Estate of Cline, Matter of

• Decision Date: 14 July 1995
• Docket Number: No. 72,415,72,415
• Citation: 898 P.2d 643,258 Kan. 196
• Parties: In the Matter of the Estate of Maria Slade CLINE, Deceased.
• Court: Kansas Supreme Court

Page 643

898 P.2d 643

258 Kan. 196

In the Matter of the Estate of Maria Slade CLINE, Deceased.

No. 72,415.

Supreme Court of Kansas.

July 14, 1995.

Syllabus by the Court

1. The construction of a written instrument is a question of law, and the instrument may be construed and its legal effect determined by an appellate court.

2. Where a court, either trial or appellate, is called upon to determine the force and effect to be given terms of a will, the court's first duty is to survey the instrument in its entirety and ascertain whether its language is so indefinite and uncertain as to require employment of rules of judicial construction to determine its force and effect.

3. When interpreting a will, the primary function of the court is to ascertain the testator's intent from the four corners of the will and to carry out that intent if possible and not contrary to law or public policy.

4. Where the language of a will is clear, definite, and unambiguous, the court should not consider rules of judicial construction to determine the intent of the testator.

5. The same words are ordinarily to be given the same meaning in one part of the will as in other parts; where different words are used in separate parts of the will, the context of the will may clearly indicate that the testator gave different words used in separate parts of the will the same meaning.

6. The judicial doctrine of equitable apportionment springs from equitable principles and, by the very nature of its source, stands for the proposition that only property which generates the federal estate tax, whether probate or nonprobate, shall bear the burden of the tax, absent statutory direction otherwise or a clearly expressed intention to the contrary on the part of the testator.

7. The term "general estate" in a will provision directing that all taxes imposed by reason of the testator's death, whether or not such property passes under the will or otherwise, should be paid out of testator's "general estate" means that the taxes due by reason of the testator's death are to be imposed on the residuary estate.

Linda S. Mock, Bednar and Mock, P.A., Atchison, argued the cause and was on the brief for appellants.

Charles E. Hammond, Overland Park, argued the cause and was on the brief for appellee.

LOCKETT, Justice:

The residuary beneficiaries of a will appeal the district court's denial of their claim that the will was ambiguous and, therefore, that the doctrine of equitable apportionment required the estate and inheritance taxes to be apportioned over the entire gross estate. This case was transferred from the Court of Appeals pursuant to K.S.A. 20-3018(c).

On October 4, 1992, Maria Slade Cline died testate in Kansas City, Missouri. Cline's will, which was executed in Kansas in August 1982, contains specific bequests of real and personal property and provides that the residue of her estate be distributed to her son, John May. In the event her son failed to survive her, the residue of her estate was to be distributed in equal shares to her son's widow, JoAnn May, and his two daughters, Kristina May Paquette and Karin May Walz (the residuary beneficiaries).

Maria Cline's will also exercised the power of appointment of a marital deduction trust established by the will of Cline's predeceased husband, Neil Cline. Neil Cline's will, although not a part of the record on appeal, established two trusts, a marital deduction trust and a nonmarital trust. A marital deduction trust is "a trust, either living or testamentary, which gives the spouse the income for life and a power of appointment, with terms that qualify the property for the marital deduction." 76 Am.Jur.2d, Trusts § 11, p. 41.

Maria Cline's will directs that one-fifth of the principal and undistributed income in the trust be distributed to John May. In the event John May failed to survive Cline, the will provides that his one-fifth share be distributed in equal shares to the residuary beneficiaries. The will further provides that the remaining four-fifths of the principal and undistributed income in the trust be distributed in one-fifth shares to parties unrelated to the decedent.

Maria Cline's will also provides that Maria's son, John May, be appointed executor. In the event John May predeceased his mother or was unwilling to act as executor, the will appointed The Security Bank of Kansas City (the Bank) as successor executor. John May predeceased his mother. On January 8, 1993, the Bank filed a petition for the probate of Cline's will. An order admitting Cline's will to probate and naming the Bank as the executor of the estate of Maria Slade Cline was filed on February 8, 1993. The inventory and valuation of Cline's residual estate consisted of approximately $843,000 in stocks, bonds, mortgages, notes, and cash. The trust assets over which Cline held the power of appointment were worth approximately $1.5 million. The Bank was also the trustee of the trust established by the will of Cline's predeceased husband.

On July 7, 1993, based on its interpretation of Article I of the will, the Bank paid $639,431.67 in federal estate taxes and $126,746.64 in state inheritance taxes generated by the property passing under Cline's will and the trust out of Cline's residuary estate. No notice of the payment of the inheritance and estate taxes was given to the beneficiaries of Cline's estate.

On August 25, 1993, the residuary beneficiaries of Cline's will filed a petition in Wyandotte District Court to interpret the will and apportion the inheritance and estate taxes over the entire gross estate. A copy of the petition was served on the attorney for the Bank and each of the beneficiaries of the trust. No written response was filed.

At a hearing on September 14, 1993, the Bank stated that the taxes were paid from the residue of the estate as required by Article I of the will. The residuary beneficiaries argued that the gross estate, including the trust assets over which Cline held the power of appointment, should bear the burden of the taxes in proportion to how the property generated the taxes. Article I of Cline's will provides:

"All estate, inheritance, legacy, succession, excise or transfer taxes (including any interest and penalties thereon) imposed by any domestic or foreign laws with respect to all property taxable under such laws by reason of my death, whether or not such property passes under this my will or otherwise and whether such taxes be payable by my estate or by any recipient of any such property, shall be paid by my Executor out of my general estate as part of the expense of the administration thereof with no right of reimbursement from any recipient of any such property."

The court denied the petition.

On December 17, 1993, the residuary beneficiaries filed a motion for reconsideration or, in the alternative, a new trial. After a hearing the court denied the motion. The residuary beneficiaries appeal both the denial of their petition and their motion for reconsideration or new trial. The residuary beneficiaries contend that Cline's will is ambiguous because it does not clearly state an intention that the entire estate and inheritance taxes be paid out of her residuary estate. They argue that the court failed to apply the doctrine of equitable apportionment under which the assets in the trust (over which Cline exercised her power of appointment) would bear a proportionate tax burden. The Bank asserts that Article I of Cline's will directing the payment of all estate, inheritance, legacy, succession, excise, or transfer taxes from "my general estate" was a clear and unambiguous expression of Cline's intent that the taxes be paid out of her residuary estate.

The construction of a written instrument is a question of law, and the instrument may be construed and its legal effect determined by an appellate court. In re Estate of Pickrell, 248 Kan. 247, Syl. p 1, 806 P.2d 1007 (1991). Where a court, either trial or appellate, is called upon to determine the force and effect to be given terms of a will, the court's first duty is to survey the instrument in its entirety and ascertain whether its language is so indefinite and uncertain as to require employment of rules of judicial construction to determine its force and effect. In re Estate of Wernet, 226 Kan. 97, Syl. p 1, 596 P.2d 137 (1979); In re Estate of Reynolds, 173 Kan. 102, 104, 244 P.2d 234 (1952). Where the language of a will is clear, definite, and unambiguous, the court should not consider rules of judicial construction to determine the intent of the testator. In re Estate of Wernet, 226 Kan. 97, Syl. p 2, 596 P.2d 137. In the interpretation of wills, the primary function of the court is to ascertain the testator's intent from the four corners of the will and to carry out that intent if possible and not contrary to law or public policy. 226 Kan. 97, Syl. p 3, 596 P.2d 137.

The parties agree that the estate and inheritance taxes generated as a result of Cline's death are governed by the law of Missouri. See K.S.A. 59-806(a)(6) (providing that nothing in act regarding estates of nonresidents shall affect determination of the ultimate burden of estate or inheritance taxes imposed by reason of death of a nonresident decedent). The parties further agree that if the will is ambiguous, Missouri requires that the rule of equitable apportionment be applied. In re Estate of Wahlin, 505 S.W.2d 99, 112 (Mo.App.1973).

The judicial doctrine of equitable apportionment springs from equitable principles and, by the very nature of its source, stands for the proposition that only property which generates the federal estate tax, whether probate or nonprobate, shall bear the burden of the tax, absent statutory direction otherwise (there being none in Missouri) or a "clearly expressed intention" to the contrary on the part of the testator. 505 S.W.2d at 112.

No Kansas cases interpreting the phrase "my general estate" as used in Article...