Schaad v. Lorenz

• Decision Date: 11 July 1984
• Docket Number: Nos. 135-822,s. 135-822
• Citation: 688 P.2d 1342,69 Or.App. 16
• Parties: In the Matter of the Estate of Matilda Kottmeier, Deceased. Patricia SCHAAD, Appellant, v. Carl LORENZ as Personal Representative of the Estate of Matilda Kottmeier, Deceased, Respondent. Patricia SCHAAD, Hilmer Finne and Eva Maxey, Appellants-Cross-Respondents, v. Carl LORENZ as Personal Representative of the Estate of Matilda Kottmeier, Deceased. Delores Lorenz, Karen Lorenz, David C. Lorenz, Kathy Jo Lorenz, Teresa Platts, John Platts, Barbara Luhrs and Christine Eide, Respondents-Cross-Appellants. ; CA A27894; A8110-06070; CA A28158.
• Court: Oregon Court of Appeals

Page 1342

688 P.2d 1342

69 Or.App. 16

In the Matter of the Estate of Matilda Kottmeier, Deceased.

Patricia SCHAAD, Appellant, v. Carl LORENZ as Personal Representative of the Estate of

Matilda Kottmeier, Deceased, Respondent.

Patricia SCHAAD, Hilmer Finne and Eva Maxey, Appellants-Cross-Respondents, v. Carl LORENZ as Personal Representative of the Estate of

Matilda Kottmeier, Deceased. Delores Lorenz, Karen Lorenz,

David C. Lorenz, Kathy Jo Lorenz, Teresa Platts, John

Platts, Barbara Luhrs and Christine Eide,

Respondents-Cross-Appellants.

Nos. 135-822; CA A27894; A8110-06070; CA A28158.

Court of Appeals of Oregon.

Argued and Submitted March 12, 1984.

Decided July 11, 1984.

Ferris F. Boothe, Portland, argued cause and filed briefs for appellants-cross-respondents.

Donald A. Bick, Eugene, argued cause for respondent-cross-respondent Carl Lorenz. With him on briefs were Janice M. Stewart, and McEwen, Hanna, Gisvold, Rankin & Van Koten, Portland, for remaining respondents-cross-appellants.

Before RICHARDSON, P.J., JOSEPH, C.J., and WARDEN, J.

JOSEPH, Chief Judge.

A.M. Kottmeier and Matilda Kottmeier, husband and wife, had no children. In 1946, when A.M. was 70 and Matilda 58, they executed a joint will, which states, in pertinent part:

"KNOW ALL MEN BY THESE PRESENTS, that we, A.M. Kottmeier and Matilda Kottmeier, husband and wife, both of sound mind and disposing memory, and desiring to make disposition of our property, do each mutually in consideration of our mutual agreement with each other and of the provisions made herein in each others behalf, make this our Last Will and Testament and agree that the same cannot be changed nor varied by either without the consent in writing of the other, hereby revoking all previous wills by either of us made.

"FIRST: All of our property held by us jointly, both real and personal, at the time of the death of either of us shall be held by the survivor during his or her lifetime, the survivor to have the use and benefits thereof and rents and profits arising therefrom during the period of his or her natural life, and it is accordingly by us so bequeathed and devised to the survivor of us during the period of the survivor's natural life.

"SECOND: After the death of the survivor of us as aforesaid all property remaining unexpended and the rents and profits arising therefrom, and the rest, residue and remainder of all real, personal or mixed property that the survivor may die seized and possessed of is hereby given, devised and bequeathed as follows:

"One half thereof shall be divided share and share alike between the following heirs and devisees of A.M. Kottmeier:

"William H. Coffee, a nephew; Mary Finnie [sic], a niece; Ethel Reglan, a niece; Eva Maxey, a niece; Hilmer Finnie [sic], a nephew; Albert Coffee, a nephew, and Caroline R. McCormack, a sister-in-law;

and in the event that any of said persons shall not be living at the time of the death of the survivor of us under this will, the share which is herein devised to such person so deceased, shall be divided equally among the living devisees hereinabove named.

"The remining [sic] one-half thereof shall be divided between the following heirs and devisees of Matilda Kottmeier, share and share alike:

"Mary N. Lorenz, her mother; Caroline R. McCormack, a sister; John Lorenz, a brother; Carl H. Lorenz, a nephew; and Barbara Jean Lorenz, a niece;

and in the event that Mary N. Lorenz and John Lorenz, or anyone of them, should be deceased at the time of the death of the survivor herein, then in that event the share of such deceased devisee shall be divided in equal proportion between Carl H. Lorenz and Barbara Jean Lorenz; and in the event that Caroline R. McCormach [sic] should be deceased at the time of the death of the survivor herein, then in that event the share that said Caroline R. McCormack would have received had she been living shall be divided equally between her two children:

"Warren H. Dobyns, Jr. and Patricia H. Shaad [sic]."

A.M. Kottmeier died in 1950, and the will was probated. In that proceeding all of A.M.'s property was considered to have been devised to Matilda. In 1972 Matilda executed another will making dispositions that are inconsistent with the dispositions in the 1946 will; she also made substantial inter vivos transfers that are also inconsistent with the 1946 scheme. ¹ Matilda died in 1981 at the age of 93, after Caroline McCormack had died.

The plaintiffs, takers under the 1946 will, seek removal of defendant Carl Lorenz as personal representative of the estate of Matilda and also a declaratory judgment of their rights under the 1946 will. The trial court denied the petition for removal of the personal representative and found that a contract to make a will existed, under which Matilda could not disinherit Hilmer Finne and Eva Maxey, takers by A.M.'s will, but was free to disinherit Patricia Schaad. The trial court also found that inter vivos transfers of money and real property made by Matilda were subject to the provisions of the 1946 will and imposed a constructive trust on those assets.

The contractual language of the introductory paragraph of the will is clear and convincing evidence that the will was executed according to a contract between the parties. See Taylor v. Wait, 140 Or. 680, 684, 14 P.2d 283 (1932); Cook v. Walsh, 39 Or.App. 357, 591 P.2d 1201 (1979). Defendants argue, however, that, if a contract exists, it is contrary to public policy and therefore unenforceable. That is not the law in Oregon. Oregon has long recognized the right of parties to contract freely for the distribution of their property. After the death of one testator, if the survivor has benefitted, courts will enforce the contract. Florey, et al. v. Meeker, et al., 194 Or. 257, 240 P.2d 1177 (1952); Ankeny v. Lieuallen, 169 Or. 206, 113 P.2d 1113, 127 P.2d 735 (1942); Taylor v. Wait, supra. The fact that Matilda lived more than 30 years after executing the 1946 will does not alter her obligation to abide by the agreement that her husband died believing would be complied with.

We turn first to a consideration of whether Matilda was bound to devise part of her estate to Patricia Schaad. The trial court found that Matilda was free to change her testamentary dispositions, although she could not alter those of her husband. The difficulty results in no small part from the efforts by the testators each to devise one-half of their combined estates separately while keeping their property commingled. Defendants have urged that allowing Matilda to disinherit Patricia would effectuate the intention of each testator to dispose of an individual half of the estate as he or she wished. Defendants cite in support Florey, et al. v. Meeker, et al. supra. However, in Florey the testators reserved the right to substitute devisees; here, on the contrary, the testators specifically agreed that the provisions of the will could "not be changed or varied by either without the consent in writing of the other."

The only analogous case cited by either counsel is Brewer v. Simpson, 53 Cal.2d 567, 2 Cal.Rptr. 609, 349 P.2d 289 (1960). In Brewer, a husband and wife contracted that, after the death of the survivor of them, one-half of the estate would go to the heirs of the husband and one-half to the heirs of the wife. The surviving wife remarried and transferred to and mingled her assets with those of her second husband. Accepting the claims of the heirs of the wife (who was still alive at the time of trial), the court noted:

"Defendants argue that any promise of Abigail to leave one half the property to plaintiffs, her own kin, if she survived George, was only incidental to the main purpose of the contract, which was to make sure that if she survived George she would receive the entire estate, and if she did not survive him, her own relatives would receive one half the estate; therefore, defendants say, the contract was not 'made expressly for the benefit' of plaintiffs (Civ.Code § 1559) and plaintiffs, as mere incidental beneficiaries, cannot enforce it. Acceptance of this argument would lead to peculiar conclusions. The will of Abigail and the will of George each set forth the gifts to the kindred of both in language which does not differentiate between the intent to benefit the testator's own kindred and the intent to benefit the kindred of the spouse. Yet Abigail would have us believe that she intended that her relatives should be the express beneficiaries of George's will if she predeceased George but only incidental beneficiaries of her will if she survived George. From this it would follow that George's will, listing the gifts to kindred of both spouses in the same straightforward manner as Abigail's, nevertheless is the vehicle of the same subtle differentiation of intent.

"On the other hand, the contract evidenced by the mutual wills is readily and reasonably susceptible of the trial court's view that it was 'made for the express benefit of all the persons named therein as beneficiaries.' " Brewer v. Simpson, supra, 53 Cal.2d at 588, 2 Cal.Rptr. 609, 349 P.2d 289.

We find Brewer persuasive. Although Matilda was technically free to revoke her 1946 will, which she did, she was not free to repudiate the underlying contract. Irwin v. First Nat'l Bank, 212 Or. 534, 540, 321 P.2d 299 (1958). The result is admittedly peculiar in that A.M., who provided for Patricia's mother, Caroline McCormack, did not provide for a gift over to Caroline's children in the event that she should predecease him. Matilda did so provide. Why the testators chose to do that is unknowable. Be that as it may, the testators evidenced an understanding that they were binding themselves as well as each other by their agreement. As a third party beneficiary of the contract Patricia has the right to enforce its terms. See Irwin v. First Nat'l Bank, supra, and cases cited therein. The judgment of the trial court finding that Matilda was free to...