Opinion
No. 1-742 / 00-363
Filed October 30, 2002
Appeal from the Iowa District Court for Webster County, Ronald H. Schechtman, Judge.
Certain devisees named in decedent's will appeal a district court ruling on the co-executors' request for an interpretation and construction of the will. AFFIRMED.
Jerry L. Schnurr III of Schnurr, Fitzgerald, Kersten Hansen, Fort Dodge, and Sheldon F. Kurtz, Iowa City, for appellant Indian Law Resource Center.
Steven W. Hendricks of Kersten, Brownlee, Hendricks, L.L.P., Fort Dodge, for appellants Alaska Conservation Foundation, Animal Welfare Institute, International Rescue Committee, and Earthjustice Legal Defense Fund.
James L. Kramer of Johnson, Erb, Bice, Kramer, Good Mulholland, P.C., Fort Dodge, and Mark Crimmins of Bennett, Crimmins, Ostrander Yung, Fort Dodge, for appellees.
Heard by Mahan, P.J., and Miller and Hecht, JJ.
Certain devisees named in decedent's will appeal from the district court's ruling on the co-executors' application for construction of the will. Some of the same devisees also appeal from a subsequent order concerning abatement. Appellant Indian Law Resource Center (ILRC) argues (1) the trial court erred in finding decedent's will patently ambiguous and thus in admitting extrinsic evidence; (2) the trial court erred in ruling the will created a charitable trust where there was no expression of a charitable purpose, unless it is the charitable purpose of the ILRC; (3) the decedent's will reveals her intent to bequeath her home, artwork, furnishings, books, Iowa land, and Canadian land outright or in trust to the ILRC; (4) the evidence does not support the trial court's creation of a charitable trust, but instead establishes that the decedent's intent is that lines 1-33 of her will constitute a single bequest to the ILRC; and (5) the bequest of real property is specific and the bequest of the stocks, bonds, and cash is general. Appellants Alaska Conservation Foundation (ACF), Animal Welfare Institute (AWI), International Rescue Committee (IRC), and Earthjustice Legal Defense Fund (Earthjustice) argue (1) the will is not ambiguous and extrinsic evidence should not have been admitted; (2) if extrinsic evidence is admissible, the evidence shows that decedent intended her wealth to benefit them; (3) if extrinsic evidence is admissible, only evidence surrounding the preparation or drafting of the will is admissible; and (4) the trial court incorrectly apportioned the payment of debts and charges. We affirm.
I. BACKGROUND FACTS.
Ann Smeltzer, a prominent Fort Dodge philanthropist, died in February 1999. Her handwritten will, dated October 10, 1996, was admitted to probate. William Griffel and First American Bank were named co-executors of the estate.
In lines 1-3 of the will, Smeltzer directed that, "The following real estate and my home at 1019 2nd Avenue South, Fort Dodge, Iowa are to be maintained in a trust together with all furnishings, artworks and books in." In the immediately following lines 4-27 Smeltzer listed some thirteen tracts of rural and city real estate. Smeltzer bequeathed land in Saskatchewan, Canada, to the ILRC of Montana in lines 28-33. In lines 34-35, Smeltzer gave land in Montana to the Earth Island Institute. In lines 36-49, Smeltzer directed that all her stocks, bonds, and cash in banks be held in trust to be distributed to various entities, including the IRC, the ACF, the AWI, and the Sierra Club Legal Defense Fund, n/k/a Earthjustice Legal Defense Fund.
In May 1999, the co-executors filed an application for construction of the will. They asserted (1) Smeltzer left no surviving spouse or heirs; (2) lines 1-27 created a trust for charitable purposes to advance and support the artistic, cultural, and environmental interests Smeltzer espoused during her lifetime; (3) the Canadian land was bequeathed to ILRC; (4) the Montana land was bequeathed to Earth Island Institute; and (5) Smeltzer intended a charitable trust in lines 36-49 for the benefit of the named beneficiaries. The ILRC objected, claiming lines 1-32 of Smeltzer's will bequeathed all the property identified in those lines to the ILRC, to be held in trust during administration of Smeltzer's estate and then distributed directly to the ILRC. ACF, AWI, and IRC argued the will established only one trust, in favor of them and the several other beneficiaries named in lines 36-49.
The district court concluded the language of the will was ambiguous, and permitted the introduction of extrinsic evidence. The district court concluded that based on all the evidence it was Smeltzer's intent to create a charitable trust in lines 1-27 to preserve her Iowa assets and promote the environmental, social justice, conservation, cultural, and educational interests she had espoused and supported during her lifetime. It construed the will as devising the Canadian land to the ILRC and the Montana land to the Earth Island Institute. The court concluded that it was Smeltzer's intent to limit the bequest to ACF, AWI, and IRC to shares of the property described at lines 36-38. ILRC appealed the trial court's decree construing the will. The trial court subsequently entered an order concerning abatement. ACF, AWI, and IRC appealed from this order as well as the court's prior decree construing the will. Earthjustice belatedly joined in the appeal filed by ACF, AWI, and IRC. (No party has challenged the joinder by Earthjustice, although it does not appear it participated in this case before the trial court and its "joinder" was not filed within the time for appeal.)
II. SCOPE OF REVIEW.
Our review is de novo. In re Estate of Redenius, 455 N.W.2d 295, 297 (Iowa Ct.App. 1990). We make findings of fact anew. Id. However, when considering the credibility of witnesses, we give weight to the fact findings of the trial court, but are not bound by them. Id.
III. BEQUESTS TO DEVISEES.
ILRC contends that (1) the trial court erred in finding Smeltzer's will patently ambiguous and thus should not have received extrinsic evidence; (2) the trial court failed to follow Iowa law in ruling that the will created a charitable trust, because the will does not contain an expression of a general or specific charitable purpose, unless it is the charitable purpose of the ILRC; (3) Smeltzer's will reveals her testamentary intent to bequeath her home, artworks, furnishings, books, Iowa land, and Canadian land outright or in trust to the ILRC; and (4) the evidence at trial does not support the trial court's creation of the charitable trust, but instead establishes that the decedent's intent is that the "first paragraph" of her will is a single bequest to the ILRC. ACF, AWI, IRC, and Earthjustice argue that (1) because the will was not ambiguous, extrinsic evidence should not have been admitted; (2) if extrinsic evidence is admissible, the evidence clearly discloses that Smeltzer intended her wealth to benefit national and international organizations, such as Harvard University, IRC, ACF, World Wide Fund for Nature Conservation, AWI, and Earthjustice; and (3) if extrinsic evidence is admissible, then only evidence surrounding the preparation or drafting of the will is admissible, and evidence offered from persons admitting that Smeltzer never discussed her will, her testamentary intent, or any financial matters is not admissible.
In interpreting wills, we are guided by well-settled principles. The testator's intent is the polestar and must prevail. In re Estate of Rogers, 473 N.W.2d 36, 39 (Iowa 1991). This intent must be derived from all the language contained within the will's four corners, the scheme of distribution, the surrounding circumstances at the time of the will's execution, and existing facts. Id. We will resort to technical rules or canons of construction only when the will is ambiguous or conflicting or the testator's intent is uncertain. Id. A testator's intent must not be ascertained from a single part or paragraph of the will, but the instrument must be read and considered as a whole, each part in connection with every other part and with the entire will, and each part given meaning and operation if possible. In re Estate of Roberts, 171 N.W.2d 269, 271-72 (Iowa 1969).
When a will's terms are clear, plain, and unambiguous, reference to extrinsic material facts is not allowed. Redenius, 455 N.W.2d at 298. Thus, before extrinsic evidence is admissible to show the testator's intent, an ambiguity must be shown. Id. A patent ambiguity is an ambiguity that appears on the face of the will and arises from the phraseology or defective, obscure, doubtful, or uncertain language. Id. A latent ambiguity exists where the language does not lack certainty, but some extrinsic or collateral matter outside the will renders the meaning obscure and uncertain. Id.
We conclude that a strong, indeed compelling, argument can be made that a trust intended by Smeltzer in lines 1-27 of her will should fail for lack of a charitable purpose and charitable beneficiary and the described property escheat to the State of Iowa because the will contains no residuary clause and Smeltzer left no surviving spouse or heirs. However, despite notice the State has not participated in this case either in the trial court or on appeal and no party urges escheat. We thus need not decide whether the property should escheat. Instead, we limit our review to whether under the terms of Smeltzer's will any appellant is entitled to receive or share in the property described in lines 1-27.
For reasons discussed below we find there is no ambiguity in Smeltzer's will concerning the nature, extent, or limits of the property Smeltzer intended to devise to the appellants. That property did not include the property described in lines 1-27 of her will. Therefore, even if the trial court erred in allowing extrinsic evidence regarding Smeltzer's intent concerning the property described in lines 1-27, any such error is not prejudicial to the beneficiaries who are appealing and does not constitute grounds for reversal or modification of the trial court's ruling. See Shawhan v. Polk County, 420 N.W.2d 808, 810 (Iowa 1988) (holding that erroneous admission of evidence does not require reversal when the admission is not prejudicial).
We find, as the trial did, that Smeltzer intended and attempted to make four bequests in her will. The first encompasses lines 1-27. In it she provided that her home, certain other real estate, furnishings, artworks, and books were "to be maintained in a trust." The second bequest is contained in lines 28-33, giving only Canadian land to the ILRC. The third encompasses lines 34-35, giving only certain land in Montana to Earth Island Institute. The fourth bequest, found in lines 36-49, provides for stocks, bonds, and cash in banks to go to several organizations, including ACF, AWI, IRC, and Earthjustice.
We disagree with the ILRC's claim that lines 1-33 constitute a single bequest. Each of the four bequests has somewhat similar structure and content. In each Smeltzer first identified the property she intended to devise. Next, she stated the nature of the devise, using four dispositive phrases, "to be maintained in a trust" (first bequest), "to be given to" (second bequest), "to be given to" (third bequest), and "shall be held in trust to be distributed" (fourth bequest). The phrase "to be" or "shall be" thus appears four times in Smeltzer's will, strongly suggesting four separate bequests. Two of the three bequests that involve real estate contain somewhat detailed descriptions of the real estate. (The third bequest that involves real estate describes it only as a " small plot of land" in Hardin County, Montana.) (Emphasis added). All of the bequests except the first clearly identify named beneficiaries. Nothing in lines 1-27, or elsewhere in the will, suggests that the ILRC is to be a beneficiary of the property "to be maintained in a trust" as provided in the first bequest. Smeltzer's will has no consistent use of spacing, indentation, or paragraphs, contrary to the ILRC's assertion that such characteristics aid its claim.
We also disagree with the arguments of ACF, AWI, IRC, and Earthjustice that the property identified in lines 1-27 must pass to them and the other devisees named in lines 39-49, either outright or in trust, and that Smeltzer intended a residuary distribution of such property to the entities named in lines 39-49. First, nothing in lines 1-27, or elsewhere in the will, suggests Smeltzer intended to devise the items in lines 1-27 to the beneficiaries named in lines 39-49, part of the last bequest. That Smeltzer used the word "trust" in both locations does not itself evince any intent that all items in the two separate lists of property are to go to the beneficiaries named in connection with the second of those two lists of property. Furthermore, Smeltzer used the word "trust" differently in the two locations. In the first bequest she directed that the real estate and contents be maintained in a trust, whereas in the last bequest she provided that the stocks, bonds, and cash were to be held in trust to be distributed to entities named in the bequest. To maintain items in a trust is to do something different than holding items in trust for the purpose of distributing the items to others. Finally, two separate specific devises of real estate intervene between the list of property "to be maintained in a trust" and the property devised and to be distributed to entities including ACF, AWI, IRC, and Earthjustice.
In summary, we conclude the will contains four bequests, and further conclude that neither the bequest to the ILRC nor the bequest to the group of beneficiaries that includes the appellants ACF, AWI, IRC, and Earthjustice encompasses those items listed in lines 1-27. We do so based upon consideration of the will alone, finding no ambiguity as to the nature, extent, or limits of the property Smeltzer intended to devise to the entities which include the appellants. Because Smeltzer's will gives the appellants no interest in property listed in the first bequest, lines 1-27, the appellants cannot have been prejudiced by trial court error, if any, in allowing extrinsic evidence regarding Smeltzer's intent concerning that property. We therefore need not and do not decide whether the trial court erred in admitting such evidence. We affirm the part of the trial court's decree that construes the dispositive provisions of Smeltzer's will.
IV. DEBTS AND CHARGES.
ACF, AWI, and IRC filed a timely notice of appeal from the abatement order. Earthjustice later purported to join the appeal. These appellants argue that there is but one devise under lines 1-27 and lines 36-49. They contend that, pursuant to Iowa Code section 633.437(2) (1999), Smeltzer did not intend for the assets under lines 36-49 to be treated differently than those under lines 1-27, and that in order to give effect to Smeltzer's testamentary plan the debts and charges should be apportioned among all of the assets passing under her will. We have already determined adversely to ACF, AWI, IRC, and Earthjustice their argument that there is but one devise under lines 1-27 and lines 36-49. ILRC essentially agrees with the trial court's ruling.
The procedure of assigning the burdens of paying various estate obligations is through abatement. In re Estate of DeVoss, 474 N.W.2d 542, 543 (Iowa 1991). Abatement is "the reduction of gifts in a will because of insufficiency of assets to pay all debts, charges, and gifts in full." In re Estate of Hoagland, 203 N.W.2d 577, 579 (Iowa 1973). Abatement is generally governed by the statute which provides for the order in which bequests stand aside in deference to debts, charges, and taxes, unless the provisions of the will, the testamentary plan, or the express or implied purpose of the devise would be thereby defeated. Colthurst v. Colthurst, 265 N.W.2d 590, 596 (Iowa 1978). Section 633.436 provides for the following order of abatement:
1. Property not disposed of by the will;
2. Property devised to the residuary devisee, except property devised to a surviving spouse who takes under the will;
3. Property disposed of by the will, but not specifically devised and not devised to the residuary devisee, except property devised to a surviving spouse who takes under the will;
4. Property specifically devised, except property devised to a surviving spouse who takes under the will;
5. Property devised to a surviving spouse who takes under the will.
Section 633.437 provides that if the provisions of the decedent's will provide explicitly for an order of abatement contrary to the provisions of section 633.436, the provisions of the will determine the order of abatement. Iowa Code § 633.437(1). Furthermore, except as provided in section 633.437(1), if the provisions of the will, the testamentary plan, or the express or implied purpose of the devise would be defeated by the order of abatement as provided in section 633.436, then the court is to determine the order of abatement in such other manner as will give effect to the testator's intention. Iowa Code § 633.437(2). To change the order of abatement as provided in section 633.436, the court must find it clear and convincing that the provisions of the will, the testamentary plan, or the express or implied purpose of the devise would be defeated by the general order of abatement found in section 633.436. Id.
In its abatement ruling the trial court acknowledged and discussed section 633.352, which provides that unless otherwise provided by the will the personal representative is to collect income from property of which it has possession, pay taxes and fixed charges thereon, and apply the balance to general estate obligations. It then noted its holdings that lines 1-27 constituted a specific devise, the Canadian land to ILRC was a specific devise, the Montana land was a specific devise to Earth Island Institute, and the bequest in lines 36-49 was a general bequest, not a residuary bequest, and its finding that certain real estate and personal property were not disposed of by the will. The trial court determined the property would abate in the following manner: first, property undisposed of by the will and any income therefrom; second, income from the charitable trust real estate (lines 1-27) from the date of death to the date the charitable trust is organized, income from the Canada/Montana land (lines 28-33 and 34-35) from the date of death to December 1, 1999, and the income from the general bequest (lines 36-49) to December 1, 1999; third, income from any of the specific bequests where possession is extended, by order for cause, and income from the general bequest (lines 36-49) from December 31, 1999 until possession of its principal is delivered; and fourth, principal of the general bequest.
We agree with the trial court's determination concerning application of estate income and abatement of estate assets for the purpose of paying debts and charges. The trial court's order is consistent with sections 633.352 and 633.436, and nothing in Smeltzer's will indicates she intended a different plan of abatement than that in section 633.436. Accordingly, we affirm the trial court's abatement ruling.
V. CONCLUSION.
We conclude that Smeltzer's will does not devise to any appellant any interest in the property described in lines 1-27 of the will. We further conclude the trial court's order concerning abatement is correct. We therefore affirm the trial court's rulings.