This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C1-02-1702

 

 

In re:

Estate of Terrence H. Williams,

Deceased.

 

Filed April 8, 2003

Reversed

Lansing, Judge

 

Hennepin County District Court

File No. P6012387

 

 

Richard L. Gill, Ethan Glass, Robins, Kaplan, Miller & Ciresi L.L.P., 2800 LaSalle Plaza, 800 LaSalle Avenue, Minneapolis, MN  55402 (for appellant Joan Swanson)

 

William G. Peterson, Peterson Law Office, P.A., Suite 800, 3601 Minnesota Drive, Bloomington, MN  55435 (for respondent Marianne Tyson)

 

James Williams, 5617 Code Avenue, Edina, MN  55436 (pro se respondent)

 

            Considered and decided by Toussaint, Chief Judge, Lansing, Judge, and Huspeni, Judge.*

 

U N P U B L I S H E D   O P I N I O N

 

LANSING, Judge

 

            On appeal from a modification of a prior order adjudicating intestacy and determining heirs, Joan Swanson argues the district court erred in concluding that a valid prenuptial agreement limited her interest in the homestead to a life estate, with the remainder interest passing in equal shares to respondents Marianne Tyson and James Williams, decedent Terrence Williams’s children from a previous marriage.  Because we conclude that the plain language of the prenuptial agreement entitles Swanson to one-third of all probate assets, including the homestead, we reverse.

F A C T S

 

            Shortly before their marriage, Terrence Williams and Joan Swanson entered into a prenuptial agreement.  The district court concluded the agreement was valid and this conclusion was not disputed in the district court or on appeal.  Paragraph 2 of the agreement limited Swanson’s claim against her husband’s estate to

a.                   A life estate in [the homestead];

b.                  An amount equal to one-third of the value of probate assets remaining for distribution after payment of all taxes, debts, and expenses; and

 

c.                  An amount equal to one-third of the value of any non-probate assets transferred to a third party by reason of joint tenancy ownership, beneficiary designation or otherwise.

 

Paragraph 3 of the agreement required Williams not to transfer property during the marriage in a manner that would impair Swanson’s interests under paragraph 2.  It also provided that if the homestead were sold, Swanson would be immediately entitled to one-third of the net proceeds from the sale.

            Williams died intestate in February 2001.  In January 2002, Swanson petitioned for a formal adjudication of intestacy, determination of heirs, and appointment of a personal representative.  Unaware of the prenuptial agreement, the court issued an order appointing Swanson as personal representative and determining Williams’s heirs to be Joan Swanson, Marianne Tyson and James Williams.  Shortly after, Swanson moved to modify the court’s order, claiming that she was entitled to a life estate under paragraph 2(a) of the prenuptial agreement and a one-third remainder interest in the homestead under paragraph 2(b).

            In her reply and counter-motion, Tyson asserted that the prenuptial agreement limited Swanson’s interest to a life estate.  James Williams did not join Tyson’s motion; instead, he filed an affidavit stating that in several conversations, his father had said that Swanson would have the right to reside in the homestead for the remainder of her life and that if she decided to sell the homestead after his death Marianne Tyson, James Williams, and Joan Swanson would share equally in the proceeds.

            In August 2002, the court issued an order modifying its previous order and concluding that the prenuptial agreement’s intent was to give Swanson a life estate but not a remainder interest in the homestead.  The court implicitly determined that the prenuptial agreement was ambiguous and construed the agreement to limit Swanson’s interest in the homestead to a life estate.  Swanson appeals, contending the district court erred by disregarding the plain and unambiguous language of the prenuptial agreement.

D E C I S I O N

 

A prenuptial agreement is a contract.  See Minn. Stat. § 519.11 (2002) (setting forth requirements parties must meet to create valid and enforceable prenuptial agreement).  As such, it is subject to the same rules of construction as any other contract.  In re the Marriage of Garrity & Bishton, 181 Cal. App. 3d 675, 683 (Cal. Ct. App. 1986).  The construction of a contract raises a question of law subject to de novo review.  Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979).  Judicial construction is neither necessary nor appropriate when, on its face and as applied to the facts of a particular case, a contract’s meaning is plain.  Carl Bolander & Sons, Inc. v. U.S. Stockyards Corp., 298 Minn. 428, 433, 215 N.W.2d 473, 476 (Minn. 1974).

            Paragraph 2(b) of the prenuptial agreement provides that upon Williams’s death, Swanson is entitled to “[a]n amount equal to one-third of the value of probate assets remaining for distribution after payment of all taxes, debts, and expenses.”  Paragraph 1 of the agreement defines “probate assets” as “assets which are subject to the jurisdiction of the Probate Court.”  An interest in a homestead, remainder or otherwise, is subject to the jurisdiction of the probate court.  See Minn. Stat. § 524.2-402(a) (2002) (providing for probate disposition of homestead); Bengtson v. Setterberg, 227 Minn. 337, 357-58, 35 N.W.2d 623, 635 (1949) (stating that probate court has jurisdiction over homestead).  Accordingly, by virtue of the prenuptial agreement’s definition of probate assets, Swanson is entitled to a one-third remainder interest in the homestead under paragraph 2(b).

               Tyson makes four arguments against this construction of the prenuptial agreement.  First, relying on an 1881 case in which Justice Mitchell stated that “[t]he homestead  * * * never becomes, even for an instant, a part of the estate of a decedent for the purposes of administration,” Tyson argues that the homestead is not subject to the probate court’s jurisdiction as a matter of law.  See Wilson v. Proctor, 28 Minn. 13, 16, 8 N.W. 830, 832 (1881) (emphasis added).  But in expressly rejecting a similar argument in Bengtson, the supreme court emphasized the qualifying words “for purposes of administration,” and explained that the import of Justice Mitchell’s statement is that the homestead is exempt from the probate court’s jurisdiction only for purposes of “collecting property, taking possession thereof and preserving it, converting it into cash, applying the proceeds to the payment of claims, and distributing the residue.”  Bengtson, 227 Minn. at 358, 35 N.W.2d at 633.  The court further stated that “[i]n no case, [did it] find an unqualified statement by the [Wilson] court that the homestead is nopart of the estate.”  Id. at 358-59, 35 N.W.2d at 634.

Second, Tyson argues that because the homestead vests immediately upon the death of the owner, the homestead is not subject to the jurisdiction of the probate court.  But the Bengtson court also rejected this argument unequivocally, concluding that “the fact that the homestead vests immediately upon the death of the owner [does not] prevent it from being part of the decedent’s estate or remove it from the jurisdiction of the probate court.”  Bengtson, 227 Minn. at 359, 35 N.W.2d at 634; see also Murray v. Calkins, 191 Minn. 460, 462, 254 N.W. 605, 606 (1934) (stating that principal function of probate court in administering estates is to determine who is entitled to share estate and to what extent, and to assign each person his or her share).

            Third, Tyson argues that a person may not hold both a life estate and the remainder interest in the same property because a remainderman can take his or her possessory interest only after the life tenant dies.  According to Tyson, because the remainderman and the life tenant are the same person, such a transfer of property creates a legal impossibility.  Tyson offers no authority or reasoned argument in support of this position.  Furthermore, under the doctrine of merger, a life estate and a remainder interest covering the same property and held by the same person merge to create ownership of the property in fee simple.  John A. Borron, Jr., The Law of Future Interests, § 197 (3rd ed. 2002); see Minn. Stat. § 500.15, subd. 1 (2002) (recognizing the merger doctrine).

            Tyson’s fourth argument is that “[t]he purpose of an antenuptial agreement is to limit the surviving spouse’s claim to less than what is allowed by statute, not to expand a legacy beyond the statutory provisions.”  But Minnesota law allows the contracting parties to divide their property as they see fit and makes no reference to the laws of intestate succession:

         An antenuptial contract or settlement made in conformity with this section may determine what rights each party has in the non-marital property * * * upon dissolution of marriage, legal separation or after its termination by death and may bar each other of all rights in the respective estates not so secured to them by their agreement.

 

Minn. Stat. § 519.11, subd. 1 (2002).  There is thus no basis for Tyson’s claim that parties execute prenuptial agreements to reduce a surviving spouse’s intestate share for the benefit of the deceased spouse’s children from a former marriage.  Significantly, had Swanson and Williams intended to limit Swanson’s interest in the homestead to a life estate, there would have been no need for a prenuptial agreement because Swanson’s intestate share of the homestead would have been limited to a life estate.  Minn. Stat. § 524.2-402(a)(2) (2002).

            The district court, in determining that Swanson was entitled only to a life estate, relied on reasons other than those raised by Tyson on appeal.  The court reasoned that    (1) it is highly unusual to give a life estate and a partial remainder interest in the same property to the same person, (2) the failure to provide for a remainder interest in the homestead in paragraph 2(a) reflects the parties’ intention to exclude the homestead from the probate assets promised to Swanson in paragraph 2(b), (3) a one-third remainder interest in the homestead is inconsistent with the prenuptial agreement’s primary purpose, which is to provide for Swanson during her lifetime, and (4) paragraph 3 of the agreement is consistent with the parties’ intent to provide for Swanson during her lifetime only.

The district court did not provide a factual or legal basis for the generalization that it is highly unusual to give a life estate and a partial remainder interest to the same person.  But whether or not the prenuptial agreement is unusual, it must be enforced as written.  We are similarly unpersuaded that the parties’ failure to provide for a remainder interest in paragraph 2(a) reflects the parties’ intent to exclude the homestead from the probate assets distributed in paragraph 2(b).  Although paragraph 2(a) does not specifically refer to a remainder interest in the homestead, the homestead is a probate asset for purposes of paragraph 2(b) both under the terms of the agreement and as a matter of law.  By focusing on the omission in paragraph 2(a), the court’s reasoning would effectively rewrite paragraph 2(b) based on speculation of an unexpressed intent.  Swanson correctly argues that a court cannot alter an agreement’s unequivocal language based on speculation of an unexpressed intent.

            The court’s third reason, that the passing of a remainder interest to Swanson is inconsistent with the intent to provide for Swanson during her lifetime, is not supported by the agreement.  The court concluded that the parties could not have intended to give Swanson a partial remainder interest in the homestead because, if the homestead were sold after her death, the interest would pass to her heirs.  Nothing in the agreement indicates the parties intended to exclude Swanson’s heirs.  Indeed, such an intent is inconsistent with paragraph 3 of the agreement, which gives Swanson an unconditional right to one-third of the net proceeds immediately upon the sale of the homestead.

            The court’s final reason, that paragraph 3 of the prenuptial agreement reflects the parties’ intent to provide for Swanson during her lifetime only, is also inconsistent with the language of the agreement.  Paragraph 3 prohibits Williams from making any property transfers during the marriage that would impair Swanson’s ability to receive the amounts provided for her in paragraph 2.  It also entitles Swanson immediately to receive one-third of the net proceeds from a sale of the property during the marriage.  Under this provision, Swanson would be entitled to retain, distribute, or devise her share of the proceeds as she wished.  Thus, because the sale of the homestead during Swanson’s lifetime would have removed one-third of the homestead’s value from Williams’s estate, paragraph 3 is inconsistent with a determination that the parties intended to deny Swanson the right to a remainder interest in the homestead.

The court’s construction of the prenuptial agreement rests on an implicit determination that the language of the agreement is ambiguous.  In attempting to resolve the perceived ambiguity the court relied on the four unsupported inferences rather than the only extrinsic and unrefuted evidence offered to show the parties’ intent—James Williams’s affidavit stating that in conversations with his father, his father consistently said that if Swanson “decided to sell the duplex after his death, the net proceeds would be shared equally by Joan, Marianne, and myself.”  It is, however, unnecessary to consider the extrinsic evidence.  The plain and unambiguous language of the prenuptial agreement distributes to Swanson one-third of all probate assets including the homestead.  We therefore reverse.

            Reversed.

 



* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.