Dullard v. Schafer
| Decision Date | 12 January 1960 |
| Docket Number | No. 49863,49863 |
| Citation | 100 N.W.2d 422,251 Iowa 274 |
| Parties | Willard E. DULLARD, Trustee of the Estate of Charles Ludwig Schafer, Bankrupt, Appellant, v. Louis Henry SCHAFER; Charles Ludwig Schafer; A. Hollis Horrabin, as Temporary Administrator, as Trustee of the Louis Henry Schafer Trust, as Trustee of the Charles Ludwig Schafer Trust, and as Executor, all under the 'Last Will and Testament of Lew H. Schafer', Dec'd; and the Union Bank and Trust Company of Ottumwa, Iowa, as Trustee of the Louis Henry Schafer Trust, as Trustee of the Charles Ludwig Schafer Trust, and as Executor, all under the 'Last Will and Testament of Lew H. Schafer,' Dec'd, Appellees. |
| Court | Iowa Supreme Court |
Gilmore, Dull & Keith, Ottumwa, for appellant.
Bailey C. Webber, and A. Hollis Horrabin, Ottumwa, for appellees.
In contemplation of a second marriage, Lew H. Schafer entered into a written prenuptial contract with Clara C. Carter on the 28th day of December, 1944. The contract was unusual in that Lew's son, Charles Ludwig Schafer, was made a party thereto and signed the agreement. It is this third party phase of the instrument with which we are concerned in this suit by the trustee in bankruptcy as he attempts to recover assets in the father's estate which the trustee alleged were disclosed, confirmed, and established by that instrument. The trial court held, in denying plaintiff's prayer for relief, that plaintiff had failed to establish any present or enforceable interest of Charles in Lew's property immediately before signing the agreement, and that the alleged contract as it related to Lew and Charles was without adequate consideration and did not confer any right or interest on Charles other than the right of inheritance which he already had under the law. We think the trial court was right.
The basic issue is whether the bankrupt had such an interest in the property sought to be recovered, at the time of the bankruptcy or within six months thereafter, that it would pass to the trustee in bankruptcy for the benefit of his creditors. The Bankruptcy Act of 1938, as amended, particularly Title 11, Chapter 7, Section 110, sub. a, of the United States Code, of which the trial court took notice, provides that the trustee in bankruptcy is vested by operation of law with the title of the bankrupt, as of the date of the filing of the petition in bankruptcy, to all of the property of the bankrupt, except exempt property. It is, of course, the substantive law of the state that determines what is or is not a present interest subject to being transferred or used to satisfy creditors. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188.
Apparently the usual antenuptial agreement between Lew and Clara was originally contemplated, but the coming event evidently disturbed Charles, Lew's only son to the extent that he desired some assurance in his own right that his father would not later convey to Clara or others property which Charles thought ought to descend to the heirs of his father alone. As a result, the scrivener attempted to draft an instrument which, at least on its face, recited a consideration for Lew's promise to leave all the property then by him possessed to Charles and his heirs, to execute such a will, and not to change either without the 'written sworn consent' of Charles. This instrument as drafted provided: (Emphasis supplied.)
The services recited in the agreement upon which the alleged 'interest now existent' arose stated:
'Whereas, Charles Ludwig Schafer is the son of Lew H. Schafer, and has, during his majority, deported himself as a dutiful and loving son, and has thereby contributed to his father's acquisition and maintenance of the property, real, personal and mixed, by the said Lew H. Schafer now possessed, the same constituting an interest therein due and owing the said Charles Ludwig Schafer, and therefore a good and valuable consideration for the signing of this instrument.
'Now, Therefore, these parties do hereby contract and agree, the consideration from each to the other existing in the specific performances, many and manifold, which have been performed by the said Charles Ludwig Schafer in the past, * * *.' (Emphasis supplied.)
By a will executed on the same date as the contract Lew bequeathed all of his property, real, personal, and mixed 'to my beloved son, Charles Ludwig Schafer, should he survive me, but should I survive my said son, then and in that event it is my desire, and I so will and direct that all of the property * * * shall go * * * to his child or children then living.'
Lew married Clara and she died December 23, 1954, after having willed her property to members of her family. The terms of the agreement between Lew and Clara were carried out and her estate has been administered. We are satisfied that those provisions of the fully-executed agreement of December 28, 1944, as amended, do not affect one way or the other the issue here involved. Clara simply agreed that Lew's property should go to his heirs, not hers.
Other events set out in the record we may pass at the present, but on March 22, 1956, Charles Ludwig Schafer filed his voluntary petition in bankruptcy, which did not list any present interest in his father's property. He listed assets of only $50 and claims of $26,808.74. By amendment, these sums were changed to assets of $4,885.88 and claims of $40,903.66. On April 10, 1956, Lew H. Schafer executed a new will and on September 19, 1956, executed a codicil thereto which left substantially all of his property in trust for the benefit of the bankrupt Charles Ludwig Schafer and his son, Louis Henry Schafer. On September 9, 1957, Lew H. Schafer died, and his will and codicil were admitted to probate over the objections of the trustee plaintiff herein.
Most if not all of the claims in the bankruptcy grew out of the operation of a beer distributing business by the bankrupt in Ottumwa, Iowa, during the years 1953 to 1956.
Plaintiff contends, as he must, that Charles had a substantial interest in Lew's property prior to the execution of the agreement; that by the agreement Charles received the property, subject only to a life estate in Lew. He also contends that Charles could have at any time enforced his rights in and to the property held by his father, and did so on occasions; that he could have prevented his father from changing his will; that if Charles had died prior to Lew's death, his estate could have enforced these rights; that these property rights were established and could have been reached by Charles' creditors, and that they therefore passed to the trustee in bankruptcy for the benefit of creditors on March 22, 1956. Defendants deny all these contentions or that such were the intentions of the parties, and the trial court found the recited present interest was not established and that the alleged valuable consideration disclosed was inadequate to justify a specific performance decree by a court of equity. Although there are many other well-argued propositions raised in this appeal, we are agreed that if the trial court was correct on that issue, it is conclusive of plaintiff's case. Obviously, only the established interest of Charles in the property of Lew on March 22, 1956, and within six months thereafter, was available for the benefit of the bankrupt's creditors. Title 11, Chapter 7, Section 110, U.S.C.A.
I. As in all contracts, written and oral, we are interested in determining the intent of the parties to this agreement. Did it appear that Lew, the father, intended to presently grant to Charles his property valued at nearly $200,000, reserving only the date of delivery to the date of his death? We think not, although it must be conceded that for a valuable and adequate consideration such an agreement would be enforceable. In re Lundgren's Estate, Iowa, 98 N.W.2d 839.
Plaintiff relies upon the written agreement and the subsequent conduct of the parties for some twelve years thereafter for his proof of the parties' intentions. Nothing is shown as to the nature or extent of the past services. Without relating the subsequent acts or conduct in detail, w...
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