Jared MUHLBAUER and Luke Muhlbauer, Plaintiffs and Appellees, v. ESTATE OF Glenn E. OLSON, Defendant, and James W. Olson and Gary E. Olson, Intervenors and Appellants, v. Estate of Glenn E. Olson, Defendant.
No. 25761.
Supreme Court of South Dakota.
July 27, 2011.
2011 S.D. 42 | 446
Considered on Briefs April 25, 2011.
Robert W. Klimisch of Goetz and Klimisch, Yankton, South Dakota, Attorneys for appellants.
GILBERTSON, Chief Justice.
[¶ 1.] The personal representative of an estate sold real prоperty that had been specifically devised to several heirs. This
FACTS
[¶ 2.] The underlying facts can be found in In re Estate of Olson (Olson I), 2008 S.D. 4, 744 N.W.2d 555, and In re Olson (Olson II), 2008 S.D. 126, 759 N.W.2d 315. The facts are not disputed. Consequently, they are only briefly recited now.
Glenn Olson died testate in 2002. Wayne Olson was appointed personal representative of Glenn’s estate (Estate). In the will, Glenn specifically devised his real estate to James Olson and six other nieces and nephews. The Estate was informally probated in accordance with the Uniform Probate Code. Without noticе to the heirs in violation of
[¶ 3.] James objected to the confirmation of the sale to the Muhlbauers. Jared Muhlbauer was asked to testify at the hearing confirming the sale. Despite Jamеs’ objection, the trial court confirmed the sale. The objecting heirs appealed. Muhlbauers were not informed of the appeal confirming the sale until after our decision was issued. On appeal, this Court determined that Wayne lacked the power to sell the specifically devised lаnd and “reverse[d] the trial court order confirming the sale of specifically devised real estate and remand[ed] for further proceedings[.]” Olson I, 2008 S.D. 4, ¶ 29, 744 N.W.2d at 564. This Court also instructed that on remand the third-party purchaser would have “the opportunity to intervene to protect his or her interests.” Id.
[¶ 4.] “Following remand, Muhlbauеrs intervened and filed a claim against the Estate seeking to confirm the sale that this Court had previously voided. In the alternative, Muhlbauers asserted a damage claim that they contended would arise if the sale were not confirmed.” Olson II, 2008 S.D. 126, ¶ 2, 759 N.W.2d at 317. James and another heir, Gary Olson (collectively Heirs), moved to intervene in the proceedings. Id. ¶ 3, 759 N.W.2d at 317-18. The trial court denied their motion to intervene, but this Court reversed that decision on appeal, and remanded to allow the heirs to intervene. Id. ¶ 12, 759 N.W.2d at 321.
[¶ 5.] On remand, Muhlbauers filed a motion for summary judgment. Heirs filed a motion for partial summary judgment. The Estate then filed a response to thе cross-motions for summary judgment, agreeing that summary judgment was appropriate but declining to advocate for either side.1 The trial court granted summary judgment in favor of Muhlbauers, stating that “[b]ecause there is no factual dispute that the Muhlbauers were good faith purchasers for value from the Estate
[¶ 6.] On appeal, the issue presented is: Whether, under the facts of this case, Muhlbauers were good faith purchasers for value of specifically devised land protected by
STANDARD OF REVIEW
[¶ 7.] This Court’s standard of review of a grant or denial of a motion for summary judgment is well settled.
In reviewing a grant or a denial of summary judgment under
SDCL 15-6-56(c) , we determine whether the moving party has demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. In considering a trial court’s grant or deniаl of summary judgment, this Court will affirm only if all legal questions have been decided correctly.
Bertelsen v. Allstate Ins. Co., 2011 S.D. 13, ¶ 15, 796 N.W.2d 685, 692–93 (internal citations omitted).
ANALYSIS
[¶ 8.] Heirs argue that Olson I determined that the sale to Muhlbauers was void, specifically relying on our language that “[t]he sale should have been voided as the personal representative did not have authority to sell the specifically dеvised property[.]” Olson I, 2008 S.D. 4, ¶ 28, 744 N.W.2d at 563. Because the property vested in the Heirs at the time of Glenn’s death, the Estate did not have an interest in the land that the personal representative could sell. Id. ¶ 15, 744 N.W.2d at 560. Heirs assert that Olson I contemplated a remedy for Muhlbauers directly against the personal representative, not the cоnfirmation of the sale. Muhlbauers respond that Olson I did not determine their title to the land because it “determined the rights of the personal representative vis-à-vis the heirs, not the rights of the Muhlbauers as innocent third party purchasers for value.” They point out that this Court remanded precisely to allow Muhlbauers an оpportunity to assert their rights. Muhlbauers contend that a sale can be void in one context and valid in another. See, e.g., Hauck v. Crawford, 75 S.D. 202, 62 N.W.2d 92 (1953) (discussing void versus voidable title).
[¶ 9.] The trial court found that this “Court recognized the lack of an indispensable party [the Muhlbauers] to afford the complete relief sought by the Heirs and remanded the matter back tо the trial court to permit the Muhlbauers to intervene and hold further proceedings consistent with Olson I.” The trial court framed the issue it was addressing on remand as whether the “sale is void as to the Muhlbauers as third party purchasers[.]” In other words, the trial court did not read Olson I as determining any of Muhlbauers’ rights.
[¶ 10.] Today, we affirm on more narrow grounds. At the time Muhlbauers purchased the property at auction, the law was not clear as to whether a personal representative possessed the power to sell specifically devised land when the power of sale was not contained in the will and the sale was not necessary to pay estate debts; that was the subject of Olson I. 2008 S.D. 4, ¶ 9, 744 N.W.2d at 559. This Court extensively reviewed our Territorial Probate Code, the effect of the enactment of the Uniform Probate Code, and case law regarding the power of personal representatives to sell property. See id. ¶¶ 11-29, 744 N.W.2d at 559-64. This Court held that “the personal representative did not have authority to sell the specifically devised property[.]” Id. ¶ 28, 744 N.W.2d at 563. Muhlbauers could not have known the outcome of Olson I at the time they purchased the property.
[¶ 11.] Muhlbauers seek the protection of
A person who in good faith either assists a personal representative or deals with a personal representative for value is protected as if the personal representative was properly authorized to act. The fact that a person deals with a personal representative with knowledge of the representative capacity does not alone require the person to inquire into the existence of a power or the propriety of its exercise. Except for restrictions on powers of supervised personal representatives which are endorsed on letters as provided in § 29A-3-504, no provision in any will or order of court purporting to limit the power of a personal representative is effective except as to persons with actual knowledge thereof. A person is not bound to see to the proper application of estate assets paid or delivered to a personal representative. The protection here expressed extends to instances in which some procedural irregularity or jurisdiсtional defect occurred in proceedings leading to the issuance of letters, including a case in which an alleged decedent is found to be alive.
[¶ 12.] In order to be protected by
[¶ 13.] Muhlbauers contend that title must vest in them under
CONCLUSION
[¶ 15.] We affirm because at the time Muhlbauers purchased the land, Olson I had not been decided, and as a result, they could not have known that the personal representative lacked the authority to sell them the land. Muhlbauers were good faith purchasers for value, and therefore, protected by
[¶ 16.] MEIERHENRY, Retired Justice, concurs.
[¶ 17.] KONENKAMP, ZINTER, and SEVERSON, Justices, concur in result.
SEVERSON, Justice (concurring in result).
[¶ 18.] I conсur only in the result. The Muhlbauers are good faith purchasers for value under
[¶ 19.] I do not join that part of the opinion that relies on In re Estate of Olson (Olson I), 2008 S.D. 4, 744 N.W.2d 555. Before the South Dakota Legislature adopted the Uniform Probate Code (UPC), one who purchased property from an еxecutor needed to examine the will, court records, or other relevant sources to confirm the executor’s authority to complete the transaction. See 1994 S.D. Sess. Laws ch. 232 (enacting the UPC in South Dakota effective July 1, 1995). This requirement changed with the enactment of
Section 3-714 explicitly рrotects purchasers from allegations that a sale from a personal representative was unnecessary or at too low a price or even against the terms of a will. The purchaser is expressly excused from examining the terms of the will, court records relating to the appointment, or other sources that might be relevant to the question of whether the sale is proper as between the fiduciary and those entitled to the inheritance. The only restriction on the power of sale contemplated by the Code is when supervised administration (
§§ 3-501 et seq. ) has been ordered. In this setting, the сourt is authorized to endorse restrictions on the personal representative’s power on the letters of authority the court issues to the personal representative. A purchaser does take subject to these restrictions. In the ordinary case, however, a title examiner would only need to see that letters were issued and in effect when a personal representative gave a deed to a purchaser.3
[¶ 20.] Limiting
[¶ 21.] Furthermore, Olson I does not follow this Court’s settled precedent in In re Estate of Kappenmann, 82 S.D. 91, 141 N.W.2d 780 (1966). In Kappenmann, we held that an executor may sell specifically devised real property under a power of sаle in a will, even if there is not a directive in the will to sell the property and the sale is not necessary to pay debts and costs of administration. Id. Although Kappenmann was decided before the Legislature adopted the UPC, there is no reason to conclude that the UPC dictates a different result. Nothing distinguishes a power оf sale in a will and a power of sale granted by statute.
[¶ 22.] The Olson I majority concluded that a statutory power of sale is inherently inconsistent with a specific devise. 2008 S.D. 4, ¶ 20, 744 N.W.2d at 561. That conclusion is logically flawed. It assumes as a premise a difference between a power of sale in a will and a power of sale granted by statute. See
[¶ 23.] Thus, I concur in the result that the Muhlbauers are good faith purchasers for value under
[¶ 24.] KONENKAMP аnd ZINTER, Justices, join this special writing.
GILBERTSON
CHIEF JUSTICE