McGahan v. National Bank of Logansport

• Decision Date: 19 April 1972
• Docket Number: No. 1271A264,1271A264
• Citation: 151 Ind.App. 658,281 N.E.2d 522
• Parties: Dorothy McGAHAN, Appellant, v. The NATIONAL BANK OF LOGANSPORT, Administrator of the Estate of Alice M. Scharf, deceased, Appellee.
• Court: Indiana Appellate Court

Page 522

281 N.E.2d 522

151 Ind.App. 658

Dorothy McGAHAN, Appellant, v. The NATIONAL BANK OF LOGANSPORT, Administrator of the Estate of Alice M. Scharf, deceased, Appellee.

No. 1271A264.

Court of Appeals of Indiana, Third District.

April 19, 1972.

Miller, Tolbert, Hirschauer & Wildman, Logansport, for appellant.

Ice, Miller, Donadio & Ryan, Indianapolis, Charles K. Michael, Logansport, for appellee.

SHARP, Judge.

This action was commenced by the filing on the 29th day of January, 1971, of a Petition to Impose a Constructive Trust in the Matter of the Estate of Alice M. Scharf deceased. Based upon the pleadings, the answers to interrogatories, the responses to requests for admissions, and an affidavit of an employee of the bank, the trial court determined that there was no genuine issue of material fact and granted summary judgment in favor of Appellee, The Logansport National Bank as administrator of the Estate of Alice M. Scharf (hereinafter the Bank) under Trial Rule 56, IC 1971, 34--5--1--1. Appellant filed her motion to correct errors which was overruled and this appeal was duly perfected.

The pertinent facts underlying this controversy are that Plaintiff-Appellant is the sister of Fred L. Scharf, who died January 29, 1969, leaving a Will that was duly admitted to probate. On July 27, 1970, Fred's widow, Alice M. Scharf, died intestate. The Bank, which had also acted in the capacity of Fred L. Scharf's Executor and as the Court appointed Guardian of Alice, was appointed Administrator of Alice's estate. Plaintiff-Appellant had been named in Fred's Last Will and Testament as a residuary legatee of assets remaining upon the dissolution of a trust created for the care and maintenance of Alice M. Scharf and two specific bequests to Fred's two brothers. By the Last Will and Testament of Fred L. Scharf, his entire estate was devised to the Bank as trustee for the care and maintenance of Alice, the residue, if any, passing to the Plaintiff-Appellant.

Due to an error on the part of the Executor of Fred's Estate (the Bank), certain properties in which Fred L. Scharf had a legal interest as tenant in common, were excluded from and not inventoried with Fred's estate and resulted in said estate having no probate assets after payment of expenses. The trust was therefore never established and these assets went directly to the guardian of Alice M. Scharf and were, at least partially exhausted in the care and maintenance of Alice during her remaining lifetime.

Fred L. Scharf's estate was closed and is not involved in this litigation, the Bank being named only in its capacity as Alice's personal representative. The Plaintiff-Appellant brought this action as an individual and in no other capacity.

The petition in this cause was filed in three legal paragraphs which will be treated separately because each contains a separate and distinct basis for the imposition of a trust. As to Paragraph I the essential theory is one of implied fraud due to mistake. The implied fraud alleged is that it was the desire and intent of both Fred and Alice Scharf that their property upon the death of both of them should descend and be distributed pursuant to the terms of the Will of Fred L. Scharf. That this intent was thwarted when the scrivener of Fred's Will failed to advise the Scharfs as to the steps necessary in regard to the ownership of their property so as to carry out said intent.

It should be noted that Plaintiff-Appellant has neither alleged actual fraud, constructive fraud or undue influence against a specific party, nor that the intent of Fred L. Scharf is not adequately contained in his Will. Quite the contrary, as Plaintiff-Appellant actually alleges that while Fred's Will, in fact, manifests his intention, the way in which his property was held precluded the intent from being realized. As to Alice M. Scharf, Plaintiff-Appellant is asking that the assets of her estate be held in trust for plaintiff solely in reliance on past verbal declarations of intent. Here the question is whether an oral declaration of intent is sufficient to vary the statutory method of descent and distribution of a person who dies intestate absent fraud or undue influence.

The intention of Fred L. Scharf is manifested in and by his Last Will and Testament, which was duly admitted to probate. The estate was opened, administered and finally closed. An order of final settlement of an estate possesses the elements of a final judgment and, as such, is conclusive on interested persons until set aside by an appeal or a proceeding brought for that purpose. Heitman, Rec. v. Scales, 111 Ind.App 68, 30 N.E.2d 890 (1941). An appeal will lie from an order approving the final report and discharging the personal representative and such order cannot be collaterally attacked. Manor v. Manor, 222 Ind. 374, 53 N.E.2d 343 (1943). Since Plaintiff-Appellant has not attempted to set aside the final settlement and have the estate reopened pursuant to IC 1971 29--1--1--22, Ind.Stat.Ann. § 6--122 (Burns 1953 Repl.) on the grounds of illegality, fraud or mistake, the Will of Fred L. Scharf remains the last and best manifestation of his intent and parol evidence cannot now be used to vary or contradict said intent. This is especially true in this case where the estate of Fred L. Scharf is not even a party to the proceedings.

In Plaintiff-Appellant's Paragraph I it is also alleged that Alice M. Scharf likewise intended Plaintiff-Appellant to have all her property at her death. Alice M. Scharf made no will manifesting such an intention, nor did she convey her interest in property to her husband so that it would pass by and through Fred L. Scharf's Will. We are thus confronted with an alleged verbal declaration of intent that was never acted upon. Alice M. Scharf died intestate and the assets of her estate will pass pursuant to the statutory scheme, regardless of her intent otherwise. We hold, as a matter of law, that such intention is insufficient to support the imposition of a constructive trust on the assets of Alice M. Scharf.

As can readily be seen, the basic contention in the first paragraph of the petition is a mistake by the Scharfs as to the proper method of ownership of their property so as to effectuate an intent to leave the same to Plaintiff-Appellant. While we recognize that courts have broad equitable powers we do not believe that such a mistake, absent fraud, or undue influence, is one that the courts may be cognizable of and grant relief pursuant to. We therefore, hold that as to Paragraph I there was no issue as to material facts and summary judgment was appropriate.

Paragraph III is based on Item VII of the Last Will and Testament of Fred L. Scharf which reads as follows:

'I now own real estate on Linden Avenue in the City of Logansport, Cass County, Indiana, and said real estate is not to be sold unless the purchaser thereof be first approved by Mary Adell Weaver. We have been neighbors and in that location for some 55 years.'

It is the contention that the above provision created an election which Alice M. Scharf failed to avail herself of and that that she was therefore estopped to deny the ability of Fred L. Scharf to dispose of her property through his Will. But the case of Young v. Biehl, 166 Ind. 357, 77 N.E. 406, 407 (1906), cited by Appellant, and upon which she relies, states as follows:

'It must be made clear by the will beyond all reasonable doubt that the husband intentionally assumed to dispose of his wife's real estate before she can be held, by her election, to take under such will, to have bound herself to permit such property to pass under its operations.' (our emphasis)

The rule in Indiana concerning such elections is that if a testator disposes of property not his own, gives a benefit to the person to whom the property belongs, the devisee or legatee who elects to accept the benefits so given him must make good the testator's attempted disposition of such person's property. Ragsdale v. Robinson, 219 Ind. 335, 38 N.E.2d 570 (1941).

The basic requirement essential to the creation of an election is an intentional disposition of another's property and the same must be made clear beyond a reasonable doubt. Here there is no disposition of the property, rather there is an attempt by the testator to influence the disposition of the property should that event ever occur. To what election could Alice M. Scharf be put by such a provision? To create an election it would seem that the testator must dispose of the property to someone other than the person forced to make the election. Here the property is not disposed of to someone other than the person making the election nor, in fact, is the property even disposed of. Since there is no dispute as to the material fact, but only the legal consequences to be subscribed to said facts, summary judgment was again appropriate.

Finally we come to Paragraph II of said Petition wherein it is alleged:

'1. That she is the sister of Fred L. Scharf and the prime beneficiary under his Last Will and Testament, a copy of which is affixed hereto, which Will was administered in the Case Circuit Court in the estate of Fred L. Scharf as Cause No. P69--21.

2. That she was notified of the opening of the estate of Fred L. Scharf when the same was opened and The National Bank of Logansport appointed as Executor on the 3rd day of February, 1969.

3. That she did not receive any notice or copy of the final report in the estate of Fred L. Scharf so that she had no opportunity to object to the proposed final report.

4. That on various occasions she had conferences with the attorney of record for the estate of Fred L. Scharf and was advised by him that she need not obtain her own counsel and that he would see to it that the terms of the Will of Fred L. Scharf were complied with and that upon the death of Alice M. Scharf she would receive all the property of both Fred L. Scharf and Alice M. Scharf, whose...