I respectfully disagree with the majority's opinion that under the facts of this case the probate court had jurisdiction to enter a personal judgment against Appellant. I believe there are several distinct reasons why no such jurisdiction existed.
Appellant's seventeen points of error in summary assert the lack of jurisdiction of the Probate Court to render a personal judgment against him. In claiming lack of jurisdiction, Appellant first argues that the court had no power to require Appellant as an Independent Administrator to submit an accounting or to disapprove it since Probate Code § 221 does not explicitly apply to Independent Administrators. Appellant further argues that no pleadings were filed by the judgment creditor, Parkdale Bank; no notice of any hearing was personally served on him; he did not waive service of process or make an appearance before the court; no evidence of mismanagement of estate funds was introduced; and no judicial admissions of guilt occurred, all of which render the judgment void.
The initial task in this case is the comparison and resolution of several apparently conflicting Probate Code provisions, while recognizing the proper limits of judicial inquiry.
PROBATE COURT JURISDICTION OVER A RESIGNING INDEPENDENT ADMINISTRATOR Tex.Prob Code Ann. § 221 (Vernon 1980) contains the procedure for resignation of a "personal representative." Although the definition of "personal representative" in § 3(aa) of the Code seems to include independent administrators, that section further provides: "(t)he inclusion of independent *Page 489 executors1 shall not be held to subject such representatives to control of the courts in probate matters with respect to settlement of estates except as expressly provided by law." It has been held that the phrase, "settlement of estates," as used in § 3(aa), should be read in conjunction with § 145, in order to determine the extent of a court's power over independent executors. Bellv. Still, 389 S.W.2d 605, 606 (Tex.Civ.App. — Waco 1965), aff'd, and opinion adopted, 403 S.W.2d 353 (Tex. 1966).2 Probate Code § 145(h) states: "[W]hen an independent administration has been created, . . . as long as the estate is represented by an independent executor, further action of any nature shall not be had in the county court except where this Code specifically and explicitly provides for some action in the county court." Tex.Prob Code Ann. § 145(h) (Vernon 1980). Thus, both § 3(aa) and § 145(h) relate to independent executors as they are engaged in the "settlement of estates". 389 S.W.2d at 606.
The initial question, therefore, is whether a probate court has the power to preside over the resignation of an independent administrator, or whether the act of resigning comes within the meaning of "settlement of estates" in § 3(aa) of the Probate Code, thereby excluding independent administrators from judicial control in those instances in which they resign. I would overrule Appellant's first two points of error which assert lack of probate court jurisdiction over resigning independent administrators, but my reasons for doing so are entirely different from that offered by the majority. By answering that question, I believe this to be a case of first impression.
First, it must be determined what is meant by the term, "settlement of estates," in § 3(aa) of the Probate Code, for, as has already been mentioned, when independent administrators are engaged in settling estates, they are not subject to control of the courts3 in probate matters, except as the Probate Code expressly provides.
"Settlement" of an estate has been defined as the judicial or non-judicial adjustment of claims and demands in favor of and against the estate. 34 C.J.S. Executors andAdministrators § 827 (1942). In contrast, an "account" of a personal representative is a statement of the conduct of the administration of the estate in the form of debits and credits, including itemized receipts and disbursements. Id. While an independent executor acts in his official capacity and "settles" the estate under his care by paying its debts and collecting amounts owed to it, he may, for example, sell property of the estate, set aside exempt property or pay the allowance in lieu thereof, and having paid all debts, he may distribute the estate among the heirs. Roy v. Whitaker, 92 Tex. 346, 48 S.W. 892, 896-897 (1898). Cf., 34 C.J.S. Executors and Administrators § 827 (1942) ("settlement" of an estate in other jurisdictions does not include distribution of it).
In analyzing the issue of jurisdiction of a probate court over resignations of independent administrators under § 221 of the Probate Code, I think it useful to examine in some detail the closely related issue of the power of a probate court to remove an independent administrator.
Prior to the adoption in 1979 of § 149C which grants probate courts the power of removal, the Texas Supreme Court inBell v. Still, 389 S.W.2d 605, held that the probate courts had no jurisdiction under § 222, as the Code then existed, to remove independent executors on grounds of mismanagement *Page 490 of the estate. Two "general tests" were enunciated to justify that conclusion:
Id. at 606. Although it might appear superficially that the curtailment of probate court jurisdiction in § 222 over removal of an independent executor, as declared inBell v. Still, would similarly limit jurisdiction over a resigning independent administrator in § 221, I find numerous differences between resignation and removal as these events are treated by the Probate Code.(1) whether removal of the independent executor for the assigned reasons requires the probate court to take action in connection with the "settlement" of the estate, and (2) whether the code "specifically and explicitly" provides for that action in the latter tribunal.
In the first place, there has been considerable disagreement over the reach of Bell v. Still and the meaning of its "general tests". One view believes Bell implies that a statute will subject an independent executor to probate court control only "if the statute relates to some matter other thansettlement of the estate and if the statute specifically andexplicitly is made applicable to the independent executor." Note,Administration of Estates — Control and Removal of the Independent Executor, 21 Baylor L.Rev. 264, 265 (1969) (emphasis in original). Another interpretation was advanced by chief Justice Cadena in his dissenting opinion in Killgore v. Estate ofKillgore, 568 S.W.2d 182 (Tex.Civ.App. — San Antonio 1978, no writ), in which he paraphrased the Bell guidelines as follows:
Id. at 185. Justice Cadena then concluded that "removal of a personal representative for lack of capacity does not constitute an intrusion by the probate court into the forbidden area of 'matters with respect to settlement of estates'." Id. at 187. The issues of capacity to perform duties and the manner in which those duties are performed are distinctly separate. Id. Justice Cadena's interpretation of Bell has been well-received. See, e.g., Note, Independent Administration — ProbateCourt Lacks Authority to Remove an Independent Executor Adjudged NonCompos Mentis, 10 St. Mary's L.J. 665, 669 (1979); and Galvin, Wills andTrust, 33 SW.L.J. 21, 26 (1979).(1) Does removal of the independent executor for the "assigned reasons" require that the probate court "take action in connection with the settlement of the estate?" If this question be answered in the affirmative, then we must ask: (2) Does the Probate Code, "specifically and explicity" vest the probate court with the power to take "that action"? It is clear that the term "that action" in the second portion of the test necessarily refers to the "action" referred to in the first portion — that is, "action in connection with the settlement of the estate," rather than to the act of removal.
In addition to the linguistic and logical difficulties posed by the Bell decision, there are several other means, both within and outside the Probate Code, for removing an independent executor who mismanages the estate entrusted to him. Very likely in response to the Killgore decision, the Legislature in 1979 enacted § 149C which now enables a court to remove independent executors for various reasons, including gross mismanagement and legal incapacity. Tex.Prob Code Ann. § 149C (Vernon 1980). In addition, Bell v. Still suggests that a probate court may remove an independent executor for failure to post bond under § 149 of the Code. 389 S.W.2d at 307. However, Chief Justice Cadena disputes the availability of this option in his dissent in Killgore 568 S.W.2d at 187. Furthermore, a district court under its broad equity powers may appoint a receiver in place of the independent executor. Stanley v. Henderson 139 Tex. 160,162 S.W.2d 95 (1942); Note, Fiduciary Administration —Administration of Estates — Texas Probate Courts do not HaveJurisdiction to Remove an Independent Executor for Mismanagement andMalfeasance, 45 Texas L.Rev. 352, 355-357 (1966).
Predecessors of § 222 explicitly provided for jurisdiction over removal of executors and administrators, just as predecessors of § 221 provided for their jurisdiction over *Page 491 resignations. See Tex.Prob Code Ann. § 222, Historical Note (Vernon 1980). Furthermore, the Texas Supreme Court in Roy v. Whitaker, confirmed that even though courts had no power over responsible executors engaged in settlement of an estate, probate courts did have jurisdiction over resigning independent executors. 48 S.W. at 897.
In summary, I conclude that neither the holding of Bellv. Still nor various Probate Code provisions relating to removal of an independent executor controls the issue of probate court jurisdiction over a resigning independent administrator, such as in the case at bar. I do not believe that the Legislature intended independent administrators to be excluded from the resignation procedure of § 221, which applies to "personal representatives" but not expressly to independent administrators. Were that true, there would be no Probate Code provision governing resignations such as Appellant's.
For all the foregoing reasons, therefore, I would hold independent administrators are one kind of "personal representative" under § 221 and resignations of independent administrators are governed by that provision of the Probate Code.
PROBATE COURT AUTHORITY UNDER § 221 Having determined that Appellant's resignation is subject to § 221 and does not come within the meaning of "settlement of estates," it must be next ascertained whether the action taken against him by the probate court comports with its powers under the statute.
A probate court is authorized by § 221 to do the following: to accept or reject the resignation of the personal representative; to appoint a successor representative; to hold an evidentiary hearing, the sole purpose of which is to examine, restate, audit, settle and approve the final account; to enter an order approving the account and requiring that the estate be transferred to the party entitled to receive it; and to discharge the resigning personal representative after he has complied with all requirements and orders. Tex.Prob Code Ann. § 221 (Vernon 1980).
While it is clear under § 221(b) that the personal representative who is resigning should not be discharged "until final order or judgment shall have been rendered on his account," neither the current statute nor its predecessors contains any procedure to be followed in obtaining a "final order or judgment" when the court finds the account to be unacceptable. Section § 221(b) does not state, or even imply, that a probate court may enter a personal judgment against a resigning personal representative.
It would be improper for this or any other court to substitute its opinion for that of the legislature by pronouncing missing statutory language, thereby creating a jurisdictional power which simply does not exist under the present statute. In effect, the majority has done just that.
The majority relies on the case of Northwestern Fuel Co.v. Brock, 139 U.S. 216, 11 S.Ct. 523, 35 L.Ed. 151 (1891) as standing for the principle that a probate court generally has "jurisdiction to correct what had been wrongfully done" and thus had jurisdiction to enter a personal judgment against Appellant, presumably for his "wrongful" use of estate funds. I cannot agree that Northwestern Fuel is even remotely germane to this case. In that opinion Justice Field was merely stating that when a court has no jurisdiction to hear a particular kind of case in the first place, but nonetheless erroneously enters a judgment in the misplaced lawsuit, that same court does have jurisdiction "to undo what it had no authority to do originally . . . and to restore, so far as *Page 492 possible the parties to their former position." Id. 139 U.S. at 219, 11 S.Ct. at 524. The NorthwesternFuel discussion of the right to restitution for a loss occasioned by enforcement of a judgment which has been subsequently reversed simply is not relevant to this case.
The majority has relied on other cases which I consider to be inapplicable. Two courts of civil appeals have expressed the opinion, explicity or implicitly, that the Probate Code grants probate courts the power to hold personal representatives and guardians personally liable for amounts improperly withdrawn from the estate. In neither of these cases was there a separate lawsuit for damages filed against the fiduciary for breach of his duty, but rather the court imposed a personal judgment against him in the context of a hearing on his final account. I question the correctness of these holdings to the extent that they state or suggest that the Probate Code grants such authority to probate courts.
In Currie v. Drake, 550 S.W.2d 736 (Tex.Civ.App. — Dallas 1977, writ ref'd n.r.e.), the lack of a hearing for the presentation of evidence was cause for reversal and remand of the probate court's personal judgment against the administratrix for payment of attorneys' fees not incurred by the estate. However, in considering the separate issue of the administratrix' personal liability to the estate, the court inCurrie found that "(s)ince her debt is personal and not in the capacity as administratrix, the probate court was correct in holding her individually liable for reimbursement."550 S.W.2d at 739. The court also held that no separate lawsuit to recover property transferred under an erroneous judgment need be filed against the administratrix. A motion for restitution filed by an interested party would suffice as long as basic requirements of notice and hearing were satisfied. Id. at 740. It should be emphasized that the court in Currie did not sua sponte impose individual liability.
Another court, citing Currie, held that a probate court has jurisdiction to enter, on its own motion, an order requiring the guardian of an estate to restore money "improperly diverted" from that estate. Kaphan v. Fidelityand Deposit Company of Maryland, 564 S.W.2d 459, 461-462 (Tex.Civ.App. — Houston [1st Dist.] 1978, writ ref'd n.r.e.). The judgment in Kaphan was against the former guardian personally and in favor of the successor guardian in the amount "unaccounted for." Id. at 461. In this case by the notation on the docket sheet under the entry of the contested judgment, it appears that the probate court relied on Kaphan as justification for its action against Appellant. If that be true, such reliance was misplaced. Although in Kaphan the court on its own motion held the guardian personally liable for improper expenditure of estate funds, at least the guardian was notified by personal citation of the show cause hearing on his account, and a hearing actually was held.
Furthermore, we challenge the correctness of the statement inKaphan that "(t)he annual accounting . . . together with the show cause order issued by the probate court constituted pleadings sufficient to invoke the jurisdiction of the court upon the subject matter determined by the judgment."Id. at 462.
In Tharp v. Blackwell, 570 S.W.2d 154 (Tex.Civ.App. — Texarkana 1978, no writ), the probate court had entered a judgment against a guardian after restating the account for final settlement of the estate under Tex.Prob Code Ann. § 408 (Vernon 1980). The appellate court reversed the judgment, stating:
"(n)o money judgment was sought against appellant. The trial court thus erred in rendering a personal judgment against appellant when the proceeding was only one to determine the correctness of the annual account and the account for final settlement. . . . It is well settled that the court may not grant relief not supported by pleadings or prayer."
Id. at 158 (citation omitted).
By no stretch of the imagination could a resigning personal representative's final account and show cause order be construed as pleadings under Tex.R.Civ.P. 45 et seq. Not only does the account fail to state a *Page 493 cause of action in plain and concise language, but there is no opponent to whom fair notice must be given. As the majority correctly points out, Parkdale Bank is not a party to this action. There were no plaintiffs and defendants in this case. Furthermore, no plaintiff in his right mind would ask a court to render judgment against himself, and not against the defendant.
However, more basic than either of those criticisms ofKaphan is our belief that the court in that case similarly had no jurisdiction under the Probate Code to take the action it did. A court's powers and duties with respect to resigning or removed guardians under § 399 et seq., applicable in Kaphan, do not include the ability to enter personal judgments on its own motion. Although § 414 does provide that the court may enter an order against a negligent guardian and sets out a scheme of statutory damages for that neglect, some person entitled to a portion of the estate must first file a complaint against the guardian. Tex.Prob Code Ann. § 414 (Vernon 1980). Even Currie involved the response of the court to a motion filed by another party. As I have previously discussed, there is no suggestion in either removal provision, § 149C(b) or § 222(c), that the order of removal of a personal representative can impose a personal judgment against him.
Accordingly, I would hold that the summary action taken by the probate court against Appellant exceeded the court's jurisdiction under § 221 of the Probate Code and was improper according to both general principles of fair play and the mandates of other statutes, rules of procedure, and case law.
REQUIREMENT OF EVIDENTIARY HEARING The probate court had no jurisdiction to enter personal judgment against Appellant for yet another reason. The court ignored the requirement under § 221(d) of an evidentiary hearing on Appellant's final account. Although, the court did set a hearing date of May 25, 1981 and notice to "interested persons" was properly posted, all in compliance with § 221(c), when the court entered the personal judgment against Appellant on June 4, 1981, no evidentiary hearing to consider the final account had ever been held.
Section 221(d) provides that at the time set for hearing the court shall examine the account, and after hearing all evidence for and against the final account, the court "shall, if necessary, restate, and audit and settle the same," and upon acceptance of the account, "shall enter an order of approval." (emphasis added). The language of the statute is mandatory. Although a probate court may fail to discharge a resigning personal representative, nothing in § 221 gives a court power to take any action at all if it does not approve the final account after hearing evidence.
In another context, the filing of an accounting by an administrator at final settlement of an estate under §§ 407 and 408 of the Probate Code, it has been held that the court has no discretion in setting a final account for hearing and issuing notice of that hearing. Crouch v. Stanley,390 S.W.2d 795, 798 (Tex.Civ.App. — Eastland 1965, writ ref'd n.r.e.), cert. denied, 383 U.S. 945, 86 S.Ct. 1201, 16 L.Ed.2d 208 (1966). The § 407 provision that a court shall upon proper notice hold a hearing on a personal representative's account is a "ministerial duty required by the Probate Code of Texas." Id. at 799.
I would hold that the duty of a probate court to hold an evidentiary hearing is no less a requirement under § 221 of the Code than it is under §§ 407 and 408.
CONCLUSION I would hold that if after the hearing on the final account a person interested in the estate wishes to hold a resigning personal representative liable for amounts unaccounted for, that interested person may proceed in a separate action in a court of competent jurisdiction, which could include the probate court, to recover any loss to the estate caused by the representative's mismanagement. See Tharp v. Blackwell, 570 S.W.2d at 159. In the absence of pleadings or prayer filed by some interested party seeking a personal judgment against Appellant in a separate action, followed by proper notice and opportunity for hearing, the *Page 494 court below had no authority to enter the judgment against Appellant. In my opinion, the judgment against appellant is void and I would vacate it.