Matter of Conservatorship of Richar ( 1995 )

NO. 95-103
IN THE SUPREMECOURT OF THE STATE OF MONTANA
1995
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Robert S. Keller, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Keith Tokerud, Jon S. McCarty; Scott & Tokerud,
Great Falls, Montana
For Respondent:
Ward E. Taleff; Alexander, Baucus, Taleff & Paul,
Great Falls, Montana
J. Daniel Hoven; Browning, Kaleczyc, Berry & Haven,
Helena, Montana
Submitted on Briefs: July 6, 1995
Decided: fiovember 2, 1995
Filed:
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Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
Appellant Mazie Ross appeals from an order of the Eight
Judicial District Court, Cascade County, denying Ross' requested
relief regarding the conservatorship of Mazie Richardson, deceased,
and denying Ross' request for attorney's fees. We affirm.
Backqround
In October 1981, respondent Gene B. Daly was, by court order,
appointed conservator of Mazie Richardson's estate. Richardson was
an incapacitated and protected person. Ross is her daughter and
only surviving child. Pursuant to § 72-S-424, MCA, and the court-
ordered conservatorship appointment, Daly was required to file an
inventory of the estate and annual accounting of estate
administration. From its beginning, this conservatorship was
subject to disputes between Daly and Ross and her sons.
After a November 1984 hearing, the District Court appointed
respondent Jack P. Stevens, P.C., C.P.A., as co-conservator to
serve with equal and independent authority with Daly. The court
further ordered that Stevens file an estate inventory within 90
days, account for the period between October 1981 and November
1984, and account annually for the estate‘s administration. Mazie
Richardson died in September 1991 and Ross was appointed personal
representative of her estate.
In December 1991, Ross petitioned the court to order the co-
conservators to file an estate inventory and accounting. The court
ordered that Daly file an inventory within two weeks and that both
conservators file an account of estate administration within five
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weeks. These tasks were not completed. Ross alleges that Daly was
unwilling, while Daly alleges that health problems prohibited him
from complying.
As a result of Daly's alleged inaction, Ross requested a
conference with the District Court. In June 1992, Ross and her
counsel held the conference with Judge Joel Roth; Judge Roth
subsequently held Daly in contempt and awarded Ross her attorney's
fees and costs in an amount to be determined at a later hearing.
Daly was not notified of this conference. In July 1992, Daly filed
an accounting of the conservatorship estate, prepared by a private
accounting firm, with the District Court. Ross objected to this
accounting and requested a hearing to clarify Daly's accounting and
to determine her attorney's fees and costs from the June contempt
proceeding. Daly did not appear at the hearing scheduled to
determine these issues, held in December 1992. Only Ross presented
testimony and the court took the matter under advisement.
In January 1993, Daly requested the court reopen the matter as
well as continue the hearing on Ross' objections and request for
attorney's fees and costs. On the April 1993 date set for the
rehearing, Judge Roth recused himself. The matter was transferred
to Judge Robert S. Keller. In November 1994, Judge Keller
conducted a re-hearing on all issues and on December 31, 1994,
issued an order denying Ross' requested relief. This appeal
followed.
Issues
We restate Ross' issues as follows:
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1. Did the District Court err by ruling that Daly and Stevens are
not liable for misfeasance or for the alleged insufficiencies
in the accounting of the estate administration?
2. Did the District Court err by allowing the co-conservators
their fees?
3. Did the District Court err by disallowing Ross her attorney's
fees?
Standard of Review
We use a three-step test to determine whether the findings are
clearly erroneous. First, if a court's findings are not supported
by substantial credible evidence, they are clearly erroneous.
Second, if a court has misapprehended the effect of the evidence,
its findings are clearly erroneous. Third, if a review of the
record leaves the reviewing court with the definite and firm
conviction that a mistake has been committed, the lower court's
findings are clearly erroneous. Interstate Production Credit Ass'n
v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. We do
not reweigh the evidence before the district court, evaluate
witness credibility, or substitute our judgment for that of the
district court. See Detienne Associates Ltd. v. Montana Rail Link,
Inc. (1994) I 264 Mont. 16, 22, 869 P.2d 258, 262. "We review
conclusions of law to determine whether the district court's
interpretation of the law was correct." In re Marriage of Barnard
(1994), 264 Mont. 103, 106, 870 P.2d 91, 93.
1. Did the District Court err by ruling that Daly and Stevens are
not liable for misfeasance or for the alleged insufficiencies in
the accounting of the estate administration?
Claims aaainst Daly
The District Court described this situation as a family feud,
a characterization that we cannot challenge. At the heart of Ross'
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arguments is Daly's alleged misfeasance and deficient accounting.
Because of health problems, Daly was unable to assist with the
District Court's December 1994 hearing. The District Court found
that the maximum disputed amount is $38,000, which includes $22,000
of conservator fees paid to Daly ($10,000 is identified as
conservatorship fees and $12,000 is identified as "possible"
conservatorship fees).
The District Court found that:
any amounts of money not directly traceable to the care
of Mazie Richardson are more than offset by convincing
evidence illustrating that Mr. Daly and his wife Ruth
utilized their personal funds to set up an income-
producing account with Waddell and Reed [an investment
firm]. The only credible evidence submitted to the Court
establishes that Mr. Daly and his wife set up an income
producing account by utilizing $24,000 of their own
personal funds.
This account provided Richardson with $150-200 per month from the
time of its inception in 1986 until her death in 1991. The
District Court heard evidence that the redemption value of the
Waddell and Reed account was $27,315 and it paid dividends of
$13,094 over the life of the account. The District Court found
that "a total of over $40,000 of principal and dividends generated
from the personal funds of Mr. Daly and his wife went directly to
the care of Mazie Richardson and upon her death to her estate."
The court concluded that the 1992 inventory was as complete
and accurate as possible. It appears that Daly did not cooperate
with all court orders and that Ross and her sons did not fully
cooperate with Daly. The District Court concluded that Daly was
not able to prepare an inventory of the estate's assets but Daly
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did know what he had received and spent and he therefore could have
made an annual accounting. The District Court balanced this
deficiency against the fact that Daly provided for Richardson's
best interests and Daly substantially augmented the assets of the
conservatorship.
We now apply the three-part test from De&ye. The District
Court's findings are supported by substantial evidence. Further,
the District Court did not misapprehend the evidence in the record.
Finally, after a review of the District Court's order, we have a
firm conviction that a mistake was not committed. The record
supports that the District Court's findings were not clearly
erroneous. We will not substitute our judgment for that of the
District Court.
Finally, we affirm the District Court's conclusion that in
light of Daly's present health concerns no useful purpose can be
served in examining questions of contempt or sanctions.
Claims aqainst Stevens
The District Court found that Stevens did not receive any fees
for his conservatorship duties and no evidence was presented to
contradict the finding that the only money paid to Stevens was for
out-of-pocket expenses. The District Court also found that Ross'
conduct and prior pleadings support the finding that Stevens was
not jointly liable for the acts of Daly. The record supports that
Stevens properly collected and accounted to the estate for all
funds and assets collected by him or in his possession. Finally,
the District Court held that Stevens did not consent to Daly's
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failure to file an inventory, nor did Stevens negligently allow or
enable Daly to commit a wrongful act. Our application of DeSaye is
the same for Stevens as it was for Daly. The record supports that
the District Court's findings were not clearly erroneous. We will
not substitute our judgment for that of the District Court.
2. Did the District Court err by allowing the co-conservators
their fees?
The District Court considered that Daly has no memory of the
proceedings and no personal assets. The District Court applied the
doctrine of in pari delict0 to conclude that the parties should be
left the way they were found. The District Court noted that to
disallow Daly his fees would require him to pay Ross $8,000. The
District Court, as a court of equity, concluded that such a payment
would be "fundamentally wrong." Particularly in light of Daly's
care for Richardson, we agree.
As we held in issue one, the District Court did not err in its
findings regarding the co-conservators' conduct and liability.
Further, the District Court correctly found that Richardson was
well taken care of and her estate was augmented by Daly's conduct.
It would be unequitable and manifestly unjust to disallow the co-
conservators' fees when these facts are combined with the
contentious conduct of Ross and her sons and the apparent ongoing
family dispute regarding the conservatorship.
3. Did the District Court err by disallowing Ross her attorney's
fees?
The District Court properly considered that attorney's fees
are awarded where authorized by statute or contract. This case
does not fit into either of those categories and there is no
equitable basis for awarding fees in this case. The District Court
properly interpreted the law regarding Ross' attorney's fees.
Ross' arguments to the contrary are not supported by the record or
law.
Affirmed.
Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1988 Internal Operating Rules, this decision shall not be cited as
precedent and shall be published by its filing as a public document
with the Clerk of the Supreme Court and by a report of its result
to Montana Law Week, State Reporter, and West Publishing Company.
We concur:
Justices
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Justice Terry N. Trieweiler specially concurring in part and
dissenting in part.
I concur with those parts of the majority opinion which affirm
the District Court's judgment in favor of Jack G. Stevens and deny
attorney fees to the personal representative of Mazie Richardson's
estate.
I dissent from that part of the majority opinion which allows
the respondent, Gene B. Daly, to recover fees for his services as
conservator of Mazie Richardson's estate.
It is not necessary to conclude that any of the District
Court's findings of fact are clearly erroneous in order to conclude
that Daly was not entitled to a fee for his services. A
conservator who flagrantly violates his obligations to the estate
that he manages is not entitled to a fee. The following findings
of the District Court clearly establish that Daly flagrantly
violated his duties:
3. [Gene B.] Daly, of Helena, Montana, was
appointed as Conservator of the Estate on October 20,
1981. Pursuant to § 72-S-424, M.C.A., and Court Order,
Daly was required to file an inventory of the Estate
within 90 days. In addition, pursuant to § 72-5-438,
M.C.A., and Order of the Court, Daly was required to
account annually for his administration of the Estate.
. . .
5. Jack Stevens was appointed as Co-conservator of
the Estate of Mazie Richardson on November 14, 1984.
. . . .
11. Following the auction of the personal property,
the sale of the residence and recovery of the stock for
the Estate, Stevens completed each item on the detailed
memorandum he had advised the parties he would undertake
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as Co-conservator. The only exception was the completion
of the final inventory, a task he could not complete
without the assistance of Daly. Stevens did prepare
reconciliation of the Estate's bank account and a summary
of the Estate in 1984, but thereafter was unable to
obtain the cooperation of Mr. Daly or information
necessary for Stevens himself to complete an inventory or
accounting.
. . . .
13. Between approximately 1985 and 1991, Stevens
attempted numerous times to obtain from Daly a final
accounting and inventory. Stevens prepared one income
tax return for the Estate, but Daly indicated he would be
responsible for filing all others. Stevens' efforts to
obtain the inventory and accounting information or
documentation and to prevail on Daly to complete his
duties included letters to Daly and telephone or personal
conversations with Joseph Marra, counsel for the Estate
and a long-time friend of Daly. In each instance, Marra
prevailed on Stevens not to resign or take other steps,
indicating that he would be able to convince Daly to
provide an accounting. . . .
. . . .
16. Shortly after Mazie Richardson passed away Mr.
Marra finally determined that he would not be successful
in obtaining a final inventory from Daly. He withdrew as
counsel. Upon Mazie Richardson's death Mazie R. Ross was
appointed personal representative of her estate. Mr.
Stevens was in the process of retaining counsel to seek
his release as Co-conservator when the present
proceedings were initiated.
17. On December 16, 1991 [more than ten years after
Daly was first appointed conservator], Mazie R. Ross
filed a Petition in this matter seeking an order against
the Co-conservators directing them to file an inventory
and account for their administration of the estate. She
also sought the discharge of the Co-conservators and
turn-over of the residue of the estate to her as personal
representative.
. . .
25. During the time period of 1984, following Mr.
Stevens' appointment, through 1991, Mr. Daly failed to
file an annual accounting. However, on July 24, 1992,
Mr. Daly, in response to orders of the Court, filed a
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final accounting, prepared by Anderson Zurmuehlen Co.
The final accounting is representative of the activities
undertaken by Mr. Daly on behalf of Mazie Richardson for
the preceding ten years. The final accounting
demonstrates that the maioritv of the disbursements from
the conservatorship account can be directly attributable
to the care of Mazie Richardson.
26. The final accounting shows that there is
approximately $38,000 which cannot be directly
attributable to the care of Mazie Richardson. Of that
amount, $10,000 is identified as conservatorship fees,
and another $12,000 is identified as "possible"
conservatorship fees. Unfortunately, Mr. Daly is unable
to assist the Court in any further delineation of the
$38,000 and whether it was attributable directly to the
care of Mazie Richardson because of his present physical
and mental condition, which this Court recognizes.
. . .
28. After her appointment as personal
representative, Mazie Ross petitioned the Court on
December 16, 1991, to order the co-conservators to file
an inventory and accounting. The Court issued its Order
on January 16, 1992, giving conservator Daly until
January 31, 1992, to file an inventory and both
conservators until February 21, 1992, to file an account
of the administration of the Estate.
29. Stevens filed a partial accounting which
covered only the disposition of the ward's personal
property and sale of her home in 1986. It did not list
the Estate's income and expenses. Nor did it list the
Estate's assets on hand and available for distribution to
the ward's probate Estate.
30. Daly did not comply with the Court's Order to
file an inventory and accounting by the dates set forth
therein.
(Emphasis added.)
As conservator of Mazie Richardson's estate, Gene B. Daly was
required to file an inventory of her assets, and file it with the
District Court within 90 days from the date of his appointment. He
was also obligated to keep records of his administration of her
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estate and provide it to any interested person upon that person's
request. Section 72-S-424, MCA. Additionally, Daly was required
bY law to account to the court annually regarding his
administration of the Richardson estate. Section 72-S-430, MCA.
For over ten years while he served as conservator of Richardson's
estate, he did neither. Even after being ordered repeatedly to do
so by the District Court, he did neither. Finally, after being
held in contempt of court, he filed an inventory of assets which
the District Court liberally found accounted for a "majority" of
Richardson's assets, but which disclosed that $10,000 had been
spent on conservatorship fees, and that $28,000 of expenses cannot
be accounted for.
While the District Court found that Daly's administration of
the Richardson conservatorship was impeded by interference from
Mazie Ross and her sons, the fact is that the last documented
interference by Mazie Ross and her sons occurred prior to
February 18, 1983. On that date, the District Court granted Daly's
request for an injunction and ordered Ross and her sons to vacate
Richardson's house, pay rent for the time that one of the sons had
resided there, and return to the estate items of personal property
which had been removed. Whatever Richardson and her sons did from
1981 until 1983, does not account for Daly's repeated dereliction
of responsibility and frustration of Stevens's efforts from 1983
until 1992.
The District Court excused Daly's inability to account for
approximately $28,000 of conservatorship funds and the payment to
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himself of $10,000 as a conservator fee based on the assumption
that the sum of $24,000 which was placed in a Waddell and Reed
account and used for Richardson's benefit came from Daly and his
wife. However, the source of those funds was anything but clear.
Furthermore, the fact that Daly and his wife may have at some time
or other made a gift to Mrs. Daly's mother does not justify the
award of a conservatorship fee to a conservator who has totally
neglected his responsibilities under the law.
This Court previously considered the propriety of a
conservator fee under similar circumstances in In re AllardGuardianship
(1914)) 49 Mont. 219, 141 P. 661. In that case, the district court
also interpreted the propriety of fees to a conservator who, for a
period of thirteen years, had failed to account for the estate's
assets or provide an inventory of those assets. The law at that
time provided for reasonable compensation to a conservator, just as
§ 72-5-432, MCA, provides now. However, this Court held that the
district court correctly denied attorney fees in that case for the
following reasons:
While a mere technical breach of duty which does not
result in injury to the ward's estate will not ordinarily
justify a court in withholding compensation altogether,
a flagrant violation of the duties of the trust will do
so.
During the entire term of this guardianship the
statute in force required every guardian to return to the
court an inventory of the estate of his ward within three
months after his appointment, and annually thereafter
(Code Civ. Proc., sec. 2985; Rev. Codes, sec. 7774), and,
upon the expiration of a year from the time of his
appointment, to render an account to the court (Code Civ.
Proc., sec. 2986; Rev. Codes, sec. 7775). Not only did
the guardian absolutely ignore these provisions of law,
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but the district court was equally remiss, for no
inventory was ever made, and from the date of appointment
in March, 1899, to December, 1912--a period of more than
thirteen years--no report was ever required by the court
or rendered by the guardian. It is not any answer to say
that the guardian managed the estate prudently and
accounted for every cent belonging to it. The purpose of
these statutory provisions is to furnish a means by which
the guardian's management may be checked and his accounts
verified. In the present instance the trial court was
practically limited to the guardian's own testimony as to
what property of this ward came into his possession, and
what disposition he made of it, without any means of
determining the truth of the testimony. These statutes
were enacted to be obeyed, and the conduct of the
guardian in ignoring them altogether is inexcusable, and
all the more so because he had the advice and assistance
of able counsel. In disallowing the guardian's claim for
compensation, the trial court doubtless reached the
conclusion that, by reason of his mismanagement of the
estate, he had forfeited all claim to compensation.
InreAllard, 141 P. at 664 (citations omitted).
Likewise, in this case, whether Daly actually managed Mazie
Richardson's estate in her best interest is not the point. No one
will ever know. There is no record of what was done with her
assets for a period of over ten years. By the time Daly was
finally forced to account for her assets, he was no longer capable
of recalling what he had done with them. For all practical
purposes, no one knows the full extent of the assets that he
managed or what was done with all of her property. The statutes
regarding an inventory and an annual accounting were designed to
prevent the kind of uncertainty that now exists. Daly not only
ignored those statutes, he ignored repeated efforts by his
co-conservator to gather the necessary information to comply with
them; he ignored previous requests by the estate's attorney to
comply with them; and most seriously, he ignored repeated court
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orders that he comply with them. When he finally did make an
effort to comply with them, he was unable to completely do so due
to the passage of time, his failed memory, and the impossibility of
reconstructing what had happened during the previous ten years.
According to our prior decision in InreAllard, a flagrant violation
of a conservator's duties is a sufficient basis for denying that
conservator a fee for his services. Under the undisputed facts in
this case, I conclude that Daly flagrantly violated his duties as
conservator and that the District Court abused its discretion when
it allowed him to retain fees for acting as a conservator on
"equitable" grounds.
As a practical matter, I realize that Mazie Ross may be no
better off had the District Court ordered Daly to return the fees
that he had received. However, as a matter of precedent and
principle, I also believe it is inappropriate for the courts to
sanction Daly's conduct in this case.
For these reasons, I dissent from the majority opinion.
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Justice James C. Nelson specially concurring.
I concur in our opinion to affirm the District Court's
judgment in favor of Jack G. Stevens and against Mazie Richardson's
estate.
I also agree in substance with Justice Trieweiler's dissent as
regards our opinion in favor of Gene B. Daly to recover fees for
his services as conservator. Notwithstanding, I have signed the
majority opinion because I am convinced that, given Daly's present
circumstances--he is apparently under a conservatorship and is
penniless--there is little, aside from moral victory, that will be
accomplished in sending this case back for still further
litigation. That which starts out badly usually ends worse. This
case proves the rule.
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