Estate of Finstrom , 2020 ND 227 ( 2020 )

Filed 10/26/20 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2020 ND 227
In the Matter of the Estate of Ruth Finstrom, Deceased
Heartland Trust Company c/o Jon Benson,
Personal Representative of
The Estate of Ruth Finstrom, Petitioner and Appellee
v.
Joel Finstrom and James Finstrom, Respondents and Appellants
and
Daniel Finstrom, Janice Schulz, and
Mark Finstrom, Respondents and Appellees
and
Rebecca Lusk and Annette Hauser, Respondents
and
Teresa Finstrom, Claimant and Appellee
No. 20190360
In the Matter of the Estate of Ruth Finstrom, Deceased
Heartland Trust Company c/o Jon Benson,
Personal Representative of
The Estate of Ruth Finstrom, Petitioner and Appellee
v.
Joel Finstrom, Respondent
and
Annette Hauser and James Finstrom, Respondents and Appellants
and
Daniel Finstrom, Janice Schulz, and
Mark Finstrom, Respondents and Appellees
and
Rebecca Lusk, Respondent
and
Teresa Finstrom, Claimant and Appellee
No. 20190361
Appeal from the District Court of Traill County, East Central Judicial District,
the Honorable Wade L. Webb, Judge.
AFFIRMED.
Opinion of the Court by Crothers, Justice.
Timothy G. Richard, Fargo, ND, for petitioner and appellee; submitted on brief.
Craig E. Johnson, Fargo, ND, for respondents and appellants Joel Finstrom,
Annette Hauser and James Finstrom; submitted on brief.
Samuel G. Larson, Bismarck, ND, for respondents and appellees Daniel
Finstrom and Janice Schulz and claimant and appellee Teresa Finstrom;
submitted on brief.
Mark Finstrom, Chaparral, NM, respondent and appellee; submitted on brief.
Estate of Finstrom
Nos. 20190360, 20190361
Crothers, Justice.
[¶1] Joel Finstrom, James Finstrom and Annette Hauser appeal from orders
and a judgment denying their claims related to Ruth Finstrom’s estate. We
affirm.
I
[¶2] Ruth and Carl Finstrom had seven children: James Finstrom, Daniel
Finstrom, Joel Finstrom, Annette Hauser, Janice Schulz, Mark Finstrom, and
Rebecca Lusk. In the late 1980s, Carl and Daniel Finstrom began farming
together. According to trial testimony, Daniel Finstrom made oral agreements
with his parents to acquire three quarters of real property. In 2011 Daniel
Finstrom believed he had fulfilled the agreements, but Carl Finstrom
requested an additional $240,000 for the property.
[¶3] In August 2011, Ruth and Carl Finstrom executed identical wills. The
wills devised one-third of a quarter section of property to Joel Finstrom, stating
he had paid one-third of the price for the property. The quarter devised to Joel
Finstrom was one of the quarters Daniel Finstrom believed he purchased. Carl
Finstrom died in November 2011.
[¶4] In December 2012, Ruth Finstrom executed a contract for deed
conveying the three quarters of real property to Daniel and Teresa Finstrom
for $240,000. Ruth Finstrom executed a new will in July 2015, devising the
residue of her estate to her seven children in equal shares. In July 2016, Ruth
Finstrom conveyed additional real property to her daughter Janice Schulz.
Ruth Finstrom died in December 2016.
[¶5] In December 2016, the district court admitted Ruth Finstrom’s 2015 will
to informal probate and appointed James Finstrom personal representative. In
March 2017, Joel Finstrom filed a claim against the estate, asserting the estate
owed him $200,000 for the value of an interest he owned in Ruth Finstrom’s
real property. Joel Finstrom also claimed the estate owed him $2,000 per
1
month for providing Ruth Finstrom in-home health care from May 1, 2015, to
April 21, 2016.
[¶6] In May 2017, Mark Finstrom petitioned for the removal of James
Finstrom as personal representative. In September 2017, James Finstrom,
individually and as personal representative, sued Schulz and Daniel and
Teresa Finstrom seeking to invalidate the real property conveyances Ruth
Finstrom made to them. James Finstrom argued Ruth Finstrom was unduly
influenced in conveying the property. Schulz and Daniel and Teresa Finstrom
denied the claims and counterclaimed, arguing James Finstrom breached his
fiduciary duties to the estate. James Finstrom resigned as personal
representative and Heartland Trust Company was appointed as successor
personal representative.
[¶7] The district court held a two-day trial in January 2019 on the claims in
the complaint and counterclaim. Joel Finstrom also agreed to have his claim
that he owned an interest in Ruth Finstrom’s real property decided at trial. All
of Ruth Finstrom’s children were present at trial except Rebecca Lusk.
[¶8] On March 12, 2019, the district court issued its findings of fact,
conclusions of law and order for judgment. The court ruled Ruth Finstrom’s
2015 will was valid and revoked her 2011 will. The court denied Joel Finstrom’s
claim he had an interest in Ruth Finstrom’s real property, and upheld Ruth
Finstrom’s conveyances to Schulz and Daniel and Teresa Finstrom. The court
found Ruth Finstrom did not lack mental capacity to make the conveyances.
The court also found Daniel and Teresa Finstrom did not have a confidential
relationship with Ruth Finstrom, and Ruth Finstrom was not unduly
influenced.
[¶9] In April 2019, Joel Finstrom petitioned the district court for an order
allowing his earlier claims relating to his interest in Ruth Finstrom’s real
property and the care he provided her before her death. In July 2019, Annette
Hauser petitioned the court for formal probate of Ruth Finstrom’s 2011 will,
arguing she lacked testamentary capacity to execute her 2015 will.
2
[¶10] After a hearing on the petitions in September 2019, the district court
denied Joel Finstrom’s claim that he owned an interest in Ruth Finstrom’s real
property. The court concluded that issue was decided at trial. The court
partially granted the remainder of his claim, finding he was entitled to $6,000
from the estate for the care he provided his mother before her death. The court
also denied Annette Hauser’s petition for formal probate, concluding her claim
related to Ruth Finstrom’s testamentary capacity was decided at trial. In
November 2019, the court entered a final judgment disposing of James
Finstrom’s claims.
II
[¶11] James Finstrom argues the district court erred in denying his claims
against Daniel and Teresa Finstrom. He argues the court erred in ruling
Daniel and Teresa Finstrom did not unduly influence Ruth Finstrom. He
argues the court erred in concluding Daniel and Teresa Finstrom were not
unjustly enriched at the expense of Ruth Finstrom. He also claims the court
erred in admitting parol evidence relating to the contract for deed between
Ruth Finstrom and Daniel and Teresa Finstrom.
A
[¶12] James Finstrom argues the district court clearly erred in finding Daniel
and Teresa Finstrom did not have a confidential relationship with Ruth
Finstrom and did not unduly influence her. He claims Ruth Finstrom was
unduly influenced because she sold the property for much less than what it
was worth.
“In cases involving nontestamentary transactions, this Court has
defined undue influence as ‘improper influence [ ] exercised over
the grantor . . . in such a way and to such an extent as to destroy
his free agency or his voluntary action by substituting for his will
the will of another.’ In nontestamentary cases, this Court has held
‘[a] finding of undue influence . . . requires that three factors be
established: (1) A person who can be influenced; (2) The fact of
improper influence exerted; and (3) Submission to the
overmastering effect of such unlawful conduct.’”
3
Nelson v. Nelson, 2018 ND 212, ¶ 7, 917 N.W.2d 479 (quoting Erickson v. Olsen,
2014 ND 66, ¶ 26, 844 N.W.2d 585) (citations omitted). “Undue influence may
be proven by circumstantial evidence because direct evidence is rarely
available.” Nelson, at ¶ 9.
[¶13] Whether undue influence exists generally is a question of fact which will
not be overturned on appeal unless it is clearly erroneous. Nelson, 2018 ND
212, ¶ 7. A finding of fact is clearly erroneous if it is induced by an erroneous
view of the law, if no evidence supports it, or if, on the entire record, we are left
with a definite and firm conviction a mistake has been made. Vig v. Swenson,
2017 ND 285, ¶ 14, 904 N.W.2d 489. In a bench trial, the district court
determines credibility issues, which will not be second-guessed on appeal. Id.
[¶14] “A confidential relationship exists whenever trust and confidence is
reposed by one person in the integrity and fidelity of another, and that such
relationship is a fact to be established in the same manner and by the same
kind of evidence as any other fact is proven.” Estate of Bartelson, 2015 ND 147,
¶ 16, 864 N.W.2d 441 (quoting Estate of Dinnetz, 532 N.W.2d 672, 674 (N.D.
1995)). A person who voluntarily assumes a confidential relationship becomes
a trustee, and any transaction between the trustee and the trustee’s
beneficiary by which the trustee gains an advantage is presumed to be made
under undue influence. Bartelson, at ¶ 16.
[¶15] The district court found a confidential relationship did not exist between
Daniel and Teresa Finstrom and Ruth Finstrom. The court found “the
Claimants failed to adduce sufficient evidence to establish such a relation,
other than the fact of a familial relationship. This alone does not give rise to a
confidential relationship.” The court found that in 2010, Daniel and Teresa
Finstrom stopped contacting Carl and Ruth Finstrom after they refused to
convey the property on the basis of their earlier agreements. The court found
that Ruth Finstrom approached Daniel and Teresa Finstrom about the 2012
contract for deed.
[¶16] Additionally, the district court found Daniel and Teresa Finstrom did not
unduly influence Ruth Finstrom into signing the 2012 contract for deed. The
4
court found Ruth Finstrom approached Daniel and Teresa Finstrom about the
contract for deed, which was drafted in Ruth Finstrom’s favor. The court found
an attorney witnessed the execution of the contract and he had no notes
mentioning undue influence.
[¶17] The district court addressed James Finstrom’s contention that Ruth
Finstrom sold the property for far less than what it was worth. James Finstrom
submitted an appraisal valuing the property at $1,360,000 as of July 2018. The
parties executed the contract for deed in December 2012 for $240,000. The
court stated, “While some evidence was presented to the Court that the
purchase price paid by Daniel and Teresa to Ruth was below market value, one
also needs to consider the value of Daniel working the land for decades and
that a parent may favor one child over another.”
[¶18] The mere fact that a parent deeds property to a child, or that some
children are favored to the exclusion of others, does not raise a presumption of
undue influence. Johnson v. Johnson, 85 N.W.2d 211, 225 (N.D. 1957). James
Finstrom did not present sufficient evidence showing Teresa and Daniel
Finstrom had a confidential relationship with Ruth Finstrom, or that they
unduly influenced Ruth Finstrom into executing the contract for deed. The
district court’s findings have support in the record, and we are not left with a
definite and firm conviction a mistake was made.
B
[¶19] James Finstrom asserts the district court erred in concluding Daniel
and Teresa Finstrom were not unjustly enriched at the expense of Ruth
Finstrom or her estate.
[¶20] A determination of unjust enrichment is a conclusion of law because it
holds that a certain state of facts is contrary to equity, and therefore, a district
court’s conclusion of whether there has been unjust enrichment is fully
reviewable. Broten v. Broten, 2017 ND 47, ¶ 10, 890 N.W.2d 847. The court’s
findings of fact supporting its unjust enrichment conclusion are subject to the
clearly erroneous standard of review. Id.
5
[¶21] Unjust enrichment is a broad, equitable doctrine resting upon quasi or
constructive contracts implied by law to prevent a person from unjustly
enriching herself at the expense of another. Broten, 2017 ND 47, ¶ 9. The
essential element in recovering under the doctrine is the receipt of a benefit by
the defendant from the plaintiff which would be inequitable to retain without
paying for its value. Id. “[I]t is well-settled that unjust enrichment applies only
in the absence of a contract between the parties, and there can be no implied-
in-law contract when there is an express contract between the parties relative
to the same subject matter.” Ritter, Laber & Assocs., Inc. v. Koch Oil, Inc., 2004
ND 117, ¶ 28, 680 N.W.2d 634.
[¶22] Here, a contract existed between Daniel and Teresa Finstrom and Ruth
Finstrom for the three quarters of real property. Additionally, the district court
found “Daniel and Teresa [Finstrom] set forth credible evidence that Carl and
Ruth [Finstrom] were enriched by the receipt of profits, labor, and
expenditures by Daniel and Teresa [Finstrom] dating back to 1989, and
culminating in a final cash payout in 2014.”
[¶23] The district court did not err in concluding Daniel and Teresa Finstrom
were not unjustly enriched.
C
[¶24] James Finstrom contends the district court erred in admitting and
considering parol evidence relating to the contract for deed between Ruth
Finstrom and Daniel and Teresa Finstrom. James Finstrom asserts the court
erred in considering evidence of the parties’ oral agreements before executing
the contract for deed.
[¶25] Under N.D.C.C. § 9-06-04(3), an agreement for the sale of real property
is invalid unless the agreement is in writing and subscribed by the party to be
charged. In construing a written contract, parol or extrinsic evidence may not
be admitted to add to or vary the terms of the contract or to supply a missing
essential term of the agreement; however, parol evidence may be received to
explain and make certain the existing terms of the agreement as set forth in
the contract. Zitzow v. Diederich, 337 N.W.2d 799, 802 (N.D. 1983) (citing
6
N.M. (J.) v. Auran, 214 N.W.2d 641, 653 (N.D. 1974)). Parol evidence is also
“admissible to show the inducement for entering a contract.” Citizens State
Bank-Midwest v. Symington, 2010 ND 56, ¶ 20, 780 N.W.2d 676. “The decision
to admit parol evidence is a determination of law and is fully reviewable on
appeal.” Id.
[¶26] Over James Finstrom’s objection at trial, the district court allowed
Daniel and Teresa Finstrom to testify about their earlier oral agreements with
Carl and Ruth Finstrom relating to the purchase of the three quarters of
property. Daniel Finstrom testified that in 1989 he began farming with Carl
Finstrom with the intention of acquiring the property. Daniel Finstrom
believed he had fulfilled the terms of the oral agreements to purchase the
property until 2011, when Carl Finstrom requested an additional $240,000.
Daniel Finstrom testified he initially refused to pay his father the additional
money. He testified he and Teresa Finstrom agreed to pay the $240,000 after
Carl Finstrom died and Ruth Finstrom suggested executing a contract for deed
for the property.
[¶27] The district court did not err in admitting the testimony relating to the
oral agreements for the purchase of the property. The testimony was not used
to add to or vary the contract for deed’s terms. Rather, the testimony explained
the circumstances surrounding the contract and the reasons for executing the
contract.
III
[¶28] Joel Finstrom argues the district court lacked subject matter jurisdiction
over his claim against Ruth Finstrom’s estate because it was not properly
before the district court at trial. He claims the court erred in concluding Ruth
Finstrom’s 2011 will did not create a trust in his benefit. He also argues the
court erred in concluding res judicata barred a portion of his April 2019 petition
for allowance of claim.
7
A
[¶29] Joel Finstrom argues the district court lacked subject matter jurisdiction
over his claim against Ruth Finstrom’s estate relating to his one-third interest
in her real property because it was not properly before the district court at
trial. He argues his claim was not tried by consent, and the only issues properly
before the court at trial were the claims raised in James Finstrom’s complaint
against Schulz and Daniel and Teresa Finstrom, and the counterclaims by
Schulz and Daniel and Teresa Finstrom against James Finstrom.
[¶30] For a district court to issue a valid order or judgment, the court must
have jurisdiction over both the subject matter of the action and the parties.
Albrecht v. Metro Area Ambulance, 1998 ND 132, ¶ 10, 580 N.W.2d 583.
“Subject-matter jurisdiction is the court’s power to hear and determine the
general subject involved in the action, while personal jurisdiction is the court’s
power over a party.” Id. For subject matter jurisdiction to attach, the issue to
be decided must be properly brought before the district court in the particular
proceeding. Id. at ¶ 11. Issues involving subject matter jurisdiction cannot be
waived and can be raised sua sponte at any time. Garaas v. Cass Cty. Joint
Water Res. Dist., 2016 ND 148, ¶ 4, 883 N.W.2d 436. When the jurisdictional
facts are not in dispute, this Court reviews challenges to a district court’s
subject matter jurisdiction de novo. Schweitzer v. Miller, 2020 ND 79, ¶ 6, 941
N.W.2d 571.
[¶31] Under N.D.R.Civ.P. 15(b)(2), issues not raised in the pleadings may be
tried by the parties’ consent:
“When an issue not raised by the pleadings is tried by the parties’
express or implied consent, it must be treated in all respects as if
raised in the pleadings. A party may move—at any time, even after
judgment—to amend the pleadings to conform them to the
evidence and to raise an unpleaded issue. Failure to amend does
not affect the result of the trial of that issue.”
“[A]mendment by implication under N.D.R.Civ.P. 15(b) is limited to situations
where the novelty of the issues sought to be raised is reasonably apparent and
8
the intent to try these issues is clearly indicated by failure to object or
otherwise.” SolarBee, Inc. v. Walker, 2013 ND 110, ¶ 13, 833 N.W.2d 422.
[¶32] In March 2017, Joel Finstrom’s claim against the estate was filed with
the district court under N.D.C.C. § 30.1-19-04. Joel Finstrom’s claim that he
had an interest in Ruth Finstrom’s real property was related to the allegation
in James Finstrom’s complaint that Ruth Finstrom’s 2011 will stated Joel
Finstrom paid one-third of the price for a quarter of real property. James
Finstrom’s pretrial brief argued Ruth and Carl Finstrom’s 2011 wills
established that an express trust was created for Joel Finstrom’s benefit in a
one-third interest in a quarter of property. Six of the seven Finstrom siblings
attended the trial, including Joel Finstrom. Testimony was presented on Joel
Finstrom’s claim.
[¶33] At trial, the personal representative’s attorney stated it was the personal
representative’s hope “that the court will resolve all probate issues, including
any claims that have been made against the estate.” James Finstrom’s
attorney initially stated at trial “the question is whether or not the transfer to
Daniel and Teresa Finstrom, as well as the transfer to Janice Schulz was done
because of undue influence that was put upon the decedent, Ruth Finstrom,
and I believe that’s the only issue that’s before the court at this time.” The
following discussion then occurred about Joel Finstrom’s claim:
“MR. JOHNSON: . . . I have a question with respect to Joel
Finstrom. Is his claim part of this proceeding?
THE COURT: As best I could tell, and I don’t want to take forever
trying to figure out what the issues are, but as best I can tell, they,
Mr. Andrews, Ms. Champ and their clients believe that there are
factual issues in dispute having to do with Joel Finstrom’s claim
as a creditor and also perhaps claim as you have advanced on
behalf of your client, and you don’t represent Joel, but of a trust in
regards to this matter, so I do believe that that would be a factual
issue. Is that a fair statement, Mr. Andrews?
MR. ANDREWS: We don’t believe there are any factual issues,
Your Honor, as we’ve made abundantly clear, but clearly that
9
claim is—Joel’s claim is part and parcel of what we’re doing here.
I mean, there is no question about that.
MR. JOHNSON: I guess the question is, is it res judicata against
Joel, because I should probably talk to Joel if we’re representing
his interests to find out if he’s willing to waive his right to a jury
trial as well. A jury was requested in the complaint.
....
THE COURT: . . . We left off, Mr. Johnson, where we were at. Mr.
Johnson?
MR. JOHNSON: Yes. I spoke with Joel and he’s willing to go
forward to the extent that this may bind him and he’s willing to go
forward with a court trial.
THE COURT: And here in Cass County?
MR. JOHNSON: Here in Cass County.
THE COURT: Joel, that’s okay with you?
JOEL FINSTROM: Yes.
THE COURT: Okay. And for the record, Mr. Joel Finstrom
indicated yes, affirmative to the court’s question.”
[¶34] Joel Finstrom’s claim was filed with the district court. James Finstrom’s
pretrial brief argued that Joel Finstrom held a one-third interest in a quarter
of land owned by Ruth Finstrom. Joel Finstrom consented to having his claim
decided at trial. Joel Finstrom’s claim was properly before the court, and his
claim was tried by the parties’ consent under N.D.R.Civ.P. 15(b)(2).
B
[¶35] Joel Finstrom claims the district court erred in concluding Ruth
Finstrom’s 2011 will did not create an express trust in his benefit. He also
contends the court erred in concluding an implied trust was not established.
10
[¶36] Whether a trust has been created is a question of fact. Estate of Binder,
386 N.W.2d 910, 912 (N.D. 1986). An express trust in real property must be
created or declared by written instrument subscribed by the trustee or an
authorized agent and cannot be created by parol evidence. N.D.C.C. § 59-12-
18; Binder, at 912.
[¶37] “There are two types of implied trusts: resulting and constructive.”
Spagnolia v. Monasky, 2003 ND 65, ¶ 15, 660 N.W.2d 223. An implied trust
must be established by clear and convincing evidence. Id. A resulting trust is
“based on the implied intention of the parties,” and “exists where the acts or
expressions of the parties indicate an intent that a trust relation resulted from
their transaction.” Id. See also Schrank v. Meade, 145 N.W.2d 514, 517 (N.D.
1966) (stating a resulting trust is based upon the doctrine that valuable
consideration was paid by one party, but legal title taken in another).
[¶38] “A constructive trust is an equitable remedy to compel a person who
unfairly holds a property interest to convey it to the rightful owner.” Spagnolia,
2003 ND 65, ¶ 15. A court may impose a constructive trust to prevent the
unjust enrichment of the person wrongfully interfering with the owner’s
possession of the property. Scheid v. Scheid, 239 N.W.2d 833, 838 (N.D. 1976).
[¶39] Joel Finstrom asserts Ruth and Carl Finstrom’s 2011 wills created an
express trust in his benefit on the basis of the following language:
“(A). That during my lifetime, my son Joel paid for one-third
of the NW¼ of Section 22 in Wold Township but did not take title
to said one third of the parcel; therefore I give to my son Joel
Finstrom, an undivided one-third share in the NW¼ of Section 22
in Wold Township.”
[¶40] Joel Finstrom argued in the alternative that if the 2011 will did not
create an express trust, an implied trust was established by clear and
convincing evidence. He testified he suffered an accident as a child and
received a settlement, which was used to purchase part of the property. He
testified he did not know the amount of the settlement. Annette Hauser
testified about Joel Finstrom’s accident and stated the settlement money was
11
used to purchase property. James Finstrom testified Ruth and Carl Finstrom
held a one-third interest in the property for Joel Finstrom’s benefit.
[¶41] The district court found the 2011 wills did not create an express trust for
Joel Finstrom’s benefit. The court found there was no credible evidence
showing that Ruth and Carl Finstrom contracted to hold the property in trust
for Joel Finstrom. See Hagen v. Schluchter, 126 N.W.2d 899, 903 (N.D. 1964)
(stating reciprocal wills “wholly testamentary in character cannot be
considered as a memorandum of an irrevocable contract to devise property in
accordance with its terms”). The court found Ruth Finstrom revoked her 2011
will by executing her 2015 will. See N.D.C.C. § 30.1-08-07(1)(a) (“A will or any
part thereof is revoked . . . [b]y executing a subsequent will that revokes the
previous will.”).
[¶42] The district court also found Joel Finstrom’s claim for an implied trust
was not established by clear and convincing evidence. “Although a claim was
made that there was some consideration from Joel in the form of an accident
settlement years ago, no sufficient evidence was furnished by the Claimants to
substantiate this claim.” “The Court has no credible evidence as to the amount
or value of said settlement.” The court also found that while Ruth Finstrom’s
2011 will expressed an intention to devise certain property to Joel Finstrom,
her actions afterwards, including the execution of the 2012 contract for deed
and the July 2015 will, expressed a different intention.
[¶43] On our review of the record, the district court did not clearly err in
finding that Ruth Finstrom did not create an express or implied trust for Joel
Finstrom’s benefit.
C
[¶44] Joel Finstrom asserts the district court erred in concluding res judicata
barred a portion of his April 2019 petition for allowance of claim. He argues
the court denied him due process by prohibiting him from presenting evidence
on his claim to an interest in Ruth Finstrom’s real property.
12
[¶45] In April 2019, Joel Finstrom filed a petition for allowance of his March
2017 claim to an interest in Ruth Finstrom’s real property and the care he
provided to her from May 2015 to April 2016. At the August 2019 hearing, Joel
Finstrom argued his claim relating to Ruth Finstrom’s property was not an
issue at trial, and Heartland did not disallow his claim against the estate until
after trial. The district court concluded res judicata prohibited Joel Finstrom’s
petition for allowance of his claim that he owned an interest in Ruth Finstrom’s
property because it was litigated at the January 2019 trial.
[¶46] Res judicata prevents relitigation of claims that were raised, or could
have been raised, in prior actions between the same parties or their privies.
Fredericks v. Vogel Law Firm, 2020 ND 171, ¶ 10, 946 N.W.2d 507. A judgment
on the merits in the first action between the same parties constitutes a bar to
the subsequent action based upon the same claim or claims or cause of action.
Id. at ¶ 11. The applicability of res judicata is a question of law, fully
reviewable on appeal. Id. at ¶ 10.
[¶47] The district court did not err in ruling res judicata barred Joel Finstrom’s
petition for allowance of his claim to an interest in Ruth Finstrom’s property.
Joel Finstrom consented to having that claim decided at trial. Joel Finstrom,
Annette Hauser and James Finstrom testified about Joel Finstrom’s claim to
Ruth Finstrom’s property. The issue of whether Joel Finstrom owned an
interest in Ruth Finstrom’s property was litigated and decided at trial.
Therefore, res judicata prevented him from raising the issue again in a
subsequent proceeding involving the estate.
IV
[¶48] Annette Hauser contends the district court erred in denying her petition
for formal probate of Ruth Finstrom’s 2011 will. Hauser’s petition alleged Ruth
Finstrom lacked testamentary capacity when she executed her July 2015 will.
Hauser argues the court erred in concluding the issues relating to Ruth
Finstrom’s testamentary capacity were decided at the January 2019 trial.
[¶49] This Court has explained testamentary capacity:
13
“Testator must have sufficient strength and clearness of mind and
memory, to know, in general, without prompting, the nature and
extent of the property of which he is about to dispose, and nature
of the act which he is about to perform, and the names and identity
of the persons who are to be the objects of his bounty, and his
relation towards them. He must have sufficient mind and memory
to understand all of these facts; . . . . He must also be able to
appreciate the relations of these factors to one another, and to
recollect the decision which he has formed.”
Estate of Wagner, 551 N.W.2d 292, 296 (N.D. 1996) (quoting Stormon v. Weiss,
65 N.W.2d 475, 504-05 (N.D. 1954)). Testamentary capacity is examined at the
time of execution. Wagner, at 295. A will contestant must prove a lack of
testamentary capacity by a preponderance of the evidence. Id. at 296. A
determination of testamentary capacity, or the lack thereof, is a question of
fact. Id. at 295.
[¶50] After trial, the district court found no credible evidence established that
“Ruth [Finstrom] lacked [testamentary] capacity . . . when she executed the
July 2015 Will.” The court found Ruth Finstrom signed her July 2015 will in
the presence of an attorney and six of her seven children, including Hauser.
The court found “[n]o evidence was provided that any of the siblings voiced
concern and objection over Ruth’s capacity to contract at that time.” The court
found that “[w]hile [Ruth Finstrom’s doctor] testified that Ruth may have had
some capacity or memory problems in April of 2015, no other evidence was
admitted showing Ruth lacked capacity when she signed the July 2015 Will.”
[¶51] The district court also found Ruth Finstrom’s 2015 will was her last valid
will and testament. The court found the 2015 will expressly revoked the 2011
will. The court’s findings on Ruth Finstrom’s testamentary capacity and the
validity of her 2015 will have support in the record and are not clearly
erroneous.
[¶52] The district court’s order denying Hauser’s petition concluded “[t]he
claims raised in said Petition are barred by res judicata and were previously
decided by the Court’s Findings of Fact, Conclusions of Law and Order for
14
Judgment dated March 12, 2019.” The court discussed its decision at the
August 2019 hearing on Hauser’s petition:
“The Court has already decided these issues [raised in
Hauser’s petition] are res judicata. The Court has already decided
the seminal issues that would warrant a formal probate on the
petition filed by Mr. Johnson in regards to this matter. Whether
his client [Hauser] agrees with me or not, that’s a different issue;
right? But I decided those, including conclusions of law starting at
the bottom of page eight, the top of page nine and throughout the
20-some page opinion of the Court from March 12, [2019].
“These issues were tried, fully litigated, fully briefed, fully
discussed, the 2011 will, 2015 will, a couple days of testimony,
competent, capable attorneys, written briefing, written
submissions thereafter. The matter has been decided by the Court.
The train has left the station, as it were.
“This matter was admitted to probate informally by and
under the petition of James Finstrom, the original PR in regards
to this matter. . . . I admitted this matter to probate a long time
ago, and it was the 2015 will that was admitted to probate at that
point in time.
“We’ve had litigation, undue influence, capacity, all those
kinds of things have been addressed and have been more fully
addressed in the court’s 20-some page opinion. I’m not going to
restate them at this point in time. . . . The 2015 will was admitted
to probate. That’s the will that stood up. That’s the last will and
testament of Ruth Finstrom.
“The 2011 will has been rejected specifically by findings,
conclusions and order in the court’s opinion of March 12, [2019]. I
won’t go through them all, but the petition for a formal probate is
denied.
“It is a true statement, as I’ve indicated both in my opinion
and on the record and inquired of counsel in the January trial,
certainly a true statement there have been aspects of a formal
probate going on in this file for a long time. We were removing PRs
15
and then by consent and adding a professional PR, Heartland
Trust, a contested trial here having to do with undue influence,
capacity, which will provides, multiple different wills, et cetera,
multiple different oral agreements, all kinds of things that came
up at the trial, and so this certainly has had a feel of a formal
probate and supervised administration to a point throughout the
process, so I’m not saying this has completely been informal. It
hasn’t, okay?
“But I am saying that it was probated informally, it was
submitted by James as then the PR. I’ve been probating it for years
on at least a semi-formal basis, if you prefer. These issues have
been litigated in regards to the matter. It’s res judicata. The Court
has already found and concluded the 2015 will is the last will and
valid testament of Ruth Finstrom.”
[¶53] Hauser asserts the district court erred in ruling res judicata prohibited
her petition for formal probate of the 2011 will. She argues that at the time of
the January 2019 trial, the only petition before the court was James Finstrom’s
petition for informal probate of the 2015 will and the 2011 will was not at issue
at trial.
[¶54] “Informal proceedings” are “those conducted by the court for probate of a
will or appointment of a personal representative without notice to interested
persons.” N.D.C.C. § 30.1-01-06(25). Informal proceedings do not involve
adjudication. Estate of Ketterling, 515 N.W.2d 158, 162 (N.D. 1994). “Formal
proceedings” are those “conducted before a judge with notice to interested
persons.” N.D.C.C. § 30.1-01-06(20). “A formal testacy proceeding is litigation
to determine whether a decedent left a valid will.” N.D.C.C. § 30.1-15-01(1). “A
contested hearing on whether the decedent left a valid will, after notice and
before a judge, is ordinarily a formal testacy proceeding.” Ketterling, at 162.
Under N.D.C.C. § 30.1-15-01(2), one may petition for formal probate of a will
“without regard to whether the same or a conflicting will has been informally
probated.”
[¶55] For res judicata purposes, an informal probate “is conclusive as to all
persons until superseded by an order in a formal testacy proceeding.” N.D.C.C.
16
§ 30.1-14-02. See also Ketterling, 515 N.W.2d at 162 (stating that in an informal
proceeding, the determinations made generally have no res judicata effect but
are protected by various statutes of limitation). However, in formal
proceedings, interested persons given notice of the proceedings under N.D.C.C.
§ 30.1-03-01 are bound by orders of the court. N.D.C.C. § 30.1-12-06. “When
the formal processes of admitting a will to probate, appointing a personal
representative, or settling an estate are preceded by notice to all interested
persons and a full adversarial hearing, the adjudication generally binds
notified persons.” Ketterling, at 163. See also 96 C.J.S. Wills § 872 (2020) (“Any
judgment rendered which determines the validity of a will is binding on all
persons interested who were properly notified. . . . [A] judgment sustaining a
will is res judicata on every ground which was, or could have been, litigated in
that proceeding.”).
[¶56] Here, James Finstrom petitioned for informal probate of Ruth Finstrom’s
2015 will in December 2016. James Finstrom provided notice of the probate to
his six siblings. The proceedings became more formal in May 2017 when Mark
Finstrom petitioned to remove James Finstrom as personal representative.
James Finstrom then filed a complaint against Schulz and Teresa and Daniel
Finstrom, and Schulz and Teresa and Daniel Finstrom brought counterclaims
against James Finstrom. Ruth Finstrom’s mental capacity, the validity of her
2015 will, and Joel Finstrom’s claim involving the 2011 will were decided after
a two-day trial at which six of the seven children were present. Notice of all
proceedings was provided to all interested parties throughout this action.
[¶57] Although this probate action began informally, it later had the
characteristics of a formal probate with a trial and other hearings. See
Ketterling, 515 N.W.2d at 162 (“A contested hearing on whether the decedent
left a valid will, after notice and before a judge, is ordinarily a formal testacy
proceeding.”). Hauser had notice of all proceedings and appeared at trial. The
issue raised in Hauser’s petition for formal probate, Ruth Finstrom’s
testamentary capacity, was decided at trial. The district court also found Ruth
Finstrom’s 2015 will was valid and revoked her 2011 will.
17
[¶58] In light of the procedural posture of this case, Hauser was bound by the
district court’s March 2019 order. The court did not err in concluding res
judicata prohibited Hauser’s petition for formal probate of Ruth Finstrom’s
2011 will.
V
[¶59] We have considered the parties’ remaining arguments and conclude they
are without merit or not necessary to our decision. The orders and judgment
are affirmed.
[¶60] Daniel J. Crothers
Douglas A. Bahr, D.J.
Gerald W. VandeWalle
Jerod E. Tufte
Jon J. Jensen, C.J.
[¶61] The Honorable Douglas A. Bahr, D.J., sitting in place of McEvers, J.,
disqualified.
18