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Harris v. Davis

Court of Appeals of Indiana

October 24, 2017

Judy K. Harris, Personal Representative of the Estate of Gary W. Stahl, Appellant-Defendant,
Beth Ann Davis and Amy L. Westerman, Appellee-Plaintiff.

         Appeal from the Sullivan Circuit Court The Honorable Robert E. Hunley II, Judge Trial Court Cause No. 77C01-1609-PL-437

          Attorneys for Appellant Jeffrey B. Kolb Charles E. Traylor Kolb Roellgen & Kirchoff LLP Vincennes, Indiana

          Attorneys for Appellees William M. Olah Sarah L. Wachala Wilkinson, Goeller, Modesitt, Wilkinson & Drummy, LLP Terre Haute, Indiana

          Robb, Judge.

         Case Summary and Issue

         [¶1] Judy Harris, as personal representative of the Estate of Gary Stahl ("Gary's Estate"), appeals the trial court's judgment in favor of Beth Davis and Amy Westerman ("Beth and Amy"). Gary's Estate raises four issues for our review, one of which we find dispositive: whether the trial court's judgment is clearly erroneous. Concluding the trial court's judgment is clearly erroneous, we reverse its order in favor of Beth and Amy.

         Facts and Procedural History

         [¶2] In 1991, William Lawrence Stahl created the Revocable Trust Agreement of William Lawrence Stahl ("William's Trust"). From 1991 until his death in 2011, William amended his trust twice. The latest amendments to William's Trust provided that, upon William's death, his children, Gary Stahl and Rita Springer, were each to receive one-half of the assets of William's Trust. Rita would receive one-half of William's Trust's assets outright; however, Gary's portion was to be held in a separate residuary trust during Gary's lifetime. William also amended his trust to appoint Gary's daughters, Beth and Amy, as co-successor trustees of William's Trust. Beth and Amy are also co-trustees of the residuary trust. William's Trust further provided Gary was not to receive any of the principal of the residuary trust, but could only receive income generated by its assets. Upon Gary's death, the residuary trust was to be distributed in equal parts to Beth and Amy.

         [¶3] On numerous occasions before William's death, Gary received money from William's Trust in return for a promise to repay the money with interest. William died in May of 2011. Upon his death, his family began administering his estate and preparing to distribute his assets in the manner provided in William's Trust. In June of 2011, Beth and Amy, as co-trustees of William's Trust, and Gary signed a Settlement Statement memorializing the total amount Gary owed from his dealings with his father. The Settlement Statement provides,

I, Gary W. Stahl, acknowledge that I owe the Trust of my father, William Lawrence Stahl (deceased May 2, 2011) for funds advanced to me in the amount of Eighty Thousand Dollars ($80, 000.00) to be deducted from my share of the William Lawrence Stahl Revocable Trust Agreement dated November 15, 1991.

         Appellant's Appendix, Volume 2 at 62.[1]

         [¶4] On February 10, 2012, Gary, Rita, Beth, and Amy, signed a Family Settlement

         Agreement in an attempt to terminate William's Trust. The Family Settlement Statement provides, in relevant part,

Rita Springer . . . acknowledges that Gary Stahl owes [William's Trust] . . . the total sum of $80, 000 only, and Gary Stahl . . . acknowledges/consents to the transfer of the first $80, 000 of financial assets from [William's Trust] . . . to Rita Springer, and to the transfer of the $80, 000 obligation owed by Gary Stahl to the Residuary Trust f/b/o Gary Stahl under [William's Trust] . . . .

Id. at 65-66. The Family Settlement Statement also includes a step-by-step process for liquidating William's Trust. Steps 1 and 2 of the process involve transactions between the parties not relevant to this appeal. However, Step 3 states, in relevant part,

Result at this point: [William's Trust] owns half interest in N 40 of 100 ac[res] . . . and 100% of S 60 ac[res] plus financial assets (that have been reduced by the $80, 000 paid to Rita to off-set Gary's debt (that [debt] having been distributed to Gary's Trust- Gary then owes his trust, not Rita, that $80, 000) . . . .)[.]

Id. at 69.

         [¶5] On February 20, 2016, Gary died. Thereafter, Judy Harris, Gary's personal representative, filed a petition to probate Gary's will. Gary's will disinherited Beth and Amy. On April 7, 2016, Beth and Amy, as co-trustees of Gary's residuary trust, filed a verified statement of claim against Gary's Estate claiming their father's estate owed $80, 000 to Gary's residuary trust. The verified statement of the claim alleged as follows:

2. The amount of indebtedness due claimant from the decedent's estate is $80, 000.00 plus accrued interest at the rate of 8% annum from and after May 2, 2011 - principal and interest aggregating $111, 316.16 as of March 23, 2016 . . . .
3. The consideration for this debt is: $80, 000.00 in monies loaned to decedent as evidenced by that certain June 21, 2011 Settlement Statement signed by Gary W. Stahl . . . which debt was distributed to claimant pursuant to that certain Family Settlement Agreement dated February 10, 2012 . . . .

Id. at 46.

         [¶6] On October 27, 2016, the trial court held a hearing on Beth and Amy's claim against Gary's Estate. At the hearing, Beth and Amy introduced into evidence three promissory notes executed by Gary in favor of William's Trust. Each promissory note includes a promise to repay the borrowed amount plus interest at a rate of five percent per annum to William's Trust. See Plaintiffs' Exhibits G, O, & P. Beth and Amy also introduced a document labeled "Notes on Gary & Connie to Trusts" created by William detailing thirteen different dates on which Gary received money from either William's Trust or the trust of William's wife, Ruth. See Plaintiffs' Exhibit Q. In addition to these documents, Beth and Amy also submitted an Inheritance Tax Return ("Tax Return") filed by Gary and Rita as personal representatives of William's estate. The Tax Return lists, as an asset of William's estate, a "loan owed to the trust at date of death from Gary Stahl Settlement Statement" for $80, 000. Appellant's App., Vol. 2 at 159. The trial court also considered a letter written by William to Gary in January of 2006. In the letter, William documented the loans received by Gary. William wrote,

As you know, you and Connie executed a Promissory Note in favor of [William's Trust] dated July 1, 1997, the Ruth Stahl Revocable Trust dated July 1, 1997, a twenty-five thousand dollar ($25, 000.00) Promissory Note to the Ruth Stahl Revocable Trust dated April 6, 1996, and a twenty-five thousand dollar ($25, 000.00) Promissory Note to [William's Trust] dated April 6, 1996. All four of the above Notes provided for interest at the rate of seven and one-half percent (7.5%) per annum.

Plaintiffs' Exhibit F.

         [¶7] Following the hearing, the trial court adopted, verbatim, Beth and Amy's proposed findings of fact and conclusions thereon and entered judgment in favor of Beth and Amy in the amount of $114, ...

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