Shriner's Hospital for Crippled Children of Texas v. Stahl
1980 Tex. LEXIS 416, 24 Tex. Sup. Ct. J. 146, 610 S.W.2d 147 (1980)
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Rule of Law:
When a specific devise in a will is adeemed by extinction, meaning the property is no longer in the testator's estate at the time of death, the proceeds from the pre-death sale of that property pass under the will's general residuary clause, not through partial intestacy, unless the will expresses a contrary intent.
Facts:
- On December 12, 1973, Eloise Williams executed a will that specifically devised her 103-acre 'home place' to several nieces and nephews, including Jack Williams and Billy Jo Stahl.
- The will also contained a residuary clause directing that all the 'rest, residue and remainder' of her estate go into a trust for her brother, John Dawson.
- The residuary clause further stipulated that if John Dawson predeceased her, the entire residuary estate would pass directly to the 'Masonic Home or Homes for Crippled Children'.
- In September 1976, Eloise Williams's brother, John Dawson, died.
- The following month, on October 5, 1976, Eloise Williams sold the 'home place' to a third party, receiving an $80,000 promissory note in exchange.
- On January 7, 1977, Eloise Williams died without having altered her will after the sale of the property.
Procedural Posture:
- The executor of Eloise Williams's will filed suit in a Texas trial court to construe the will and determine ownership of the $80,000 note.
- The trial court ruled that the devise was adeemed and that the note passed under the residuary clause to the Masonic charities.
- The heirs at law and/or original devisees appealed to the Texas Court of Civil Appeals.
- The Court of Civil Appeals affirmed that the devise was adeemed but reversed the trial court's judgment on disposition, holding that the note should pass to the testatrix's heirs at law through partial intestacy.
- The residuary beneficiaries (the Masonic charities) and the estate of a specific devisee (Jack Williams) petitioned the Supreme Court of Texas for review.
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Issue:
When a testator makes a specific devise of real property in a will but sells that property before death, does the note received from the sale pass under the will's general residuary clause, or does it pass outside the will to the testator's heirs through partial intestacy?
Opinions:
Majority - Spears, Justice
Yes, the note received from the sale passes under the will's general residuary clause. The specific devise of the 'home place' was adeemed by extinction because Eloise Williams sold the property before her death, and it was therefore no longer part of her estate. The court must interpret the words used in the will, not presume what the testatrix might have intended, and there is no language providing for the proceeds to go to the specific devisees. There is a strong legal presumption against partial intestacy, especially when a will contains a comprehensive residuary clause. This presumption dictates that property not otherwise disposed of, including property from an adeemed devise, should fall into the residuary estate. The court holds that the rules applicable to lapsed bequests should also apply to adeemed devises, meaning the $80,000 note becomes part of the residue and passes to the Masonic charities as directed by the will.
Analysis:
This decision solidifies the application of the ademption by extinction doctrine in Texas and clarifies the disposition of proceeds from adeemed property. It strongly reinforces the judicial presumption against partial intestacy, giving significant power to general residuary clauses to capture assets that fail to pass through specific bequests. The ruling establishes a clear default rule: unless a will explicitly states otherwise, the proceeds of a sold asset intended as a specific gift will automatically fall into the residuary estate. This creates predictability for estate administration but also highlights the critical need for testators to update their wills following major transactions involving specifically devised assets to avoid unintended consequences.
