In the Matter of Estate of Anderson, No. 9-991/09-1066 (Iowa App. 3/10/2010), 9-991/09-1066.

• Court: Court of Appeals of Iowa
• Writing for the Court: Vogel
• Parties: IN THE MATTER OF THE ESTATE OF RALPH M. ANDERSON, Deceased. PAUL ANDERSON, Petitioner-Appellant, v. THE ESTATE OF RALPH M. ANDERSON, Respondent-Appellee.
• Docket Number: No. 9-991/09-1066.,9-991/09-1066.
• Decision Date: 10 March 2010

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IN THE MATTER OF THE ESTATE OF RALPH M. ANDERSON, Deceased.
PAUL ANDERSON, Petitioner-Appellant,
v.
THE ESTATE OF RALPH M. ANDERSON, Respondent-Appellee. No. 9-991/09-1066. Court of Appeals of Iowa. Filed March 10, 2010.

Appeal from the Iowa District Court for Hardin County, Carl D. Baker, Judge.

Paul Anderson appeals from the district court decision ordering him to pay damages to the estate of his father, Ralph M. Anderson. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

G. Arthur Cady, Hampton, for appellant.

Larry Curtis, Ames, Thomas Lawler, Parkersburg, and James P. Walters of Walters & Johnson, Iowa Falls, for appellee.

Considered by Vogel, P.J., and Doyle and Mansfield, JJ.

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VOGEL, P.J.

Paul Anderson appeals from the district court decision ordering him to pay damages to the estate of his father, Ralph M. Anderson. We affirm the finding of the district court that the estate suffered a loss because Paul was a holdover on the farmland, but we reverse as to the amount of damages.

I. Background Facts and Proceedings.

Ralph M. Anderson died on August 4, 2006. He was survived by three of his children, Paul Anderson, Laura Conaway, and Barbara Marvick, as well as three grandchildren, Amber Reed, Haley Anderson, and January Wygle, the children of his predeceased son, John Anderson.

On July 30, 2004, Paul entered into a lease agreement to farm Ralph's 394 acres as well as live in the residence on the farm. Laura signed the lease as attorney-in-fact for Ralph, the landlord. After Ralph died and during the pendency of the estate, Paul continued to farm the land and live in the residence. The lease covering the 394 acres and the residence terminated on February 28, 2008. Included in the lease was a provision:

At the termination of this Lease, Tenant will relinquish possession of the Real Estate to the Landlord. If Tenant fails to do so, Tenant agrees to pay Landlord, $150 per day, as liquidated damages until possession is delivered to Landlord.

After the lease terminated, Paul did not farm the land, but lived in the residence until July 8, 2008.

Ralph's will devised his property among his beneficiaries such that Paul was to receive 40 of the 394 acres. The "home place" where the residence was

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situated was devised to the three grandchildren, who together were to receive 200 of the 394 acres.

Paul was the executor of his father's estate. On March 21, 2007, Paul executed a court officer's deed, conveying the forty acres to himself. He did not execute the deeds to the other beneficiaries at that time.

On January 18, 2008, he filed his "Final Report and Request for Executor Extraordinary Fee." Separate objections were filed by Barbara and by the grandchildren. A hearing was held on April 30, 2008, with the district court ruling on some matters on June 2, 2008. Significant in that ruling was the district court's findings that Paul had mismanaged the estate and had failed to deliver property to the devisees as required by statute, and that there was a clear hostility between the executor and the beneficiaries. Paul was ordered to convey the rest of the real estate to the appropriate beneficiaries, which he followed through with on June 6. Paul was then removed as executor and the current executor was appointed to serve.

A subsequent hearing was held on February 19, 2009, wherein the objectors requested Paul pay the fair rental value of the residence and liquidated damages for the time he remained on the farm after his lease expired on February 28, 2008. The district court filed its ruling on March 30, 2009, with an enlarged ruling filed on June 15, 2009.¹ The court ordered Paul to pay the estate $4000 as rent and $4000 as liquidated damages. Paul appeals.²

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II. Scope of Review.

"Because this action was tried in probate as a proceeding in equity, our review is de novo." In re Estate of Thomann, 649 N.W.2d 1, 3 (Iowa 2002); see Iowa Code § 633.33 (2005).

III. Liquidated Damages Under the Farm Lease.

We begin by noting that title to the real estate passed to the grandchildren immediately after Ralph died, subject to the right of possession of the executor to administer the assets of the estate, including the payment of debts and charges. Iowa Code § 633.350. However, the devisee grandchildren had the right to rents and profits from the property, again subject to the executor determining net income. Id. § 637.201; In re Estate of Pitt, 153 Iowa 269, 269, 133 N.W. 660, 661 (1911).

The district court considered various methods for calculating the amount Paul owed the estate for remaining on the farm beyond the term of his lease, and factored in the acquiescence of the other beneficiaries to Paul's holdover. The court accepted the objector's request of $16,200,³ but reduced that amount by $8200 for their failure to mitigate their damages. The court ordered Paul to pay "liquidated damages and rent to the estate in the amount of $8000." The June 15 order on Paul's motion to enlarge and amend, designated the judgment as "$4000 for rent and $4000 in liquidated damages" finding:

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The 2004 farm lease required Paul to pay rent and to pay liquidated damages.

. . . The judgment for rent represents compensation for Paul's occupancy of the residence on the farm until July 8, 2008. The judgment for liquidated damages covers the entire farm for the period from March 1, 2008, until June 1, 2008, when the farm was rented.

Paul asserts the estate sustained no loss as he proposed in his final report filed on January 18, 2008, which was well before the termination of his lease, that he be allowed to farm the land for another year at $200 per acre. He claims he merely remained living in the residence but did nothing to "take possession" of the tillable ground, awaiting approval of the final report and his request to release the land. From his perspective, it was the objections to his report and subsequent hearings that stalled the process of the estate securing a tenant on March 1, 2008, after his lease had expired. A new lease was eventually entered into on June 1, 2008, for $200 per acre, with the husband of Amber Reed as the tenant. However, had Paul conveyed the farmland out of the estate within nine months from his appointment as executor as required by Iowa code section 633.355, the grandchildren would have had "possession" such that they could have secured their own tenant beginning March 1, 2008. See Iowa Code § 633.355. The testimony from a Hardin county realtor supported the district court's conclusion the estate had been damaged, as entering into a farm lease for the 2008 crop season was delayed and $225 per acre could have been secured, with an earlier lease commitment. We affirm the district court's finding that the estate, albeit essentially the grandchildren, was damaged by Paul's holdover of the farmland.

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Nonetheless, Paul contends the court erred in ordering him to pay $4000 of liquidated damages for holding over on the entire farm for the period of March 1, 2008, to June 1, 2008, as he had been devised 40 of the 394 acres described in the farm lease and that land had already...