In re Estate of Bachmeier
| Decision Date | 08 August 2002 |
| Docket Number | No. 71491-6.,71491-6. |
| Citation | 147 Wash.2d 60,52 P.3d 22 |
| Court | Washington Supreme Court |
| Parties | In the Matter of the ESTATE OF Angeline BACHMEIER, Deceased. Sandra L. Johnson, Respondent, v. John Bachmeier, Petitioner. |
Kenneth Rossback, Tacoma, for Petitioner.
McFerran & Helsdon P.S., Jeffrey Helsdon, Christopher Constantine, Tacoma, for Respondent.
This case involves whether a community property agreement may impliedly terminate by operation of law when the marriage underlying it becomes defunct. We hold it does not and reverse the Court of Appeals decision, In re Estate of Bachmeier, 106 Wash.App. 862, 25 P.3d 498 (2001). We remand for further proceedings consistent with this opinion.
John and Angeline Bachmeier were married in Reno, Nevada, on June 23, 1966. On March 16,1977, the Bachmeiers executed a form agreement regarding the status of community property that did not include a provision to terminate the agreement if the parties separated. The Bachmeier community property agreement (CPA) provided:
That, in consideration of the love and affection that each of said parties has for the other, and in consideration of the mutual benefits to be derived by the parties hereto, it is hereby agreed, covenanted, and promised:
I.
That all property of whatsoever nature or description whether real, personal or mixed and wheresoever situated now owned or hereafter acquired by them or either of them shall be considered and is hereby declared to be community property.
II.
That upon the death of either of the aforementioned parties title to all community property as herein defined shall immediately vest in fee simple in the survivor of them. Clerk's Papers at 9.
During February 1998, after 32 years of marriage, the Bachmeiers began to live apart. On February 23, 1998, John Bachmeier filed a petition for legal separation. On July 18, 1998, two days before her death, Angeline Bachmeier executed a will naming her daughter, Sandra Johnson, as her personal representative, bequeathing her entire residual estate to Johnson, and expressly disinheriting her husband, John Bachmeier.
On August 12, 1998, Johnson petitioned the court to probate Angeline Bachmeier's will and to appoint her the personal representative of Angeline Bachmeier's estate. John Bachmeier contested the proposed probate. Bachmeier moved to dismiss the petition or, alternatively, to have himself appointed personal representative and have Angeline Bachmeier's property declared his under the CPA. On September 3, 1998, the trial court admitted Angeline Bachmeier's will to probate and appointed John Bachmeier as personal representative. The trial court denied Johnson's petition for a declaration of rights regarding the administration of the estate.
We denied Johnson's request for direct discretionary review and transferred the case to the Court of Appeals. The Court of Appeals implied a term to the CPA, which would terminate it should the Bachmeier's marriage be found to have become defunct. The Court of Appeals remanded the matter to the trial court for further proceedings to determine whether the marriage had, in fact, been defunct. We accepted review.
Under RCW 26.16.120, a husband and wife may agree to designate all of their property as community property and vest complete title in one spouse upon the death of the other through a writing acknowledged and certified in the same manner as a real estate deed. The statute provides that CPAs may be altered or amended in the same manner as executed but is silent regarding how CPAs may otherwise be rescinded. RCW 26.16.120. The purpose of a three-prong CPA, as is at issue here, is to convert all current and after-acquired property to community property and to transfer title of all community property to the surviving spouse. Harry M. Cross, The Community Property Law in Washington, 61 Wash. L.Rev. 13, 101 (1985).
We have recognized CPAs that do not include express terms of revocation may be set aside in two circumstances. First, a CPA may be rendered inoperable by a final divorce decree. In re Lyman's Estate, 7 Wash.App. 945, 950-51, 503 P.2d 1127 (1972). Second, CPAs may be rescinded by mutual assent. Higgins v. Stafford, 123 Wash.2d 160, 166, 866 P.2d 31 (1994). Johnson argues for a third approach, one requiring courts to imply a termination clause to a CPA should the underlying marriage become defunct. The Court of Appeals embraced this approach, which is based primarily on Professor William Oltman's article, The Implied Termination of Community Property Agreements Upon Permanent Separation, 14 U. Puget Sound L.Rev. 53 (1990). However, for the reasons discussed below, we decline to adopt Johnson's approach and imply a termination clause in this case.
The first circumstance under which a CPA may be set aside is as the result of a final dissolution order. A dissolution proceeding's effect on a CPA was analyzed in Lyman, a case factually similar to that presently before us. In 1964, the Lymans executed a CPA and mutual wills, each spouse leaving their respective property to the other. In 1970, after two prior separations, the wife petitioned for dissolution. Shortly afterward, the husband executed a new will (1970 will), naming his wife the executor of his estate, and bequeathing his half community interest in the parties' property to his stepsons. He died soon after executing the 1970 will. Lyman, 7 Wash.App. at 946, 503 P.2d 1127.
On her husband's death, the wife dismissed her dissolution petition and recorded the 1964 CPA, making no effort to probate the 1970 will. A beneficiary of the 1970 will petitioned for its admission to probate over the wife's objections. The trial court found the 1964 CPA was valid and prevailed over the 1970 will. Lyman, 7 Wash.App. at 946-47, 503 P.2d 1127. The 1970 will beneficiary appealed, arguing the CPA had been revoked by the petition for divorce and the inconsistent will. Lyman, 7 Wash.App. at 948, 503 P.2d 1127.
The Court of Appeals began its analysis by considering the effect a final dissolution decree would have on a CPA that did not include a termination clause. Under RCW 26.09.080, a court has jurisdiction in a pending divorce to regulate, modify, or abrogate the property rights of the parties by final decree. CPAs create contractual rights, which are a form of property because they fix the rights of the spouses upon death. The Court of Appeals concluded, therefore, that a final dissolution decree might cancel a CPA or, that court ordered division of community property might render a CPA inoperable. Lyman, 7 Wash.App. at 950, 503 P.2d 1127.
The court next considered what effect, if any, initiating a dissolution proceeding would have on a CPA. Relying on principles of contract interpretation, the court reasoned the intention to submit community property for court disposition "is not the same as an intention to immediately effect an ex parte abandonment of a valuable contractual right." Lyman, 7 Wash.App. at 951, 503 P.2d 1127. The court held the husband's intent to abandon the CPA through the execution of an inconsistent will was unilateral, but that for the abandonment to be effective it must be mutual. Notwithstanding the wife's petition for dissolution, the court determined that for the Lyman CPA to have been mutually abandoned, the wife must: (1) know of the inconsistent will and its disposition of the community property, and (2) acquiesce to the community property's disposition. Lyman, 7 Wash.App. at 951, 503 P.2d 1127. We approved of the rationale and holding of Lyman and adopted it as the opinion of this court. In re Estate of Lyman, 82 Wash.2d 693-94, 512 P.2d 1093 (1973).
The second circumstance, under which a CPA may be set aside, results from principles of contract interpretation. We analyzed this circumstance in detail in Higgins. After executing a CPA in 1967 (1967 CPA), the spouses executed mutual wills, passing the deceased spouse's community property to the surviving spouse subject to the provisions of a second agreement regarding the disposition of community property (1977 agreement). Higgins, 123 Wash.2d at 163, 866 P.2d 31. The 1977 agreement made no mention of the 1967 CPA and contained mutual covenants preventing the surviving spouse from disposing of the deceased spouse's one-half interest in the couple's community property by any means other than the disposition identified in the 1977 agreement and the mutual wills. Less than one month after the 1977 agreement and the mutual wills were executed, the wife died. Higgins, 123 Wash.2d at 162, 866 P.2d 31. Ten years later, the husband executed a new will (1987 will), disposing of the estate in a manner contrary to the 1977 agreement. Higgins, 123 Wash.2d at 163-64, 866 P.2d 31.
Principles of contract interpretation controlled our Higgins analysis. When two contracts are in conflict, the legal effect of a subsequent contract made by the same parties and covering the same subject matter, but containing inconsistent terms, is to rescind the earlier contract. Higgins, 123 Wash.2d at 165-66,866...
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