Estate of Randeris v. Randeris

• Citation: 523 N.W.2d 600
• Decision Date: 25 August 1994
• Docket Number: No. 93-1184,93-1184
• Parties: In the Matter of the ESTATE OF Arnold RANDERIS, Gary Randeris, Executor and Beneficiary, Appellant, v. Dennis RANDERIS and Jane Patten, Objectors, Appellees.
• Court: Court of Appeals of Iowa

Page 600

523 N.W.2d 600

In the Matter of the ESTATE OF Arnold RANDERIS, Gary Randeris, Executor and Beneficiary, Appellant, v. Dennis RANDERIS and Jane Patten, Objectors, Appellees.

No. 93-1184.

Court of Appeals of Iowa.

Aug. 25, 1994.

Ronald W. Feilmeyer of Cambridge, Feilmeyer, Landsness, Chase & Jones, Atlantic, for appellant.

Anthony J. Hruban of Bradford, Coenen & Welsh, Omaha, Nebraska, and Michael P. Childs, Harlan, for appellee Jane Patten.

Thomas R. Eller of Eller, Brink, Sextro & Tilton, Denison, for appellee Dennis Randeris.

Heard by HAYDEN, P.J., and HABHAB and CADY, JJ.

CADY, Judge.

This is an appeal by the executor of the Estate of Arnold Randeris from an order by the probate court which removed him as executor and trustee, set aside three predeath conveyances of real estate, directed a set off of the executor's debt to the decedent against the executor's inheritance, and vacated the award of executor and attorney fees. We conclude the probate court was not authorized to set aside the predeath conveyances, but affirm on the remaining issues.

Arnold Randeris died June 28, 1992. His wife predeceased him. Arnold left a will, dated October 10, 1990. It named his three adult children, Gary Randeris, Jane Patten, and Dennis Randeris, as equal beneficiaries and nominated Gary as executor. The will authorized the executor to sell the residential property as well as the household goods and personal effects the children did not divide among themselves within one year after Arnold's death. The proceeds from the sale were to be divided equally among the three children. The residue of Arnold's estate was to be placed in trust, with Gary as trustee, until the tenth year of the anniversary of his death. Arnold left assets valued at nearly $700,000, including 347 acres of farmland worth approximately $500,000.

The will was admitted to probate. Gary was appointed executor. He designated Lewis and Barron, attorneys at law, as counsel. Gary ultimately filed a final report and application for discharge. Jane filed objections to the report and petitioned to remove Gary as executor and trustee. Dennis joined in the objections.

Jane and Dennis alleged Gary should have taken steps to consider whether Arnold possessed sufficient mental capacity to transfer three parcels of real estate of unequal value to each of the children nine days before his death. Gary received the most valuable parcel. Arnold was suffering from cancer at the time and resided in a nursing home. In the weeks prior to his death, he was often confused and disoriented. Jane and Dennis also observed that the final report failed to mention a debt Gary incurred to Arnold many years ago which Gary discharged in bankruptcy in 1986. They believe the debt should have been set off against Gary's distribution under the will.

Jane and Dennis were also critical of the manner Gary distributed the household and personal items. They pointed out the distribution was unequal and Gary failed to sell the undistributed items. Jane also objected to the earlier award of fees to the executor and the attorney of $13,865 for their ordinary services in the estate. The fee order was entered without prior notice to the beneficiaries and contained no itemization of services or other information. She also questioned the value placed by Gary on the farm property. The grounds for removal generally paralleled the objections to the final report.

Following a hearing on the final report and petition for removal, the district court declined to approve the final report and ordered Gary removed as executor and trustee. The court also ordered the undistributed household goods and personal property be sold at public auction with the proceeds distributed as provided in the will. The court found Gary was indebted to Arnold in the sum of $5700 and ordered the amount paid into the estate. The court also set aside the predeath conveyances based on the lack of mental capacity by Arnold to make the transfers and directed the property be distributed through the estate. Finally, the court set aside the award of executor fees and approved the attorney fees subject to an independent appraisal of the real estate. The court directed Gary be paid a reasonable fee for his services based on the submission of an itemization of services. The trial court summarily denied a motion under rule 179(b), Iowa Rules of Civil Procedure, and Gary appealed.

Gary raises a host of issues on appeal. Some overlap and will be considered together. First, Gary argues the district court, sitting in probate, had no jurisdiction or no authority to set aside the predeath conveyances. Secondly, he asserts the district court improperly set off his discharged debt because the issue was not properly raised and the decedent never intended for a setoff or retainer to apply. Gary next argues the evidence did not support his removal as executor and trustee. Finally, Gary claims the executor and attorney fees should be awarded based on the values of the estate assets he utilized in the probate inventory.

I. Standard of Review.

Our review in appeals from rulings by the probate court on objections to an executor's final report is de novo. In re Estate of Bruene, 350 N.W.2d 209, 211 (Iowa App.1984). We are not bound by the findings of the trial court, but give them weight, especially when the credibility of a witness is involved. Id. We also confine our review to those propositions raised in support of reversal. In re Estate of Martin, 261 Iowa 630, 634, 155 N.W.2d 401, 403 (1968). In questions involving the removal of an executor by the probate court, we review the entire record under an abuse of discretion standard. In re Myers' Estate, 229 Iowa 170, 171, 294 N.W. 235, 235 (1940).

II. Jurisdiction.

Gary argues the probate court had no authority to set aside the predeath conveyances. He asserts the issue was never pled and the probate court lacked jurisdiction to consider the matter.

In Iowa, probate courts have special jurisdiction exercised by a separate division of a court of general jurisdiction. In re Guardianship of Matejski, 419 N.W.2d 576, 578 (Iowa 1988). When sitting in probate, the district court is a court of general jurisdiction. Id. Although the probate court is not typically open to actions at law or equity, "it has plenary jurisdiction to determine matters essential to probate business before it." Id. Thus, the question whether a matter is properly before a probate court is often more one of procedure than jurisdiction. Beem v. Beem, 241 Iowa 247, 250, 41 N.W.2d 107, 109 (1950); See Cleghorn v. Benjamin, 239 Iowa 455, 31 N.W.2d 887 (1948) (in absence of motion to transfer, probate court has same jurisdiction as it would either at law or in equity).

Notwithstanding, the jurisdiction of a court can ordinarily be exercised only within the scope of the pleadings, except when new issues are raised by the evidence without objection. See 20 Am.Jur.2d Courts § 74, at 81 (1990); McCarthy v. McCarthy, 162 N.W.2d 444, 447 (Iowa 1968) (court had no right or authority to consider matters outside the pleadings); Henry Walker Park Ass'n v. Mathews, 249 Iowa 1246, 1257, 91 N.W.2d 703, 710 (1958) (issue not fairly raised by the pleadings should not be considered by the court). In this case, the probate court was presented with a final report of the executor, together with objections to the report and an application to remove the executor. In such proceedings the executor generally occupies the same status as a plaintiff in a civil action and the objector occupies the position of defendant. 34 C.J.S. Executors and Administrators § 883 (1942). The final report and objections stand as the pleadings which limit the issues to be tried. Id. The jurisdiction of the court is invoked to determine those issues contained within the pleadings.

The issues involved in the removal of an executor are unrelated to the issue of whether predeath transfers of property by the decedent should be set aside. See Iowa Code § 633.65 (1993). The issues presented by a hearing on a final report involve the correctness of the executor's accounting and those questions necessarily involved in the accounting. 34 C.J.S. Executors and Administrators § 892 (1942). The inquiry can be broad, but is usually confined to the conduct of the executor in his or her fiduciary capacity. Id. Furthermore, a hearing on a final report does not invoke the court's jurisdiction to actually adjudicate title to property. McGarry v. Mathis, 226 Iowa 37, 43, 282 N.W. 786, 789 (1938); See Iowa Code § 633.477 (1993).

We conclude the probate court improperly set aside the predeath transfers of property at the hearing. The issue was not properly before the court through the pleadings, nor was it adjudicated by consent. One of the issues before the probate court was whether the executor failed in his duty to account for all estate property, including the need to take action to set aside any transfers made by the decedent prior to his death. The actual validity of the deeds, however was not at issue and was not necessarily involved in the resolution of the question concerning the conduct of the executor. The evidence offered at the hearing regarding the competency of the decedent prior to his death related to the reasonableness of Gary's failure to pursue action to challenge the deeds and did not justify a trial over the validity of the deeds.

III. Right to Retainer.

When a distributee of an estate is indebted to the estate, the executor is authorized to treat the amount of the debt as a setoff against the property of the estate which the distributee is entitled to receive. Iowa Code § 633.471 (1993). This is known as the right of retainer or setoff. It is based on the equitable principle that heirs should not be permitted to share in the estate until they have discharged their moral and legal obligation to contribute to it. In re Cook's Estate, 236 Iowa 399, 402, 19 N.W.2d...