Court Opinion

ID: 876889
Source: CourtListenerOpinion
Date Created: 2013-06-04 20:58:55.024404+00
Date Added: 2024-06-11T15:37:07.427997
License: Public Domain

No.   14347

              I N THE SUPREME COURT O THE STATE OF M N A A
                                     F              OTN

                                             19 79

I N THE MATTER O THE ESTATE O
                F            F
MAURICE D. MURPHY, Deceased.

Appeal from:         D i s t r i c t Court of t h e F i f t e e n t h J u d i c i a l D i s t r i c t ,
                     H o n o r a b l e M. James S o r t e , J u d g e p r e s i d i n g .
                                                                                <
C o u n s e l o f Record:

     For Appellant:

           T r a y n o r and H o v e r s l a n d , S c o b e y , Montana
           Kenneth W. H o v e r s l a n d a r g u e d , Scobey, Montana
           R o b e r t L. S t e p h e n s , J r . , B i l l i n g s , Montana
           David B. K i n n a r d a r g u e d , B i l l i n g s , Montana

     For Respondents:

           James Gardner a r g u e d , Dept. L a b o r , H e l e n a , Montana
           James McCann a r g u e d , Wolf P o i n t , Montana
           E a r l C. G r o s s ,   H a r d i n , Montana
           James A. T o r s k e , H a r d i n , Montana
           K r o n m i l l e r and S e y k o r a , H a r d i n , Montana
           J o h n M. D i e t r i c h , B i l l i n g s , Montana
           Douglas Freeman, H a r d i n , Montana
           L o r e n J . O ' T o o l e , Plentywood, Montana

                                             Submitted:          F e b r u a r y 5 , 1979

                                                 Decided:        m
                                                                 6      - 9 1979
Filed:     AuG 3 1379
                 -
Mr. Justice Daniel 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 creditors have appealed from a June 1, 1978 order,
which authorized the personal representative of Maurice
Murphy's estate to take all cash and personal property in
the personal representative's possession and deliver the
same to respondent, Northeast Montana Production Credit
Association of Wolf Point (hereafter PCA).
     Technically, this appeal only involves an order entered
June 1, 1978; however, to understand why we must remand
without a decision on the merits, it is necessary 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 creditors were:    (1) W. 3 D Graham, et a1.--
                                       .
$464,392.28--this balance was due under a contract for deed
executed by the decedent prior to his death; (2) PCA--
$305,687.24--this was a secured debt incurred by decedent
to finance his ranching operations; and (3) Citizenti State

Bank of Scobey, Montana (hereafter Bank)--$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 act was 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, equipment
and feed.     The District Court routinely granted 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 the money 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 request was also routinely granted.
Thus, during the first three months after his death, Maurice

Murphy's estate became indebted to PCA for an additional
$229,577 with 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 this matter was set for August 9,
1974, and at that time Shiell's resignation was 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 1,017 head of estate cattle (all of the cattle were
pledged as security for the various PCA loans).      The authori-
zation 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, OIToole filed a second petition (August 9,

1976b   This petition asked the District Court to determine
which creditors should receive payment from the funds held

for the estate.    OIToole's petition stated that the estate
currently had $286,545 on 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 con-

ference in the judge's chambers.      Apparently, the parties
attending the informal conference agreed to submit written
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
 ( a l s o n o t recorded) t h e D i s t r i c t Court e n t e r e d t h e following

order :

        "Payments from t h e e s t a t e o f t h e above named
        d e c e d e n t a r e ORDERED a s f o l l o w s and i n t h i s
        o r d e r of p r i o r i t y :
        " 1 . The c o n t r a c t f o r deed e n t e r e d i n t o on t h e
        1 0 t h day o f J u l y , 1973 by and between W. J. D.
        Graham and Ruth M. Graham, husband and w i f e ;
        William S. Graham and Lavere C. Graham, husband
        and w i f e , a s s e l l e r s , and Lalon F l a d a g e r and
        Daryl F l a d a g e r , and t h e assignment made t h e r e u n d e r ;

        "2.    Secured and unsecured o b l i g a t i o n s owing t o
        t h e P r o d u c t i o n C r e d i t A s s o c i a t i o n , Wolf P o i n t ,
        Montana t h a t e x i s t e d a s of t h e d a t e of d e a t h
        and any advances made upon p e t i t i o n and approved
        by s p e c i f i c c o u r t o r d e r a f t e r t h e d a t e of d e a t h ;

        "3.       S t a t u t o r y A t t o r n e y s f e e s , and f e e s of t h e
        P e r s o n a l R e p r e s e n t a t i v e s , and A c c o u n t a n t s ' f e e s
        a s d e t e r m i n e d by t h e C o u r t ; ( P u b l i c p o l i c y c o m p e l l s
        t h a t a t t o r n e y s f e e s must r e c e i v e a p r i o r i t y i n
        e s t a t e s of questionable solvency o r insolvent
        e s t a t e s would n o t be p r o p e r l y a d m i n i s t e r e d w i t h
        t h e a d v i c e of c o u n s e l .          If there are insufficient
        f u n d s f o r f u l l payment of P a r a g r a p h s 1, 2 and 3 ,
        t h e n t h e payment a s p r o v i d e d i n P a r a g r a p h s 2 and
        3 w i l l be p r o - r a t a ) .

        "4.    E x t r a o r d i n a r y f e e s of t h e a t t o r n e y s , a c c o u n t a n t s ,
        and t h e p e r s o n a l r e p r e s e n t a t i v e s a s d e t e r m i n e d by
        t h e Court;

        "5.      C r e d i t o r s a s of t h e d a t e o f d e a t h ;

        "6.   Any c l a i m o f t h e second p e r s o n a l r e p r e s e n t a t i v e ,
        Gary Murphy, f o r monies expended, and d e t e r m i n e d
        t o be n e c e s s a r y and r e a s o n a b l e , f o r t h e p r e s e r v a t i o n
        of t h e e s t a t e a s s e t s ;

        "7.       B e n e f i c i a r i e s under t h e t e r m s of t h e W i l l o r
        o t h e r w i s e ; and

        "8.       Any o t h e r f u n d s advanced by t h e P r o d u c t i o n
        C r e d i t Association a f t e r t h i s d a t e , f o r purposes
        n e c e s s a r y f o r t h e p r e s e r v a t i o n of t h e e s t a t e
        a s s e t s , and approved by an Order of C o u r t , w i l l
        be p a i d i n a c c o r d a n c e w i t h P a r a g r a p h 2 of t h i s
        O r d e r , and s u b j e c t o n l y t o t h e Graham c o n t r a c t
        r e f e r r e d t o i n Paragraph 1 and, i f necessary,
        pro-rated a s provided i n Paragraph 3."

        Gary Murphy, a p a r t y d e s i g n a t e d t o r e c e i v e payment i n
no. 6 of t h e November 22, 1976 o r d e r , f i l e d a p e t i t i o n f o r

w r i t of s u p e r v i s o r y c o n t r o l w i t h t h i s C o u r t .     T h i s Court

h e a r d o r a l arguments on October 6, 1977, and l a t e r d e c l i n e d

j u r i s d i c t i o n f o r t h e 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),       Mont  .    , 571
P.2d 803, 804, 34 St.Rep. 1365, 1366.
     From the time this Court issued its November 17, 1977

decision until February 1, 1978, the District Court file
reflects little activity      the part of the Murphy estate

administrators.   The most 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 PCA petition was held on March 1, 1978, in

Wolf Point, Montana.   A transcript of 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
     following hearing 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 Credit Association
     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

ante mortem 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 first priority.

     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's possession.    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 "an order 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 the matter on the merits.   The order
entered by the District Court states simply "that the
personal representative is authorized and directed to take
                                      his
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 to why the District Court found PCA entitled
to the proceeds in the possession of the personal representative.
Briefs and oral arguments before this Court clearly assert
that the parties are not certain which law the District Court
judge applied (the old 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 the merits.

     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 Court will know
precisely the questions presented for appellate review.

We recently defined the underlying reasons for findings of
fact and conclusions of law:

    "The purpose 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 is most
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

                             9+g-A
this opinion.

We Concur:

       Chief Justice