Opinion
No. 2-131 / 01-0178.
Filed July 19, 2002.
Appeal from the Iowa District Court for Mitchell County, JOHN S. MACKEY, Judge.
Marian Fox appeals from the district court's ruling determining whether proceeds from the sale of grain by decedent were a gift causa mortis, construing decedent's will, and resolving objections to her final report. AFFIRMED.
Nathaniel W. Schwickerath of Schwickerath, P.C., New Hampton, for appellant.
Mark L. Walk of McKinley, Folkers, Walk Murphy, Osage, for appellees.
James F. Smith of Noah, Smith Schuknecht, P.L.C., Charles City, for executor First Security Bank Trust Company.
Heard by MAHAN, P.J., and ZIMMER and EISENHAUER, JJ.
Marian Fox appeals from the district court's ruling determining whether the proceeds of the sale of grain were gifted away by decedent prior to his death as a gift causa mortis, construing decedent's will, and resolving objections to her final report. She contends the trial court erred in concluding there was no gift causa mortis of the proceeds from the grain sale. She also argues the court erred in its construction of the will, particularly in (1) concluding that a patent ambiguity existed where the will bequeathed "all other tangible personal property" to her, and then in a later provision directed the executor to sell the decedent's real estate and machinery and place the proceeds in a trust if an express condition of the will failed, and (2) using parol evidence to give effect to an expressly conditioned article of the will directing the sale of certain assets and creation of a trust when the condition failed to occur. We affirm.
I. BACKGROUND FACTS.
Dale Fox died testate in June 2000. At that time, he was married to Marian Fox, his second wife. He has nine children from a previous marriage. Marian was named as executor of Dale's estate, but she was removed and replaced by First Security Bank and Trust Company.
Article III of Dale's will left $15,000 cash to Marian. He then left his "interest in any automobiles, household furniture, goods and appliances, and all other tangible personal property, to my wife." He also left $5,000 cash to each of his children.
Article IV provided for the sale of his farm. He gave the first option to purchase his real estate to his sons, in order of the oldest to the youngest. If none of them exercised this option, then he gave the first option to purchase to his daughters, in order of the oldest to the youngest. Article IV was made subject to Article V. Dale's oldest son has exercised the option in Article IV.
Article V provided as follows:
If none of my children exercise the option granted in Article IV above, I direct my Executor to sell all of my real property and machinery, subject to the right of my wife, Marian Thein Fox, to use and occupy my house and curtilage until the closing on the farm. The net proceeds of said sale, after payment of any mortgage balances thereon, shall be distributed to First Security Bank and Trust, Charles City, Iowa, as Trustee, to be held, managed, and distributed as provided in Article VI below.
Article VI provided for the trust income to be paid to Marian, with the entire remaining principal to be paid to Dale's children upon Marian's death. In Article VII, Marian was named the residuary beneficiary.
Just prior to his death, Dale sold grain. The check for the sale proceeds was made payable to Dale. Marian received the check after Dale's death. Marian deposited the check into her personal account. She ultimately transferred the money into Dale's estate.
The executor bank filed an application to construe Dale's will. It alleged that a clear ambiguity and conflict arose in attempting to apply Articles III and V, in that Article III directs that all personal tangible property is to be given to Marian, but in Article V the machinery is to be sold and the proceeds put into a trust. Six of Dale's children filed an objection to the final report and accounting by Marian. They alleged there was no delivery of the grain to Marian, and thus the proceeds from the grain sale should have been distributed under Article III of the will.
During the hearing on the pending application and objection, the district court heard testimony from the scrivener of Dale's will, attorney Brian McPhail. McPhail testified Dale intended to leave personal property in and around the house to Marian, and wanted farm-related things such as machinery to be sold and put into trust pursuant to Article V of the will. McPhail also testified Dale had some cash on the farm that he wanted to go to Marian and that Dale had intended to sell some grain and machinery and add that to the cash he intended to give to Marian.
The district court determined that (1) the phrase "all other tangible personal property" in Article III does not include farm-related items and farm machinery as envisioned under Article V, (2) the grain proceeds were not a gift causa mortis to Marian, and (3) Dale intended to fund a trust with the proceeds from the sale of the real estate whether received by virtue of exercise of a son's or daughter's option granted under Article IV or by sale under Article V. Marian appeals.
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. GIFT CAUSA MORTIS.
Marian contends the trial court erred in concluding there was no gift causa mortis of the proceeds of the grain sale when Dale expressed his intent that the proceeds were to be gifted to her and delivered the grain to the purchaser prior to his death, but the proceeds were not received until after his death. She argues that actual delivery of the proceeds was impossible, because Dale died prior to his receipt of the proceeds. She maintains that the facts of this case support a constructive delivery or delivery to a third person, satisfying the elements of a gift causa mortis.
A gift causa mortis is defined as a gift of personal property made by one in expectation of death then imminent upon condition that the property shall belong fully to the donee if the donor dies as anticipated, leaving the donee surviving him, and the gift in the meantime is not revoked. Carlson v. Bankers Trust Co., 242 Iowa 1207, 1215, 50 N.W.2d 1, 6 (1951). There cannot be a gift causa mortis unless (1) it is with a view to the donor's death, (2) it is conditioned to take effect only on the donor's death from his existing disorder or illness, and (3) there is a delivery of the subject of the gift. Id. "There may be a constructive or symbolic delivery where manual tradition cannot be made, either from the nature of the subject or its situation at the time." Id. at 1216, 50 N.W.2d at 6. A delivery may be made to a third person for the benefit of the donee and, when this is done, the requirements necessary to a gift causa mortis have been satisfied. In re Estate of Hanson, 205 Iowa 766, 769, 218 N.W. 308, 310 (1928). In this case, the parties have focused only on the question of whether there was a delivery of the proceeds. Thus, we will limit our discussion to that issue.
We conclude there was no delivery, either actual or constructive, to Marian of the proceeds from the grain sale. In order for delivery to have occurred, there must have been a present transfer of title. Gray v. Watters, 243 Iowa 430, 434, 51 N.W.2d 885, 888 (1952). Dale delivered the grain to the purchaser for the purpose of converting the grain into cash proceeds. He did not intend to transfer title to the proceeds to the purchaser of the grain to be held for Marian. Thus, there can be no delivery of the proceeds, either actual or constructive. We affirm the trial court on this issue.
IV. MACHINERY.
Marian argues the trial court erred in concluding that a patent ambiguity existed where the will bequeathed "all other tangible personal property" to her, and then in later provision directed the executor to sell the decedent's real estate and machinery and place the proceeds in a trust if an express condition of the will failed, and that condition did fail. She contends the court erred by expanding the term "machinery" to include farm-related items, and by limiting the term "all other tangible personal property" to include only that personal property within the curtilage of the residence, where the court specifically found only a patent ambiguity.
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 the 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 there is a patent ambiguity as regards the terms of the will governing the distribution of the farm machinery. Article III gives "all other tangible personal property" to Marian, but Article V provides for the sale of machinery. The scrivener testified Dale intended to leave all personal property within the curtilage of the residence to Marian, and intended that all farm-related items including machinery be sold and the proceeds be placed in trust. We conclude that there is a patent ambiguity, and that Dale intended for his executor to sell the machinery. Furthermore, we find the trial court did not err in differentiating between farm-related items including machinery and all personal property within the curtilage of the residence. Because we agree with the trial court's conclusions, we affirm the trial court on this issue.
V. CREATION OF A TRUST.
Marian contends the trial court erred in giving effect to Article V and creating a trust from the proceeds from the sale of machinery and real estate when the condition upon which Article V was premised failed to occur. She argues the court erred in using parol evidence to give effect to Article V.
We conclude there is a patent ambiguity as regards the creation of a trust, and thus the parol evidence was admissible. Article V is subject to two interpretations, namely that a trust would be created in the situation where the children did not exercise their options under Article IV, or that a trust was to be created whether or not the options were exercised. The scrivener testified that Dale intended to dispose of the farm-related items to the children and the personal property around the curtilage to Marian. The trial court concluded that he intended to fund a trust with the proceeds of the real estate sale, whether the real estate was sold under Article IV or Article V. We agree, and thus we affirm the trial court on this issue.
VI. CONCLUSION.
We conclude Dale did not deliver the proceeds from the grain sale, and thus there was no gift causa mortis of those proceeds. We also determine there was a patent ambiguity in the will regarding the distribution of the personal property and farm machinery. We conclude Dale intended to give Marian the personal property within the curtilage, and wished to have the farm related items, including machinery, sold with the proceeds to be placed in trust. We find that Dale intended the creation of a trust, whether his real property was distributed under Article IV or Article V. Our resolution of this case makes it unnecessary to address the children's renewed motion to dismiss. We affirm the trial court's ruling.
AFFIRMED.