Funk v. Funk, 79A02-9004-CV-208

• Decision Date: 27 November 1990
• Docket Number: No. 79A02-9004-CV-208,79A02-9004-CV-208
• Citation: 563 N.E.2d 127
• Parties: Mae Clements FUNK and Dennis Woods, Co-Executors of the Estate of Cleo M. Funk, Deceased, Mae Clements Funk and Karl M. Jacobs, Appellants (Defendants Below), v. Larry M. FUNK and Peggy Odegaard, Appellees (Plaintiffs Below). 1
• Court: Indiana Appellate Court

Page 127

563 N.E.2d 127

Mae Clements FUNK and Dennis Woods, Co-Executors of the

Estate of Cleo M. Funk, Deceased, Mae Clements

Funk and Karl M. Jacobs, Appellants (Defendants Below), v. Larry M. FUNK and Peggy Odegaard, Appellees (Plaintiffs Below).

No. 79A02-9004-CV-208. ¹

Court of Appeals of Indiana,

First District.

Nov. 27, 1990.

Charles R. Vaughan, Grant C. Mitchell, Vaughan and Vaughan, Lafayette, for appellants.

Charles Max Layden, Rod A. Ray, Layden and Layden, Lafayette, for appellees.

ROBERTSON, Judge.

Mae Clements Funk and Dennis Woods as the co-executors of the Estate of Cleo M. Funk, and Mae Clements Funk and Karl M. Jacobs, individually, appeal the trial court's granting of partial summary declaratory judgment ² in favor of plaintiffs, Larry M. Funk and Peggy Odegaard. The trial court's finding that the doctrine of equitable conversion does not apply in the present case causes the proceeds of a certain land sale contract, with a principal balance of $105,000.00, to pass under Cleo's will to his children, the plaintiffs, instead of to Mae Clements Funk, his widow. The co-executors raise two issues, neither of which constitutes error. Therefore, we affirm.

FACTS

Cleo M. Funk, decedent, was the father of the plaintiffs/appellees, Larry M. Funk and Peggy Odegaard. Cleo was appellant, Mae Clements Funk's, husband. Mae was Cleo's childless second wife.

Cleo executed a will on September 1, 1983. ³ In the will he devised to Mae a certain parcel of real estate consisting of 29 acres of land and "all of my personal property." The will provided that if Mae should predecease Cleo or fail to survive him for a period of five (5) months, the personal property would go to his children, Larry and Peggy. The will contained a residuary clause devising the remainder of the estate (which necessarily would only consist of real estate), "of every kind and nature and wherever situate or located" to the children, Larry and Peggy. The will did not otherwise provide for either Larry or Peggy.

The will did not specifically mention the Funk family farm which Cleo owned at the time he executed his will. This farm had been in the family for three (3) generations and consisted of 101 acres of land. It is undisputed that--had the farm not been sold by contract, as will be discussed later--the farm would have passed under the residuary clause to the children.

On February 19, 1987, Cleo appointed Jacobs as his attorney-in-fact by a durable power of attorney. Jacobs prepared the power of attorney.

On January 25, 1988, Cleo was injured in an automobile accident and remained comatose until his death. While Cleo was comatose, Jacobs sold the farm by land contract under the authority of the power of attorney for $130,000.00. The unpaid balance on the contract was $105,000.00 on the date Cleo died, June 22, 1988. After Cleo's death, the co-executors, Mae Clements Funk, and Jacobs' law associate, Dennis Woods, included the expected proceeds from the land contract as personal property instead of real estate in the inventory filed in the estate. Because the will bequeathed all the personal property to Mae, the characterization of the land contract as personal property effectively causes the children, Larry and Peggy, to be disinherited.

DECISION

The purpose of summary judgment is to terminate litigation about which there can be no factual dispute and which may be determined as a matter of law. Bassett v. Glock (1977), 174 Ind.App. 439, 368 N.E.2d 18. Summary judgment is proper only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Marsym Development Corp. v. Winchester Economic Development Com'n (1983), Ind.App., 447 N.E.2d 1138, 39 A.L.R. 4th 1087, trans. denied. Any doubt as to the existence of a genuine issue of material fact must be resolved against the party moving for summary judgment. Peterson v. Culver Educational Foundation (1980), Ind.App., 402 N.E.2d 448. For purposes of determining if summary judgment is appropriate, a fact is said to be material if its existence facilitates the resolution of any of the issues involved. Anderson v. State Farm Mutual Auto Insurance Co. (1984), Ind.App., 471 N.E.2d 1170. Summary judgment must be denied if the resolution thereof hinges upon a state of mind, credibility of witnesses, or weight of testimony. Bassett, supra. Summary judgment is a lethal weapon and courts must be mindful of its aims and targets and beware of overkill in its use. Mayhew v. Deister (1969), 144 Ind.App. 111, 244 N.E.2d 448.

I.

Whether the trial court erred by finding that the doctrine of equitable conversion does not operate as a matter of law to cause the unpaid balance of the land contract to pass to Mae as personal property?

IND. CODE 29-1-13-6, which codifies the doctrine of equitable conversion, reads in pertinent part as follows:

... any real property sold by the decedent on written contract, the purchase price of which shall not have been paid in full prior to the death of the decedent, shall be deemed personal assets in the hands of his personal representative and be distributed and accounted for as such....

The co-executors argue that the well-settled doctrine of equitable conversion as applied to the undisputed facts of this case operates to convert the Funk family farm to personal property as a matter of law. As such, the expected proceeds from the land sale contract pass to Mae under the will.

The doctrine of equitable conversion is a legal fiction invented to protect the beneficiaries and to sustain and carry out the intention of the testator, never to defeat it. Duckwall v. Lease (1939), 106 Ind.App. 664, 20 N.E.2d 204. Under the doctrine of equitable conversion, the form into which the property changes is not material, for equity will follow the property into whatever form it may assume in order to secure it for the person entitled thereto. Id. To bring about an equitable conversion, there must be an adequate expression of the testator's absolute intention that the land shall be sold and turned into money. Walling v. Scott (1911), 50 Ind.App. 23, 96 N.E. 481.

In In re Estate of Richard (1981), Ind.App., 419 N.E.2d 1012, we held that the doctrine of equitable conversion, as codified under I.C. 29-1-13-6, did not operate to convert the sale proceeds of a farm sold under a land contract into personal property. The farm was owned by an incompetent testator and sold on contract by her co-guardians during her incompetency and before her death. In Richard, we held I.C. 29-1-13-6 did not operate to convert the property in question into personal property because the statute only covers "real property sold by the decedent on written contract," not real property sold on contract by a decedent's guardian. Id. 419 N.E.2d at 1014 (emphasis in original). In deciding Richard, we noted that the testator had set out her intentions for the disposition of the farm in particular by specifically devising the farm to a trust benefitting her husband, children and grandchildren. We held that her wishes should be followed if at all possible. We relied on the decisions of other jurisdictions faced with similar situations. For example, we noted that a Virginia court held "[T]he prevailing rule in equity [is] that those dealing with the estate of an insane person cannot so change the nature of the property as would change the devolution of the same upon death." Id. (citations omitted.) We cited a North Carolina case which held "The object[ive] of the rule is to prevent as far as possible, any alteration by the guardian of a lunatic of the respective rights of the heirs of such lunatic in his real property should he die still a lunatic." Id. (Citations omitted.)

The co-executors argue that Richard, is inapposite to the case at bar because Jacobs sold the farm as Cleo's attorney-in-fact and not as Cleo's guardian. They distinguish the authority of a guardian with an attorney-in-fact by asserting that an attorney-in-fact does not need court approval, as does a guardian, to sell a particular piece of property. They conclude that, because the power of attorney executed by Cleo gave Jacobs the power to "execut[e] Warranty Deeds ... and all things in connection with any and all of my property and affairs of every kind and nature the same as I might or could do if personally present," the doctrine of equitable conversion operates as if Cleo personally entered into the land sale contract.

The effect of an act performed by an attorney-in-fact under a durable power of attorney is governed by IND.CODE 30-2-11-2 which reads:

All acts done by an attorney-in-fact pursuant to a durable power of attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled.

In the present case, the children, Larry and Peggy, have never asserted the sale of the farm was invalid or not binding upon them. Likewise, they do not contend that the ownership rights of the third party buyers of the Funk farm under the land contract are in question.

In the well-reasoned opinion of In re Estate of Graham (1975), 216 Kan. 770, 533 P.2d 1318, a testator's attorney-in-fact sold a parcel of real estate during the testator's incompetency which had been specifically devised by will. The issue was whether the sale worked an ademption or revocation of this specific devise or whether the unexpended proceeds of the sale that remained in the hands of the executor were impressed with a trust to be paid in accordance with the specific devise contained in the will. The court held that when the testator does not personally dispose of specifically devised property, an ademption does not necessarily take place. The Court noted that:

Practically all of the cases in which ademption was claimed by reason of acts not personally committed by the...