Estate of Watkins, In re, S-90-1036

• Decision Date: 11 June 1993
• Docket Number: No. S-90-1036,S-90-1036
• Citation: 243 Neb. 583,501 N.W.2d 292
• Parties: In re ESTATE OF Louise C. WATKINS, Deceased. Mary Ann STALLINGS et al., Appellants, v. Richard H. ROBERTS, Personal Representative of the Estate of Louise C. Watkins, Deceased, Appellee.
• Court: Nebraska Supreme Court

Page 292

501 N.W.2d 292

243 Neb. 583

In re ESTATE OF Louise C. WATKINS, Deceased.

Mary Ann STALLINGS et al., Appellants, v. Richard H. ROBERTS, Personal Representative of the Estate of Louise C. Watkins, Deceased, Appellee.

No. S-90-1036.

Supreme Court of Nebraska.

June 11, 1993.

Syllabus by the Court

1. Res Judicata. The doctrine of res judicata is based on the principle that a final judgment on the merits by a court of competent jurisdiction is conclusive upon the parties in any later litigation involving the same cause of action.

2. Decedents' Estates: Appeal and Error. In the absence of an equity question, an appellate court, reviewing probate matters, examines for error appearing on the record made in the county court.

3. Attorney Fees: Appeal and Error. On appeal, a trial court's decision awarding or denying an attorney fee will be upheld in the absence of an abuse of discretion by the trial court.

4. Statutes. Interpreting a statute presents a question of law for judicial determination.

5. Judgments: Appeal and Error. Regarding a question of law, an appellate court has an obligation to reach a conclusion independent from a trial court's conclusion in a judgment under review.

6. Decedents' Estates: Costs: Attorney Fees: Evidence. The "good faith" required in Neb.Rev.Stat. § 30-2481 (Reissue 1989) is an ultimate fact for the court's decision upon all the evidence.

7. Decedents' Estates: Costs: Attorney Fees: Words and Phrases. "Good faith," for the purpose of Neb.Rev.Stat. § 30-2481 (Reissue 1989), is honesty in fact concerning conduct or a transaction and is distinguished from mere negligence or an honest mistake.

Gordon Peterson and Mark Brown of Orton, Brown, Thomas & Peterson, Lincoln, for appellants.

Patrick R. McDermott, Grant, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, FAHRNBRUCH, and LANPHIER, JJ.

SHANAHAN, Justice.

In this appeal, the question is whether a personal representative is entitled to compensation and an attorney fee for the personal representative's lawyer in defending an action brought by devisees to surcharge and remove the personal representative, when the personal representative is surcharged but not removed from the office of personal representative.

At the time of her death on February 24, 1985, Louise C. Watkins owned property valued at approximately $100,000. On April 12, a petition for informal probate of Louise Watkins' will was filed in the county court for Perkins County, and Richard H. Roberts was appointed personal representative of the estate of Louise C. Watkins, deceased. A significant part of the Watkins estate consisted of a dryland quarter section in Perkins County. On May 22, Roberts obtained an appraisal in which a licensed appraiser concluded that the fair market value of the land at the date of Louise Watkins' death was $500 per acre, or $80,000.

Under her will, Louise Watkins extended to Amy May Watkins, Louise's daughter-in-law and surviving spouse of Louise's son, Jay Laurn Watkins, an option to purchase the quarter section anytime within 6 months after Louise's death at the land's appraised fair market value on the date of Louise's death. The will also authorized Amy May Watkins to assign the option to her children. However, Amy May Watkins neither exercised nor assigned the option; therefore, the real estate passed into Louise Watkins' residuary estate for distribution among several devisees. Louise Watkins' will also authorized her personal representative to sell any estate assets at public or private sale without the necessity of court approval for a sale.

After expiration of the option, Roberts contacted Amy May Watkins' children, Mary Ann Stallings, Bruce Watkins, Clinton Watkins, and Douglas Jay Watkins, and inquired whether any of them might be interested in purchasing the quarter section. In January 1986, Douglas Jay Watkins told Roberts that he and the other children of Amy May Watkins would pay only $200 per acre, or $32,000, for the tract. Roberts considered the proposed price to be inadequate. When other heirs declined to purchase the quarter section and rejected the possibility of a distribution in kind concerning the land, Roberts, on February 5, began running an advertisement in the local newspaper, offering the land for sale to the general public. Subsequently, on April 18, Roberts, in light of the declining value of dry cropland in Perkins County, entered into a contract to sell the quarter section to Vern and Delores Woodmancy for $300 per acre, or $48,000.

On July 14, 1986, Mary Ann Stallings, Bruce Watkins, and Clinton Watkins filed their petition in county court, seeking to restrain Roberts from closing the Woodmancy sale. Douglas Jay Watkins and Amy May Watkins, as plaintiffs, later joined in this action. The petition was amended, alleging acts of negligence and breaches of fiduciary duty by Roberts and seeking to surcharge Roberts for any loss sustained by the estate and remove him as personal representative of the Watkins estate.

On March 12, 1987, the county court ordered that Roberts perform the contract of sale to Woodmancys. However, questions concerning surcharge of Roberts and his removal as personal representative were later disposed in a trial in which much of the evidence consisted of contradictory opinions regarding the value of the quarter section in view of the generally declining real estate values in the area. On June 25, the county court, in its "Judgment Order," concluded that on June 18, 1986, when Roberts sold the quarter section to Woodmancys, the land had a fair market value of $350 per acre, or $56,000; nevertheless, "with falling land prices, it could have been reasonable to sell the land below fair market value; however, it was not reasonable to sell below market value and not give prior notice to the interested parties." The court then concluded that Mary Ann Stallings, Bruce Watkins, and Clinton Watkins had sustained a loss of $1,500 as the result of the Woodmancy sale; surcharged Roberts $1,500, "the same representing $500.00 apiece for Bruce A. Watkins, Clinton Watkins and Mary Ann Stallings"; and ordered Roberts "to pay said surcharge directly to" Mary Ann Stallings, Bruce Watkins, and Clinton Watkins. The court dismissed the plaintiffs' action for Roberts' removal as personal representative of the Watkins estate.

Amy May Watkins, Mary Ann Stallings, Bruce Watkins, Clinton Watkins, and Douglas Jay Watkins appealed to the district court, which on May 31, 1988, affirmed the county court's judgment concerning the surcharge and removal of Roberts as personal representative.

Amy May Watkins, Mary Ann Stallings, Bruce Watkins, Clinton Watkins, and Douglas Jay Watkins then commenced an appeal to this court and, among their claimed errors, asserted that the county court should have removed Roberts as the personal representative of the Watkins estate and should have surcharged Roberts more than $1,500. That appeal, however, was dismissed for lack of jurisdiction because the appeal was filed out of time. Consequently, the county court's judgment concerning surcharge and removal of Roberts as personal representative became final.

The doctrine of res judicata is based on the principle that a final judgment on the merits by a court of competent jurisdiction is conclusive upon the parties in any later litigation involving the same cause of action....

Res judicata is founded on a policy favoring termination of an action by preclusion or prevention of subsequent litigation on the same cause.

NC + Hybrids v. Growers Seed Assn., 228 Neb. 306, 310-11, 422 N.W.2d 542, 545 (1988). Accord Ballard v. Giltner Pub. Sch., 241 Neb. 970, 492 N.W.2d 855 (1992). Hence, we express no opinion concerning the correctness of the county court's judgment concerning the surcharge and retention of Roberts as personal representative; instead, we accept the county court's decision in that regard as a final determination on the issues of surcharge and removal of Roberts as personal representative.

On November 7, 1989, as part of his "Formal Petition for Complete Settlement" of the Watkins estate, Roberts requested $7,493.07 as compensation for his services in conjunction with the litigation for his surcharge and removal as personal representative. Roberts also requested $12,089.90 as fees and costs for his attorney in the litigation. The plaintiffs who had maintained the surcharge and removal actions objected to the requested payments from estate funds on the grounds that Roberts' actions in defending the actions did not "benefit the estate" and were not in " 'good faith.' " Despite the plaintiffs' objections, the county court, after consideration of the evidence concerning compensation of the personal representative and a fee for the personal representative's attorney, allowed compensation and fees as requested. The district court affirmed the county court's judgment. Allowance of that compensation and attorney fee is the subject of the present appeal.

In the absence of an equity question, an appellate court, reviewing probate matters, examines for error appearing on the record made in the county court. See, Neb.Rev.Stat. § 25-1911 (Cum.Supp.1992); In re Estate of Snover, 233 Neb. 198, 443 N.W.2d 894 (1989); In re Guardianship and Conservatorship of Sim, 225 Neb. 181, 403 N.W.2d 721 (1987); In re Estate of Peterson, 221 Neb. 792, 381 N.W.2d 109 (1986); In re Estate of Casselman, 219 Neb. 653, 365 N.W.2d 805 (1985). Cf., In re Estate of Detlefs, 227 Neb. 531, 418 N.W.2d 571 (1988) (county courts may apply equitable principles to matters within probate jurisdiction); In re Estate of Steppuhn, 221 Neb. 329, 377 N.W.2d 83 (1985).

In a bench trial of a law action, a trial court's factual findings have the effect of a verdict and will not be set aside unless clearly erroneous. In reviewing a judgment awarded in a bench trial of a law action, an appellate court does not reweigh evidence,...