Estate of Newell, Matter of

• Decision Date: 15 December 1988
• Docket Number: No. 88-51,88-51
• Citation: 765 P.2d 1353
• Parties: In the Matter of the ESTATE OF Elizabeth NEWELL, Deceased. Donald L. NEWELL and Earl R. Cherry, Jr., Personal Representatives of the Estate of Elizabeth Newell, Deceased, Appellants (Petitioners), v. Joanne Read TRUMPER, Donna I. Read Douglas, and James L. Read, Appellees (Protestants).
• Court: Wyoming Supreme Court

Page 1353

765 P.2d 1353

In the Matter of the ESTATE OF Elizabeth NEWELL, Deceased.

Donald L. NEWELL and Earl R. Cherry, Jr., Personal Representatives of the Estate of Elizabeth Newell, Deceased, Appellants (Petitioners), v. Joanne Read TRUMPER, Donna I. Read Douglas, and James L. Read, Appellees (Protestants).

No. 88-51.

Supreme Court of Wyoming.

Dec. 15, 1988.

Donald E. Jones of Jones and Graham Law Offices, Torrington, for appellants.

Eric M. Alden of Jones, Jones, Vines & Hunkins, Wheatland, for appellees.

Before CARDINE, C.J., THOMAS, URBIGKIT and MACY, JJ., and BROWN, J., Retired. ^*

URBIGKIT, Justice.

This is a second stage probate case appeal taken from a decree of distribution where the apportionment of taxes and expenses is questioned. The trial court, in an Amended Final Report, Accounting and Decree of Final Distribution following reversal and remand in Douglas v. Newell, 719 P.2d 971 (Wyo.1986) (Newell I), determined that inheritance tax, estate tax, debts, charges, as well as estate operational and administrative expenses should be charged to the estate rather than the specific beneficiaries. We affirm.

Appellants frame the issues as:

1. Does Douglas v. Newell require that the contract balance and interest thereon be treated as a specific bequest which does not abate in any manner for the payment of debts, charges, expenses and federal and state taxes under W.S. § 2-7-808?

2. Does the balance of a contract of sale substituted for a devise of real property by operation of W.S. § 2-6-109(b) remain a specific devise or become a general pecuniary legacy?

3. Is income from the gift to the Read heirs exempt from the provisions of W.S. § 2-7-802, directing income of the estate to be first used for payment of care, management and settlement of the estate?

4. Is the gift to the Read heirs exempt from the provisions of W.S. § 2-10-103, relating to apportionment of federal estate taxes, and former W.S. § 39-6-806(b), relating to state inheritance taxes? [Footnotes omitted.]

FACTS

As earlier considered in Newell I, 719 P.2d 971, ¹ the facts of this contested probate will only be re-examined as necessary to illuminate the particularized issues now presented. Originally, controversy arose over the will of Elizabeth Newell (decedent) between two grandsons, primary residual beneficiaries, and two nieces and two nephews, as then stated specific devisees. The object of litigative disagreement was whether the Read ranch interest in Converse In first appeal, the parties brought a declaratory judgment seeking the proper construction of the will and to determine whether a will provision would lapse or adeem. ³ After both sides moved for summary judgment, the trial court then granted partial summary judgment to each--in favor of the Read heirs, the nieces and nephew, finding the provision did not lapse, but in favor of the trustees that the devise did adeem. This court reversed by determining that the proviso as an enforceable specific bequest neither lapsed nor adeemed. Newell I, 719 P.2d at 972.

                County, which the decedent received from her brother, was for probate as a specific devise to be considered property of the decedent at the time of her death. 2  The decedent owned the land at the time of drafting the will, but her interest with that of other co-owners had been sold by a contract for deed about two years before her death.  Thus, the status of the decedent's annual payments collected under the installment contract of $117,438.73 and the interest attributable to the contract payments is questioned.  Also advanced in present appeal is apportionment of taxes and attribution of accrued expenses during the six years of administration
                

ANALYSIS

In the essence of three of the four issues pursued by appellants is a request for this court to reconsider Newell I. Two words accurately sum up this part of the case: res judicata.

"Res judicata is a fact of the Anglo-American system of unified adjudication.

'A court does not face a legal problem as a new, pristine blackboard "never writ upon." Decisions are mirrors of past decisions and in turn are reflected in the decisions of the future. The continuum can no more be broken than can reflecting mirrors be interrupted.' A. Vestal, Res Judicata/Preclusion at V-3 (1969).

"The doctrine of res judicata is that a judgment, decided upon the merits by a court with jurisdiction, is conclusive of that cause of action and facts or issues litigated, both to the parties and their privies in any other action in the same or different court of concurrent jurisdiction on the same issues. 46 Am.Jur.2d Judgments § 394."

Matter of Swasso, 751 P.2d 887, 889-90 (Wyo.1988) (quoting from CLS v. CLJ, 693 P.2d 774, 775-76 (Wyo.1985)). ⁴ The criteria used to determine res judicata's applicability to a situation are: "(1) the parties were identical; (2) the subject matter was identical; (3) the issues were the same and related to the subject matter; and (4) the capacities of the persons were identical in reference to both the subject matter and the issues between them." Matter of Swasso, 751 P.2d at 890. All four criteria unquestionably are met as to whether the contract payment in the instant case should be treated as a specific bequest which, as determined in first appeal, will not now be reconsidered.

Appellants also challenge the issue of the proper characterization of the accruing purchase contract interest as included in the periodic payments. They contend that the interest is income of the estate, while the Read heirs claimed the interest as part of their specific bequest. Wyoming has adopted the view set out in 6 Bowe-Parker: Page on Wills, § 59.15 (1962) that "[i]n the absence of a provision to the contrary in a will, a specific bequest also carries accretions accrued after the testator's death." Matter of Deutsch's Estate, 644 P.2d 768, 770 (Wyo.1982). Where, as here, there is no contrary provision in the will, the interest after death as attributable to the contract payments is part of the specific bequest for estate distribution. Although W.S. 2-3-601, et seq. as the principal and income apportionment code may primarily address trust administration, W.S. 2-3-605(b)(i) ⁵ is applicable since the legacy in this case does include both principal and interest as asset income. See Matter of Deutsch's Estate, 644 P.2d at 771 (this court found royalty payments from copyrights to be a kind of property involving principal and income so that W.S. 2-3-611 and 2-3-605(b)(ii) were relevant). The record discloses that no expenses were attributable to the contract payments, and that the amount of income taxes allocable to the Read heirs was properly set off against the bequest. The trial court was correct in attribution decision for distribution.

As to the first specifically stated issue involving abatement, we do not perceive relevance since the record fails to disclose that abatement is necessary with the ample resources in the residual estate to pay the taxes and expenses. Otherwise, this specific bequest in its entirety would properly fall within W.S. 2-7-808(a)(iv) ⁶ and take its place within the abatement order after the property given to the residual beneficiaries.

The second appellate issue concerned transformation of the bequest into a general pecuniary legacy. Appellants' reliance on the definition of general bequest enunciated in Matter of Deutsch's Estate, 644 P.2d 768 and W.S. 2-6-109(b) is misplaced. This court in Matter of Deutsch's Estate, 644 P.2d at 769, 770 looked to Justice Blume's articulation of specific and general bequests in State v. Underwood, 54 Wyo. 1, 86 P.2d 707 (1939) to provide guidance.

[A] specific legacy is a bequest of a specific article of the testator's estate, distinguished from all others of the same kind, as, for example, a particular horse, or piece of plate, or money in a certain purse or chest, etc. Pomeroy, supra, [Equity, 4th ed.] Sec. 1130. A general legacy is a gift of a certain amount of money without pointing out any source from which the amount is to be paid, * * *.

Id. at 715. Clearly, the source of the funds was the Read ranch installment contract. Thus, from a purely definitional perspective, appellants have not shown us persuasive authority to reverse the trial court. Additionally, appellants rely on W.S. 2-6-109(b) to bolster their position. However, that statutory subpart does not support their stance, as it provides:

(b) A specific devisee has the right to the remaining specifically devised property and:

(i) Any balance of the purchase price together with any security interest owing from a purchaser to the testator at death by reason of sale of the property;

* * *.

The unitary interest as the proceeds from a defined real estate installment contract constituted a specific devise under the will. Recitation of this statute does not convert that specific asset into a general legacy by legislative metamorphosis. ⁷

As to the third issue on the use of payments constituting the Read inheritance, appellants consider that W.S. 2-7-802 authorizes payment of the expenses of care, management, and settlement of the estate to come out of this fund. However, W.S. 2-7-802(b) provides:

(b) Except as otherwise directed by the decedent's will, the expenses shall be paid first out of income of the estate received by the personal representative, then from the residue of the estate. [Emphasis added.]

The fallacy in appellants' claim is the characterization of these contract payments as "estate income." Those annually received amounts, including interest belonged to the defined legacy and were not estate receipts constituting income.

As the last appellate issue, appellants contest the apportionment of federal estate and state inheritance taxes. Appellants specifically rely on W.S. 39-6-806(b) (1977 Replacement) ⁸ relating to the apportionment of inheritance taxes and W.S. 2-10-103 ⁹ relating to the apportionment of estate taxes. However, ...