Opinion
No. 5-774 / 05-0511
Filed November 23, 2005
Appeal from the Iowa District Court for Bremer County, Paul W. Riffel, Judge.
The administrator of the estate of Allen O. Schumacher appeals a district court ruling allowing a claim for funeral expenses and interest thereon. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
David H. Skilton of Cronin, Skilton Skilton, Nashua, for appellant.
David M. Engelbrecht of Engelbrecht, Ackerman Hassman, Waverly, for appellee.
Heard by Zimmer, P.J., and Miller and Vaitheswaran, JJ.
The administrator of the estate of Allen O. Schumacher appeals a district court ruling allowing a claim for funeral expenses of $9,248.22 with interest at a rate of eighteen percent per annum. We affirm in part, reverse in part, and remand.
I. Background Facts and Proceedings
Allen O. Schumacher died intestate. He was survived by a wife, Miller Schumacher, who lived in Arizona and from whom he had been separated for several years. He was also survived by his mother and several siblings who lived in Iowa.
Schumacher's Iowa relatives made funeral arrangements with Rettig Funeral Home. The invoice for supplies and services totaled $9,248.22. The funeral home added to that sum an "unanticipated late payment charge" of $665.76 calculated at the rate of eighteen percent per annum.
By the time of the hearing, the total amount of the claim had risen to $9,913.98.
The funeral home submitted a claim for that amount to Miller, as administrator of Allen's estate. Miller filed a notice of disallowance. Following a hearing, the district court allowed the claim in the amount of $9,248.22 with interest at a rate of eighteen percent per annum beginning a month after Allen's death. Miller filed a request for reconsideration which was denied, and this appeal followed.
II. Scope of Review
The parties disagree on our scope of review, with Miller contending it is de novo and the funeral home arguing it is for errors of law. We agree with the funeral home that our review is on error. Iowa Code § 633.33 (2003). "Findings of fact in a law action are binding upon the appellate court if supported by substantial evidence." In re Estate of Buss, 577 N.W.2d 860, 861 (Iowa Ct.App. 1998).
III. Reasonableness of Funeral Expenses
Miller argues the funeral expenses allowed by the district court were unreasonable. We agree with Miller that reasonableness is the standard. Foley v. Broeksmit, 119 Iowa 457, 459, 93 N.W. 344, 345 (1903) ("[W]hatever is furnished should reasonably comport with the station in life of the deceased and the amount of his property. The privilege thus granted should not be construed into a license to plunder the estate."); A.W. Gans, Annotation, Amount of Funeral Expenses Allowable Against Decedent's Estate, 4 A.L.R. 2d 995 (1949). We disagree that the record lacked substantial evidence to support this standard.
In finding the funeral expense claim reasonable, the district court stated:
While the funeral expenses amount to approximately 66 percent of the total gross estate, the estate is not insolvent. Allen left no children and he was estranged from his wife. The record reflects that members of his immediate family simply wanted to give their son and brother a proper burial. It appears that the funeral was not extravagant. The record does not support Miller's claims that Allen's family either acted with ill will to purposefully deplete the assets and thereby deprive her of her inheritance or that their acts were racially motivated due to the fact that she is an African-American. Miller acknowledged that she and Allen had a distant relationship during the ten years preceding his death and, according to her testimony, the only reason they did not dissolve their marriage is because he wanted to continue receiving his full military pension and she was content to continue receiving medical benefits as his spouse. As Allen's surviving spouse, Miller will continue to be eligible for medical benefits for the rest of her life and she will also receive a pension of approximately $800 per month. Accordingly, Miller is not dependent on the estate assets for her future care and support.
These detailed findings are supported by substantial evidence. Accordingly, we affirm them.
In affirming the district court, we have considered Miller's contention that Allen's Iowa relatives acted to deprive her of her inheritance, as reflected by the fact that the funeral expense claim approximated the amount in Allen's checking account. We are not persuaded that this fact renders the evidence supporting reasonableness insubstantial. The funeral home director testified that he was not told how much money was in Allen's checking account. In addition, Allen's Iowa relatives testified they had no intent to deplete the checking account funds in order to deprive Miller of part of her inheritance. In light of this testimony, as well as Miller's testimony that she believed a reasonable funeral would cost as much as $5,000-$6,000, we cannot conclude the allowed expense was an "extravagant outlay," to Miller's prejudice. In re Ewing's Estate, 234 Iowa 950, 953, 14 N.W.2d 633, 635 (1944). Cf. Foley, 119 Iowa at 459, 93 N.W. at 345 ("Surely, one may die in this faith without being troubled by visions of the undertaker plundering his estate.").
IV. Interest
Miller also argues the district court "abused its discretion by awarding contractual penalty interest figured at 18% without any basis for doing so and without determining or finding why said expense was reasonable." We agree with Miller that the award of interest should not stand.
Miller raises no other challenges to the interest rate.
Interest includes "compensation . . . fixed by the parties, for the use, detention, or forbearance of money or its equivalent." Vasquez v. LeMars Mutual Ins. Co., 477 N.W.2d 404, 406 (Iowa 1991) (citation omitted). "Contract interest is recoverable strictly according to the terms of the contract." Id.
The contract governing this transaction was not placed in the record. Instead, the funeral home relied on an invoice stating, "A charge of 18% per annum for unanticipated late payment will be effective July 19, 2004." We conclude this evidence is insufficient to support an award of contract-based interest. We note, however, that an allowed claim becomes a judgment that is enforceable like other civil judgments. Iowa Code § 633.448 (2003). Accordingly, we remand for entry of an order prescribing judgment interest pursuant to Iowa Code section 535.3.