Opinion
No. 1-769 / 00-1439,
Filed April 24, 2002.
Appeal from the Iowa District Court for Wapello County, RICHARD VOGEL, Judge.
Verlan Rouw appeals from a final order of the district court resolving his objections to the final estate of his mother. AFFIRMED IN PART, REVERSED IN PART.
Miranda L. Hughes of Brown, Winick, Graves, Gross, Baskerville Schoenebaum, P.L.C., Des Moines, for appellant.
Thomas M. Walter of Johnson, Hester, Walter Breckenridge, L.L.P., Ottumwa, and James Box of Box Box, Ottumwa, for appellees.
Heard by HUITINK, P.J., and MILLER and EISENHAUER, JJ.
Verlan Rouw appeals from a final order of the district court resolving his objections to the final report and accounting in the estate of his mother, Verna Rouw. He contends the court erred in ordering his share of Verna's estate be reduced by $70,700. He also asserts the executor of Verna's estate, Emery Rouw, is guilty of self-dealing and thus liable to the estate for his profits.
I. Background Facts and Proceedings . Everett Rouw died in 1994. He was survived by his wife, Verna, and two sons, Emery and Verlan. In his will, he gave Verna a life estate in the farms he owned, with the remainder interest to Emery and Verlan. Several codicils to Everett's will provided a total of $203,000 should be deducted from Verlan's share for sums loaned to him. The final report, approved by the court, found Verlan's share in Everett's estate was effectively exhausted due to the $203,000 reduction. Verlan did not appeal this ruling.
Prior to the closing of Everett's estate, Verna died. Her will notes Verlan had borrowed money and received advancements from her and Everett. The will states Verlan's remainder interest in Everett's estate is subject to a debt of $101,500 and directed the debt be deducted from Verlan's share in her estate. When Verna executed her will, it appears she believed Verlan was indebted to Everett's estate for half of the $203,000 debt. In fact, Everett was found liable for the full $203,000. In the subsequent district court proceedings regarding Verna's will, the court found Verlan's share in Verna's estate should be reduced by $70,700. It arrived at this amount by concluding the offset in Everett's estate was $70,700 short of satisfying his debt to his parents. It therefore reduced Verlan's share in Verna's estate by that amount. The district court also rejected Verlan's argument that Emery, as executor of Verna's estate, engaged in self-dealing when he farmed estate property on a crop share basis. Verlan appeals from this order.
II. Scope of Review . Our review of rulings on objections to an executor's final report is de novo. Estate of Randeris v. Randeris, 523 N.W.2d 600, 604 (Iowa Ct.App. 1994). While we are not bound by the findings of the trial court, we give them weight, especially when the credibility of a witness is involved. Id.
III. Verlan's Share of Verna's Estate . Verlan contends the district court erred in ordering his share of Verna's estate be reduced by $70,700. He claims the expressed intent in Verna's will shows she wished to forgive any debts above the $101,500 owed to Everett's estate. Because the district court reopened Everett's estate after Verna's death and directed that the full $203,000 debt be taken from Verlan's share of Everett's estate, Verlan argues the conditions that would have triggered the reduction in his share of Verna's estate did not occur.
Before extrinsic evidence can be admitted to show testamentary intent, there must first be a showing of ambiguity. In re Trust of Cross, 551 N.W.2d 344, 348 (Iowa Ct.App. 1994). However, where the terms of a will are clear, plain, and unambiguous, extrinsic material is not allowed. Id. Where the language of the will is doubtful or susceptible to more than one interpretation, a patent ambiguity exists. Stoffel v. Stoffel, 241 Iowa 427, 431-32, 41 N.W.2d 16, 19 (1950). Where the written language is apparently clear, but becomes doubtful in light of something extrinsic or collateral, the ambiguity is latent. Id.
Article V of Verna's will provides:
My son, Verlan E. Rouw, has borrowed money and received advancements from my deceased husband and myself over the years and the remainder interest he has in the farm real estate left to him out of my deceased husband's estate is subject to a debt of $101,500.00. I direct that this debt of $101,500.00 shall be deducted from my son, Verlan E. Rouw's share of my estate before it is closed and any other debts owed to me by him shall be forgiven.
We find this language is latently ambiguous. While the sum of $101,500.00 is clear on its face, when viewed in light of the circumstances surrounding the making of Verna's will it is clear she intended to reduce Verlan's share of her estate by only the amount she believed Verlan owed Everett's estate. Prior to the execution of her will, Verna, as executor, signed the final report in Everett's estate. In the report, Verna instructed that Verlan's interest in the remainder estate be subject to a $101,500.00 indebtedness owed to Everett. It is this debt that Verna directed be deducted from Verlan's share of her estate and all other debts Verlan owed to her were forgiven. However, after her death, Everett's estate was reopened and the district court divested Verlan of his one-half remainder interest in the Dahlonega Farm, valued at $132,300. It was error for the district court to further reduce Verlan's interest in Verna's estate by $70,700 because Verna specifically forgave all debt over the $101,500.00. Accordingly, we reverse the district court's reduction of Verlan's interest in Verna's estate.
IV. Self-Dealing . Verlan also contends the district court erred in denying his claim Emery engaged in self-dealing. He argues Emery violated Iowa Code section 633.155 (1999) by renting the estate's farmland without court authorization and deriving profit from doing so.
For twenty-five years, Emery had an oral contract to farm the Dahlonaga and Highland farms pursuant to a crop share agreement in which he would farm the land, pay half the costs, and receive half of the crop. In exchange, the landowners, Everett and Verna, would pay half of the expenses and receive half of the crop. The lease was less favorable to Emery than the average crop share arrangement.
The district court found Verlan failed to show Emery's continuance of the lease until his purchase of the property in any way prejudiced him or diminished his share of the inheritance. Emery continued the same arrangement he had for years in his operation of the farms. Upon an audit of the accounts, a referee determined Emery's rental terms were fair and below market value. Under these circumstances, we find Emery did not engage in self-dealing and derived no profit as contemplated by section 633.155. See In re Estate of Phoenix, 493 N.W.2d 79, 81 (Iowa Ct.App. 1992) (finding executors did not breach their duties to an extent necessary to be removed from office where they purchased property from the estate at a fair price). We affirm the district court's holding that Emery did not engage in self-dealing.
AFFIRMED IN PART, REVERSED IN PART.