Campbell v. Kabance

NOT DESIGNATED FOR PUBLICATION
No. 122,528
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
KIRK W. CAMPBELL and JILL A. CAMPBELL,
Individually and as Co-Trustees of the DANOR CAMPBELL TRUST and as
Co-Trustees of the MAVIS A. KABANCE
REVOCABLE LIVING TRUST,
Appellants,
v.
CORRIN G. KABANCE, Individually and as
Trustee of the CORRIN GALEN KABANCE
REVOCABLE LIVING TRUST,
Appellee.
MEMORANDUM OPINION
Appeal from Crawford District Court; JEFFRY L. JACK, judge. Opinion filed December 23, 2020.
Affirmed.
Rachael K. Pirner and Shane A. Rosson, of Triplett Woolf Garretson, LLC, of Wichita, for
appellants.
Mark A. Werner, of Law Office of Mark A. Werner, of Pittsburg, for appellee.
Before HILL, P.J., BRUNS and SCHROEDER, JJ.
PER CURIAM: This case is an example of where a married couple sought and
obtained good counsel in how to preserve their assets and make sure that those assets are
distributed according to their wishes after their deaths. And because they followed their
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lawyer's advice, they executed an estate plan that the district court followed and thus
achieved their aims.
When the district court here refused to impose a life estate on marital property
when Mavis Campbell, known as Mickie, died, her adult children from a prior
marriage—Kirk and Jill Campbell—appealed. They argue that Corrin G. Kabance,
known as Galen, Mickie's surviving husband, owes them fiduciary duties under the
prenuptial agreement and contractual wills that Galen and Mickie had executed in 2001.
In their view, the estate plan created a life estate in the property that Galen and
Mickie jointly acquired during their marriage, with one-half of the assets passing to them
after Galen's death. And, they argue, because Galen possesses only a life estate in the
property, he has a fiduciary duty to preserve the property and keep them reasonably
informed about the assets, and he may only dispose of any of that property for
necessities. Kirk and Jill also contend that the district court abused its discretion when it
refused to impose a constructive trust on some real estate that Galen transferred in
violation of the contractual will.
After considering the arguments of the parties and examining the record, we find
no errors and affirm the district court's rulings.
This was a second marriage for Galen and Mickie.
Galen and Mickie married in January 2001. Galen was 65, Mickie was 66. Both
were widowed and had children from their prior marriages. Galen had four children.
Mickie had two—Jill and Kirk, the plaintiffs in this case.
Before marrying, Galen and Mickie made a prenuptial agreement with help from
an attorney. As part of that agreement, Galen and Mickie both agreed that if their
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marriage ended, neither would claim any right to the other's premarital or individual
property. The purpose of the agreement was for each of them to protect their premarital
assets for their respective children. When they signed the agreement, Mickie's net worth
was $786,100; Galen's was $350,168. The agreement also affirmed that Mickie and
Galen intended to pool all of their income for their living expenses and enjoyment.
After that, in October 2001, Galen and Mickie signed substantially similar wills
with help from the same attorney who had prepared the prenuptial agreement. Neither
party disputes that the wills are contractual and bind Galen and Mickie. Galen's will gives
all his nonmarital property to a trust in his name—his children are the beneficiaries of
that trust. Mickie's will gives all her nonmarital property to a trust in her name—her
children, Kirk and Jill, are the beneficiaries of that trust.
We focus on one provision of Mickie's will and the events that follow.
Basically, Article II of Mickie's will is the subject of this appeal. It states that she
bequeaths all her marital property to Galen. It then lists the current marital assets (to be
updated once per year) and states that assets remaining after her and Galen's deaths will
be split between her children and Galen's children. The language is clear:
"I give and bequeath to my husband, Corrin G. Kabance, my share of all the
assets or properties that we have acquired subsequent to our marriage on January 26,
2001. As of this date the assets or properties that we have jointly acquired since January
26, 2001, are as follows, to-wit:
"(1) 1996 Chrysler Concorde automobile;
"(2) Checking account at Commerce Bank, Pittsburg, Kansas;
"(3) Savings account at Commerce Bank, Pittsburg, Kansas;
"(4) Holstein cattle;
"(5) Kitchen table and 4 chairs;
"(6) Campbell-Hausfeld air compressor.
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As assets or properties are acquired they shall be added, signed and notarized and be
made a part of this Will at least once per year on or about January 26.
"Upon the death of both Mavis A. Kabance and Corrin G. Kabance the remainder
of the assets or properties in. Article II shall be divided equally between their
children, one-half (½) of the remainder will go to the Campbell children, per stirpes,
and the remaining one-half (½) to the Kabance children, per stirpes."
While Mickie and Galen did not update their list of assets every year, they did sign
lists in 2002, 2003, and 2004, but they failed to update their assets again until 2010. The
last time an updated list was signed was 2011. A document purporting to update the
assets from 2013 was in their lawyer's file, but it was unsigned.
Then, in August 2015, Mickie died. After her death, Galen made two transfers of
funds from trust accounts owned by Mickie into his own account even though he was not
a trustee; one was for $8,794.46 and the other was for $435.63. Galen said that he
transferred the funds to himself to pay on a line of credit at a bank for which both he and
Mickie were liable. Galen also deeded a property that the parties call the "Gladys Place"
to his trust account, where his children are beneficiaries. Mickie and Galen had bought
that property in 2012, sold a house on it, and retained the farm ground in joint tenancy.
Kirk and Jill pursue litigation.
In 2016, Kirk and Jill filed this lawsuit. They brought the claim individually and as
cotrustees of the two trusts that Mickie had controlled. They sought declaratory relief,
asking the court to determine marital and nonmarital property, to find that the wills were
contractually binding, and to find that Galen holds only a life estate in the marital
property. They also alleged that Galen had converted funds from Mickie's trust account
when he made the two unauthorized transfers to his own account. In his answer, Galen
told the court that Kirk and Jill had no right to relief and raised a counterclaim, alleging
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that Mickie's trusts owed him for crop input costs and various insurance costs. This
counterclaim was dismissed later after Galen decided not to pursue it.
After taking testimony on the case, the court took the matter under advisement and
issued a comprehensive and meticulous written decision giving its interpretation of the
documents. The court found:
• Mickie and Galen intended their premarital property and individual property
acquired during the marriage to go to their respective children;
• Mickie and Galen intended that, in the event that either of them died, their
jointly acquired property would remain with the survivor;
• Article II of Mickie's will applies to all jointly acquired property, even if that
property was not included on one of the signed and notarized updated lists;
• Article II of Mickie's will does not create a life estate in the jointly held
property for Galen. There is no evidence that was intended, and it would go
against Mickie and Galen's estate planning; and
• because there is no life estate, Kirk and Jill may not require an accounting of or
exercise control over the marital property, and there is no need for a
constructive trust.
Although the court rejected Kirk and Jill's claims for relief, it granted them
judgment on their conversion claim because Galen did not have authority to transfer
funds from Mickie's trusts. The court did not find that Galen acted in bad faith when he
did so. The court granted judgment to Kirk and Jill for $9,230.09, plus statutory interest.
Galen satisfied that judgment in February 2020. Kirk and Jill bring the matter to us.
They make three arguments in this appeal. First, they argue that Galen owes them
certain fiduciary duties under the contractual will because he retains only a life estate in
the marital property. Then, they argue that they are entitled to information about Galen's
use of the marital assets because he has tried to undermine the purpose of the contract.
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Finally, they argue that the district court erred when it refused to impose a constructive
trust on the "Gladys Place"—the property Galen had transferred to himself. We will
address the issues in that order.
The rules that guide our decision are well settled.
The construction of a written instrument, including a will, presents a question of
law when the document, analyzed in its entirety, contains no pertinent ambiguity. In re
Estate of Cline, 258 Kan. 196, 199, 898 P.2d 643 (1995). If a survey of the will's
language makes the testator's intent clear, the document is unambiguous and should be
enforced consistent with that intent. In re Estate of Haneberg, 270 Kan. 365, 371, 14 P.3d
1088 (2000). This court need not look to rules of construction or outside evidence in that
case. 270 Kan. at 371. Ultimately, "the primary function of the court is to ascertain the
testator's intent from the four corners of the will and to carry out that intent if possible[.]"
270 Kan. at 372.
In Mickie's will, all of her considerable premarital property passes to a trust where
her children are the beneficiaries. It gives to Galen "[Mickie's] share of all the assets or
properties that [they] have acquired subsequent to [their] marriage on January 26, 2001."
(Emphasis added.) And it leaves any remainder of those assets to be split one-half
between Galen's and Mickie's children when both she and Galen have died. It does not
explicitly restrict Galen's use or transfer of the marital property.
Kirk and Jill contend that two Kansas Supreme Court decisions that have
recognized contractual duties based on language much like that in Mickie's will are
controlling. See Estate of Draper v. Bank of America, 288 Kan. 510, 523-29, 205 P.3d
698 (2009); In re Estate of Jones, 189 Kan. 34, 366 P.2d 792 (1961). We review both.
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In Estate of Jones, a husband and wife both had children from prior marriages.
Under their jointly executed will, if one of the spouses died, all of that property passed to
the surviving spouse "'absolutely and without reservation.'" After the death of the
surviving spouse, "'all property thus possessed'" was to be split evenly among their
children from the prior marriages. 189 Kan. at 34. In a probate proceeding after the
husband's death, the court determined that the wife took the property in fee simple, so she
could dispose of it in any lawful way. The Supreme Court overturned that decision,
holding that it was the husband's and wife's intent to leave a life estate to the surviving
spouse, so the wife could dispose of the property only for necessities. 189 Kan. at 39.
Thus, Kirk and Jill argue that since the language in Jones was very similar to the
language in Mickie's will, the court should have found that it created a life estate.
Then, in Estate of Draper, a husband and wife entered into a prenuptial agreement
that required the wife to execute and maintain a will leaving not less than one-fourth of
her estate to each of her husband's three sons from an earlier marriage. When her husband
died, the wife received a substantial portion of his estate. The wife then transferred most
of her assets to two trusts and executed a will splitting the rest of her estate between her
husband's three sons. When the wife died, her estate was less than $10,000, but the assets
in the trusts—the beneficiaries of which were religious and medical institutions—
exceeded $1 million.
The Supreme Court rejected the holding of a panel of this court that the will failed
to create a life estate because it was not done explicitly, noting that several appellate
cases had recognized that "the expression of a desire to direct the devise of the remainder
of one's property is an expression of intent that there be a remainder." 288 Kan. at 525.
Without deciding whether the will created a life estate, the Supreme Court found that the
wife had breached the duty of good faith and fair dealing because she thwarted the
intention of the contract by effectively disinheriting her husband's sons. 288 Kan. at 525-
26, 528-29.
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We find those cases instructive, but not controlling. We note that disputes
involving a life estate "turn upon [their] own particular facts and no general rules can be
formulated which will apply in all factual circumstances." In re Estate of Kreie, 235 Kan.
143, 151, 679 P.2d 712 (1984).
Some of the language of the wills in Jones and Draper is similar, but there is a
crucial factual difference. Unlike in Jones and Draper, Galen did not receive all or most
of Mickie's property. In Jones and Draper, the surviving spouse could—and in Draper
did, effectively disinherit the deceased spouse's children. The surviving spouse disposed
of all of the property before it could pass to the children. That did not occur here.
Here, the district court found that Mickie and Galen had protected Mickie's assets
for her children by devising the entirety of her considerable premarital and individual
property to a trust in which her own children were the soul beneficiaries. As Kirk and Jill
acknowledge, that was the very reason for executing a prenuptial agreement. By
following their lawyer's advice, Mickie and Galen created an estate plan that would carry
out their wishes.
Thus, the facts here do not support Kirk and Jill's contention that Mickie and
Galen intended to create a life estate of the marital property in the survivor. Under Kirk
and Jill's theory, Galen could spend the marital assets only on necessities; those marital
assets are otherwise unavailable to him. But that makes little sense—having already
protected their children's inheritance in the prenuptial agreement and wills, why would
Galen and Mickie intend the survivor to preserve the marital assets they might acquire
during their late-in-life marriage?
As the district court found, there is no evidence—in the language of the wills or
otherwise—suggesting that Mickie and Galen intended to create a life estate in the
marital property. Since the primary function of this court is to determine the testator's
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intent, we hold that it was not Mickie's intent that Galen receive only a life estate in the
disputed property.
We do not suggest that Galen does not owe any contractual duties under the will.
As Draper recognized, the duty of good faith and fair dealing is implicit in agreements to
devise property a certain way. Under this duty, the surviving spouse may not thwart the
intention of the contract. 288 Kan. at 525. But since the intention of the will was not to
create a life estate in the marital property for the survivor, Galen would not thwart the
intention of their contract by using the property how he sees fit.
Kirk and Jill are not entitled to a continuing accounting from Galen.
In our view, since Galen is not a life tenant of the marital property, he need not
give Kirk and Jill information about his use of it. Even when a person does hold a life
estate, the general rule is that "a life tenant who has the power to dispose of or consume
the corpus will not be required to give security for the protection of the remainderman"
with no showing of bad faith, a danger of loss, or waste. In re Estate of Lehner, 219 Kan.
100, 107, 547 P.2d 365 (1976).
Even though Kirk and Jill allege bad faith here because of Galen's unauthorized
transfer of funds from Mickie's trust after her death, the district court put that claim to
rest. After hearing Galen's testimony that the payments were inadvertent, the court did
not find that Galen acted in bad faith, and Galen has repaid the funds. We see no error in
the district court's ruling on this point. There is no reason to require an accounting of the
property, as Jill and Kirk request. We move to the final issue.
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The court's refusal to impose a constructive trust is not an abuse of discretion.
The imposition of a constructive trust is an equitable remedy. Nelson v. Nelson,
288 Kan. 570, 579, 205 P.3d 715 (2009). When a court weighs the equities under the
circumstances, it decides what is fair and equitable. This is an exercise of judicial
discretion. As a result, we review a district court's refusal to apply an equitable remedy
for an abuse of discretion. A district court abuses its discretion if its action stems from an
error or law or fact or is otherwise arbitrary or unreasonable. In re Partnership of PB&R,
52 Kan. App. 2d 871, 874-75, 380 P.3d 234 (2016).
Kirk and Jill argue that the district court abused its discretion because it arbitrarily
"completely misunderstood Kirk and Jill's position when [the judge] issued his ruling
nearly eight months after trial and immediately before retiring." Kirk and Jill do not
explain why the timing of the judge's retirement or the time he took to reach a decision
are relevant. But their argument was that they held an interest in the "Gladys Place" and
that Galen transferred the property to his trust without regard to their interests.
For the first time on appeal, they frame this as an issue of unjust enrichment. They
argue in a supplemental brief that while they may not have named the claim as unjust
enrichment in the district court, they argued for the return of the property. That is not
equivalent. Simply put, they never raised the elements of an unjust enrichment claim in
the district court. So the district court never considered arguments about whether the
elements of unjust enrichment were proved. For this failure to raise the claim, as much as
their claim relies on unjust enrichment, we hold that Kirk and Jill have abandoned that
argument on appeal. See Wolfe Electric, Inc. v. Duckworth, 293 Kan. 375, 403, 266 P.3d
516 (2011).
Turning to their argument on this point, we remain unpersuaded by Kirk and Jill.
Nothing in the record suggests that the district court arbitrarily denied their request to
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impose a constructive trust because it misunderstood their position. They raised the issue
in their trial brief and proposed findings of fact and conclusions of law. Galen argued
against imposing a constructive trust in his trial brief and proposed findings of fact and
conclusions of law. The district court considered these arguments, heard testimony, and
reviewed documentary evidence. It then decided that since there is no life estate in the
jointly held property, it would not impose a constructive trust. It is clear to us that the
district court exercised discretion and it did not abuse its discretion.
Mickie and Galen agreed on how their property was to be distributed after their
deaths. The antenuptial agreement along with their two wills and the trusts they created
depict an estate plan that would satisfy their intentions. The district court here
scrupulously followed their plan. We find no errors, nor do we see any abuse of
discretion.
Affirmed.
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