In Re Estate of Kelsey

847 N.E.2d 1277, 165 Ohio App. 3d 680, 2006 Ohio 1171

• Court: Ohio Court of Appeals
• Decided: March 10, 2006
• Docket: No. 2004-L-099.
• Status: Published

Opinions

Diane V. Grendell, Judge.

{¶ 1} Appellant, Darryl M. Kelsey, appeals the judgment of the Lake County Court of Common Pleas, Probate Division, ordering the sale at auction of a family Bible as part of the administration of the estate of decedent, Dorothy F. Kelsey. For the following reasons, we affirm the decision of the probate court.

{¶ 2} Dorothy F. Kelsey, of Concord Township, died testate at Lake East Hospital on January 30, 2000. According to the decedent’s last will and testament, her son, Darryl M. Kelsey, was nominated executor of the estate. Pursuant to the provisions of the will, “all of [decedent’s] property whether real, personal or mixed,” was left to her children, Darryl M. Kelsey and appellee, Marguerite J. Barton, “in fee simple absolute in equal shares, to share and share alike.”

{¶ 3} On February 6, 2001, Kelsey filed an application to probate the will and an application for authority to administer the estate. On February 9, 2001, Barton filed a request for hearing on Kelsey’s application to administer the estate. Barton challenged Kelsey’s suitability to serve as executor of the estate, citing the fact that Kelsey waited over a year before proceeding with the probate of'decedent’s estate, that Kelsey failed to file a timely estate tax return for the estate, that Kelsey transferred real estate belonging to the decedent to his daughter shortly before decedent’s death, and that “there exists hostility and distrust” between Kelsey and Barton.

{¶ 4} On June 19, 2001, Kelsey and Barton were appointed co-executors of decedent’s estate.

{¶ 5} On January 4, 2002, the probate court issued writs of citation for failure to file an inventory and ordered Kelsey and Barton to file estate inventories by January 17, 2002. On January 23, 2002, Barton filed an estate inventory. Barton inventoried decedent’s tangible personal property as follows: “Household goods & furnishings, jewelry, antiques” valued at $3,987. Kelsey did not sign Barton’s inventory and did not file his own inventory.

{¶ 6} On January 9, 2002, Barton filed several motions with the court, including a motion to have Kelsey removed as a co-executor. Attached to Barton’s motions was an affidavit that stated that decedent’s personal property was appraised on September 10, 2001, and that she had been denied access to decedent’s personal property.

{¶ 7} On February 12, 2002, Kelsey filed objections to Barton’s inventory on the grounds that certain items of property were not valued or were undervalued.

{¶ 8} In April 2002, a hearing was held on the parties’ various motions and objections at which the parties agreed to withdraw as co-executors. On May 8, 2002, the probate court entered judgment removing Kelsey and Barton as co-executors and appointing Richard T. Spotz, Jr. successor administrator with the will annexed.

{¶ 9} In November 2002, a hearing was held on matters pending before the court, including Kelsey’s objections to Barton’s inventory. At this hearing, the parties entered into a settlement agreement. This agreement provided: “Each party shall submit their list of desired personal property to the other party not later than December 5, 2002, and each party shall retain as their sole property all items in their sole possession that are not desired by the other party. The administrator shall sell any property desired by both parties. * * * Each party also hereby fully and finally releases the other party hereto from any and all claims that said party has, might have, or claims to have, regarding this estate, and any advances claimed to be made on behalf of this estate, services claimed to be rendered to the decedent or to this estate, or in any way relating to this estate or to the decedent, Dorothy Kelsey.” The trial court adopted the parties’ agreement in a judgment entry dated November 15, 2002.

{¶ 10} On November 20, 2002, a judgment entry was filed approving the inventory and appraisement of the estate of Dorothy F. Kelsey. 1

{¶ 11} On October 28, 2003, Spotz filed a final and distributive account for the estate.

{¶ 12} On December 4, 2003, Barton filed objections to the final account, in which she alleged that Kelsey had improperly given the family Bible to his daughter pursuant to a power of attorney during the decedent’s lifetime. A hearing on Barton’s objections was held in February 2004. On March 23, 2004, the probate court entered judgment ordering Spotz to sell the family Bible and distribute the proceeds in accordance with the will.

{¶ 13} On May 24, 2004, the trial court issued findings of fact and conclusions of law on a motion filed by Kelsey. The probate court found that Kelsey had given the family Bible to his daughter during decedent’s lifetime pursuant to a power of attorney. Therefore, “[t]he family Bible was not an asset of decedent’s estate at the time of her death, and was not listed on the estate inventory.” The probate court found, however, that Kelsey’s power of attorney “did not contain any grant of authority to make gifts” and, therefore, “the transfer is presumptively invalid.” The probate court concluded that Kelsey had failed to rebut the presumption and that the Bible was properly a part of the decedent’s estate. From this judgment, Kelsey timely brings appeal.

{¶ 14} Kelsey raises the following assignments of error on appeal:

{¶ 15} “[1.] The Lake County Probate Court erred in failing to apply res judicata to the exclusion of the family Bible from the inventory of the Estate of Dorothy J. Kelsey.

{¶ 16} “[2.] The Lake County Probate Court erred in concluding the gift of the family Bible failed.

{¶ 17} “[3.] The Lake County Probate Court erred in concluding that the release included in the settlement agreement relating to the objection to inventory did not bar the claim made for the family Bible at the final account.

{¶ 18} “[4.] The Probate Court was without jurisdiction to make the determination it made with respect to the family Bible.”

{¶ 19} Under the first assignment of error, Kelsey argues that res judicata applies to prevent Barton from challenging the exclusion of the family Bible from the estate inventory. Kelsey maintains that Barton has waived her right to challenge the estate’s accounting as to the family Bible by not raising the issue at the time the probate court approved the inventory. We disagree.

{¶ 20} “When an inventory is filed and approved by the probate court without exceptions having been taken it is not res judicata to a [subsequent] action seeking to include other assets in the estate that were not in the approved inventory.” Eger v. Eger (1974), 39 Ohio App.2d 14, 68 O.O.2d 150, 314 N.E.2d 394, paragraph three of the syllabus. Accord In re Ross (1989), 65 Ohio App.3d 395, 398-399, 583 N.E.2d 1379; cf. In re Rudy (Dec. 3, 1993), 11th Dist. No. 93-T-4850, 1993 WL 545111, at *2 (“the inclusion of the personalty in the inventory filed by appellees is not res judicata, and does not prejudice the claims of appellants as to ownership”). Moreover, “the failure of an executor * * * to include an asset of which he had knowledge in the inventory or failure of a beneficiary or other interested person to file timely exceptions to an inventory are not valid defenses in a [subsequent] action seeking to include assets in an estate.” Eger, 39 Ohio App.2d at 19, 68 O.O.2d 150, 314 N.E.2d 394; Ross, 65 Ohio App.3d at 398-399, 583 N.E.2d 1379 (failure of beneficiaries to file exceptions to inventory did not bar them from litigating in a declaratory judgment action issues that could have been excepted).

{¶ 21} In the present case, Kelsey had delivered possession of the family Bible to his daughter prior to the death of the decedent and the creation of the estate. Thus, the Bible was not in the decedent’s possession at the time of her death and, according to Kelsey, the Bible was not the “personal property of the decedent” such as should be included in an inventory. See R.C. 2115.02. Since title to the family Bible was disputed, Barton should not be penalized for failing to raise the issue at the time the estate was inventoried.

{¶22} Kelsey argues Barton could have raised the issue when the probate court considered his objections to her inventory, since she knew of the Bible’s existence at this time. There is no support for this position under Ohio law. The only instances in which res judicata has been applied in this situation are where the probate court has actually litigated a claim regarding a particular asset. See, e.g., Bolles v. Toledo Trust Co. (1940), 136 Ohio St. 517, 17 O.O. 156, 27 N.E.2d 145, at syllabus (“[a] final adjudication, that certain inventoried personal property is assets of a decedent’s estate and lawfully included in the inventory thereof * * * by filing exceptions to the inventory, is res judicata when properly pleaded as a defense in a subsequent action”); cf. In re Lewis (July 23, 1999), 4th Dist. No. 98CA17, 1999 WL 595458, at *2 (holding that res judicata did not apply to bar subsequent litigation where appellants filed, but subsequently dismissed, exceptions to estate inventory); Ross, 65 Ohio App.3d at 398-399, 583 N.E.2d 1379; Eger, 39 Ohio App.2d at 19, 68 O.O.2d 150, 314 N.E.2d 394. In the present case, the issue of whether the family Bible was properly an asset of the estate had never been raised, litigated, or determined prior to Barton’s objections.

{¶ 23} Finally, since the trial court determined that Kelsey’s gifting of the family Bible to his daughter was invalid, the Bible had the status of a concealed asset of the estate. In the case of concealed assets, there is no time limit for the filing of exceptions to the exclusion of that asset from the estate. R.C. 2115.16. Accordingly, there was nothing untimely about Barton’s challenge to the inventory, albeit raised as an objection to the final accounting.

{¶ 24} Kelsey’s first assignment of error is without merit.

{¶25} Under the second assignment of error, Kelsey argues that the probate court erred in invalidating the transfer of the family Bible to his daughter. Kelsey’s first argument is that the presumption of undue influence in transactions involving fiduciaries does not apply in this case because Kelsey’s daughter, the donee of the Bible, was not in a fiduciary relationship with the decedent. According to Kelsey, the “family gift presumption” applies, which holds that transfers of property between family members are presumed to be gifts. See Creed v. Lancaster Bank (1852), 1 Ohio St. 1, at paragraph three of the syllabus.

{¶ 26} Kelsey misrepresents the factual situation. The trial court did not find that the decedent herself had gifted the Bible to her granddaughter, but that Kelsey had made the gift. The focus, therefore, was on Kelsey’s authority to make that gift. During the proceedings on Barton’s objections, Kelsey made the following stipulation: “Prior to decedent’s death, Darryl Kelsey gave the family Bible to his daughter, Katherine Kelsey, under the Power of Attorney.” The trial court properly concluded that Kelsey’s power of attorney did not grant Kelsey authority to make gifts on the decedent’s behalf. See In re Meloni, 11th Dist. No. 2003-T-0096, 2004-Ohio-7224, 2004 WL 3090190, at ¶ 34 (a fiduciary, as agent of the principal, “may not make gratuitous transfers of the principal’s assets unless the power of attorney from which the authority is derived expressly and unambiguously grants the authority to do so”). Therefore, decedent’s relationship with Kelsey’s daughter is not determinative.

{¶ 27} Kelsey also argues that, even if a presumption of undue influence exists by virtue of his position as the decedent’s fiduciary, that presumption does not defeat the family-gift presumption that existed between him and the dece dent. We disagree. The law is well settled in this district “that in cases where * * * family members are also in a fiduciary relationship, the family gift presumption yields to the more specific presumption of undue influence, which arises in fiduciary relationships.” In re Anderson (Dec. 15, 2000), 11th Dist. No. 99-T-0160, 2000 Ohio App LEXIS 5928, at *4-*5, citing In re Guardianship of Blumetti (Jan. 14, 1994), 11th Dist. No. 92-T-4752, 1994 WL 45250, at *2.

{¶ 28} Kelsey’s second assignment of error is without merit.

{¶ 29} Under the third assignment of error, Kelsey argues that Barton is barred from challenging the exclusion of the Bible by the language in the settlement agreement providing that “[e]ach party * * * fully and finally releases the other party * * * from any and all claims * * * regarding this estate.” Barton argues that this language does not apply to her because she is “not asserting a claim to the Bible” but, rather, seeks “to determine title to the Bible.” We reject Barton’s argument. Barton would not have standing to raise the issue of title to the Bible unless she was able to claim an interest in the Bible as a beneficiary of the estate.

{¶ 30} The release provision of the settlement agreement, however, conflicts with another provision of the agreement providing that both parties may make claims to particular items of personal property and that the administrator should sell property that is claimed by both parties. It is also significant that, under the peculiar procedural history of this case, when the parties entered their agreement, there was no approved inventory of the estate, and no itemized appraisal of decedent’s personal property had been filed with the probate court. The agreement does not purport to define the personal property that belongs to the estate. In light of these considerations, the release language should not be construed to bar Barton from asserting her interest in the personal property of the estate, although title to that particular property was disputed.

{¶ 31} Kelsey’s third assignment of error is without merit.

{¶ 32} Under the fourth and final assignment of error, Kelsey claims that the probate court lacked jurisdiction to determine title to the Bible. Kelsey relies on this court’s decision in Burns v. Daily (1996), 114 Ohio App.3d 693, 683 N.E.2d 1164, which states that, where “title does not reside in the decedent upon her death, but passed to a third party by inter vivos transaction or gift, then such property may not be included as an estate asset, and may not be retrieved by a summary proceeding in the probate court.” Id. at 702-703, 683 N.E.2d 1164. We disagree.

{¶ 33} The probate court’s conclusion that the Bible was not an asset of the estate for the purpose of inventorying the estate does not mean that title did not reside in the decedent upon her death. The probate court’s conclusion was based on the fact that the Bible was not in the decedent’s possession and that there had been an attempted transfer of title. Where, as here, a dispute exists regarding title, the probate court is not deprived of jurisdiction to resolve the dispute under Burns. See Rudloff v. Efstathiadis, 11th Dist. No. 2002-T-0119, 2003-Ohio-6686, 2003 WL 22931382, at ¶ 9 (“[bjecause the gifts * * * are invalid, ownership never passed from the decedent and these assets are properly part of the estate, albeit wrongfully withheld”).

{¶ 34} Kelsey is also incorrect that Barton’s sole remedy in this situation is to file a concealment/embezzlement action under R.C. 2109.50 or an action for declaratory judgment under R.C. 2721.05. It is well settled that the probate court can determine title to personal property on exceptions to an inventory and that it is a matter of discretion whether the exceptor should be ordered to pursue other remedies. In re Gottwald (1956), 164 Ohio St. 405, 58 O.O. 235, 131 N.E.2d 586, at paragraph two of the syllabus. This court has also held that the probate court has concurrent jurisdiction, under R.C. 2101.24(B)(1)(b), to determine title to disputed assets in addition to the jurisdiction granted under R.C. 2109.50 in concealment/embezzlement actions. Burwell v. Rains, 11th Dist. No. 2004-T-0042, 2005-Ohio-1893, 2005 WL 940580, at ¶ 29, citing R.C. 2101.24(B)(1)(b) (“[t]he probate court has * * * the same powers at law and equity as, the general division of the court of common pleas * * * to hear and determine * * * [a]ny action that involves * * * a power of attorney”).

{¶ 35} Kelsey’s fourth assignment of error is without merit.

{¶ 36} For the foregoing reasons, Kelsey’s assignments of error are without merit. The judgment of the Lake County Court of Common Pleas, Probate Division, ordering the sale at auction of the family Bible as part of the administration of the estate of Dorothy F. Kelsey, is affirmed.

Judgment accordingly.

Rige, J., concurs. O’neill, J., dissents with a dissenting opinion.

1 . The November 20, 2002 judgment entry does not specifically identify the inventory and appraisement being approved. Barton’s inventory was the only inventory ever filed in this case, and her inventory did not include an appraisal.