Kenneth Scholz v. Lorraine Kirk

Indiana Court of Appeals·Decided July 19, 2013·No. 37A03-1211-Pl-493·Unpublished

Opinion

Jul 19 2013, 6:31 am

Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:

ROBERT H. LITTLE EDWARD P. DUMAS Brookston, Indiana RUSSELL DEAN BAILEY Dumas & Mahnesmith, P.C.

Rensselaer, Indiana

IN THE

COURT OF APPEALS OF INDIANA

KENNETH SCHOLZ, )

)

Appellant-Respondent, )

)

vs. ) No. 37A03-1211-PL-493 )

LORRAINE KIRK, )

)

Appellee-Petitioner. )

APPEAL FROM THE JASPER CIRCUIT COURT The Honorable John D. Potter, Judge Cause No. 37C01-1007-PL-480

July 19, 2013

MEMORANDUM DECISION - NOT FOR PUBLICATION PYLE, Judge

STATEMENT OF THE CASE

This appeal involves a family dispute between a brother, Kenneth Scholz (“Scholz”), and sister, Lorraine Kirk (“Kirk”), regarding 117 tillable acres of farmland (“the Farmland”)1 left to them and their sister, Shirley Ann Duley (“Duley”),2 upon the death of their mother, Edith Scholz (“Edith”).

This case returns to our Court following a dispute between Scholz and Kirk—in the probate proceedings and on appeal—regarding the terms of Edith’s will pertaining to the Farmland and the division of rental income from the Farmland. See In re Supervised Estate of Scholz, 859 N.E.2d 731 (Ind. Ct. App. 2007), reh’g denied. In that appeal, we held that Edith’s will provided that Scholz would have a “life estate to farm the land” and directed that the “‘equitable proceeds’ from the farming be shared” with his sisters. Estate of Scholz, 859 N.E.2d at 735 (emphasis in original). We affirmed the probate court’s determination that Scholz would receive income from the Farmland as a life estate holder and as a beneficiary/landlord and that Kirk and Duley would receive income as beneficiaries/landlords. Specifically, Scholz would receive the proceeds of his tenant farming, and each sibling was to receive a one-third of the landlord’s share of the annual rental income.

Scholz, who was a tenant farmer on the Farmland, paid Kirk her one-third share of the rental income from the Farmland for 2008 crop season but did not pay her the one- third share of the rental income for 2009-2011 crop seasons. Kirk filed a complaint

1 The Farmland contains a total of 127.92 acres but has 117 tillable acres. Part of the Farmland is located in Jasper County (37 tillable acres) and the other part is located in Pulaski County (80 tillable acres). 2 Duley was neither a party in the case below nor is a party on appeal.

against Scholz, seeking payment for the 2009-2011 crop seasons and alleging that Scholz’s obligation to pay rental income was an issue that had already been established by this Court’s opinion in Estate of Scholz. Scholz now appeals the trial court’s judgment in favor of Kirk and against Scholz in the amount of $16,380.00 for Kirk’s one-third share of the rental income from the Farmland for 2009, 2010, and 2011 plus prejudgment interest of $2,584.89.

We affirm in part and reverse in part.

ISSUES

1. Whether the trial court erred by determining that Scholz owed rental income to Kirk for the Farmland.

2. Whether the trial court erred in its calculation of the rental income owed to Kirk.

3. Whether the trial court erred by awarding Kirk prejudgment interest.

FACTS

This case involves the continuing dispute between a brother and sister—Scholz and Kirk—over the Farmland left to them by their mother, Edith. In 1983, Edith executed a will (“Edith’s Will”), in which she made specific provisions regarding the Farmland as follows:

I give, devise and bequeath all of the property that I may own or have an interest in at the time of my death, in equal shares, to my children[3] . . . as joint tenants in common . . . It is my intention and my wish that my farm land remain in the family as long as possible. Therefore, all of the above joint tenants in common are subject to a life estate that I hereby grant to my beloved son, Ken Scholz, so that he may farm my farm land during his life.

3 At the time Edith executed her will, she had four children. One child, however, predeceased Edith. Thus, at the time of Edith’s death, there were three children—Scholz, Kirk, and Duley—who were beneficiaries of Edith’s estate.

My son, Ken Scholz, will be granted the first right to purchase any of the farmland that his . . . sisters wish to sell. Any sales of the bequeathed farm land shall be made at a fair-market price. The joint tenants shall share annually in the equitable proceeds of the life estate.

(Kirk’s Ex. 1).

Edith died in 2001. An estate was opened (“estate proceeding”) in the Jasper Circuit Court (“the probate court”) to probate Edith’s Will, and Scholz was appointed as personal representative. During the estate proceeding, the trial court determined, based on a stipulation among the interested parties, that Edith’s Will devised the Farmland to Scholz, Kirk, and Duley “as equal tenants in common, and not as joint tenants with right of survivorship[.]” (Kirk’s Ex. 2 at 2; App. 34). See also Estate of Scholz, 859 N.E.2d at 733.

Also during the estate proceeding, Scholz, “as ‘Personal Representative and beneficiary of the estate,’” asked the probate court to construe Edith’s Will. Estate of Scholz, 859 N.E.2d at 733. Specifically, Scholz sought to have the probate court (1) construe the scope of his life estate in the Farmland and (2) to interpret the meaning of the clause that the beneficiaries “‘share annually in the equitable proceeds of the life estate’” and instruct the beneficiaries of the estate regarding that meaning. Id. (quoting Edith’s Will).

On March 30, 2004, the probate court in the estate proceeding issued an order (“the Estate Order”), in which the trial court determined that Edith’s Will gave Scholz “the right to a life estate in [the Farmland] and the right to farm it for the remainder of his life, but also provid[ed] that [Kirk and Duley] would share in the farm proceeds

annually.” (Kirk’s Ex. 2 at 3; App. 35). See also Estate of Scholz, 859 N.E.2d at 733. The probate court also determined that, “so long as [Scholz was] farming” the Farmland, he would “receive the landlord and tenant’s share of the annual proceeds of the farm for an undivided one-third, and the tenant’s share for the undivided two-thirds of said farm, with Shirley Ann Duley and Lorraine Kirk each receiving an undivided one-third of the landlord’s share of the annual proceeds of said farm.” (Kirk’s Ex. 2 at 3; App. 35). See also Estate of Scholz, 859 N.E.2d at 734.

Scholz appealed the Estate Order, arguing, in part, that the probate court had disregarded his life estate and the rights accompanying the life estate, including the right to receive all the income from a life estate. Scholz also argued that the probate court had erroneously determined that he could not receive any of the income from the Farmland. We disagreed with Scholz. We held that the probate court had not erred and had not disregarded the life estate because it was clear that Edith’s Will provided that Scholz would have a “life estate to farm the land” while at the same time directed that the “‘equitable proceeds’ from the farming be shared” with his sisters. Estate of Scholz, 859 N.E.2d at 735 (emphasis in original). We also held that the probate court had not “deprived” Scholz of income from the Farmland and that specifically, Scholz—“as the life-estate holder”—would “receive[] the proceeds of his tenant farming and”—“as beneficiary”—would “receive[] one-third the annual rental income (i.e., one-third of the landlord share). Id. at 736 (emphasis in original).4

4 We also affirmed the probate court’s determination that Scholz had engaged in self-dealing by “acting in the capacity of personal representative and renting to himself the farmland he held in his life estate at an amount less than one-third of the fair market rental value[.]” Estate of Scholz, 859 N.E.2d at 736.

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