In re Estate of Livingston ( 1990 )

CAVANAUGH, Judge:

This is an appeal from an order dismissing exceptions to a decree nisi in the Court of Common Pleas, Fayette County. Appellant presents two issues for our review. First, whether the appellant, who is the surviving spouse of the decedent and was the administratrix of decedent’s estate, filed a timely claim against the estate; and second, whether the appellant’s claim is barred by the doctrine of laches. For the reasons that follow, we affirm the order of the lower court.

Ronald G. Livingston, the decedent, died on August 9, 1980, survived by his spouse, Margaret L. Livingston, the appellant herein, and his father, John L. Livingston, the appellee herein. At his death, the decedent was separated from his wife and resided with his father. Letters of Administration were granted to Mrs. Livingston on August 18, 1980.

On or about August 20, 1980, Mrs. Livingston inventoried a safe deposit box in the name of the decedent which contained certificates of deposit, some of which were in the joint names of the decedent and Mrs. Livingston, and some of which were in the decedent’s name alone. It is the certificates which were in the decedent’s name alone at the time of his death which are the subject matter of this appeal.

After she inventoried the safe deposit box, Mrs. Livingston had the certificates registered in the name of the decedent’s estate. Thereafter, the inheritance tax return was prepared, signed and filed by Mrs. Livingston, listing the certificates of deposit as estate assets. On November 6, 1980, not very long after the administration of the estate commenced, Mrs. Livingston paid herself an administratrix fee of $15,108 and paid an attorney fee of $15,108, both of which were made from estate funds. It appears that Mrs. Livingston performed no further duties as administratrix of the estate and she did not file an inventory, an account,- or complete the administration of the estate.

On June 9, 1987, almost seven years after the decedent’s death, Mrs. Livingston filed a claim dated May 22, 1987 against the estate. ' The basis of her claim was that the certificates were entireties property at the time of the decedent’s death; that because she was the surviving tenant, she was entitled to all of the money on deposit in the certificates; and that the certificates were, therefore, not estate assets. On June 15, 1987, decedent’s father, John L. Livingston, petitioned the court to remove Mrs. Livingston as administratrix because of the neglect of her duties and conflict of interest. On June 16, 1987, Mrs. Livingston was removed as personal representative and attorney Daniel L. Webster was appointed as administrator d.b.n. Attorney Webster filed an inventory, first and final account, and petition for distribution on January 7, 1988. Mr. Webster’s inventory treated the certificates as property owned solely by the decedent at the time of his death. The proposed distribution was $20,000 plus half of the residue to Mrs. Livingston and half of the residue to the decedent’s father.

Mrs. Livingston filed objections to the account and petition for distribution based on her claim that the certificates were entireties property.

The lower court, in denying Mrs. Livingston’s objections relied on Estate of Cohen, 469 Pa. 29, 364 A.2d 888 (1976). In Cohen, supra, the executrix alleged that the orphans court erred in disallowing her claim against the estate because the executrix failed to give notice of her claim against the estate until more than six years after loans, which were the bases of executrix’s claim, had been made. The supreme court affirmed, holding that the executrix did not toll the six-year statute of limitations.

Appellant did nothing under the above section to toll the statute of limitations. Appellant argues that since she was the personal representative of the estate, she was required to do nothing since she would have been giving notice to herself, a fruitless act. We do not agree with appellant’s position. Section 3384 was designed to give all persons who have an interest in the estate notice of possible outstanding claims. While the letter of the act does not cover the situation in the instant case, the spirit of the law required that appellant give notice of her claim and her failure to do so bars her claim. See Kuhlman’s Estate. Rehfuss’s Appeal, 180 Pa. 109, 36 A. 566 (1897).

Id. 469 Pa. at 34, 364 A.2d at 891.

Thus, our Supreme Court has clearly mandated that personal representatives of estates, who also have claims against the estate, must give notice consistent with the provisions set forth in 20 Pa.C.S.A. § 3384 in order to toll the applicable statute of. limitations.¹

Mrs. Livingston clearly was aware that the certificates were the property of the estate. She registered the certificates in the name of the estate and paid the inheritance tax on the certificates in her capacity as administratrix. At no time did Mrs. Livingston claim the certificates to be entireties property until her claim against the estate was filed almost seven years after the filing of the tax returns. Furthermore, the record indicates that in Mrs. Livingston’s petition to file a first and final account and to continue as administratrix, filed in June of 1987 after decedent’s father filed petitions to remove her as administratrix, she again listed the certificates as estate property. The argument asserted by appellant on appeal is totally inconsistent with her position during the time she acted as administratrix of the estate. Given the position stated by our supreme court in Estate of Cohen, supra, it is simply too late for Mrs. Livingston to now assert a new claim that the certificates are entireties property.

We agree with the trial court that in the circumstances of this case the proper statute of limitations to be applied is 42 Pa.C.S.A. § 5527 which provides for a six-yeár period.² To decide if the claim filed on June 9, 1987 was timely filed, we must determine when the statute of limitations began to run. Various starting dates have been proposed by the parties, the date of death (August 8, 1980), the date letters of administration were granted to the administratrix (August 20, 1980), the date the safety deposit boxes were inventoried and the certificates of deposit discovered (August 20, 1980), and the date the inheritance tax return was filed (November 6, 1980). No matter which of these events commenced the running of the statute, the claim filed June 9, 1987 is beyond the six-year limitation and is barred.

Counsel for Mrs. Livingston mailed a letter dated February 18, 1986 to the attorney for the estate, which Mrs. Livingston now alleges tolled the statute. However, that correspondence does not state a claim against the estate. It is addressed to counsel and suggests that alleged errors made by counsel in the estate administration process had given Mrs. Livingston in her capacity as “heir and surviving spouse” a potential claim against counsel. That letter concludes, “We are not anxious to make a claim against you for this amount, so we are proposing the above resolution.” In order to toll the statute of limitations, an individual with a claim against an estate must do one of the acts specified in 20 Pa.C.S.A. § 3384 entitled Notice of Claim. Mrs. Livingston, as heir and claimant, did not do any of the acts specified in that section. The correspondence of February 18, 1986 to the attorney of record for the estate was ineffective as it failed to state a claim against the estate. Therefore, Mrs. Livingston’s failure to do any of the enumerated acts to toll the statute bars her claim.

Furthermore, Mrs. Livingston’s claim is barred by the doctrine of laches. The application of laches depends on whether the complaining party is guilty of a want of due diligence in failing to assert his rights, which works to another’s prejudice. In re Estate of Dorothy M. Doerr, 388 Pa.Super. 474, 565 A.2d 1207 (filed Oct. 31, 1989); In re Estate of Marushak, 488 Pa. 607, 413 A.2d 649 (1980); Leedom v. Thomas, 473 Pa. 193, 373 A.2d 1329 (1977). Laches requires not only. a passage of time, but also a resultant prejudice to the party asserting the doctrine. In re Estate of Dorothy M. Doerr, Id.; Young v. Hall, 421 Pa. 214, 218 A.2d 781 citing (1966), Miller v. Hawkins, 416 Pa. 180, 205 A.2d 429 (1964). Clearly laches is applicable because during the almost seven years that Mrs. Livingston was administratrix, the decedent’s father was denied use of his share of the estate. Finally, a review of the record finds no reasonable basis why Mrs. Livingston did not assert her claim at an earlier date.

We add the following in reply to the Dissenting Opinion of Brosky, J.: The dissent states at, page 215: “The majority’s focus on what they believe to be an inordinate delay in the filing of an inventory seems to me nothing more than a smoke screen ... Appellant is not an attorney and could hardly be expected to understand the nature of her interest in the certificates and could easily have been under certain legal misapprehensions regarding them.”

The appellant was represented by counsel from the outset of the estate’s administration and at the very beginning of the administration, she paid herself, from estate assets, a substantial administrator’s commission of $15,108.00 and a counsel fee of the same amount to her lawyer.

Notwithstanding the delay of many years in filing an inventory by appellant, she nevertheless prepared an inventory in or about June, 1987, when she was still attempting to continue as administratrix, that listed the certificates in question as estate property. It appears therefore that the appellant herself treated the certificates of deposit in question for some seven years as assets of the decedent.

The appellant filed an inheritance tax return setting forth that the certificates were property of the decedent and subject to inheritance taxes. The Inheritance and Estate Tax Act, 72 Pa.C.S. § 1736(a) provides in pertinent part:

(a) Persons responsible for returns.—

The following persons shall make a return:

(1) The personal representative of the estate of the decedent as to property of the decedent administered by him. (Emphasis added.)

Inheritance taxes were paid by the appellant on assets belonging to the decedent, including the certificates which she now claims. A claimant, as appellant, may not administer an estate for many years, pay herself an administrator’s commission and substantial lawyer’s fees, prepare an inheritance tax return and pay taxes based on assets as being decedent’s property, and-then after she is removed from serving as a personal representative for conflict of interest, and after the statute of limitations has run, take a totally inconsistent position that the assets didn’t belong to the estate after all, but were in reality, hers. The law properly does not countenance such activity.

We do not understand the reasoning of the dissent in the following statements at pages 215 & 216:

Furthermore, as an adminitratrix of the estate it would not necessarily be inconsistent for her, in her administrative capacity, to list the certificates as estate assets and then turn around and claim them, acting in her own self interests, as a survivor. In fact, given that the certificates were titled in decedent’s name alone at the time of his death, this may have been the most legally expedient approach to take in keeping with her fidicuary duty as executrix of the estate. (Emphasis added).

It seems to us that the appellant would clearly violate her fiduciary duty in listing certificates of deposit as assets in the inheritance tax return which were not assets of the decedent’s estate, and to pay inheritance taxes from the estate which would not have been due, if the appellant’s contention is correct.

Finally, the dissenting opinion states at slip opinion, page 209:

However, the majority appears to have little difficulty in concluding that the term “claim” encompasses a contention that personal property has been wrongfully included in an inventory and appraisement as property of the decedent.

The appellant contends that the certificates of deposit were “wrongfully included” in the inventory and appraisal and yet, the inheritance tax return she filed and the inventory she prepared and proposed filing, included these same assets.³

We affirm the order of the court below.

BROSKY, J., files dissenting opinion.

1 . 20 Pa.C.S.A. § 3384 provides:

"(a) Written notice. — Written notice of any claim against a decedent given to the personal representative or his attorney of record before the claim is barred shall toll the statute of limitations.

"(b) Acts equivalent to written notice. — Any of the following acts by a claimant shall be equivalent to the giving of written notice of a claim to the personal representative:

“(1) Instituting proceedings to compel the filing of an account.

“(2) Bringing an action against the personal representative in any court having jurisdiction of the claim and having the writ or pleading duly served on the personal representative.

“(3) Substituting the personal representative as a defendant in an action pending against the decedent.

"(4) Receiving a written acknowledgment by the personal representative or his attorney of record of the existence of the claim."

2 . 42 Pa.C.S.A. § 5527 provides in pertinent part:

§ 5527. Six year limitation

The following actions and proceedings must be commenced within six years:

(6) Any civil action or proceeding which is neither subject to another limitation specified in th is subchapter nor excluded from the application of a period of limitation by section 5531 (relating to no limitation).

See also Clemmens v. Security Peoples Trust Co., 24 D & C 3d (1981).

3 . Appellant’s proposed account shows that on November 16, 1980, Pennsylvania Inheritance taxes were paid in the amount of $13,883.82 and in 1981 the balance of inheritance taxes was paid in the amount of $612.60. If the certificates in question belonged to the appellant, rather than the decedent, most of the inheritance taxes would not have been due. Appellant’s proposed inventory listed the entire estate as valued at $163,844.06 which included $141,800.00 of certificates which she now contends belong to her. The estate would have had a gross value of only $22,000.00 if appellant's contention is correct, and counsel fee and administrator’s commission amounted to over $30,-000.00.