Old National Bank of Washington v. Tate

Decision Date02 July 1992
Docket NumberNo. 18546,18546
PartiesIn the Matter of the CONSERVATORSHIP OF the ESTATE of Nuna C. REINWALD, a protected person. The OLD NATIONAL BANK OF WASHINGTON, Conservator, Plaintiff-Appellant, v. Robert TATE, Defendant-Respondent. Lewiston, October 1991 Term
CourtIdaho Supreme Court

Schwam Law Firm, Moscow, for plaintiff-appellant. Andrew M. Schwam argued.

Stellmon & Mosman, Moscow, for defendant-respondent. Roy E. Mosman argued.

MICHAUD, Judge Pro Tem.

This appeal is from an opinion and order of the district court affirming a determination by the magistrate that appellant Old National Bank (ONB) as conservator of the estate of Nuna C. Reinwald failed under I.C. § 15-5-427 to take into account and preserve insofar as possible a known estate plan of Mrs. Reinwald. ONB contends the magistrate erred in requiring the bank to preserve what amounts to an invalid oral testamentary trust. We affirm.

Reinwald purchased a 2 1/2 year certificate of deposit in the amount of $60,188.29, in 1980. The CD contained a rollover provision effective ten days after maturity unless the depositor instructed otherwise. A payable on death provision in favor of Reinwald's nephew, respondent Robert Tate, was included. Tate was with Reinwald on the day the CD was purchased and commented, "That's a lot of money you just gave me." Reinwald responded, "I want you to divide it with your sisters Ruth, Marguerite and Janie."

Also in 1980, ONB was appointed Reinwald's conservator. At the bank's request, Tate surrendered the CD and received a receipt acknowledging the POD provision. In 1982 when the CD matured ONB transferred the money to itself as conservator and reinvested the proceeds without continuing the POD provision in favor of Tate. Apparently, Tate was not notified of the bank's actions. In 1984 Reinwald passed away.

In January 1985, ONB filed its final accounting as conservator. Tate filed an objection contending he was entitled to $60,188.29 plus interest pursuant to the POD provision. Tate maintained that when ONB reinvested the money without continuing the POD provision it violated I.C. § 15-5-427 by failing to take into account and preserve insofar as possible a known estate plan of Mrs. Reinwald. ONB took the position that the CD with its POD provision did not meet the definition of an "estate plan" under I.C. § 15-5-427.

The magistrate concluded that the POD provision constituted an estate plan and that ONB had a duty under I.C. § 15-5-427 to take the POD provision into account as an express desire of Mrs. Reinwald to dispose of a portion of her estate outside her will. The magistrate also found that Reinwald's statement to Tate constituted a part of Reinwald's estate plan. The magistrate entered an order requiring ONB to surrender $60,188.29 to Tate to be held in trust by Tate for equal distribution to himself and his sisters.

On appeal to the district court, ONB argued that the order of the magistrate required the bank to preserve an invalid oral testamentary trust. As a result of its deposition of Tate prior to the hearing before the magistrate, the bank was aware of the statement by Reinwald to Tate to share the CD proceeds, yet the bank failed to raise the issue of an invalid oral testamentary trust before the magistrate. Because the magistrate had not been asked to decide whether a trust had been created, valid or otherwise, the district court concluded that the issue need not be decided. Nonetheless, the district court ruled that Reinwald's statement to Tate to share the proceeds of the CD did not create a trust since it was no more than a request or an expectation as shown by the precatory words used. The court noted that the magistrate erred in ordering Tate to hold the proceeds in trust, but since no appeal was taken from that order it was affirmed, as was the order that ONB should have preserved the POD provision as a valid estate plan.

The issue before this Court is the same as that considered by the district court sitting in its appellate capacity. As such, this Court will review the magistrate's order independent of but with due regard for the district court's decision. State v. Bitt, 118 Idaho 584, 798 P.2d 43 (1990); Robinson v. Joint School Dist. No. 331, 105 Idaho 487, 670 P.2d 894 (1983); Hentges v. Hentges, 115 Idaho 192, 765 P.2d 1094 (Ct.App.1988).

While both parties have extensively briefed the issue of whether an oral testamentary trust was created, the issue was not presented to the magistrate. Therefore, no findings of fact were made by the magistrate regarding the trust theory proposed on appeal. This Court will not consider an issue not raised before the trial court and addressed for the first time on appeal. Sun Valley Shopping Center v. Idaho Power Co., 119 Idaho 87, 803 P.2d 993 (1991); Kinsela v. State Dep't. of Fin., 117 Idaho 632, 790 P.2d 1388 (1990).

The remaining question is whether the magistrate erred in concluding that the POD provision was an estate plan and that ONB had a statutory duty to take into account and preserve that plan insofar as possible. On this point the Court is mindful of the magistrate's finding that Reinwald's statement to Tate was part of Reinwald's "estate plan."

Conservators are given broad powers under our statutes in administering estates. I.C. §§ 15-5-424 and 15-5-425. However, I.C. § 15-5-427 places a limit on the exercise of those powers. That section provides:

In investing the estate, and in selecting assets of the estate for distribution under subsections (a) and (b) of section 15-5-425 of this Part, in utilizing powers of revocation or withdrawal available for the support of the protected person, and exercisable by the conservator or the court, the conservator and the court should take into account and preserve insofar as possible any known estate plan of the protected person, including his will, any revocable trust of which he is settlor, and any contract, transfer or joint ownership arrangement with provision for payment or transfer of benefits or interests at his death to another or others which he may have originated. (Emphasis added.)

Today we hold that when conservators in the administration of estates have knowledge of an estate plan valid and complete on its face, they must under I.C. § 15-5-427 take into account and preserve that estate plan insofar as possible. Once this is done,...

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