Appellate Decisions
| Publication year | 2009 |
| Pages | 27 |
| Citation | Vol. 78 No. 6 Pg. 27 |
Supreme Court
Civil
CONSTRUCTIVE TRUSTS ESTATE OF DRAPER V BANK OF AMERICA N.A. JOHNSON DISTRICT COURT—AFFIRMED COURT OF APPEALS — REVERSED NO. 96,060 — APRIL 17, 2009
FACTS: Clark Draper and Ethel Catlin were married in 1967 and executed an antenuptial agreement in contemplation of their marriage. Ethel had no children, but Clark had three sons from a previous marriage. The antenuptial agreement stated each retained his or her assets, but that income from the assets would be shared in "a common fund for their mutual support and living expenses." Both Clark and Ethel executed wills after the marriage. Ethel agreed that she would consent to Clark's will and, if she survived him, she would maintain a valid will devising Clark's sons "not less than onefourth to each of them of her entire estate remaining after the payment of debts, administrative expense, taxes, or other obligations." Clark died testate in January 1977, and Ethel received her share of his estate as Clark's surviving spouse. In September 1977, before the estate was settled, Ethel created and funded an irrevocable trust whose successor trustee was UMB Bank and contained multiple charitable bequests upon her death, not including any of Clark's sons. In April 1982, Ethel executed a will dividing her estate equally among Clark's sons, but she also created another irrevocable trust in the same manner and beneficiaries as the first irrevocable trust. When Ethel died in October 2002, she left a probate estate of less than $10,000, while the total assets in the two irrevocable trusts exceeded $1 million. Clark's sons sued Bank of America and UMB on behalf of the estate requesting a constructive trust on three-quarters of the trust assets. The district court concluded that the antenuptial agreement contained an implied duty, which prevented Ethel from divesting Clark's sons of their share of the trust assets, and Ethel had a life estate in the marital property. The district court found that Ethel's transfers to the irrevocable trusts were void because the transfers exceeded her authority under the agreement. The court granted the estate's summary judgment motion and ordered that the property be placed in a constructive trust for Clark's sons. The Court of Appeals reversed concluding that the antenuptial agreement did not restrict Ethel with respect to gifting or inter vivos transfers of her property; further, no language in the agreement restricted Ethel from creating irrevocable trusts. Consequently, the panel determined that Ethel complied with the clear language of the antenuptial agreement and did not breach the contract. The Court of Appeals also found the nonclaim statute was unrelated to the present action.
ISSUE: Constructive trusts
HELD: Court found a confidential relationship existed because Clark made an agreement with Ethel, upon his death he left his assets to her, and he trusted her to comply with the agreement for the benefit of his sons. Court stated that an implied duty of good faith and fair dealing applied to Ethel's agreement to leave three-quarters of her estate to Clark's sons and that Ethel removed more than $1 million in assets from her estate and left $10,000 to be distributed to Clark's sons. In light of the trust Clark reposed in Ethel and the agreement they reached, her giving away virtually all of her assets to others thwarted the intent of the agreement and violated the duty of good faith that Ethel owed to Clark. Court stated that Clark's sons, not the estate, were the intended third-party beneficiaries under the antenuptial agreement and therefore Clark's sons had a claim against Ethel to the extent she failed to fulfill her contractual obligations. However, a beneficiary claim was not the only permissible course of action. Court held that the administrator could bring this action, the action was not a claim against the Estate, and the action was not barred by the failure to bring a claim against the Estate within the period of the nonclaim statute. Court found the action was filed well within the statute of limitations.
STATUTES: K.S.A. 20-3018; K.S.A. 58a-410, -416; K.S.A. 591401, -2239, -6a201, -6a204, -6a205; and K.S.A. 60-511, -512, -513, -515, -2101
DECEDENT'S ESTATES, CONSTRUCTIVE TRUSTS, STATUTE OF LIMITATIONS, AND NONCLAIM STATUTE NELSON V. NELSON SEDGWICK DISTRICT COURT—AFFIRMED COURT OF APPEALS — AFFIRMED NO. 97,664 — APRIL 17, 2009
FACTS: After 33 years of marriage, Margaret and Albert Nelson II divorced in 1975. The property settlement agreement provided that Albert II would execute a will creating a testamentary trust funded by his entire estate. Albert III and Markeyta, adult children, were one-half beneficiaries. Albert II married Doris three years after his divorce and remained married to her until his death in 2003. Albert III and Markeyta complained about substantial donations Albert II made to Oklahoma State University and gifts he made to Doris. They argued Albert II's gifts/donations violated the clear meaning of the property settlement agreement and should have been included in Albert II's entire estate in trust for their benefit. At the time of his death, Albert II's estate plan consisted of two inter vivos trusts and a pour-over will, as opposed to the will and testamentary trust contemplated by the settlement agreement. The inter vivos trusts, one a living trust, and the other an irrevocable trust were funded with corporate stock. Albert III and Markeyta were informed of the will and living trust, but Albert II's attorney did not reveal the irrevocable trust. 'They did not learn of its existence until they received the estate's tax return. Albert III and Markeyta sued Doris for the money they claimed was due under the 1975 property settlement agreement and subsequent income. They did not take any action to file a petition for administration of an estate in Kansas and had not filed a claim against Albert II or his estate in Florida. The district court and the Court of Appeals held the decedent's assets were not subject to a constructive trust because a claim had not been made against the decedent's estate within the period of limitations imposed by the Kansas nonclaim statute, K.S.A. 59-2239.
ISSUES: (1) Decedent's estates, (2) constructive trusts, (3) statute of limitations, and (4) nonclaim statute
HELD: Court stated the appellants failed to include a claim of constructive fraud in pretrial orders and the appellants consequently failed to assert a claim of either actual or constructive fraud. Court held the district court and Court of Appeals correctly determined that appellant's claim was for breach of contract of the 1975 property settlement agreement. Court clarified the law in Kansas concerning constructive trusts. Court concluded the view that actual or constructive fraud must be established before the remedy of a constructive trust can be granted is contrary to widely accepted analysis of the remedy and is not justified by Kansas' law. Court stated that any case holding that actual or constructive fraud is the exclusive basis for the remedy of a constructive trust is disapproved. Court held that the appellants as third-party beneficiaries asserted a claim against the estate by alleging that Albert II's transfers of assets to the trusts were a breach of the property settlement agreement and, therefore, the transfers were void. This claim against Albert II 's estate was barred by the appellants' failure to exercise the right of creditors to open an estate and make a timely claim as required by the Kansas nonclaim statute.
STATUTES: K.S.A. 59-1401, -2239; and K.S.A. 60-208, -209(b), -216(e), -260
EMINENT DOMAIN U.S.D. NO. 232 V. CWD INVESTMENTS JOHNSON DISTRICT COURT—AFFIRMED NO. 97,581 — APRIL 17, 2009
FACTS: School district condemned approximately 18 acres for use as an elementary school in a proposed residential development of more than 130 acres. Court-appointed appraisers valued the partial taking at $626,859. Landowner defendants appealed the award to the district court. District court granted school district's motion for partial summary judgment and struck claims for lost profits (through unbuilt homes and distribution of amenity costs), which defendants had not linked to fair market value of the land. District court also granted school district's motion in limine to exclude evidence of damages that had not been timely and/or adequately disclosed in discovery. Jury found fair market value of property was $718,100. Defendants appealed, claiming in part the district court erred in (1) granting partial summary judgment to bar several of defendants' damage claims because defendants failed to come forward with evidence and (2) granting motion in limine to bar damage claims not timely or adequately disclosed.
ISSUES: (1) Summary judgment in eminent domain appeal and (2) discovery responses
HELD: Rules of summary judgment apply in an eminent domain appeal under K.S.A. 26-508 where neither party bears the burden of proof on the issue of damages. Under facts in this eminent domain appeal, district court did not err in granting partial summary judgment to school district to bar several of defendant landowners' damages claims for their failure to come forward with evidence.
Under facts in case, district court did not abuse its discretion in granting school district's motion in limine to bar several of defendant landowners' damage claim on the basis that they were not timely or adequately disclosed. Analogous case of Olathe Mfg. Inc. v. Browning Mfg., 259 Kan. 735 (1996), is discussed.
No need to address additional issue of whether district court erred in refusing to instruct the jury that fair market value could not be determined by the summation of two different valuation approaches.
STATUTES: K.S.A. 26-504, -508, -513(c), -513(d)...
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