NO. 93-109
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
IN THE MATTER OF THE ESTATE OF
ROBERT E. MELVIN,
Deceased.
APPEAL FROM: District Court of the Second Judicial District,
In and for the County of Silver Bow,
The Honorable James E. Purcell, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Jo Antonioli, Worden, Thane & Haines, Missoula,
Montana
For Respondent:
Robert T. O'Leary, Butte, Montana
Submitted on Briefs: July 15, 1993
Decided: November 8, 1993
Justice Fred J. Weber delivered the Opinion of the Court.
This is an appeal from a Decree of Distribution settling the
estate of Robert E. Melvin. Carol A. Reeves, one of three heirs to
the estate of Robert E. Melvin, appeals the order allowing and
settling the First and Final Account of the Personal
Representative. We reverse.
The issues are restated as follows:
1. Did the District Court err in issuing the Decree of
Distribution?
2. Did the District Court err in appointing Paul Melvin as
personal representative of the estate?
3. Did the personal representative breach his fiduciary duty
to the heirs of the estate?
Robert E. Melvin died on May 29, 1989. He was survived by his
three children, Paul Melvin, Carol Reeves and John Melvin. On
November 9, 1989, Paul Melvin filed an Application for Informal
Probate and Appointment of Personal Representative and was
appointed as personal representative of the estate of Robert E.
Melvin. Appellant, Carol A. Reeves (Reeves), claims that she was
under the impression that her brother, Paul Melvin, had been
appointed personal representative of the estate under a valid will.
On numerous occasions from 1989 until the final account was
presented in 1992, Reeves requested information from Paul Melvin
about the administration of the estate.
On September 30, 1992, Paul Melvin filed the "First and Final
Account and Petition for Distribution of Estate." On October 1,
2
1992, Reeves filed a pro se motion objecting to the final
accounting as being inadequate under § 72-3-1005, MCA, and as not
providing the minimum of information required by Montana law. A
hearing was held on October 30, 1992, at which Reeves' husband
requested that Reeves be given an itemization and breakdown of the
expenses of the estate and the detailed accounting that Reeves had
requested since 1989. The District Court ordered that an
accounting be furnished to Reeves. The personal representative
provided a check register and bank statements to Reeves on January
25, 1993, along with a copy of the Decree of Distribution entered
by the District Court on January 21, 1993.
Reeves then retained counsel who appeared on February 1, 1993,
objecting to the First and Final Account and also to the check
register and bank statements as being an insufficient accounting.
No hearing was scheduled in the District Court prior to the running
of the time necessary for filing this appeal. Further facts will
be provided throughout this opinion as necessary.
I.
Did the District Court err in approving the final accounting
and issuing the Decree of Distribution?
Reeves contends that the personal representative did not
comply with Montana law governing estate administration and closing
and that the District Court erred in approving the incomplete final
accounting and issuing the Decree of Distribution. Specifically,
she claims that Paul Melvin did not provide intermediate
accountings to her when she asked for them during the period of
3
estate administration and that the final accounting provided by
Paul Melvin did not provide minimum information about estate
assets, income, expenses and the distribution of the assets.
Counsel representing the estate of Robert E. Melvin contends
that Paul Melvin has properly accounted for the assets and expenses
of the estate by preparing the Inventory and Appraisement and the
INH-2 form for inheritance tax purposes. He further argues that
the District Court verified that Reeves had received the Inventory
and Appraisement, Application for Determination of Inheritance Tax
and her share of the distribution of all assets except for her
share of the amount remaining to be distributed after closing the
estate.
From the information contained in the record, we are unable to
determine what, if any, estate expenses were incurred or paid. The
Inventory and Appraisement lists total estate assets as $33,268.00.
A copy of the form INH-2 prepared by Paul Melvin detailing estate
expenses is not a part of the record before us. The "final
accountingl' filed by the Personal Representative states that
property remaining after the payment of debts, claims, taxes, costs
and expenses should be distributed in accordance with the property
as listed in the Inventory and Appraisement on file with the Clerk
of the Court and the balance remaining is to be distributed to the
three heirs as set forth in Exhibit "A" attached to the final
account, which provides as follows:
ASSETS REMXtNING:
1982 Mercury $ 2,400.OO
Cash on Hand (plus garage sale) 1,439.oo
4
U.S. West Refund 16.99
TranSaNeriCa InSUranCS 325.00
New Dimensions Distributors Refund 297.50
100 Shares of Prudential Federal
Savings (Olympus Corporation) 575.00
$ 5,053.49
LIABILITIES:
Paul M. Melvin (l/3 Paid) 1,684.49
Carol A. Reeves (l/3 Unpaid) 1,684.50
John M. Melvin (l/3 Unpaid) 1,684.50
$ 5,053.49
Although Reeves was not present at the hearing, her husband
appeared and was questioned by the District Court. Because Mr.
Reeves advised the court that the personal representative had not
fully informed Reeves of the estate expenses, the District Court
ordered the personal representative to provide Reeves with 'Ia copy
of the check register or such other itemization detailing the
expenses incurred on behalf of the estate." The District Court
also ordered that the personal representative be discharged upon
payment of remaining amounts due the heirs as set forth in Exhibit
"A" and as quoted above. Paul Melvin has made arrangements to pay
the amount to John Melvin in monthly installments of $45.00.
Reeves has refused to accept a similar payment plan for her share
of the remaining estate.
The Decree of Distribution is dated January 21, 1993. On
January 25, 1993, Paul Melvin provided Reeves with a copy of the
check register from one of the bank accounts he used as personal
representative and some bank statements from other accounts. On
February 1, 1993, Reeves formally objected to this accounting and
5
to the Decree of Distribution as being improper and premature.
Section 72-3-1005, MCA, provides:
Final accounting required to close estate. (1) Before an
estate may be finally closed and the personal
representative relieved of his duties and obligations, he
shall either file with the court or deliver to all
interested persons an accounting under oath showing the
amount of money received and expended by him, the amount
of all claims presented against the estate, and the names
of the claimants and all other matters necessary to show
the state of its affairs.
(2) Any interested person at any time during the
course of the administration of an estate may for good
cause shown require further accountings.
(3) If the personal representative is the sole
residual beneficiary of the estate, no accounting need be
made.
This section provides that the personal representative must file an
accounting with the court --or deliver the same to all interested
persons--showing the amount of money received and expended by the
personal representative, all claims presented against the estate
and all other information necessary to show the state of its
affairs. An exception to this requirement is permitted only when
the personal representative is the "sole residual beneficiary" of
the estate. Such is not the case here: Paul Melvin was required to
provide a proper accounting before the estate of Robert E. Melvin
could be closed.
The District Court ordered as follows:
3 . That the First and Final Account of the Personal
Representative is allowed and settled and that
distribution of the remaining assets of the estate, as
described in Exhibit "A" to the First and Final Account,
be made by the Personal Representative.
4. That the Personal Representative shall provide
Carol A. Reeves with a copy of the check register or such
other itemization detailing the expenses incurred on
behalf of the estate.
6
The "First and Final Account and Petition for Distribution of
Estate" does not describe the monies received and expended by the
personal representative, nor does it describe the claims presented
and paid. It does not describe the manner of disposition of estate
assets. While the transcript indicates that Reeves received copies
of the Inventory and Appraisement and the INH-2, that information
is not sufficient to constitute an accounting.
The check register and bank statements furnished to Reeves
also are inadequate to constitute a final accounting of assets,
income and expenses and claims. An estate may not be settled and
a final distribution made until the final accounting is properly
completed. Section 12-3-1005, MCA, requires the District Court to
make a determination that the final account complies with the
requirements of 5 72-3-1005, MCA, before the estate may be finally
closed and before the personal representative may be relieved of
his duties.
When proceedings in the District Court are of a broad
equitable nature and the issues raised on appeal are mixed
questions of law and fact, this Court's duty is to review all
questions of fact arising upon the evidence presented in the
record, whether the evidence is alleged to be insufficient or not,
and to determine the same, as well as questions of law. Daniels v.
Thomas, Dean & Hoskins, Inc. (1990), 246 Mont. 125, 134, 804 P.2d
359, 364 (citing 3 3-2-204(5), MCA). In Daniels, 804 P.2d at 364,
we stated:
[W]e will review both questions of law and questions of
fact but will not reverse the trial court in an equity
7
case on questions of fact unless there is a decided
preponderance of the evidence against those findings.
We addressed the standard of review for a mixed question of fact
and law in division of marital property cases in In Re the Marriage
of Danelson (1992), 253 Mont. 310, 317, 833 P.2d 215, 220, and
determined that the standard of review in such equity cases is
whether the court abused its discretion.
Obtaining [an] equitable distribution will at times
require the lower court to engage in discretionary action
which cannot be accurately categorized as either a
finding of fact or a conclusion of law. These
discretionary judgments made by the trial court are
presumed to be correct and will not be disturbed by this
Court absent an abuse of discretion by the lower court.
Danelson, 833 P.2d at 220. The issue before us requires us to
review a determination made by the District Court which cannot be
precisely classed as either a finding of fact or a conclusion of
law.
The District Court failed to comply with § 72-3-1005, MCA,
which requires the accounting filed with the court to include all
money received and expended by the personal representative and the
amount of all claims presented against the estate as well as the
names of claimants and all other matters necessary to show the
state of the affairs of the estate. The record contains
substantial evidence of numerous items of income, expense and
claims which should have been included in the final account
according to § 72-3-1005, MCA. We conclude the District Court
allowed the personal representative to settle and close the estate
in this case without the accounting required by 5 72-3-1005, MCA.
We further conclude that the District Court abused its discretion
8
by approving the First and Final Account in this estate and by
entering the Decree of Distribution.
We hold the District Court erred and abused its discretion by
approving the final accounting submitted by the personal
representative in this case. We vacate the District Court's order
allowing and settling the final account and ordering distribution
of the remaining assets of the estate as described in Exhibit @qA8V
of the personal representative's final account.
II.
Did the District Court err in appointing Paul Melvin as
personal representative of the estate?
Reeves also appeals the informal appointment of Paul Melvin as
personal representative in this proceeding. She claims that she
was under the impression throughout the administration of the
estate that Paul Melvin was appointed as personal representative in
the will of Robert E. Melvin and that she was unaware that her
father had not prepared a valid will.
An application for informal appointment of a personal
representative must conform to the requirements of 5 72-3-202, MCA,
and, in the case of an intestacy proceeding, must also conform to
the requirements of 5 72-3-204, MCA. Paul Melvin's Application for
Informal Probate and Appointment of Personal Representative states:
The heirs designated herein have nominated the applicant
to serve in their stead as personal representative and
said nominations have been filed of record in this estate
proceeding.
We find no nominations by John Melvin or Carol Reeves in the record
for this estate proceeding. Section 72-3-504(3), MCA, provides:
9
When two or more persons share a priority, those of them
who do not renounce must concur in nominating another to
act for them or in applying for appointment. If they are
unable to concur in nominating another to act for them or
in applying for appointment, the court may appoint any
qualified person.
It does not appear from the record that the proper procedure for
appointment was followed in this proceeding. Nonetheless, we need
not address this issue as 5 72-3-503(l), MCA, provides that an
objection to an appointment of a personal representative can be
made & in formal proceedings.
Although an objection to the appointment of a personal
representative is not allowed in informal proceedings, a person
interested in the estate is allowed to petition for the termination
of an appointment of a personal representative "for cause" at any
time. Section 72-3-526, MCA.
The Official Comments to § 72-3-204, MCA, explain the
rationale for not allowing objections to appointments of personal
representatives in informal proceedings as follows:
Forcing one who seeks informal probate or informal
appointment to make oath before a public official
concerning the details required of applications should
deter persons who might otherwise misuse the no-notice
feature of informal proceedings. The application is
available as a part of the public record. If
deliberately false representation is made, remedies for
fraud will be available to injured persons without
specified time limit . . . .
Clearly, an appeal from a Decree of Distribution in an informal
estate proceeding is not the appropriate vehicle for an objection
to irregularities in the appointment of the personal
representative. Therefore, we decline to rule on the issue whether
the District Court erred in appointing Paul Melvin as personal
10
representative for the estate of Robert E. Melvin.
III.
Did the personal representative breach his fiduciary duty to
the heirs of the estate?
No claim for breach of fiduciary duty was before the District
Court and we will not address the issue for the first time on
appeal.
Reversed and remanded. The Decree of Distribution entered by
the District Court on January 21, 1993, is vacated and the District
Court is instructed to require the personal representative for this
estate to prepare a proper final accounting in accordance with 5
72-3-1005, MCA, to settle the same and to consider any and all
objections to such accounting and distribution in an appropriate
manner.
Justices
11
Justice Terry N. Trieweiler dissenting.
The majority opinion violates the rule that we will not place
the District Court in error on the basis of objections raised for
the first time on appeal. The theory behind the rule is that in
fairness to the parties and the District Court, if one party has an
objection to the procedure followed in the District Court, he or
she has an obligation to bring it to the attention of the other
party and to the District Court so that any error can be cured if
possible without the necessary expense of an appeal and further
delay. Because there was absolutely no timely objection by the
appellant to any aspect of this estate's administration prior to
the entry of the Court's final decree, I conclude that she waived
any objection she may have had to the "First and Final Account and
Petition for Distribution of Estate."
A review of the actual record in this case suggests just how
unusual the majority's decision is.
Robert E. Melvin died on May 29, 1989, and his son, Paul, was
appointed personal representative of his estate on November 9,
1989. On November 9, 1990, an inventory and appraisement, listing
and describing all of the estate's assets, was filed in the
District Court. It is conceded for purposes of appeal that
appellant received a copy of the inventory and appraisement, along
with the list of estate expenses which was provided for purposes of
determining whether inheritance tax was due.
On September 30, 1992, nearly three and one-half years after
he applied for informal appointment as personal representative, and
12
nearly three years after his actual appointment, Paul Melvin filed
a first and final account and petition for distribution of the
estate. Prior to that time, his sister, Carol, had neither
appeared in this action nor filed any objection to his appointment
nor his handling of the estate.
On October 1, 1992, Carol filed a pro se document entitled
"Motion for an Order to Require an Accounting." By that document,
she sought "a full and complete accounting of all estate assets."
A list of the estate's assets at the time of the final account are
exactly what was provided in Exhibit A to the personal
representative's petition. Contrary to assertions in the majority
opinion, there is no record that appellant ever filed an objection
to the final accounting based on the requirements of 5 72-3-1005,
MCA. Neither is there any indication in the record of the District
Court what Carol's impressions were regarding the existence of a
will or that she at any time requested information from Paul about
his administration of the estate. After presenting no evidence in
the District Court, Carol's attorney sought to file a bunch of
correspondence with the Supreme Court. However, that after-the-
fact evidence was appropriately stricken from the record by order
of this Court dated May 4, 1993.
The District Court held a hearing to consider the personal
representative's petition on October 30, 1992. The only witness
who testified at the hearing was the personal representative.
During the hearing, he was questioned at length by his attorney and
the court regarding his disposition of the estate assets. After
13
being provided with notice of the hearing, Carol did not bother to
appS3r. John Melvin, who is Paul and Carol's brother, did appear
and had no objection to the disposition of the estate.
Neither did Carol appear by an attorney. Her husband did
appear and advised the court that he objected to the approval of
the personal representative's petition on the basis that the income
and disbursements of the estate had been inadequately accounted
for. While he had no personal standing to assert an objection, was
never under oath and subject to cross-examination, and was not
authorized by law to represent his wife in this proceeding, this
inadequate and untimely objection is the first indication of any
kind in this record during the three and one-half years since
Robert Melvin's death, that there was any objection to the manner
in which the estate was being handled.
Under these circumstances, it is not surprising that the
District Court expressed disapproval of the untimely objection.
However, in spite of that fact, the personal representative was
told to provide Carol with further information about income and
expenses of the estate, and the court gave her ten days from the
date of the hearing within which to file an objection.
At the time of the hearing, the District Court stated:
To me, there has never been a question of the
accounting story.
YOU have an opportunity to object to the accounting.
He has ten days. And that has to be by certified mail.
And we will go from there.
. . . .
14
If there is an objection in this regard, I will have
a hearing on that objection.
No objection was lodged within the time provided by the court
and the decree was ultimately entered on January 21, 1993, nearly
three months later.
We do not know what information was provided to Carol, and we
do not know when it was provided. There simply is no record of any
occurrence after the court hearing until after the court's decree
was entered.
The court's decree approving the final account of the personal
representative was entered on January 21, 1993, nearly three months
after the hearing on the personal representative's petition. NO
formal objection was filed by Carol during the intervening period
of time.
On February :L, 1993, an attorney first appeared as counsel of
record for Carol. On that same date, an objection to the personal
representative's account was first filed on her behalf. However,
the certificate of mailing indicates that it was not mailed to the
personal representative until February 18, 1993, one day prior to
Carol's notice of appeal to this Court.
Contrary to the statement in the majority opinion, there is no
evidence in this record that the personal representative first
provided Carol with a copy of the check register and some bank
statements on January 25, 1993.
On this record, the majority has taken upon itself to first
strike evidence offered for the first time on appeal, and then rely
15
on it in its opinion. The majority has decided issues on appeal
that were never raised in an appropriate nor timely fashion in the
District Court.
At best, this case is precedent for approval of pretty sloppy
and untimely legal work. At worst, no district court nor personal
representative can close an estate in the future in reliance on the
status of the record at the time the proposed decree is entered.
For these reasons, I dissent from that part of the majority
opinion which sets aside the District Court's decree of
distribution.
16
November 8, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
Jo Antonioli, Esq.
Worden, Thane & Haines, P.C.
P.O. Box 4747
Missoula, MT 59806
Robert T. O’Leary
Attorney at Law
40 E. Broadway
Butte, MT 59701
John Melvin
Clyde Park
Clyde Park, MT 59018
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA