(concurring in part and concurring in result in part)
I agree that this case should be reversed and remanded. I believe the majority opinion adequately describes the federal preemption concepts which apply to this matter. However, I disagree with the majority *281opinion that Betty is entitled to an automatic judgment upon remand for the sum of $10,000.00 plus interest as I believe a more equitable approach should be taken based upon a more fully developed record.
Betty’s claim against the estate cannot be founded upon SDCL 20-1-2(1). This code provision states that an obligation may arise from a “contract of the parties.” But, the Settlement Agreement is not a contract. It was written in Hanks v. Hanks, 334 N.W.2d 856, 857 (S.D.1983):
This ... obligation is not the consequence of contract or agreement between the parties, but is an obligation created by the court for the division of the property interests of the parties.
In accord, Johansen v. Johansen, 365 N.W.2d 859 (S.D.1985).
The majority then declares that Betty’s obligation may arise either under the Hanks decision or SDCL 20-1-2(2) (obligation by operation of law). I do not disagree in general with that part of the writing for Betty’s claim has to be grounded in some right which she can legally enforce. But the obligation which can be enforced should not be used to also define the extent of the monetary claim sought under the obligation. For in doing so a large body of equitable principles are being ignored. It also ignores the federal law which preempts either state laws or obligations created by state courts which might interfere with one’s right to change a beneficiary on a NSLI policy.
The majority opinion cites the case of In re Will of Hilton, 88 Misc.2d 760, 388 N.Y.S.2d 985 (N.Y.Sur.Court 1976) as authority for its position. The Surrogate Court in New York allowed the wife to file a claim against the estate for the full value of the face amount of the NSLI policy and in doing so reasoned:
The act of the decedent [herein Ray] in changing the beneficiary of the policy from his former wife to his widow constituted a fraud upon his former wife which cannot be countenanced by a court of equity....
Id. at 989. But this reasoning that a fraud had been committed was specifically rejected five years later in Ridgway v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 70 L.Ed.2d 39 (1981). The majority so notes by writing: “Also, his conduct could not be fraudulent because he had the authority to change the beneficiary, and, a person cannot commit a fraud by exercising a given statutory power.” With this in mind, I question the value of the Hilton decision in giving Betty an automatic right to the full amount of her claim — not that she is prevented from making a claim — just the extent without a better record.
Both divorce proceedings and probate proceedings are equitable in nature. Cases decided prior to the creation of the South Dakota Unified Judicial System in 1975 consistently held that circuit courts had unlimited equity jurisdiction in probate matters, Spitzer v. Spitzer, 84 S.D. 147, 168 N.W.2d 718 (1969); Lass v. Erickson, 74 S.D. 503, 54 N.W.2d 741 (1952), although the assumption of such jurisdiction was to be used only when the (then existing) county court was unable to afford adequate relief.
With the adoption of the Unified Judicial System, S.D. Const, art. V, § 11, and, SDCL 16-2, the county courts were abolished. Now, the original jurisdictional authority “In all matters of probate, guardianship and settlement of estates of deceased persons” rests within the circuit court exclusively. SDCL 16-6-9(5). Moreover, the circuit court has the original authority as to “all actions or proceedings in chancery” and “all actions at law and in equity.” SDCL 16-6-9(1) and (2). Since the probate, estate and divorce functions are now merged into one court, there is no reason why the circuit court cannot apply equitable principles where necessary in order to achieve a proper and just result. I find nothing in SDCL 16-2, 16-6, or the S.D. Const, art. V, § 11 which changes the pre-1975 case law which pronounced that these matters are all equitable in nature and that the rules of equity apply.
Granting relief from an error, whether it be error of law or fact, is within the exclusive jurisdiction of equity and is one of the most familiar functions of equity. Spoon-*282Shacket Co. v. Oakland County, 356 Mich. 151, 97 N.W.2d 25 (1959). An attempt has been made to distinguish the type of error, and, general rules developed that equity will not relieve a party of an error at law, Bakke v. Bakke, 242 Iowa 612, 47 N.W.2d 813 (1951), but will grant relief from an error of fact. Minnesota Mut. Fire & Cas. Co. v. Rudzinski, 347 N.W.2d 848 (Minn.App.1984). See generally, 27 Am.Jur.2d Equity §§ 31 and 37 (1966). These distinctions have been viewed as artificial, unnecessary and unworkable. In the case of Moritz v. Horsman, 305 Mich. 627, 9 N.W.2d 868 (1943), a case involving an attempt to recover money paid through an error of law to a legatee, the court noted that “It is well nigh impossible to reconcile the many cases allowing or denying recovery caused through a mistake of law.” Id. at 869. The court continued:
[WJhere a person is ‘ignorant or mistaken with respect to his own antecedent and existing private legal rights, interests, or estate, and enters into some transaction, the legal scope and operation of which he correctly apprehends and understands, for the purpose of affecting such assumed rights, interests, or estates, equity will grant its relief, defensive or affirmative, treating the mistake as analogous to, if not identical with, a mistake of fact.’
Id.'
This is a unique appeal. But, the uniqueness of Betty’s position and the lack of case authority specifically on point does not prohibit her from seeking redress for the mutual error of the parties at the time the Settlement Agreement was signed. Nor does it prevent this court from fashioning a remedy for Betty. Equity is a system of positive jurisprudence founded upon established principles which can be adapted to new circumstances where a court of law is powerless to give relief. 1 Pomeroy, Equity Jurisprudence 78 (5th Ed.). In Dodd v. Reese, 216 Ind. 449, 462, 24 N.E.2d 995, 999 (1940), relatives of an elderly, senile woman sought to set aside an adoption claiming that the consent to adopt and the whole proceeding had been procured by fraud all which had been orchestrated by Dodd, the elderly woman’s lawyer. Dodd sought to intervene, but the request had been denied. In reversing the Indiana Supreme Court held that a party may seek the aid of equity to “protect a cherished and valuable right, and to prevent a great injury or wrong [suffered]” by a person. Id. The fact there was no precedent for the relief sought was of no great significance, as the court wrote:
[A] court of equity does not depend upon the mere accident of the court having in some previous case, at some distant time, granted relief under similar circumstances. If it were so, equity would not have grown and developed.
Id.
The Iowa Supreme Court has held in similar fashion that
[O]ur equity jurisdiction allows us the necessary reach and flexibility to work out the equities of the parties. Hence, if we find a situation that is contrary to equitable principles and can be redressed within the scope of judicial action, we may devise a remedy to meet it, though no similar relief has ever been given.
Becker v. Central States Health and Life, 431 N.W.2d 354, 356 (1988).
And in Spoon-Shacket Co. v. Oakland County, supra, it was held:
The true function of precedents is that of illustrating principles; they are examples of the manner and extent to which principles have been applied; they are the landmarks by which the court determines the course and direction in which principles have been carried. But with all this guiding, limiting, and restraining efficacy of prior decisions, the Chancellor always has had, and always must have, a certain power and freedom of action, not possessed by the courts of law, of adapting the doctrines which he administers. He can extend those doctrines to new relations, and shape his remedies to new circumstances, if the relations and circumstances come within the principles of equity, where a court of law in analogous cases would be powerless to give any relief. In fact, there is no limit to the *283various forms and kinds of specific remedy which he may grant, adapted to novel conditions of right and obligation, which are constantly arising from the movements of society.
97 N.W.2d at 32.
There was an obvious mutual mistake of law. Betty and Ray both misunderstood the impact of federal law upon Ray’s NSLI policy. If Betty had known the effect of federal law, she naturally would have sought other assets from the divorce estate. If Ray had known the true state of law, he would have changed beneficiaries without writing to the VA. But, while I believe that Betty is entitled to make a claim against the estate, I cannot conclude upon this existing record whether this claim should be allowed in whole or in part only, for the times, parties and circumstances have changed. Equity looks to substance rather than form and seeks to prevent an injustice and arrive at a decision which is consistent with the dictates of the facts at hand. Petty v. Mutual Benefit Life Ins. Co., 235 Iowa 455, 15 N.W.2d 613 (1944). And a person who requests that equity be done must also herself do equity. Beadle County v. Hinckley, 69 S.D. 381, 10 N.W.2d 757 (1943). In this regard here are some factors I believe the trial court should consider on remand:
The value of the net estate should be calculated. A determination should then be made as to how Betty’s claim will affect the estate and those who are to receive thereunder. Will allowance of the whole claim work a hardship upon the widow? Does the widow have special needs which can only be met by giving Betty a reduced claim? Does Bet- • ty have particular needs which should also be addressed? What impact will allowing Betty’s claim have upon other legatees? There is no evidence of record on any of these facts and there is a need for the trial court to hear evidence. And the trial court should understand that the inquiry need not be limited to the above items, but any facts which affect the equities of the parties involved should be reviewed. For in deciding Betty’s claim we do not desire a result which may leave her whole, but cause a harmful situation to arise to other third parties who are in this lawsuit only because of their relationship to Ray. That would not be equitable either.
Finally there is a matter the majority does not mention. Betty and the estate disagree over the timeliness of Betty's claim in addition to the merit of the claim. It was written in the trial court’s decision that “the court need not address the Estate’s assertion that Betty’s claim was not timely filed.” As the trial court did not rule on this issue, no substantial right on the timeliness of the claim has been affected and no appeal lies therefrom in the context of the matter now before this court. SDCL 15-26A-3; Johnson v. Straight’s, Inc., 288 N.W.2d 325, 328 (S.D.1980). It should also be noted that Betty challenged the constitutionality of the creditor’s claim statute, SDCL 30-21-17, in view of Tulsa Prof. Collection Servs. v. Pope, 485 U.S. 478, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988). However, this untidy record fails to disclose whether the attorney general has been notified of this challenge under SDCL 15-6-24(c). Ordinarily, this court will not rule upon such a challenge unless notification is given. Sharp v. Sharp, 422 N.W.2d 443, 446 (S.D.1988).