No. 01-355 1N THE SUPREME COIJRT OF THE STATE OF MONTANA 2002 MT 304 

## vff ;&.@ 

# FD 4 83 

## LA IN THE MATTER OF THE ESTATE OF PATRICIA ANN SPENCER. Deceased.

APPEAL FROM: District Court of the Fourthjudicial District, In and for the Countyof Missoula. Honorable JohilW. L,arson, Judge Presiding

COIJNSEL. OFRECORD: For Appellant: Quentin 

### hl. Rhoades, Sullivail,Tabaracci & Rhoades, Missoula, Montana For Respondent' Charles W. Schuyler, hlars~llo & Schuyler. PLLC, M~ssoula, Montana

Filed: Submitted oil Rnefs Octobcr 18.2001 Dended December 12,2002iiisiicc 

### Jim Rice delivered tI?c

### Opinion 

### of the i'oiirt.

, ' tI\ppclIar~t. 

### IexasCommerce Bank; N.:. (i3:rnk), appeals fro13rhc dccret.ci~tcred by the District Court 

### fortho Fo~~rtlr Judicial District, Wissoulir County, inthe Esiaie of Patricia AnnSpencer (Estate).~thicil found thattlie Bank's claini againsttile Ectirte wars time-barred. LVc reverse and remand. 

### 72 We restate the dispositivc issues on appeal as follows: 

### 73 1. thesthis Court lackjurisdiction because the Bank's appeal was untimcly'l 7,4 

### 2. Was the 

### Bank cnt~tled to a notlee of hear~ng on the personal representati~e's petition for ndjud~catlon of nitestacy. for cletermtnation of hem, and for settlement and ilistrihution of the estate'? fict~tol NII~ ProceiJurtrl K(lckgvo!rrtrl

e:5 The facts in this matter arc uncontested. On March 23, 2000: blichael 

### Z. Spencer (Spencer) filed an application for inforrnal appointment of personal 

### representative in 

### intestacy for the cstatcofhis niotl~cr, Patricia Ann Spencer,with 

### the \.Iissoula County- Clerk of ('oui-t's office. On the same day, tlie clerk of court perfunctor~ly issued an order appointing Spencer as personal I-cpresentativeof the estate in inforn~ai proccedirrgs. aild issued letters of appointment 

### to him. illso on March 23, 2000, Spencer tlled a "Notice and Infor~nation to Heirs anci Devisees" and served a copy upon bferitech Mortgage Sewices. Inc,, the Bank's predecessor in interest. Spenccr published a noticc to creditors on four occasions, beginning March 30. 20Oii, in the .t.li.ssorrlii

### Irrcii~/~e/rci~~i~i. The notice rcquircdcseiiitcirs 

### ro fiie slairns withi11four inontlls of the date ofthe first p~lklicaiion ofthei~orics. i ilc iidni\ d~d not file a demand tor noricc 

### as an lntcrestea pci-son "r; Sin September 18,2000,the Bankfiled a creditor's claim in the amountof

### S53.454.90. Despite the filing of the claim more than five months after March 

### 23, 2000, Spcnccr considered the Bank's cla~m and allowed 535,031.59, d~sallourng 

### the rcrnalndcr 

# ' Spencer filed and served 

### a "kotice of Disallowa~tce."containing his partial disallowance of ihe Hank's claim, on September 28,2000. The notice included the ~viirning set forth in tj 72-3- 805(1), MCA,' that the cla~m nouldbe barred unless the Bank filed a petition for allouance

or commeiiced a separate proceeding against the personal representative within sixty days ai'tcr the rnall~ng of

### the notlee. Sixt4-onc days later, on No\ ember 28,2000, the Bank filed

a petition for declaratol-y judgment against the Estate, contesting Spencer's partial disallowance of its claim 

### 17 On January 

### 4, 2001: Spencer filed a Filial Account and Petition for Settletncrlt and t)lstr~but~on of an Intestate hateand a notlce ofhearing on the petition. vi hrch nasset for Jaiiuary 8,2001. Spencer did not serve these documents upon the Bank. After the hearing

on January 8. 2001. the court entered its decree ofdistribution, order acijudieating intestacy: orderdeterm~ntng helrs, and order appro\ tng final accountofan intestate estate. Further. the

.-. Ihepossible untimely filing oi'thc Rank's initial claim is not an issue in this appeal, although the Bank iias challenged Spencer's publ~shing ofthenoticit to creditors in the ~'vti.s.soulir I~~depeii(letit, corrtending that this newspaper does not constiti~te a --newspaperoi'generai circulation" requircd hy $ 72- 3-801(l). MC'A. "l:nlcss indicated otherwise. ail citations are to the 1900version oi'the Montana (ode Annotated.(j ,i~i

, 

## ..

# .,.

LL



# . discharged Spencer from 'his office aspcrsor~al rcpresentat~~/i. Regardii~g tkc Bank's c!a!rn. rhe dccrce ~tatcd as foiiou.;. The Koticc of Disallowancc efkctivcly bars the di~allo-~\ed part 

### of Texas Cotnniercc Bank N..A,, creditor's claim. hccause t!ic crctditor failed to commence aproceeding not later than November 27.20i)0, which dare is sixty (60)days after mailing ofthe notice ofdisallowance, on September 

### 29,2000, and therefore the 

### creditor's pct~tion filed in 

### a separate action, is barred b> I/IC/"~CC 72-3-805(lj 18 No notice of entry ofjudgment pursuant to Rule 77(d), hl.R.C:iv.P., was filed or seried follouing entry of the decree. On Apr~l 13. 2001, the Rank filed a notrcc of appeal from the decree.

19 Does this Court lackjurisdiction because the Rank's appeal was utltitnely? 

### 710 Spellceri contendsthat we are withoutjurisdiction to entertain the Bank's appcal. He notes that the decree mas entered on January 8. 2001, and that the Bank's appeal \\as not filcd untrl Apr~l 13, 2001, over three months later. C'ittng our lroldnigs in 

### ifunhe1bt.1-gei- L I3lrrlitrgton hill-tlrerrz 

### (1994), 265 'Llont. 243, 876 P.2d. 218, and Cliulliiror v. 

### Glacier iVcll. 

### Hnr~iz (19K),283 blont. 342,943 P.2d 83, Spencer argues that the Rank's fa~li~re to tile an appcal within thirty days of the judgment, as allotted by Rule 

### 5, V.R.App.P.,is an absolute jurtsdrctiotial bar to this Court's cons~deration ofthe appeal

12cspondcnt's connscl contends that Spencer is not a proper pa-iyto this appeal. 'oc.c:iusi.hi. was discharged iiom his duties by thc dccrcc. fJowev~r. Sor I)U~>~SCS of ih!s appeal, which challenges the validity of thc decree. Spcnccr remains the proper party. 

### 41 1 Although Rule 

### 5provides fiatthcthirty-dayappeal period 

### cornn?cncesupon the filing 

### of a rlotice 

### of entry ofjudgtncrit pursuant to Rulc 77jd), M.k.Civ.P.. Spclncercunterids that he was not required to file and serve a notice of entry ofjudgliicnt ihllo\ving the ilistrict Court's entryofthe decree. Citing $72-1-207, MCA. which provides thatihc Rules ofC'ivi! f'rocedure are applicable to formal proceedings, Spencer argues therefrom that, con~erscly, the Rules are not apphcable to ~nformal proceedings. Spencer explains that he protided nottce to the Bank reyuired by the statutes gotcr~i~ng rnfonnal proceedings, that 

### being publication ofa notice to creditors, and also provided actual written notice ofthe proceeding by serving the Notice and lnforniation to Heirs and Devisees upon the Bank?but that the Bank failed to exercise options provided to it by the probate eodc, including fililig of a formal procecding as an interested person pursuant to 

### C; 72-3-302, 

### MCA, or filing a demand for notice under the infornlal procecding initiated by the personal representative. pursualit to 

## 5 72-3-106, MCA. Therefore, Spencer contends that he was not obligated to provide further notice to the Rank, including notice of entry of the decree. 112 The Bank virtually concedes that 

### $ 72-1-207, 

### MC'A, applies the Rules of Civil Proceciure to formal proceedings only, but argucs that the Rules are made applicable to informal proceedingsby Rulc 81(c);M.R.Civ.P., entitled "Rules incorporated into statutes." .4ltcrni1ti\!cly. the Bank argues that; in any event, Spcmcer7s petition forjudicial approval 

### of thc settlement and distribution of thc estate 

### converted the proceeding from 

### an i~~fc~forrnal procccdirrg to a formal proceeding. The Bank notes that ''formal proceedings" are defined

### by 

## 5 72-

### 1

### - i ()?(I 9): 

### :,,{C*\; as those conducted beibre 

### a-~udge, 

### and therefore, the izcciring 

### on ihi: petition hcijrcJudgeLarson consriluied a forinai 

### pioceeding lo whichthe Ru!ii ofCiivi1 Proccdure applied, and cntrq ofanotlcc ofentrq ofthedecree thereafter mas requrted under Rule 77(d) W~thotlt a notrce ofentryof the decree. thc Bank contends. thc thrrty-day appeal period did not begin to run 

### '1 13 Rule Sl(c),M.R.CI> 

### .P., states as folloas: 

### Rules incorporated into statutes. Where any statute herctofi)re or hereafter enacted, whcther or not applicable to a special statutory proceeding or listed in any table appended hereto, provides that any act in a civil proceeding in a district court shall be done in thc manner provided by law or as in a civil action or as provided by any statute superseded by these rules, such act shall be done in accordance with these 

### rilles and tlie procedure thereon sllall c011fo1-nl to these rules: insofar as practicable. Rule 81(c)s~mply spphesthe Rules of 

### Civil Procedure \\hen anothcr statute prolides that

some act witliin the course of a civil proceeding is to be done "as provicied by law" or "as in

a elk11 act~on" or 

### "as prok~ded by any statute superseded" b) the Rules. Rule 8l(c) doc?not interject the Rules of Civil Procedure into other statutory schemes which provide diffcrercnt procedural reclulrements and, therefore, does not make the Rules appltcable to Informal procecd~ngs, wh~ch are govented by tlie spcclfic proccciurai prokisrons set hrth in 72-3- 201, et. seq., MC.4. This conclusion is consistent with the probate code itse!f, which is very clear about the applicability of'thc Rules of Civil Procedure to procceciings thcrcunder: "l.,Tnless specifically provided to the contra!? in this code

. 

### . . the rules 

### of civil 

### procedure,iilcliiding the rilles concerning vacation 

### of orders and appellate re*:iew9 

### goxvcrn .for.nlni

%~ proceedings under this code. Section 72-i-207, 

### Mi'~4 (emphasis lidded). 

### '1 14 ,Althoughthc Bank's Rule 

### 8I(c) argumcnt is without merit, illat is not the cnd nfthc matter. The critical issue here is whether Spencer's rcyiiest 

### forjudicial approval of the settlement and distribution of the estate changed thc proceeding from informal to formal. Both partics concedethat the Rules of<:ivil Procedure are applicable to fomlal proceedings, but contest the nature of this proceeding. In answer to the Bank's 

### assertion that his pctition made this a fomlal proceeding, Spencer argues that this matter Mas initiated as an inihrma! proceeding, that the Bank did not file a fosn~al proceeding, and therefore, the proceeding remained an irifolmal onethroughout the entireprocess, which concluded with the entry of thc District Court's decree. 

## 7 15 l'he linifonn Probate Code ([.!PC) provides for a "Flexible Systemof'Administration of 1)ccedents' Estates." 

### [;PC, Official Comments, Ch.3. This flexibility allows proceedings for appointment of a personal representative, probate of a will, or otlier dctcrn~ination 

### of testacy tobe commcnced either for111allyor ~nformally by an? mtercsted party. Further, the I.lPC also envisions the use of formal and informal proceedings in combination. whereby a procccciing begun infol-mally may be brought before the court for- resoltrtiori of specific issiies, and tllci~ rcturncii to informal, nor~jt~dicial, adminisnation: [P]cr.sons interested in cstatcs (including personal rcprcsentatives, ivhcthcr appointed inforfutallyor after notice) may use an "in and out" relationship to the court sothat any question orassumption relatingtothe estate, including the status ofan estate astestate or intestate,matters relating to one orInore claims.

### disputed titles; accounts ofpersona! reprcscntativcs; and 

### distribution, may bc 

### resolved or established by adjudication after notice without necessarily sabjccting rhc estate to the necessitl-ofjudicial orders in rcgard to 

### other or 

### fi~rthcr questions or assumptions.

Overall, the system accepts the premise that the court's role 

### in regard to probate and adn~inistration, and its relationship to personal representatives



### . . .is wholly passive until sonic interested person invokes its power to secure resolution of a matter. I.jPC: Official Comments, Ch. 

### 3. The two distinctions between formal and informal 

### proceedingsarethejudge's involvement andnotice. 

### :\s correctly argued

### by the Bank, formal proceedings are conducted by 

### ajudge and require notice. Section 

### 72-1-1 03(i9), MCA. .As 

### quoted from the Official Comments above, formal matters are those which are 

### "resolved or established by adjudication after notice." In 

### contrast, infomlal proceedings are conducted by the clerk ofcourtand generally donot require notice to itlterested persons. Section 

### 72-1- 103(,24),

### MCA. (See 

### czl.~o the descriptiori in CPC, Official Comments, Ch. 3, of informal probate as "a nonadjudicative determination.") Consequently, Spencer's act ofpetitioning forjudicial approval ofhis final account,and for the settlen~ent anddistribution ofthe estate, converted the proceeding, at that point and for those purposes, to a formal proceeding, 

### '1 16 

### As wehave already stated, the RulesofCivil Procedureare

### applicableto forma! estatc 

### proceedings. Further, this Court has 

### specifically held that Rule 77(dj, M.R.Civ.P., 111ust bc applied to the entry ofadecree in a formal estateprocei--ding.in ;Iloitci-ofE.stcifeoj'l-ioiii~cs (lO?"); 183 

### tlont. 290, 599 

### P.2d 344, a devisee appealed to this Court from the entry 

### of aijrmal cstatc decree for \\-hiellthe personal reprcseniative ltird not given norice of' entry of jndg~nent.The Court 

### first derern~iacd that a debisec was a "parry" for purposes of 

### Rule 77(ci). and =a:, thus el~titled to notrce ofentry ofthe decree. becnusc "'de\rsce" tiasiilclt~dcd within the definition of "intercstcd person" for estates set forth in 

### 6 72-1-103(25), 5lC.i. The Con13then 

### concluded. TIICeffect of lack of notice of entry of the order of the District Court is covered by case law interpreting the Montana Rules of Civil Procedure. Rule 77jd) requires the clerk of court to send notice oforders entered in eases to parties to an action not in default for failure to appear. If the clerk fails to send the notice, the time for a party to appeal an order does not begin to run. 

### Pierce I'uckirrg Co.v. 

### TlteDistrict C;ozrrdt (1978), 177 Mont. 50, 579 P.2d 700, 701-762; I-Iuj~>t:ood 

### v. 

### Secliilo (1975), 167 Mont. 101, 104, 535 P.2d 1014. This rule applies regardless of actual notice of the entq of the order by the party seeking to appeal thc order. 

### I'ier-ce, 579 P.2d at 761. Here, the record does not disclose any notice having been sent to the [devisee] by the clerk at any tirile. Unclcr

### Pier-ce,the titne fbr appealing the order ofthe District Court has not yet begun to run. This is important in fonnal probate proceedings because the 

### MUPCallows the District Court to modify or vacate orders inthe proceedings within the time allowed for appeal. Section 72-3-118, MCA. E.~tiztc' 

### Offlol~~~cs, 183 Mont. at 295,599 P.2d at 347. Ltkeuisc here, the Rank, as a credltor who has filed a claim against the estate, is an "interestcd person" as defined by 

### $ 72-1- 103(25),ClCA ('"[iJnterested person' includes heirs, devisees, children, spouses, creditors



### . hs such, the Bank was entitled to notice of ciitry of the formal estate decree. Although Rule 77(d)hasbeen amended since

### Estarc 

### (fHolr~rcs to require theparties, instead of thc clerk of court, to serve the notlee. the effect is the same, and Spencer's relrance on 

### i)i~tiltrl/~ci-get- arid 

### C%(zll111ot- IS misplaced. The th~rtl-day appeal time enforced In those 

### decisions did not begin to run here.

### 7 The Rank has filed zt timely appeal. and this Corrrt hasjurisdictioii to cnte~lain it T11crer"ore.since [Appeilarrt]ncver rcceivcd the rcyuircd i~oiicz from tile clcrk of court of entry ofjudgment.

. . . [Appellanr's] notice of appea! was tiineiy filed and this Court hasjurisdiction to hear and determine that appeal on its ~~icrits.

718 Rule 77(d)?M.K.Civ.P., allows either party to serve a notice of entry ofjncigmcnt. Thebetterprocedure would havebeen forthe Bank,prtortofilsngits appeal.ro ha\ein~trated service ofthc notice of entry itself. Such service would have properly activated the postjudgment time frasnesestablished under the Rules. Nonetheless, 011authority of

### Pierce and 

### Estate of

### flolnies,the Bank's appeal is properly bcforc the C'ourt. Isslre Tlvo 719 Was the Bank entitled to a notice ofhcaring on Spencer's petition for adjudication 

### of intestacy, for detcrminatiosi ofheirs, and for settlement and distribution 

### of the estate'! 

### 2 The parties acknowledge that the Bank was not served lvith cither the pctition 

### ibr settlement and distribution of the estate or notice ofhearing thereon, wliieh was conducted by the District Court on January 8. 2001. The Bank argues that it was cntitled to notice of the hearing pursuant to both 

## $3 72-3-805(3) and 

### 72-3-1001, MCA?and that this Failure of notice constitutes reversible error. The Rank asserts it was deprived of the opportunity to appearand contest Spencer's assertion thatthe Bank's claim was time-barred. The Bank also briefly avers aviolation ofconstitutionaldueprocess, hut docs not develop the argument,anti the issue will not be addressed here. The Court will not consider unsupported issucs 

### orarguments. 

### hi re 

### Citirociy qy"Kru~rse, 200 i 

### MT37,

# rl 31; -304 Vont, 

### 202,8; 32, 19 

### P.3d 81 1:



### 4'1 1 

### Spencer argues that he ga\ einorethan suffic~ent notice to thc Bank irenotcs that hc scrved the Hank with his Noticc of llnforination to Heirs and Devisees: \vhich Xras not required by law, that he published a notice to creditors, and also sewed a Notice of 

### Disa!lowance oftile Bank's creditor's claim. Spencer furtl~er argues that the Rank failed to 

### dcmand notice under $72-3-106,

### MCA,and therefore, the Estate \\as rel~eied ofan>further obligation to provide nottee to the Bank by operation of 

### 46 72-1-103(21) and 72-3-21 1. 

### MCA. 

### 722 S~ctron 72-1-103(24), MCA, 

### states: "Informal proceedings" means proeeedlngs conductcJ nithour notlee to Interested persons by the clerk of court 

### . . . . Sectlon 72-3-21 1, MCA. 

### states. 

### Informal probate-notice requirements. (1)The moving party must give notice as described by 72-1-301 of his application for informal probate: (a) to any person demanding it pursuant to 

### 72-3-106; and (b) to anypersonal representative of the decedent whose appointment has not been temiinated. (2) No other notice of informal probate is required. Spencerexcuses 111s

### failureto senethe Bank mitli thepet~tion and notree ofhear~ng by agdrn arguing that this was an informal proceeding, and as such, was to he compleied withat 

### notice to interested persons, because infoi-nmalproceedings are sodefined in 

### 9 72-1-lfl3(24), MCA. 

### He furthcr argues that, because the Bank failed to demand notice under 

## 5 72-3-lii0,MC'A, 

### he was not required to give furthernotice to the 

### Rank,citiiig tilejnstruction in 

### j? 

### 73-3- 21 1(2)* 

### MCX, that "jnlo further notice of informal probate is required." 

### "/23 Spencer's reliance onthese statutoryprovisions isbased on his flalved assumption that the proceeding remained an informal one, wen though he had filed a petition forjudicial appro~ial.As den~onstrated tinder Issue I, that assertion is erroneous, 'The filing of the petition, requesting intenention by a district courtjudge, changed the matter to a formal proceeding for purposes ofthe issues raised by the petition. Thus, the provisions regarding notlee under formal proceedings became applicable. Because the petltlon 

### addressed the lalidity of the Bank's declaratory judgment action filed in response to the Fstate's 

### disallowance ofits claim, the Bank\?-asentitled 

### tonotice ofthe hearing under

## 5 72-1-805(3), MCA,wliich requires notice to be given to 

### a claimant ofa petition filed to address 

### its claim, and ftirtlier, was entitled to notice pursuant to 

## 3 72-3-1001, 

### MCA. This latter section specifically addresses hearings to judicially tennillate an estate's administration, tvhcthcr adniirristcred formally or informally, and pi-ovides for notice: 

### Formal proceedings terminating administration-testate or intestate-order ofcomplete settlement. (I)Apersonal representativeorany interested person maypetition foran orderofcompletesettlementoftheestate. Thepersonal representative niay petition at any time, and any other interested person may petition after 

### 1 year froin the appointment ofthe original pcrsonal representative, except that no petition under this section may be entertained until the time for presenting claims whiclr arose prior to the death of the decedent has expired. 

### (2) The petition may request the court to determine tcstacy: if not previously determined, to consider the filial account or compel or approve an accounting and distribution, to construe any 

### will or dctern~inc heirs. and to adjudicate the final scttlcment and distribution of the estate.(3) 

### /!tier itotice to 

### iili 

### intercsrcli~icr.s-ioiis iijrd hearing, 

### ihe court 

### may enter an order or orders, on appropriate conditions, determining tile persons entitled to distribution of the estate and. as circunastances require, appro% iizg settlement and directingorapprovingdistribution oftheestateand discharging the personal representative from further claim or demand of any interested person, Section 72-3-100

### I MCA (emphasis addedj. The Bank, as we have seen, was an '"interested person," and was therefore entitled to noticeoftlre hearing and the opportunity to appear and contest thejudicial adjudication sought by the personal representative. .I24 Addressing a similar issue in 

### Estate cf/-I(?/~nes, this Court held that. in aformal cstatc proeceding,judicial "orders issued without notice are not binding on the parties that do not receive notice." 

### Estate 

### ofHolnzcs, 183Mont. at 295, 599 P.2d at 347. Conscquenrly, 

### as to the Bank, the decree 1s necessar~ly \old and uithout effect. arid must be retersed 1125 On appeal, the Rank has also challenged the valrdtt) of Spencer's publicat~on of tlie Notice to Creditors in the 

### :Vfissozrku lrzdepen(tent and the decree's determination that the Bank's declaratoiy action was time-barred. The Hank further ritises a question conce~xing the amount of attorney fees approved by the court. However. gihen our holding herein, mhrch reverses the decree, we decl~nc to reach these issues, 

### deeming them appropriate for resolution, if neccssarq, by the D~str~ct Court foliow~ng a 11en hearrng, dfter notlee. 

### on the personal reprcsentat~\e'spetltlon. We deny the Respondent's rcclriest for Rule 32, \I.R.App.P., sanctions

### 7125 Rcvcrsc<iar?d

### rcn~slndrci for !i~ril~er poceedings consislcnt herewith.

\Ye concur: