West v. Wyoming State Treasurer

LEIMBACK, District Judge,

dissenting.

I disagree with the majority on the issue of whether wrongful death proceeds are part of the estate, so as to require creditors to file a claim with the estate. The majority relies on DeHerrera v. Herrera, 565 P.2d 479 (Wyo.1977) for the proposition that wrongful death proceeds are not part of the decedent’s estate. This approach disregards Wetering v. Eisele, 682 P.2d 1055 (Wyo.1984) (modified on other grounds Butler v. Halstead by and through Colley, 770 P.2d 698 (Wyo.1989)), in which we said that under the current wrongful death statute:

The only proper way to effectuate [the intent of the legislature] is to treat the proceeds of the judgment [in a wrongful death action] as being subject to administration as part of the probate estate, but with special rules as to distribution.
This is clearly a different result than that which pertained prior to 1973 [when the wrongful death statute was amended] in which the judgment in a wrongful death action did not become a part of the decedent’s estate and was not subject to debts or administration. DeHerrera v. Herrera, supra. * * * We further must assume that the legislature did not intend futile acts and that its amendment of the statute indicated some change in the existing law was intended. DeHerrera v. Herrera, supra.

Wetering, 682 P.2d at 1061 (citations omitted).

The majority attempts to distinguish Wetering by emphasizing the language that wrongful death recovery is subject to “ ‘special rules as to distribution.’ ” (Majority at 1275, quoting Wetering, 682 P.2d at 1061). It writes that “it is clear from the context [in Wetering ] that they were those provided in the intestacy statute as well as exemption from creditors’ claims as provided in the wrongful death statute.” (Majority at 1275). The majority completely ignores the language in Wetering to the effect that the legislature intended to change the law regarding whether wrongful death judgments should be subject to debts or administration. I read Wetering to mean simply that the “special rules as to distribution” are these:

1. The statute providing for intestate descent and distribution defines the class of persons on whose behalf a wrongful death action may be brought. See W.S. 2-4-101 (Supp.1991).
2. As each person benefitted by the wrongful death action may prove his respective damages, W.S. l-38-102(c), the distribution of wrongful death proceeds will be in accord with the amount of each beneficiary’s proven damages rather than with the intestate distribution formula prescribed by W.S. 2-4-101.

Unlike the majority, I do not believe it is at all “clear from the context” that the “special rules” in Wetering extend to exemption from creditors’ claims in the wrongful death statute.

If one combines the majority’s conclusion that a lien for reimbursement of death benefits is not a “debt” of the decedent with the language in Wetering indicating that wrongful death judgments are part of the probate estate, the logical conclusion is *1277that the Worker’s Compensation Division may assert a lien for reimbursement against a wrongful death judgment. The remaining issue is whether the Division is foreclosed from enforcing its lien because it failed to file a claim against the estate. I submit that the Division is foreclosed from collecting the debt from assets in the hands of decedent’s personal representative.

W.S. 2-7-703(a) (Supp.1991) (as amended to provide for notice to creditors as mandated by Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988)) states in part, “all claims whether due, not due or contingent, shall be filed in duplicate with the clerk within the time limited in the notice to creditors and any claim not so filed is barred forever.” The legislature has mandatorily barred creditors’ claims against the estate of a decedent probated in this state, unless such claims are presented and filed within the definitely limited time prescribed by the statutes. Matter of Estate of Peterson, 75 Wyo. 416, 296 P.2d 504, 505 (1956). Thus, a probate court’s order decreeing that the personal representative pay the claim out of the funds of the estate is an order made in excess of its jurisdiction. Id.

The case of State ex rel. State Board of Charities & Reform v. Bower, 362 P.2d 814, reh’g denied, 363 P.2d 791 (Wyo.1961), is particularly relevant. In Bower, the state filed a claim against the decedent’s estate to recover costs for her care in the Wyoming State Hospital. The state filed its claim well after the time limit specified in the statute for filing of creditors’ claims. We held that, regardless whether the estate was required to reimburse the state for the decedent’s care, the state’s claim was time-barred. We noted:

The question presented here * * * is whether the liability for [the cost of care at the State Hospital] may be satisfied from the assets of the deceased without the State’s observing the procedural conditions precedent which have been imposed by the State’s own legislature. Had it been the legislative purpose to exempt the State from compliance with those precedent procedures, it might easily have done so. The failure to except the State from the barring provision of the statute makes necessary the plain implication that the law-making arm of the State’s government did not intend that the State should be relieved of the requirement. * * * If the legislature did not see fit to say the door should be left open indefinitely for the State to come forward with its legitimate claim against the estate, it would be highly improper for this court to read into its statute an exception which the enactment did not see fit to incorporate within it.

Id. at 822-23. The majority attempts to avoid the clear import of Bower by holding that a wrongful death judgment is not part of the decedent’s estate. But once we accept the proposition in Wetering that such a judgment is part of the estate, Bower teaches that the state, like all other creditors of the estate, must honor the requirements of the Wyoming Statutes.

“[T]he object of probate proceedings in connection with estates of deceased persons is to wind up the affairs of a decedent in an orderly manner and to make distribution of assets remaining to persons entitled as speedily as is practicable.” Lo Sasso v. Braun, 386 P.2d 630, 632 (Wyo.1963). Permitting creditors to file claims years after the decedent’s death frustrates this object. See Bower, 362 P.2d at 822. Thus, Wyoming has imposed the limitation on the time within which a creditor may assert claims against an estate. The majority’s result would contravene both the object of winding up a decedent’s affairs rapidly and the clear intent of the legislature.

The Worker’s Compensation Division may not be entirely foreclosed from collecting on its lien. It is unclear from the record whether the Division received proper notice of the probate of decedent’s estate. The Division has conceded that it had notice. Yet if it was not given proper notice, the failure of notice would constitute a denial of due process. See Tulsa Professional Collection Services, Inc., 485 U.S. 478, 108 S.Ct. 1340. “[S]tate action affecting property must generally be accompanied by notification of that action[.]” *1278Id. at 484,108 S.Ct. at 1344 (citing Mulleme v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950)). Probate of an estate is state action for purposes of the Fourteenth Amendment Due Process Clause. Tulsa Professional Collection Services, Inc., 485 U.S. at 487, 108 S.Ct. at 1345-46. A statute which bars untimely-filed claims affects property. Id. at 488, 108 S.Ct. at 1346. Thus, a creditor must be given notice by mail or other means to ensure actual notice. Id. at 489-91, 108 S.Ct. at 1346-48.

Wyoming has recognized the need for notice articulated in Tulsa Professional Collection Services, Inc. The legislature has amended the Probate Code to provide for the type of notice Tulsa Professional Collection Services, Inc. requires. W.S. 2-7-205 and 2-7-703 (Supp.1991). We have held that Tulsa Professional Collection Services, Inc. does not apply retroactively to probate proceedings rendered final before that case was decided on April 19, 1988. Hanesworth v. Johnke, 783 P.2d 173, 177 (Wyo.1989). A probate proceeding becomes final when the court issues the decree of distribution. Id. at 177-78. However, the probate of West’s estate was not yet final as of April 19, 1988. Our concern in Hanesworth was that retroactive application would disturb many long-settled property rights. Since the rights arising out of the probate of decedent’s estate in this case were still unsettled at the time Tulsa Professional Collection Services, Inc. was decided, our fears in Hanesworth would not arise here. Thus, if the Worker’s Compensation Division did not receive “actual notice” within the meaning of Tulsa Professional Collection Services, Inc. and Mullane, then termination of its claim would violate due process, and failure to file in a timely manner would not foreclose the Division’s claim.

Even if the Division received proper notice, it may still have recourse. Statutes providing that creditors timely file claims against a decedent’s estate or be forever barred do not invalidate debts which are otherwise valid and subsisting. Estate of Peterson, 296 P.2d at 505. Such statutes merely bar the collection or payment of the

debt from assets subject to the probate estate. Id. A claim which has been forever barred for failure to timely file may be required to be paid out of other assets not within the decedent's estate, such as out-of-state assets. Id. Thus, the Division may still recover the death benefits paid to decedent’s family if decedent had assets outside of Wyoming, and the policy against double recovery may still be effectuated. However, the Division must look elsewhere than to the judgment for wrongful death.