In re Estate of Falck

• Decision Date: 17 December 2003
• Docket Number: No. 03-0367.,03-0367.
• Citation: 672 N.W.2d 785
• Parties: In the Matter of the ESTATE OF Arlin C. FALCK, Deceased, Kathleen V. Nelson, Trustee of the Arlin C. Falck Living Trust and Executor of the Last Will and Testament of Arlin C. Falck, Deceased, Appellant.
• Court: Iowa Supreme Court

672 N.W.2d 785

In the Matter of the ESTATE OF Arlin C. FALCK, Deceased,

Kathleen V. Nelson, Trustee of the Arlin C. Falck Living Trust and Executor of the Last Will and Testament of Arlin C. Falck, Deceased, Appellant.

No. 03-0367.

Supreme Court of Iowa.

December 17, 2003.

David J. Dutton and Carolyn A. Rafferty of Dutton, Braun, Staack & Hellman, P.L.C., Waterloo, for appellant.

Robert J. Cowie, Jr. and Donald H. Gloe of Miller, Pearson, Gloe, Burns, Beatty & Cowie, P.L.C., Decorah, for appellee Kirkeby Welding & Machinery.

WIGGINS, Justice.

Kirkeby Welding & Machinery (Kirkeby) provided Arlin C. Falck (Arlin) welding services during his lifetime. Upon Arlin's death, Kirkeby filed a claim against the Arlin Falck Living Trust (Trust) for payment of those services. The trial court entered judgment against the Trust in favor of Kirkeby. Ten and one-half months after judgment entry, the Trust filed a motion to set aside the judgment asserting the trial court did not have subject matter jurisdiction to decide the claim. The trial court overruled the motion. The Trust appeals this ruling. For the reasons that follow, we conclude the trial court had subject matter jurisdiction over the claim and affirm the ruling.

I. Background Facts and Proceedings.

In 1988, Arlin executed a will leaving his property to a testamentary trust for the benefit of his spouse, Maxine, and his only son, Jerry. The 1988 will required the trustee to pay five percent of the initial fair market value of the assets of the trust annually to Maxine and Jerry. Jim L. Nichols (Nichols) and Marquette Bank of Rochester, Minnesota (Marquette) were nominated as co-executors and co-trustees.

Arlin revoked the 1988 will by executing a new will in 1993. The 1993 will left Arlin's property to the Trust. Arlin created the Trust at the same time he executed the 1993 will.

Arlin amended the Trust in June of 1995. The amendment named Kathleen V. Nelson (Nelson) as the sole trustee. The Trust designated its situs as Caledonia, Minnesota. During Arlin's lifetime, the Trust paid him its net income. Arlin retained the right to withdraw principal on request. Upon Arlin's death, Maxine was to receive $30,000 annually and Jerry was to receive $10,000 annually. At Maxine's death, Jerry's annual allowance increased to $30,000. Upon the death of Maxine and Jerry, the remainder was to be distributed to various charities.

In July of 1995, Arlin executed a third will. This will revoked all prior wills. It declared Hidalgo County, Texas as Arlin's residence and domicile. He named Nelson as executor. He left all his property to the Trust.

Arlin died on September 2, 1995. At the time of his death, his assets were valued in excess of $7.5 million. Under the 1988 will, Maxine and Jerry would be entitled to receive over $350,000 annually. The 1995 bequest entitled Maxine and Jerry to receive only $40,000 annually.

Nelson filed the 1995 will for probate in Hidalgo County, Texas on September 6, 1995. On October 31, 1995, Maxine filed the 1988 will for probate in Winneshiek County, Iowa. The Iowa court issued letters of appointment to Nichols and Marquette as co-executors (Executors). On November 27, 1995, Nelson, as trustee of the Trust, filed a petition to set aside the 1988 will, alleging the execution of the 1993 and 1995 wills revoked the 1988 will. On January 16, 1996, the Executors filed a request asking the trial court to issue an injunction enjoining Nelson from dealing with any of Arlin's assets.

Meanwhile, Kirkeby filed its claim against the Trust on January 24, 1996. The claim was for $2,813.57. The clerk of court mailed copies of the claim to the Executors.

On January 31, 1996, Nelson filed a motion to dismiss the injunction. She alleged she was not a party to the estate, either individually or in her capacity as trustee, thus the court did not have jurisdiction over her or the Trust. The trial court overruled the motion to dismiss finding that Nelson as trustee had "submitted to the jurisdiction of the court by instituting proceedings in this case, and because she was duly served with the notice of the petition for injunction."

The Trust filed a motion for summary judgment on March 6, 1996, requesting judgment on its petition to set aside the will. On April 9 the trial court concluded the 1993 and 1995 wills revoked the 1988 will. The court terminated the administration of the estate under the 1988 will and imposed a constructive trust on the assets. It ordered the Executors to preserve the assets of the estate that they collected as a receiver would. The constructive trust was to continue until the 1995 will was admitted to probate in either Iowa or Texas.

The Executors filed their final report on July 9, 1996, requesting substantial fees. The report also listed Kirkeby's claim. The Trust filed objections to the fee request but not to Kirkeby's claim.

By this time, Arlin's death generated litigation in Iowa, Texas, and Minnesota over the distribution of his assets. On August 6, 1996, the trial court entered an order continuing indefinitely the trial on the objections to the final report until the pending litigation concluded.

In October 1997 the parties advised the trial court the pending litigation had been settled. The Trust was a party to the written settlement agreement. The settlement agreement allowed the 1995 will to be probated in Texas. The agreement settled most of the claims made in the litigation. The agreement excluded the settlement of the fee and tax matters arising out of the attempted probate of the 1988 will. There was no mention of Kirkeby's claim in the settlement agreement. None of the parties gave Kirkeby notice of the settlement.

The Executors filed an amended final report on January 4, 2001. The amended final report listed Kirkeby's claim. The trial court entered an order requiring notice of the amended final report be given to all interested parties and set the report down for trial. Upon receipt of the amended final report and notice of trial, Kirkeby filed an amended claim against the Trust in the sum of $6,178.19. Accrued interest accounted for the additional sums in Kirkeby's amended claim. The clerk of court mailed notice of the amended claim to Nichols and Marquette. The Trust did not receive copies of the amended claim. The Trust filed further objections to the fee request contained in the amended final report but did not object to Kirkeby's claim.

The trial on the objections to the amended final report took place on September 20. Kirkeby offered testimony in support of its claim. The Trust chose not to cross-examine Kirkeby's witness. It did not call any witnesses or offer any exhibits. Instead, the Trust made the following objection:

First of all, for the record I lodge an objection that there is no estate in Iowa for Arlin Falck. This court has no jurisdiction at this time to make any award on a nonexistent estate. Thirdly, the claim was not timely filed, nor was it timely passed on by anyone who claimed to have authority to allow the claim. [Fourth], the interest charges are usurious and not justified under the law or any private agreement. [Fifth], the exhibits that have been offered which simply deal with finance charges are confusing and start with October, go down to February, and then seem to start over again. I am not a person of numbers, but I am totally at a loss as to how to understand such a document.

I would also point out that in the Final Report there is no request by the Marquette Trust Company or Jim L. Nichols that a different amount, namely $2,897.40, be awarded. So that there is no recommendation or determination by even the people who were deposed as co-executors that this bill be allowed.

The Trust did not make an objection to the trial court's subject matter jurisdiction over Kirkeby's claim.

At the conclusion of the trial, the trial court issued an order granting the parties additional time to file post-trial briefs. The Trust's post-trial brief did not mention Kirkeby's claim.

The trial court awarded fees to the Executors and their attorneys in excess of $300,000. The court also entered judgment against the Trust in the sum of $6,178.16 plus interest on Kirkeby's claim.¹ The Trust filed a motion to enlarge findings of facts and conclusions of law under Iowa Rule of Civil Procedure 1.904(2). This motion did not raise any issues as to Kirkeby's claim. The motion was overruled and the Trust filed a notice of appeal.

The Trust filed its final appellate brief on August 12, 2002. The Trust did not raise any issues in its brief regarding Kirkeby's claim.²

The Trust collaterally attacked Kirkeby's judgment by filing a motion to set aside the judgment in September 2002. The Trust claimed the trial court lacked subject matter jurisdiction over Kirkeby's claim. The trial court overruled the motion to set aside the judgment.

II. Challenges to Subject Matter Jurisdiction.

A party can raise subject matter jurisdiction at any time in the proceeding. In re Estate of Dull, 303 N.W.2d 402, 406 (Iowa 1981). If a court enters a judgment without jurisdiction over the subject matter, the judgment is void. In re Gardiner, 287 N.W.2d 555, 559 (Iowa 1980). A void judgment is subject to a collateral attack. Hutcheson v. Iowa Dist. Court, 480 N.W.2d 260, 262 (Iowa 1992). Unlike personal jurisdiction, a party cannot waive or vest by consent subject matter jurisdiction. In re Estate of Dull, 303 N.W.2d at 406. A party cannot confer subject matter jurisdiction on the court by an act or procedure. Id.

In Christie v. Rolscreen Co., we distinguished subject matter jurisdiction from the court's "lack of authority to hear a particular case," also referred to as "lack of jurisdiction of the case." 448 N.W.2d 447, 450 (Iowa 1989). "Subject matter jurisdiction" refers to the power of a court to deal with a class of cases to which a particular case belongs. Id. A constitution or a legislative enactment confers...