MATTER OF ESTATE OF HOLAN, 22955

• Decision Date: 05 May 2004
• Docket Number: No. 22955,22955
• Citation: 680 NW 2d 331,2004 SD 61
• Parties: IN THE MATTER OF THE ESTATE OF LAWRENCE HOLAN, Deceased.
• Court: South Dakota Supreme Court

2004 SD 61

680 NW 2d 331

IN THE MATTER OF THE ESTATE OF LAWRENCE HOLAN, Deceased.

No. 22955

Supreme Court of South Dakota.

Considered on briefs on March 22, 2004

Opinion Filed May 5, 2004

WALLY EKLUND of Johnson, Eklund, Nicholson & Peterson Attorneys for appellant, Gregory, South Dakota, Dennis Holan.

BRETT M. KOENECKE of Attorneys for appellees, May, Adam, Gerdes & Lynette Leifermann, Thompson Judene Holan, Duane Holan, Pierre, South Dakota and Dean Holan.

KONENKAMP, Justice

[¶ 1.] Interest usually begins to accrue on pecuniary devises either at the time set by statute or the time set in the will. The question presented here is whether a delay in the settlement of an estate caused by a will contest and a dispute on valuation will also delay the time interest begins to accrue on such devises. In this case, the circuit court ruled that, despite the delay in settlement, interest accrued from the date of death, as provided in the testator's will. Although there is a split of authority on the question, we adopt the majority view that delay in settlement will not delay accrual of interest because such a rule more closely honors testamentary intent, in that it bases the accrual of interest on an initial point that cannot be moved by fortuities in the probate process, thus allowing testators to provide certainty in their pecuniary bequests. We affirm.

Background

[¶ 2.] Lawrence Holan died on April 11, 1998. A widower, Lawrence was survived by six children. His estate consisted of farm equipment, a house in Pukwana, and 1,358.5 acres of farmland. Shortly after his death, Lawrence's daughters, Judene Holan and Lynette Leiferman, offered for probate a will dated March 3, 1997. Dennis Holan contested the admission, arguing that the will was the product of undue influence. He offered instead, Lawrence's will of May 15, 1991 and its codicil.

[¶ 3.] The significant difference between the two wills was the disposition of the farmland. Under the 1997 will, Lawrence devised to Dennis 80 acres in Brule County. The remainder of Lawrence's estate was to be divided in equal shares among the six children. Under the 1991 will, Lawrence left his home in Pukwana to the other five siblings and his farm property to Dennis, provided that he make payments over a fifteen-year period to his siblings equaling their share of the appraised value of the farmland at the time of Lawrence's death.¹

[¶ 4.] In November 1999, a jury ruled that the 1997 will was made through the undue influence of Lynette and Judene. We affirmed the verdict in Estate of Holan, 2001 SD 6, 621 NW2d 588. On remand, the 1991 will and its codicil were admitted to probate. On April 11, 2002, the court valued the farmland Dennis received under the will, and it ordered Dennis to pay each of the five devisees 13.3 percent of the value of the farmland. The payments were to be in fifteen annual installments, with interest at the rate of 5.98 percent calculated from the decedent's date of death, April 11, 1998, with the first of the annual payments due and owing as of April 11, 1999.

[¶ 5.] On appeal, Dennis challenges the circuit court's decisions in ordering him to pay interest (1) calculated from the date of death of the decedent, and (2) at the rate permitted by the Internal Revenue Service at the time of Lawrence's death instead of the lower rate later approved by the IRS.² Under our standard of review, we will not set aside trial court findings of fact unless they are clearly erroneous. Estate of Dokken, 2000 SD 9, ¶10, 604 NW2d 487, 490 (citations omitted). Conclusions of law and rulings on statutory interpretation are reviewed de novo. Osloond v. Osloond, 2000 SD 46, ¶¶6-7, 609 NW2d 118, 121.

1. Interest Calculated From the Date of Death

[¶ 6.] Dennis contends that the interest he was required to pay under the will should not have been calculated from the date of death. Because it was not possible to figure the amount on which interest was due until April 11, 2002, the day the circuit court ruled on the proper valuation for the farmland, Dennis insists that it was not possible for him to perform his obligations. For their part, the other siblings argue that from the date of Lawrence's death Dennis had possession of the farmland and he benefited from the use of that property for six crop seasons.

[¶ 7.] The gist of Dennis's position is that from the date of Lawrence's death until April 11, 2002, he was prohibited from making the payments because of the actions of Lynette and Judene acting as personal representatives, and because a value was not placed upon the property before that time. His argument is premised on several sections of the South Dakota Codified Laws, Title 20, dealing with excuse for want of performance because of delay or prevention. These statutes are not pertinent to the issue here. Instead, we look to Title 29A, the Uniform Probate Code.

[¶ 8.] SDCL 29A-3-101 provides:

The power of a person to leave property by will, and the rights of creditors, devisees, and heirs to the person's property are subject to the restrictions and limitations contained in this code to facilitate the prompt settlement of estates. Upon the death of a person, that person's real and personal property devolves to the persons to whom it is devised by will or to those indicated as substitutes for them in cases involving lapse, renunciation, or other circumstances affecting the devolution of testate estate, or in the absence of testamentary disposition, to the heirs, or to those indicated as substitutes for them in cases involving renunciation or other circumstances affecting devolution of intestate estates, subject to homestead allowance, exempt property and family allowance, rights of creditors, elective share of the surviving spouse, and administration.

Under this statute, "real and personal property devolves to the persons to whom it is devised," at the time of the testator's death. Dennis does not argue that SDCL 29A-3-904 applies. That statute provides:

General pecuniary devises bear interest at the category B rate of interest specified in § 54-3-16 beginning one year after the first appointment of a personal

...