Estate of Johnson, Matter of

• Decision Date: 21 May 1986
• Docket Number: No. 84-1731,84-1731
• Citation: 387 N.W.2d 329
• Parties: In the Matter of the ESTATE OF Hans JOHNSON, Deceased. Carol Jean Gerdes, Appellant, Dennis Johnson, Byron Johnson, Irene Drane, and Chester Johnson, Appellees.
• Court: Iowa Supreme Court

Page 329

387 N.W.2d 329

In the Matter of the ESTATE OF Hans JOHNSON, Deceased Carol Jean Gerdes, Appellant Dennis Johnson, Byron Johnson, Irene Drane, and Chester Johnson, Appellees.

No. 84-1731.

Supreme Court of Iowa.

May 21, 1986.

David J. Price of Price, Correll & Sheerer, Cedar Falls, for appellant.

LeRoy H. Redfern of Redfern, McKinley, Mason & Dieter, Cedar Falls, and Emil Trott, Jr., of Barrett & Trott, Des Moines, for appellees.

Considered en banc.

McGIVERIN, Justice.

In this case, we must determine whether the will of decedent Hans Johnson created a vested proportionate remainder interest in his son, Robert Johnson, which in turn passed when he died under the residuary clause of Robert's will to his brother, Dennis Johnson, or whether Robert only received a life income interest coupled with a general testamentary power of appointment.

The executor of the estate of Hans Johnson recommended in the final report to the district court that Robert's share pass to his brother, Dennis. One of the other beneficiaries of Hans' estate, Hans' daughter Carol Gerdes, objected to the proposed distribution. The district court approved the final report and found that Robert's share passed to Dennis under the terms of Robert's will. Carol appealed, and we transferred the case to the court of appeals. That court reversed the district court ruling and held that Robert did not receive a vested proportionate interest in Hans' estate. We granted the application for further review of Dennis Johnson, Byron Johnson, Irene Drane and Chester Johnson, who are other beneficiaries of Hans' estate. We now vacate the decision of the court of appeals and affirm the judgment of the district court.

Decedent Hans Johnson died on October 28, 1952 as a resident of Grundy County. His estate was opened in 1952, and the executor's final report was approved in 1984. The order approving that report is the subject of this appeal.

Hans was survived by his wife, Edel, and eight children: Minnie, Carol, Robert, Dennis, Byron, Irene, Chester and Margaret. Minnie was adopted out of the immediate family before Hans died.

Hans' will was drafted by a layman and executed on October 17, 1952. After the usual direction for payment of debts and funeral expenses, the will provided that Hans' wife, Edel, would receive a life estate in all decedent's property and that their remaining minor child, Carol, would receive $500 per year until she reached age eighteen. Subject to these provisions, the remainder of the property was to go to Hans' children, except Minnie.

Upon Edel's death, Minnie was to receive a specific bequest of $500, and then the remainder of the estate was to be divided into seven equal shares and given to each of the remaining seven children of the testator. The share of Robert was to be put into a "spendthrift" trust with Dennis as trustee. Dennis was directed to pay the net income of the trust fund to Robert and authorized to terminate the trust if he believed Robert was capable of managing his share. This summarizes the basic scheme of distribution as described in Hans' will.

This controversy stems from paragraphs four and five of Hans' will. These provisions state:

Paragraph 4. Subject to the foregoing, I give the remainder of my property to my children except as hereafter stated, share and share alike, as their property absolutely and by right of representation, provided however, (and Paragraph (2) is subject to this provision) that should my wife re-marry, then her life estate shall cease and she shall take her one-third interest, and this paragraph is also subject to this, that Minnie Johnson Lund, who has been adopted, shall not be included in or among the children above referenced to but I hereby give her the sum of $500.00 to be paid by my executors, however, the share that my son Robert Johnson shall receive by reason of the above provisions shall be held in trust as hereinafter provided.

Paragraph 5. I hereby appoint my son, Dennis Johnson, as trustee for and on behalf of Robert Johnson and said trust fund is to be received and invested or reinvested according to the best judgment of said trustee. The net income of said trust fund shall be paid to my son Robert Johnson annually during his natural life but subject to the rest of this paragraph, and on his death the principal of said fund shall be paid as he may direct by Will or upon his failing to direct or appoint, in equal portions to his wife and children, share and share alike. The right of my said son to receive such income or principal shall not be anticipated or assignable nor in any event applicable to the payment of his debts. The right of any beneficiary to receive the income from this trust created by this will shall be free from the interference or control of his or her creditors. The trust may also be terminated when in the best judgment of the trustee the said Robert Johnson is able and capable of managing his affairs, and in that event the trustee is authorized and empowered to turn over to the said Robert Johnson any portion of the trust when he deems it advisable.

In 1956, Robert died in an automobile accident while a resident of California. He had no surviving spouse or children. No trust for Robert was ever established because he predeceased the life tenant, Edel. Thus, the paragraph of the will creating the trust and the powers of appointment did not become operative.

Robert's will, which was executed in 1944, left all of his property to his brother, Dennis Johnson. It provided in pertinent part:

I give, devise and bequeath unto my brother, Dennis Elmer Johnson, all of the property, whether real, personal or mixed, or whatsoever character and wheresoever situate[d], of which I may die seized or possessed, in fee simple and with absolute power of disposition.

Robert's will and estate were probated in California and subsequently recorded in Grundy county. See Iowa Code §§ 633.33-".34 (1954). ¹

Hans' surviving spouse, Edel, died testate on May 8, 1983. Her will gave all of her property to her daughters, Margaret and Carol.

On June 7, 1984, the executor of the Hans Johnson estate filed the final report. The executor recommended in his proposed distribution that Robert's one-seventh share remainder interest in Hans' estate pass to his brother, Dennis. Thus, Byron, Irene, Chester, Margaret and Carol each would receive a one-seventh interest in the estate's assets, and Dennis would have a two-sevenths interest. Carol filed an objection to the final report challenging this proposed distribution. Carol contended that Hans died intestate as to Robert's one-seventh remainder interest.

After a hearing on the matter, the district court found that Hans intended to create and vest a remainder interest in Robert and that upon Robert's death, this interest passed under his will to Dennis. Thus, the executor's final report was approved. Carol appealed, and we transferred the case to the court of appeals. The court of appeals reversed the district court's ruling and held that Robert only received a life income interest in the remainder with a general power of appointment, and that when Robert failed to exercise the power, his interest reverted to Hans' estate and passed as partially intestate property to Hans' surviving seven children, including Minnie.

The controlling issue raised on further review is whether Hans Johnson bequeathed to his son, Robert, a vested proportionate remainder interest or only a life income interest coupled with a general testamentary power of appointment.

We conclude the district court correctly found that Robert's remainder interest was vested and passed to Dennis under the terms of Robert's will.

I. Standard of review. This appeal involves a challenge to the district court's approval of the final report of the executor of Hans' estate. A hearing on objections to a fiduciary's final report is an equitable proceeding, Iowa Code section 633.33 (1983); thus, our review is de novo. Iowa R.App.P. 4; In re Estate of Roehlke, 231 N.W.2d 26, 27 (Iowa 1975). Although we give deference to the district court's findings of fact, we are not bound by them. Iowa R.App.P. 14(f)(7).

We also consider well-settled rules of will construction. These general principles of construction were set forth in In re Estate of Larson, 256 Iowa 1392, 1395, 131 N.W.2d 503, 504-"05 (1964), and more recently in In re Estate of Eickholt, 365 N.W.2d 44, 46 (Iowa Ct.App.1985). Therefore, we need not repeat them here.

II. Hans' intent. In order to determine the extent of Robert's interest in Hans' testamentary disposition, and, thus, to ascertain whether Robert was capable of disposing of the property to Dennis in the residuary clause of his will, we must first seek to determine the intention of the testator, Hans, and undertake to effectuate that intent. See In re Estate of Anderson, 359 N.W.2d 479, 480 (Iowa 1984). In construing the testamentary trust concerning Robert, it must be considered in relation to other relevant portions of the will.

In his 1952 will, Hans' first concern was for his wife, Edel. She was given a life estate in all Hans' real and personal property and the right to receive income and the right, under the direction of the court, to invade the principal to maintain her standard of living and to pay for necessities. Hans next provided that his minor child, Carol, was to receive $500 per year until she reached age eighteen. This was to be paid from the principal. Upon the death of Edel, Hans directed that all seven of his children, excluding Minnie, were to receive equal shares of his estate. Evidently entertaining some doubt as to the ability of Robert to manage his one-seventh interest, the testator decided not to give him immediate possession, but to create a trust for him. Robert was to receive the income but the trustee, Dennis, was to determine when, if ever, Robert's business ability was such as to justify turning over to him the...