No. 87-260 

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, 1988 

Decided: March 10, 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