Estate of Luken, Matter of

• Decision Date: 24 July 1996
• Docket Number: No. 960007,960007
• Parties: In the Matter of the ESTATE OF Donna J. LUKEN, Deceased. Roland LUKEN, Petitioner and Appellant, v. Darcy J. SCHULZ, Personal Representative, Respondent and Appellee. Civil
• Court: North Dakota Supreme Court

Page 794

551 N.W.2d 794

In the Matter of the ESTATE OF Donna J. LUKEN, Deceased.

Roland LUKEN, Petitioner and Appellant, v. Darcy J. SCHULZ, Personal Representative, Respondent and Appellee.

Civil No. 960007.

Supreme Court of North Dakota.

July 24, 1996.

Leslie Johnson Aldrich (argued), Johnson Law Office, Fargo, for appellant.

William P. Harrie (argued), Nilles, Hansen & Davies, Ltd., Fargo, for appellee.

MARING, Justice.

Roland J. Luken (Ron) appeals from a district court order denying his motion to amend an order adopting the personal representative's proposed distribution of the estate of Donna J. Luken, his deceased spouse. We affirm.

Donna died July 4, 1994. Ron and four adult children of a previous marriage survived her. Donna's will, dated June 17, 1994, directed that the bulk of her property be distributed to her children. Donna left her automobiles and an assortment of household goods to Ron. She also left Ron her home, contingent on him making a $40,000 payment to her children. On October 4, 1994, Ron gave notice that he elected to take his share of Donna's augmented estate, as provided by chapter 30.1-05, N.D.C.C., rather than taking under Donna's will. He petitioned the court to calculate his elective share.

In response, the personal representative (P.R.) prepared an augmented estate and elective share analysis. The P.R., however, stated the analysis was incomplete because it was prepared without information about Ron's assets. After a hearing, the district court on May 9, 1994, issued a memorandum opinion and order instructing that, under section 30.1-05-02(2)(c), N.D.C.C.:

"The burden is on Mr. Luken, the surviving spouse, to establish that any property he owned at Mrs. Luken's death was not derived from her. Unless that burden is sustained, all property owned by Mr. Luken at his wife's death is included in the augmented estate. Thus, Mr. Luken is required to disclose all of his assets to the personal representative."

Seeking information about Ron's assets, the P.R. served a subpoena duces tecum on January 26, 1995, requiring Ron to produce certain documents and records. Ron objected, and, instead of producing the requested material, sent the P.R. a letter, dated June 22, 1995, in which he listed his assets. On July 24, 1995, the P.R. prepared an elective share analysis including the value of Ron's business, R & J Grain Dryers (R & J), in the augmented estate. Ron objected to the P.R.'s proposed distribution, and asked the trial court to calculate his elective share. A hearing was held, and on September 25, 1995, the court dismissed Ron's objections and approved the P.R.'s proposed distribution. Ron moved the court to amend its findings and order. The court denied Ron's motion. Ron appeals.

The first issue we consider is whether the trial court's order is appealable. Although neither party raised this question, the right to appeal is statutory and we consider it sua sponte. E.g., Johnson v. Johnson, 527 N.W.2d 663, 665 (N.D.1995). The trial court's November 8, 1995, order denying Ron's motion is appealable because Donna's estate is under informal probate administration. See N.D.C.C. ch. 30.1-14. Informal probate proceedings are unsupervised and "each proceeding before the court is independent of any other proceeding involving the same estate." N.D.C.C. § 30.1-12-07; see Estate of Zimbleman, 539 N.W.2d 67, 70 (N.D.1995). "Orders in an unsupervised probate are appealable without certification under Rule 54(b), N.D.R.Civ.P., unless they determine 'some, but not all, of one creditor's claims against an estate.' " Zimbleman, 539 N.W.2d at 70 (quoting Estate of Starcher, 447 N.W.2d 293, 296 (N.D.1989)).

Rule 52(a), N.D.R.Civ.P., governs our review of this action. While questions of law are fully reviewable on appeal, State Farm Mut. Auto. Ins. Co. v. Estate of Gabel, 539 N.W.2d 290, 292 (N.D.1995), under Rule 52(a) we will set aside a trial court's findings of fact only when they are clearly erroneous. Estate of Ostby, 479 N.W.2d 866, 869 (N.D.1992). A finding of fact is clearly erroneous if it is unsupported by evidence or, if some evidence supports it, we are left with a definite and firm conviction the trial court has made a mistake or that an erroneous view of the law induced the finding. Zimbleman, 539 N.W.2d at 72.

The essence of Ron's claim on appeal is the augmented estate was improperly calculated. Under our Uniform Probate Code, a surviving spouse may elect to take a share of the decedent's augmented estate instead of taking under the decedent's will. See ch. 30.1-05, N.D.C.C. (Elective Share of Surviving Spouse) ¹. In general, the augmented estate is the sum of:

"decedent's net probate estate increased by decedent's gratuitous transfers to donees, other than the surviving spouse, and by the value of the spouse's property owned at the decedent's death and the value of property transferred by the spouse to donees, other than the decedent, to the extent such owned or transferred property was derived from the decedent." Sheldon F. Kurtz, The Augmented Estate Concept Under the Uniform Probate Code: In Search of an Equitable Elective Share, 62 Iowa L.Rev. 981, 1012 (1977) (hereinafter Kurtz).

Section 30.1-05-02, N.D.C.C., governs calculation of the augmented estate. The underlying goal of the augmented estate concept is to protect the surviving spouse from disinheritance. Kurtz at 1011. Ron's first argument is the trial court erred by finding R & J was derived from Donna and by including R & J's value in the augmented estate. Section 30.1-05-02(2)(c), N.D.C.C., requires:

"Property owned by the surviving spouse as of the decedent's death, or previously transferred by the surviving spouse, is presumed to have been derived from the decedent except to the extent that the surviving spouse establishes that it was derived from another source."

The trial court found Ron failed to rebut the statutory presumption and concluded R & J was derived from Donna.

Ron claims he provided enough evidence to rebut the presumption his business was derived from Donna. Under Rule 301(a), N.D.R.Ev., once a presumption is established, it:

"substitutes for evidence of the existence of the fact presumed until the trier of fact finds credible evidence that the fact presumed does not exist, in which event the presumption is rebutted and fails to operate. A party against whom a presumption is directed has the burden of proving that the nonexistence of the presumed facts is more probable than its existence."

"Rule 301, N.D.R.Ev., 'operates to shift the original burden of proof to the opponent of the presumption[.]' " Land Office Co. v. Clapp-Thomssen Co., 442 N.W.2d 401, 406 (N.D.1989).

We have not previously considered what type and amount of "credible evidence" are required to rebut the presumption contained in section 30.1-05-02(2)(c). This section, however, is derived from section 2-202 of the Uniform Probate Code. We interpret uniform laws in a uniform manner and may seek interpretive guidance from other states that have adopted uniform laws. Zimbleman, 539 N.W.2d at 72; see N.D.C.C. § 1-02-13.

A surviving spouse may rebut the presumption his or her property was derived from the deceased spouse "by establishing that the property was obtained from a different source." Estate of Lettengarver, 249 Mont. 92, 813 P.2d 468, 472 (1991); see also Matter of Ridgeway, 877 S.W.2d 167, 171 (Mo.App. W.D.1994); Estate of Donahue, 464 N.W.2d 393, 396 (S.D.1990). The surviving spouse bears the burden of showing to what extent his or her property was derived from sources other than the deceased spouse. See Estate of Fisher, 545 A.2d 1266, 1270 (Me.1988).

The presumption a surviving spouse's property is derived from the deceased spouse helps insure the surviving spouse does not receive an "excessive share" of the deceased spouse's property. John F. Kuether, Recent Significant Probate and Trust Decisions, 26 Real Prop. Prob. & Tr. J. 299, 347 (Summer 1991). Testimony from a surviving spouse may be sufficient to establish property was derived from a source other than the deceased spouse. See Estate of Ziegenbein, 2 Neb.App. 923, 519 N.W.2d 5, 8 (1994).

At trial, Ron testified he and a partner started R & J in 1977, each contributing $500. Ron testified he bought out his partner in 1979--the same year he married Donna--and had been the sole owner of the business since then. Ron admitted R & J "cleared $100,000 to $150,000 gross" annually in the ten years before Donna's death; gross receipts in 1992 and 1993 were more than $300,000 annually; R & J owned vehicles worth $45,000 to $50,000; R & J had more than $62,000 in its bank accounts at Donna's death; and he had personally borrowed $150,000 from R & J since 1993.

Ron, however, presented no testimony or other evidence explaining to what extent R & J and its apparently valuable resources were derived from sources other than Donna, other than the testimony relating to his initial $500 investment. Because Ron failed to present adequate evidence regarding R & J's derivation, we conclude Ron failed to rebut the statutory presumption his property was derived from his deceased spouse. The trial court, therefore, did not err when it allowed the value of R & J to be included in the augmented estate.

Ron next argues the trial court erred by approving the value the P.R. placed on R & J. Under the P.R.'s augmented estate analysis, which the court approved, the P.R. valued R & J at $120,000 "minimum." The P.R. also accounted for the value of an R & J bank account, $10,111.09, in its augmented estate analysis. Ron claims it was clearly erroneous for the trial court to rely on the P.R.'s "minimum" business value when no qualified witnesses or experts testified to establish the value, and that it was also error for the trial court to approve the P.R.'s inclusion of the business bank account in its analysis in addition to the value of the business itself.

Property values are...