American Fletcher Nat. Bank & Trust Co. v. American Fletcher Nat. Bank & Trust Co.
| Decision Date | 06 August 1974 |
| Docket Number | No. 2--673A134,2--673A134 |
| Citation | 314 N.E.2d 810,161 Ind.App. 166 |
| Parties | AMERICAN FLETCHER NATIONAL BANK AND TRUST COMPANY, as Trustee under Article III of the Will of Sheldon A. Key, Deceased, and Barbara Ann Key Williamson, Respondents-Appellants, v. AMERICAN FLETCHER NATIONAL BANK AND TRUST COMPANY, as Executor of the Estate of Sheldon A. Key, Deceased, Petitioner-Appellee, Velma P. Key and Indiana Central College, Respondents-Appellees. |
| Court | Indiana Appellate Court |
David I. Day, Jr., Marshall, Batman, Day & Swango, Terre Haute, Alan H. Lobley, D. Robert Webster, Ice, Miller, Donadio & Ryan, Charles E. Barker, Indianapolis, for respondents-appellees.
Respondents-Appellants Barbara Ann Key Williamson (Barbara) and American Fletcher National Bank and Trust Company (AFNB) appeal from a judgment in favor of Respondents-Appellees Velma P. Key (Velma) and Indiana Central College in a will construction action filed by AFNB, as Executor of the Will of Sheldon A. Key (Key), requiring a fractional bequest to the widow to be computed on the basis of the gross estate.
We reverse.
The Probate Court entered twenty (20) findings of fact, a synopsis of which follows:
Key, a lawyer of thirty (30) years experience and a lifetime resident of Marion County, Indiana, died August 23, 1971. His Will, executed on January 15, 1968, and the First Codicil thereto, dated October 6, 1970, were both drafted by Key himself and were duly admitted to probate on September 20, 1971.
Decedent was first married in 1940 to Rosalind Lamb, who died in 1963. They adopted Barbara in 1951. Rosalind established for Barbara a trust with assets of approximately $275,000.00.
Velma and Key were married in 1965 and lived as husband and wife until his death in 1971. At the time of her marriage, Velma's personal assets amounted to $5,000.00, and during his lifetime Key made certain gifts to Velma and her two (2) children and two (2) of her grandchildren. He gave his wife twenty (20) shares of Rosedale Shopping Center, Inc. stock, and purchased a lot at Lamb Lake for Velma. He also gave twenty (20) shares of Rosedale stock to each of his wife's two (2) children and five (5) shares each thereof to two (2) of her grandchildren. At the time of his death this stock was worth $1,676.00 per share.
At the hearing, pertinent testimony was given by the attorney for the Estate of Sheldon A. Key, W. Rudolph Steckler, who recalled from a telephone conversation with the Decedent in October, 1970, that Sheldon was cognizant that some property would need to be sold, but was of the opinion that the Rosedale stock should be split evenly between his daughter and wife.
A complete inventory and appraisement had not been made at the time of the hearing, nor had all of the debts and expenses been ascertained. However, the Executor testified to the assets as being approximately $810,000.00, while estimating the liabilities to be approximately $409,000.00.
Key's Will, executed January 15, 1968, and the subsequent Codicil thereto, contained the following four (4) clauses:
I appoint the American Fletcher National Bank and Trust Company of Indianapolis, Indiana, Executor of my Will and direct said Executor to pay all my just debts, funeral expenses and expenses of my last illness out of the first moneys coming into said Executor's hands. I direct said Executor to pay all estate taxes, inheritance taxes and death duties that may be levied against my estate, or any of the individual beneficiaries hereof, out of the residue of my estate, and ask that no charge be made against any of the individual beneficiaries hereof on account of any such payments.
I give my Executor full and complete power and authority to sell any and all real or personal property that may be necessary to carry out the provisions of this Will, without petition, appraisement, order or prior approval of any court, without notice, and upon such terms and conditions as said Executor shall deem best, and to execute all bills of sale, deeds, acquittances and other documents in connection therewith with the same force and authority as though executed by me while living.'
It is my will and I do hereby give and bequeath to Indiana Central College for its Endowment Fund the sum of Fifty Thousand Dollars ($50,000.00).'
It is my will and I do hereby give and bequeath to my beloved wife, Velma P. Key, one-half (1/2) of my personal property and a life estate in one-third (1/3) of my real estate.'
(Hereinafter the Fractional Bequest Clause)
It is my will and I do hereby give, devise and bequeath all the rest and residue of my estate, both real and personal, unto the American Fletcher National Bank and Trust Company of Indianapolis, Indiana, in trust, nevertheless, for the following uses and purposes:
(a) To pay and apply the income therefrom or so much of said income as said Trustee deems necessary, to the use and support, maintenance, care and education of my daughter, Barbara Ann Key.
* * *'
(Hereafter the Residuary Clause) (emphasis supplied)
Barbara and AFNB object to the Court's construction of the Fractional Bequest Clause. That conclusion states in pertinent part:
'Under said Article II of decedent's Will, Velma P. Key, decedent's surviving wife, is entitled to receive a life estate in one-third of all of the real estate of which decedent died seized and she is also entitled to receive one-half part of all of decedent's personal property, tangible and intangible, including decedent's interest in goods, money, choses in action, evidences of debt, chattels real, and any and all property of decedent other than real estate, without diminution on account of any of decedent's debts, funeral expenses, expenses of last illness, expenses of administration or death taxes and subject to abatement, in whole or in part, only after exhaustion of all other property of decedent, in the order hereinafter set forth . . ..' (emphasis supplied)
The trial court ordered the assets to be appropriated to pay liabilities in this order:
'(i) First, out of the rest and residue of decedent's estate, real and personal, otherwise devised to American Fletcher National Bank and Trust Company, as Trustee under the provisions of Article III of decedent's will, to pay such debts, expenses of last illness, funeral expenses, expenses of administration and death taxes, and to pay the devises to Velma P. Key, under Article II of decedent's will, and to Indiana Central College, under Article I--A of said will, herein referred to;
'(ii) Then, next, out of the property otherwise devised to Indiana Central College, under the provisions of said Article I--A of the codicil to decedent's will, to pay any remaining such debts, expenses and death taxes and the said devise to Velma P. Key, after exhaustion of the residuary estate; and
'(iii) Lastly, out of the property devised to decedent's widow, Velma P. Key, under Article II of decedent's will; and, . . .' (emphasis supplied)
The judgment of the Court leaves the respective parties, based on the estimated assets and liabilities of the Estate, in about this position:
Gross Estate
------------
$810,000.00
To Widow: (Velma)
One-half gross personalty $315,000.00
Life Estate in one-third
realty 38,773.00
(by current Federal tables) -----------
$353,773.00 $456,227.00
Liabilities
Debts and expenses $374,000.00
Death taxes 35,000.00
-----------
$409,000.00 $ 47,227.00
Legacy:
Cash bequest $50,000.00 $ 47,227.00 $ -0-
To Barbara Ann: $ -0- $ -0-
ISSUE
The single issue is:
Is the fractional bequest to Velma of one-half of the personal property and a life estate in one-third of the real estate computed on the gross estate or on the net estate?
Barbara and AFNB contend that a fractional bequest of a portion of the testator's property is computed on the basis of the net distributable estate in the absence of a contrary provision in the Will . . . and there is no such contrary provision expressed in the Will.
Velma argues that the express language of the Will indicates the intention of the testator to give her a specific devise of one-half of the personal property and one-third life estate in real property undiminished by debts, taxes or expenses, and that there is no indication in the Will that this devise is chargeable with any debts or expenses other than in accordance with the rules of abatement set forth in the Probate Code, IC 1971, 29--1--17--3, Ind.Ann.Stat. § 7--1103 (Burns Code Ed.).
CONCLUSION--It is our opinion that the fractional bequest to Velma is a general legacy and should be computed on the basis of the net estate available for distribution, because the Will does not express a contrary intent.
To charge or not to charge the residue with the debts and expenses . . . that is the question.
If Velma's fractional bequest is to be treated like a general legacy, it is chargeable with the debts and expenses against the estate. The general rule is that when a person dies his real and personal property are chargeable with the expenses of administering the estate, and with the payment of debts and expenses. Our Probate Code expresses the general rule:
Devolution of estate at death--When a person dies, his real and personal property, except homestead interests, passes to persons to whom it is devised by his last will, or, in the absence of such disposition, to the persons who succeed to his estate as his heirs; but it shall be subject to the...
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