No. 14347 INTHE SUPREME COURT OF THE STATE OF MONTANA 1979

INTHE MATTER OF THE ESTATE OF MAURICE D. MURPHY, Deceased.

Appeal from: DistrictCourt of the Fifteenth Judicial District, Honorable M. James Sorte, Judge presiding. < Counsel of Record: For Appellant: Traynor and Hoversland, Scobey, Montana Kenneth W. Hoversland argued, Scobey, Montana Robert L. Stephens, Jr., Billings, Montana David B. Kinnard argued, Billings, Montana For Respondents: James Gardner argued, Dept. Labor, Helena, Montana James McCann argued, Wolf Point, Montana Earl C. Gross, Hardin, Montana James A. Torske, Hardin, Montana Kronmiller and Seykora, Hardin, Montana John M. Dietrich, Billings, Montana Douglas Freeman, Hardin, Montana Loren J. O'Toole, Plentywood, Montana

Submitted: February 5, 1979 Decided:

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### Mr. JusticeDaniel J. 

### Shea delivered the Opinion of the Court.

This is an appeal from a probate proceeding in the District Court,Daniels County. A number of Maurice D. Murphy's creditorshave appealed from a June 

### 1,1978 order, which authorized the personal representativeof Maurice Murphy's estate to take all cash and personalproperty in thepersonal representative'spossession and deliver the same to respondent,Northeast Montana Production Credit Association of Wolf Point (hereafterPCA). Technically, this appeal only involves an order entered June 1, 1978;however, to understand why we must remand without a decision on themerits, it isnecessary to briefly review the convoluted history of Maurice D. Murphy's estate. Maurice D. Murphy died testate on December 7, 1973. At the time of his death,Murphy was heavily in debt;his principal creditorswere: (1) W. 3

### D. Graham, et a1.-- $464,392.28--this balance was due under a contract for deed executed by thedecedentprior to his death; (2) PCA-- $305,687.24--this was a secured debt incurred by decedent to financehis ranching operations; and (3)

### CitizentiState Bank of Scobey,Montana (hereafterBank)--$72,667.75--this is an unsecured debt owed by decedent on a personal note to the Bank. Decedent also owed approximately $100,000 to other unsecured creditors. On December 20, 1973,Ralph Shiell was appointed personal representative of 

### Maurice D. 

### Murphy's estate. Shiell's first actwas to apply for authorization to continue the decedents ranching business; at the same time, Shiell applied for authority to borrow $91,077 from PCA for the estate and to be allowed to secure such a loan by executing mortgages on the estate's livestock, equipmentand feed. The District Court routinelygranted all of Shiell's requests and specifically found that such action "is in the best interests of the estate." On February 26, 1974, after all of themoney from the first loan had been expended, Ralph Shiell petitioned the District Court for authorization to borrow an additional $138,500 from PCA to enable Shiell to continue operating the Murphy ranch and to allow him to pay off certain creditors of the estate. This requestwas also routinely granted. Thus, during the first threemonths after his death,Maurice Murphy's estate became indebted to PCA for an additional $229,577with all loans purportedly secured by mortgages on the estate's livestock,machinery and feed. On March 29, 1974,Ralph Shiell filed his notice of resignation with the District Court and requested that his accounts be approved and his responsibility to the estate terminated. A hearing on thismatter was set for August 9, 1974, and at that time Shiell's resignationwas accepted, his accounts approved, and Gary Murphy, decedents son,

was appointed to succeed Shiell as administrator. Gary Murphy administered the estate from August 9, 1974 until September 20, 1976, the date he filed his resignation with the District Court. During his term as administrator,Murphy was authorized by the District Court to borrow the following sums from PCA: AMOUNT DATE SECURITY GIVEN September 26, 1974 Mortgage on livestock, machinery and feed March 13, 1975 Mortgages on livestock, machinery, feed - and real estate August 22, 1975 Mortgage on livestock, machinery and feed$ 18,000 October 30, 1975 Mortgage on livestock, machinery and feed $ 85,000 December 10, 1975 Mortgage on livestock, machinery and feed $ 25,000 March 10, 1976 Mortgage on livestock,

- machinery and feed $336,767 TOTAL On March 29, 1976, Loren O'Toole, one of the attorneys for the estate,petitioned the District Court for authority to sell 1,017head of estate cattle (allof the cattle were pledged as security for the various PCA loans). The authorization to sell was granted by the District Court and OIToole

was able to sell the cattle to John Wycoff, James Wycoff, and Richard Redland for a consideration of $263,120. Thereafter, OIToolefiled a second petition (August9, 1976b Thispetition asked the District Court to determine which creditors should receive payment from the fundsheld for the estate. OIToole'spetition stated that the estate currentlyhad $286,545on hand, and that "with the exception of $22,500.00 all of the sums above came from the sale of cattle, which were mortgaged to the Production Credit Association of Wolf Point,Montana." The District Court set O'Toole's petition for hearing

on September 3, 1976;however, because of various delays, the court did not hold the hearing until September 20, 1976. At that time, the court held an informal,unrecorded conference in the judge's chambers. Apparently, the parties attending the informal conference agreed to submitwritten briefs detailing their theories on how the $286,545 should be distributed. On November 22, 1976,after receiving a number of written briefs and after entertaining further arguments(alsonot recorded) the District Court entered the following order: "Payments from the estateof the above named decedent are ORDERED as follows and inthis order of priority: "1. The contract fordeed entered intoon the 10thday of July, 1973by and between W. J. D. Graham and Ruth M. Graham, husband and wife; William S. Graham and Lavere C. Graham, husband and wife, as sellers, and Lalon Fladager and Daryl Fladager, and the assignment made thereunder; "2. Secured and unsecured obligations owing to the Production CreditAssociation, Wolf Point, Montana that existed asof the date of death and any advances made upon petition and approved by specific court order after the date of death; "3. StatutoryAttorneys fees, and fees of the Personal Representatives, and Accountants' fees asdetermined by the Court; (Publicpolicy compells that attorneys feesmust receive a priority in estatesof questionable solvency or insolvent estateswould not be properly administered with the advice of counsel. If there are insufficient funds for fullpayment of Paragraphs 1, 2 and 3, then the payment asprovided inParagraphs 2 and 3willbe pro-rata). "4. Extraordinary fees of the attorneys, accountants, and thepersonal representatives asdetermined by the Court; "5. Creditors as of thedateof death; "6. Any claimof the second personal representative, Gary Murphy, formonies expended, and determined tobe necessary and reasonable, for thepreservation of theestateassets; "7. Beneficiaries under the termsof theWillor otherwise; and "8. Any other funds advanced by the Production CreditAssociation after thisdate, forpurposes necessary for thepreservation of the estate assets, and approved by an Order of Court, will be paid inaccordance with Paragraph 2 of this Order, and subject only tothe Graham contract referred toinParagraph 1and, if necessary, pro-rated asprovided inParagraph 3." Gary Murphy, a party designated toreceive payment in

no. 6 of theNovember 22, 1976 order, filed a petition for writof supervisory controlwith thisCourt. This Court heard oral arguments on October 6, 1977, and laterdeclined jurisdiction for the following reasons:"(1) This is a fragmented appeal without the necessary record to support a review. 

### " (2) This matter comes to this Court on brief only. There is no evidence of a proper hearing in the District Court due to the absence of a transcript record. 

### " (3) If a hearing was had, we cannot be sure that all interested parties were represented. 

### "(4) We find no evidence in the court record of a determination of validity of the claims involved. "For these reasons the application of Petitioner Relator is dismissed without prejudice." Murphy v. District Court (1977)

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# . , 571 P.2d 803, 804, 34 St.Rep. 1365, 1366. From the time this Court issued itsNovember 17, 1977 decision until February 1, 1978, the District Court file reflects little activity the part of the Murphy estate administrators. Themost activity we can discern occurred

on February 1, 1978, when PCA filed a petition seeking an order directing the personal representative to pay over the estate assets in partial satisfaction of the PCA claim. A hearing on the PCApetitionwas held on March 1, 1978, in Wolf Point,Montana. A transcriptof that proceeding was kept, and it indicates that the PCA, the Bank,Gary Murphy and the attorneys for the estate were present, and presented oral argument to the court. It also indicates that Douglas Freeman, attorney for the administrator, Erle C. Gross,had notice of the hearing, but was unable to attend due to bad weather. After hearing oral arguments, the District Court entered the following one page order on June 1, 1978: "Northeast Montana Production Credit Association having on the 31st day of January, 1978, filed its petition herein directing payment to it of $499,686.37 together with interest; and followinghearing on said petition on March 1, 1978;"IT IS HEREBY ORDERED,ADJUDGED AND DECREED that the personal representative is authorized and directed to take all cash and personal property now in his hands as belonging to decedent's estate and to deliver the same to Northeast Montana Production CreditAssociation to payment of its claim. Items of personal property may be sold and converted to cash prior to such delivery at the discretion of personal representative." Citizens State Bank of Scobey, a creditor with an antemortem debt, filed a notice of appeal from the June 1 order on June 8, 1978. The Bank claims it has first priority over all other estate claims, and therefore the District Court erred in awarding PCA firstpriority. The notices of appeal filed by Gary Murphy and the State Department of Labor do not appear in the record transmitted to this Court; however, the District Court Clerk has informed this Court that timely notices were filed on behalf of the Department and Murphy. Accordingly,we shall assume that Murphy and the Department have complied with Rule 

### 4,M0nt.R.App.Civ.P. The Department and Murphy claim to be entitled to

a pro rata share of the funds and personal property in the personal representative'spossession. They allege their claims are costs of administration and are in the same class

as PCA's claim. The June 

### 1, 1978 order is an appealable order under Rule 1,M0nt.R.App.Civ.P. That rule specifically provides that "anorder directing the delivery, transfer,or surrender of property"may be appealed by an aggrieved party. Thus, the parties are properly before this Court. Unfortunately, this Court is still not in a position to finally dispose of thematter on themerits. The order entered by the District Court states simply "that the personal representative is authorized and directed to takehis all cash and personal property now in/hands 

# .. . and to deliver the same to Northeast Montana Production Credit Association to (sic)payment to its claim." There is no memorandum opinion or other explanation of the basis for entry of the order. The parties and this Court are left to speculate as towhy the District Court found PCA entitled to theproceeds in the possession of the personal representative. Briefs and oral argumentsbefore this Court clearly assert that the parties are not certain which law the District Court judge applied (theold probate provisions or the provisions of the Uniform Probate Code),which claims are valid, and which classification was given to the various claims. As

a result, this Court is not in a position to enter a binding decision on themerits. Although Rule 52,M0nt.R.Civ.P. is seldom used in probate proceedings, we feel that it must be applied to the present fact situation so that this Courtwill know precisely the questions presented for appellate review. We recentlydefined the underlying reasons for findings of fact and conclusionsof law: "Thepurpose of requiring findings of fact is three-fold: 1) as an aid in the trial judge's process of adjudication; 2) for purposes of res judicata and estoppel by judgment; and 3) as an aid to the appellate court on review. 5A Moore's Federal Practice Yl52.06 [I]

# ." Marriage of Barron (1978), Mont

# . , 580 P.2d 936, 938, 35 St.Rep. 891, 894. For purposes of this opinion,reason no. 3 ismost important. As the record now stands,we can only speculate

on the factors which went into the District Court's decision. The facts of this case require a remand to the District Court

so that a proper order can be entered. The District Court is directed to enter findings and conclusions or a memorandum clarifying the order it entered June 1, 1978.This cause is remanded for action consistent with this opinion. 

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We Concur:

Chief Justice