### No. 80-88 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980

IN THE MATTER OF THE ESTATE OF EMMA SAUTER, Deceased.

leal 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 

## ~~13 %@J Filed: -Mr. Justice John C. Sheehy delivered the Opinion of the Court. he appeal isby JoAnn Palmer, the daughter of Emma Sauter, deceased, from an order of the DistrictCourt, Ninth ~udicial District, Glacier County, denying JoAnn Palmer's petition toremove Wilbur Werner aspersonal representative of her mother's estate, or inthe alternative toappoint a special administrator to administer the estate. The single issuetobe resolved 

### iswhether Wilbur Werner, an attorney, may properly actaspersonal representativeof the estatewhen a potential asset of the estate is

a claim against decedent's other daughter and her husband, Margaret and Wayne Simonson, and where Werner's law partner, James Nelson, was representing the Simonsons inopposing the claim atthe 

### timeof Werner's appointment aspersonal representative. JoAnn Palmer contends that the DistrictCourt should eitherhave required Werner's removal or else appointed a special administrator for the estate. We determine that the appointment of a special administrator 

### isnecessary under the circumstances of this case. The facts gleaned from the DistrictCourt records showed thaton July 28, 1978, during the lifetime of Emma Sauter, a petition for the appointment of a conservator of her assets

### was filedby her daughter, JoAnn Palmer, seeking the appointment of Dwaine Iverson. The only other next of kin of Emma Sauter was another daughter, Margaret Simonson. On September 20, 1978, Dwaine Iverson was appointed conservator of the estate of Emma Sauter, and thereafter letters of conservatorship

### were issued to~waine Iverson. On October 4, 1978, Dwaine J. Iverson, asconservator, entered into a contingent feearrangement with R. V. ~ottomly,a Great Falls attorney, concerning alleged claims of the estateof Emma Sauter againstMargaret Simonson and Wayne Simonson, her husband. It

### isunnecessary to detail the factors of the alleged claim here, except to statethat the conservator sought $300,000 inactual damages and $50,000 inexemplary damages from the Simonsons. On November 18, 1978, Emma Sauter died. Her 

### last Will and Testament, executed April 17, 1962, nominated Wilbur P. Werner, attorney, of Cut Bank, Montana, asher personal representative, and except for two small devises, distributed her estate to her daughters, Margaret Simonson and JoAnn Palmer



### as equal devisees and legatees. The Last Willand Testament 

### was offered forprobate in informal proceedings on November 24, 1978, and Wilbur P. Werner was appointed personal representative of the decedent's estate. On December 8, 1978, Dwaine J. Iverson, as conservator, filedhispetition for formal probate of the Will, determination of heirs and testacy, and appointment of personal representative. That petition sought the removal of Wilbur Werner aspersonal representative and the appointment of Dwaine J. Iverson as personal representative. The petition

was based on the contention thatWerner 

### was unable to act

aspersonal representative because of a conflict of interest. In the civil suitfiledby Iverson, as conservator, against the Simonsons, the Simonsons had retained as their attorney torepresent them inthematter, James Nelson, a law partner of Wilbur Werner. Margaret Simonson and Wilbur Werner each filed objections to the petition of Dwaine J. Iverson tobe appointed

aspersonal representative. Eventually, the DistrictCourtdismissed Iverson's petition for formal probate and his appointment aspersonal representative because of his lack of pecuniary interest inthe estateof Emma Sauter. On July 11, 1979, JoAnn Palmer filedher petition for formal probate of the Will, for the removal of Werner as personal representative, and for the appointment of a special administrator tohandle allof the affairsof the estate. She nominated Dwaine J. Iverson as such special administrator

# . Wilbur Werner, as personal representative, and Margaret Simonson, asthe other heir of the estate, objected to thispetition. After a hearing, the DistrictCourt judge denied JoAnn Palmer's petition. It is from that order of denial, dated November 5, 1979, thatJoAnn Palmer appeals. With respect to the suitcommenced by the conservator against the Simonsons, it appears thaton October 25, 1979, James Nelson, Werner's law partner, appeared on behalf of the Simonsons and moved todismiss the claim. The motion



### was overruled on November 8, 1978. Emma Sauter's death, as
we have said, occurred on November 18, 1978. On November 24, 1978, James Nelson, on behalf of the Simonsons, filed

a motion for extension of time to filean answer, inthe civil action. On December 12, 1978, after the filingof the petition by Iverson inthe estateproceedings, the law firm of Werner and Nelson withdrew from defense of the civil actionbrought by the conservator. Barney Reagan was substitutedascounsel of record for the Simonsons. Attorney James Nelson has appeared in the estateproceedings representing thepersonal representative inbriefs filed inopposition toJoAnn Palmer's petition and as Werner's attorney inthe hearing before the court.In the meantime, the business of the estate is suffering. Beyond the appointment of thepersonal representative and the publication of the notice to creditors, nothing further has been done. The estatewillrequire a federal estate tax return and there arebills tobe paid, and substantial assets tobe accounted for. Werner has posted a bond aspersonal representative. He testified thathe realized acting as the personal representative he was "stepping into something," and advised the Simonsons that he and Nelson could not continue torepresent them inthe civil action if theWillwas offered forprobate and he was personal representative. However, Werner has no reservations about his neutrality inhandling the pending civil claim against the Simonsons asan asset of the estate. The conservator has filed an inventory inthe conservatorship proceedings acknowledging receipt of certain 

### items of personal property, outlining the real property held by the deceased atthe 

### timeof her death, and listing also as

an assettobe accounted for by him, the claim against the Simonsons. The order of the District Court denying JoAnn Palmer's petition for the removal of Werner isnot without logic. The court pointed out thatWerner 

### was designated by the Will of Emma Sauter aspersonal representative and thathe was

a longtime counselor and friend of the Sauter family. There is no question about the validity of theWillnor the qualifications of Werner except for the possible bias

or conflict thatmight exist inhis handling of the claim against the Simonsons, said the court. The court further stated that there

### was no conflictwhich was so antagonistic to the interests of the estate thatWerner would beunable to do justice, and further said that if JoAnn Palmer

was dissatisfiedwith the personal representative's efforts, her remedy was to commence an action against the Simonsons and the personal representative, citing In Re Estate of Graf (1968), 150Mont. 577, 437 P.2d 371. The factors which lead us to overrule the November 5, 1979 order of the DistrictCourt are these: Letters were issued toWilbur Werner aspersonal representative of the estate on November 24, 1978. On that date, and until December 12, 1978, Werner's 

### lawpartner, James Nelson, was the attorney of record in the civil action defending the Simonsons against

a claim which isnow purported tobe an asset of the estate. Werner, if no special administrator is appointed, 

### willbe called upon aspersonal representative todetermine what disposition should be made of the claim of the Simonsons and whether the litigation should be continued. The competing interests of JoAnn Palmer, who would be the beneficiary if the claim resulted ina judgment against the Simonsons and the Simonsons, whose interest is to defeat the civil litigation, are atstake. The situation is covered by the Canons of Professional Ethics, adopted by thisCourt on May 1, 1973, and appearing inVol. 160 of the Montana Reports, in Section DR 5-105. In pertinent part, that section provides: "(B) A lawyer shall not continuemultiple employment if the exercise of his independent professional judgment inbehalf of a client willbe or is likely tobe adversely affected by hisrepresentation of another client, except to the extent permitted under DR 5-105(C). "(C) In the situation covered by DR 5-105



# . . 

# . (B), a lawyer may represent multiple clients if it isobvious that he can adequately represent the interest of each and if each consents to the representation after fulldisclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each."(D) If a lawyer isrequired todecline employment or towithdraw from employment under DR 5-105, no partner or associate of his or his firmmay accept or continue such employment.

### " From the facts foregoing, it isclear that James Nelson, atthe time of the appointment of the personal representative, could not have been appointed because of a conflictof interestthatwould ariseout of his representation of Margaret Simonson against the claimed interestof the estate inthe civil litigation. Under DR 5-105(D) above, if one lawyer isrequired todecline employment because of such possible conflict, no partner or associatemay accept or continue such employment. Accordingly, Werner iswithin the rule and cannot himself actaspersonal representative, except upon fulldisclosure and consent of allinterested parties

as the Rule provides. Itmakes no difference that here Werner is acting as a personal representative rather than

asan attorney. Even as a personal representative, his attorney 

### isJames Nelson, and the problem persists unabated. Nothing 

### we say here impugns the integrityof Wilbur P. Werner. The intentof the Canons of Professional Ethics isnot only to avoid impropriety, but even the appearance of impropriety. Lawyers inthe conduct of their business,

ormatters relating to their legal business must, like Mrs. Caesar, be beyond suspicion. This isnot to say thatWerner may not continue in allother matters except with respect to the claim against the Simonsons toact as personal representative of the estate, and to take care of itsbusiness. That obviously

was the intentof hisdeceased client. But it isproper here that theDistrictCourt appoint a special administrator for the purpose of handling the disposition of the

### claim against the Simonsons. No reason appearswhy 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 preserve the estate or to secure its proper administration, particularly where the general personal representative cannot or should not act. Thematter 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 ismade against the estate, then the subject of the special administrator's attorney's feeswould 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 appointmentof a special administrator, whose dutieswould be limited to the eventual disposition of the suit against the Simonsons, there is no reasonwhy Wilbur Werner may not continue as the general personal representative of the estate. Since his law firm has withdrawn from the representation of the Simonsons, there is no reason why JamesNelson 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 mattertobe decided by the special administrator when he or she 

### is appointed. The cause is therefore remanded to the DistrictCourt with the following instructions: 1. Wilbur P. Werner may continue as the general personal representative of the estate, with the exception of the claim against the Simonsons, and may enter upon the performance of his duties otherwise as such personal representative. 2. The DistrictCourt shall reconsider its order denying JoAnn Palmer's petition for formal proceedings in this estate. 3. The District Court shall appoint a special administrator, whose duties shall be circumscribed to the eventual disposition of the alleged claim of the 

### estate against the Simonsons. 4. Each party shall bear his or her own costs with respect to this litigation relating to the appointment of the special administrator and this appeal, except that the personal representative, if the District Court determines that he isproceeding ingood faith, shall be entitled to receive his necessary expenses and disbursements, including reasonable attorney's fees asprovided under section 72-3- 632, MCA. Reversed and remanded with instructions.

We concur: 

# (J 

# YAd&u& Chief Justice