Colthurst v. Colthurst

• Decision Date: 19 April 1978
• Docket Number: No. 60746,60746
• Citation: 265 N.W.2d 590
• Parties: Jessie M. COLTHURST and Keith Lord, Executors of the Estate of Roger Colthurst, Deceased, Appellants, v. George COLTHURST and Betty Caldwell, Appellees.
• Court: Iowa Supreme Court

Page 590

265 N.W.2d 590

Jessie M. COLTHURST and Keith Lord, Executors of the Estate of Roger Colthurst, Deceased, Appellants, v. George COLTHURST and Betty Caldwell, Appellees.

No. 60746.

Supreme Court of Iowa.

April 19, 1978.

As Amended July 26, 1978.

G. Gifford Morrison, Washington, for appellants.

Robert Day, Washington, for appellees.

Considered by MOORE, C. J., and MASON, UHLENHOPP, REYNOLDSON, and McCORMICK, JJ.

MASON, Justice.

This is an appeal by plaintiffs, Jessie M. Colthurst and Keith Lord, executors of the estate of Roger Colthurst deceased. It stems from the district court's ruling sustaining objections by George Colthurst and Betty Caldwell, remaindermen under the decedent's will, to the executors' application and the amendment thereto entitled interlocutory final report for an order to proceed with the payments and distributions as set out in exhibit B attached to the application.

The appeal is authorized under section 633.36, The Code. See also Kurtz and Reimer, Iowa Estates: Taxation and Administration, section 18.3, p. 921.

May 12, 1975, Roger Colthurst died testate leaving a surviving spouse, Jessie Colthurst, age 81, to whom he had been married for 25 years, and two adult children by his first wife, George Colthurst, age 46, and Betty Caldwell, age 49. Pursuant to decedent's will, Jessie was made executor of his estate. Later, upon her application, Keith Lord was appointed co-executor of the estate.

In a preliminary tax report and probate inventory filed by Jessie, decedent's estate totaled $318,037.63, $300,000 of which represented the value of a farm owned by decedent which at the time of his death was leased to a Harlan Edgar. The remaining $18,037.63 consisted of $10,897.40 in proceeds from the sale of seed corn, $6,235.23 from decedent's share of property held in joint tenancy, $900.00 in household goods and $5.00 in stock. There is no dispute here as to the accuracy of this inventory.

Of importance here are the following provisions of decedent's will:

"ITEM I

"I direct that as soon as practicable after my death all of my just debts and funeral expenses be paid.

"ITEM II

"If my beloved wife, Jessie M. Colthurst, survive me, I give and bequeath to her all of my personal property of each and every kind whatsoever, as and for her absolute property.

" * * *elo

"ITEM III

"If my wife, Jessie M. Colthurst, survive me, I give, devise and bequeath to her the use, benefits, rents and profits in and to all real estate of which I die seized, for the term of her natural life. I also direct that my children, George Colthurst and Betty Caldwell, pay to my wife, Jessie M. Colthurst any balance due on my note payable to her, said note being in the principal sum of $12,500.00 dated July 6, 1971, which note represents the proceeds from the sale of Jessie's real estate, loaned to me on July 6, 1971. The provisions herein made in this, my Will, for my wife are in lieu of her dower interest in my estate."

Other provisions of the will provided that subject to the life estate of Jessie, the remainder interest in the farm was devised to George and Betty, with George having an option to purchase Betty's interest.

Jessie was to receive the following sums under the provisions of the will and otherwise: $12,470.46 as surviving joint tenant in the couple's bank accounts and in the couple's old car; $10,016.11 as beneficiary of life insurance policies on decedent; $900.00 in household goods as recipient of the personal property; $10,897.40 from the proceeds of the sale of seed corn as recipient of decedent's personal property; $7,500.00 still owed by decedent on the note payable to Jessie which the will provided the children should pay; and the $5.00 share of stock. During the period of administration Jessie requested a widow's allowance from the estate and was granted $500 a month for one year.

Jessie Colthurst elected to take under the will, giving up the statutory dower right. Thus, she is considered a purchaser for value. In re Estate of Hartman, 233 Iowa 405, 409, 9 N.W.2d 359, 362; Nolte v. Nolte, 247 Iowa 868, 880, 76 N.W.2d 881, 888; In re Estate of Twedt, 173 N.W.2d 545, 548 (Iowa 1970).

The real estate owned by decedent was divided by a road with approximately 182 acres being located on the north side of the road and 193 acres being located on the south side of the road. The portion of the farm located on the north side of the road is principally pasture and timber for which the tenant who had been on the farm since 1958 paid cash rent annually of less than $500.00 and this arrangement was continued by the executors through March 1, 1977, and the expenses for taxes, insurance and maintenance each year were approximately $1500.00 per year making a let loss from this portion of the farm of approximately.$1000.00 per year. Neither tract constituted a homestead.

June 6, 1976, Jessie and her co-executor filed an application for sale of real estate in the court. In this application they stated the estate had no personal property with which to pay the federal estate tax, Iowa inheritance, tax, and costs of administration and, therefore, it was necessary to sell a portion of the real estate for that purpose.

They asked approval of the court of a contract of sale into which they had entered to sell the 182 acres of timberland for $90,000. They proposed that the balance of the proceeds not used to pay the obligations of the estate remain in the life estate of Jessie and be used to pay her income as provided in decedent's will. George and Betty approved the executors' application for sale and joined with the executors in seeking court approval. The court approved the sale and the land was conveyed pursuant to the contract.

November 2, after the executors had had possession of the real estate during the crop years 1975 and 1976, they filed the application previously mentioned setting forth the income received by the estate, the expenses incurred, the debts and charges which the executors proposed to pay with the $90,000 of sale proceeds from the land and then proposed that any balance remaining from the $90,000 be placed in a separate savings account subject to any additional debts and charges of the estate with the income from the account being payable to the surviving spouse during her lifetime and the principal to be delivered to the remaindermen upon the death of Jessie M. Colthurst, the surviving spouse.

They explained the federal estate tax with interest and the Iowa inheritance tax had been paid in full.

They justified this proposed use on their belief the $90,000 was the type of property which abates under section 633.436, The Code, prior to abatement of property devised to a surviving spouse.

November 18, George and Betty filed objections to the application for order. January 11, 1977, the executors filed an amended application for order and an interlocutory final report.

In this application, they struck their original proposed use of the $90,000 and stated instead:

"That in addition to the above (the payment of all the debts and obligations of the estate), there will be taxes on the land sold, and there remains the unpaid note plus interest at 7% from the date of death of Roger Colthurst. In addition, there was lost to the surviving spouse, Jessie M. Colthurst, due to the sale of the real estate as aforestated, which sale was solely for the benefit of the remaindermen, her life estate interest in said real estate so sold. That it sold for $90,000.00 and the value of her life estate so lost is thus the sum of.$19,836.00, which represents 4% each year on the basis of her life expectancy, based on the life expectancy tables in the Code of Iowa.

"In addition there will be extraordinary legal fees for the attorneys for this estate in view of the extended problems involved with the preparation and approval of this interlocutory final report.

"That these Executors proposed to apply all of the $90,000.00 received from the sale of the real estate to the above, and the balance remaining unpaid, due Jessie M. Colthurst, shall stand as a debt due her from the remaindermen, and a lien due her, or her heirs or assigns, attach to the remaining real estate in the estate, together with legal interest on all the same, till paid by said remaindermen, all as provided by Section 633.436 of the Code of Iowa."

February 2, George and Betty filed objections to the amended application and interlocutory final report. They stated Jessie had refused to mortgage the farm to pay the debts and obligations of the estate and, instead, had proposed the sale of the 182 acres. They explained an oral family agreement was reached whereby the proceeds of the sale were to be applied to the extent necessary to the payment of the debts and obligations of the estate.

In objection 2 they argued Jessie, by the family agreement and other actions, had estopped herself from now claiming any right to lost income from the real estate.

In objections 3 and 4 they explained the farm income for 1975 had been $13,038.36 and the estimated income therefrom in 1976 was $25,000.00.

In objection 5 they stated their belief it was the duty of the executors under section 633.351, The Code, to keep available the farm income from 1975 and 1976 to pay debts and general estate obligations incurred in those years.

In objection 6 they explained Jessie had reported the income received in 1975 on a personal income tax return rather than on a fiduciary report and the income tax payments shown in the report were amounts paid by her for the payments of the federal and state income taxes on her personal return.

In objection 7 they stated it was equitable to allow reimbursement to Jessie of the federal and state income taxes paid on the income, to allow her credit for the Iowa inheritance tax paid, and to allow her sufficient income for her support during 1975 and 1976.

In objection 8 they stated their belief " * * * the income for the year 1...