Title: ESTATE OF SAUTER

State: montana

Issuer: Montana Supreme Court

Document:

No. 80-88 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 IN THE MATTER OF THE ESTATE OF EMMA SAUTER, Deceased. l e a l from: District Court of the Ninth Judicial District, In and for the County of Glacier Honorable B. W. Thomas, Judge presiding. Counsel of Record: For Appellant: R . V. Bottomly, Great Falls, Montana For Respondent : Wilbur P . Werner, Cut Bank, Montana Barney Reagan, Cut Bank, Montana Submitted on briefs: July 11, 1980 ~ ~ 1 3 % @ J Filed: - M r . J u s t i c e John C. Sheehy delivered t h e Opinion of t h e Court. he appeal i s by JoAnn Palmer, t h e daughter of Emma Sauter, deceased, from an order of the D i s t r i c t Court, Ninth ~ u d i c i a l District, Glacier County, denying JoAnn P a l m e r ' s p e t i t i o n t o remove Wilbur Werner a s personal representative of her mother's e s t a t e , o r i n the a l t e r n a t i v e t o appoint a s p e c i a l administrator t o administer t h e e s t a t e . The s i n g l e i s s u e t o be resolved i s whether Wilbur Werner, an attorney, may properly a c t a s personal represen- t a t i v e of t h e e s t a t e when a p o t e n t i a l asset of t h e e s t a t e i s a claim a g a i n s t decedent's other daughter and her husband, Margaret and Wayne Simonson, and where Werner's law partner, James Nelson, was representing t h e Simonsons i n opposing t h e claim a t t h e t i m e of Werner's appointment a s personal repre- sentative. JoAnn Palmer contends t h a t t h e D i s t r i c t Court should e i t h e r have required Werner's removal o r else appointed a s p e c i a l administrator f o r t h e e s t a t e . W e determine t h a t t h e appointment of a s p e c i a l administrator is necessary under t h e circumstances of t h i s case. The f a c t s gleaned from the D i s t r i c t Court records showed t h a t on J u l y 28, 1978, during t h e l i f e t i m e of E m m a Sauter, a p e t i t i o n f o r t h e appointment of a conservator of her a s s e t s w a s f i l e d by her daughter, JoAnn Palmer, seeking t h e appointment of Dwaine Iverson. The only other next of k i n of Emma Sauter was another daughter, Margaret Simonson. On September 20, 1978, Dwaine Iverson was appointed conservator of the estate of Emma Sauter, and t h e r e a f t e r l e t t e r s of conservatorship w e r e issued t o ~ w a i n e Iverson. On October 4, 1978, Dwaine J. Iverson, a s conservator, entered i n t o a contingent f e e arrangement with R. V. ~ o t t o m l y , a Great F a l l s attorney, concerning alleged claims of t h e e s t a t e of Emma Sauter a g a i n s t Margaret Simonson and Wayne Simonson, her husband. I t i s unnecessary t o d e t a i l t h e fac- t o r s of t h e alleged claim here, except t o s t a t e t h a t t h e conservator sought $300,000 i n a c t u a l damages and $50,000 i n exemplary damages from t h e Simonsons. O n November 18, 1978, E m m a Sauter died. Her l a s t W i l l and Testament, executed April 17, 1962, nominated Wilbur P. Werner, attorney, of Cut Bank, Montana, a s her personal repre- s e n t a t i v e , and except f o r two small devises, d i s t r i b u t e d her e s t a t e t o her daughters, Margaret Simonson and JoAnn Palmer as equal devisees and legatees. The Last W i l l and Testament w a s offered f o r probate i n informal proceedings on November 24, 1978, and Wilbur P. Werner was appointed personal representative of t h e dece- d e n t ' s e s t a t e . O n December 8, 1978, Dwaine J. Iverson, a s conservator, f i l e d h i s p e t i t i o n f o r formal probate of t h e W i l l , deter- mination of h e i r s and t e s t a c y , and appointment of personal representative. That p e t i t i o n sought t h e removal of Wilbur Werner a s personal representative and the appointment of Dwaine J. Iverson as personal representative. The p e t i t i o n was based on t h e contention t h a t Werner w a s unable t o a c t a s personal representative because of a c o n f l i c t of i n t e r e s t . I n t h e c i v i l s u i t f i l e d by Iverson, as conservator, a g a i n s t t h e Simonsons, the Simonsons had r e t a i n e d as t h e i r attorney t o represent them i n t h e matter, James Nelson, a law partner of Wilbur Werner. Margaret Simonson and Wilbur Werner each f i l e d objec- t i o n s t o t h e p e t i t i o n of Dwaine J. Iverson t o be appointed a s personal representative. Eventually, t h e D i s t r i c t Court dismissed Iverson's p e t i t i o n f o r formal probate and h i s ap- pointment a s personal representative because of h i s lack of pecuniary i n t e r e s t i n t h e e s t a t e of E m m a Sauter. O n J u l y 11, 1979, JoAnn Palmer f i l e d her p e t i t i o n f o r formal probate of t h e W i l l , f o r the removal of Werner a s personal representative, and f o r t h e appointment of a spe- c i a l administrator t o handle a l l of t h e a f f a i r s of t h e e s t a t e . She nominated Dwaine J. Iverson a s such s p e c i a l administrator . Wilbur Werner, as personal representative, and Margaret Simonson, a s the other h e i r of t h e e s t a t e , objected t o t h i s p e t i t i o n . After a hearing, t h e D i s t r i c t Court judge denied JoAnn P a l m e r ' s p e t i t i o n . It i s from t h a t order of d e n i a l , dated November 5, 1979, t h a t JoAnn Palmer appeals. With r e s p e c t t o t h e s u i t commenced by t h e conservator a g a i n s t t h e Simonsons, it appears t h a t on October 25, 1979, James Nelson, Werner's law partner, appeared on behalf of t h e Simonsons and moved t o dismiss t h e claim. The motion w a s overruled on November 8, 1978. E m m a S a u t e r ' s death, as we have s a i d , occurred on November 18, 1978. O n November 24, 1978, James Nelson, on behalf of t h e Simonsons, f i l e d a motion f o r extension of time t o f i l e an answer, i n t h e c i v i l action. O n December 12, 1978, a f t e r t h e f i l i n g of t h e p e t i t i o n by Iverson i n t h e e s t a t e proceedings, t h e law firm of Werner and Nelson withdrew from defense of the c i v i l a c t i o n brought by t h e conservator. Barney Reagan w a s sub- s t i t u t e d a s counsel of record f o r t h e Simonsons. Attorney James Nelson has appeared i n t h e e s t a t e pro- ceedings representing t h e personal representative i n b r i e f s f i l e d i n opposition t o JoAnn Palmer's p e t i t i o n and a s Werner's attorney i n t h e hearing before t h e court. I n t h e meantime, the business of t h e e s t a t e i s s u f f e r - ing. Beyond t h e appointment of t h e personal representative and t h e publication of the n o t i c e t o c r e d i t o r s , nothing f u r t h e r has been done. The e s t a t e w i l l r e q u i r e a f e d e r a l estate t a x r e t u r n and t h e r e a r e b i l l s t o be paid, and sub- s t a n t i a l a s s e t s t o be accounted f o r . Werner has posted a bond a s personal representative. He t e s t i f i e d t h a t he r e a l i z e d a c t i n g as t h e personal representative he was "step- ping i n t o something," and advised the Simonsons t h a t he and Nelson could not continue t o represent them i n t h e c i v i l a c t i o n i f t h e W i l l was offered f o r probate and he was per- sonal representative. However, Werner has no reservations about h i s n e u t r a l i t y i n handling t h e pending c i v i l claim a g a i n s t t h e Simonsons a s an a s s e t of t h e e s t a t e . The conservator has f i l e d an inventory i n the conser- vatorship proceedings acknowledging r e c e i p t of c e r t a i n i t e m s of personal property, o u t l i n i n g t h e r e a l property held by the deceased a t t h e t i m e of her death, and l i s t i n g a l s o a s an a s s e t t o be accounted f o r by him, t h e claim a g a i n s t t h e Simonsons. The order of t h e D i s t r i c t Court denying JoAnn Palmer's p e t i t i o n f o r t h e removal of Werner i s not without l o g i c . The c o u r t pointed o u t t h a t Werner w a s designated by t h e W i l l of E m m a Sauter a s personal representative and t h a t he was a longtime counselor and f r i e n d of the Sauter family. There i s no question about the v a l i d i t y of t h e W i l l nor t h e q u a l i f i c a t i o n s of Werner except f o r t h e possible b i a s o r c o n f l i c t t h a t might e x i s t i n h i s handling of t h e claim a g a i n s t t h e Simonsons, s a i d t h e court. The c o u r t f u r t h e r s t a t e d t h a t t h e r e w a s no c o n f l i c t which was so antagonistic t o t h e i n t e r e s t s of t h e estate t h a t Werner would be unable t o do j u s t i c e , and f u r t h e r s a i d t h a t i f JoAnn Palmer was d i s s a t i s f i e d with t h e personal r e p r e s e n t a t i v e ' s e f f o r t s , her remedy w a s t o commence an a c t i o n a g a i n s t t h e Simonsons and t h e personal r e p r e s e n t a t i v e , c i t i n g I n R e E s t a t e of Graf (1968), 150 Mont. 577, 437 P.2d 371. The f a c t o r s which l e a d us t o overrule t h e November 5, 1979 order of t h e D i s t r i c t Court a r e these: L e t t e r s were issued t o Wilbur Werner a s personal r e p r e s e n t a t i v e of t h e e s t a t e on November 24, 1978. O n t h a t d a t e , and u n t i l December 12, 1978, Werner's l a w p a r t n e r , James Nelson, was t h e a t t o r n e y of record i n t h e c i v i l a c t i o n defending t h e Simonsons a g a i n s t a claim which i s now purported t o be an a s s e t of t h e estate. Werner, i f no s p e c i a l administrator i s appointed, w i l l be c a l l e d upon a s personal r e p r e s e n t a t i v e t o determine what d i s p o s i t i o n should be made of t h e claim of t h e Simonsons and whether t h e l i t i g a t i o n should be continued. The com- p e t i n g i n t e r e s t s of JoAnn Palmer, who would be t h e b e n e f i c i a r y i f t h e claim r e s u l t e d i n a judgment a g a i n s t t h e Simonsons and t h e Simonsons, whose i n t e r e s t i s t o d e f e a t t h e c i v i l l i t i g a t i o n , a r e a t stake. The s i t u a t i o n i s covered by t h e Canons of Professional Ethics, adopted by t h i s Court on May 1, 1973, and appearing i n Vol. 160 of t h e Montana Re- p o r t s , i n Section DR 5-105. I n p e r t i n e n t p a r t , t h a t s e c t i o n provides : " ( B ) A lawyer s h a l l not continue m u l t i p l e employment i f t h e e x e r c i s e of h i s independent professional judgment i n behalf of a c l i e n t w i l l be or i s l i k e l y t o be adversely a f f e c t e d by h i s r e p r e s e n t a t i o n of another c l i e n t , ex- c e p t t o t h e e x t e n t permitted under DR 5-105(C). " ( C ) I n t h e s i t u a t i o n covered by DR 5-105 . . . ( B ) , a lawyer may r e p r e s e n t m u l t i p l e c l i e n t s i f it i s obvious t h a t he can adequately represent t h e i n t e r e s t of each and i f each con- s e n t s t o t h e r e p r e s e n t a t i o n a f t e r f u l l d i s c l o - s u r e of t h e p o s s i b l e e f f e c t of such represen- t a t i o n on t h e e x e r c i s e of h i s independent professional judgment on behalf of each. "(D) I f a lawyer i s required t o d e c l i n e employment o r t o withdraw from employment under DR 5-105, no partner o r a s s o c i a t e of h i s o r h i s firm may accept o r continue such employment. " From t h e f a c t s foregoing, it i s c l e a r t h a t James Nelson, a t t h e time of t h e appointment of t h e personal representative, could not have been appointed because of a c o n f l i c t of i n t e r - e s t t h a t would a r i s e o u t of h i s representation of Margaret Simonson a g a i n s t t h e claimed i n t e r e s t of t h e estate i n t h e c i v i l l i t i g a t i o n . Under DR 5-105(D) above, i f one lawyer i s required t o decline employment because of such possible c o n f l i c t , no partner o r a s s o c i a t e may accept o r continue such employment. Accordingly, Werner is within the r u l e and cannot himself a c t a s personal representative, except upon f u l l d i s c l o s u r e and consent of a l l i n t e r e s t e d p a r t i e s as the Rule provides. It makes no d i f f e r e n c e t h a t here Werner i s a c t i n g a s a personal r e p r e s e n t a t i v e r a t h e r than a s an attorney. Even a s a personal representative, h i s attorney i s James Nelson, and t h e problem p e r s i s t s unabated. Nothing w e say here impugns t h e i n t e g r i t y of Wilbur P. Werner. The i n t e n t of t h e Canons of Professional Ethics i s not only t o avoid impropriety, b u t even t h e appearance of impropriety. Lawyers i n t h e conduct of t h e i r business, o r matters r e l a t i n g t o t h e i r l e g a l business must, l i k e M r s . Caesar, be beyond suspicion. This i s not t o say t h a t Werner may not continue i n a l l o t h e r matters except with respect t o t h e claim a g a i n s t t h e Simonsons t o a c t as personal representative of t h e e s t a t e , and t o take c a r e of its business. That obviously was t h e i n t e n t of h i s deceased c l i e n t . But it i s proper here t h a t t h e D i s t r i c t Court appoint a s p e c i a l administra- t o r f o r t h e purpose of handling t h e d i s p o s i t i o n of t h e claim against the Simonsons. No reason appears why Dwaine J. Iverson could not act in that circumscribed capacity, but who will be appointed special administrator is a matter for the discretion of the District Court. The situation presented here is contemplated by the provisions of the Uniform Probate Code. Section 72-3-701, MCA, provides for the appointment by the clerk in an informal proceeding of a special administrator or by the court in a . formal proceeding where the appointment is necessary to pre- serve the estate or to secure its proper administration, particularly where the general personal representative cannot or should not act. The matter of the fee for the attorney of the special administrator would be a subject for negotiation between the special administrator's attorney and JoAnn Palmer, the beneficiary of the alleged claim. If, however, the estate is benefited, and claim for attorney's fees is made against the estate, then the subject of the special administrator's attorney's fees would be a matter for determination by the District Court in accordance with section 72-3-631(5), MCA, and subject to the District Court's discretion. With the appointment of a special administrator, whose duties would be limited to the eventual disposition of the suit against the Simonsons, there is no reason why Wilbur Werner may not continue as the general personal representa- tive of the estate. Since his law firm has withdrawn from the representation of the Simonsons, there is no reason why James Nelson may not serve as attorney representing Werner in matters pertaining to the general handling of the estate, exclusive of the claim against the Simonsons. The attorney who will represent the special administrator is a matter t o be decided by t h e s p e c i a l administrator when he o r she i s appointed. The cause i s t h e r e f o r e remanded t o t h e D i s t r i c t Court with t h e following i n s t r u c t i o n s : 1. Wilbur P. Werner may continue a s t h e general personal r e p r e s e n t a t i v e of t h e e s t a t e , with t h e exception of t h e claim a g a i n s t t h e Simonsons, and may e n t e r upon t h e performance of h i s d u t i e s otherwise a s such personal r e p r e s e n t a t i v e . 2. The D i s t r i c t Court s h a l l reconsider i t s order denying JoAnn Palmer's p e t i t i o n f o r formal proceedings i n t h i s e s t a t e . 3. The D i s t r i c t Court s h a l l appoint a s p e c i a l admini- s t r a t o r , whose d u t i e s s h a l l be circumscribed t o t h e eventual d i s p o s i t i o n of t h e a l l e g e d claim of t h e estate a g a i n s t t h e Simonsons. 4. Each p a r t y s h a l l bear h i s o r her own c o s t s with r e s p e c t t o t h i s l i t i g a t i o n r e l a t i n g t o t h e appointment of t h e s p e c i a l administrator and t h i s appeal, except t h a t t h e personal r e p r e s e n t a t i v e , i f t h e D i s t r i c t Court determines t h a t he i s proceeding i n good f a i t h , s h a l l be e n t i t l e d t o receive h i s necessary expenses and disbursements, including reasonable a t t o r n e y ' s f e e s a s provided under s e c t i o n 72-3- 632, MCA. Reversed and remanded with i n s t r u c t i o n s . W e concur: (J Y A d & u & Chief J u s t i c e