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No. 103,728 IN THE COURT OF APPEALS OF THE STATE OF KANSAS HARRIET F. EGGESON, Appellee, v. GERTRUDE DELUCA, Appellant.

SYLLABUS BY THE COURT 1. This court's standard of review in summary judgment cases is well established. When the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the same rules apply; summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence.

2. The interpretation and legal effect of written instruments are matters of law, and an appellate court exercises unlimited review. Regardless of the trial court's construction of a written instrument, an appellate court may construe a written instrument and

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determine its legal effect. Moreover, the question of whether a written instrument is ambiguous presents a question of law subject to de novo review.

3. Mutual wills made in pursuance of a contract and in consideration of reciprocal provisions do not violate public policy and have long been held valid in Kansas. Whether a will is contractual presents a question of fact. The burden is on the party who asserts a contract to establish by direct or circumstantial evidence that mutual and contractual wills were made in consideration of each other. The contract must be established by full and satisfactory proof that cannot be supplied by a presumption arising from the fact that the wills were mutual. The fact that the wills fail to reference a contract is not conclusive. Moreover, a contract cannot be presumed because two people simultaneously make reciprocal testamentary dispositions. Nevertheless, the terms of the will may be circumstantial evidence of a contract and may show by implication, along with other known circumstances such as family relations, that execution of the will was the result of a preexisting agreement. Finally, the contract must be definite, certain, and unequivocal as to parties, subject matter, and consideration.

4. A joint, mutual, and contractual will between husband and wife creates a binding, enforceable obligation upon the survivor who takes under the will to distribute the survivor's estate in accordance with the terms of the contractual will.

5. Under K.S.A. 60-460, evidence of a statement which is made other than by a witness while testifying at the hearing, offered to prove the truth of the matter stated, is hearsay evidence and inadmissible unless it meets one of the recognized hearsay exceptions under K.S.A. 60-460. If the statement offered does not fit within the definition of hearsay, the evidence is admissible if the other rules of evidence are satisfied. 2

6. K.S.A. 60-460(1) states that declarations of present state of mind are admissible as an exception to the hearsay rule unless the judge finds it was made in bad faith, a statement of the declarant's then existing state of mind, emotion or physical sensation, including statements of intent, plan, motive, design, mental feeling, pain and bodily health, but not including memory or belief to prove the fact remembered or believed, when such a mental or physical condition is in issue or is relevant to prove or explain acts or conduct of the declarant.

7. Generally, self-serving out-of-court statements of a decedent are inadmissible unless they are part of the res gestae.

Appeal from Johnson District Court; LAWRENCE E. SHEPPARD, judge. Opinion filed February 25, 2011. Affirmed in part and remanded with directions.

M. Courtney Koger, John M. McFarland, and Scott E. Harvison, of Kutak Rock LLP, of Kansas City, Missouri, for appellant.

John P. Hastings, of Leawood, for appellee.

Before GREENE, P.J., GREEN, J., and LARSON, S.J.

GREEN, J.: John and Barbara Leavey, husband and wife, executed joint contractual wills in 1987 which detailed their asset distribution plan for Barbara's siblings and John's children upon the death of the surviving spouse. After Barbara signed a durable power of attorney in 1997 allowing John to create a revocable trust with dispositive provisions "substantially similar" to her 1987 will, John created revocable trusts for both him and Barbara that contained virtually the same asset distribution plan to Barbara's siblings and John's children as their 1987 joint contractual wills. In 2002, 3

approximately 3 years after Barbara's death, John executed an amendment to his trust that effectively changed the asset distribution plan. It greatly changed the asset distribution between Barbara's siblings and John's children.

Harriet Eggeson, Barbara's sister, filed the present declaratory action against Gertrude DeLuca, John's daughter and the trustee of John's trust, challenging John's 2002 amendment to the 1997 trust and asking for reformation of the trust. The trial court determined that John's 2002 amendment to the trust was not authorized by the 1987 joint contractual wills or by Barbara's durable power of attorney and granted summary judgment to Eggeson.

On appeal, DeLuca contends that the trial court improperly excluded statements made by John as to his reasons for executing the 2002 amendment and that a genuine issue of material fact existed as to whether the 2002 amendment resulted in an estate plan "substantially similar" to the 1987 joint contractual wills. Nevertheless, we determine that John's statements, which were made approximately 15 years after the 1987 wills were executed and approximately 3 years after Barbara's death, constituted inadmissible hearsay and were not relevant to the issues in this case. Moreover, no genuine issue of material fact existed as to whether John's 2002 amendment resulted in an estate plan "substantially similar" to the 1987 joint contractual wills. Because John's 2002 amendment completely changed the asset distribution plan in the 1987 joint contractual wills and was contrary to John's and Barbara's agreement regarding the distribution of their assets, we determine that the trial court properly granted summary judgment to Eggeson. Accordingly, we affirm in part and remand with instructions.

Did the Trial Court Err in Granting Summary Judgment to Eggeson?

John and Barbara Leavey were married in 1975. In June 1975, before they were married, John and Barbara executed an antenuptial agreement in which they stated that 4

they "both have relatives for whom they desire to preserve their respective estates." Within the antenuptial agreement, John and Barbara agreed that all of the real and personal property owned by each party when the marriage occurred would remain the separate property of the respective party. In addition, the antenuptial agreement created a life estate for John in Barbara's residence at Lake Quivira:

"In view of the fact that [John]'s residence is being sold in anticipation of the marriage, and that it may be his desire to continue his residence in the home of [Barbara] after her death, it is agreed that [John] shall be allowed to live in the residence of [Barbara] for so long as he desires, should [Barbara] die, and this agreement shall act as the creation of such an estate in the residence."

Attached to the antenuptial agreement were balance sheets listing John's net assets at $113,620, including his residence which was to be sold, and Barbara's net assets at $220,700, including the Lake Quivira house.

In February 1987, Barbara and John executed joint reciprocal wills. Both Barbara's and John's wills recited the fact that the parties intended to create joint wills: "The two Instruments are intended to be, and shall be construed as Joint Wills. Neither of us may modify or revoke our Will during, or after the lifetime of the other, unless consented to by the non-modifying or non-revoking spouse."

Within Article VII of her will, Barbara again gave John a life estate in her real property at Lake Quivira. Barbara's will further provided that upon John's death, the Lake Quivira property would pass to Barbara's siblings as follows:

"Upon my husband's death the said real property shall pass to my brother and sister, John O. Farmer and Harriet F. Eggeson, absolutely and in fee simple, share and share alike. If any such brother or sister of mine predeceases me, his or her share shall be distributed to that brother or sister that does survive me."

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Under Article VI of her will, Barbara gave all of her personal property and the entire residue of her estate to John. Similarly, under Article VI of his will, John gave Barbara the entire residue of his estate, "whether real personal or mixed of every kind, nature and description whatsoever." Both Barbara's and John's wills provided that the surviving spouse was to give certain monetary gifts to three charitable organizations. Moreover, the surviving spouse was to devise the residue of the surviving spouse's estate as follows: one-half of the personal property and all of the real property to Barbara's brother and sister, John O. Farmer and Harriet F. Eggeson, and one-half of the personal property to John's children, Gertrude C. DeLuca and Robert F. Leavey.

In April 1997, Barbara Leavey executed a durable power of attorney appointing John Leavey her "true and lawful Attorney in Fact." Under Barbara's durable power of attorney, John was granted the power to do the following:

"(21) To transfer all or any part of my assets to any revocable trust of which I am the grantor; "(22) To establish a revocable trust on my behalf with dispositive provisions substantially similar to those of the Last Will and Testament executed by me prior thereto."

In May 1997, John established revocable trusts for both him and Barbara. John signed Barbara's trust as "Barbara M. Leavey by John F. Leavey." John was the trustee of both his and Barbara's trusts. Both Barbara's and John's trust documents created the Family Trust, which "shall be funded with the largest amount of assets, if any, which, if allocated to the Family Trust, would result in no increase in federal estate tax payable at Grantor's death."

Article III of both trusts provided that upon the death of the other spouse, the assets of the Family Trust were to be managed and distributed as follows: 6

"B.

Provisions Applicable After Death of Grantor's Spouse 1. Distribution of Residence. Trustee shall distribute Grantor's

residence at Lake Quivira, Kansas, to the extent said residence comprises a portion of the trust estate, equally to the siblings of Grantor's spouse, HARRIET EGGESON and JOHN O. FARMER, outright and free of trust, if they are then living. If either HARRIET EGGESON or JOHN O. FARMER predeceases Grantor, the Trustee shall distribute Grantor's residence to the survivor. If both HARRIET EGGESON and JOHN O. FARMER both predecease Grantor, then this gift shall lapse. 2. Division of Assets Into Shares. Upon the death of Grantor's

spouse, or upon the death of Grantor, if Grantor's spouse does not survive Grantor, Trustee shall divide the principal of the Family Trust, as then constituted, as follows: a. Distributions to Children. Trustee shall pay over and distribute,

outright and free of trust, one-half (1/2) of the remaining trust assets equally to Grantor's children, GERTRUDE C. DeLUCA and ROBERT F. LEAVEY, if they are then living. . . . b. Distributions to Siblings of Grantor's Spouse. Trustee shall pay

over and distribute, outright and free of trust, one-half (1/2) of the remaining trust assets equally to the siblings of Grantor's spouse, JOHN O. FARMER and HARRIET EGGESON, if they are then living. . . ."

Under Article XX of both trust documents, the Grantor reserved the right to alter, amend, and revoke the trust agreement.

After Barbara's death in 1999, John amended his 1997 trust agreement. Specifically, in October 2002, John executed a first amendment to his trust agreement, which provided as follows:

"Paragraph B of Article III shall be deleted in its entirety, and the following new paragraph B of Article III shall be substituted therefor: "B. Provisions Applicable After Death of Grantor. Upon the death of

Grantor, the Trustee shall distribute the remaining trust assets equally to Grantor's

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children, GERTRUDE C. DeLUCA and ROBERT F. LEAVEY, if they are then living. If either GERTRUDE C. DeLUCA and ROBERT F. LEAVEY predeceases Grantor, then his or her share shall be distributed to his or her then living descendants, per stirpes."

Thus, under the 2002 amendment, all of the remaining trust assets were to be distributed to John's children.

Apparently, John continued to live in the Lake Quivira home until he died in 2006. Around July 2006, Eggeson sold the Lake Quivira home for approximately $575,000. John's children did not receive any of the proceeds from the sale of the Lake Quivira home. After John's death, the residue of John's trust was held on account with Merrill Lynch. In September 2006, the approximate value of the residue of John's trust was $700,000.

After John's death, Eggeson petitioned for the probate of a will and the issuance of letters testamentary in regard to John's 1987 will. Nevertheless, the trial court denied admission of John's 1987 will to probate. The trial court determined that the evidence failed to establish that John's 1987 will was executed with the statutory formalities of execution required under K.S.A. 59-606. The trial court held that Eggeson had failed to show that John's 1987 will was attested to and subscribed in John's presence by at least two competent witnesses who saw him subscribe or heard him acknowledge the will. This court affirmed the trial court's decision. See In re Estate of Leavey, 41 Kan. App. 2d 423, 424-26, 202 P.3d 99 (2009).

In October 2006, Eggeson also filed the present declaratory judgment action against DeLuca. Eggeson sought a declaratory judgment from the trial court declaring that Barbara's and John's 1987 wills were joint contractual wills that were enforceable and binding upon Barbara's and John's heirs, successors, and assigns. In addition, Eggeson sought a judgment declaring that the trusts created by John under his durable 8

power of attorney were not in conformity with the 1987 contractual wills and that the trusts were subject to reformation by the trial court. Further, Eggeson brought claims of conversion and failure to perform duties as the successor trustee to Barbara's and John's trusts against DeLuca.

In June 2009, Eggeson moved for summary judgment. DeLuca then moved to strike Eggeson's motion for summary judgment and supporting brief for failure to comply with the requirements of Supreme Court Rule 141 (2010 Kan. Ct. R. Annot. 228). Approximately 1 month after DeLuca's motion to strike was filed, Eggeson filed an amended brief supporting her motion for summary judgment.

In responding to Eggeson's amended brief, DeLuca set forth additional facts from an affidavit filed by her and an affidavit filed by Cheryl Boushka, the attorney retained by John to draft the 2002 amendment. In their affidavits, both DeLuca and Boushka detailed statements made by John that because the Lake Quivira property had greatly increased in value, he had executed the 2002 amendment in order to more evenly distribute estate asset values among DeLuca, Robert Leavey, Eggeson, and Farmer.

In a detailed written memorandum decision filed in December 2009, the trial court granted summary judgment to Eggeson. The trial court found no prejudice to either party "from the shortcoming or omissions of the other to strictly observe the requirements of Rule 141" and deemed Eggeson's motion for summary judgment properly submitted for ruling. Moreover, the trial court determined that the proffered testimony of John, as contained in DeLuca's and Boushka's affidavits, was inadmissible hearsay. In addition, the trial court held that John's rationale or motive for amending his 1997 trust to disinherit Eggeson and Farmer from receiving one-half of the residuary assets in the Family Trust was not relevant or admissible evidence at trial.

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The trial court determined that John's authority to modify or revoke the dispositive provisions of his and Barbara's 1987 wills and 1997 trusts was limited and that he could not change his and Barbara's dispositive estate plan without Barbara's consent. Concluding that John's 2002 amendment to the trust agreement must be reformed to be consistent with Barbara's expectations for distribution of their estates, the trial court stated as follows:

"The Court concludes, as a matter of law, that the [Durable Power of Attorney] did not give Mr. Leavey the power to amend his revocable trust more than three years after Mrs. Leavey's death in a manner contrary to her justified expectations as expressed in their 1975 Antenuptial Agreement, their 1987 Wills, her 1997 [Durable Power of Attorney], and their 1997 Revocable Trusts. Reading and considering these documents in pari materia, Mr. Leavey's 2002 Amendment of his Family Trust must be reformed to be consistent with Mrs. Leavey's expectations for distribution of their estates."

Thus, the trial court held that Eggeson and Farmer should share the residue of the estate equally with DeLuca and Robert Leavey.

Did the Trial Court Err in Granting Summary Judgment to Eggeson?

On appeal, DeLuca argues that the trial court erred in granting summary judgment to Eggeson when material issues of fact remained as to John's intent in 2002 when he amended his revocable trust and whether the 2002 amendment resulted in a "substantially similar" distribution of his and Barbara's estate.

Standards of Review

This court's standard of review in summary judgment cases is well established. When the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact 10

and that the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the same rules apply; summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence. Shamberg, Johnson, & Bergman, Chtd. v. Oliver, 289 Kan. 891, 900, 220 P.3d 333 (2009).

Moreover, DeLuca's argument requires the interpretation of the various written instruments involved in this case. The interpretation and legal effect of written instruments are matters of law, and an appellate court exercises unlimited review. Miller v. Westport Ins. Corp., 288 Kan. 27, 32, 200 P.3d 419 (2009). Regardless of the trial court's construction of a written instrument, an appellate court may construe a written instrument and determine its legal effect. See Shamberg, 289 Kan. at 900. The question of whether a written instrument is ambiguous presents a question of law subject to de novo review. City of Arkansas City v. Bruton, 284 Kan. 815, 829, 166 P.3d 992 (2007).

Barbara's and John's 1987 Wills Constituted Joint Contractual Wills.

In granting summary judgment to Eggeson, the trial court in this case determined that the terms of Barbara's and John's wills were enforceable by contract. DeLuca does not dispute this determination. Moreover, DeLuca apparently concedes that the 1987 wills formed a contract between John and Barbara.

"Mutual wills made in pursuance of a contract and in consideration of reciprocal provisions do not violate public policy and have long been held valid in Kansas. [Citation omitted.]" In re Estate of Stratmann, 248 Kan. 197, 203, 806 P.2d 459 (1991). Whether a 11

will is contractual presents a question of fact. In re Estate of Chronister, 203 Kan. 366, 372, 454 P.2d 438 (1969). The burden is on the party who asserts a contract to establish by direct or circumstantial evidence that mutual and contractual wills were made in consideration of each other. The contract must be established by full and satisfactory proof that cannot be supplied by a presumption arising from the fact that the wills were mutual. The fact that the wills fail to reference a contract is not conclusive. Moreover, a contract cannot be presumed because two people simultaneously make reciprocal testamentary dispositions. Stratmann, 248 Kan. at 203-04. Nevertheless, the terms of the will may be circumstantial evidence of a contract and may show by implication, along with other known circumstances such as family relations, that execution of the will was the result of a preexisting agreement. Finally, the contract must be definite, certain, and unequivocal as to parties, subject matter, and consideration. Reznik v. McKee, Trustee, 216 Kan. 659, 674, 678, 534 P.2d 243 (1975).

The following seven factors generally indicate the testators' intent to be contractually bound by a joint and contractual will:

"'"(1) A provision in the will for a distribution of property on the death of the survivor; "'"(2) a carefully drawn provision for the disposition of any share in case of a lapsed residuary bequest; "'"(3) the use of plural pronouns; "'"(4) joinder and consent language; "'"(5) the identical distribution of property upon the death of the survivor; "'"(6) joint revocation of former wills; and "'"(7) consideration, such as mutual promises." [Citations omitted.]'" Mangels v. Cornell, 40 Kan. App. 2d 110, 116, 189 P.3d 573 (2008).

See Reznik, 216 Kan. at 674-78; In re Estate of Thompson, 206 Kan. 288, 291, 478 P.2d 174 (1970); In re Estate of Chronister, 203 Kan. at 369-71; In re Estate of Wade, 202 Kan. 380, 390, 449 P.2d 488 (1969). 12

An application of the previous seven factors to Barbara's and John's 1987 wills supports the trial court's conclusion that the wills were contractual in nature. The 1987 wills provide for the distribution of property upon the death of the surviving spouse. The wills further provide for the distribution of property in the event that one of Barbara's siblings or John's children predeceases the surviving spouse. Although the use of plural pronouns is not present throughout the 1987 wills, the following joinder language contained in both wills expresses a clear intent by Barbara and John that the wills were joint and contractual:

"My [spouse and] I are executing a Last Will and Testament at approximately the same time. The two [1987 wills] are intended to be, and shall be construed as Joint Wills. Neither of us may modify or revoke our Will during, or after the lifetime of the other, unless consented to by the non-modifying or non-revoking spouse."

Moreover, in their 1987 wills, both Barbara and John revoked all previous wills and codicils and provided for the identical distribution of property upon the death of the surviving spouse. Based on those provisions in Barbara's and John's 1987 wills, the trial court properly determined that the intent of Barbara and John was to create joint and contractual wills.

Importantly, although John's 1987 will was not accepted for probate, it still formed an enforceable contract between John and Barbara. Our Supreme Court has held that a single written instrument may be both a will contractual in nature and a contract testamentary in character. As a will, it is revocable. As a contract, however, it is enforceable. Thus, although a contractual will revoked by execution of a second will cannot be probated, it may still be enforced as a contract against the estate of the testator breaching it. Reznik, 216 Kan. at 671. Similarly, although John's 1987 will did not meet all of the testamentary formalities to be accepted for probate, it could still be enforced as 13

a contract against his estate. As set forth in In re Estate of Burcham, 248 Kan. 897, Syl.

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