In re BARNHART ESTATE
Docket Nos. 63729, 66088.Michigan Court of Appeals.
Decided July 19, 1983.Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, Irving B. Feldman, Assistant Attorney General, State Public Administrator, and James P. Delaney and Mary Louise Albrecht, Assistants Attorney General, for petitioner.
James T. Miller, for respondent.
Before: T.M. BURNS, P.J., and CYNAR and P.J. MARUTIAK,[*] JJ.
T.M. BURNS, P.J.
On March 24, 1982, the trial court entered an order granting respondent's motion to strike the Attorney General's petition. On *385 July 16, 1982, the trial court[1] denied the Attorney General's petition for a constructive trust. Petitioner appeals from both orders as of right. These appeals have been consolidated.
Charles Barnhart died on August 25, 1981. Within a few hours after Barnhart died, respondent (Barnhart's attorney) filed a petition to commence probate proceedings. The will (drafted by respondent about a year earlier) not only listed respondent as executor but also left everything to him. About nine months before he died, Barnhart (with respondent's help) set up a revocable living trust. The trustee would make payments to Barnhart as he requested in writing during his life.[2] The corpus was to pass to respondent when Barnhart died. When the trust was set up, the corpus was $80,983.62. The only other asset involved in this case is a 1980 Buick Sedan which Barnhart bought in November, 1980, for about $10,300. The car was allegedly given to respondent, who later sold it to someone else for $7,500.
Eventually, petitioner intervened into the probate proceedings. He claimed that the State of Michigan was interested in Barnhart's estate because he had died without heirs and challenged the will claiming that Barnhart was incompetent or lacked the capacity to make a will when it was executed. He also alleged that respondent had subjected Barnhart to duress or undue influence. Later, petitioner filed a petition to set aside the trust agreement because of Barnhart's alleged lack of mental capacity, subjection to duress or undue influence, lack of independent legal advice, and *386 mistake of fact. Petitioner further attempted to void the transfer of the car to respondent.
MCL 700.181; MSA 27.5181 states:
"(1) When a petition for the appointment of a personal representative of the estate of a deceased person is filed with the court and it appears from the petition that the decedent died intestate without leaving any known heirs, when it appears during the course of administration of an intestate estate that the decedent did not leave any known heirs, or when a petition is filed for the administration of the estate of a testate decedent and from the petition it appears that the devisees of the purported will would not be entitled to share in the estate but for the terms of the will and that the decedent died without leaving any known heirs; the petitioner * * * shall immediately serve notice of hearing * * * upon the attorney general * * *.
"(2) In any such case, the attorney general, representing the state, shall have all the rights of any heir, representative or creditor to be heard and to contest the validity of any claim, order, appointment or any instrument purporting to be a contract or will of the decedent, and shall have all the rights granted or accruing to an heir, representative, or creditor by laws relating to the settlement of testate or intestate estates in the probate court or by way of appeal."
No one argues that the Attorney General does not have the power to intervene in the probate proceedings regarding the will itself. In re Estate of Matt Miller, 274 Mich. 190; 264 N.W. 338 (1936). See also In re Karabatian's Estate, 17 Mich. App. 541; 170 NW2d 166 (1969).
The trial court, however, held that the Attorney General does not have the authority to attempt to set aside the trust itself in the probate proceedings. The trial court interpreted the words in MCL 700.181(2); MSA 27.5181(2), "In any such case" as limiting the Attorney General's power to situations *387 enumerated in MCL 700.181(1); MSA 27.5181(1). The court reasoned that, since the right to attack an inter vivos trust is not specifically listed, the Attorney General does not have that power in the probate proceedings.
The trial court erred in not allowing the Attorney General to challenge the validity of the trust. The Michigan Code of Escheats, MCL 567.11 et seq.; MSA 26.1053(1) et seq., at § 3, places a duty on the Attorney General to protect the interest of the state in any property which is escheatable:
"Whenever the attorney general has knowledge of any property which has escheated, is subject to escheat or escheatable to the state, it shall be his duty to protect the interests of the state therein and he shall immediately cause to be instituted appropriate proceedings in accordance with the general laws of this state and as in this act provided, for the purpose of marshalling, protecting and conserving such property, and he shall represent the state and protect its interests, in and to such property as well as that of the owners and/or their unknown heirs-at-law." MCL 567.13; MSA 26.1053(3).
This statute is to be construed broadly. MCL 567.74; MSA 26.1053(64).
The trial court's interpretation of MCL 700.181; MSA 27.5181 would severely limit the Attorney General's statutory duty to institute proceedings to marshal, protect, and conserve escheatable property. Statutes should not be construed to create such conflicts. Paquin v Northern Michigan University, 79 Mich. App. 605; 262 NW2d 672 (1977).
Statutes should also be construed to effectuate their purpose. Zawacki v Detroit Harvester Co, 310 Mich. 415; 17 NW2d 234 (1945). MCL 700.181(2); MSA 27.5181(2) specifically gives the Attorney General "all the rights granted or accruing to an *388 heir, representative, or creditor". Clearly the purpose of this statute is to grant the Attorney General the same rights as an heir, representative or creditor in situations where a decedent dies leaving no known heirs. An heir has standing to bring an action to set aside a trust entered into by a decedent prior to his or her death. See Schroeder v Gerlach, 366 Ill 596; 10 NE2d 332; 112 A.L.R. 1399 (1936). A personal representative can also contest a trust agreement whereby a decedent transferred assets prior to his death and can raise questions as to the validity of the transfer. Chandler v White, 244 Mich. 532; 221 N.W. 618 (1928). A creditor has standing to contest conveyances which had been made by decedent to a trustee which would prevent the collection of his claim. Bogert, Trusts and Trustees (2d ed rev), § 211, p 69.
The trial judge's interpretation would frustrate the purpose of this statute. Zawacki, supra. An heir, representative, or creditor has the right to contest the validity of a trust created by the decedent prior to his death. MCL 700.181; MSA 27.5181 grants this right to the Attorney General when property may be subject to escheat. Consequently, the Attorney General has the right to intervene in this case, and contest the validity of the trust and petition for a constructive trust on the proceeds of the sale of the car.
Respondent also argues that petitioner should not be allowed to intervene because a number of others have interests in the property and can adequately protect themselves. However, even if an interest is already adequately represented, the Attorney General may intervene. In re Lewis' Estate, 287 Mich. 179; 283 N.W. 21 (1938); Van Stock v Bangor Twp, 61 Mich. App. 289, 299-301; 232 NW2d 387 (1975), lv den 395 Mich. 806 (1975).
We also note that an instrument drafted by an *389 attorney in his own favor is looked upon with suspicion. Creller v Baer, 354 Mich. 408; 93 NW2d 259 (1958). Also, when an attorney creates an account with his client in which he retains the right of survivorship, he has the burden of showing that he did not unduly influence his client. Habersack v Rabaut, 93 Mich. App. 300; 287 NW2d 213 (1979). It appears that respondent drafted a trust agreement for Barnhart in which the trust corpus was to pass to respondent upon Barnhart's death. Thus, even though the record may not fully support the Attorney General's contentions, it does show that respondent has failed to meet his burden. Considering these facts, the parties should be allowed to fully litigate this issue.
The trial court erred in striking petitioner's petitions. Therefore, both orders are reversed.
Reversed and remanded.
P.J. MARUTIAK, J., concurred.
CYNAR, J. (concurring).
Because my basis for reversal differs from the majority, I feel compelled to concur separately, relying on the following reasoning. The Attorney General challenged the alleged will and filed a petition to set aside a trust agreement allegedly executed by Charles Barnhart during his lifetime based upon allegations of Barnhart's lack of mental capacity, subjection to duress or undue influence, lack of independent legal advice and mistake of fact. The allegations at best are conclusory. The record does not factually support the petitioner's contentions. The deposition of respondent is not helpful to the petitioner. At this point, however, considering the trust and confidential relationship involved, public confidence in the judicial process would be ill served by a summary disposition affirming the trial court's order granting respondent's motion to strike.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment.
[1] Actually two different probate court judges issued the different orders. We have referred to both as "the trial court" for convenience.
[2] Petitioner alleges that Barnhart was illiterate beyond the ability to sign his own name.