No. 8 7 - 2 6 0
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
IN THE MATTER OF THE ESTATES OF:
ALBERT McDANIEL
JOHN E. WILSON
SUSIE DUTT
ETHEL HUNTER
CLARA NOONAN
GORDON WILSON
CHARLES LITTLE
JOHN P. COONEY
CHARLES T. HAMILTON
MINNIE BRANDRIFF
ROBERT CARLISLE
APPEAL FROM: The District Court of the Third Judicial District,
In and for the County of Deer Lodge,
The Honorable Robert Boyd, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Nick Rotering, Dept. of Institutions, Helena, Montana
For Respondent :
William Brolin, Anaconda, Montana
Submitted on Briefs: Jan. 14, 1 9 8 8
Decided: March 1 0 , 1988
Filed: MAR 1 0 1988
Mr. Justice R. C. McDonough delivered the Opinion of the
Court.
This is an appeal from the Third Judicial District of
the State of Montana, County of Deer Lodge. The Department
of Institutions appeals the District Court's disapproval of
its objection to the public administrator's denial of their
creditor's claims. We affirm.
The issue on appeal is whether the District Court erred
in allowing the Public Administrator, acting as the personal
representative in these estates, to deny the Department of
Institution's creditor's claim for services rendered the
decedents at Montana State Hospital.
This case involves eleven separate probate causes. The
decedents were all patients at Warm Springs State Hospital
and were receiving Social Security or other retirement or
disability benefits. The Department of Institutions was
acting both as payee of these benefits and assessing care and
maintenance charges. In 1976 Montana Legal Services brought
suit against the Department in Caddell and Underwood, et al.
v. Robert Mattson, et al., Cause No. 40258, Lewis and Clark
County, saying there was a conflict in the Department's dual
role. The district judge issued an injunction pendente lite
restraining the State Hospital from acting both as the
representative payee and removing from the plaintiff
patients' accounts at the State Hospital any amounts
allegedly due for care and maintenance. The social security
benefits then accumulated in a trust pending resolution of
the conflict.
In 1985 the Department of Institutions notified the
Public Administrator of the estates of decedents which
required the creation of a probate estate. The Public
Administrator filed in probate for all the decedents who had
assets in the trust. The public administrator publishec!
notices to creditors in all these estates over three years
subsequent to the respective decedent's date of death. The
Department filed its creditor's claims for services rendered
and the Public Administrator denied the claims on the basis
of untimely filing. The Department objected to the denial
and asked the District Court to set aside the denial and
order the claims paid. The District Court disapproved the
Department's objections and ordered that the estates be
distributed according to the laws of intestacy.
Section 72-3-803, MCA, sets forth the time frame for the
filing of a claim against a decedent's estate:
(1) With the exception of claims for taxes
and claims founded on tort, all claims against a
decedent's estate which arose before the death of
the decedent, including claims of the state and any
subdivision thereof, whether due or to become due,
absolute or contingent, liquidated or unliquidated,
founded on contract or other legal basis, if not
barred earlier by other statute of limitations, are
barred against the estate, the personal
representative, and the heirs and devisees of the
decedent unless presented as follows:
(a) within 4 months after the date of the
first publication of notice to creditors if notice
is given in compliance with 72-3-801, provided
claims barred by the nonclaim statute at the
decedent's domicile before the first publication
for claims in this state are also barred in this
state; or
(b) within 3 years after the decedent's death
if notice to creditors has not been published.
The Department contends that the statute of limitation
argument is not available to the personal representative.
The Department argues that the pending Underwood and Caddell
lawsuit and the injunction tied up the patient's funds and
tolled the statute of limitations.
The Department relies on Reese v. Reese (1981), 196
Mont. 100, 637 P.2d 1183, as authority for their argument
that a pending lawsuit tolls the S 72-3-803, MCA, statute of
limitations. Reese held "a claimant is not required to
present a claim to the personal representative of a
decedent's estate where such claim is the subject of a legal
proceeding against the decedent pending at the time of his
death." Reese, 637 P.2d at 1185. This Court in Reese upheld
S 72-3-804(2), MCA, which provides:
(2) The claimant may commence a proceeding
against the personal representative, in any court
where the personal representative may be subjected
to jurisdiction, to obtain payment of his claim
against the estate, but the commencement of the
proceeding must occur within the time limited for
presenting the claim. No presentation of claim is
required in regard to matters claimed in
proceedings against the decedent which were pending
at the time of his death.
Neither peese nor 5 72-3-804(2), MCA, is applicable in this
case. The Department's creditor's claims were not "the
subject of a legal proceeding against the decedent." The
pending Caddell litigation was about the propriety of the
State acting as both the representative payee and as the
assessor of care and maintenance charges for a class of
patients. The injunction pendente lite prevented the State
from removing the patients' funds but did not prevent the
State from filing creditor's claims during the pendency of
the suit. When any one of the conditions in S 72-3-803, MCA,
has been met, as the three year bar was met here, the statute
has run and the claim is barred. The three year statute of
limitation set by S 72-3-803(1) (b), MCA, was not tolled and
the District Court was correct to disapprove the Department's
objection to the denial of its creditor's claims.
The Department also asserts that the District Court was
incorrect in view of the federal regulation, 20 C.F.R.
404.2010, that indicates that proceeds of b-enefits are to be
used to pay care and maintenance charges of patients in
institutions. However 20 C.F.R. 404.2010 merely provides for
the appointment of a Representative Payee. The Department
failed to comply with the law requiring the timely filing of
creditor's claims and thus its claims are barred. Affirmed.
&/&/A Justice