Estate of Koch, Matter of

• Decision Date: 02 April 1993
• Docket Number: No. 67713,67713
• Parties: In the Matter of the ESTATE OF Mary R. KOCH, Deceased.
• Court: Kansas Court of Appeals

Page 977

849 P.2d 977

18 Kan.App.2d 188

In the Matter of the ESTATE OF Mary R. KOCH, Deceased.

No. 67713.

Court of Appeals of Kansas.

April 2, 1993.

Review Denied June 18, 1993.

Syllabus by the Court

1. K.S.A. 59-605 requires a testatrix to receive independent advice concerning the preparation of a will when the will is prepared by the principal beneficiary who is in a confidential relationship with the testatrix.

2. When the scrivener is not a beneficiary under the will and receives no input from those who are devisees and legatees under the will, the independent advice requirement of K.S.A. 59-605 is not applicable.

3. Two or more persons who receive the bulk of an estate in fairly equal portions are not considered the principal beneficiary for purposes of applying K.S.A. 59-605.

4. Under the facts and circumstances of this case, the trial court properly found the scrivener's actions in drafting the will could not be imputed to the proponents of the will, nor could the proponents be held to have written or prepared the testatrix's will within the meaning of K.S.A. 59-605.

5. In construing a will, a court must give supreme importance to the intention of the testatrix. When intent can be ascertained it will be given full effect unless contrary to law or public policy.

6. The right to make a will includes the right to make it according to the testatrix's own desire, subject only to statutory restrictions. It is no condition of this right that the will shall please a court, the testatrix's relatives, or anyone else.

7. A condition precedent contained in a will is a fact or action which must exist or be satisfied in every particular before an interest in an estate will vest. In disposing of property by will, a testatrix has the right to impose any condition so long as it is not contrary to law or public policy.

8. An in terrorem clause, which imposes upon a devisee or legatee a condition 9. Compromise, the settlement of disputes between parties, and family settlements regarding the distribution of an estate are favorites of the law in the absence of fraud or bad faith.

that he or she shall not dispute the provisions of the will or the gift shall be void, is to be given effect when a beneficiary attacks the validity of the will without probable cause to do so.

10. The anti-litigation or forfeiture clause in the will herein is not void as contrary to public policy.

11. Canons 1 through 9 of the Code of Professional Responsibility, Supreme Court Rule 225 (1992 Kan.Ct.R.Annot. 188) continue as general statements of required professional conduct, but the specific conflict of interest raised herein is governed by MRPC 1.7 (1992 Kan.Ct.R.Annot. 261).

12. Relevant factors to be considered in determining if a conflict of interest exists under MRPC 1.7 (1992 Kan.Ct.R.Annot. 261) include the duration and intimacy of the lawyer's relationship with the client or clients involved, the functions being performed by the lawyer, the likelihood that actual conflict will arise, and the likely prejudice to the client from the conflict if it does arise. The question is often one of proximity and degree.

13. The determination of whether an attorney suffers under a conflict of interest is a question of law. In the context of the preparation of a will, whether a conflict of interest coupled with a confidential relationship resulted in an imposition of undue influence upon a testatrix is a question of fact.

14. When determining whether a conflict of interest exists a down-to-earth, real world, functional approach should be utilized.

15. Under the facts and circumstances of this case, a scrivener of a will who represents the testatrix's children in pending litigation, but received no input from them as to the provisions of a will in which they become beneficiaries, is not in a conflict of interest position with the testatrix under MRPC 1.7.

16. When a will is offered for probate, the proponent has the burden of proof in the first instance to present a prima facie case showing due execution of the will. Once this prima facie showing has been made, the burden of proof shifts to the contestant to overcome that showing by clear, satisfactory, and convincing evidence.

17. To destroy the validity of a will, undue influence must amount to coercion, compulsion, or constraint which destroys the testatrix's free agency and by overcoming her power of resistance obliges her to adopt the will of another instead of exercising her own. The influence must be brought to bear directly upon the testamentary act, and particular parties must be benefited or disfavored as the result of the purpose and pressure of the dominating mind.

18. The burden of proof to overcome the presumed validity of a will rests upon whoever alleges undue influence unless the will benefits one who stood in a confidential relationship to the testatrix and there are additional circumstances of a suspicious character present which require explanation. In such case, the law raises a presumption of undue influence and the burden of proof is shifted to the proponent.

19. A confidential relationship exists whenever trust and confidence is reposed by the testatrix in the integrity and fidelity of another, but the existence of such relationship between the testatrix and the favored beneficiary, standing alone, does not constitute undue influence.

20. The relationship of parent and child, without more, does not establish a confidential relationship.

21. Although the relationship between attorney and client is fiduciary in character, in the context of a will contest, the triggering confidential relationship is that between the testatrix and the beneficiary.

22. There is substantial competent evidence under the facts and circumstances in this case to support the trial court's conclusion that the evidence clearly and convincingly shows the testatrix was not subject to 23. Under the facts of this case, we hold the anti-litigation and forfeiture provisions of the testatrix's will apply to any and all bequests, including those in the supplemental statements or lists authorized by K.S.A. 59-623.

undue influence when she revised her last will and testament.

Monte Vines and Clifford L. Malone, Adams, Jones, Robinson, and Malone, Chartered, Wichita, for appellants Frederick Koch and William Koch.

Richard C. Hite and Linda S. Parks, Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, for appellee Robert L. Howard.

James M. Armstrong and Carol A. Beier, Foulston, Seifkin, Wichita, for appellee Charles G. Koch, executor.

Before LARSON, P.J., LEWIS, J., and BARRY A. BENNINGTON, District Judge, Assigned.

LARSON, Presiding Judge.

This is a will contest in which the contestants claim an anti-litigation clause is void and unenforceable.

Frederick Koch and William Koch contend this provision in their mother's will is void under K.S.A. 59-605; void as contrary to public policy; and, because the scrivener of the will was in a conflict of interest position, void as a product of undue influence and constructive fraud. Contestants further assert the trial court erred by ruling a memorandum disposing of personal property, supplemental to the will, was subject to the provisions of the forfeiture clause.

To understand the holding herein, it is necessary to recite a detailed factual background, which was determined by the trial court after extensive hearings.

FACTUAL BACKGROUND

Mary R. Koch died at age 83 on December 21, 1990, leaving an estate of approximately $10,000,000. She was the widow of Fred C. Koch, who died in 1967. Mary and Fred Koch were the parents of four sons, Frederick, Charles, and twins David and William, all of whom survive. Charles and David are the proponents of the will at issue herein. William and Frederick are the contestants.

Fred C. Koch was the founder of companies now consolidated and known as Koch Industries, Inc. In 1966, he transferred substantial amounts of his Koch Industries stock in equal shares to four trusts, of which his sons were the beneficiaries. Frederick's behavior became unacceptable to his father and later transfers only benefited the other three sons. Frederick was not a beneficiary of his father's estate.

Charles was employed by Koch Industries and became its chairman and chief executive officer upon his father's death. He continues to serve in this capacity.

David and William were officers and employees of Koch Industries after their father's death. David continues in this capacity. William was terminated as an officer and employee in 1980 following a failed hostile attempt to take control of Koch Industries. Frederick supported William in this abortive action.

Charles, David, and William each owned approximately 20 percent of Koch Industries stock. Frederick has never been employed by Koch Industries and beneficially owned approximately 1,600,000 shares of stock.

During the period between 1967 and 1980, Koch Industries grew rapidly and prospered extensively. It is now a diversified company with petroleum, hydrocarbon, chemical, chemical technology, agricultural, and mineral business groups. As a private company, Koch Industries' specific data about its finances is proprietary and confidential, but it is one of the largest purchasers of crude oil in the United States and has approximately 11,000 employees. An indication of the company's success can be derived from the dividends it paid. In 1967, dividends on Koch Industries stock were less than three cents per share. By 1980, the dividends had increased to $1.50 per share.

Frederick's annual income from dividends was approximately $4,500,000 in 1983 when he sold his stock in Koch Industries back to the company for $300,000,000. William's income grew and was larger than Frederick's because of his higher percentage of stock ownership until June 1983, when he sold his Koch Industries stock back to the company for $470,000,000.

Fred C. Koch also established the Fred C. Koch Fou...