Family Squabble Over Land - Brother Claims Retaliation By Estate Executors

June 13, 2009 | Erin Herbold

 

When an estate is opened in Iowa, the appointed executors must take an oath to the court to accept the duty of a fiduciary- meaning that an executor must “manage an estate with the level of care an ordinary prudent person would exercise under like circumstances in their own affairs.” Under Iowa Code § 633.160, a fiduciary is liable for “negligent or willful acts or nonfeasance in the fiduciary’s administration of the estate by which loss to the estate arises.” 

Here, a father passed away leaving behind six children and two farms. The north farm was put into trust for the benefit of the mother with the remainder going to the children. Part of the north farm was allegedly purchased by one of the children (a subsequent executor to his mother’s estate) and his wife.  When the mother died in 2005, her will left her estate in six equal shares to her children. Two of the brothers were appointed as executors to the estate. Thereafter, one of the executors expressed an interest in purchasing the south farm, while another brother expressed an interest in purchasing the north farm from the estate. The executor brother offered a lower amount than was acceptable to the brother wishing to purchase the north farm. After he complained, he received notice that the south farm would be sold by auction. The auction was held and the farm was purchased by an outside farmer.     

Soon after, the brother wishing to purchase the south farm filed suit claiming that his executor brother never had a valid deed to the north farm and the purchase price was well below market price. Further, the brother claimed that the executors did not act properly as fiduciaries when they denied him the ability to purchase the property.  The executor filed a motion to have the suit dismissed, which his brother resisted claiming that he had an oral agreement to purchase the south farm and that the executor was retaliating against him by disallowing the purchase. The trial court determined that the brother’s attempt to enforce an oral real estate contract was invalid under the statute of frauds, which requires that transfers of real estate be in writing. Further, the court found that the executor did not breach his fiduciary duty, because they had not breached any duty to the estate. 

On appeal, the court first addressed the issue of breach of fiduciary duty and fair dealing in estate decision-making. The Iowa Court of Appeals, upon examining testimony and the selling price of the land, determined that the brother had not sustained an actual loss or damage as an heir of the Estate. In fact, the land sold for far more than the brother had been willing to pay. Next, the court addressed the issue of intentional interference of the oral contract by the executor. The court reiterated prior case law and said that it is well established that the brother show, 1) that there was a valid contract with a third-part, 2) that the executor knew of that contract, 3) that the executor intentionally interfered with the contract, 4) that the interference caused contract not to be performed, and 5) that the brother suffered damages. Here, the court found that since there was no written agreement for the sale of the land between the brother and the estate, the statute of frauds prevented the existence of the contract. Therefore, the executor could not interfere with a contract that did not exist in this case.Schaefer v. Schaefer, No. 9-190/008-1301, 2009 Iowa App. LEXIS 484 (Iowa Ct. App., May 29, 2009).