author: KAPSNER, Justice.

text:
    2001 ND 53
    In the Matter of the ESTATE OF Leo H. DION. Viola Bartusch, Petitioner and Appellant, v. Kenneth Hager, Personal Representative of the Estate of Leo H. Dion, Respondent and Appellee, Carnegie Library and Devils Lake Area Foundation, Appellee.
    No. 20000178.
    Supreme Court of North Dakota.
    March 20, 2001.

      Viola Bartusch, Elk River, MN, pro se.
    Peter K. Halbach, Haugland, Halbach and Halbach, Devils Lake, ND, for respondent and appellee.
    J. Thomas Traynor, Jr. (appeared), Traynor, Rutten & Traynor, P.C., Devils Lake, ND, for appellee.
   KAPSNER, Justice.

[¶ 1] Viola Bartusch appealed from a judgment and numerous other court orders involving the estate of her late brother, Leo H. Dion. We conclude the trial court did not err in denying her motion for change of venue or in its rulings during and after trial, and did not err in upholding the validity of Dion’s June 1998 will. We affirm.

I

[¶ 2] Leo Dion was born February 1, 1917, near Lakota. Dion had 12 siblings and moved away from home when he was 13 years old. In 1942, Dion married Frances, a school teacher 19 years his senior who had graduated from Mayville State College. After serving and being wounded in World War II, Dion attended the North Dakota State College of Science at Wahpe-ton.

[¶ 3] Frances taught school for 52 years in North Dakota, Illinois and Minnesota, while Dion worked at various odd jobs. When the couple moved to Alexandria, Minnesota, Leo worked at the Post Office. The couple had no children of their own and lived frugally. The couple accumulated a substantial amount of money during their lifetimes.

[¶ 4] Viola Bartusch is Dion’s younger sister. When PYances became ill in 1986, Bartusch stayed with Dion and helped him care for Frances. Frances died on May 16, 1986, and Dion was distraught. That same day, Bartusch went to an attorney’s office with Dion where he had a will prepared. Bartusch understood she would receive a part of Dion’s estate and she would be the personal representative. After Frances died and Dion’s health began to deteriorate, Bartusch stayed with Dion in Alexandria for periods of time to assist him. Bartusch organized Dion’s financial papers and knew he had a substantial amount of money. In 1985, Bartusch began keeping a journal, listing the things she did for Dion.

[¶ 5] In 1997, Dion moved to Devils Lake to be closer to where Frances was buried. Dion initially moved into Lake Country Manor, a nursing home, but he became irritable and depressed and decided to move from the nursing home to an apartment at Heartland Court in August 1997. Dion was physically incapacitated, and Patsy Hood was one of several caregivers who worked with Dion, giving him 24-hour care at his apartment. Hood eventually opened a joint bank account with Dion, and in November 1997, Dion signed a power of attorney appointing Hood as his attorney in fact.

[¶ 6] Dion visited several times with one of his nieces and told her he had been thinking about what Frances might have wanted him to do with their money. Dion mentioned his college in Wahpeton and Frances’ college in Mayville. Dion thought education was important, and mentioned as possibilities “something to do with Lake Region, or Devils Lake area.” Dion also mentioned he wanted to leave something for the young girls who used to live next door to him in Alexandria. Hood contacted attorney Melvin Christianson for Dion, and Dion began discussing his estate plans with Christianson.

[¶ 7] Dion’s relationship with Bartusch had begun to sour. He would get upset with his sister because, according to a friend from Alexandria, “[h]e felt that she was controlling and bossy....” Dion did not mention his family while discussing estate planning because he believed they were “taking advantage of him.” For Christmas 1997, Dion received a card and letter from Bartusch which included a list charging Dion for food, gas and labor at $50 per day for periods of 1996 and 1997. The list totaled more than $8,800, with credit given for money earlier paid to Bar-tusch. Bartusch wrote Dion, “I sure Hope & Pray You Find it in ... Your Heart that I Receive some of my List Before the Season is out.” (Emphasis in original.) Bartusch signed the letter, “In God we Trust.” When Dion saw Bartusch again, he told her, “I can’t understand how a sister could do this to me.” He told her to leave because she caused him stress.

[¶ 8] Dion had a total of 13 meetings with Christianson in December 1997 and January 1998 to discuss estate planning and prepare a will. Dion showed little interest in leaving money to his family, but wanted to leave money to the schools he and his wife had attended. He also wanted to leave something for his former neighbors’ children. He also became interested in leaving money to the Carnegie Library after discussing the subject with his dentist, who served as the library board president. Dion met with the library board and with members of the North Dakota State College of Sciences Foundation to discuss endowments.

[¶ 9] Dion became severely ill in January 1998 and was taken to a hospital in Grand Forks. Christianson prepared a will and Dion signed it on January 29, 1998, while he was hospitalized. According to Christianson, Dion verbally confirmed the devises and discovered Bartusch’s first name, Viola, had been misspelled as “Violet.” The misspelling was corrected by drawing a line through it and entering the correct spelling above it; Dion initialed the change. The January 1998 will included devises of $50,000 to Dion’s brother, Everett Dion; $10,000 to Everett Dion’s granddaughter; $1,000 to another brother, Luke Dion; $1,000 to Bartuseh; $300,000 to the Carnegie Library; $65,000 to the Mayville State University Alumni Foundation; $90,000 to the North Dakota State College of Sciences Foundation; $30,000 in trust to the three children of his former neighbors in Alexandria; $140,000 to Colleen Quinn, a friend from Alexandria; and $100,000 to Hood. Small devises were also given to others and the residue of the estate was devised to the Devils Lake Area Foundation in accordance with an endowment agreement. Dion nominated Hood to be personal representative of his estate.

[¶ 10] After visiting with Dion when he returned to his apartment from the hospital, Bartuseh hired an attorney and filed a petition for appointment of a guardian and conservator for Dion. Bartuseh was appointed temporary guardian on March 2, 1998, pending the formal guardianship and conservatorship hearing. Fearing Hood was stealing money from Dion, Bartuseh proceeded to transfer all of the money out of Hood and Dion’s joint account. Dion retained attorney Michael N. Steffan, who was later appointed to be Dion’s guardian ad litem. Dion instructed Steffan to obtain money Hood had deposited by check into her personal account. The court ordered the bank to place the $25,088.47 in an interest-bearing account in Dion’s name. Hood consented to the transfer of funds. When questions arose over Bar-tusch’s handling of Dion’s funds, Bartuseh stipulated to have Ken Hager, the Ramsey County public administrator, serve as Dion’s temporary guardian and conservator, and an order of substitution was entered on March 13, 1998. Before the guardianship hearing, Dion prepared a handwritten note addressed “To whom it may concern: I do not want my sister Vi to have control of my money.”

[¶ 11] The guardianship hearing was held by District Court Judge Lee A. Chris-tofferson on March 19, 1998, at Dion’s apartment. By then, according to Bar-tusch’s notes, Dion’s condition had improved dramatically. Judge Christoffer-son found “no basis for a guardianship.” According to the judge, “there was nothing wrong with his mental capacity. He was alert, he was tracking, he was basically keen as to what was going on.” The judge, however, ordered a limited conser-vatorship. The judge explained, because Dion’s “mind was keen and it appeared he had accumulated significant assets by his own decisions, I left those with him. What he really needed was someone to physically go and do things, or sort of make sure those assets were not wasted.”

[¶ 12] Because of all the people suddenly involved in Dion’s life, and Dion’s perceived vulnerability, the judge suggested a new will should be prepared. The judge said, “I wanted him to get away to another attorney to just talk about what he really wanted to do with his estate, and then memorialize that in a new will.” At the guardianship hearing, the judge explained, “I wasn’t suggesting that it be a different Will. That’s up to him but a new one in the sense that it was done at a different location after discussion with an independent attorney.” The court noted, “If Leo refuses to cooperate so be it.” One of the provisions in the formal court order appointing Hager as limited conservator stated:

8. Mr. Dion shall redraft any recently executed last will and testament and his guardian ad litem is instructed to assist Mr. Dion in locating a suitable attorney unrelated to these proceedings to accomplish the redrafting of a'last will and testament, and for the guardian ad litem to assist Mr. Dion and such chosen counsel in obtaining necessary services to establish his competency by means of a suitable examination, video taping of proceedings, or other like measures which may assist Mr. Dion’s execution of a further last will and testament.

[¶ 13] According to Steffan, Dion did not think he was required to redraft the will because the court found he was competent, and he indicated to Steffan he was not going to redraft the will because he did not want to incur needless expenses. Dion later changed his mind and told Steffan he was thinking of redrafting his will. Stef-fan suggested having another attorney, Michael Klemetsrud, participate in the process to comply with the court’s order and satisfy Dion. According to Steffan, Dion consented to Klemetsrud’s involvement and “it was Leo’s choice as to what involvement Mike Klemetsrud would have” in the will redrafting process. Steffan said Klemetsrud was “someone at least independent to previous proceedings [who would be] there to talk with Leo, to ensure that this is something that Leo wanted, and that nobody was applying any undue influence.”

[¶ 14] On May 8, 1998, Steffan and Klemetsrud met with Dion and reviewed the January 1998 will. Dion corrected the spelling of names and corrected a devise to the Lutheran Church by changing the location of the church from Devils Lake to Alexandria. Dion had the $1,000 devise to his brother, Luke, crossed out because Luke had died. Dion also deleted a small devise to another person. Dion rejected the suggestion of his brother, Everett, being the personal representative, and decided his limited conservator, Hager, should serve in that role. There was no discussion of removing the devise to Hood from the will at that time.

[¶ 15] In June 1998, Dion moved from Devils Lake to a nursing home in Lakota where he had grown up. Because of the level of care he required, Dion decided it would cost less than maintaining his own staff at an apartment. While in Lakota, Dion decided to eliminate the $100,000 devise to Hood from the will.

[¶ 16] Dion signed the new will on June 18, 1998, and revoked Hood’s power of attorney. Klemetsrud was there, met with Dion alone, and Dion indicated to him “the will was fíne.” The major devises in the June 1998 will were the same as in the January 1998 will, except the $100,000 devise to Hood was removed.

[¶ 17] Dion was eventually moved to another nursing home in Anoka, Minnesota, where he died on January 16, 1999. Hager filed an application for informal probate and was appointed personal representative of Dion’s estate. In March 1999, Bartusch filed a petition to set aside Dion’s will. The amended petition claimed a May 16, 1986 lost will, which left Bartusch and Everett Dion each 50 percent of Dion’s estate, should be probated rather than the January 1998 or June 1998 wills. Bar-tusch alleged Dion did not have the testamentary capacity to execute the 1998 wills and those wills “were executed as a result of undue influence and duress.” Bar-tusch’s motion to change venue from Ramsey County to Nelson County was denied. A five-day jury trial was held in March 2000. At the close of Bartusch’s case, the court directed verdicts against Bartusch on her claims the June 1998 will was the result of the undue influence of Steffan or Hood. The jury found Dion had testamentary capacity when he executed the June 1998 will. Judgment was entered awarding statutory costs and disbursements against Bartusch in March 2000. Bar-tusch’s motions to vacate the judgment and grant a new trial were subsequently denied, and the trial court awarded the defendants attorney fees incurred in responding to the post-trial motions. Bar-tusch appealed.

II

[¶ 18] Bartusch contends the trial court erred in refusing to transfer venue of the trial to Nelson County. Bartusch argues a change of venue was warranted because the Carnegie Library would receive $300,000 from Dion’s $800,000 estate under the June 1998 will and, because Ramsey County and the City of Devils Lake fund the “County City library,” the “District Court of Ramsey County presided over a civil matter with itself as a real party in interest.” We interpret Bartusch’s argument to be an impartial trial was impossible ⅛ Ramsey County because the county itself, as well as its taxpayers, were primary parties in the will contest.

[¶ 19] A defendant has a statutory right to have an action tried in the county of the defendant’s residence, “subject to the power of the court to change the place of trial as provided” by statute. N.D.C.C. § 28-04L05. See Slaubaugh v. Slaubaugh, 499 N.W.2d 99,106 (N.D.1993). The statutory right to a trial in the defendant’s home county is a significant factor in determining venue and should not be denied except for good cause. Porth v. Glasoe, 522 N.W.2d 439, 441 (N.D.1994). Venue may be changed when there is a reason to believe an impartial trial cannot be held in the county where the action is pending. N.D.C.C. § 28-04-07(2). The party seeking the change in venue has the burden to establish an impartial trial cannot be held in the county from which the transfer is sought. Jerry Harmon Motors, Inc. v. First Nat’l Bank & Trust Co., 440 N.W.2d 704, 708 (N.D.1989). The party moving for the change of venue has the burden of stating facts, not conclusions, to support the change. Porth, at 441.

[¶ 20] Whether a change of venue is required to obtain a fair and impartial trial is a question of fact, and we will not overturn a trial court’s decision granting or denying a motion for change of venue unless the court abused its discretion. Eckman v. Stutsman County, 1999 ND 151, ¶ 7, 598 N.W.2d 494. A trial court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner, or when its decision is not the product of a rational mental process leading to a reasoned determination. In re S.J.F., 2000 ND 158, ¶22, 615 N.W.2d 533.

[¶ 21] The only evidence presented in support of the motion were exhibits Bar-tusch submitted for the 1997 and 1998 tax levies for Ramsey County showing 1.5 mills is assessed annually for the county library. The trial court denied the motion, ruling “[t]he fact that a resident of Ramsey County may receive some indirect benefit from Mr. Dion’s gifts is not sufficient cause to change venue.” We cannot say the trial court abused its discretion in refusing to change venue.

[¶ 22] While there may be some situations in which a change of venue should be granted when a governmental subdivision is a party and the other party challenges venue because of the potential jurors’ status as taxpayers, see Sheridan County v. Davis, 61 N.D. 744, 240 N.W. 867 (1932), Bartusch’s argument that Ramsey County and its taxpayers are actually parties to this proceeding is unpersuasive. The record establishes that Carnegie Library is an entity distinct from Ramsey County, governed by a seven-member board appointed by the Devils Lake city commission and Ramsey County commission. Moreover, although the county imposes a 1.5 mill levy for the library, we have consistently held that an affidavit which merely asserts that an action is one against a political subdivision and that prospective jurors are taxpayers of the political subdivision is insufficient in itself to effect a change of venue under N.D.C.C. § 28-04-07(2). See Haugo v. Haaland, 349 N.W.2d 25, 28 (N.D.1984); Marshall v. City of Beach, 294 N.W.2d 623, 627 (N.D.1980); Hanson v. Garwood Indus., 279 N.W.2d 647, 650 (N.D.1979). Bartusch in this case has done no more than assert potential jurors are taxpayers subject to the mill levy for the library.

[¶ 23] Bartusch’s reliance on Willesen v. Davidson, 249 Iowa 1104, 90 N.W.2d 737, 738-39 (Iowa 1958), is misplaced because the decision is based on an Iowa statute mandating a change of venue when a county is a party to the action. North Dakota has no similar statute. Bartusch also relies on Linington v. McLean County, 150 N.W.2d 239 (N.D.1967), in which this Court affirmed a trial court’s decision granting a motion for change of venue. Linington merely illustrates the broad discretion afforded trial courts in granting or denying change of venue motions.

[¶ 24] In Marshall, 294 N.W.2d at 627, we said N.D.C.C. § 28-14-06(5), which does not allow challenges for cause based on a person’s interest as a member or citizen of a political subdivision, “recognizes that where juror interest in the outcome of a suit extends no further than to effect [sic] him as an ordinary taxpayer, the resident or taxpayer is still a competent juror not subject to a challenge for cause.” We noted, however, that “[w]hether or not their interest as taxpayers will impair their ability to act fairly and impartially is, nevertheless, a proper subject of inquiry on voir dire examination.” Id. In this case, voir dire was conducted off the record, rendering it impossible for us to review Bartusch’s claim she was unable to receive a fair trial before an impartial jury in Ramsey County.

[¶ 25] We conclude Bartusch has failed to establish the trial court abused its discretion in denying her motion for change of venue.

Ill

[¶ 26] Bartusch’s primary argument on appeal is the June 1998 will is invalid because “Judge Christofferson and his court-appointed agents illegally made the will.”

[¶ 27] Dion was a “protected person” when the trial court granted Hager a limited conservatorship. See N.D.C.C. § 30.1-26-01(4). With respect to a protected person, a court has “all the powers over the person’s estate and affairs which the person could exercise if present and not under disability, except the power to make a will.” N.D.C.C. § 30.1-29-08(2)(e). This statute forbids a court from making a will for a protected person. See Matter of Conservatorship of Sickles, 518 N.W.2d 673, 679 (N.D.1994). Bartusch claims the trial court’s formal order stating “Dion shall redraft any recently executed last will and testament” invalidates the June 1998 will because the order violates N.D.C.C. § 30.1—29—08(2)(c).

[¶ 28] We reject the contention that the trial court and its “agents” somehow “made” Dion’s June 1998 will. The record unequivocally establishes that Dion, not the court, made Dion’s will. See N.D.C.C. § 30.1-08-01. The will is in writing, is signed by Dion, and is signed by two witnesses. See N.D.C.C. § 30.1-08-02(1). Dion was the testator, and Steffan prepared the will as Dion’s attorney according to Dion’s stated wishes. See, e.g., Hitz v. Estate of Hitz, 319 N.W.2d 137,139 (N.D.1982). Klemetsrud was hired as independent counsel to serve as an impartial observer over Dion’s execution of the will. At the guardianship and conservatorship hearing Bartusch agreed to involve independent counsel, and to place Steffan in charge of contacting that person. There is no evidence the court, Steffan or Klemets-rud forced Dion to sign the June 1998 will. Bartusch’s claim the court and its agents “made” Dion’s will in violation of N.D.C.C. § 30.1-29-08(2)(c) is without merit. Bar-tusch’s related claim the will is invalid because the court failed to follow the procedures governing the ante-mortem probate of wills under N.D.C.C. ch. 30.1-08.1 is equally without merit. Any person who executes a will “may institute” an action for a judgment declaring the validity of the will. N.D.C.C. § 30.1-08.1-01. This procedure is not a requirement.

[¶ 29] The wording of Judge Christofferson’s order appointing Hager limited conservator is unfortunate. The direction that “Dion shall redraft any recently executed last will and testament” was, as the trial court concluded in this case, unenforceable as a matter of law. Obviously, a court has no power to order anyone to execute a will, and the trial court properly instructed the jury in this case that “[a] Court or judge cannot order a person to make out a Will or how to make out a Will nor can a Court order additional formal requirements before a Will can be found valid.” The power to make a will belongs to the testator and is not subject to veto power of the courts. Matter of Estate of Anderson, 671 P.2d 165, 169 (Utah 1983). As this Court said in Stormon v. Weiss, 65 N.W.2d 475, 505 (N.D.1954), “[a] competent testator may dispose of his property as he wishes without regard to the desires of prospective beneficiaries or the views of juries or courts so long as the terms of the will are not prohibited by law, or opposed to public policy.”

[¶ 30] It is apparent from the record that Judge Christofferson suggested Dion execute a new will with safeguards in place in an unsuccessful attempt to thwart a will contest. All present at the guardianship and conservatorship hearing held in Dion’s apartment, including Bartusch and her attorney, appear to have concurred that Dion did not have to make out a new or different will if Dion did not want to do so.

[¶ 31] Notwithstanding the court’s order which was invalid insofar as it directed Dion to make a new will, the record shows the decision to make out a new will was left to Dion. The court did not “make” Dion’s will. Consequently, the trial court did not err in denying Bartusch’s summary judgment motion on the grounds the will was made by the court, and because a court need not instruct the jury on a theory when there is no evidence to support it, see Harfield v. Tate, 1999 ND 166, ¶ 6, 598 N.W.2d 840, the court did not err in rejecting Bartusch’s proposed jury instructions relating to a “court-made will.”

IV

[¶ 32] Bartusch claims the trial court erred in granting directed verdicts against her on her claims Steffan and Hood exerted undue influence on Dion in executing the June 1998 will.

[¶ 33] A trial court’s decision on a motion brought under N.D.R.Civ.P. 50 to grant or deny judgment as a matter of law is based upon whether the evidence, when viewed in the light most favorable to the party against whom the motion is made, leads to but one conclusion as to the verdict about which there can be no reasonable difference of opinion. Felco, Inc. v. Doug’s North Hill Bottle Shop, 1998 ND 111, ¶ 8, 579 N.W.2d 576. In determining whether the evidence is sufficient to create an issue of fact, the trial court must view the evidence in the light most favorable to the non-moving party and must accept the truth of the evidence presented by the nonmoving party and the truth of all reasonable inferences from that evidence. Symington v. Mayo, 1999 ND 48, ¶ 4, 590 N.W.2d 450. A trial court’s decision on a motion for judgment as a matter of law is fully reviewable on appeal. Peterson v. Traill County, 1999 ND 197, ¶7, 601 N.W.2d 268.

[¶ 34] Undue influence is characterized by four elements: 1) the testator is subject to such influence; 2) the opportunity to exercise undue influence existed; 3) there was a disposition to exercise such influence; and 4) the result appears to be the effect of such influence. In re Estate of Robinson, 2000 ND 90, ¶ 10, 609 N.W.2d 745. For the issue of undue influence to be submitted to a jury, the evidence must be sufficient with regard to each essential element of the claim and the evidence must also create more than just a mere suspicion of undue activity. Perry v.. Reinke, 1997 ND 213, ¶ 13, 570 N.W.2d 224.

[¶ 35] The evidence shows Steffan asked what Dion wanted in his will and Dion made the decisions, even rejecting Steffan’s suggestion about a possible personal representative of the estate. Klem-etsrud did not witness Steffan exerting any pressures on Dion. The record shows what was in the will was a result of Dion’s wishes as refined during Dion’s initial estate planning sessions with attorney Chris-tianson. Christianson was unaware of any involvement by Hood in Dion’s estate planning even prior to the January 1998 will. Bartusch’s theory that Steffan forced Dion to remove the $100,000 devise to Hood is not supported by any evidence and is pure speculation. Bartusch’s intimation that Hood unduly influenced Dion to remove Hood’s own $100,000 devise is also not supported by any evidence and is totally illogical.

[¶ 36] Nor can we find any evidence in the record that Dion was unduly influenced to make a new will by the existence of Judge Christofferson’s formal order. Dion was not threatened with contempt proceedings, and there is no evidence that Dion believed he had to comply with the court’s order. When questioned whether he discussed paragraph 8 of the court’s order with Dion, Steffan testified:

A. Yes, we did, and we put that issue to rest, you know, shortly after reviewing that order. Leo felt those were suggestions of the Court, especially since the Court found that he was competent and not in need of a guardian, and that they were suggestions; that was Leo’s interpretation of them. He questioned me on them. I concurred in his evaluation of it.
The Court, in my opinion — my understanding of the hearing was that, first of all, the Court order indicated that the petition was dismissed, and that — and that Leo was competent and was not in need of a guardian. And then there were some discussions as to if certain things were — there are certain tools and certain things to consider, and it was all premised on whether or not Leo would do those or wanted to do them.

Although there is evidence that Dion was irritable and depressed at times, that testimony tied Dion’s irritability and depression to either his deteriorating physical condition, his displeasure with having to .live in a nursing home, or Bartusch’s presence and perceived attempts to gain control of his finances.

[¶ 37] There is no evidence to suggest Dion was unduly influenced to execute the June 1998 will by Steffan, Hood, or the existence of the court’s order. The trial court did not err in granting the motion for judgment as a matter of law on Bar-tusch’s claims of undue influence.

V

[¶ 38] Bartusch challenges the jury’s finding Dion had testamentary capacity when he executed the June 1998 will.

[¶ 39] In Stormon v. Weiss, 65 N.W.2d 475, 504-05 (N.D.1954), this Court explained testamentary capacity:

Testator must have sufficient strength and clearness of mind and memory, to know, in general, without prompting, the nature and extent of the property of which he is about to dispose, and nature of the act which he is about to perform and the names and identity of the persons who are to be the objects of his bounty, and his relation towards them. He must have sufficient mind and memory to understand all of these facts;.... He must also be able to appreciate the relations of these factors to one another, and to recollect the decision which he has formed.

[¶ 40] A will contestant has the burden of proving testamentary incapacity by a preponderance of the evidence. Matter of Estate of Wagner, 551 N.W.2d 292, 296 (N.D.1996). A determination of testamentary capacity, or the lack of it, is a question of fact for the trier of fact. Matter of Estate of Mickelson, 477 N.W.2d 247, 251 (N.D.1991). We review questions of fact tried to the jury in the light most favorable to the verdict, and we affirm the jury’s decision if there is substantial evidence to support the verdict. Fode v. Capital RV Ctr., Inc., 1998 ND 65, ¶ 26, 575 N.W.2d 682.

[¶ 41] There is substantial evidence Dion had testamentary capacity when he executed his will on June 18, 1998. Judge Christofferson and attorneys Klemetsrud and Steffan testified that Dion had the testamentary capacity to make a will. The evidence shows a consistency in Dion’s estate planning, and Dion personally met with some devisees. The evidence established Dion knew the extent of his assets and knew of his living family members. A psychologist who reviewed Dion’s medical records and various legal documents and transcripts, including the results of a mental examination conducted the day before the will was signed, testified Dion had testamentary capacity.

[¶ 42] We conclude there is substantial evidence supporting the jury’s finding that Dion had testamentary capacity when he signed the June 1998 will.

VI

[¶ 43] Bartusch argues the trial court erred in awarding costs, disbursements, and attorney fees against her.

[¶ 44] Under N.D.C.C. § 28-26-10, costs may be allowed for or against either party in the discretion of the court, and we will not overturn a court’s decision on costs unless the court abused its discretion. Blackburn, Nickels & Smith, Inc. v. National Farmers Union Property & Cas. Co., 482 N.W.2d 600, 605 (N.D.1992). Under N.D.C.C. § 28-26-06, the clerk is directed to tax, as part of the judgment in favor of the prevailing party, that party’s necessary disbursements as enumerated in the statute. National Farmers Union Property & Cas. Co., 482 N.W.2d at 605. Bartusch has not persuaded us the trial court abused its discretion in awarding costs, and because the defendants were the prevailing parties, the court properly awarded disbursements to them.

[¶ 45] The defendants sought attorney fees under N.D.R.Civ.P. 11 and N.D.C.C. § 28-26-01(2) for defending a frivolous claim for relief. The trial court found Bartusch’s post-trial motions were frivolous and awarded the defendants attorney fees incurred only in defending the post-trial motions.

[¶ 46] A claim for relief is frivolous under N.D.C.C. § 28-26-01(2) only if there is such a complete absence of actual facts or law a reasonable person could not have expected a court would render a judgment in that person’s favor. Industrial Comm’n v. McKenzie County Nat’l Bank, 518 N.W.2d 174, 178 (N.D. 1994). An award of attorney fees under the statute lies within the sound discretion of the trial court, and its determination will be disturbed on appeal only for an abuse of discretion. Nygaard v. Continental Res., Inc., 1999 ND 172, ¶ 16, 598 N.W.2d 851.

[¶ 47] The vast majority of Bartusch’s arguments in the post-trial motions related to her meritless claim Dion’s will was a “court-made will.” This spurious argument, made without any factual basis, had been repeatedly rejected by the trial court in pretrial rulings and rulings made during the trial. On this record, we cannot say the trial court abused its discretion in awarding the defendants attorney fees incurred in defending this frivolous claim once again in Bartusch’s post-trial motions.

VII

[¶ 48] We have considered Bartusch’s other arguments and deem them to be without merit. The defendants request attorney fees under N.D.R.App.P. 38 for defending a frivolous appeal. Although some of Bartusch’s arguments are frivolous, others are not, and we deny the request. The judgment and other orders are affirmed.

[¶ 49] VANDE WALLE, C.J, and SANDSTROM, NEUMANN, and MARING, JJ., concur.


source: Caselaw Access Project

author: GILBERTSON, Justice.

license: Public Domain

text:
    2001 SD 26
    The ESTATE OF Kerry JUHNKE, Deceased, by Janice JUHNKE, Administratrix, and the Estate of Thomas Juhnke, Deceased, by Teresa Juhnke, Administratrix, Plaintiffs and Appellants, v. George MARQUARDT, as Special Administrator of the Estate of Calvin Marquardt, Deceased, George Marquardt, Darlene Engelmeyer, Edward Engelmeyer, Dotty Adams, Carol Marnach, and Steve Marnach, Defendants and Appellees.
    No. 21574.
    Supreme Court of South Dakota.
    Argued Jan. 10, 2001.
    Decided March 7, 2001.
    Jonathan K. Van Patten, Vermillion, Robert J. Burns, Burns Law Firm, Sioux Falls, Attorneys for plaintiffs and appellants.
    John H. Billion, Lon J. Kouri of May, Johnson, Doyle & Becker, Sioux Falls, Attorneys for defendants and appellees.
   GILBERTSON, Justice.

[¶ 1.] The estates of Thomas and Kerry Juhnke (Juhnkes) brought this action under South Dakota’s version of the Uniform Fraudulent Transfers Act (UFTA) to set aside various gifts made by Calvin Mar-quardt (Marquardt) to the defendants. The circuit court granted summary judgment in favor of the defendants as to certain transfers, finding that the date of transfer under UFTA was the date the gifts were received. Therefore, the UFTA claims were barred by the statute of limitation. We affirm.

FACTS AND PROCEDURE

[¶ 2.] Marquardt operated a feed and chemical business under the name of Mar-quardt Feed. As part of the business operation, Calvin would often extend credit to his customers and receive promissory notes in return. Over time, Marquardt loaned substantial amounts of money to Juhnkes, who operated a hog facility near Marquardt’s home. The relationship between Marquardt and Juhnkes deteriorated as the parties began to dispute the actual amount of the loan. This dispute led to a tragic confrontation on July 10, 1993, during which Marquardt shot and killed both Thomas and Kerry. Mar-quardt was convicted of first degree manslaughter and sentenced to twenty-five (25) years in prison. On August 13,1996, Mar-quardt died while still incarcerated.

[¶ 3.] On December 15, 1994, a wrongful death action was commenced against Marquardt by Janice Juhnke, the wife of Kerry, and Teresa Juhnke, the wife of Thomas. Default judgment was entered in favor of each estate in the amount of $1.5 million. During the course of the wrongful death action, it was discovered that Mar-quardt had made substantial gifts to his children and nieces, who are the defendants in this action. Those gifts consisted of a number of promissory notes payable to Marquardt Feed by various customers of the business.

[¶ 4.] This present action was commenced on July 9, 1996 to set aside a number of those gifts as fraudulent transfers pursuant to SDCL chapters 54-8 and 54-8A. Specifically, Juhnkes challenged certain transfers they claimed were made after July 10, 1993, the date they became creditors of Marquardt. While the promissory notes in question were all gifted to the defendants prior to August 28, 1992, Juhnkes claimed they were not “transferred” under UFTA terminology until the payors made payment on the notes. The defendants received multiple payments from the payors on the notes after July 10, 1993. Juhnkes claimed the notes were not “transferred” until the defendants received those payments and therefore, Juhnkes were entitled to avoid those payments under SDCL 54-8A-5(a). The defendants claimed the notes were transferred when they received physical possession of the notes. The circuit court granted summary judgment in favor of the defendants as to Juhnkes’ claim under SDCL 54-8A-5, finding that the notes were transferred on the date they were received by the defendants. Juhnkes appeal raising the following issue:

Whether the circuit court erred in holding that the notes were “transferred” when delivered to the defendants, rather than when payments on the notes were received.

STANDARD OF REVIEW

[¶ 5.] When reviewing a trial court’s decision to grant summary judgment, we will affirm only if all legal questions have been decided correctly and there are no genuine issues of material fact. Holzer v. Dakota Speedway, 2000 SD 65, ¶ 8, 610 N.W.2d 787, 791 (citations omitted). The nonmoving party will receive the benefit of all reasonable inferences that can be drawn from the facts. Id. It is the responsibility of the moving party to demonstrate the absence of genuine issues of material fact. Id. at 791-92. Only if that burden is met will the moving party be entitled to judgment as a matter of law. Id. Additionally, summary judgment will be affirmed if it is correct for any reason. Id. at 792.

ANALYSIS AND DECISION

[¶ 6.] This Court recently discussed UFTA in Prairie Lake Health Care Sys., Inc. v. Wookey, 1998 SD 99, 583 N.W.2d 405. We noted that “the purpose of the UFTA is to thwart depletion of debtors’ estates to the disadvantage of unsecured creditors.” Id. ¶ 6, 583 N.W.2d at 410. Under UFTA, both actually fraudulent transfers and constructively fraudulent transfers are subject to avoidance. Id. ¶ 7, 583 N.W.2d at 411. While a finding of fraudulent intent is required to show actual fraud, “[a] debtor’s intent in transferring assets is immaterial to a constructively fraudulent transfer.... ” Id. ¶ 14, 583 N.W.2d at 413.

[¶ 7.] Juhnkes claim is based on one of the constructive fraud provisions, SDCL 54-8A-5(a), which provides that:

A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.

Under this statute, one of the elements that Juhnkes must establish is that their claim arose before the allegedly fraudulent transfer occurred. This appeal will thus turn upon when the notes were “transferred” to the defendants. According to the provisions of UFTA:

A transfer is made: (ii) [wjith respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien otherwise than under this chapter that is superior to the interest of the transferee....

SDCL 54-8A-6(l)(ii). Although-the term “perfected” is not defined under UFTA, it was intended by the drafters of UFTA that parties look to Article 9 of the U.C.C. for guidance as to the meaning of that term. Uniform Fraudulent Transfers Act (U.L.A.) § 6, cmt. 1. Pursuant to South Dakota’s version of Article 9, instruments can be perfected only by possession. SDCL 57A-9-304(l). Therefore, as the circuit court held, when the defendants took possession of the notes given by Mar-quardt, their interests were perfected under SDCL 54-8A-6(l)(ii).

[¶ 8.] While this conclusion may seem to be dispositive, Juhnkes point out that perfection cannot occur under Article 9 until all the elements of attachment are satisfied, one of which is the giving of value. SDCL 57A-9-203(l)(b). Juhnkes argue that because no value was given by the defendants in exchange for the notes, no attachment occurred and therefore the notes were not perfected under Article 9 of the U.C.C. By extension, they claim the notes were not “transferred” under SDCL 54-8A-5 until value was given, which did not occur until payment was received from the payors on the notes. Therefore, according to Juhnkes, all payments made by the payors to the defendants after July 10, 1993 are subject to avoidance.

[¶ 9.] Such strict adherence to the requirements of Article 9, as advocated by Juhnkes, is unwarranted. To define perfection as used in UFTA, we refer to Article 9 by analogy only.

The purpose of [section 6(1) ] is to prevent a transfer from becoming invulnerable to attack by the lapse of time after it was made when the fid of the transfer has not been disdosed in any way to creditors of the transferor. The intended effect of the provision is to prod the parties to a transfer to deliver and take possession or to record it or otherwise give it overt publicity.

Frank R. Kennedy, The Uniform Fraudulent Transfer Act, 18 UCC LJ 195, 208 (1986) (emphasis added). The gift of the promissory notes in this case accomplished this goal. When the defendants took physical possession of the notes, the entire world was on notice that Marquardt was no longer the owner of those notes.

[¶ 10.] Furthermore, Juhnkes cannot claim they were unaware of the transfers. Four notes were gifted to the defendants on which Juhnkes were listed as payors, three of which were signed by Juhnkes. Between December 31, 1986 and April 11, 1996, Juhnkes made at least ten separate payments, totaling nearly $350,000, to the defendants. In addition, one of the defendants sued Juhnkes in 1992 to enforce one of the notes gifted to her by Marquardt. Clearly, Juhnkes were on notice that Marquardt had gifted the notes to the defendants. Therefore, the purpose of SDCL 54-8A-6(l) was accomplished.

[¶ 11.] Further support for our conclusion is found in Article 9, which applies only “[t]o any transaction (regardless of its form) which is intended to create a security interest in personal property.... ” SDCL 57A-9-102. Marquardt clearly did not intend to create a security interest in the notes when he made the gifts to defendants. Nor does Article 9 contemplate this scenario. To apply Article 9 to this situation would require donees to give some value in exchange for a gift in order to protect that gift from the transferor’s future creditors. Such a requirement destroys the very nature of a gift as something voluntarily transferred without compensation. Black’s Law Dictionary 696 (7th ed.1999). UFTA provides that “[i]f applicable law does not permit the transfer to be perfected as provided in [SDCL 54-8A-6(1)], the transfer is made when it becomes effective between the parties to it.” SDCL 54-8A-6(3). Because Article 9 does not contemplate the situation before us, it is not proper to impose its mandates. Instead, we apply SDCL 54-8A-6(3) and determine when the transfer was effective between the parties. It is settled law that a gift is complete when its three elements are satisfied: intent, delivery, and acceptance. Meyer v. S.D. D.S.S., 1998 SD 62, ¶ 12, 581 N.W.2d 151, 155. All three elements were satisfied when the notes were delivered to the defendants. Therefore, the transfer is deemed made upon delivery of the notes.

[¶ 12.] Additionally, it should be noted that if we were to adopt Juhnkes’ reasoning, no gift would be safe from the reach of UFTA regardless of the lapse of time since the gift. Under Juhnkes’ argument, if one of the defendants had received a gift of personal property from Marquardt some fifty years ago, the statute of limitation will not begin to run on that gift until the donee has given value. Therefore, unless value has been given, that gift would be subject to avoidance even today. Such a result is clearly contrary to our public policy of barring stale claims and “allowing people, after the lapse of a reasonable time, to plan their affairs with a degree of certainty, free from the disruptive burden of protracted and unknown potential liability....” Green v. Siegel, Barnett & Schutz, 1996 SD 146, ¶ 8, 557 N.W.2d 396, 398.

[¶ 13.] The adoption of Juhnkes’ reasoning would likewise cause great unease in South Dakota’s lending industry, which has in the past and will in the future, rely on promissory notes and other personal property as collateral. If payments made on such notes are avoidable simply because the notes are not paid in full, the notes essentially have no value as collateral. Such a holding would throw lender-borrower relationships into a state of upheaval.

[¶ 14.] Judgment is affirmed.

[¶ 15.] MILLER, Chief Justice, and SABERS, AMUNDSON and KONENKAMP, Justices, concur.

      . The term "instrument” includes "a negotiable instrument ... or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary endorsement or assignment.” SDCL 57A — 9—105(l)(i).

      . Value is given when a person acquires rights:
      (a) In return for a binding commitment to extend credit or for the extension of immediately available credit ... or (b) As security for or in total or partial satisfaction of a preexisting claim; or (c) By accepting delivery pursuant to a preexisting contract for purchase; or (d) Generally, in return for any consideration sufficient to support a simple contact.
      SDCL 57A-1-201(44).
      The remaining elements required before attachment occurs are (1) the debtor has rights in the collateral and (2) a security agreement has been signed or the collateral is in the secured party's possession. SDCL 57A-9-203.

      . Kennedy was a member of the committee that drafted UFTA for the National Conference of Commissioners on Uniform State Laws.

      . Juhnkes’ argument that the gifts were incomplete because Marquardt exercised control over the notes, does not affect our conclusion. The note they rely on named Marquardt and Darlene Engelmeyer, one of the defendants, as co-payees. That note was subsequently gifted to Darlene on March 24, 1989. On that date, Marquardt relinquished any rights he may have had to receive payment on the note, therefore, the gift was complete. The fact that Juhnkes made payments to Marquardt until 1991 does not show Marquardt's control, it shows they paid the wrong party.

      .Counsel for Juhnkes conceded as much at oral argument.


text:
    2001 SD 40
    FALL RIVER COUNTY, a Political Subdivision of the State of South Dakota, Plaintiff and Appellant, v. SOUTH DAKOTA PUBLIC ASSURANCE ALLIANCE, Defendant and Appellee.
    No. 21690.
    Supreme Court of South Dakota.
    Considered on Briefs on Feb. 13, 2001.
    Decided March 21, 2001.

      Patrick M. Ginsbach, Fall River County State’s Attorney, Hot Springs, SD, Attorney for plaintiff and appellant.
    Donald P. Knudsen of Gunderson, Palmer, Goodsell & Nelson, Rapid City, SD, Attorneys for defendant and appellee.
   GILBERTSON, Justice.

[¶ 1.] Fall River County (County) brought this declaratory action against S.D. Public Assurance Alliance (Alliance), seeking a determination of coverage under an errors and omissions policy. The circuit court granted summary judgment to Alliance, finding coverage was excluded. We affirm the circuit court’s determination.

FACTS AND PROCEDURE

[¶ 2.] On January 19,1993, Charles and Lois Seger (Segers) purchased 3,737 acres of real estate from Leonard and Kay Benson. The land was purchased by a contract for deed, to be paid over twenty years. The property is located in Fall River County, and at that time, was classified as agricultural land for property tax purposes.

[¶ 3.] In 1993, the legislature enacted SDCL 10-6-58, which created a new classification of agricultural land for taxation purposes. If real estate sold for more than 150 percent of its agricultural value, a county could assess the land at a higher value, and thereby collect more taxes. SDCL 2-14-16 states that unless otherwise provided, an act of the Legislature becomes law on the first day of July following its enactment. In addition, there was no textual support in SDCL 10-6-58 for retroactive application. Nonetheless, on March 7, 1994, Joel Wendell, Fall River County Director of Equalization, wrote a letter to Segers, informing them that SDCL 10-6-58 was enacted to be retroactive to January 1, 1993 and that their property would be reclassified. This retroactive application and subsequent valuation would have cost Segers $4,000 per year over the twenty year term of the contract for deed. Segers subsequently challenged the method used by the Board of Equalization (Board) to assess the value of their real estate.

[¶ 4.] On August 22, 1995, Segers met with Board. At that meeting, Segers presented documents demonstrating the effective date of SDCL 10-6-58 was July 1, 1993, rather than January 1, 1993. At that time, Board recognized its error and agreed to give Segers a tax abatement, refund for taxes already paid, and reclassified their property back to agricultural status.

[¶ 5.] On October 22,1996, Segers sued County, seeking reimbursement for attorneys’ fees, costs and expenses incurred in reversing the reclassification of their property. County submitted the claim to Alliance, a risk-pooling entity of which County is a member. Alliance denied coverage because the policy excluded coverage for:

Any “Wrongful Act” of any “Member” in connection with:
1. Any tax assessment, fine, fee or adjustment, or
2. The collection, refund, disbursement or application of any taxes.

County brought this declaratory judgment action against Alliance on February 16, 2000. Both parties moved for summary judgment, which was granted in favor of Alliance. County appeals the circuit court’s determination that coverage was excluded under the policy.

STANDARD OF REVIEW

[¶ 6.] When reviewing summary judgment, we will affirm only if there are no genuine issues of material fact and all legal questions have been decided correctly. Holzer v. Dakota Speedway, 2000 SD 65, ¶ 8, 610 N.W.2d 787, 791. As there is no dispute as to material facts, this case involves the interpretation of the insurance policy, which we review de novo. Sawyer v. Fawn Bureau Mut. Ins. Co., 2000 SD 144, ¶ 13, 619 N.W.2d 644, 648 (additional citations omitted). “Whether the contract is ambiguous is also reviewed de novo. We have previously stated that ‘[a]n insurance policy is ambiguous when it is fairly susceptible to two constructions.’ ” When ambiguity is found, “the interpretation most favorable to the insured should be adopted.” Id.

ANALYSIS AND DECISION

' [¶ 7.] The policy at issue is commonly referred to as an “errors and omissions” policy. It covers wrongful acts, which are defined as:

Any actual or alleged error or misstatement or act of omission or neglect or breach of duty including misfeasance, malfeasance or nonfeasance, or violation of any federal or state civil rights statute including discrimination, by the member, individually or collectively, in the discharge of their duties for the public entity, or any other matter claimed against them solely by reason of their being or having been a member.

County argues that Wendell, as Director of Equalization, was “mistaken in the exercise of his judgment” as to the effective date of SDCL 10-6-58 and thus his actions are covered under the policy.

[¶ 8.] However, the policy .contains a significant exclusion, which as noted above, excluded coverage for:

Any “Wrongful Act” of any “Member” in connection with:
1. Any tax assessment, fine, fee or adjustment, or
2. The collection, refund, disbursement or application of any taxes.

“Limits to coverage, whether in exclusions, limitations, riders, or endorsements, should be set forth clearly and explicitly.” Mid-Century Ins. Co. v. Lyon, 1997 SD 50, ¶ 9 n. 4, 562 N.W.2d 888, 891 n. 4. This language is broadly written and is clear and unambiguous in its intent to exclude coverage for any wrongful act in connection with tax related activity.

[¶ 9.] County urges us to examine this case as two separate and distinct acts. One act is the classification done by Wendell, whereby Segers’ land was reclassified for tax purposes. The second act is the actual tax assessment. County argues the dispute with Segers was over the classification, rather than the actual tax assessment, and therefore, the tax exclusion does not apply. We find County’s argument to be without merit. The language of the exclusion applies to any act “in connection with any tax assessment, fine, fee or adjustment.” (emphasis added.) Even were we to agree with County’s “separate acts” theory, the classification is “in connection with” the assessment. Indeed, there would have been no dispute as to the classification without the assessment. In addition, were it not for the assessment, Segers would not have been harmed. The mere classification of Segers’ property caused no damage; it was the assessment that followed. Because Segers’ lawsuit challenged the assessment, the claim falls within the tax exclusion. Clearly, it was an act in connection with “[a]ny tax assessment ... or adjustment, or [t]he collection, refund, disbursement or application of any taxes.” Therefore, there is no coverage under the policy for County’s acts.

[¶ 10.] Judgment is affirmed.

[¶ 11.] MILLER, Chief Justice, and SABERS, AMUNDSON and KONENKAMP, Justices, concur.

       In 1997, SDCL 10-6-58 was held by this Court to be an unconstitutional violation of Art. VIII § 15 of the South Dakota Constitution in the case of Gould v. Pennington County Bd. of Equalization, 1997 SD 129, 570 N.W.2d 846. However, Gould has no application to the issue now before us.


author: LARSON, Justice.

text:
    STATE of Iowa, Appellee, v. Larry James DALY, Appellant.
    No. 98-1968.
    Supreme Court of Iowa.
    Feb. 14, 2001.
    Linda Del Gallo, State Appellate Defender, and Stephan J. Japuntich, Assistant State Appellate Defender, for appellant.
    Thomas J. Miller, Attorney General, Kevin Cmelik, Assistant Attorney General, John P. Sarcone, County Attorney, and Jamie Bowers, Assistant County Attorney, for appellee.
   LARSON, Justice.

Larry James Daly was convicted of possession of methamphetamine with intent to deliver, failure to possess a tax stamp, and possession of marijuana in violation of Iowa Code sections 124.401(l)(b)(7); 453B.3, 453B.12; and 124.401(6) (1997), respectively. He appealed, raising various issues, including the district court’s ruling allowing evidence of his prior drug convictions. The court of appeals affirmed. We vacate the court of appeals decision, reverse the judgment of the district court, and remand.

Daly was charged with these offenses in late 1997. On February 3, 1998, he filed a motion in limine, seeking to exclude evidence of his prior convictions for identical narcotics crimes in 1993, citing Iowa Rule of Evidence 403 (exclusion of relevant evidence if it is “substantially outweighed by the danger of unfair prejudice”); rule 404(b) (prior “bad acts” evidence); and rule 609 (impeachment by evidence of pri- or convictions).

The general rule regarding claimed error in admission of evidence, when the issue has been raised in a motion in li-mine, has recently been stated by this court:

Ordinarily, error claimed in a court’s ruling on a motion in limine is waived unless a timely objection is made when the evidence is offered at trial. However, “where a motion in limine is resolved in such a way it is beyond question whether or not the challenged evidence will be admitted during trial, there is no reason to voice objection at such time during trial. In such a situation, the decision on the motion has the effect of a ruling.”

State v. Tangie, 616 N.W.2d 564, 568-69 (Iowa 2000) (quoting State v. Miller, 229 N.W.2d 762, 768 (Iowa 1975)) (other citations omitted).

The district court, prior to trial, ruled that the motion in limine was overruled as to the defendant’s rule 609 claim, and the ruling on his rule 404(b) claim would be reserved until trial. Defense counsel then inquired, “May I consider the second part of the court ruling [rule 609 impeachment] the final order of the court then?” The court responded, “Yes, sir.” We conclude the defendant’s rule 609 claim was resolved “in such a way it is beyond question” what the court’s ruling would be at trial. This avoided the necessity of Daly objecting again at trial in order to preserve error.

At trial the court sustained Daly’s objection to the State’s attempt to enter evidence of the circumstances surrounding the convictions under rule 404(b). However, Daly still faced impeachment with the convictions upon cross-examination during the presentation of his case in chief. The defendant, having lost his legal argument under rule 609, preemptively raised the matter of his prior convictions in his own testimony. Daly’s attorney engaged him in the following colloquy:

Q. Let’s get one thing out right now, Mr. Daly. You’ve been convicted of crimes in the past, haven’t you? A. Yes.
Q. What crimes were you convicted of? A. Possession with intent to deliver methamphetamine, failure to possess drug stamp and possession of marijuana.
Q. And when was that? A. Pardon me?
Q. When was that? A. 1993.
Q. Found guilty by a jury? A. No, I pleaded guilty.

Daly contends the court’s order admitting evidence of his convictions forced him to raise the issue of his own conviction by preemptively testifying to it in his case in chief. This raises the issue of whether he thereby waived any objection to the court’s ruling on his motion in limine. After the briefs were filed in this case, the United States Supreme Court in a five-to-four decision concluded a defendant waives any error in the court’s preliminary ruling allowing conviction evidence by preemptively raising the matter in her own testimony. See Ohler v. United States, 529 U.S. 753, 759, 120 S.Ct. 1851, 1855, 146 L.Ed.2d 826, 832 (2000) (“[W]e conclude that a defendant who preemptively introduces evidence of a prior conviction on direct examination may not on appeal claim that the admission of such evidence was error.”).

The four-justice dissent in Ohler noted the district court’s in limine ruling forced the defendant’s attorney to raise the issue because “defense lawyers do not set out to impeach their own witnesses, much less their clients.” Id. at 761, 120 S.Ct. at 1856, 146 L.Ed.2d at 833 (Souter, J., dissenting). In such a case, the dissent notes, “the defendant has opposed admission of the evidence and introduced it herself only to mitigate its effect in the hands of her adversary.” Id. at 761, 120 S.Ct. at 1856, 146 L.Ed.2d at 834. It has been said “[i]t is common for witnesses to reveal on direct examination their convictions to ‘remove the sting’ of the impeachment.” Fed.R.Evid. 609(a) advisory committee’s note to 1990 amendment.

One problem with effectively forcing a defendant’s preemptive introduction of the evidence and then holding he waives any objection to the court’s ruling is that “a testifying defendant perforce waives the right to appeal an adverse in limine ruling admitting prior convictions for impeachment.” Ohler, 529 U.S. at 760,120 S.Ct. at 1855, 146 L.Ed.2d at 833 (Souter, J., dissenting). Moreover, the rule of waiver is contrary to established precedent in this state. See, e.g., State v. Jones, 271 N.W.2d 761, 766 (Iowa 1978).

Where the issue is fully argued and [the] trial court, carefully apprised of defendant’s objection, rules evidence of prior convictions admissible, we are not convinced defendant must abandon all trial tactics to preserve error. We hold defendant has not waived his right to assert error in this instance.

Id.; accord State v. Griffin, 323 N.W.2d 198, 202 (Iowa 1982). We decline to follow Ohler and conclude Daly has not waived his right to object to the court’s admission of the evidence.

The State contends Daly failed to raise the rule 609 issue before the trial court. We disagree; while the defendant’s trial counsel intermixed his arguments under rule 404(b) (prior “bad acts” evidence) and rule 609 (impeachment by evidence of prior convictions), we believe a fair reading of his motion in limine raised the issue. It stated:

The [conviction] evidence is ... inadmissible for impeachment purposes under Iowa R. Evid. 609. Pursuant to the 1996 amendment to the rule, evidence of any conviction punishable in excess of one year of incarceration is admissible for impeachment purposes. Prior to admission, however, the court must determine that “the probative value of admitting the evidence outweighs its prejudicial effect to the accused.” Iowa R.Evid. 609(a)(1).

Because we conclude the rule 609 issue now raised was adequately preserved in the district court, it is unnecessary for us to consider Daly’s alternative claim of ineffective assistance of counsel.

Rule 403 requires a balancing of probative value against the danger of unfair prejudice in this language:

Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

Rule 609 covers impeachment of a witness by evidence of a prior conviction. It provides:

(a) General Rule. For the purpose of attacking the credibility of a witness:
(1) Evidence that a witness other than the accused has been convicted of a crime shall be admitted, subject to rule 403, if the crime was punishable by death or imprisonment in excess of one year pursuant to the law under which the witness was convicted, and evidence that an accused has been convicted of such a crime shall be admitted if the court determines that the probative value of admitting this evidence outweighs its prejudicial effect to the accused; and
(2) Evidence that any witness has been convicted of a crime shall be admitted if it involved dishonesty or false statement, regardless of the punishment.

(Emphasis added.)

There is an obvious difference in the language of rules 403 and 609 with respect to their probative-value/prejudice analyses concerning an accused as a witness. Rule 403 says evidence may be excluded, if its probative value is substantially outweighed by the danger of unfair prejudice. Rule 609 provides evidence shall be admitted if the court determines the probative value outweighs its prejudicial effect. Daly complains that the district court did not make a determination on this question.

It is true, as the State argues, trial courts are given considerable discretion in most evidentiary rulings. See, e.g., State v. Liggins, 524 N.W.2d 181, 188 (Iowa 1994). However, we do not view this case as one involving an abuse of discretion in weighing the probative value and likely prejudice. Rather, we see the issue as one involving an error of law in failing to engage in the weighing process at all. In fact, the issue of admissibility seemed to turn in the trial court only on the seriousness of prior convictions. The court stated:

I believe that the nature of the crimes of which Mr. Daly has previously been convicted are serious crimes and I think while they may not fall specifically within the category of those which are described as dishonesty, they are serious enough that — -that their probative value is substantial in this case. Clearly, the potential punishment for those crimes of which he has been convicted are no greater than and no less than certain very serious sexual assaults which by their nature do not call into play dishonesty, but there would be little dispute that they would be the type of convictions that would be relevant on a fact finder’s determination of the credibility of a witness, particularly an accused.

We believe an assessment by the trial court of the probative value of this evidence in relation to its likely prejudice is contemplated by rule 609: “[e]vidence that an accused has been convicted of such a crime [punishable by more than one year in prison] shall be admitted if the court determines that the probative value of admitting this evidence outweighs its prejudicial effect to the accused.... ” (Emphasis added.) Such a process is also contemplated by our cases. See, e.g., State v. Axiotis, 569 N.W.2d 813 (Iowa 1997). In that case, we said:

In determining whether the probative value of evidence of a prior conviction outweighs its prejudicial effect, the trial court should consider such factors as: (1) the nature of the conviction; (2) the conviction’s bearing on veracity; (3) the age of the conviction; and (4) its tendency to improperly influence the jury.

Id. at 816. In Axiotis we expressly approved the trial court's disposition by noting “the trial court explicitly referred to and applied those factors.” Id.

A federal court has observed, with respect to evidence of similar crimes:

Where multiple convictions of various kinds can be shown, strong reasons arise for excluding those which are for the same crime, because of the inevitable pressure on lay jurors to believe that “if he did it before he probably did so this time.” As a general guide, those convictions which are for the same crime should be admitted sparingly; one solution might well be that discretion be exercised to limit the impeachment by way of a similar crime to a single conviction and then only when the circumstances indicate strong reasons for disclosure, and where the conviction directly relates to veracity.

Gordon v. United States, 383 F.2d 936, 940 (D.C.Cir.1967).

In this case, the first factor under Axiot-is (nature of the conviction) and its fourth factor (tendency to improperly influence the jury) are of particular concern. The 1993 convictions were for exactly the same crimes for which Daly was currently on trial (possession of methamphetamine with intent to deliver, failure to possess tax stamps, and possession of marijuana). This fact alone could very likely have a substantial effect on a jury, which, although instructed not to do so, could reasonably be expected to misuse the evidence as substantive proof of guilt. See Green v. State, 338 S.C. 428, 527 S.E.2d 98, 101 (2000). While we give deference to a trial court’s ruling under rule 609, the evidence of Daly’s conviction in 1993 for the identical three crimes charged here was so likely to have influenced the jury improperly we conclude the court abused its discretion in admitting it.

We reverse and remand for a new trial. This disposition makes it unnecessary to address the remaining issues raised by Daly. We vacate the decision of the court of appeals, reverse the judgment of the district court, and remand for a new trial.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT REVERSED; CASE REMANDED.


author: NEUMAN, Justice. CARTER, Justice

text:
    IOWA SUPREME COURT COMMISSION ON UNAUTHORIZED PRACTICE OF LAW, Appellee, v. A-1 ASSOCIATES, LTD., Appellant.
    No. 99-0536.
    Supreme Court of Iowa.
    March 21, 2001.

      Alfredo Parrish of Parrish, Kruidenier, Moss, Dunn & Montgomery, L.L.P., Des Moines, for appellant.
    Thomas J. Miller, Attorney General and Grant K. Dugdale, Assistant Attorney General, for appellee.
    W. Don Brittin, Jr., of Nyemaster, Goode, Voigts, West, Hansell & O’Brien, P.C., Des Moines, for amicus curiae Iowa Collectors Association, Inc.
   NEUMAN, Justice.

The district court enjoined A-l Associates, Ltd., a collection agency representing clients in small claims court, from engaging in the unauthorized practice of law. A-l contends on appeal that Iowa Code sections 539.1, 539.3, and 631.14 (1997) specifically permit its litigation activities. We conclude, as did the district court, that these statutes do not provide the authorization A-l seeks. We therefore affirm the injunction issued by the district court.

The parties submitted the case on the following stipulated facts. Plaintiff, Iowa Supreme Court Commission on Unauthorized Practice of Law, was created by court rule “for the abatement of the unauthorized practice of law.” Court Rule 118A. Defendant, A-l Associates, Ltd., is an Iowa corporation providing debt collection services for creditors in central Iowa. Since at least 1982, A-l has engaged in the practices that are the subject of this controversy.

A-l’s debt collection services range from contacting debtors by letter and telephone to instituting legal action. The creditor receives the proceeds of any recovery made by A-l with a fixed percentage (thirty to fifty percent) retained by A-1 as compensation for its services. This financial arrangement is outlined by letter to each client.

A-l also- obtains an assignment of the account as part of its agreement with the creditor. Based on the written assignment, A-l may commence an action in small claims court, either pro se or by an attorney selected and retained by A-l. In those cases in which A-l does not retain counsel, its employees prepare the small claims original notice on forms provided by the clerk of court, appear at trial, and prepare the necessary legal documents to collect any judgment entered. A-l initiates legal action only in consultation with the creditor.

Although not recited as part of the stipulation, it is evident from the record and arguments of counsel that A-l’s employees are not admitted to practice law in this state. It is likewise apparent that the Commission has no quarrel with the operation of the collection agency, per se. Its focus is on A-l’s activities that involve seeking relief in the courts based on assignments in which the creditor retains an interest in the underlying debt.

The district court ruled that A-l’s litigation activities on behalf of its clients constitute the unauthorized practice of law. It permanently enjoined A-l from engaging in such practices. See Court Rule 118A.1 (authorizing district court to enter appropriate dispositional order following hearing). This appeal by A-l followed.

I. Scope of Review.

“A request for an injunction invokes the district court’s equitable jurisdiction.” Sear v. Clayton County Zoning Bd. of Adjustment, 590 N.W.2d 512, 515 (Iowa 1999). Thus, our review on appeal is de novo. Id.

II. Issue on Appeal.

The Commission argued in the district court that a debt collection agency such as A-l engages in the unauthorized practice of law

when, as a regular part of its business, it procures or takes assignments for collection where the creditor still retains an interest in the underlying debt and the collection agency institutes and maintains legal action to recover the unpaid debt.

A-l contends on appeal that the district court, by accepting the Commission’s argument, has misapplied a clear legislative directive to the contrary. That directive, A-l argues, may be found in Iowa Code sections 539.1, 539.3, and 631.14.

A. History. Before turning to the statutes upon which A-l relies, we think it helpful to review the source of the Commission’s agitation. In 1944 this court considered a nearly identical case, Bump v. Barnett, 235 Iowa 308, 16 N.W.2d 579 (1944). As in the case before us, Barnett engaged in the business of collecting delinquent accounts on a commission basis. The record revealed that he brought in his own name — as assignee — over 1500 actions in “justice court” pursuant to section 10526 of the 1939 Code of Iowa, which permitted parties in such courts to appear “in person or by agent” Barnett, 235 Iowa at 313, 16 N.W.2d at 582. Barnett argued that the law of assignments, pro se practice and the statute’s own language, permitted his litigation activity. Id. at 313-14, 16 N.W.2d at 582.

This court rejected Barnett’s rationale and affirmed the trial court’s decision to enjoin his practices. Id. at 314-15, 16 N.W.2d at 583. We began by reasoning that neither the recognized right of parties to assign choses in action nor the equally well-settled right to try one’s own case in court resolved the question of whether Barnett’s litigation activity on behalf of others constituted the unauthorized practice of law. Id. at 313, 16 N.W.2d at 582. Concerning the creditors’ purported assignment of their claims to Barnett, we said:

Undoubtedly one might for example engage in the business of buying claims as investments and might take assignments of them to himself and maintain actions thereon in his own name. But when he does not purchase the claims and only takes colorable assignment of them so he may render or cause to be rendered legal service to others and holds himself out as engaged in such practice, it is a quite different matter. In one case he is dealing in property on his own ac count, in the other he is selling service and merely adopting the guise of an investor to conceal the real nature of his operations.

Id. (emphasis added). In a similar vein, we rejected Barnett’s claim of pro se status, saying:

If it is really his own litigation the right is unquestioned and unquestionable. But if it is another’s lawsuit or action, placed in plaintiffs name so as to enable him to render service to that other under the pretext of trying his own case, it does not come under the protection of the rule. And if it is done by one who engages in it as a business and holds himself out as peculiarly qualified or equipped, it comes under the ban of illegal practice of law.

Id.

Finally, we held in Barnett that the statutory reference to appearing in justice court “in person or by agent” did not authorize someone like Barnett to make a business or “profession” of representing clients before a justice of the peace. Id. at 313-14, 16 N.W.2d at 582-83. To do so, we reasoned, would lower practice standards by encouraging the growth of a class of “ ‘justice court lawyers,’ unfettered by the rules that bind licensed attorneys and without training in law and ethics.” Id. at 314, 16 N.W.2d at 583. We recognized that such a trend was not in the public’s interest and the court’s decision to enjoin it enjoyed ample support in our own case law as well as that of other jurisdictions. Id. at 315, 16 N.W.2d at 583; see Bump v. Dist. Ct., 232 Iowa 623, 635-40, 5 N.W.2d 914, 920-22 (1942) (discussing authority and enjoining non-lawyer’s practice of soliciting claims for tax refunds and advising clients concerning their recovery in quasi-judicial tribunals).

B. Amended legislation. A-l insists on appeal that the collection activities condemned in Barnett as unauthorized legal practice have been legislatively authorized, since 1982, by specific amendments to sections of the Iowa Code pertaining to assignments and small claims actions. See 69 Iowa Acts ch. 1235 (1982) (now codified at Iowa Code §§ 539.1, 539.3, and 631.14). Section 539.1, governing the assignability of non-negotiable instruments, provides in pertinent part:

Bonds, due bills, and all instruments by which the maker promises to pay another ... are assignable by endorsement on the instrument, or by other writing. The assignee, including a person who takes assignment for collection in the regular course of business, has a right of action on them in the assignee’s own name, subject to any defense or counterclaim which the maker or debtor had against an assignor of the instrument before notice of the assignment.

(Emphasis added.) Iowa Code section 539.3, concerning assignments of open accounts, states:

An open account of sums of money due on contract may be assigned. The assignee, including a person who takes assignment for collection in the regular course of business, has a right of action on the account in the assignee’s own name, subject to the defenses and counterclaims allowed against the instruments mentioned in section 539.2, before notice of the assignment is given to the debtor in writing by the assignee.

(Emphasis added.) Applying the foregoing statutes in the context of small claims litigation, section 631.14 provides in pertinent part:

A person who in the regular course of business takes assignments of instruments or accounts pursuant to chapter 539, which assignments constitute small claims, may bring an action on an assigned instrument or account in the person’s own name and need not be represented by an attorney....

Taken together, A-l argues, tffe foregoing statutes effectively overrule Barnett. The Commission counters that the amendments pertain only to a true assignment and that the principles articulated in Bar nett retain their vitality when considered in the light of the sham assignments at issue here. In the alternative, the Commission contends that any statutory interpretation giving the legislature the right to authorize unlicensed practice in our state courts violates constitutional separation of powers principles. See Iowa Const. art. III, § 1.

C. Analysis. Several fundamental principles guide our consideration of these competing claims. First, it appears beyond dispute that A-l’s litigation-related services on behalf of its clients come within any reasonable definition of the practice of law.

[T]he practice of law includes the obvious: representing another before the court. But the practice of law includes out-of-court services as well. For example, one who gives legal advice about a person’s rights and obligations under the law is practicing law. Or one who prepares legal instruments affecting the rights of others is practicing law. Or one who approves the use of legal instruments affecting the rights of others is practicing law.

Comm. on Prof l Ethics & Conduct v. Baker, 492 N.W.2d 695, 701 (Iowa 1992); accord Bergantzel v. Mlynarik, 619 N.W.2d 309, 312 (Iowa 2000) (quoting Iowa Code of Prof'l Responsibility EC 3-5); Bump, 232 Iowa at 636, 5 N.W.2d at 920.

Second, the legislature has vested the power to admit persons to practice law in the courts of this state “exclusively in the supreme court.” Iowa Code § 602.10101; see Bergantzel, 619 N.W.2d at 311-12 (recognizing exclusive authority and citing implementing rules). We summarily reject A-l’s claim that the reach of section 602.10101 extends only to “constitutional” courts, not “legislative” courts such as small claims. The semantic distinction A-l attempts to make finds no support in our law, constitutionally or statutorily. To the extent the general assembly may, from time to time, establish “inferior” courts, the judicial power is constitutionally vested in the courts themselves, not the legislature. See Iowa Const, art. V, § l. Consistent with this constitutional scheme, the legislature has established a unified trial court, known as the district court, whose jurisdiction is exercised by judicial officers ranging from district judges through magistrates presiding in small claims. Iowa Code § 602.6101; see id. §§ 631.1(l)-(5), .2 (referring uniformly to small claims court as “district court sitting in small claims”).

Third, we are obliged to construe statutes to uphold their constitutionality if possible. Iowa City v. Nolan, 239 N.W.2d 102, 103 (Iowa 1976). This means that if sections 539.1, 539.3, and 631.14 lend themselves to more than one construction, one of which renders them constitutional and the other of doubtful constitutionality under our separation of powers clause, we must adopt the construction upholding the statutes. Id. Finally, we interpret these provisions in light of them evident legislative intent, harmonizing them, if possible, with related statutes. Doe v. Ray, 251 N.W.2d 496, 500-01 (Iowa 1977).

Applying these principles to the record before us, we are convinced that A-l’s practices are not consistent with the ordinary meaning of assignment recognized at common law and by statute and, therefore, cannot be harmonized with the legislature’s broad grant of authority to the supreme court under section 602.10101.

The assignment form executed by A-l’s clients purports to transfer absolutely all right, title, and interest in described accounts receivable owned by A-l’s clients. If such instrument actually meant what it said, it would come within the ordinary meaning of assignment — a transfer of the assignor’s entire interest or rights in the property. Padzensky v. Kinzenbaw, 343 N.W.2d 467, 471 (Iowa 1984); see generally 6 Am.Jur.2d Assignments § 1, at 185 (1963) (“[UJnless in some way qualified, [an assignment] is properly the transfer of one’s whole interest in an estate, or chattel, or other thing.”); Black’s Law Dictionary 79-80 (abr. 6th ed.1991) (defining “assignment” as [a] “transfer or making over to another the whole of any property, real or personal, in possession or in action, or of any estate or right therein”). And it would plainly give A-l the right to maintain an action on the debt in its own name and represent itself in court on a pro se basis if it chose to do so. Barnett, 235 Iowa at 313, 16 N.W.2d at 582; see Iowa Code §§ 539.1, .3 (authorizing assignments of non-negotiable instruments and open accounts); id. § 631.14 (authorizing assignees under chapter 539 to bring small claims actions on such assignments with or without counsel).

A-l’s claimed status as a bona fide assignee is defeated under this record, however, because the assignment — though absolute in form — -is, in fact, a transfer intended primarily to secure payment for services rendered. See Padzensky, 343 N.W.2d at 471 (distinguishing assignment from transfer for security). This is demonstrated by the fact that A-l pays nothing for the purported “assignment.” The letter accompanying the “assignment” confirms that the creditor will receive the proceeds of any recovery less a fixed sum representing A-l’s commission for its services. In the case of small claims litigation, those services are indisputably legal in nature. Courts throughout the country have condemned this practice as an attempt by collection agencies to accomplish indirectly what the law otherwise prohibits. State ex rel. Norvell v. Credit Bureau of Albuquerque, Inc., 85 N.M. 521, 514 P.2d 40, 49 (1973) (assignments procured by credit bureau not truly taken to acquire title and ownership but to facilitate delivery of legal services for consideration); State ex rel. Frieson v. Isner, 168 W.Va. 758, 285 S.E.2d 641, 651-52 (1981) (citing numerous cases to support conclusion that assignment taken solely to maintain suit on creditor’s claim is sham perpetrated on court to circumvent unauthorized practice laws); State ex rel. State Bar of Wisconsin v. Bonded Collections, Inc., 36 Wis.2d 643, 154 N.W.2d 250, 256 (1967) (“It is sheer hypocrisy to conclude that the percentage retained by the collection agency represents its equity or ownership share of the claim. It is its fee or charge for professional services rendered.”).

A-l suggests that by adding the words “including a person who takes assignment for collection in the regular course of business” to sections 539.1 and 539.3 the legislature has somehow altered the customary meaning of assignment. We disagree. The statute may as reasonably be read to conform to the ordinary meaning of assignment. An assignment is an assignment, whether done in the regular course of business or not. The instrument before us, though executed as part of A-l’s business, does not effect an assignment of its clients’ rights but a transfer of them to secure payment for services rendered. Calling it an assignment does not make it so. Neither does it bring the action within the realm of sections 539.1 and .3.

Because the arrangements between A-l and its clients are not done “pursuant to chapter 539,” they do not come within the exception for chapter 539 actions authorized by section 631.14. So long as A-l is not representing its own legal interests in small claims court, but the legal interests of others, it is engaging — without license or other authorization — in the practice of law. We therefore affirm the injunction issued against it by the district court.

AFFIRMED.

All justices concur except CARTER, J., who dissents.

CARTER, Justice

(dissenting).

I dissent.

On the issue of statutory interpretation that is presented, we are not interpreting the word “assignments.” We are interpreting the words “including a person who takes assignments for collection in the regular course of business,” as used in Iowa Code sections 539.1 and 539.3. I am convinced that those words were intended to authorize the type of collection efforts that are an issue on this appeal. As so interpreted, the legislation effectively overturns the principle this court established in Bump v. Barnett, 235 Iowa 308,16 N.W.2d 579 (1944).

I would reverse the judgment of the district court.

      . This article provides:
      The powers of the government of Iowa shall be divided into three separate departments — the Legislative, the Executive, and the Judicial: and no person charged with the exercise of powers properly belonging to one of these departments shall exercise any function appertaining to either of the others, except in cases hereinafter expressly directed or permitted.

      . This article provides that “[t]he judicial power shall be vested in a supreme court, district courts, and such other courts, inferior to the supreme court, as the general assembly may, from time to time, establish.”


author: TERNUS, Justice.

text:
    In re the MARRIAGE OF Kathleen J. HILMO and Chris A. Hilmo. Upon the Petition of Kathleen J. Hilmo n/k/a Kathleen J. Gerety, Appellant, and Concerning Chris A. Hilmo, Appellee.
    No. 99-1196.
    Supreme Court of Iowa.
    March 21, 2001.

      Dennis D. Jasper, Bettendorf, for appel-lee.
    Daniel D. Bernstein of William J. Bri-briesco & Associates, Bettendorf, for appellant.
   TERNUS, Justice.

The issue presented in this case is whether social security disability benefits paid to a disabled parent’s children should be considered income to the disabled parent in calculating the disabled parent’s income for purposes of setting child support. Under the circumstances of this case, we agree with the court of appeals that such benefits are income to the disabled parent and should be included as such for purposes of determining child support payments. Therefore, we affirm the court of appeals decision that affirmed, as modified, the district court’s calculation of the parties’ respective child support obligations.

I. Background Facts and Proceedings.

The parties to this action, Kathleen Ger-ety and Chris Hilmo, were divorced in 1992. Physical custody of their three minor children was awarded to Kathleen, and Chris was required to pay child support.

In 1998 Chris filed a modification action seeking a reduction in child support based on the fact that he had become legally blind. There was no dispute that Chris was disabled. At that time, he was receiving $1232 per month in social security disability benefits, and Kathleen, as the representative payee of Chris’s minor children, received $600 per month in benefits. The court concluded that Chris’s disability was a substantial change in circumstances and ordered that the benefits received by the children should be offset against Chris’s child support obligation.

In 1999 Chris filed the present modification action seeking a reduction in his child support. By this time the parties’ oldest child had turned eighteen and the parties’ middle child, Danielle, was permanently residing with Chris. The parties agreed that physical custody of Danielle should be awarded to Chris. By virtue of this change in custody, Chris received $300 each month in dependent social security disability benefits on behalf of Danielle, and Kathleen received $300 each month in dependent benefits for the parties’ youngest child.

The disputed issue in this case is the amount of each party’s child support. The parties agreed that Kathleen earned gross income of $42,000 per year, and Chris’s social security disability benefits and private pension benefits totaled $16,800 annually. They did not agree, however, on how the dependent disability benefits should be treated in two respects: (1) Should they be considered income to Chris? (2) Should the benefits be offset against the parties’ child support obligations? The district court did not include the dependent benefits in its calculation of Chris’s gross income, but did allow Chris a $300 offset against his monthly support obligation of $296.38. Kathleen was ordered to pay Chris $509.57 per month for Danielle’s support. She was not allowed an offset for the benefits received by Danielle.

Kathleen appealed, and the case was transferred to the court of appeals. The court of appeals rejected Kathleen’s request that the $300 in dependency benefits received by Chris on behalf of Danielle be offset against her monthly support obligation. The court did, however, conclude that the $600 in dependency benefits should be included in Chris’s gross income. Using Chris’s revised income figure, the court of appeals determined that Chris’s child support under the child support guidelines was $427.57 per month and Kathleen’s was $480.86 per month. Chris was allowed a $300 offset against his support obligation for the dependency benefits received by Kathleen as the representative payee for their youngest child.

We granted Chris’s application for further review. He claims the court of appeals should not have included the dependency benefits received by his children in his gross income. Kathleen, in her resistance to the application for further review, contends that the court of appeals correctly determined the parties’ respective child support obligations. She has apparently abandoned her request that she receive a credit against her child support obligation for the dependency benefit paid to Danielle. Therefore, the sole issue presented for our consideration is the appropriateness of considering the full amount of dependency benefits as income to Chris.

Our review of this issue is de novo. See In re Marriage of Rietz, 585 N.W.2d 226, 229 (Iowa 1998); Iowa R. App. P. 4.

II. Discussion.

In determining child support, the court must first look to the child support guidelines. See In re Marriage of Benson, 495 N.W.2d 777, 780 (Iowa Ct. App. 1992). Application of the guidelines requires a determination of the net monthly income of the parents. See id. ¿Net income is gross income less certain allowable deductions.” See In re Marriage of Lee, 486 N.W.2d 302, 304 (Iowa 1992). Gross income is not limited to income that is reportable to the federal government as income: ¿Although veterans’ disability benefits, social security disability or retirement payments, and workers’ compensation benefits are exempt from federal taxes, they are properly considered as income in determining ... the amount of child support.” Id. at 305 (holding that father’s veterans’ disability benefits were to be included as income for purposes of child support); accord State ex rel. Pfister v. Larson, 569 N.W.2d 512, 515 (Iowa Ct. App. 1997) (including noncustodial parent’s social security retirement income in calculating that parent’s net income under child support guidelines). While it is clear that Chris’s social security disability benefits are included in his gross income for child support purposes, we have never decided whether dependent social security disability benefits are included in the disabled parent’s gross income for child support purposes.

Courts from other jurisdictions are split on this issue. Compare Drummond v. State, 350 Md. 502, 714 A.2d 163, 165 n. 2, 171 (Ct. App. 1998) (refusing to include dependent benefits as income to the disabled parent and refusing to give the disabled parent an offset for the benefits received by the child); Graby v. Graby, 87 N.Y.2d 605, 641 N.Y.S.2d 577, 664 N.E.2d 488, 492 (1996) (refusing to treat dependent social security disability payments as income of the disabled parent or as a credit against the parent’s support obligation); In re Marriage of Krompel, 129 Or .App. 394, 879 P.2d 223, 224 (1994) (reaffirming In re Marriage of Lawhom, 119 Or.App. 225, 850 P.2d 1126 (1993), wherein court held that dependent benefits are income of the child), with Miller v. Miller, 890 P.2d 574, 576-77 (Alaska 1995) (including social security retirement dependency benefits as income of the worker parent); Nazworth v. Nazworth, 931 P.2d 86, 89 (Okla.Ct.App.1996) (allowing obligor father credit for the social security disability benefits being paid to his children and requiring father to add these payments to his income for purposes of calculating child support); In re Marriage of Maples, 78 Wash.App. 696, 899 P.2d 1, 4 (1995) (holding that social security disability benefits paid to a child are considered part of the disabled father’s income for child support purposes). It appears that courts allowing an offset against child support for benefits received by a dependent reason that these same benefits must be included in the disabled parent’s income to prevent a windfall to the disabled parent.

In Miller the Alaska Supreme Court addressed this issue in the analogous situation of social security retirement dependency benefits. 890 P.2d at 576. The father argued that his child support obligation should be offset by the dependency benefits. Id. Although the Alaska court had not addressed the credit issue before, it noted that “ ‘[t]he overwhelming majority of states that have considered this issue allow a credit for Social Security benefits paid to dependent children.’ ” Id. (quoting Pontbriand v. Pontbriand, 622 A.2d 482, 484 (R.I.1993)). The Alaska court decided to join the majority of jurisdictions, stating that “[although the benefits are payable directly to the child rather than through the contributing parent, the child’s entitlement to payments derives from the parent, and the payments them-sélves represent earnings from the parent’s past contributions.” Id. at 577. The court further concluded that because the benefits were “essentially earnings derived [from the father’s] past social security contributions[,][b]y parallel reasoning, the benefits should be counted as income to [the father].” Id. at 578. It reasoned that since it had deemed the dependent benefits “to be the equivalent of child support payments, excluding those benefits from [the father’s] income would seem no more defensible than deducting ordinary child support payments from [the father’s] income.” Id. at 578 n.- 6.

In the Maples case, a Washington statute provided that social security disability payments made directly to the child “shall be treated for all purposes as if the disabled person paid the compensation toward satisfaction of the disabled person’s child support obligation.” 899 P.2d at 3-4. The statute did not specify whether these benefits should be included in the disabled person’s income calculation. Id. at 4. The Washington appellate court held that dependent benefits should be considered as income to the disabled parent because to hold otherwise “would result in a windfall to the disabled parent, whose obligation would be unfairly reduced at the expense of the custodial parent.” Id. The court stated the following rationale for its decision:

Our interpretation follows and promotes the legislative goals expressed in the statute: provide for adequate support based on economic data; increase the equity of support orders by providing for comparable orders in comparable cases; and increase voluntary settlements through greater predictability. Our interpretation furthers the first goal by automatically including the disability payments in the disabled parent’s income to determine the standard calculation. It furthers the second goal of providing comparable orders — all children of disabled parents who receive direct disability payments will be similarly treated. Finally, our interpretation furthers the third goal — parties will always know that the disability payments must be factored into the disabled parent’s income, instead of wondering whether and by how much a particular judge will follow the standard calculation or order a deviation.
Common sense also dictates that all disability payments be considered income of the disabled parent. Disability payments substitute for earned income. Were the parent not disabled, the parent would continue to earn income which would be counted as parental income. The substitutionary disability payments should similarly be counted as parental income. The payments are made directly to the children, or custodial spouse, to protect the children and insure that the payments are used for the children’s benefit. But paying the child directly does not transform this substitute for the parent’s earnings into income for the child.

Id. at 4-5; accord In re Marriage of Briscoe, 134 Wash.2d 344, 949 P.2d 1388, 1390 (1998).

We agree with the rationale of those courts that include dependent benefits as income of the disabled parent. In Potts v. Potts, this court held that a disabled parent should be allowed a credit against the disabled parent’s child support obligation for dependent social security disability payments. 240 N.W.2d 680, 681 (Iowa 1976); accord Neuman v. Newman, 451 N.W.2d 843, 844 (Iowa 1990) (“The rule in Iowa is that a child support award may be offset by social security benefits during the period in which the benefits are received.”). We reasoned

dependency benefits are not a mere gratuity from the federal government. The benefits have been earned in part through the employee’s payment of social security taxes. Their purpose is to replace income lost because of the employee’s disability. Under these circumstances, it is equitable to treat dependency benefits as a substitute for child support for the period during which such benefits are paid.

Potts, 240 N.W.2d at 681 (emphasis added); see also Pfister, 569 N.W.2d at 516 (“The purpose of social security disability is to replace income lost because of the employee’s disability.” (Emphasis added.)). Having made the choice to allow the offset, in other words to treat the benefits as coming from the disabled parent, we must logically include these benefits as income of that parent. Whether the benefits are paid to the disabled parent or to the other parent makes no difference because in either event the benefits are a resource available to the disabled parent to satisfy his support obligation. See generally Maples, 899 P.2d at 4 (reasoning that dependent benefits are a resource available to satisfy the disabled parent’s child support obligation and therefore “should be considered as income to him for purposes of calculating his child support obligation”). In both situations the dependency benefits are replacement income to the disabled parent and should be considered income to that parent for purposes of establishing child support. Therefore, we agree with the court of appeals that the $600- in dependent disability benefits should be included as income to Chris in calculating the parties’ respective child support obligations.

III. Disposition.

We affirm the court of appeals decision setting Chris’s child support obligation at $427.57, with a credit for the $300 dependency benefit paid to Kathleen, and setting Kathleen’s child support payment at $480.86, with no credit for the dependency benefit paid to Chris. Accordingly, we also affirm the judgment of the district court as modified by the court of appeals.

DECISION OF COURT OF APPEALS AFFIRMED; JUDGMENT OF DISTRICT COURT AFFIRMED AS MODIFIED.

      . When custody is split between the parents, the trial court must separately calculate each parent’s support obligation. See In re Marriage of Hansen, 465 N.W.2d 906, 910 (Iowa Ct. App. 1990). The court, in calculating the support owed by one parent, considers the other parent as a noncustodial parent. See id.