Pederson v. Russell State Bank

• Decision Date: 06 March 1971
• Docket Number: No. 45909,45909
• Citation: 206 Kan. 718,481 P.2d 986
• Parties: Jerome N. PEDERSON, Appellant, v. The RUSSELL STATE BANK, Executor of the Estate of Hannah Roubach, Deceased, Appellee.
• Court: Kansas Supreme Court

Page 986

481 P.2d 986

206 Kan. 718

Jerome N. PEDERSON, Appellant, v. The RUSSELL STATE BANK, Executor of the Estate of Hannah Roubach, Deceased, Appellee.

No. 45909.

Supreme Court of Kansas.

March 6, 1971.

Syllabus by the Court

1. Under the provisions of K.S.A. 59-1206, annual crops, whether severed or not from the land of the decedent at the time of her death, are personal assets in the custody of the executor and must be inventoried and administered as such.

2. The terms of a statute dealing with a specific subject are controlling as against divergent provisions of a statute having more general application.

3. Where it is contended that a later statute has repealed an earlier statute by implication, the rule is that repeal by implication is disfavored, and such a repeal is not to be found when both statutes may operate independently without conflict.

4. A 'personal asset' consisting of the growing wheat crop on the date of the decedent's death, under K.S.A. 59-1206, is not converted to 'income from the assets of a decedent's estate' by the provisions of the Uniform Principal and Income Act. (K.S.A.1970 Supp. 58-901 et seq.)

5. The receipts from the sale of a growing wheat crop, after its harvest, will be consideration received from the sale of principal under K.S.A.1970 Supp. 58-903(b)(1) and remains a personal asset of the decedent's estate.

Rex L. Culley, Russell, argued the cause, and John C. Woelk, Russell, was with him on the brief for appellant.

Marvin E. Thompson of Thompson, Holland & Arthur, Russell, argued the cause and was on the brief for appellee.

SCHROEDER, Justice.

The question presented by this appeal is who, as between the executor and a devisee, in the absence of any direction under a will, is entitled to the crops growing on specifically devised lands as of the date of the decedent's death.

Hannah Rouback died testate on November 15, 1966. Her will was admitted to probate and the Russell State Bank was appointed executor on the 27th day of December, 1966.

Under her will four quarter sections of land in the state of Kansas were devised to Jerome N. Pederson, the appellant herein.

On the date of the testatrix' death, part of the land devised to Pederson had a growing crop of wheat which was sowed in September, 1966. The lands on the date of decedent's death were subject to an agricultural lease under which the decedent was to receive:

'* * * as rental for said crop land, one-third (1/3) of all grain crops raised on said premises in marketable condition at market, free of expenses to first party (Hannah Rouback) or in the bin or granary on the farm, as first party may choose.'

It is admitted by the appellant the decedent's interest in the growing wheat was separately inventoried and appraised as a personal asset of her estate, and was not included as a part of the real estate devised to him.

The growing wheat was harvested in the summer of 1967 and later sold for $900.72.

Procedurally, in the probate court the executor petitioned for partial distribution of the decedent's estate, which was appraised at $1,175,778.70. The order of partial distribution set over to the appellant the four quarter sections of land, oil runs of $8,285.73, agricultural income in the amount of $1,093.27, less taxes and expenses paid of $1,821.36, thereby distributing to the appellant net income withheld by the executor in the sume of $7,557.64. The agricultural income, however, did not include the sum of $900.72 received by the executor for the sale of the one-third share of the wheat harvested from the land devised to Pederson.

Pederson thereupon petitioned the probate court for the payment of farm rental in the sum of $900.72 alleging the facts. He alleged the executor refused to pay the rental proceeds from the sale of the one-third interest in the 1967 wheat. The contract and lease covering the land devised to the appellant was attached to his petition.

Following the executor's answer to the petition for allowance of claims, the parties by agreement transferred the matter to the district court, where, after hearing, the claim was denied and appeal duly perfected.

K.S.A. 59-1206 provides:

'Annual crops, whether severed or not from the land of the decedent at the time of his death, shall be deemed personal assets in the custody of the executor or administrator and shall be inventoried and administered as such.' (Emphasis added.)

The statute is clear, not only are growing crops deemed 'personal assets,' but they 'shall be inventoried and administered as such.'

These personal assets would obviously be administered in accordance with the provisions of the decedent's will.

The appellant admits the devise of the four quarter sections of land to him did not, by the terms of the will, include the growing crop of wheat. The will devised the residue of the estate in the following language:

'All of the rest, residue and remainder of my estate, whether real, personal or mixed, and wheresoever found or situate, that I may own at my death, I give, devise and bequeath to Russell State Bank, of Russell, Kansas, in a perpetual trust, * * *'

In accordance with the statute (59-1206, supra) the growing wheat crop was inventoried as a personal asset. To administer it as a personal asset, the growing wheat crop could only pass as a part of the residue of the estate in accordance with the above quoted portion of the decedent's will.

The rule of law expressed by 59-1206, supra, has always been in force in this state. In Kesler v. Heberling, 113 Kan. 571, 213 P. 639, it was held:

'As between executor and devisee, on the death of the testator, crops growing on the land devised go to the executor as assets in his hands under section 4524 of the General Statutes of 1915.' (Syl.)

The statute then applicable was not as explicit as 59-1206, supra. It only provided that annual crops 'shall be assets in the hands of the executor or administrator, and shall be included in the inventory.' The present statute explicitly provides that such crops shall be personal assets and 'inventoried and administered as such.'

Kesler was followed in Blakely v. Blakely, 115 Kan. 644, 224 P. 65, where the court held the growing crops, grown by a tenant on land belonging to a testator, and harvested and sold after his death, belonged to the estate, and not to the devisee of a life estate to whom was devised "the use of all my property, both real and personal, with the rents, issues, profits and proceeds thereof." (p. 644, 224 P. p. 65.)

The appellant concedes under the applicable rule in Kansas, prior to the adoption in 1965 of the Uniform Principal and Income Act, the growing crops here in question passed to the executor. But the appellant argues the Uniform Principal and Income Act, K.S.A.1970 Supp. 58-901 et seq., changed the rule.

The appellant contends the question, as to who is entitled to the growing crops, is governed by the Uniform Act.

The Uniform Act is general. Its broad purpose is to provide rules for the guidance of fiduciaries to determine what is principal and what is income, to determine who is entitled to the principal and who is entitled to the income, and to determine the allocation of expenses to each.

By the provisions of K.S.A.1970 Supp. 58-914, the act is made applicable to decedents' estates.

By K.S.A.1970 Supp. 58-904(a), an income beneficiary is entitled to income from the date the assets become subject to the trust, which in the case of a testate estate, is the date of death.

Under K.S.A.1970 Supp. 58-904(b)(2), receipts in the form of periodic payments, including rent, are to be apportioned to principal as of the date of the decedent's death, and to income from the date of death.

K.S.A.1970 Supp. 58-904(c) provides:

'In all other cases, any receipt from an income producing asset is income even though the receipt was earned or accrued in whole or in part before the date when the asset became subject to the trust.' (Emphasis added.)

K.S.A.1970 Supp. 58-904a(b)(1) provides that income from specifically devised property, after the death of the testator, goes to the specific devisee.

Under K.S.A.1970 Supp. 58-903(a), income includes:

'* * * return in money or property derived from the use of principal, including return received as

'(1) rent of real or personal property * * *.' (Emphasis added.)

By K.S.A.1970 Supp. 58-907(b), generally accepted accounting principles are to be used in determining income from farming operations.

K.S.A.1970 Supp. 58-901 defines an 'Income beneficiary' as the person to whom income is presently payable or for whom it is accumulated for distribution as income; and it defines a 'Remainderman' as the person entitled to principal, including income which has been accumulated and added to principal.

The appellant contends he is in the position of an 'Income beneficiary.' He argues the point at issue is the ownership of a fund in the hands of the executor. He contends the fund was not in being at the decedent's death but comes from an asset of the decedent, the land devised to the appellant.

The appellant relies primarily upon 58-904(c), supra. He argues the landlord has an interest in the crop before it matures when rent is payable in shares. (Citing Bird City State Bank v. Goodland Equity Exchange, 113 Kan. 696, 216 P. 278, and Will v. Hughes, 172 Kan. 45, 238 P.2d 478.) Under this subparagraph any receipt from an income producing asset is income even though the receipt was earned or accrued in whole or in part before the asset became subject to the trust. He contends the receipt (the right to rent payment) either accrued in whole upon planting the wheat, subject to later harvest, or it had accrued in part at the death of the testatrix, as the crop matured subject to its later harvest and sale.

In either event, the appellant argues:

'* * * the right of the decedent to a share of the crop vested upon planting the wheat. The right to rent was then absolute. The unknown...