Estate of Perkins, In re
| Decision Date | 24 December 1970 |
| Docket Number | 42412,Nos. 42411,s. 42411 |
| Citation | 289 Minn. 53,182 N.W.2d 881 |
| Parties | In re ESTATE of Lillian C. PERKINS, Deceased. FIRST NATIONAL BANK OF WINONA and Mrs. Clifford Dartt (nee Bertha Featherstone), et al., beneficiaries under the last will and testament of Fred O. Perkins, Deceased, Appellants- Respondents, v. MERCHANTS NATIONAL BANK OF WINONA, Respondent, Mrs. Lillian Walker, et al., beneficiaries under last will and testament of Lillian C. Perkins, Deceased, Respondents-Appellants. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
1. The holder of a life estate created by will is entitled to all income derived from the estate during his tenancy and income which remains unexpended at his death constitutes a part of his estate and does not pass to the remaindermen under the will.
2. At the time of the entry of the final decree in the estate of Fred O. Perkins, Minnesota followed the so-called Pennsylvania rule that the source of the dividend rather than its form determines whether and to what extent it is income or principal. The Minnesota Legislature, however, in 1951 enacted Minn.St.1967, § 501.47, which adopts the Massachusetts rule. Under the Massachusetts rule cash dividends are treated as income and all stock dividends as principal.
3. In view of In re Trust Created by Warner, 263 Minn. 449, 117 N.W.2d 224, and In re Trust Under Will of Gardner, 266 Minn. 127, 123 N.W.2d 69, determining that § 501.47 may be applied retroactively, the court below properly ruled that the remaindermen under the will of Fred O. Perkins are entitled to the stock that remains, including the increase in stock, while the heirs of Lillian C. Perkins are entitled to the cash, including interest, income, and cash dividends, and savings bonds.
Bernard M. Harroun, Minnetonka, for appellants.
Harold J. Libera, Winona, George Neperud, for Walker et al.
R. N. Thomton, Litchfield, for respondents.
Appeals were taken to the District Court of Winona County from orders of the probate court of said county allowing the final accounts in the matter of the estate of Fred O. Perkins, deceased, and in the matter of the estate of Lillian C. Perkins, deceased. The two matters were consolidated for trial and were finally disposed of by an order of the district court on December 4, 1969, amending the original findings of fact, conclusions of law, and order for judgment and denying a new trial. Separate appeals were thereafter taken to this court by the First National Bank of Winona and Mrs. Clifford Dartt (nee Bertha Featherstone) and other beneficiaries under the last will and testament of Fred O. Perkins; and by Mrs. Lillian Walker and other beneficiaries under the last will and testament of Lillian C. Perkins.
The pertinent facts are as follows: Fred O. Perkins died testate November 3, 1932. The third paragraph of his will, dated January 16, 1929, reads as follows:
'THIRD, I give, devise and bequeath to my beloved wife, Lillian C. Perkins, in case she survives me, all of the rest, residue and remainder of my estate of every kind and nature, and wheresoever situated, whether real, personal or mixed, to have, hold, use and enjoy the rents, interest, issues and profits therefrom, and with the further right to use so much and such part of the principal or corpus of my said estate as she may desire from time to time for her support, maintenance, comfort and pleasure, during the term of her natural life.'
During the course of the probate, Lillian C. Perkins petitioned the court to set aside the homestead and various personal property in the amount of $975, which was allowed by the probate court. The final decree was issued December 2, 1933, covering various stock and the homestead valued in the amount of $22,987.08. In its final decree the court dealt with the property as follows:
'To the said spouse Lillian C. Perkins, to have, hold, use and enjoy the rents, interest, issues and profits from said real estate and personal property, and the whole thereof, with the right and power to sell and convey and dispose of and transfer said real estate and personal property or so much and such part thereof as she may desire from time to time for her support, maintenance, comfort and pleasure, during the term of her natural life.'
Subject to the use, interest, rights, and estate of Lillian C. Perkins, specific bequests were vested and the rest, residue, and remainder decreed to 22 various nieces and nephews as provided for in the will.
Subsequently, Lillian transferred all of the stock to her name and controlled and managed it until her death. Cash dividends were paid directly to her from 1933 to 1967. She treated these dividends as income and paid a resulting income tax thereon.
The assets of Fred Perkins' estate included 1,100 shares of International Harvester stock, of which Lillian Perkins sold 100 shares on or about July 24, 1935, and 100 shares in 1937. In 1953 she sold all of the stock in the Merchants National Bank of Winona, and in 1962 she sold all of the Red Wing Sewer Pipe stock, both of which were also included in Fred Perkins' estate.
Stockholder records from International Harvester Company indicate that prior to June 5, 1948, there appeared outstanding 900 shares of common stock in the name of Lillian C. Perkins. On that date an additional 1,800 shares were issued in the name of Lillian C. Perkins, making a total of 2,700 shares. On March 20, 1965, an additional 2,700 shares were issued in the name of Lillian C. Perkins, making a total of 5,400 shares, which appeared in her name at the time of her death.
On February 9, 1967, Lillian C. Perkins executed her last will and testament, leaving the residue of her estate to five nieces and nephews, all of whom were remaindermen under the will of Fred O. Perkins with the exception of Lillian Walker and Blanche Greene, and to three other legatees who were heirs of remaindermen under the will of Fred O. Perkins.
Lillian C. Perkins died testate on February 19, 1967, and an inventory and appraisal was filed with the court showing the assets of her estate to be $117,080.07. This figure did not include any of the stock which was held in the name of Lillian C. Perkins at the time of her death.
It was stipulated by the parties that the homestead located in Winona, Minnesota, was the property of Lillian C. Perkins and should pass in her estate; that the will of Fred O. Perkins did not create a trust; and that the proceeds from any corporate stock sold by Lillian C. Perkins during the life estate became her property absolute.
The district court made findings of fact, conclusions of law, and order for judgment on September 15, 1969, the following portions of which are pertinent here:
'8. That the original eleven hundred shares of International Harvester stock were reduced to nine hundred shares by sales made by Lillian C. Perkins during her lifetime and that by reason of stock splits, or stock dividends, these nine hundred shares had become fifty-four hundred shares by the time of the death of Lillian C. Perkins.
'9. That the ten shares of Kahler Corporation and the fifty shares of Kahler-Roberts Corporation were consolidated and by virtue of reverse stock splits and stock splits, became four hundred eighty shares of Kahler Corporation stock at the time of the death of Lillian C. Perkins.
'10. That during her lifetime, Lillian C. Perkins received cash dividends on the stocks above referred to which money she used in part for her maintenance and support and the balance of which she deposited in U.S. savings bonds, checking accounts, savings accounts and share accounts and a portion of which she loaned to one Raymond J. Compton.
'CONCLUSIONS OF LAW
'1. That Lillian C. Perkins acquired the fee title to the homestead described in the Decree of Distribution entered by the Winona County Probate Court on December 2nd, 1933, by virtue of the Court's Order of December 9th, 1932, setting aside the homestead to the surviving spouse and not by virtue of the aforesaid Decree of Distribution.
'2. That Lillian C. Perkins took a life interest in the personal property left by the decedent, Fred O. Perkins, with the right to use so much of the principal and/or interest thereof as she might desire from time to time for her support, maintenance, comfort and pleasure, during the term of her natural life.
The heirs of Lillian C. Perkins moved to amend the findings of fact, conclusions of law, and order for judgment, or, in the alternative, for a new trial. The court entered an...
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