In re Estate of Seefeldt

• Decision Date: 09 August 2006
• Docket Number: No. 23843.,23843.
• Citation: 720 N.W.2d 647,2006 SD 74
• Parties: The ESTATE OF Merritt A. SEEFELDT, Sr., Deceased.
• Court: South Dakota Supreme Court

Page 647

720 N.W.2d 647

2006 SD 74

The ESTATE OF Merritt A. SEEFELDT, Sr., Deceased.

No. 23843.

Supreme Court of South Dakota.

Considered on Briefs April 24, 2006.

Decided August 9, 2006.

Gary W. Schumacher, Todd D. Wilkinson of Wilkinson & Wilkinson, DeSmet, South Dakota, Jonathan K. Van Patten, Vermillion, South Dakota, Attorneys for appellant Estate.

Roger W. Ellyson, Roger W. Ellyson, P.C., Watertown, South Dakota, Attorney for appellee Melanie Smith.

ZINTER, Justice.

[¶ 1.] Testator's Last Will and Testament granted his three sons an option to purchase certain farm land from the Estate. The will "suggested" that one or all of three friends (two neighbors and an attorney) would appraise the land to determine the option price. The two neighbors ultimately appraised the land on a cash flow basis. Testator's daughter objected and submitted a fair market value appraisal from an independent, professional appraiser. The circuit court sustained the daughter's objection and adopted the professional appraiser's fair market valuation. The Estate appeals. We affirm.

Facts and Procedural History

[¶ 2.] Merritt A. Seefeldt, Sr. (Testator) farmed in Clark County, South Dakota. Testator had three sons and one daughter: Merritt Jr., Michael, Marshall, and Melanie Smith. Testator executed his Last Will and Testament on November 10, 1980, and executed a codicil to that will on December 15, 1982. On December 25, 2003, Testator died, survived by his wife and four children.

[¶ 3.] Testator's will named Marshall as the personal representative. The will also granted his three sons an option to purchase farm land that Testator had acquired from his parents. "Item IV" of the will provided:

As to such other real property that I may own at the time of my decease, the property that I have acquired from my father, August C., and my mother, Jessie B. Seefeldt, it is my desire remain in the Seefeldt family. I prefer that it be purchased by my sons, who have operated it for many years, but in considering the appraisal of that property, my sons, together with myself have constructed feed lots and improvements on said property, which should be deducted from the value thereof prior to the appraisal, it should then be offered for sale to my sons, Merritt, Jr., Michael and Marshall for the appraised valuation, and they would become the owners thereof, upon payment to my daughter, Melanie Smith, a one-fourth interest therein. They shall have the privilege of installment purchase of her interest, paying to her one-tenth of her principal and interest annually, interest at the rate presently paid on passbook savings in the local banks at Clark on the unpaid balance. My Executor would be authorized to execute an Executor's Deed, issuing same to my sons on the purchase thereof, with a Note and Mortgage in favor of my daughter, pursuant to said terms.

I would suggest that my Executor use one or all of the following appraisers, if I have not disposed of this land prior to my decease, and it is necessary to appraise same: my friends and neighbors, Jack Bailey and Alfred Overlie, and my friend and attorney, Ellsworth F. Wilkinson of De Smet, South Dakota. If, of course, I have already conveyed the property, then the Executor can use such appraiser as he desires.

[¶ 4.] Following Testator's death, Marshall selected Jack Bailey and Alfred Overlie to appraise the property for the sale to the sons. Bailey appraised the land at $140,400 ($351 per acre). Overlie appraised the land at $139,600 ($349 per acre). Ellsworth Wilkinson, the Estate's attorney, did not appraise the property, but he did "sign off" on Bailey's and Overlie's appraisals.

[¶ 5.] Marshall subsequently filed an inventory of Testator's property. The inventory listed the "fair market value" of the land in question at $140,000 ($350 per acre). Melanie objected to this valuation and, at trial, called Allan Engstrom as an expert witness. Mr. Engstrom was an experienced and disinterested professional appraiser. According to Mr. Engstrom, the land's fair market value was $290,000 ($725 per acre) with or without the feedlots and other excluded improvements.¹

[¶ 6.] The circuit court concluded that Testator intended the land to be valued at its fair market value. After considering all of the evidence, the court further determined that Mr. Engstrom's appraisal most accurately represented the land's fair market value. The Estate appeals, presenting the following issues:

1) Whether the circuit court erred in concluding that the land was to be appraised at its "fair market value" despite the will's provision suggesting that certain friends act as appraisers to determine the option price.

2) Whether either party is entitled to appellate attorney's fees.

Decision

[¶ 7.] The issue in this case involves the interpretation of Testator's will. We review the interpretation of a will under the de novo standard of review, with no deference given to the circuit court's interpretation. In re Estate of Brownlee, 2002 SD 142, ¶ 13, 654 N.W.2d 206, 210.

[¶ 8.] The primary goal in interpreting a will is to determine the testator's intent. Id. ¶ 16 (citation omitted). In determining testamentary intent, "[a]ll the words and provisions appearing in [a] will must be given effect as far as possible, and none should be cast aside as meaningless." Matter of Estate of Jetter, 1997 SD 125, ¶ 20, 570 N.W.2d 26, 31 (quoting In re Estate of Bock, 85 S.D. 113, 115, 177 N.W.2d 734, 735 (1970)). "If the intent is clear from the language used, that intent controls." In re Estate of Martin, 2001 SD 123, ¶ 20, 635 N.W.2d 473, 477. "If doubt exists as to the testator's intent, `the language used and the circumstances surrounding the execution of the writing will again be examined in light of pertinent rules of construction.'" Estate of Brownlee, 2002 SD 142, ¶ 16, 654 N.W.2d at 210 (quoting In re Estate of Klauzer, 2000 SD 7, 9, 604 N.W.2d 474, 477 (quoting In re Estate of Nelson, 250 N.W.2d 286, 288 (S.D.1977))).

Testamentary Intent

[¶ 9.] In granting the sons an option to purchase, Testator's will describes the option price in terms of "value" and "appraised value" without further definition or qualification as to the type of value contemplated. While the Estate contends that "value" or "appraised value" is whatever value was determined by the two appraisers the personal representative selected, Melanie argues that "value" or "appraised value" means fair market value. We acknowledge that a mere disagreement between the parties over the interpretation of testamentary language is not enough to make the language ambiguous. Id. ¶ 17 (citation omitted). However, we conclude that the terms "value" and "appraised value" are ambiguous because, in this will, those terms are "reasonably capable of being understood in more than one sense." See id. (stating that testamentary "[l]anguage is ambiguous when it is reasonably capable of being understood in more than one sense") (citations omitted).

[¶ 10.] Our conclusion that "value" and "appraised value" are susceptible to more than one meaning is supported by the South Dakota Uniform Standards of Professional Appraisal Practice (USPAP). The USPAP indicates that appraised value has different meanings because the value of property is dependent upon the relationship of the parties and how they intend to use the property; i.e., value is "the monetary relationship between properties and those who buy, sell, or use those properties." Appraisal Standards Board, USPAP: Uniform Standards of Professional Appraisal Practice and Advisory Opinions 5 (2005).² The comment following this provision explains:

Value expresses an economic concept. As such, it is never a fact but always an opinion of the worth of a property at a given time in accordance with a specific definition of value. In appraisal practice, value must always be qualified — for example, market value, liquidation value, or investment value.

Id. This comment illustrates that the same property often has different appraised values. Furthermore, because the Testator's sons and daughter have a different relationship with this property, the terms "value" and "appraised value" have different meanings in this case.

[¶ 11.] Here, Testator's neighbors explained that they appraised the land based solely on its cash flow value; i.e., "what you could pay for it and make it pay for itself."³ Mr. Engstrom, on the other hand, appraised the land at its fair market value.⁴ Therefore, the dispositive question is whether Testator intended the land to be appraised at the neighbors' cash flow value or the appraiser's fair market value. After considering the entire will, the circuit court concluded that Testator intended that the property be appraised at its fair market value. We agree.

[¶ 12.] The Estate contends that the circuit court's interpretation of the will was incorrect because the court did not consider the second paragraph of Item IV, which suggested that Testator's friends and neighbors would appraise the property. The Estate concedes that the circuit court's fair market value interpretation would have been correct if the will did not contain the suggested appraisers provision. However, the Estate argues that if the court had considered the language regarding the suggested appraisers, it would have concluded that Testator intended the neighbors' appraisal to be controlling. The Estate relies on the general rule that absent bad faith or fraud, a named appraiser's valuation is generally deemed conclusive. The Estate cites four cases applying this general rule: Matter of Bock's Estate, 198 Neb. 121, 251 N.W.2d 872 (1977);⁵ In re Lorimor's Estate, 216 N.W.2d 349 (Iowa 1974);⁶ In re Giffin's Estate, 166 N.W.2d 800 (Iowa 1969);⁷ and In re Eckey's Estate, 192 Iowa 572, 185 N.W. 118 (1921).⁸

[¶ 13.] Although these cases apply the rule suggested by the Estate, the cases are distinguishable. We initially note that in Bock and Lorimor, the...