Opinion
No. 78-1514
Decided November 14, 1979.
Probate — Widow's election to take property — Sale at appraisal price unconscionable, when — R.C. 2113.38, construed.
When devisees, other than the surviving spouse, have added substantial value to the mansion house after the appraisement, the surviving spouse is not entitled to purchase the property at the appraisement price. Such a sale would unconscionably prejudice the rights of the parties in interest. R.C. 2113.38. ( Overturf v. Wear, 26 Ohio St. 538; and In re Estate of Fouts, 103 Ohio App. 313, distinguished.)
APPEAL from the Court of Appeals for Huron County.
Roy D. Tanner died on March 7, 1973. He was survived by his widow, Dorothy J. Tanner (who has since remarried and is now Dorothy Wobser), and two adult daughters, Patricia J. Tanner and Linda A. Tanner (now Linda Jones). The decedent's will was admitted to probate on March 16, 1973, and on April 2, 1973, the surviving spouse was appointed executrix of the estate. Decedent's original will was a typed instrument, and, in Item I thereof, he left his entire estate to his wife. Apparently, prior to signing this document, the decedent (or someone else) inserted the names of his two adult daughters in handwriting, next to the name of his wife in Item I, deleting certain other material. A declaratory judgment action was filed in the Probate Court to determine the validity of the will. The action was filed in May of 1974, but the court did not rule thereon until March, 1977. Based on the statements of the witnesses to the will, the court found that the changes were made prior to the signing of the will and that the will was valid. Therefore, the estate passed in equal shares to the wife and the two daughters.
The assets of the estate consisted of an undivided one-half interest in real property consisting of a house on a two-acre plot and 51.82 acres of land. The surviving spouse was the owner of the other undivided one-half interest. On April 23, 1973, an appraisal was made by a bank official. He testified that he valued the real property at its fair market value at the time of the death and that the house and the two-acre lot on which the house was situated were worth $10,000. The remaining 51.82 acres were valued at $800 an acre. In addition, the decedent had $110.87 in two bank accounts, some old vehicles and miscellaneous personal, tangible property valued at $1,125, making the decedent's assets total under $27,000. The debts of the estate were slightly in excess of $19,000.
It is undisputed that no inventory and appraisement was filed with the Probate Court until some three years after the decedent's death. Allegedly, the delay resulted from the proceedings in the declaratory judgment action and also because of the events occurring after the decedent's death.
As a result of the death, the surviving spouse received $20,000 in insurance proceeds and each daughter received $10,000. The daughters each gave their mother the sum of $7,700 which was deposited, together with her insurance proceeds, in a payable on death account in the name of Dorothy J. Tanner. The daughters were named as beneficiaries. These non-probate funds were used to make improvements to the house (in excess of $21,000), to make mortgage payments, to pay personal debts and to pay the debts of the estate. In consideration for contributing $15,400, the daughters allege that their mother agreed to divide the decedent's estate in three equal shares. Additionally, the daughters claim that they acted in reliance upon their mother's representations that she would divide the property. There was no writing effectuating this agreement, and the surviving spouse claims that she never made such an agreement.
In May of 1976, Dorothy Tanner had still not divided the property into equal one-third shares. The parties attempted to reach a settlement of the estate in an amicable fashion. When no solution could be reached, appellant's attorney advised the daughters to seek independent legal advice.
On August 11, 1976, the daughters' counsel filed a motion to have a citation issued to the executrix to file the inventory and appraisement of the estate.
The inventory and appraisement was filed on August 27, 1976. The daughters filed exceptions to the inventory. A second appraiser was appointed by the court, but for some unexplained reason no re-appraisal was conducted and on January 18, 1977, the exceptions were withdrawn. The Probate Court approved the inventory and appraisement on January 21, 1977. On February 9, 1977 (within the one-month provision of R.C. 2113.38), a petition to purchase all the real property of the estate was filed by the surviving spouse. An answer was filed by the daughters, and thereafter the surviving spouse filed a motion to strike. The Probate Court ruled in the daughters' favor and held: (1) that the sale of the real property to the surviving spouse at the appraised price would unconscionably prejudice the rights of the parties (R.C. 2113.38); (2) that the surviving spouse was estopped by the alleged contract with her two daughters from electing to take the mansion house; (3) that the Probate Court had specific equity jurisdiction (R.C. 2113.38) and general equity powers (R.C. 2101.24) to deal with such matters as detrimental reliance, unjust enrichment, etc.; and (4) that the 51.82 additional acres were not "lots***adjacent to the house and used in conjunction therewith as the home of the decedent." The Court of Appeals affirmed the trial court.
The cause is now before this court upon the allowance of a motion to certify the record.
Messrs. White White and Ms. Beverly B. White, for appellant.
Catri, Howells, Kellam Owens Co., L.P.A., Mr. William W. Owens, Mr. James R. Kellam, Miller Fegen Co., L.P.A., and Mr. Reese A. Wineman, for appellees.
We must decide whether the surviving spouse is entitled to purchase a one-half interest in the mansion house at the appraised price of $5,000 and whether she is entitled to purchase a one-half interest in the adjoining 51.82 acres. We deal first with the latter question.
At the time of Roy Tanner's death, R.C. 2113.38(A) stated that "A surviving spouse***may purchase***[t]he mansion house, including the parcel of land on which such house is situated and lots or farm land adjacent thereto and used in conjunction therewith as the home of the decedent***." (Emphasis added.) The appellant admitted that the 51.82 acres had not been used as farm land for some six or seven years prior to the death of the decedent. The question then becomes whether the land constitutes lots used in conjunction with the mansion house as the home of the decedent. The Probate Court noted that the appellant offered no proof on this matter. We find that she failed to meet her burden of going forward with the evidence. We concur with the Probate Court and Court of Appeals and find that the appellant is not entitled to purchase a one-half interest in the adjacent 51.82 acres. This land will pass to the devisees pursuant to the decedent's will.
See current R.C. 2113.38(A). The current statute merely clarifies the language and does not alter the substance.
We make no determination as to what constitutes a lot "used in conjunction with it [the house] as the home of the decedent." (Current language of R.C. 2113.38(A).)
In determining whether the surviving spouse should be entitled to purchase the mansion house and the two acres upon which it is situated, we find R.C. 2113.38 to be controlling. It states in pertinent part:
"On the hearing of the application or petition, the finding of the court shall be in favor of the surviving spouse, unless it appears that the appraisement was made as a result of collusion or fraud, or that it is so manifestly inadequate that a sale at that price would unconscionably prejudice the rights of the parties in interest or creditors. The action of the court shall not be held to prejudice the rights of lien holders." (Emphasis added.)
We agree with the Probate Court and the Court of Appeals and find that a sale at the appraisal price ($5,000) would be unconscionable.
Appellant states that she is entitled to purchase at the appraised value as of the date of death. There is no dispute here. The problem arises when the appellant claims that she should not have to account for any increase in value which occurred after the date of death. She cites Overturf v. Wear (1875), 26 Ohio St. 538; and In re Estate of Fouts (1957),
103 Ohio App. 313, which are distinguishable. In both of these cases, the change in value of the property was due to outside market factors and not attributable to direct monetary contributions made by those who stood to share in the real estate if it were not for the surviving spouse's eliction to purchase.
The undisputed testimony is that each daughter contributed $7,700 to a fund from which improvements were made to the property. It would be a gross injustice to allow the appellant to purchase the decedent's one-half interest in the house at the appraised value of $5,000. This amount would then be divided into thirds among the two daughters and their mother. Clearly, the sale to the appellant at the appraised price and the resulting payment to the appellees in satisfaction of their claims as devisees of Roy Tanner "would unconscionably prejudice the rights of the parties in interest." R.C. 2113.38. Such a sale fails to account for the contributions to the value of the property made by the daughters. It is exactly this type of situation which R.C. 2113.38 meant to prevent. In the rare situation where devisees contribute substantially to the value of the mansion house after its appraisal, then the doctrine of unconscionability, with its equitable roots, should be invoked. Only when outside factors cause the value of the house to increase after the appraisal, should the surviving spouse be able to purchase at the appraisement price as of the time of the decedent's death. Otherwise, the surviving spouse would benefit at the expense of the other devisees under the will. This would be unjust and unconscionable. The mansion house and the acreage on which it is situated will pass according to the decedent's will.
For the foregoing reasons, the judgment of the Court of Appeals is affirmed.
Judgment affirmed.
CELEBREZZE, C.J., SWEENEY, LOCHER and HOLMES, J.J., concur.
HERBERT and P. BROWN, JJ., dissent in part.
The majority opinion clouds several probate statutes in order to reach what is deemed to be an "equitable result." R.C. 2113.38, which in this instance should be read to permit the surviving spouse to purchase her home, less the adjacent 51.82 acres, is misread. R.C. 2113.38 provides, in its seventh full paragraph, that "the finding of the court [permitting the election to purchase] shall be in favor of the surviving spouse, unless it appears that the appraisement was made as a result of collusion or fraud, or that it is so manifestly inadequate that a sale at that price would unconscionably prejudice the rights of parties in interest or creditors." (Bracketed material added.)
The majority reads this provision to bar a spouse's purchase when a "sale" is found to be manifestly inadequate. A close examination of the statute clearly indicates that the word "it," emphasized in the above quote, refers to the appraisement not the sale. The appraisement is that which must be found manifestly inadequate. In this cause the sale may indeed have been unconscionably prejudicial to the parties, but not because the appraisement was manifestly inadequate or because of collusion or fraud. The right to election is granted by the General Assembly and should not be abrogated except in those circumstances explicitly set forth by that body; to do otherwise only disrupts the certainty of this procedure.
The appellees have not challenged the appraisal. In this instance objections to the inventory and appraisal were withdrawn.
Other statutory provisions are also undermined. R.C. 2115.02 requires the appraisal value to be based upon the value at the time of decedent's death, yet because of today's holding, appreciation over several years will inure to the benefit of the daughters. Similarly affected is R.C. 2115.17, which states that the appraisement is conclusive once it is approved. A purchase at the appraised value should be allowed except where collusion, fraud, or some other circumstances of a similar nature make the appraisement manifestly inadequate.
Equally disturbing in this cause, is the extension of the Probate Court's equity powers. The Probate Court has plenary power under R.C. 2101.24, but only as to matters properly before it. Its equitable jurisdiction should only be invoked in matters that are incidental to the express powers conferred upon such courts. Bolles v. Toledo Trust (1940), 136 Ohio St. 517, 521. An expansion of power that permits the Probate Court to completely bar surviving spouses from purchasing their homes, whenever it deems such a sale inequitable, is unwarranted and unsupported by precedent.
These problems could be easily avoided, if the surviving spouse were permitted to purchase the property at the appraised value. The statutory scheme would be left intact and the appellees would have an adequate remedy at law in a contract action to recover the money due to them. A full hearing before a common pleas court would be more appropriate on this aspect of the cause.
HERBERT, J., concurs in the foregoing dissenting opinion.