Estate of Aageson, Matter of, 85-69

• Decision Date: 11 July 1985
• Docket Number: No. 85-69,85-69
• Citation: 702 P.2d 338,217 Mont. 78
• Parties: In the Matter of the ESTATE OF Asmund AAGESON, Deceased.
• Court: Montana Supreme Court

Page 338

702 P.2d 338

217 Mont. 78

In the Matter of the ESTATE OF Asmund AAGESON, Deceased.

No. 85-69.

Supreme Court of Montana.

Submitted on Briefs April 25, 1985.

Decided July 11, 1985.

Moses Law Firm, Billings, for appellant.

Aronow, Anderson, Beatty & Lee, Shelby, Waldo Spangelo, Havre, for respondent.

MORRISON, Justice.

Three children of the deceased, Asmund Aageson, appeal the December 7, 1984, order of the Twelfth Judicial District Court dismissing their petitions for probate of wills dated September 5, 1980, and July 15, 1980. By that same order, the District Court admitted into probate a will dated December 30, 1964, together with its two codicils, dated December 17, 1974, and November 10, 1975. We affirm the order of the District Court.

Asmund and Ella Aageson, husband and wife, operated a farm north of Gildford, Montana, consisting of approximately 1,980 acres. They had five children, one of whom predeceased his parents. The remaining four are Arvin, Eugene, Delia (Lorraine) and Nan. Lorraine and Nan moved from Montana in the 1940's and now live in California and Washington, respectively. Eugene acquired his own farm in the same general area. Arvin served in the military during World War II before returning to the family farm. He then acquired adjacent farm land and entered into a farming partnership with his father in either 1948 or 1949.

Asmund and Ella retired from active farming in 1951 and moved to Seattle, Washington. To facilitate his continued operation of the farm, Arvin was granted a power of attorney permitting him to sell grain, sign checks and enter into farm programs. However, he was not allowed to sell or encumber his parents' land.

Pursuant to an estate plan recommended by Asmund's attorney, Mr. Kilbourne, Asmund and Arvin terminated their partnership in December 1964 and entered into a lease agreement. Asmund and Ella also executed wills dated December 30, 1964, whereby Arvin was to receive 1,020 acres while the remaining 960 acres were to pass one-third each to Eugene, Lorraine and Nan.

Four hundred eighty acres of the farm land were in Ella's name. Under Ella's will, those acres were to be inherited by Arvin, subject to Asmund's life interest in the income from the land. Further, the oil and gas royalties on those lands were to go to Arvin, Eugene, Lorraine and Nan, equally. The remaining 1,500 acres were in Asmund's name. By Asmund's will, Arvin was to receive 540 acres while Eugene, Lorraine and Nan were each to have 320 acres. These lands were subject to the same royalty reservations set forth in Ella's will.

Thereafter, in the early 1970s, Mr. Kilbourne advised Arvin regarding his own estate and recommended that "a generation skipping device" be employed to prevent Arvin's estate from being taxed for the farm lands. Accordingly, Asmund and Ella executed codicils to their wills on December 17, 1974, vesting the lands Arvin was to receive upon their deaths in Arvin's sons, David and Verges. David and Verges had remained at home, assisting their father with the family farm.

Arvin and his sons subsequently formed a partnership, Aageson Grain and Cattle. On November 10, 1975, Asmund and Ella replaced the original 1964 farm lease to Arvin with a new lease to the partnership. The two leases are virtually identical except the lease to the partnership: (1) covered all properties mentioned in the 1964 wills; and (2) granted to the lessee, upon Asmund's death, the option to purchase for $118,680, the 960 acres devised to Eugene, Lorraine and Nan in Asmund's 1964 will, excepting the royalty interests. The $118,680 represented the fair market value of the land at that time. (The fair market value of the land was $356,410 at the time of Asmund's death.)

The second codicil, also dated November 10, 1975, referenced the new lease and provided that should the option to purchase be exercised, Eugene, Lorraine and Nan would receive the proceeds in equal shares.

In the spring of 1978, David and Verges purchased the family farm from Arvin. In connection with the financing of the purchase, Asmund and Ella executed a mortgage on the lands they had devised to Arvin. The 960 acres devised to Eugene, Lorraine and Nan were not mortgaged so that if the option to purchase was not exercised, the lands would pass unencumbered. With Asmund's and Ella's consent, the existing farm lease was assigned to David and Verges.

Asmund and Ella had sold their home in Seattle in the spring of 1974 and moved into the Tacoma Lutheran Home and Retirement Community in Tacoma, Washington, approximately 12 miles from Nan's home. Nan visited her parents every weekend, taking them shopping and to her home for Sunday dinner. Arvin phoned at least weekly to update his father on the progress of the farm. He also visited his parents several times a year. Eugene's and Lorraine's contact with their parents was more limited.

Ella Aageson died on February 28, 1979. Probate of her 1964 will and its 1974 and 1975 codicils was commenced in the spring of 1980 in Hill County, Montana, with Arvin and Eugene appointed as co-executors of the estate. However, despite three inquiries from this Court, as of the date of the trial of this cause Eugene had failed to execute the final papers.

There was little discord within the Aageson family until Ella's death, when Eugene, Lorraine and Nan learned of the option to purchase their interest in the farm. At Asmund's 91st birthday party on February 25, 1980, the family members and a moderator held a meeting at which Arvin was told of his siblings' dissatisfaction. Arvin was advised not to exercise the option to purchase. An accounting of the farm's proceeds was requested. Nan demanded that Eugene be given his devised land immediately. Arvin refused to acquiesce to the demands of his siblings.

Asmund was present, but did not participate at the meeting. He apparently was unable to either hear or understand what was occurring.

In May 1980, Nan determined that her father needed an attorney to represent his interests. She contacted Warren Peterson, the attorney for the University for which she worked, and requested that he visit with Asmund regarding some estate matters. Though at trial she denied having done so, Nan apparently furnished Peterson with copies of at least her father's will and codicils, and possibly the farm lease. At a meeting on May 27, 1980, Asmund and Peterson discussed the facts that Arvin's fixed price on the option to purchase was too low and would be unfair to Asmund's other children, and that Arvin needed to provide his father with an accounting of the farm's business. Further, Peterson suggested to Asmund, per his deposition, that Peterson write Arvin to inquire as to his willingness to renegotiate the purchase price to reflect the fair market value of the farm upon Asmund's death and to demand an accounting. The letter was written. Upon Asmund's approval, the letter was sent to Arvin. Arvin's reply was an unresponsive, angry letter, which was shown to Asmund by Peterson. Peterson then wrote another letter to Arvin, which apparently went unanswered.

Subsequently, at a July 1, 1980, meeting at the nursing home, Peterson presented Asmund with documents revoking Arvin's power of attorney and granting a new, general power of attorney to Nan, including the right to sell Asmund's land. Those documents were signed and a decision was made to draft a new will, eliminating Arvin and his children. While admitting that the new will was not entirely equitable, Peterson testified at his deposition that he and Asmund thought such a will would be more equitable than the 1964 will, especially since Arvin and his sons would be retaining the option to purchase at a price substantially below fair market value.

Because he was concerned about Asmund's competency to execute a will, Peterson contacted Asmund's doctor, Ernest Randolph. Dr. Randolph responded that on the basis of his monthly visits with Asmund, he was uncertain whether on any given day Asmund would be competent to execute a will. Peterson therefore requested Dr. Randolph's presence at the time of the actual execution, July 15, 1980.

On that date, Dr. Randolph questioned Asmund concerning personal data, his children, his property and the nature of his actions under the new will. Both Dr. Randolph and Peterson were then satisfied that Asmund was competent to execute a will and the will was signed. There were no other witnesses.

Arvin was informed of the revocation of his power of attorney and Nan's general power of attorney on August 11, 1980. He was not told of the new will. Upon legal advice, Arvin presented his father with a new power of attorney for himself, as well as an extension of the existing 1975 farm lease providing that if any farm lands were sold, Arvin would have the right of first refusal to meet the price. These documents were signed in Asmund's room on August 29, 1980. At least four nursing home staff members and a legal secretary witnessed the execution of the documents. Most of those witnesses testified that though they had been skeptical at first, they thought upon seeing and talking with Asmund that he was competent to execute the documents.

Asmund apparently told Nan that Arvin had had him sign some new documents. Nan then contacted Peterson, who recommended that Asmund be brought to see him. Eugene took Asmund to Peterson's office on September 5, 1980. Asmund was unable to remember what documents he had signed for Arvin. Therefore, after satisfying himself that Asmund was again competent to execute a will, Peterson had Asmund re-execute the July 15, 1980, will and sign documents revoking any power of attorney given to Arvin and reestablishing a general power of attorney in Nan.

Arvin took no responsive action. However Nan, on October 24, 1980, through lawyer Peterson, petitioned the court in Tacoma, Washington, to have Asmund declared incompetent and to have herself appointed guardian...