Estate of McCoy, Matter of

• Decision Date: 15 March 1984
• Docket Number: No. 82-1796,82-1796
• Citation: 118 Wis.2d 128,345 N.W.2d 519
• Parties: In the Matter of the ESTATE OF Elizabeth F. McCOY, Deceased. FIRST WISCONSIN NATIONAL BANK OF MADISON, Cross-Petitioner-Appellant, v. WISCONSIN ACADEMY OF SCIENCES, ARTS AND LETTERS, Layton L. Phillips, Personal Representative, Respondents.
• Court: Wisconsin Court of Appeals

Page 519

345 N.W.2d 519

118 Wis.2d 128

In the Matter of the ESTATE OF Elizabeth F. McCOY, Deceased.

FIRST WISCONSIN NATIONAL BANK OF MADISON, Cross-Petitioner-Appellant, v. WISCONSIN ACADEMY OF SCIENCES, ARTS AND LETTERS, Layton L.

Phillips, Personal Representative, Respondents.

No. 82-1796.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 10, 1983.

Opinion Released Feb. 24, 1984.

Opinion Filed Feb. 24, 1984.

Confirmed on Reconsideration March 15, 1984.

James R. Cole, Thomas P. Solheim, Robert W. McLewee and Ross & Stevens, S.C., Madison, for cross-petitioner-appellant.

Howard A. Sweet and La Follette, Sinykin, Anderson & Munson, Madison, for respondent Wisconsin Academy of Sciences, Arts and Letters.

David S. Uphoff and Isaksen, Lathrop, Esch, Hart & Clark, Madison, for respondent Layton L. Phillips.

Before GARTZKE, P.J., and BABLITCH and DYKMAN, JJ.

MARTHA J. BABLITCH, Judge.

The First Wisconsin National Bank (trustee) appeals from an order directing disbursement of the corpus of an inter vivos trust pursuant to a stipulation between the estate of the settlor and the Wisconsin Academy of Sciences, Arts and Letters (Academy), the only claimants of the trust assets. The trustee was not a party to the stipulation, and opposed the distribution it outlined. Because we hold that the trial court had no authority to order the stipulated disposition without the approval of the trustee, we reverse.

The facts are undisputed for purposes of this appeal. ¹ Dr. Elizabeth McCoy executed a revocable trust in 1969 which provided for payments of net income to herself during her lifetime and specified that at her death the trust corpus would be distributed to her estate. She reserved the right to amend the trust at any time "by instrument in writing delivered to the Trustee," provided that "the duties, powers and liabilities of the Trustee shall not be changed without its written consent."

In June 1977, Dr. McCoy met with officials of the bank and instructed them to pay the future income benefits to the Academy. She also indicated her desire to have the remaining trust assets paid to the Academy at her death. Following this meeting Dr. McCoy wrote a letter to the president of the Academy confirming the arrangement. A copy of the letter was delivered to the bank some days later.

Dr. McCoy died intestate in March 1978. The estate claimed entitlement to the trust corpus pursuant to the terms of the trust document. The Academy claimed that the trust had been amended by Dr. McCoy's letter naming it as beneficiary of the corpus, and filed a petition for construction of the trust document.

The trial court held that the trust had not been effectively amended because the bank had never given its written consent to the change in beneficiaries. In an unpublished decision this court reversed, holding that the trust was ambiguous in the procedure specified for amending its terms, and remanded for further proceedings.

Following remand, the estate and the Academy stipulated to divide the trust corpus equally between them in order to avoid further litigation regarding the settlor's intent. The trustee refused to approve the stipulation on various grounds, including the ground that it did not comport with the settlor's intention. The trial court found the stipulation to be equitable to all parties and issued the order appealed from.

No authority was cited to the trial court by the respondents in seeking approval of the stipulation, and the trial court cited none in issuing the order.

Under Wisconsin common law, the right to dispose of property at death is a fundamental right of constitutional dimension. Will of Rice: Cowie v. Strohmeyer, 150 Wis. 401, 450, 136 N.W. 956, 975 (1912). For this reason, compromises between beneficiaries with respect to such dispositions were viewed as being against public policy and therefore void. Estate of Trojan, 53 Wis.2d 293, 298, 193 N.W.2d 8, 10 (1972). As the supreme court stated in Estate of Staab, 166 Wis. 587, 590, 166 N.W. 326, 327 (1918) [I]t is the declared law of this state that, given a valid will and a lawful declaration by a competent testator as to the manner in which the property that was his is to be disposed of after his death, it is the duty of the court having probate of the estate to carry out the wishes of such testator regardless of the wishes or agreements of those who may be beneficially entitled in the estate; that parties interested in such an estate cannot make a valid and binding contract or stipulation providing for a different disposition which will be enforced by a court. It is the duty of the court as an obligation resting upon it as a court, as a duty ex officio, and for reasons of public policy, to see to it that the wishes of the one who is no longer in existence as to the lawful disposition of that which was once his, shall be fully and properly carried out. [Emphasis supplied.]

In 1951, the legislature enacted the predecessor of present sec. 879.59, Stats., ² to provide for a limited right of compromise in testamentary dispositions. The supreme court has recognized that prior to the enactment of this statute "there was not even a suggestion in the law of this state that parties interested in a testate estate were competent to substitute their will for that of the testator, or that any agreement by interested parties to be carried out as if it were the scheme of the testator was enforceable." Estate of Jorgensen, 267 Wis. 1, 7, 64 N.W.2d 430, 433 (1954). More recently, the supreme court observed that the statute "[c]learly ... overruled" cases prohibiting compromises "providing that certain procedures were followed and the court approved the agreement." Estate of Trojan, 53 Wis.2d at 298, 193 N.W.2d at 10.

Both parties rely on sec. 879.59(1), Stats., on appeal. That section provides:

The court may authorize personal representatives and trustees to adjust by compromise any controversy that may arise between different claimants to the estate or property in their hands to which agreement the personal representatives or trustees and all other parties in being who claim an interest in the estate and whose interests are affected by the proposed compromise shall be parties in person or by guardian as hereinafter provided. [Emphasis supplied.]

This section specifically requires that the trustee be a party to the compromise agreement.

The trustee was not a party to the stipulation before us, and actively opposed it. We need not consider the reasons advanced by the trustee for refusing to join the compromise settlement. Its reasons are immaterial under the statute. "Where, as here, the language of a statute is clear and unambiguous, we must give the statute the effect its language warrants." Waukesha County v. Johnson, 107 Wis.2d 155, 162, 320 N.W.2d 1, 4 (Ct.App.1982). Because the trustee was not a party to the stipulation, the trial court had no authority under sec. 879.59(1), Stats., to approve it.

The Academy also relies on sec. 805.04, Stats., ³ governing the voluntary dismissal of civil actions in general, as authority Because no...