In re Estate of Olson

• Decision Date: 09 January 2008
• Docket Number: No. 24142.,No. 24127.,24127.,24142.
• Parties: In the Matter of the ESTATE OF Glenn E. OLSON, Deceased.
• Court: South Dakota Supreme Court

744 N.W.2d 555

2008 SD 4

In the Matter of the ESTATE OF Glenn E. OLSON, Deceased.

No. 24127.

No. 24142.

Supreme Court of South Dakota.

Argued on January 10, 2007.

Reassigned June 4, 2007.

Decided January 9, 2008.

Rehearing Denied February 20, 2008.

Thomas E. Alberts, Avon, South Dakota, Attorney for appellant James W. Olson.

Craig K. Thompson; Vermillion, South Dakota, Attorney for appellee Wayne A. Olson, Personal Rep./Estate.

GILBERTSON, Chief Justice (on reassignment).

[¶ 1.] Wayne Olson, in his capacity as the personal representative of Glenn Olson's estate, sold real property that had been specifically devised to James Olson and other devisees as tenants in common. Personal property passing under the residuary clause was also sold at public auction. The trial court confirmed the sales but sanctioned the personal representative $1,000 for failing to give James advance notice of the public auctions. We reverse and remand in part and affirm in part.

FACTS AND PROCEDURAL HISTORY

[¶ 2.] Glenn Olson died testate on August 3, 2002. At the time of his death, he owned approximately 132 acres of farmland, including a homestead. This realty and home, which was built in 1900, had been in the Olson family for generations. Although apparently a modest homestead by current standards, Glenn had spent his entire life living in it while farming the adjoining land. His sister also lived in the homestead and took care of housekeeping chores; Wanting to keep this farm in the family he wrote a will where he specifically devised this real estate to James and six other nieces and nephews (collectively heirs). Glenn's personal property was devised to the same heirs through the residuary clause.

[¶ 3.] Probate of Glenn's will is subject to South Dakota's Uniform Probate Code (UPC) as it was drafted subsequent to South Dakota's implementation of the UPC in 1995. Therefore, his estate was informally probated in accordance with the UPC.¹ Wayne was appointed personal representative in September 2002. Following his appointment, Wayne determined that the buildings on the homestead, were in such poor condition that they constituted a drain on the estate. Consequently, without the notice to the heirs as required by SDCL 29A-3-715(b), he sold the specifically devised real property at a public auction. The personal property was sold separately, also without the same requisite notice to the heirs. The trial court found as a finding of fact, "[t]he only notice of the sale given by the personal representative was 1 or 2 years earlier when he wrote the other heirs indicating that he was considering whether it should be sold." It entered a conclusion of law that "Wayne Olson's notices were inadequate." At oral argument Wayne conceded that the sales did not comply with SDCL 29A-3-715(b).

[¶ 4.] James had filed a demand for notice pertaining to the estate under SDCL 29A-3-204, which requires that any "order or filing" pertaining to the estate not be "made or accepted" without providing notice to James. According to Wayne, he conducted the public auction of the real and personal property under SDCL 29A-3-711, which provides that personal representatives may exercise their powers "without notice, hearing, or order of court."

[¶ 5.] James ultimately did receive legal notice of the completed sales through the filing of the summary of these public sales. He also received notice of the motion to confirm the sales. James appeared and objected to the confirmation of both sales. Following a hearing on the motion, the trial court confirmed the sales, finding that the land was a drain on the estate, the sales were conducted in a reasonable manner, and the land brought an exceptional price exceeding market value. Ultimately, the trial court concluded that "[t]he evidence is abundant that the sale [of real property] was conducted for a good reason."

[¶ 6.] James did not object to the court's finding that there was good reason to sell the property. Instead, James argued that Wayne did not have the power to sell specifically devised property. James also claimed that he was entitled to advance notice of the public auctions under SDCL 29A-3-204 and SDCL 29A-3-715(b). The trial court ultimately concluded that Wayne possessed a power of sale under the UPC. Although the court also found that Wayne did not give advance notice of the public auctions as required by SDCL 29A-3-715(b), it concluded that James had not been damaged by the lack of notice. Therefore, the sales were not voided on this basis. Instead, the court sanctioned Wayne $1,000 for failing to give advance notice.

[¶ 7.] We have restated the parties' issues² on appeal as follows:

1. Whether the personal representative possessed the power to sell specifically devised land when the power of sale was not contained in the will and the sale was not necessary to pay estate debts.

2. Whether the sale of personal property was void, under SDCL 29A-3-204 and SDCL 29A-3-715(b) for failure to give advance notice of the public auction, and if not void, was the remedy of damages proven.

By notice of review, Wayne raises the following issue:

3. Whether the trial court erred in assessing a sanction against the personal representative for failure to give advance notice of the sales.

STANDARD OF REVIEW

[¶ 8.] This Court's standard of review is well settled:

This Court reviews a trial court's findings of fact under the clearly erroneous' standard and overturns a trial court's conclusions of law only when the trial court erred as a matter of law. Century 21 Associated Realty v. Hoffman, 503 N.W.2d 861, 864 (S.D.1993) (citations omitted): . . . Questions of law are reviewed de novo. City of Colton v. Schwebach, 1997 SD 4, ¶ 8, 557 N.W.2d 769, 771. "This Court interprets statutes under a de novo standard of review without deference to the decision of the trial court" In re Estate of Jetter, 1997 SD 125, ¶ 10, 570 N.W.2d 26, 28.

Matter of Estate of O'Keefe, 1998 SD 92, ¶ 7, 583 N.W.2d 138, 139.

ANALYSIS AND DECISION

[¶ 9.] 1. Whether the personal representative possessed the power to sell specifically devised land when the power of sale was not contained in the will and the sale was not necessary to pay estate debts.

[¶ 10.] James first argues that Wayne was without power to sell specifically devised land because there was no power of sale provision in the will and the sale of specifically devised property was inconsistent with the specific devisees' right to receive property in kind. We agree.

[¶ 11.] In 1877, our first Territorial Probate Code was passed which contained a relevant statute which was to remain in effect until the enactment of the Uniform Probate Code over a century later.

When property is directed by the will to be sold, or authority is given in the will to sell property, the executor may sell any property of the estate without the order of the probate court, and at either public or private sale; and with or without notice, as the executor may determine[.]

Section 194 Probate Code, Revised Codes 1877, re-codified as SDCL 30-22-1, repealed by 1995 S.D. Laws ch. 167, § 168. In the case of In re Estate of Kappenmann, 82 S.D. 91, 141 N.W.2d 780 (1966), this Court upheld a sale of real estate by an executor solely because such authority had been granted in the decedent's will thus invoking the authority of the above-cited statute. In so doing, the Court noted that the sole other grant of authority for the sale of a decedent's real property during probate was limited to situations where:

it appears to be necessary or that it would be for the advantage, benefit and best interests of the estate and those interested therein or for the purpose of paying a debt secured by a mortgage or lien on such property[.]

Id. at 782 (emphasis added) (quoting SDL 1960 Supp. 35.1501, re-codified as. SDCL 30-22-6, repealed by 1995 S.D. Laws ch. 167, § 168). A review of the two statutes cited in Kappenmann establishes that prior to the enactment of the UPC, a sale of real estate by an executor could be legally accomplished by: (1) a grant contained in the will; or (2) for settlement of claims and debts; or (3) where it is in the best interests of the estate and the heirs. It appears that this was the general rule in many other jurisdictions. Hanson v. Hanson, 149 Iowa 82, 127 N.W. 1032, 1033 (Iowa 1910), 31 Am.Jur.2d Executors and Administrators § 731, 34 C.J.S. Executors and Administrators § 295.

[¶ 12.] As is uncontested herein, there is no such power of sale granted to Wayne by the decedent's will to validate the sale. Thus, the issue now before us calls upon us to engage in statutory interpretation to determine if the passage of the Uniform Probate Code by the South Dakota Legislature in 1995 made a change so significant in a century old doctrine as to essentially reverse it.

[¶ 13.] Some historical background of the UPC particular to South Dakota is of analytical assistance to guide us in the issue now before us: "[a]s an overall view, we would note that the UPC does not appear to be a revolutionary departure from past probate procedure." Matter of Estate of Jetter, 1997 SD 125, ¶ 16, 570 N.W.2d 26, 29. Therein, we cited to SDCL 29A-1-103 which provides that: "[u]nless displaced by the particular provisions of this code, the principles of law and equity supplement its provisions." (Emphasis added).

Although no legislative history exists concerning the adoption of the UPC, the State Bar of South Dakota published educational materials in June of 1994 on the enactment of the UPC in this jurisdiction. Co-chairman of the Probate Form Committee of the State Bar, Professor David English, wrote that this Committee created the UPC work product which was adopted by the Legislature. Committee member Richard Kolker wrote that "South Dakota's adoption of a new probate code will not change the basic principles under which property is transferred from the decedent to the decedent's heirs." While this opinion is...