in 1964 or 1965. When Carlson graduated from high school in 1967, he continued working for Sheldahl as well as other farmers in the area. In 1969 or 1970, Carlson twice applied for a job at John Deere, but was not offered a position. In 1972 or 1973, Carlson began working for Sheldahl full-time as a hired hand. His salary for this position never exceeded $24,000.
In 1976, Sheldahl built a home for Carlson and his wife on his property, telling them the house would belong to them upon his death. Sheldahl paid all real estate taxes on the home and Carlson never paid rent. Sheldahl also informed Carlson in the late 1970s and again in the mid 1990s that "he'd get" the eighty-acre farm.
Sheldahl retired in 1983 or 1984. At that time, Sheldahl and Carlson entered into a crop sharing agreement whereby each party received one-half of the crops. As a tenant on Sheldahl's land, Carlson did "everything on the farm" except keep Sheldahl's books.
At some point after his retirement, Sheldahl moved to Arizona. Carlson stayed in contact with Sheldahl and enjoyed a friendly relationship with him. Carlson tried to purchase Sheldahl's farm on several occasions and obtained an appraisal of the land for that purpose. However, Sheldahl informed Carlson he did not need to "buy something [he was] already going to get." The land is valued at $309,000.00.
According to Carlson, the only individual to offer direct testimony on the matter, the appraisal was obtained by Sheldahl or his wife.
Sheldahl died on February 21, 2001. Pursuant to the provisions of his will, the eighty acre farm was devised to his mother-in-law for life, and upon her death the remainder interest was devised to Carlson. All the rest, residue, and remainder of the estate was bequeathed to the residual beneficiaries. Carlson was nominated as Executor of Sheldahl's estate.
In November 2001, Doug Sheldahl, a nephew of the deceased and one of the residual beneficiaries, was provided a copy of the estate's state Form 706 inheritance tax return. Doug believed an error had been made on the return by the omission of a deduction for the federal estate tax. Doug contacted Professor James Monroe of the Drake University law school and hired him to review both the state and federal tax returns. Doug believed the estate should have taken a deduction in the amount of the bequest to Carlson because he believed the bequest was compensation pursuant to an agreement for services rendered. Professor Monroe was employed to prepare amended state and federal returns to correct the errors and deduct the amount of Carlson's bequeath as compensation.
When the amended returns were provided to Carlson, he was initially in agreement with the changes. However, when the attorney representing the estate contacted Carlson regarding the amended returns, his position changed.
A meeting was held at the office of the residual beneficiaries' attorney. Carlson attended the meeting, as did Doug, Professor Monroe, and the estate's attorney. Professor Monroe and Doug recall Carlson stating there was understanding between Sheldahl and himself, and that he would have "taken a walk if there hadn't been an understanding that he got the farm." Carlson admitted he would have filed a claim in the estate if he had not been bequeathed the eighty-acre parcel and home. Professor Monroe understood Carlson's part of the agreement was to take care of the grounds, Sheldahl's personal matters, and to look after Sheldahl.
On May 28, 2002, the residual beneficiaries of the estate filed a petition for declaratory action, seeking declaratory judgment that a compensation agreement existed between Sheldahl and Carlson. Following trial, the district court concluded a valid compensation agreement existed between Sheldahl and Carlson, whereby Carlson was promised the farm in exchange for labor and services provided to Sheldahl during his lifetime.
In re Estate of Sheldahl, No. 03-0136 (Iowa Ct.App. Feb. 27, 2004) (quote alteration in original).
Sheldahl appealed the district court's ruling. This court reversed, determining the district court had erroneously applied a preponderance of the evidence standard in concluding the residual beneficiaries had proved the existence of an oral agreement. Id. We remanded the matter to the district court for reconsideration of the facts under the applicable standard of proof by clear, satisfactory, and convincing evidence. Id. Upon remand, the district court applied the appropriate standard of proof, and concluded a valid compensation agreement existed between Sheldahl and Carlson.
Carlson again appeals. He asserts the record did not contain sufficient evidence to prove either an agreement or adequate consideration. He further asserts the district court erred in failing to acknowledge Sheldahl's testamentary intent, as expressed in Sheldahl's will.
II. Scope and Standards of Review.
We review law actions for the correction of errors of law. Land O'Lakes, Inc. v. Hanig, 610 N.W.2d 518, 522 (Iowa 2000). The district court's findings of fact are binding on us if supported by substantial evidence. EnviroGas, L.P. v. Cedar Rapids/Linn County Solid Waste Agency, 641 N.W.2d 776, 780-81 (Iowa 2002). 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, 610 N.W.2d at 522. The evidence is viewed in a light most favorable to the district court's judgment. Van Oort Constr. Co. v. Nuckoll's Concrete Serv., Inc., 599 N.W.2d 684, 689 (Iowa 1999).
III. Discussion.
Although the parties and district court explored various legal theories, the question before this court is in fact rather narrow. We consider only whether there is substantial evidence in the record to support the district court's determination that Carlson and Sheldahl entered into an oral compensation agreement whereby Carlson would be bequeathed Sheldahl's farm in exchange for providing Sheldahl labor and services during Sheldahl's lifetime. As we have previously noted, the residual beneficiaries were required to establish the alleged oral contract by clear, satisfactory, and convincing evidence, Ehlinger v. Ehlinger, 253 Iowa 187, 192, 111 N.W.2d 656, 659 (1961), and the terms of that contract "must be sufficiently definite to determine with certainty the duties and obligations of each party," Netteland v. Farm Bureau Life Ins. Co., 510 N.W.2d 162, 165 (Iowa Ct.App. 1993).
The question before this court is not whether Sheldahl intended to bequeath Carlson the farm. That intent, as demonstrated by the will itself, is undisputed and has been carried out. The fact that Sheldahl did not reference an agreement in his will does not in and of itself conclusively demonstrate the absence of such an agreement. Rather, it is evidence to be considered, in conjunction with the remaining record, in assessing whether the oral agreement existed.
In assessing the sufficiency of the evidence, we note it is the district court's duty, as the finder of fact, to sort out the credibility of witnesses and to assign the evidence presented whatever weight it deems proper. See State v. Thornton, 498 N.W.2d 670, 673 (Iowa 1993). When evidence is in conflict, it is the role of the district court to resolve this conflict in light of its own credibility assessments. State v. Hopkins, 576 N.W.2d 374, 377 (Iowa 1998). Significant to our review of this matter is the court's rather clear determination that the residual beneficiaries' witnesses were more credible than Carlson. Nothing in the record demonstrates a basis upon which to disturb this credibility assessment. See State v. Kostman, 585 N.W.2d 209, 211 (Iowa 1998) (finding credibility assessments should be left to the trier of fact unless testimony is "so impossible, absurd, and self-contradictory that the court should deem it a nullity").
With the foregoing principles in mind, we conclude the record contains substantial evidentiary support for the district court's determination that the residual beneficiaries established an oral compensation agreement by clear, satisfactory, and convincing evidence. The court was presented with evidence that the compensation agreement was "common knowledge" in the Sheldahl family, and that Sheldahl had mentioned the agreement to his nephew Doug several times. In addition, Carlson's wife acknowledged that, before they moved into the home on Sheldahl's farm, the couple knew the home and the land would be "theirs." This occurred not long after Carlson decided to work for Sheldahl on a full-time basis. Moreover, although Carlson denied the existence of an agreement, other witnesses testified that Carlson admitted there was an understanding or agreement that Carlson would receive the house and farm, and that he would have "taken a walk" or "not have hung around if there wasn't some kind of an understanding that he would have gotten the farm."
Carlson contends that, even if there was evidence Sheldahl had long intended to bequeath him the farm, there is no evidence he agreed to do so as a form of compensation for labor and services. However, the evidence that Carlson took care of "everything" on Sheldahl's farm other than the books, even after Sheldahl's retirement to Arizona, and testimony from Carlson's wife that Sheldahl needed Carlson to take care of Sheldahl's affairs, substantially supports the district court's finding that Carlson provided services to Sheldahl "`above and beyond' a hired man or tenant." When this evidence is viewed in light of the fact that Carlson "hung around" only because of an "understanding" that he would receive the farm, there is substantial evidence of a bargained-for exchange.
We recognize a fact finder could review the record in this matter and determine there was not clear and convincing evidence of an agreement, or that the terms of the agreement were not sufficiently definite to constitute an oral contract. However, the question on appeal is not whether the evidence supports different findings than those made by the district court, but whether it supports the findings the court actually made. Tim O'Neill Chevrolet, Inc. v. Forristall, 551 N.W.2d 611, 614 (Iowa 1996). Liberally construing the district court's findings to uphold rather than defeat its judgment, id., we conclude this standard is met. We accordingly affirm the district court's judgment that a valid compensation agreement existed between Sheldahl and Carlson, whereby Carlson was promised the farm in exchange for labor and services provided to Sheldahl during his lifetime.