No. 14347
I N THE SUPREME COURT O THE STATE OF M N A A
F OTN
19 79
I N THE MATTER O THE ESTATE O
F F
MAURICE D. MURPHY, Deceased.
Appeal from: D i s t r i c t Court of t h e F i f t e e n t h J u d i c i a l D i s t r i c t ,
H o n o r a b l e M. James S o r t e , J u d g e p r e s i d i n g .
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C o u n s e l o f Record:
For Appellant:
T r a y n o r and H o v e r s l a n d , S c o b e y , Montana
Kenneth W. H o v e r s l a n d a r g u e d , Scobey, Montana
R o b e r t L. S t e p h e n s , J r . , B i l l i n g s , Montana
David B. K i n n a r d a r g u e d , B i l l i n g s , Montana
For Respondents:
James Gardner a r g u e d , Dept. L a b o r , H e l e n a , Montana
James McCann a r g u e d , Wolf P o i n t , Montana
E a r l C. G r o s s , H a r d i n , Montana
James A. T o r s k e , H a r d i n , Montana
K r o n m i l l e r and S e y k o r a , H a r d i n , Montana
J o h n M. D i e t r i c h , B i l l i n g s , Montana
Douglas Freeman, H a r d i n , Montana
L o r e n J . O ' T o o l e , Plentywood, Montana
Submitted: F e b r u a r y 5 , 1979
Decided: m
6 - 9 1979
Filed: AuG 3 1379
-
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
This is an appeal from a probate proceeding in the
District Court, Daniels County. A number of Maurice D.
Murphy's creditors have appealed from a June 1, 1978 order,
which authorized the personal representative of Maurice
Murphy's estate to take all cash and personal property in
the personal representative's possession and deliver the
same to respondent, Northeast Montana Production Credit
Association of Wolf Point (hereafter PCA).
Technically, this appeal only involves an order entered
June 1, 1978; however, to understand why we must remand
without a decision on the merits, it is necessary to briefly
review the convoluted history of Maurice D. Murphy's estate.
Maurice D. Murphy died testate on December 7, 1973.
At the time of his death, Murphy was heavily in debt; his
principal creditors were: (1) W. 3 D Graham, et a1.--
.
$464,392.28--this balance was due under a contract for deed
executed by the decedent prior to his death; (2) PCA--
$305,687.24--this was a secured debt incurred by decedent
to finance his ranching operations; and (3) Citizenti State
Bank of Scobey, Montana (hereafter Bank)--$72,667.75--this
is an unsecured debt owed by decedent on a personal note
to the Bank. Decedent also owed approximately $100,000 to
other unsecured creditors.
On December 20, 1973, Ralph Shiell was appointed
personal representative of Maurice D. Murphy's estate.
Shiell's first act was to apply for authorization to
continue the decedents ranching business; at the same time,
Shiell applied for authority to borrow $91,077 from PCA
for the estate and to be allowed to secure such a loan by
executing mortgages on the estate's livestock, equipment
and feed. The District Court routinely granted all of
Shiell's requests and specifically found that such action
"is in the best interests of the estate."
On February 26, 1974, after all of the money from the
first loan had been expended, Ralph Shiell petitioned the
District Court for authorization to borrow an additional
$138,500 from PCA to enable Shiell to continue operating
the Murphy ranch and to allow him to pay off certain creditors
of the estate. This request was also routinely granted.
Thus, during the first three months after his death, Maurice
Murphy's estate became indebted to PCA for an additional
$229,577 with all loans purportedly secured by mortgages on
the estate's livestock, machinery and feed.
On March 29, 1974, Ralph Shiell filed his notice of
resignation with the District Court and requested that his
accounts be approved and his responsibility to the estate
terminated. A hearing on this matter was set for August 9,
1974, and at that time Shiell's resignation was accepted,
his accounts approved, and Gary Murphy, decedents son,
was appointed to succeed Shiell as administrator.
Gary Murphy administered the estate from August 9,
1974 until September 20, 1976, the date he filed his
resignation with the District Court. During his term as
administrator, Murphy was authorized by the District Court
to borrow the following sums from PCA:
AMOUNT DATE SECURITY GIVEN
September 26, 1974 Mortgage on livestock,
machinery and feed
March 13, 1975 Mortgages on livestock,
machinery, feed -
and
real estate
August 22, 1975 Mortgage on livestock,
machinery and feed
$ 18,000 October 30, 1975 Mortgage on livestock,
machinery and feed
$ 85,000 December 10, 1975 Mortgage on livestock,
machinery and feed
$ 25,000 March 10, 1976 Mortgage on livestock,
- machinery and feed
$336,767 TOTAL
On March 29, 1976, Loren O'Toole, one of the attorneys
for the estate, petitioned the District Court for authority
to sell 1,017 head of estate cattle (all of the cattle were
pledged as security for the various PCA loans). The authori-
zation to sell was granted by the District Court and OIToole
was able to sell the cattle to John Wycoff, James Wycoff,
and Richard Redland for a consideration of $263,120.
Thereafter, OIToole filed a second petition (August 9,
1976b This petition asked the District Court to determine
which creditors should receive payment from the funds held
for the estate. OIToole's petition stated that the estate
currently had $286,545 on hand, and that "with the exception
of $22,500.00 all of the sums above came from the sale of
cattle, which were mortgaged to the Production Credit
Association of Wolf Point, Montana."
The District Court set O'Toole's petition for hearing
on September 3, 1976; however, because of various delays,
the court did not hold the hearing until September 20, 1976.
At that time, the court held an informal, unrecorded con-
ference in the judge's chambers. Apparently, the parties
attending the informal conference agreed to submit written
briefs detailing their theories on how the $286,545 should
be distributed.
On November 22, 1976, after receiving a number of
written briefs and after entertaining further arguments
( a l s o n o t recorded) t h e D i s t r i c t Court e n t e r e d t h e following
order :
"Payments from t h e e s t a t e o f t h e above named
d e c e d e n t a r e ORDERED a s f o l l o w s and i n t h i s
o r d e r of p r i o r i t y :
" 1 . The c o n t r a c t f o r deed e n t e r e d i n t o on t h e
1 0 t h day o f J u l y , 1973 by and between W. J. D.
Graham and Ruth M. Graham, husband and w i f e ;
William S. Graham and Lavere C. Graham, husband
and w i f e , a s s e l l e r s , and Lalon F l a d a g e r and
Daryl F l a d a g e r , and t h e assignment made t h e r e u n d e r ;
"2. Secured and unsecured o b l i g a t i o n s owing t o
t h e P r o d u c t i o n C r e d i t A s s o c i a t i o n , Wolf P o i n t ,
Montana t h a t e x i s t e d a s of t h e d a t e of d e a t h
and any advances made upon p e t i t i o n and approved
by s p e c i f i c c o u r t o r d e r a f t e r t h e d a t e of d e a t h ;
"3. S t a t u t o r y A t t o r n e y s f e e s , and f e e s of t h e
P e r s o n a l R e p r e s e n t a t i v e s , and A c c o u n t a n t s ' f e e s
a s d e t e r m i n e d by t h e C o u r t ; ( P u b l i c p o l i c y c o m p e l l s
t h a t a t t o r n e y s f e e s must r e c e i v e a p r i o r i t y i n
e s t a t e s of questionable solvency o r insolvent
e s t a t e s would n o t be p r o p e r l y a d m i n i s t e r e d w i t h
t h e a d v i c e of c o u n s e l . If there are insufficient
f u n d s f o r f u l l payment of P a r a g r a p h s 1, 2 and 3 ,
t h e n t h e payment a s p r o v i d e d i n P a r a g r a p h s 2 and
3 w i l l be p r o - r a t a ) .
"4. E x t r a o r d i n a r y f e e s of t h e a t t o r n e y s , a c c o u n t a n t s ,
and t h e p e r s o n a l r e p r e s e n t a t i v e s a s d e t e r m i n e d by
t h e Court;
"5. C r e d i t o r s a s of t h e d a t e o f d e a t h ;
"6. Any c l a i m o f t h e second p e r s o n a l r e p r e s e n t a t i v e ,
Gary Murphy, f o r monies expended, and d e t e r m i n e d
t o be n e c e s s a r y and r e a s o n a b l e , f o r t h e p r e s e r v a t i o n
of t h e e s t a t e a s s e t s ;
"7. B e n e f i c i a r i e s under t h e t e r m s of t h e W i l l o r
o t h e r w i s e ; and
"8. Any o t h e r f u n d s advanced by t h e P r o d u c t i o n
C r e d i t Association a f t e r t h i s d a t e , f o r purposes
n e c e s s a r y f o r t h e p r e s e r v a t i o n of t h e e s t a t e
a s s e t s , and approved by an Order of C o u r t , w i l l
be p a i d i n a c c o r d a n c e w i t h P a r a g r a p h 2 of t h i s
O r d e r , and s u b j e c t o n l y t o t h e Graham c o n t r a c t
r e f e r r e d t o i n Paragraph 1 and, i f necessary,
pro-rated a s provided i n Paragraph 3."
Gary Murphy, a p a r t y d e s i g n a t e d t o r e c e i v e payment i n
no. 6 of t h e November 22, 1976 o r d e r , f i l e d a p e t i t i o n f o r
w r i t of s u p e r v i s o r y c o n t r o l w i t h t h i s C o u r t . T h i s Court
h e a r d o r a l arguments on October 6, 1977, and l a t e r d e c l i n e d
j u r i s d i c t i o n f o r t h e following reasons:
"(1) This is a fragmented appeal without
the necessary record to support a review.
" (2) This matter comes to this Court on
brief only. There is no evidence of a proper
hearing in the District Court due to the
absence of a transcript record.
" (3) If a hearing was had, we cannot be
sure that all interested parties were
represented.
"(4) We find no evidence in the court record
of a determination of validity of the claims
involved.
"For these reasons the application of Petitioner
Relator is dismissed without prejudice." Murphy
v. District Court (1977), Mont . , 571
P.2d 803, 804, 34 St.Rep. 1365, 1366.
From the time this Court issued its November 17, 1977
decision until February 1, 1978, the District Court file
reflects little activity the part of the Murphy estate
administrators. The most activity we can discern occurred
on February 1, 1978, when PCA filed a petition seeking an
order directing the personal representative to pay over the
estate assets in partial satisfaction of the PCA claim. A
hearing on the PCA petition was held on March 1, 1978, in
Wolf Point, Montana. A transcript of that proceeding was
kept, and it indicates that the PCA, the Bank, Gary Murphy
and the attorneys for the estate were present, and presented
oral argument to the court. It also indicates that Douglas
Freeman, attorney for the administrator, Erle C. Gross, had
notice of the hearing, but was unable to attend due to bad
weather.
After hearing oral arguments, the District Court entered
the following one page order on June 1, 1978:
"Northeast Montana Production Credit Association
having on the 31st day of January, 1978, filed
its petition herein directing payment to it
of $499,686.37 together with interest; and
following hearing on said petition on March 1,
1978;
"IT IS HEREBY ORDERED, ADJUDGED AND DECREED
that the personal representative is authorized
and directed to take all cash and personal
property now in his hands as belonging to
decedent's estate and to deliver the same to
Northeast Montana Production Credit Association
to payment of its claim. Items of personal
property may be sold and converted to cash
prior to such delivery at the discretion of
personal representative."
Citizens State Bank of Scobey, a creditor with an
ante mortem debt, filed a notice of appeal from the June
1 order on June 8, 1978. The Bank claims it has first
priority over all other estate claims, and therefore the
District Court erred in awarding PCA first priority.
The notices of appeal filed by Gary Murphy and the
State Department of Labor do not appear in the record
transmitted to this Court; however, the District Court Clerk
has informed this Court that timely notices were filed on
behalf of the Department and Murphy. Accordingly, we
shall assume that Murphy and the Department have complied
with Rule 4, M0nt.R.App.Civ.P.
The Department and Murphy claim to be entitled to
a pro rata share of the funds and personal property in the
personal representative's possession. They allege their
claims are costs of administration and are in the same class
as PCA's claim.
The June 1, 1978 order is an appealable order under
Rule 1, M0nt.R.App.Civ.P. That rule specifically provides
that "an order directing the delivery, transfer, or surrender
of property" may be appealed by an aggrieved party. Thus,
the parties are properly before this Court.
Unfortunately, this Court is still not in a position
to finally dispose of the matter on the merits. The order
entered by the District Court states simply "that the
personal representative is authorized and directed to take
his
all cash and personal property now in/hands .. . and
to deliver the same to Northeast Montana Production Credit
Association to (sic) payment to its claim." There is no
memorandum opinion or other explanation of the basis for
entry of the order. The parties and this Court are left
to speculate as to why the District Court found PCA entitled
to the proceeds in the possession of the personal representative.
Briefs and oral arguments before this Court clearly assert
that the parties are not certain which law the District Court
judge applied (the old probate provisions or the provisions
of the Uniform Probate Code), which claims are valid, and
which classification was given to the various claims. As
a result, this Court is not in a position to enter a binding
decision on the merits.
Although Rule 52, M0nt.R.Civ.P. is seldom used in
probate proceedings, we feel that it must be applied to
the present fact situation so that this Court will know
precisely the questions presented for appellate review.
We recently defined the underlying reasons for findings of
fact and conclusions of law:
"The purpose of requiring findings of fact
is three-fold: 1) as an aid in the trial
judge's process of adjudication; 2) for
purposes of res judicata and estoppel by
judgment; and 3) as an aid to the appellate
court on review. 5A Moore's Federal Practice
Yl52.06 [I]." Marriage of Barron (1978),
Mont . , 580 P.2d 936, 938, 35 St.Rep.
891, 894.
For purposes of this opinion, reason no. 3 is most
important. As the record now stands, we can only speculate
on the factors which went into the District Court's decision.
The facts of this case require a remand to the District Court
so that a proper order can be entered. The District Court
is directed to enter findings and conclusions or a memorandum
clarifying the order it entered June 1, 1978.
This cause is remanded for action consistent with
9+g-A
this opinion.
We Concur:
Chief Justice