Betty A. Luhrs Trust, In re
| Decision Date | 23 March 1989 |
| Docket Number | No. 16301,16301 |
| Citation | 443 N.W.2d 646 |
| Parties | In re the BETTY A. LUHRS TRUST. . Considered on Briefs |
| Court | South Dakota Supreme Court |
Ronald C. Aho and Scott K. Bradshaw of Aho & Bradshaw, Brookings, for appellant, Betty A. Luhrs.
Michael B. Crew of Crew & Crew, Sioux Falls, for appellee, Erna A. Smith.
On October 15, 1987, Petitioner/Appellant Betty A. Luhrs (Luhrs), settlor/co-trustee/beneficiary of the Betty A. Luhrs Trust, filed a petition in the circuit court for Lincoln County. The trust had been created by Luhrs on July 23, 1987, with Luhrs and her sister, Respondent/Appellee Erna A. Smith (Smith), named as co-trustees. Luhrs asked:
1) That the trust be revoked or, alternatively, that Smith be removed from co-trustee duties;
2) That Smith be required to render an accounting to the court and herself;
3) That Smith and her husband, Vernon, be "restrained from contacting, interfering [with], bothering or harassing the Petitioner in any manner whatsoever ..."; and
4) That the trust be put under the supervision of the court.
After a trial to the court, Circuit Judge Riley W. Connelly ordered that the trust be placed under judicial supervision, but otherwise rejected Luhrs' claims. This appeal followed, with Luhrs alleging that the trial court committed two reversible errors:
1) Smith should have been removed as trustee due to estrangement between the two; and
2) The trust should have been revoked as it was the product of undue influence and/or duress on Smith's part.
We affirm, upholding the trust. Our rationale follows.
This case cannot be understood without a detailed factual presentation.
Luhrs, who was 81 years old at the time of the hearing, lost her husband in March 1976. They had no children. Smith, 12 years younger, was named as executor of Mr. Luhrs' estate, and, after his death, took up residence in a mobile home on an acre of land she had purchased from the Luhrs earlier. She gave up employment in Montana to do so. She thereupon administered Mr. Luhrs' estate taking care of his widow also, including the cooking and driving. Smith later married and moved into her husband's home in North Dakota, in March 1983.
In addition to giving Smith and her children powers of attorney for herself, Luhrs seems to have had a very close, friendly relationship with Smith and her husband Vernen. This was reflected on Luhrs' "Thank You" card of May 29, 1986 (Respondent's Exhibit G), which contained her handwriting, reading, in part:
Dears Sis Erna & Brother Vernen[:]
... First of all thanks again for the many chores you did for me. Erna caring for me while sick Vernen for taking me everywhere needful.... Oh & the lots of house and yard work and washing windows & fixing bathroom & kitchen.... Who else would have helped me. The Good Lord does provide....
For all the loving kindness I would never have survived here. I was just too ill to keep going. Love to both, and thanks again.
Luhrs' and Smith's brother, Walter Gutzmer (Gutzmer), in contrast, began "helping" Luhrs in early 1986, by Luhrs' own testimony. An undated letter from Luhrs to Smith contained the following reference to Gutzmer:
Walt called. He wondered how I'm getting along. I told him just fine. He said, I want to help you, if you need. I said, no, you can't help. I thought you never did help me. Just makes me sad, when he brings his aggressiveness over.
Now, we shift to a discussion of wills executed by Luhrs. Luhrs provided very well for Erna and her children, Alfred M. Braun and Maxine E. Baker, in three wills executed from 1977 to 1986, while Gutzmer received far less, and was allocated only $1 in Luhrs' will dated September 27, 1978. The major property Luhrs possessed consisted of the below-described land. Basically, her three wills completed by 1984 disposed of her land in this manner:
SE 1/4 of SE 1/4 - NE 1/4 of NE 1/4 - SE 1/4 of NE 1/4
---------------- ---------------- ----------------
Section 8 Section 17 Section 17
1) April 6, 1977 Will
(Smith named exec.)
To: Smith A. Braun A. Braun
A. Braun M. Baker M. Baker
M. Baker (less 2.5 acres or $2,500 to four of
(equally) Luhrs' siblings, including GUTZMER)
2) September 27, 1978 Will
(Smith named exec.)
To: Smith A. Braun A. Braun
A. Braun M. Baker M. Baker
M. Baker (less 2.5 acres or $2,500 to four of
(equally) Luhrs' siblings, including SMITH, with)
GUTZMER to receive only $1)
3) December 19, 1984 Will
(Smith named exec.)
To: Smith A. Braun A. Braun
(life estate) M. Baker M. Baker
A. Braun (less 2.5 acres or $2,500 to four
(remainder) of Luhrs' siblings, including
M. Baker GUTZMER
(remainder)
These three wills are fairly consistent: Smith and her children were to take most of the real property. Significant changes were about to occur.
In July 1987, according to Smith, Luhrs informed her that relatives had taken Luhrs to Attorney Aho's (trial counsel for Luhrs in this case) office in Brookings, while she was visiting Gutzmer at Christmas time, and that she then signed papers which she did not understand. These documents, exhibits at trial, turned out to be revocations of powers of attorney Luhrs had given to Smith and her children. There is some indication that Luhrs may also have executed a will at this time, but Luhrs refused to discuss it at trial. Smith testified that Luhrs told her that she did not know where her money was, but Luhr's conversation eventually led Smith to a money market account.
The signature card for this account (introduced at trial) evidenced the signatures of Gutzmer, Hilda Wacker (another sister), Sheri L. Gutzmer (Gutzmer's daughter), and Luhrs. Bank statements (introduced at trial) for this account portray that it was opened with a balance of $16,860 on December 23, 1986, and closed out on July 13, 1987, with a balance of $17,311. This $17,311 was then deposited in a savings account in the names of Luhrs and Smith at the same bank, on the same day. These funds remained untouched until October 2, 1987, when Luhrs had a $5,256 money order drawn. (copy introduced at trial) This was payable to Gutzmer or his son, Kent.
Smith telephoned an attorney, John D. Gubbrud, to arrange a meeting. Gubbrud did not take the call himself and did not know whether it was Smith or Luhrs who made it. Three meetings resulted, during which the Betty A. Luhrs Trust was created. Smith was present all three times, and, according to Gubbrud and Smith, participated as an interpreter, to help Luhrs understand the legal terms and concepts which Gubbrud explained. Smith and Gubbrud testified (Gubbrud did not represent Smith at trial) that Luhrs was alert and took the initiative in explaining what she wanted: An arrangement which would put a permanent end to family pressures regarding her property while protecting her assets and providing for her. Gubbrud suggested a trust, revocable only by agreement of Luhrs and another trustee. Although Smith was initially unwilling to be named co-trustee, Luhrs insisted on it, and Smith agreed. Luhrs initialed each page of the trust document, and Gubbrud made an effort to explain the revocation and property division clauses very carefully. Gubbrud, based on his experiences, recommended against life estates and cash/land options, which, he felt, could create difficulties in the future. Luhrs followed his suggestions, and the trust was born.
The trust provided that the corpus was to be Luhrs' real property and $22,568 was to be then deposited with First Bank of South Dakota. The co-trustees (Luhrs and Smith) were to use trust income to support Luhrs during her life and invade the corpus if Luhrs' needs required it. Upon Luhrs' death, the corpus was to be distributed thusly:
SE 1/4 SE 1/4 NE 1/4 of NE 1/4 SE 1/4 of NE 1/4
Section 8 Section 17 Section 17
To: Smith A. Braun One-fourth shared by
M. Baker Gutzmer's children
One-fourth each to
Luhrs' siblings
Gutzmer, Florence
Kauffman, Hilda Wacker
This trust, although much more favorable to the Gutzmer faction than the earlier wills, was soon under attack, while Smith was away. On October 2, 1987, Gutzmer and son had the $5,256 money order in their hands. The next day, October 3, Smith and her husband visited Luhrs, and found Gutzmer there. Luhrs told Smith that they (Smiths) were through. An altercation ensued, provoked by either Gutzmer calling Mr. Smith a "son of a bitch" and vociferating that he now had "so much [evidence, apparently] on" Smith, or the Smiths attacking Luhrs. Until this imbroglio, Smith did not know that Luhrs had undergone a change of heart. The final act came on October 13, 1987, when Luhrs executed a new will which she now claims truly represents what she always wanted to do. To Smith, she gives her house, one acre of land, and a piano. Smith's children expressly receive nothing. Personal property and any residue goes to Hilda Wacker, who also, for the first time, is named executrix. Thereunder, the land would be distributed as follows:
SE 1/4 of SE 1/4 NE 1/4 of NE 1/4 SE 1/4 of NE 1/4
Section 8 Section 17 Section 17
To:
1/4 each to Gutzmer and Hilda
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