Neaderhiser v. State Dept. of Social and Rehabilitation Services

• Decision Date: 22 December 1983
• Docket Number: No. 55541,55541
• Citation: 9 Kan.App.2d 115,673 P.2d 462
• Parties: Emma NEADERHISER, Appellee, v. STATE DEPARTMENT OF SOCIAL AND REHABILITATION SERVICES, Appellant.
• Court: Kansas Court of Appeals

Page 462

673 P.2d 462

9 Kan.App.2d 115

Emma NEADERHISER, Appellee, v. STATE DEPARTMENT OF SOCIAL AND REHABILITATION SERVICES, Appellant.

No. 55541.

Court of Appeals of Kansas.

Dec. 22, 1983.

Syllabus by the Court

1. In reviewing questions of law a court may substitute its judgment for that of an administrative agency, although the court may give deference to the agency's interpretation of law.

2. Rules relating to creation of joint tenancies are stated and applied.

3. A joint tenancy is not necessarily terminated by an agreement allocating income or possession among the tenants.

4. Generally, an agreement clearly inconsistent with joint tenancy will terminate an existing joint tenancy.

5. In an action brought to determine eligibility for State Social and Rehabilitation Services medical assistance, dependent upon the nature of a property interest created by two contemporaneous agreements, it is held that a joint tenancy resulted and the application for medical assistance was properly denied.

Stephen J. Craeton of State Department of Social and Rehabilitation Services, Topeka, for appellant.

Evan Corman of Corman & Barefield Law Office, Minneapolis, for appellee.

Before SPENCER, P.J., JEROME HARMAN, C.J. Retired, Assigned, and STEVEN P. FLOOD, District Judge, Assigned.

JEROME HARMAN, Chief Judge, Retired, Assigned:

The State Department of Social and Rehabilitation Services (SRS) appeals a district court order reversing its denial of medical assistance to plaintiff Emma Neaderhiser. At issue is the nature of the real property plaintiff transferred to her son immediately before making application for assistance--was it joint tenancy property or was it some form of life estate?

In May, 1982, Mrs. Neaderhiser, an 89-year-old nursing home resident, consulted the SRS office at Minneapolis about receiving medical assistance. Later, SRS denied the application on the ground that the plaintiff had on June 5, 1982, transferred property to her son for less than its fair market value in order to establish eligibility for assistance. See K.S.A.1982 Supp. 39-709; K.A.R. 30-6-56.

Plaintiff appealed the denial to the district court, which ruled plaintiff had a life estate with a "possibility of reversion" in the realty transferred, and it reversed SRS's decision.

The property is a 200-acre farm in Ottawa County, Kansas, and a lot in Bennington, Kansas. Mrs. Neaderhiser became its owner in 1974 upon the death of her husband. On May 2, 1975, she deeded the property to herself and her son Verle Neaderhiser as "joint tenants with the right of survivorship and not as tenants in common ...." The same day she and her son signed the following agreement:

"IT IS UNDERSTOOD AND AGREED that the first party [Emma Neaderhiser] will transfer the above described property in joint tenancy with the right of survivorship and not as tenants in common, between the first and second parties and shall retain all of the income and the right of possession to said property for and during her lifetime, and after her death, the property shall belong to Verle Neaderhiser.

"IT IS FURTHER UNDERSTOOD AND AGREED that Verle Neaderhiser shall have the right to farm said property as long as he farms the same in a reasonable manner during the lifetime of Emma Neaderhiser.

"IT IS FURTHER UNDERSTOOD AND AGREED that all the income of said property shall be paid to Emma Neaderhiser for and during her lifetime."

According to SRS tables and regulations, $3,734.64 was the fair market value of the property plaintiff quitclaimed to her son in June, 1982, if a life estate was being conveyed; if the property had been held in joint tenancy, as SRS considered it, then the value of the interest transferred was $35,000, being one-half the value of the entire property, rendering Mrs. Neaderhiser ineligible for SRS assistance. Those values are not disputed.

In reviewing questions of law, a court may substitute its judgment for that of an administrative agency, although the court may give deference to the agency's interpretation of law. Richardson v. St. Mary Hospital, 6 Kan.App.2d 238, 242, 627 P.2d 1143, rev. denied 229 Kan. 671 (1981).

Whether a property interest is a joint tenancy or a life estate, construction of an unambiguous written contract, and determining whether a written contract is ambiguous are all questions of law.

Considered by itself, the 1975 deed creates a joint tenancy. SRS argues the written agreement could have no effect because of the presumption that prior agreements are merged in an executed and delivered deed. In Webb v. Graham, 212 Kan. 364, 366, 510 P.2d 1195 (1973), however, the court held:

"Although covenants in the contract are presumed to be merged in a deed executed and delivered in fulfillment of the contract, such a merger depends upon the intention of the parties, and intention in such cases is a question of fact to be determined by an examination of the instruments and from the facts and circumstances surrounding their execution."

This question of fact--if such it be, and neither party suggests that it is--does not limit the scope of review in the present case. SRS did not apply the merger doctrine but considered the written agreement together with the deed, as do we. SRS ruled the agreement merely set out the consideration for the creation of a joint tenancy. The trial court ruled the deed and agreement created a life estate with a "possibility of reversion."

K.S.A. 58-501 requires a clear expression of intent to...