In re Witte's Estate

• Decision Date: 05 July 1944
• Docket Number: 29341.
• Court: Washington Supreme Court
• Parties: In re WITTE'S ESTATE.

150 P.2d 595

21 Wn.2d 112

In re WITTE'S ESTATE.

No. 29341.

Supreme Court of Washington

July 5, 1944

Department 1.

Proceedings in the matter of the estate of E. A. Witte, deceased, wherein Mary Witte, widow of deceased, filed a bill of exceptions questioning the executor's final account, report, and petition for distribution. Decree of distribution in accordance with petition, and the widow appeals.

Reversed with directions.

Appeal from Superior Court, Whitman County; M. E Jesseph, judge.

G. E Lovell, of Spokane, and S. R. Clegg, of Colfax, for appellant.

Wilkinson & Evans, of Colfax, for respondent.

STEINERT Justice.

In the course of probate proceedings upon the estate of E. A. Witte deceased, his widow filed a bill of exceptions questioning the executor's final account, report, and petition for distribution. At a hearing Before the court upon the matters thus presented, witnesses testified and documentary evidence was introduced. The court took the cause under advisement and later rendered a memorandum opinion. Thereafter, in accordance with that opinion, the court made formal findings of fact, from which it concluded that the executor's final account and report should be approved and that the estate should be distributed in the manner prayed for in the executor's petition. A decree of distribution was entered accordingly, and the widow thereupon appealed.

The assignments of error protest that the trial court erred in finding (1) that the property of the estate was the separate property of the deceased, rather than community property; (2) that the inventory filed by the executor was a full and true inventory of all the assets of the estate; (3) that the amount of state and Federal taxes paid by the executor constituted the proper amount to be so paid; and (4) that the services of the executor and its attorneys were reasonably worth the amounts allowed therefor by the court.

E. A. Witte died in Whitman county on January 9, 1942, at the age of eighty-two years. He left surviving him his widow, Mary Witte, the appellant herein, and three children, Adam Witte, Clarence Witte, and Eva Kerns, the youngest of whom, Clarence, is now about thirty-nine years of age.

Mr. Witte and the appellant were united in marriage on October 26, 1898. At the time of the marriage, Mr. Witte owned, as his separate property, four hundred eighty acres of land. Thereafter, and during the period between 1899 and 1916, he acquired by purchase and by mortgage foreclosures, at different times, various other tracts of land. In that same period he inherited from his mother approximately one hundred fifty acres which, in 1931, he gave to his daughter and one of his sons. At the time of his death, he owned of record eleven hundred seventy-eight acres.

By his will, executed December 3, 1940, Mr. Witte made provision for the disposition of an estate consisting of cash, securities, and real property, the total appraised value of which amounted to approximately $265,000.

The present litigation has its source in certain provisions in the will reading as follows:

'III. I hereby declare that all property, both real and personal, owned by me is my separate property, the same having been acquired either prior to my marriage, inherited by me, or acquired by purchase with the rents, issues and profits of such property owned prior to marriage and inherited, or with the accumulations therefrom. I also hereby declare that my wife, Mary Witte, is the owner of separate property, both real and personal, which she inherited or acquired by purchase from the rents, issues and profits of such inherited property; and that during all times of my married life my said wife and I have kept the rents, issues and profits of our respective properties separate and apart, and the same have never been commingled.

'IV. In view of the fact that my wife is well off in her own right, I therefore bequeath to her only the sum of $5,000.00.

'V. I give, devise and bequeath to my three children; namely, Adam Witte, Clarence Witte and Eva Kerns, and to their heirs and assigns, all the rest and remainder of my property, both real and personal, share and share alike.' (Italics ours.)

The will was what is commonly known as a nonintervention will and designated The Old National Bank & Union Trust Company of Spokane (The Old National Bank of Spokane), the respondent herein, as executor.

At the time the will was admitted to probate, January 26, 1942, Mrs. Witte, who was then personally present in court, was intending to institute a contest proceeding, upon the theory that the greater part of the Witte estate was community property. In order to obviate such contest, however, she and the three children, personally and through their respective attorneys, in open court entered into a written stipulation, the material provisions of which read as follows:

'* * * that upon the payment of all inheritance taxes, income tax, claims and costs of administration, said Mary Witte is to receive as her share of said estate one-fourth of the property as inventoried, but that same is to be paid to her in cash, and that the land will all go to the children, and her one-fourth shall be of the net estate as inventoried after the deduction and payment of all expenses as above provided, and it is understood that any bequests made in the will of said E. A. Witte to Mary Witte shall be included in the one-fourth as part of the above settlement;

'Further stipulated that any land that was in the name of E. A. Witte, deceased, prior to his marriage to Mary Witte is not to be included in any of the above settlement or by inheritance and that the estate is to be distributed along the lines above provided.

'It is further stipulated by all parties concerned that The Old National Bank of Spokane shall act as executor regardless of the character of the estate as later determined.' (Italics ours.)

On March 11, 1942, the executor filed its 'General Inventory and Appraisement', showing cash on hand, at the time of the testator's death, amounting to $168,039.59; bonds, stocks, notes, and accounts, amounting to $4,523.67; and miscellaneous personalty amounting to $110; making a total amount of personal property appraised at $172,563.26. The inventory and appraisement also included thirteen tracts of land, eleven of which were farm lands and the other two of which were town properties, the entire real estate being appraised at $93,275. The total appraisement, covering both real and personal property, thus amounted to $265,838.26. All of these assets were inventoried, appraised, and reported as the separate property of Mr. Witte.

On June 9, 1943, the executor filed its final account, report, and petition for distribution, and on December 13, 1943, filed a supplemental report. The report as supplemented showed, among other things, that the executor had paid to the State of Washington inheritance taxes amounting to $11,694.98; gift taxes amounting to $119.25 on account of gifts made immediately prior to the testator's death; and $12,104.22 taxes exacted by law for gifts made within an extended period prior to his death. The report further showed that the executor had paid Federal estate taxes amounting to $60,917.19, and Federal gift taxes amounting to $54,426.81 similarly exacted for gifts made within the extended period prior to the testator's death. The total of all these taxes amounted to $139,262.45, which was paid by the executor out of the cash on hand.

As will appear in more detail a little later herein, the foregoing items of $12,104.22 and $54,426.51 were taxes computed and exacted by the Federal and state governments, respectively, on account of gifts alleged to have been made by Mr. Witte to his children a number of years prior to his death.

In computing the total amount of the estate left for distribution equally among Mrs. Witte and the three children, the executor included as an existing component part of the estate an amount equal to the two aforementioned tax charges of $12,104.22 and $54,426.51. It also included, as a part of such total amount for distribution, a sum equal to $32,250 which represented gifts made to the children within two years immediately preceding the decedent's death. In other words, for the purpose only of computing the total amount to be equally divided and distributed among the four surviving members of the family in accordance with the terms of their stipulation, the three amounts just mentioned were added to the net inventoried estate left after payment of all taxes and expenses of administration, thus giving Mrs. Witte the full benefit of one-fourth of the net estate as inventoried, together with one-fourth of these superadded amounts. On the basis of this computation the account and report, as supplemented, showed that after the payment of all taxes and expenses of administration and after deducting the amount of the appraised value of the real estate acquired by Mr. Witte Before marriage, there remained an estate valued at $185,870.49 for equal distribution among the four heirs. This included both real and personal property. Of this amount, Mrs. Witte was, by the terms of the stipulation, entitled to one-fourth, or $46,467.62, in cash. The residue, consisting of any remaining personal property and all of the real estate as inventoried, was to be distributed to the three children in equal undivided shares. The decree of distribution approved the account and report and then directed that the estate be distributed as provided therein, upon the theory that the assets of the estate were the decedent's separate property, but that the division and distribution thereof were controlled by the stipulation made between the heirs, giving each a one-fourth...