In Re the Estate of Long

No. 8 6 - 4 0 8
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
IN THE MATTER OF THE ESTATE OF
LOTTIE I?. LONG, Deceased.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Ravalli,
The Honorable James R . Wheelis, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Sherwood & Englund; Karl J. Englund, Missoula,
Montana
Rossbach & Whiston; William A. Rossbach, Missoula,
Montana
For Respondent:
Snavely & Phillips; Donald V. Snavely, Missoula,
Montana
Larry Persson, Hamilton, Montana
Submitted on Briefs: Dec. 4, 1 9 8 6
Decided: February 26, 1987
Filed: FEB 2 6 1987
Clerk
Mr. Justice William E. Hunt, Sr., delivered the Opini-on of
the Court.
This is an appeal from the Fourth Judicial District
Court, Ravalli County, by appellant Shriners Hospital for
Crippled Children from a denial of their petition for
appointment as Special Administrator for the Estate of Lottie
H. Long.
We affirm.
The issue presented on appeal is whether the District
Court erred in denying appellant's petition to be appointed
special administrator of the Estate of Lottie H. Long.
In March 28, 1984, appellant and Marcia Peters, the
testatrix's granddaughter, filed a complaint in District.
Court against respondents Emil and Lenora Skroch alleginq
that the Skrochs unduly influenced the testatrix to sign a
document which created a joint tenancy with rights of
survivorship between the testatrix and the Skrochs in certain
bank accounts owned by the testatrix totaling $190,000.
Appellant was named as the residual beneficiary in the
testatrix's will. In their complaint, appellant and Peters
alleged the Skrochs abused their confidential relationship by
unduly influencing the testatrix into signing the joint
tenancy documents.
Respondents Emil and I~enora Skroch were long time
friends of the testatrix. Emil had been a friend and
confidant for almost 40 years. When he first moved to
Montana, Emil worked on the Long ranch for approximately 9
years.
The previous 15 years before the testatrix's death, Emil
assisted the Long's in the financial management of their
affairs and advised them on their investments. When the
testatrix's husband died, Emil became more involved in the
testatrix's financial affairs and was consulted regarding
investments in stocks, bonds and mutual funds. He also
assisted by driving her on errands, writing checks for her,
as well as other daily business.
In June, 1983, she appointed Emil her attorney-in-fact
granting him authority to handle all transactions involving
her bank accounts together with her real and personal
property. In August, 1983, he witnessed her Last Will and
Testament. Around Christmas, 1983, she asked Emil Skroch to
transfer the certificates of deposit at issue here, from her
name alone to her and Emil and Lenora Skroch in joint
tenancy. Sometime in January, 1984, the documents were
prepared and signed. The document was signed by the
testatrix in the nursing home where she had lived for
sometime. Nursing home employee Joanne Griffith signed as a
witness.
As of the date she created the joint estate with Mr. and
Mrs. Skroch, the testatrix's estate exceeded $726,000. In
her will, she noted that she had made provisions for her two
granddaughters and her great-granddaughter outside of her
will and for that reason she made only a small bequest to
each of them in her will. She further noted that she had
also provided for certain of her friends outside of her will
for some type of savings account, or certificate of deposit
in my name, and that of the other individual in joint tenancy
with the right of survivorship. She named appellant the
residual beneficiary.
Successive suits were filed by the appellant. At the
time the first action was filed by appellant and Ms. Peters
the testatrix was still alive. Various depositions, motions
and discovery were instituted. On July 26, 1985 Marcia
Peters decided after a written request from her grandmother,
dated seven months after the controversial transfer, to
stipulate to the dismissal of her claim with prejudice.
Summary judgment was granted on the Skroch's motion to
dismiss. The lower court found that appellant, as expectant
heir, lacked standing to maintain an action to revoke a
lifetime transfer. It held that since a conservator had been
appointed for the protection of the testatrix's estate, the
conservator was the proper party to bring any action for
undue influence unless allegations of deception could be made
between the conservator and the Skrochs. The action was
dismissed without prejudice.
Appellant amended the complaint to allege deception
between the Skrochs and the conservator, Larry Persson. The
Skrochs answered the complaint. Prior to the status
conference the testatrix died. In her will, the testatrix
had appointed Eileen Wakeham Richardson and A. Don Evans as
personal representatives. At the status conference on the
amended complaint, the District Court found that appellant's
remedy as heir was first to request the personal
representatives to bring the claim and, if they refused to
act, appellant could petition the Probate Court for their
removal as personal representatives.
On November 27, 1985, the testatrix's will was admitted.
to formal probate. Appellant sent its discovery results to
the attorney for the personal representatives, Larry Persson,
to inform him of the controversy. The personal
representatives reviewed the depositions and exhibits and
concluded that the claim was not an asset of the estate of
Lottie H. Long and informed appellant that there was no basis
for pursuing the claim.
Appellant then filed a petition for appointment as
special administrator of testatrix's estate pursuant to $
72-3-701, et seq., MCA. The District Court considered that
petition and concluded that the decision of the co-personal
representatives not to litigate this claim did not constitute
a breach of their obligation under Montana Probate Code and
therefore appointment of a special administrator was not
necessary.
Appellant appeals the denial of the petition for
appointment and the denial of its' Motion to Reconsider. It
contends that the testatrix was not competent the day she
signed the transfer document and that she acted under undue
influence. It argues the existence of this information
supports an action for undue influence against the Skrochs
who sought to pursuade the testatrix to sign away property
that the personal representatives should have sought to
include in the assets of the estate. Appellant alleges the
co-personal representatives had a duty to marshal all assets
including any claims against the estate and when they did not
do so, they breached this fiduciary duty.
Appellant also contends that a special administrator
should be appointed whenever the appointment is necessary to
preserve the estate or to secure proper administration. It
contends this includes but does not limit appointment to
circumstances in which there is necessarily a conflict of
interest.
Appellant further argues that since the personal
representatives have refused to prosecute a claim against
Emil and Lenora Skroch they therefore are not securing the
proper administration of the Estate of Lottie Long. It
claims the first step in such proper administration is taking
possession and control of the estate assets under § 72-3-606,
MCA, and this may involve litigation by the personal
representatives. A right to bring an action is property of
the estate under S 72-1-103(34), MCA, and it alleges that any
claim against the Skrochs for undue influence is property of
the estate.
In addition, appellant claims the personal
representatives wrongly abandoned this claim and by so doing
violated their responsibilities as personal representatives.
Personal representatives may only abandon property with the
consent of heirs, devisees or the court and allegedly no such
permission was requested or given here.
Finally appellant argues it is the proper party to be
appointed special adminstrator and it is qualified as a.n
"interested person" under 5 72-1-103(21), MCA, because it is
the residual heir of the Long estate.
Respondents, on the other hand, claim the District Court
correctly denied the request for appointment as special
administrator in both the conservatorship and probate
proceedings. They argue the District Court correctly found in
the conservatorship proceeding that appellant, as an heir,
does not have standing to bring suit on behalf of an
incapacitated person where the duly appointed conservator of
that person's estate has determined that the subject claim is
without merit. In the probate proceeding of the testatrix's
estate the co-personal representative's decision not to
pursue the meritless claim is alleged to be final and
conclusive in the absence a conflict of interest, collusion
or other legal impediment to their making an unbiased
decision. Thus they claim no appointment of a special
administrator was necessary.
Respondents contend that this appeal places before this
Court the scope of the discretion left to personal
representatives in administering an estate when litigation
against third parties is contemplated.
The Skrochs maintain there is no evidence that the
personal representatives were impeded by conflict of
interest, colluded with the Skrochs, or acted under any legal
impediment when they decided not to pursue the claim. They
contend appellant has no right to second guess the personal
representatives when they are deciding whether to pursue a
lawsuit on behalf of the estate. A mere difference of
opinion between an heir and the personal representatives as
to the validity of the claim, they argue, is not grounds for
appointment of this residual heir as special administrator.
They note that the co-personal representatives knew
Lottie Long well for many years. Both of the representatives
saw her frequently. Eileen Richardson evidently visited
Lottie Long almost on a daily basis up to her death and Don
Evans, the other co-personal representative, consulted
frequently with her on financial matters for many years up
to the time of her death. The Skrochs claim the co-personal
representatives knew the testatrix's desires and for that
reason refused to pursue a claim of undue influence. They
also note that the testatrix's physical condition improved in
the spring of 1984 and seven months after the controversial
transfer documents were executed she wrote a letter urging
her granddaughter, Marcia Peters, to drop the lawsuit
challenging the transfer. Marcia did so with prejudice. The
Skrochs contend this indicates that the testatrix herself
confirmed her intention to put the Skrochs names as joint
tenants onto the subject bank accounts.
The respondents argue a finding of good cause is
necessary under 72-3-701, MCA, before a special
administrator may be appointed and an heir has no standing to
sue, absent demonstration of collusion, conflict of interest
or other legal impediment to unbiased action by the personal
representative.
The decision of when a special administrator should be
appointed is addressed in S 72-3-701, MCA, as follows:
A special administrator may be appointed: (1)
informally by the clerk on the application of any
interested person when necessary to protect the
estate of a decedent prior to the appointment of a
general personal representative or if a prior
appointment has been terminated as provided in
72-3-522;
(2) in a formal proceeding by order of the court
on the petition of any interested person and
finding, after notice and hearing, that appointment
is necessary to preserve the estate or to secure
its proper administration, including its
administration in circumstances where a general
personal representative cannot or should not act.
If it appears to the court that an emergency
exists, appointment may be ordered without notice.
Because the Long estate is being formally probated,
subsection (2) applies and a special administrator may be
appointed only if that is necessary to preserve the estate or
secure its proper administration. We have held that a
personal representative's conflict of interest can be such a
"circumstance," although appointment is not simply limited to
a conflict of interest of a personal representative. In
the Matter of the Estate of Sauter (Mont. 1980), 615 P.2d
875, 37 St.Rep. 1425.
Shortly after Sauter we decided State ex rel. Palmer v.
District Court (Mont. 1980), 619 P.2d 1201, 37 St.Rep. 1876
and ruled that an expectant heir had no right to intervene in
an action maintained by the special administrator who was the
sole person authorized to pursue that claim. This Court
reasoned that allowing such intervention would work chaos
upon estate proceedings. If the personal representative did
not have discretion to determine when or when not to pursue
litigation involving alleged estate assets, then an heir
could effectively tie up probate proceedings indefinitely to
the prejudice of all other heirs, creditors and persons
interested in the estate. The heir need simply state a claim
as a prima facie case and then request the personal
representative pursue the claim. As noted by this Court in
Palmer, such a result would defeat the entire purpose of
representative litigation and would likely result in the
affairs of the estate becoming hopelessly entangled. Palmer,
619 P.2d 1201, 1203-04, 37 St.Rep. 1876, 1879.
A case relied upon by this Court in its ruling in Palmer
demonstrates that the law does not countenance such a result.
Holland v. Kelly (Cal. 1917), 171 P. 421 is similar to the
one at hand. There the surviving husband of the deceased
sued one McCarthy to recover a fund deposited by the deceased
in a bank account in joint tenancy with McCarthy. The
surviving husband claimed that McCarthy had caused the
deceased to deposit money into the joint tenancy bank account
by the use of fraud and undue influence and by plying the
deceased with liquor. McCarthy moved to dismiss the
complaint, alleging that the deceased's husband, as an heir
of the deceased, did not have standing to bring the claim
because the deceased's personal representative was available
to pursue the claim. Nothing in the record indicated that in
fact the personal representative had pursued the claim, and
from all that appeared he had made a decision not to continue
pursuit of it. The trial court dismissed the complaint. The
California Supreme Court affirmed and ruled, consistent with
a unanimous line of authorities from other jurisdictions,
that in the absence of special equitable circumstances an
heir has no standing to bring suit to collect property
allegedly belonging to the deceased's estate or to bring any
action which affects the estate. Holland. 171 P. at 423.
Absent such special equitable circumstances, the power to
maintain an action to recover property of the estate rests
with the personal representatives.
Here there is no apparent conflict of interest. The
record does not indicate that the personal representatives
were related, connected in any significant way or colluding
with the Skrochs. The co-personal representatives assessed
the fruits of discovery after appellant requested they
evaluate the potential claim of undue influence. They then
sent the following letter to appellant:
.... We do agree, however, with you that the key
question here involved was whether Lottie H. Long
was competent at the time she signed the documents
which resulted in creating the joint tenancy
accounts. Both of the Co-Personal Representatives
were long associated with Lottie Long. Eileen
Richardson was a close and personal friend of
Lottie Long, who probably visited with her and
talked to her on the phone more often than any
other person, with the possible exception of Emil
Skroch. Co-Personal Representative Don Evans for
many years was a financial advisor and friend to
Lottie and Walter Long. Don Evans had a chance to
meet with Lottie Long on many occasions to talk
about their investments and to make new investments
and to make changes in existing investments. This
association continued during the time that she was
in the rest home and up until her death.
Based upon the evidence that is before us and based
upon the personal knowledge of both the Co-personal
Representatives, it is our opinion that the claim
of your client is not an asset of the estate of
Lottie H. Long, deceased. The Co-Personal
Representatives do not feel that there is a basis
for pursuing any legal action against Emil J.
Skroch and/or Lenora Skroch to set aside the joint
tenancy transfers referred to in the letter signed
by Lottie H. Long and directed to the Ravalli
County Bank, First Federal Savings & Loan Assn.,
Citizens State Rank and Western Federal Savings &
Loan Assn.. ..
Appellant argues that this refusal by the co-personal
representatives to prosecute this claim in and of itself
represents a violation of their fiduciary responsibility to
the Long estate to preserve the assets and secure proper
administration of it. We cannot agree.
The personal representatives do have the responsibility
to marshal the assets and properly administer the estate.
Lottie Long had known the co-personal representatives for
years and she trusted them to administer her estate after her
death. They reviewed the information made available by the
appellant. Simply because appellant did not agree with the
co-personal representatives on what to do about a potential
claim does not mean, as the lower court correctly concluded,
that they improperly administered the estate such that they
should be removed and a special administrator appointed.
Absent a showing of fraud, collusion, conflict of
interest, inability to act or other special equitable
circumstances the petition for appointment as special
administrator by an heir need not be granted and the power to
maintain such an action to recover property of the estate
rests with the duly appointed co-personal representatives of
the Estate of Lottie Long.
The decision of the lower court js affirmed.
We Concur: /-7+
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