Clark v. Clark

• Decision Date: 17 August 1979
• Docket Number: 48480.,No. 48479,48479
• Citation: 288 NW 2d 1
• Parties: Bruce A. CLARK, et al., Respondents, v. Pansy P. CLARK and John R. Clark, Appellants, Raymond Reister, trustee, Defendant.
• Court: Minnesota Supreme Court

288 N.W.2d 1 (1979)

Bruce A. CLARK, et al., Respondents, v. Pansy P. CLARK and John R. Clark, Appellants Raymond Reister, trustee, Defendant.

Nos. 48479, 48480.

Supreme Court of Minnesota.

August 17, 1979.

Maslon, Kaplan, Edelman, Borman, Brand & McNulty and Marcy S. Wallace, Minneapolis, for appellants.

Henson & Efron and Alan C. Eidsness, Minneapolis, for respondents.

Heard before TODD, YETKA, and SCOTT, JJ., and considered and decided by the court en banc.

SCOTT, Justice.

These consolidated appeals, taken by defendants Pansy and John Clark, involve a judgment entered by the Hennepin County District Court which, inter alia, imposed a constructive trust on most of Pansy Clark's property; permitted her to use the trust property for her "needs" during her lifetime, with the balance of the property being preserved for the benefit of plaintiffs and their sister; required her to execute an irrevocable inter vivos trust and pour-over will to implement the constructive trust; and required John Clark to give to the trust his promissory note in the amount of approximately $23,000 for a transfer Pansy Clark had previously made to him. We affirm in part and modify in part.

Pansy Clark¹ (hereafter "Mrs. Clark") and her late husband Thomas R. Clark ("Mr. Clark") had six children — John, Philip, Bruce, Ross, Winifred, and Thomas. They also raised a niece, Edith Imm, to adulthood. Bruce, Philip, and Ross are plaintiffs in this action. Winifred originally joined as a plaintiff, but withdrew prior to trial. Thomas died in 1972.

Mr. and Mrs. Clark acquired certain farm property in Eden Prairie, Minnesota (hereafter "Hennepin County farm") in 1946. Also in that year, John returned home from the service and became actively involved in the operation of the Hennepin County farm on a part-time basis while he attended college. In early 1951 John quit college prior to graduation and helped his parents fulltime on the farm. At that time, Mr. Clark's health was failing.

In the fall of 1951, John and Mr. Clark purchased farming property in Shakopee, Minnesota (hereafter "Scott County farm"), on a contract for deed. They were equal partners in this venture, with Mr. Clark contributing additional capital to reimburse John for his uncompensated work on the Hennepin County farm. Before Mr. Clark could raise his share of the down payment, the Hennepin County farm encountered great financial difficulties. John was able to make certain financial arrangements with the creditor to save the Hennepin County farm and raise additional monies for the down payment on the Scott County farm.² Due to Mr. Clark's failing health, however, the creditor agreed to these arrangements only on the condition that John would assist his father in the operation of the Hennepin County property as manager of the farming operations.

John lived on the Hennepin County farm until his marriage in February 1957, and continued to run the farm and feedlot until Mr. Clark died in August 1957. During that period, none of the other children helped in the farming operation except for Philip, who worked for wages for 18 months in 1952 and 1953, and Bruce, who also worked for wages for ten and one-half months in 1956 and 1957.

When Mr. Clark died in August 1957, he had not executed a will. At the time of his death, Mr. Clark alone held legal title to the Hennepin County farm.³ The property was then valued at about $20,000. Mr. Clark also owned certain personal property, including various pieces of farm equipment. The Scott County farm was held in joint tenancy by Mr. and Mrs. Clark and John. Since the estate was heavily encumbered, it was apparent that if the estate were liquidated there would be little to distribute to the heirs. Accordingly, the family entered into a written settlement agreement whereby plaintiffs, Winifred, and Tom would convey their interest in their father's personal property to Mrs. Clark and their brother John. The purpose of the agreement was to allow John and Mrs. Clark to continue the farming operations so that the estate's indebtedness could be paid off and the assets could be preserved. Under the terms of the agreement, the Hennepin County farm was to descend according to the laws of intestate succession. In addition, the agreement provided that Mrs. Clark would make a will leaving all of her estate at the time of her death to her six children, in equal portions, except for a specific bequest to her niece, Edith Imm.

Bruce testified that around the time the settlement was entered into, John and Wallace Odell, the family attorney, told him that in order to have the farming business continue and to avoid inheritance taxes, it was necessary that the children quitclaim the Hennepin County property to Mrs. Clark. He claimed that he executed such a quitclaim deed in 1958 and understood that his other brothers and sister had done the same. Bruce stated that he had a conversation with his mother in 1958 in which she had promised that in return for the children's giving up their inheritance rights she "would preserve and keep that property" for the children's use. He also claimed that his mother told him "* * * that she would divide all of her property between her children with the exception of John, who was her partner, and that she reserved the right to leave an inheritance of five thousand dollars for Edith Imm, my cousin."

Philip indicated that he did not remember the specific conversations with his family, but stated that he recalled discussions with his mother to the effect that "* * * the best thing for us to do was sign quitclaim deeds which would remove us from any immediate claim to the estate but she would preserve the estate for our ultimate use." Winifred testified that she was told by her mother in 1958 that it was necessary to sign quitclaim deeds to the Hennepin County property so that the operation of the farm could continue undisturbed, and this would result in a mere deferral of the children's distribution of their shares of Mr. Clark's estate. Winifred claimed that she signed a quitclaim deed to the Hennepin County farm in June, 1959. Ross did not testify at trial. Mrs. Clark, John, and Wallace Odell denied that any agreement, other than the written family settlement contract, had been entered into by Mrs. Clark and her children. Odell stated that he had not drafted any quitclaim deeds for transfer of the Hennepin County real property during the 1958-59 period.

After Mr. Clark's death, Mrs. Clark, John, and John's family moved to the Scott County farm. The Hennepin County property was primarily wasteland, and after 1961 was not farmed. In 1960 Mrs. Clark and John entered into an agreement severing their farming partnership, which was no longer needed after Mr. Clark's estate was closed. In addition, the agreement provided, inter alia, that John convey to Mrs. Clark all of his interest in the Hennepin County farm; the joint tenancy in the Scott County farm was severed and Mrs. Clark agreed to convey to John a portion of her interest in the Scott County property; Mrs. Clark leased to John her interest in the balance of the Scott County farm with an option to purchase the property at fair market value; and John agreed to assume and pay the mortgage indebtedness on both the Hennepin and Scott County properties. The contract also provided that John agreed to be bound by any will his mother might make which omitted him as an heir. Pursuant to the agreement, John conveyed to Mrs. Clark, by quitclaim deed, his interest in the Hennepin County farm.

The Scott County property was sold on a contract for deed in August 1969. On October 22, 1969, John and Mrs. Clark entered into an accord and satisfaction agreement which stated that all debts and claims arising out of their 1960 agreement were discharged and satisfied and that the accord and satisfaction agreement replaced the 1960 agreement. The accord and satisfaction apportioned payments to be received from the contract vendee and apportioned the responsibility for paying debts with respect to the Scott County property. The agreement also reaffirmed John's renunciation of any interest in Mrs. Clark's estate, and John agreed to be bound by the terms of any will which his mother might execute omitting him as an heir.

On September 1, 1970, the Hennepin County farm was sold on a contract for deed to Waste Management for $250,000, payments to be made on September 1 of each year until 1980, when the balance would be due in a balloon payment. At that time, Wallace Odell examined the title to the Hennepin County farm and determined that the property was owned by Mrs. Clark and her children, except John. Accordingly, Odell used certain quitclaim deeds, which had been executed by the children in 1964 and 1965 when Bruce considered buying the Hennepin County farm and had been retained in Odell's files, to transfer title to Mrs. Clark to facilitate the sale.⁴ Since these deeds contained an incorrect legal description, it was later necessary to prepare new deeds.

The first payment made on the contract was about $60,000. Out of this payment, Mrs. Clark loaned Bruce about $42,000. Shortly thereafter, on December 30, 1970, Mrs. Clark and Bruce entered into a contract for last will and testament. The document was prepared by Bruce with the advice of his attorney, after discussions with Mrs. Clark. The agreement provided that Mrs. Clark would leave her estate to her children, except for John, in equal shares, but she was still free to make a present of an undetermined amount to her niece, Edith Imm. The contract stated that the consideration for Mrs. Clark's promise was the fact that Bruce had borrowed against his anticipated inheritance and had secured these loans with promissory notes "based on receiving one fifth of all gifts to and estate left to" the five children named in the agreement. Mrs. Clark gave some of Bruce's promissory notes to her other children.

In late 1970, or early 1971,...