Estate of Niehenke, Matter of
| Citation | 117 Wn.2d 631,818 P.2d 1324 |
| Decision Date | 31 October 1991 |
| Docket Number | No. 57348-4,57348-4 |
| Parties | In the Matter of the ESTATE OF Raymond J. NIEHENKE, Deceased. Catherine A. MIDTHUN, Mark J. Niehenke, Robert E. Niehenke, Jerome F. Niehenke, Keith M. Niehenke, and Patrick J. Niehenke, Respondents, v. Elmer GUSKE and Alvin Guske, and Estate of Raymond J. Niehenke, Petitioners. |
| Court | United States State Supreme Court of Washington |
Nuxoll, Libey, Ensley & Esser, Wesley A. Nuxoll, Colfax, for petitioner Estate.
Lukins & Annis, P.S., Martin G. Weber, Spokane, for respondents.
This case involves construction of a will and application of Washington's anti-lapse statute to a testamentary option to purchase estate property.
Raymond J. Niehenke (hereafter testator) died on February 12, 1987 leaving a last will and testament which provided in pertinent part:
Option to Purchase Property
I give, devise and bequeath unto the following relatives the option to purchase the farmlands as hereinafter set forth, upon the terms and conditions hereinafter provided:
1. My nephew, FRANCIS NIEHENKE, shall have the option to purchase on contract as hereafter provided, the The purchase price is the sum of Fifty-Two Thousand Dollars ($52,000.00) less the principal and interest owing at the time of my death for any encumbrances on said real estate, together with interest on the unpaid balance at the rate of four per cent (4%) per annum from the date of my death. In the event my nephew, FRANCIS NIEHENKE, does not exercise said option as hereinafter provided, my nephews, ALVIN GUSKE and ELMER GUSKE, shall have the option to jointly purchase said farmland upon the same terms and conditions.
farmland and buildings commonly described as the "Home Place"....
The will then gave an option to purchase a second farm to Alvin Guske and an option to purchase a third farm to another nephew with alternate optionees named in those clauses. There is no dispute as to the options for these other two farms. The testator declared that it was his desire that his farmland stay in the family as long as possible.
In the event that the named optionees did not exercise their right to purchase, the residuary beneficiaries (11 nieces and nephews or their representatives) were given the right to purchase on the same conditions except that the farms were to be sold to the highest bidder. The will provided that the first optionees must exercise their options within 3 months after the testator's death and alternate optionees within 4 months. The receipts from the sales of the farms were given to certain named charities and the 11 nieces and nephews named in the residuary clause.
The will named Francis Niehenke and Elmer Guske, or the survivor thereof, as executors of the will and provided:
Either of my executors shall in no way be prohibited or prevented from exercising any of the options to purchase as provided in Article IV. by reason of his acting as executor for my estate.
Francis Niehenke (first optionee of the "Home Place") died 7 years before the testator died. The testator made no changes to his will after Francis' death. After the testator died (on February 12, 1987), Francis' six children (respondents herein) by letter dated March 30, 1987, gave notice The Whitman County Superior Court concluded that since death prevented Francis from exercising his option, his children succeeded to it by operation of RCW 11.12.110, commonly referred to as the anti-lapse statute. That court also awarded to Francis' children the landlord's share of all receipts from the sale of crops grown on the "Home Place" and harvested in 1987 and thereafter. The Superior Court by oral ruling determined that no attorneys' fees were to be awarded.
that they were exercising the option to buy the "Home Place". Thereupon, by letter dated April 29, 1987, Alvin and Elmer Guske (alternate optionees and appellants herein) also gave notice of intent to exercise that option. This action followed
The estate and the alternate optionees (Alvin and Elmer Guske) separately appealed to the Court of Appeals where the appeals were consolidated. The estate challenged the crop proceeds distribution for the year of the testator's death and Alvin and Elmer Guske challenged the decision that Francis' children were entitled to exercise the option to purchase the "Home Place". The Court of Appeals affirmed and held that (1) the anti-lapse statute applied to transfer the option to buy the farm from Francis to Francis' children; (2) Francis' children were entitled to the crop proceeds; and (3) attorneys' fees should be borne by the estate. 1
Three issues are presented by this case.
ISSUE ONE. Upon the death of the testator, did the right to exercise the option to purchase the "Home Place" pass to the lineal descendants of Francis Niehenke, the first optionee, or to the alternate optionees, Alvin and Elmer Guske?
ISSUE TWO. Is the estate or the holder of the option to purchase the "Home Place" entitled to the proceeds from ISSUE THREE. Did the Court of Appeals err in awarding attorneys' fees against the estate?
the sale of crops growing at the time of the testator's death but not harvested until after the options were attempted to be exercised?
ISSUE ONE.
CONCLUSION. Upon the death of the testator, the right to exercise the option to purchase the "Home Place" passed by operation of Washington's anti-lapse statute (RCW 11.12.110) to the lineal descendants of the first optionee, Francis Niehenke.
The resolution of this issue requires that two questions be answered: (1) should testamentary options always be construed as "personal" to the optionee so that the anti-lapse statute should never be applied to save such gifts for the optionee's lineal descendants; and (2) if such gifts are susceptible to the operation of the anti-lapse statute in some instances, did this testator's naming of alternate optionees in the event Francis did not exercise the option show his clear intent that the anti-lapse statute not be applied?
There is a significant split of authority in other jurisdictions on whether or not a testamentary gift in the form of an option to purchase estate property survives the optionee's death. 2 One line of cases holds that testamentary options to purchase property are significant property rights that survive the death of the optionee. 3 However, other cases hold that an option to purchase estate property Rather than asking which line of cases constitutes the majority, we deem it more appropriate to consider the underlying purpose of the anti-lapse statute and a testator's probable intent when giving an option to purchase. Options to purchase estate property are frequently used in wills to equalize the shares of a testator's property given to different relatives. 6 Options can be used to keep a piece of property in the family while still giving gifts of equal value to a number of children. The option can be used to give a family home, farm or business to one child at some percentage of its market value with the purchase price being used to fund a gift to another of the testator's children. 7
is personal to the optionee and cannot be exercised by successors in interest to the devisee or legatee. 4 A number of cases which consider the applicability of anti-lapse statutes to testamentary options indicate that options survive the optionee's death (and pass to that named person's descendants) by virtue of such statutes. 5
There is good reason in such cases to hold that such a gift can be transferred to a beneficiary's lineal descendants in the case where the named beneficiary predeceases the testator. The policy of the law of Washington is against the lapsing of gifts to relatives of a deceased. 8 If we held Although at common law a testamentary gift lapses if a beneficiary predeceases the testator, Washington's anti-lapse statute (RCW 11.12.110) changes this result in many cases. The statute operates so that when a testator fails to provide for the possibility that a consanguineous beneficiary might predecease him or her then the "lineal descendants" of that beneficiary take the gift. 10
that an option is always personal to the beneficiary, an entire bloodline of the testator would often be disinherited. For example, if a testator gave an option to buy the family home (worth $100,000) to child No. 1 at a price of $50,000 and gave the $50,000 purchase price to child No. 2 and child No. 1 predeceased the testator, the anti-lapse statute would operate to give child No. 1's children the option to buy the home. If the statute can never operate to transfer an option, then in the example just posed, the family of child No. 1 could be totally disinherited. It is just such a result that the anti-lapse statute was intended to prevent. 9
The statute is based on the assumption that this is what a testator would have intended had the testator contemplated this contingency. It would naturally be expected that a testator would intend that his or her property should go to the lineal descendants of the testator's named relative-beneficiary because such descendants would be the relatives for whose welfare testator might be supposed to have a concern. 11
The anti-lapse statute, RCW 11.12.110, provides in relevant part:
When any estate shall be devised or bequeathed to any child, grandchild, or other relative of the testator, and such devisee or legatee shall die before the testator, having lineal descendants who survive the testator, such descendants shall This language raises the question whether an option to purchase is an "estate" as that term is used in the anti-lapse statute. This court has given a very broad interpretation to the anti-lapse statute, holding that even an inter vivos trust will be subject to its operation. 12 Equally broadly, the court in In re Estate of Quigley, 37 Misc.2d...
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