Arnott v. Arnott , 190 Ohio App. 3d 493 ( 2010 )

[Cite as Arnott v. Arnott, 190 Ohio App. 3d 493, 2010-Ohio-5392.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
HIGHLAND COUNTY
In re Arnott et al. :
: Case No. 09CA25
:
DECISION AND
: JUDGMENT ENTRY
:
Released 11/1/10
:
______________________________________________________________________
APPEARANCES:
Judkins & Hayes, Robert J. Judkins, and John W. Judkins, for appellees Kenneth D.
Arnott et al.
Shannon M. Treynor, for appellants James Wayne Arnott et al.
______________________________________________________________________
Harsha, Judge.
{¶ 1} James Arnott, successor trustee of the Joseph Scott Arnott Revocable
Trust (“Trust”), appeals from a declaratory-judgment action in the probate court
involving the Trust, which gave James and his brother, Kenneth Arnott, the option to
purchase specified parcels of the Trust-owned farmland “at a price equal to the
appraised value of said real property as affixed for federal and/or state estate tax
purposes.” Kenneth and other beneficiaries disagree with James over the interpretation
of this sentence. Kenneth argues that the option price is the value of the realty as
determined by the appraiser, i.e., the fair market value. James contends that the option
price is the appraiser’s value reduced by an estate-tax deduction allowed for farmland in
either the federal or state tax code.
Highland App. No. 09CA25 2
{¶ 2} In 2007, Kenneth filed a complaint seeking declaratory relief and asking
the probate court to interpret the provision in the Trust concerning the option price. The
court found that the contested sentence was unambiguous and declared that the option
price was the appraiser’s value, i.e., the fair market value. The court reached this
conclusion because the appraisal document was physically “affixed” to the estate-tax
return.
{¶ 3} James initially asserts that the trial court erred in entertaining an action for
declaratory relief. He claims that the complaint failed to set forth a “justiciable issue”
and additionally, declaratory relief would not end the controversy between the parties.
However, the interpretation of the correct option price was justiciable because, to the
detriment of Kenneth and other Trust beneficiaries, James had already exercised his
option according to his interpretation of the contested provision. And the declaratory-
judgment action would end the controversy concerning the interpretation of the
sentence, as well as confer certain legal rights and status on the Trust beneficiaries.
Thus, the trial court did not abuse its discretion in exercising declaratory relief.
{¶ 4} Next, James asserts that the trial court erred in its interpretation of the
contested option-price language. We agree that the sentence concerning the option
price is susceptible of more than one reasonable interpretation. However, we are
guided by the rule that we should review the Trust as a whole to determine the settlor’s
intent. Looking at the document as a whole, we conclude that the settlor intended the
option price to be the value established for federal and/or state estate-tax purposes, in
this case, the federal and/or Ohio qualified-use value. This result comports with the
Highland App. No. 09CA25 3
settlor’s intent to keep the farms in the family and to benefit James over other Trust
beneficiaries. Therefore, we reverse the trial court’s judgment.
I. Summary of the Case
{¶ 5} In 2004, Joseph Arnott created the Trust, designating his son James as
successor trustee upon his death. His other son, Kenneth Dale Arnott, was designated
second successor trustee. James, Kenneth, and a number of other individuals are
beneficiaries under the Trust.
{¶ 6} The Trust document contains two paragraphs at issue here. The “d.3”
paragraph provides Kenneth with the exclusive option to purchase one tract of farmland
owned by the Trust. Paragraph “d.4” gives James the exclusive option to purchase
three tracts of farmland owned by the Trust. The Trust did not list specific purchase
prices for the tracts of realty. Instead, the option price was described as “a price equal
to the appraised value of said tract as affixed for federal and/or state estate tax
purposes.”1 Both James and Kenneth had to exercise their option to purchase the
property within 90 days of the “written date of notice to [either son] of the appraised
value affixed by the appraiser of the trust estate.”
{¶ 7} After Joseph’s death, the Trust hired John Rittenhouse to appraise the
four tracts of Trust property. He appraised James’s three tracts of farmland at a total
value of $1,821,00. And he appraised Kenneth’s single tract at $210,000. Neither party
disputes that the Rittenhouse appraisals were physically attached to both Joseph’s
federal and state estate-tax-return schedules.
{¶ 8} Peter Quance, attorney for the Trust, wrote a letter to the Trust
beneficiaries, explaining that the Trust gave James and Kenneth the option to purchase
1
In the clause granting James an option, the word “tract” is replaced by “real property.”
Highland App. No. 09CA25 4
farmland at the value listed on the federal and state estate-tax returns. Quance advised
that a deduction, also known as a “qualified use valuation,” was available for the
farmland real estate on both the federal and state estate-tax returns. If James and
Kenneth opted to use the Ohio version of the qualified-use valuation, James’s option
price to purchase the three tracts of farmland would be $1,375,265 and Kenneth’s
option price would be $155,735. As is evident, both qualified-use values were
significantly less than the Rittenhouse appraisals.
{¶ 9} Kenneth’s attorney, Larry D. Hayes, wrote Quance a letter, explaining that
he disagreed with Quance’s interpretation of the Trust option price. Hayes argued that
the correct option price was the actual appraised value of the farmland, i.e., the
Rittenhouse appraisal. James hired a new attorney, James M. Dietz, who responded
with a letter defending Quance’s interpretation.
{¶ 10} James decided to exercise his option and purchase the three tracts of
property at the Ohio qualified use value, or $1,375,265. Kenneth refused to exercise his
option at any reduced value and wished to pay the Rittenhouse appraisal price of
$210,000. Because of the 90-day limitation and to ensure timely administration of the
Trust, James created and recorded a deed memorializing a transfer of Kenneth’s option
property to Kenneth. The deed reflected a sale price of the Ohio qualified-use value.
Proceeds from the Trust were used to pay the purchase price, pending the outcome of
litigation concerning the correct interpretation of the Trust option price. The propriety of
James’s decision to exercise Kenneth’s option and convey the property to him is not an
issue here.
Highland App. No. 09CA25 5
{¶ 11} In August 2007, Kenneth and other trust beneficiaries filed suit against
James in the probate court of Highland County, seeking a declaratory judgment of the
correct interpretation of the option price. After a trial, the court issued a decision finding
that “a price equal to the appraised value of said tract as affixed for federal and/or state
estate tax purposes” meant the appraised value of the tracts of realty, i.e., the
Rittenhouse appraisal.
{¶ 12} After the court issued this decision, the case went through a number of
procedural hurdles that are not relevant except to note that the case was dismissed,
refiled in a different county, transferred, refiled in the same county, and then
consolidated. The case ultimately ended up refiled in Highland County, where the
parties stipulated to all matters decided in the original lawsuit.
{¶ 13} In April 2009, the Highland County probate court issued an entry that
closely mirrored its initial decision. First, it found that the complaint satisfied the
requirements for a declaratory action. Second, it addressed the contested option
language and found:
On review of the language at issue in Article III paragraphs d.3 and d.4 of
the trust, specifically “a price equal to the appraised value of said tract
(d.3) or appraised value of said real property (d.4) as affixed for federal
and/or state estate purposes * * *.” It has been since initial review of said
language by this Court and remains crystal clear to this Court the option
price of each of the four tracts is the Rittenhouse appraisal value. The
Rittenhouse appraisal is the only “appraised value” of record in this action
and the only “appraised value” affixed to the Federal and State Estate Tax
returns.
{¶ 14} James filed a timely appeal from this entry.
II. Assignments of Error
{¶ 15} James sets forth the following assignments of error:
Highland App. No. 09CA25 6
Assignment of Error No. 1
The trial court erred in its finding that the grounds for proceeding on a declaratory
judgment action were satisfied.
Assignment of Error No. 2
The court erred in its finding that the “appraised price affixed for federal and/or
state [estate] tax purposes” is equivalent to “fair market value.”
Assignment of Error No. 3
The finding of the trial court that no tax implications would flow from using the
Rittenhouse appraisal as purchase price is unsupported by the record and
against the manifest weight of the evidence.
III. Grounds for a Declaratory-Judgment Action
{¶ 16} In his first assignment of error, James claims that the court erred in its
finding that grounds for issuing a declaratory judgment were satisfied. The trial court
found that a complaint for declaratory judgment must show “1) a justifiable2 controversy
exists; 2) facts to justify a declaration as to the rights of the parties would terminate the
uncertainty and put an end to the controversy; and 3) the party seeking relief has a legal
interest in the controversy.” The trial court briefly mentioned that it found that these
elements had been satisfied. It did not explain its factual or legal conclusions for having
done so.
{¶ 17} A declaratory judgment is a civil action and provides a remedy in addition
to other legal and equitable remedies available. Aust v. Ohio State Dental Bd. (2000),
136 Ohio App. 3d 677, 681, 737 N.E.2d 605. A court may grant declaratory relief so
long as it finds the action is within the spirit of the Declaratory Judgments Act, R.C.
Chapter 2721, that a real and justiciable controversy exists between the parties, and
that speedy relief is necessary to preserve rights that may otherwise be impaired or lost.
2
We presume the trial court meant “justiciable.”
Highland App. No. 09CA25 7
Schaefer v. First Natl. Bank (1938), 134 Ohio St. 511, 18 N.E.2d 263, at paragraph
three of the syllabus. Dismissal of a complaint seeking declaratory relief is appropriate
when no real controversy or justiciable issue exists between the parties. State v.
Brooks (1999), 133 Ohio App. 3d 521, 525, 728 N.E.2d 1119, citing Weyandt v. Davis
(1996), 112 Ohio App. 3d 717, 721, 679 N.E.2d 1191.
A. Standard of Review
{¶ 18} James contends that our standard of review is mixed, i.e., de novo review
of the legal issues and deferential review of the facts. Kenneth argues that the
appropriate standard for reviewing declaratory judgments is abuse of discretion.
{¶ 19} In Mid-American Fire & Cas. Co. v. Heasley, 113 Ohio St. 3d 133, 2007-
Ohio-1248, 863 N.E.2d 142, the Supreme Court of Ohio reaffirmed that “ ‘[t]he granting
or denying of declaratory relief is a matter for judicial discretion, and where a court
determines that a controversy is so contingent that declaratory relief does not lie, this
court will not reverse unless the lower court’s determination is clearly unreasonable.’ ”
Id. at ¶12, quoting Bilyeu v. Motorists Mut. Ins. Co. (1973), 36 Ohio St. 2d 35, 303
N.E.2d 871, at syllabus. See also Englefield v. Corcoran, Ross App. No. 06CA2906,
2007-Ohio-1807, at ¶11. Accordingly, we will not reverse the trial court’s decision to
render declaratory relief unless the trial court abused its discretion. “Abuse of discretion”
connotes more than an error of judgment; it implies that the court’s action was
unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio
St.3d 217, 219, 450 N.E.2d 1140.
B. A Justiciable Controversy
Highland App. No. 09CA25 8
{¶ 20} James sets forth two principal arguments concerning the absence of a
“justiciable controversy.” First, James contends that the actual option price is now a
moot point because the options were exercised and the respective farmlands were
transferred before the complaint was filed. Kenneth argues that the controversy is ripe
because the lawsuit was filed only after James had exercised the options at “a price
which was beneficial to him, and detrimental to other trust beneficiaries.”
{¶ 21} Second, James claims that the trust document gave him broad powers as
successor trustee, including the explicit authority to convey any unexercised option
property to himself in the absence of a higher claim. He explains that “a mere
declaration of rights, given the broad discretion of the Trustee James W. Arnott to vend
or not vend the trust assets, fails to rise to the level of controversy required for just
declaratory adjudication.” Kenneth argues that James’s broad powers to sell trust
property have no effect on the justiciability of the controversy. Kenneth contends that
interpretation of the correct option price was not a discretionary matter for James and
that the issue was properly before the probate court. And until the court determined that
James’s option price was incorrect, no secondary action, i.e., a breach-of-fiduciary-duty
claim, would be ripe.
{¶ 22} “For a cause to be justiciable, there must exist a real controversy
presenting issues which are ripe for judicial resolution and which will have a direct and
immediate impact on the parties.” Stewart v. Stewart (1999), 134 Ohio App. 3d 556, 558,
731 N.E.2d 743, quoting State v. Stambaugh (1987), 34 Ohio St. 3d 34, 38, 517 N.E.2d
526. “[I]n order for a justiciable question to exist, ‘[t]he danger or dilemma of the plaintiff
must be present, not contingent on the happening of hypothetical future events * * * and
Highland App. No. 09CA25 9
the threat to his position must be actual and genuine and not merely possible or
remote.’” Mid-American, 113 Ohio St. 3d 133, at ¶ 9, quoting League for Preservation of
Civ. Rights v. Cincinnati (1940), 64 Ohio App. 195, 197, 28 N.E.2d 660. Thus,
“[i]nherent in determining whether a complaint sets forth a justiciable issue is the
question of ripeness.” Thomson v. Ohio Dept. of Rehab. & Corr., Franklin App. No.
09AP-782, 2010-Ohio-416, at ¶10.
{¶ 23} The declaratory action here presented a justiciable issue between the
parties. James and Kenneth fundamentally disagreed on the correct interpretation of
the option-price language. Subsequently, James exercised both options to purchase
Trust lands based on his own interpretation of the option price. At that time, a “real
controversy” arose.
{¶ 24} Clearly, the issue is not moot simply because James exercised the
options. If James underpaid for his farmland by using the Ohio qualified-use evaluation,
then the Trust, Kenneth, and the other beneficiaries of the Trust were harmed by a
reduction in the total assets available for distribution. In other words, the Trust
beneficiaries faced an “actual and genuine” threat to their interest in the Trust property.
Regardless of whether James properly exercised the option, the correct option price
remained an active, genuine controversy between the parties.
{¶ 25} Moreover, James’s broad powers as successor trustee do not make the
issues here any less justiciable. James may have had discretion to convey, manage,
and even purchase unexercised option property. But as Kenneth correctly argues,
James does not have the power as successor trustee to interpret Trust provisions in a
Highland App. No. 09CA25 10
manner inconsistent with the settlor’s intentions. Accordingly, the trial court did not
abuse its discretion in its finding that a justiciable issue existed.
C. Termination of the Controversy
{¶ 26} Next, James argues that Kenneth, other than requesting the court to
determine the option price, failed to request any additional relief that would flow from
this determination. Essentially, he contends that the trial court’s determination of the
option price would not put an “end to the controversy.” Kenneth would still be forced to
pursue a secondary action, such as a breach-of-fiduciary-duty claim against James.
Kenneth argues that no additional prayer for relief was necessary because R.C.
2721.05, part of the Declaratory Judgment Act, allows a trial court to interpret and
construe provisions in a Trust.
{¶ 27} The Supreme Court of Ohio long ago held that the Declaratory Judgment
Act is remedial in nature and should be liberally construed, but it “does not require a
court to render a futile judgment that ‘would not terminate’ any ‘uncertainty or
controversy’ whatsoever.” Walker v. Walker (1936), 132 Ohio St. 137, 139, 5 N.E.2d
405, quoting from an earlier version of the Declaratory Judgment Act, Gen.Code 12102-
6. And under R.C. 2721.07 a court may refuse to render declaratory relief “if the
judgment or decree would not terminate the uncertainty or controversy giving rise to the
action or proceeding in which the declaratory relief is sought.”
{¶ 28} “[I]n keeping with the long-standing tradition that a court does not render
advisory opinions, [courts] allow the filing of a declaratory judgment only to decide ‘an
actual controversy, the resolution of which will confer certain rights or status upon the
Highland App. No. 09CA25 11
litigants.’” Mid-American, 113 Ohio St. 3d 133, at ¶ 9, quoting Corron v. Corron (1988),
40 Ohio St. 3d 75, 79, 531 N.E.2d 708.
{¶ 29} The only controversy presented here was the correct option price. And
the court’s interpretation of the correct option price put an end to that controversy
(contingent of course upon the outcome of this appeal and any subsequent
proceedings). However, James is correct that the court’s interpretation of the option
price may not fully end all controversy between the parties. James would still have to
rescind his option and reconvey the Trust property or pay the Trust an amount reflecting
the correct option price for the option property. If he failed to act, the Trust beneficiaries
might seek injunctive relief or file a breach-of-fiduciary-duty action. Thus, the trial
court’s declaration here would not end all possible future controversies between the
parties.
{¶ 30} However, we agree with Kenneth that R.C. 2721.05 explicitly provides a
right of action for a trust beneficiary seeking a declaration concerning the interpretation
of a trust provision. Furthermore, R.C. 2721.02(A) provides that “courts of record may
declare rights, status, and other legal relations whether or not further relief is or could be
claimed.” Thus, the legislature clearly intended for courts to issue declaratory
judgments provided for in the Act regardless of whether secondary actions were
necessary to provide parties with full relief. See also State ex rel. Thernes v. United
Local School Bd. Dist. of. Edn., Columbiana App. No. 07CO45, 2008-Ohio-6922
(concluding that a declaratory action seeking interpretation of a statute was proper even
when the declaratory judgment would not terminate a related but separate contractual
dispute between the parties).
Highland App. No. 09CA25 12
{¶ 31} Nonetheless, James directs our attention to the case of Hay v. Jefferson
Industries Corp. (1992), 62 Ohio Misc.2d 472, 601 N.E.2d 672, for the proposition that a
court should decline to award declaratory relief when the practical effect of the
declaratory action would not fully end the dispute between the parties. In Hay, the
plaintiff alleged that she had slipped and fallen on an icy sidewalk while leaving the
worksite of her employer, Jefferson Industries Corporation. Id. at 474. She sued both
Jefferson and the Ohio Bureau of Workers’ Compensation. Her complaint alleged that
Jefferson was liable for her injuries and that she also was entitled to participate in the
Workers’ Compensation fund. She additionally sought a declaration from the court as
to which claim for liability she should pursue. Id.
{¶ 32} The court declined to grant the requested declaratory relief and
characterized it as a request for an advisory opinion. The court noted that nothing in the
Declaratory Judgment Act provided for a declaration of remedies available to a
personal-injury plaintiff. Id. at 474-475. Moreover, the court noted that such a
declaration, if made, would not terminate the controversy between the parties. Id. at
475. The court explained: “Plaintiff would still have the burden of proving those facts
necessary to establish her right to recover from Jefferson or participate in the bureau’s
fund.” Id.
{¶ 33} We find Hay distinguishable. In that case, no portion of the Declaratory
Judgment Act envisioned the sort of relief sought by the plaintiff. But here, as
discussed above, one provision within the Declaratory Judgment Act does just that.
R.C. 2721.05 provides:
Any person interested as or through an executor, administrator, trustee,
guardian, or other fiduciary, creditor, devisee, legatee, heir, next of kin, or
Highland App. No. 09CA25 13
cestui que trust, in the administration of a trust, or of the estate of a
decedent, *** may have a declaration of rights or legal relations in respect
thereto in any of the following cases:
***
(C) To determine any question arising in the administration of the estate or trust,
including questions of construction of wills and other writings.
{¶ 34} The statute explicitly provides a right of action for a trust beneficiary, i.e.,
“cestui que trust,” to obtain declaratory relief regarding the administration of a trust,
including questions about “writings” in the Trust. Moreover, in Hay, the declaratory
action would not have granted the plaintiff any rights that she did not possess
beforehand. All she wanted from the court was guidance, i.e., who do I sue? Here, the
practical effect of the declaratory decision will be to grant Kenneth and other trust
beneficiaries potential causes of action against James if he decides to do nothing. That
is to say, the action has conferred “certain rights or status upon the litigants.”
{¶ 35} Accordingly, we overrule James’s first assignment of error.
IV. Interpretation of the Option-Price Language
A. Standard of Review
{¶ 36} Again, the parties dispute the standard of review. James argues that we
are faced with a legal issue here, akin to the interpretation of wills, and our review is de
novo. Citing Mid-American, Kenneth contends that our review is abuse of discretion,
even when reviewing legal issues. Kenneth also cites Hamblin v. Daugherty, Medina
App. No. 08CA0009-M, 2008-Ohio-5306, for an example of a case where the court
adopted an abuse-of-discretion standard when reviewing legal determinations in a
declaratory-judgment action.
Highland App. No. 09CA25 14
{¶ 37} As we stated in Section I of the opinion, in Mid-American, the court
reaffirmed its prior holding that the standard of review for dismissal of a declaratory-
judgment action is abuse of discretion. The language used by the court in Mid-
American was broad: “We therefore reaffirm that declaratory judgment actions are to be
reviewed under an abuse-of-discretion standard.” Id. at ¶ 14.
{¶ 38} Apparently relying on this language, in Hamblin, 2008-Ohio-5306, the
Ninth District indicated that it was applying an abuse-of-discretion standard to a trial
court’s legal conclusions in a declaratory-judgment action. There the appellant argued
that the trial court erred in granting declaratory relief on the basis of three separate legal
arguments: election-of-remedies doctrine, collateral estoppel, and mootness. The court,
citing Mid-American, announced that its standard of review of the trial court’s grant of
declaratory judgment was abuse of discretion. Id. at ¶ 8.
{¶ 39} Upon review of Hamblin, the court appears to have engaged in de novo
review. This was noted by the concurring judge who agreed with most of the court’s
analysis, but disagreed with applying an abuse-of-discretion standard. Id. at ¶ 22. The
concurring opinion acknowledged that Mid-American mandates abuse-of-discretion
review of the decision to grant or deny declaratory relief. But it explained, “[o]nce a trial
court determines that a request for declaratory relief should be entertained, it applies
the law just as it does in any other case. It does not have discretion to determine
whether to correctly apply the law.” Id. at ¶ 23.
{¶ 40} This position comports with a decision of the Ninth District only a year
prior, in Pierson v. Wheeland, Summit App. No. 23422, 2007-Ohio-2474. In that case,
the court, also noting the recent Mid-American decision, held that it would apply de novo
Highland App. No. 09CA25 15
review to a purely legal issue decided within the context of a declaratory-judgment
action. Id. at ¶ 10.
{¶ 41} Likewise, we do not read Mid-American to mandate abuse-of-discretion
review of legal issues in a declaratory-judgment action. In other words, no court has the
discretion to commit an error of law. And in fact, the issue in Mid-American was
whether the court erred in dismissing an action for declaratory judgment, i.e., whether
the grounds for declaratory judgment (discussed in Section I of this opinion) were
satisfied. The court did not address whether the trial court, after exercising its discretion
to proceed with declaratory judgment, correctly applied the substantive law.
{¶ 42} And thus we agree with the concurring opinion in Hamblin. A trial court’s
determination of purely legal issues is never one of degree or discretion. Regardless of
whether the action is styled as one for declaratory relief, the trial court must correctly
apply the law. See also State v. Thompson, Montgomery App. No. 22984, 2010-Ohio-
1680 (Fain, J., concurring). Accordingly, we review the trial court’s interpretation of the
option clause de novo.
B. The Option-Price Language
{¶ 43} The language at issue in the trust is located in Article Three and reads:
d.3 I give, bequeath and devise to my son, [KENNETH] DALE ARNOTT,
on the condition he survive me, the exclusive option to purchase a certain
tract of land, containing 69 acres, more or less, located at 9784 Paint
Creek Road, in the Township of Madison, County of Highland, State of
Ohio, at a price equal to the appraised value of said tract as affixed for
federal and/or state estate tax purposes. Said option shall expire ninety
(90) days from the written date of notice to Dale Arnott of the appraised
value affixed by the appraiser of the trust estate.
d.4 I give, bequeath and devise to JAMES WANYE ARNOTT, on the
condition that he survive me, the exclusive option to purchase any part of
or all of my remaining land titled to the trust, including any real estate not
Highland App. No. 09CA25 16
purchased by Dale Arnott and to include the following, being (1) tracts
containing 220 acres, more or less, located at 12951 Black Road, in the
Township of Paint, County of Highland, State of Ohio, and.or [sic] (2)
approximately 99 Acres, located in Perry Township, Fayette County, Ohio,
and/or (3) a tract of land containing 248 Acres located in Paint Township
on Ladd Road, each at a price equal to the appraised value of said real
property as affixed for federal and/or state estate tax purposes. Said
option shall expire ninety (90) days from the written date of notice to
James Wayne Arnott of the appraised value affixed by the appraiser of the
trust estate.
{¶ 44} When we construe the language of a revocable inter vivos trust, we apply
the same rules of construction as when we interpret wills. Henson v. Casey, Pickaway
App. No. 04CA9, 2004-Ohio-5848, at ¶ 12, citing Ohio Citizens Bank v. Mills (1989), 45
Ohio St. 3d 153, 543 N.E.2d 1206, superseded by statute on other grounds. Our
fundamental goal is to “ascertain and carry out, within the bounds of the law, the intent
of the testator.” In re Estate of Lewis (July 23, 1999), Athens App. No. 98CA17, 1999
WL 595458, at *2, citing Domo v. McCarthy (1993), 66 Ohio St. 3d 312, 314, 612 N.E.2d
706; Oliver v. Bank One, Dayton, N.A. (1991), 60 Ohio St. 3d 32, 34, 573 N.E.2d 55.
Therefore, when the language of the will is clear and unambiguous, the testator’s intent
must be ascertained from the express terms of the will itself. Domo at 314. Only when
the express language of the will creates doubt as to its meaning may the court consider
extrinsic evidence to determine the testator’s intent. Oliver at 34. See also In re Estate
of Evans (1956), 165 Ohio St. 27, 30, 133 N.E.2d 128. In addition, when determining
the testator’s intent, we consider not just the contested language but rather the “whole
will, and read in light of the applicable law, and circumstances surrounding the will’s
execution.” Cent. Trust Co. of N. Ohio, N.A. v. Smith (1990), 50 Ohio St. 3d 133, 136,
553 N.E.2d 265.
Highland App. No. 09CA25 17
{¶ 45} Kenneth argues that the language is unambiguous. He contends that the
option price must be the Rittenhouse value because that is the only “appraisal” that was
physically attached, or “affixed,” to the estate-tax return. James argues that this
interpretation fails to give any effect to the qualifying words “for federal and/or state
estate tax purposes.” James argues that this last clause indicates that the option price
was intended to be the value submitted to the federal and/or state taxing authority for
purposes of paying any federal and/or state estate taxes owed. And the only appraisal
values submitted “for” federal and/or state purposes were the qualified-use values.
{¶ 46} At first glance, the contested sentence appears ambiguous. The term
“affixed” appears to be a main source of confusion and apparently formed the basis of
the trial court’s decision.
{¶ 47} When construing testamentary language, words “if technical, must be
taken in their technical sense, and if not technical, in their ordinary sense, unless it
appear[s] from the context that they were used by the testator in some secondary
sense.” Townsend’s Exrs. v. Townsend (1874), 25 Ohio St. 477, paragraph three of the
syllabus. Black’s Law Dictionary defines “affix” as “to attach, add to, or fasten on
permanently.” Ballentine’s Law Dictionary defines “affix” as “to attach in a degree of
permanence” and “affixed” as “securely attached.” And the Merriam-Webster
Dictionary defines it as “to attach physically” or “to attach in any way.” Clearly, the word
connotes a degree of physical attachment. But the dictionary definitions suggest that
physical attachment is not the only possible method of “affixing” something, especially
when that word is subject to a dependent clause. As alluded to previously, “[a]ll the
Highland App. No. 09CA25 18
parts of the will must be construed together, and effect, if possible, given to every word
contained in it.” Townsend at paragraph four of the syllabus.
{¶ 48} The trial court interpreted “affixed” in the most physical sense and in
isolation from the remaining language in the sentence and the rest of the document.
The Rittenhouse appraisal was the only “appraisal” that was physically attached (or
perhaps more accurately, “appended”) to the estate-tax returns. But as James
indicates, this interpretation ignores the qualifying phrase “for federal and/or state estate
tax purposes.” When we give effect to that qualifying phrase, the most logical
interpretation is that the appraised value affixed “for federal and/or state estate tax
purposes” is the value that was used on the tax-return schedule, i.e., the qualified value,
which was physically written (in a sense, affixed) and submitted to the taxing authority
for determination of the estate tax. The Ohio qualified-use value was the only
“appraised value” that was used for estate-tax purposes. The Rittenhouse appraisals
were the basis for those values. But they were not the actual appraised value submitted
for determination of the federal and/or state estate tax.
{¶ 49} Arguably, the contested sentence, when viewed alone, is ambiguous. But
interpretation of testamentary or trust documents, like the interpretation of legislation, is
a holistic endeavor. And there is another sentence in both options that significantly
clarifies the meaning of the word “affixed.”
{¶ 50} Both paragraphs conclude with the phrase “[s]aid option shall expire
ninety (90) days from the written date of notice to [Kenneth or James] of the appraised
value affixed by the appraiser of the trust estate.” This sentence clearly demonstrates
that “affixed” is being used in some secondary sense. If one replaces the word “affixed”
Highland App. No. 09CA25 19
with the phrase “physically attached,” the sentence becomes nonsensical: “[s]aid option
shall expire ninety (90) days from the written date of notice *** of the appraised value
physically attached by the appraiser of the trust estate.” (Emphasis added.) Physically
attached to what? But if one interprets the word “affixed” to mean “set,” “determined,” or
“established,” the sentence is logical: “[s]aid option shall expire ninety (90) days from
the written date of notice *** of the appraised value set by the appraiser of the trust
estate.” Moreover, it is logical that the settlor would have used unqualified language,
i.e., “of the appraised value affixed by the appraiser of the estate,” in the sentence fixing
the option price if his intent were to adopt the fair market value of the land. In other
words, there would be no need to add language referring to estate-tax values if it were
not meant to qualify the language that preceded it.
{¶ 51} Finally, when we look at the document as a whole to determine the
settlor’s intent, it is clear that he intended to favor James in the distribution of the trust’s
assets. James was to receive 40 percent of the distribution of the Trust property after
all options were exercised. The other beneficiaries received only a 10 or 15 percent
share. Likewise, James received the option to purchase three tracts of land totaling 567
acres, while Kenneth received an option to purchase 69 acres. The other beneficiaries
received no options. And the fact that the settlor granted James and Kenneth the option
to purchase land is a strong indicator that he wished the land to remain in the family
with his sons. Using the qualified-use value rather than the fair market value is more
likely to accomplish that result because the purchase prices were substantially lower. In
light of the settlor’s clear intent to keep the farms in the family and to favor James in the
Highland App. No. 09CA25 20
distribution of Trust assets, it is only logical that he would use an option value that
promoted that intent, i.e., the value set for estate-tax purposes.
{¶ 52} The appraised value established for state estate-tax purposes was the
Ohio qualified-use value. Therefore James’s interpretation of the Trust provision was
correct. Accordingly, we hold that “at a price equal to the appraised value of said real
property as affixed for federal and/or estate tax purposes” means that the option price
was the appraised value, reduced by any proper deductions, submitted to the taxing
authority (either federal or Ohio).
V. Manifest Weight of the Evidence
{¶ 53} James’s third assignment of error is moot per our resolution of his second
assignment of error.
VI. Conclusion
{¶ 54} For the foregoing reasons, we overrule James’s first assignment of error.
However, we sustain his second assignment of error and reverse the declaratory
judgment of the trial court. James’s third assignment of error is moot based upon our
disposition of his second assignment of error.
Judgment reversed
and cause remanded.
MCFARLAND, P.J., and ABELE, J., concur.