In re Estate of Warrington

• Decision Date: 01 September 2004
• Docket Number: No. 02-1727.,02-1727.
• Citation: 686 N.W.2d 198
• Parties: In the Matter of the ESTATE OF Leonard WARRINGTON, Deceased. Gary D. Hyland, Conservator of Leona Warrington, Appellant, v. Kim S. Sheldon and Cindy L. Sheldon Alder, Appellees.
• Court: Iowa Supreme Court

686 N.W.2d 198

In the Matter of the ESTATE OF Leonard WARRINGTON, Deceased.

Gary D. Hyland, Conservator of Leona Warrington, Appellant, v. Kim S. Sheldon and Cindy L. Sheldon Alder, Appellees.

No. 02-1727.

Supreme Court of Iowa.

September 1, 2004.

Roger L. Sutton of Sutton Law Office, Charles City, for appellant.

Keith A. McKinley of McKinley, Folkers, Walk & Murphy, P.L.C., Osage, for appellees.

TERNUS, Justice.

This case involves a dispute over a life tenant's right to invade the corpus of the real property subject to the life estate. Although the appellees, heirs of the remainderpersons, did not dispute that Leonard Warrington's will gave the life tenant, his wife Leona, a power of invasion in addition to a life estate, they contended Leona had waived this right. The district court agreed, concluding Leona, who served as executor of her husband's estate, had waived this power by not expressly mentioning it in her application for approval of the final report. Based on this determination, the district court refused the request of Leona's conservator, the appellant, Gary Hyland, to sell the remainder interest to pay for Leona's care. Upon our review of the court's decision and the arguments of the parties, we reverse the decision of the district court and remand with directions.

I. Background Facts and Proceedings.

The facts are largely undisputed. Leonard Warrington died testate on December 4, 1972. His wife, Leona Warrington, was appointed executor of his estate. Under Leonard's will, Leona was bequeathed Leonard's personal property and a life estate in Leonard's real property together with the power to use the principal "as shall be necessary to maintain [Leona] in her usual station of life, and to bury her," subject to court approval "of the necessity and wisdom of such [expenditure]." The residue of Leonard's estate was bequeathed to his sisters, Mildred Warrington and Delene Sheldon.

At the time of his death, Leonard held an undivided one-half interest in a 140-acre farm; Leona held the other undivided one-half interest. In the executor's final report, Leona asked that the clerk of court be directed to change title to Leonard's interest in the real estate in question "into the names of Mildred Warrington and Delene Sheldon subject to the life use of Leona Warrington." The probate court approved the final report and in its order directed the change in title requested by Leona. Thereafter, the remainderpersons elected to defer payment of inheritance tax on the farm ground until the termination of Leona's interest in the property.

For nearly three decades thereafter, Leona rented the property in which she held a life estate to one Steve Jensen, retaining the rental income. In 1992 twenty-two acres of the parcel were sold to the county for a right-of-way. One-half of the proceeds of this transaction was placed in a certificate of deposit with the interest income to be paid to Leona and the principal, upon the death of Leona, to be divided equally between Mildred and Delene. In 1993 and 1994 Leona contacted her sisters-in-law to ask if they would agree to sell the farm to Jensen. Although they refused to do so, Leona nonetheless sold her one-half undivided interest to him. Thereafter, both remainderpersons passed away and their interest in the land passed to their heirs, Kim Sheldon and Cindy Alder, to whom we will hereafter refer as the remainderpersons.

In June 1999 Leona moved to a nursing home, where she has resided ever since. On August 9, 2000, the appellant, Gary Hyland, was appointed conservator for Leona, who was then eighty-five years of age.

By May 2002 Leona was rapidly running out of funds to pay for the nursing home. Consequently, her conservator filed a petition to reopen Leonard's estate and obtain permission to sell the real estate in question so the proceeds could be used for Leona's care. The remainderpersons, appellees in this appeal, resisted the conservator's petition, raising the affirmative defenses of statutory bar, waiver, and estoppel by acquiescence. Various documents were attached to the petition and the resistance chronicling the factual background of the present dispute.

After a telephonic hearing, the district court ruled that Leona had waived her right to use the principal because she did not reserve this power in her final report requesting a change of title in the real estate. The court therefore denied her conservator's petition to reopen the estate and sell the remainder interest. After the conservator's motion for reconsideration was overruled, this appeal was filed.

The conservator argues on appeal that this court should find on its de novo review that Leona did not waive her power of invasion. The remainderpersons contend the district court did not abuse its discretion in refusing to reopen the estate for three reasons: (1) the court correctly determined Leona waived her right to consume the principal; (2) Leona's claim is barred by the provisions of Iowa Code sections 633.487 and 633.489 (2001); and (3) Leona is precluded from asserting her claim by the doctrine of estoppel by acquiescence.¹ Before we address these issues, we set forth the applicable standard of review.

II. Standard of Review.

Although the district court expressly denied the conservator's petition to reopen the estate, it did so on the basis there was no merit in the conservator's underlying request to use the remainder interest in the property for Leona's care. In essence, the court skipped a preliminary determination of whether the substantive claim asserted by the conservator (Leona's request to invade the principal) warranted reopening the estate so that claim could be litigated. Cf. In re Estate of Witzke, 359 N.W.2d 183, 185 (Iowa 1984) (affirming district court's refusal to reopen estate without addressing merits of underlying fraud claim petitioner sought to assert against administrator of estate). Instead, the court went straight to a determination of the merits of that claim. Consequently, even though a decision to reopen an estate is generally reviewed for an abuse of discretion, see id., we will review the trial court's ruling on the waiver issue de novo because that ruling was actually a decision on the merits of the claim the conservator sought to pursue in the reopened estate. See Iowa Code § 633.33 (matters not specifically listed in statute but triable in probate are tried in equity); In re Estate of Gearhart, 584 N.W.2d 327, 329 (Iowa 1998) (probate matters tried in equity are reviewed de novo). Under a de novo standard of review, we are not bound by the trial court's conclusions of law or findings of fact, although we do give weight to factual findings, particularly when they involve the credibility of witnesses. In re Estate of Gearhart, 584 N.W.2d at 329.

Ordinarily, a decision whether to reopen an estate would precede a decision on the merits of the underlying claim, and that same progression would be followed on appeal. We will first address the merits of the conservator's request to sell the remainder interest, however, as the district court relied on a perceived lack of merit in the underlying claim to justify its decision not to reopen the estate. After we determine the correctness of the district court's ruling on the merits, we will then examine whether that ruling provided a sound basis for the district court's refusal to reopen the estate.

III. Waiver.

"`[W]aiver is an intentional relinquishment of a known right.'" Huisman v. Miedema, 644 N.W.2d 321, 324 (Iowa 2002) (citation omitted). The party asserting waiver, here the remainderpersons, bears the burden of proof. See Grandon v. Ellingson, 259 Iowa 514, 521, 144 N.W.2d 898, 903 (1966).

"The essential elements of a waiver are the existence of a right, knowledge, actual or constructive, and an intention to relinquish such right." Waiver can be express, "shown by the affirmative acts of a party," or implied, "inferred from conduct that supports the conclusion waiver was intended."

Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd. v. Federated Mut. Ins. Co., 596 N.W.2d 546, 552 (Iowa 1999) (citations omitted).

In the present case there is no dispute that under Leonard's will Leona had the right to invade the principal of the property should it become necessary for her support, provided she first obtained court approval. Moreover, due to Leona's position as executor of her husband's estate, she certainly had constructive knowledge that the will provided this power to her. The only disputed issue is whether Leona had an intention to relinquish this power. The remainderpersons do not argue she expressly waived this right or that she stated an intention to do so. Thus, the fighting issue is whether such an intention can be inferred from Leona's conduct and the surrounding circumstances.

The trial court concluded and the remainderpersons argue on appeal that Leona's failure to reserve her right to seek court authorization to invade the principal when she requested a change of title to the property in her final report as executor operated as a waiver of that right. In this regard, the parties expend considerable effort in their briefs debating whether Leona, acting as the executor, was required by the probate code to explicitly state this limitation on the remainder interest in her final report. The remainderpersons argue persuasively that identification in the final report of any legacy or devise that remains a charge against real estate is critical to ensure the reliability of record title. Even if these assertions are true, neither the propriety of Leona's actions as executor nor the effect of these actions on the accuracy of record title is an issue in this case. We are not concerned with whether Leona would be equitably estopped from asserting her interest against a good-faith purchaser of the remainder interest. The issue in this case has an entirely different focus: Leona's intent...