Court Opinion

ID: 5092011
Source: CourtListenerOpinion
Date Created: 2021-10-01 15:52:04.977593+00
Date Added: 2024-06-11T08:20:39.436090
License: Public Domain

I agree with the majority's conclusion that the trial court erred in granting Geary's motion for summary judgment. However, I do not agree with the majority that section 306 applies to independent administrations.1 Because I am convinced that the rule of Fischer v. Britton, 125 Tex. 505, 508-09, 83 S.W.2d 305, 306-07 (1935), survived the probate code, I dissent to that portion of the majority's opinion that holds section 306 applies to independent administrations. As a consequence, I would sustain TCB's fourth point of error.
 BACKGROUND
Steven J. Corey, in his capacity as president of Incorsel International Entertainment Consultants, Inc., executed a $800,000 note, secured by a deed of trust of certain residential property. TCB became the holder of this note. Following Corey's death, the probate court appointed Michael P. Geary as independent executor of Corey's estate.
Incorsel continued to make payments on the note until it filed for bankruptcy. Subsequently, TCB foreclosed on the real property *Page 216 
that secured the note. TCB sold the property for $402,000.
Within a month after the foreclosure, Geary filed to convert the estate to a dependent administration and the probate court appointed Geary as dependent administrator. TCB then submitted to Geary its claim for the deficiency under the note. Geary denied the claim and TCB sued to collect the deficiency under the note.
 TCB'S MOTION FOR SUMMARY JUDGMENT
In TCB's fourth point of error, it contends the probate court erred in denying its motion for summary judgment. TCB moved for summary judgment asking the probate court to: (1) declare that section 306 does not apply to independent administrations, (2) allow its deficiency claim, and (3) grant attorney's fees.
 1. The Parties' Contentions
TCB contends that section 306 does not apply to independent administrations. It was not until the probate court converted the estate to a dependent administration that TCB presented its claim for the deficiency pursuant to the procedures set forth in section 306.
Geary contends that section 306 applies to independent administrations. He maintains that when TCB sold the property at foreclosure, it impliedly elected preferred debt and lien status under section 306(a)(2). Geary argues that, having elected preferred debt and lien status, TCB has no right to a deficiency.2 Although several of our sister courts have held that section 306 does not apply to independent administrations, this Court has not addressed the issue.3
 2. Applicable Law
A secured creditor must follow section 306 to perfect his claim against an estate. Section 306 provides:
 (a) Specifications of Claim. When a secured claim against an estate is presented, the claimant shall specify therein, in addition to all other matters required to be specified in claims:
 (1) Whether it is desired to have the claim allowed and approved as a matured secured claim to be paid in due course of administration, in which event it shall be so paid if allowed and approved; or
 (2) Whether it is desired to have the claim allowed, approved, and fixed as a preferred debt and lien against the specific property securing the indebtedness and paid according to the terms of the contract which secured the lien, in which event it shall be so allowed and approved if it is a valid lien; provided, however, that the personal representative may pay said claim prior to maturity if it is for the best interest of the estate to do so.
 (b) Handling of Secured Claims Not Presented in Time. If a secured claim is not presented within the time provided by law, it shall be treated as a claim to be paid in accordance with Paragraph (2) of Subsection (a) hereof.
 (c) Approved Claim as Preferred Lien Against Property. When an indebtedness has been allowed and approved under Paragraph (2) of Subsection (a) hereof, no further claim shall be made against other assets of the estate by reason thereof, but *Page 217
 the same thereafter shall remain a preferred lien against the property securing same, and the property shall remain security for the debt in any distribution or sale thereof prior to final maturity and payment of the debt.
§ 306. Under this section, a secured creditor must elect whether to have his claim treated as a matured secured claim or as a preferred debt and lien against the property securing the indebtedness. § 306(a)(1) (2). If a claimant elects the latter option, he may not seek a deficiency from the estate. § 306(c).
In an independent administration, after the inventory and appraisement has been filed and approved by the county court, "further action of any nature shall not be had in the county court except where this Code specifically and explicitly provides for some action in the county court." § 145(h). Section 146 of the probate code provides:
 Payment of Claims and Delivery of Exemptions and Allowances
 An independent executor, in his administration of an estate, although free from the control of the court, shall nevertheless, independently of and without application to, or any action in or by the court, receive presentation of and classify, allow, and pay, or reject, claims against the estate in the same order of priority, classification, and proration prescribed in this Code, and set aside and deliver to those entitled thereto exempt property and allowances for support, and in lieu of homestead, as prescribed in this Code, to the same extent and result as if his actions had been accomplished in, and under orders of, the court.
§ 146.
 3. Application of Law to Facts
TCB relies on Fischer as support for its position that section 306 does not apply to independent administrations.See Fischer, 125 Tex. at 508-09, 83 S.W.2d at 306-07. Before the legislature enacted the probate code, theFischer court had held that the predecessor to section 306 did not apply to independent administrations. The majority agrees with Geary that section 146 effectively overruledFischer. I disagree.
In Fischer, Britton held a $10,000 note executed by the decedent. The note was secured by certain real property. During the independent administration of the estate, Britton foreclosed on the property and then sought to recover the deficiency from the estate.4 Id. The legislature had added section 306's predecessor to statutes that regulated only court-supervised administrations. TheFischer court concluded that the legislature did not intend for a secured creditor's election to apply to independent administrations. Id. 83 S.W.2d at 306.
Although Fischer predated the probate code, the supreme court revisited Fischer after the legislature enacted the probate code. Bunting v. Pearson, 430 S.W.2d 470
(Tex. 1968). In Bunting, the supreme court reversed the judgment of the court of civil appeals and disapproved the court of civil appeals' view that the probate code radically changed precode law. The majority claims thatBunting does no more than mention Fischer in a string cite. It is true that the Fischer case is cited among many others, but I disagree that the "string cite" disposes of the Fischer rule. Some opinions influence the common law as much by what they do not say, as by what they do say. Bunting is one of those cases.
A look at the Bunting facts proves enlightening. Bunting filed claims with the independent executrix for services rendered to the deceased. The independent executrix took no action on the claims. More than ninety days later, Bunting filed suit on her claims. The trial court ruled for Bunting. The court of civil appeals reversed the trial court's judgment and held that section 313 applies to independent administrations.5 Id. In reversing the court of civil appeals, the supreme court acknowledged several precode cases, Fischer among them, that held that general provisions regulating the procedures for establishing claims against an estate did *Page 218 
not apply to estates administered by an independent executor.Id. at 471.
The supreme court then interpreted section 146 as follows:
 Prior to the adoption of the Code the courts had held that "independent executors" were required to handle claims in accordance with provisions of the statute dealing with classifications, priority and proration of claims. It appears to us that section 146 carries forward the law in this respect, as it existed prior to the adoption of the [C]ode. The phrase [in section 146] "in the same order of priority, classification, and proration prescribed in this code" refers to sections 322 dealing with classification; 321 dealing with proration; and 320 dealing with priority. The only other part of the Code that this section could have reference to is the section dealing with exempt property and allowances.
Id. at 473. Bunting confirms that section 146 does not overrule Fischer.
The majority discusses the two-part analysis ofBunting and then states that no other court addressing the applicability of section 306 to independent administrations has applied this analysis. No other court has applied this analysis because the supreme court never established this analysis. Rather, the majority authors a new two-part analysis. According to the majority, other code sections apply to independent administrations when either (1) the context of the sections does not preclude applying them to independent executors or (2) another provision of the code "explicitly or specifically" makes the sections applicable to independent administrations. The majority concludes that section 146 makes section 306 applicable to independent administrations.
The Bunting court simply held that section 146 does not make section 313 applicable to independent administrations. In so holding, the Bunting court recognized that section 146 merely codified precode law requiring independent executors to handle claims in accordance with provisions of the statute dealing with classification, priority, and proration of claims. Id. at 473. The majority fails to recognize that the section 146 requirement existed before the probate code. Enactment of the probate code and section 146 did not change the relationship of section 306 to independent administrations.
In 1995, the legislature amended section 146 to make the election requirement of section 306 applicable to independent administrations. See Act of May 27, 1995, 74th Leg., R.S., ch. 1054, § 1, 1995 Tex. Sess. Law Serv. 5207, 5207-5208 (codified at TEX. PROB. CODE ANN. § 146 (Vernon Supp. 1996)). The effective date of this Act is January 1, 1996. The majority concludes that the legislature amended section 306 to "clarify" section 306. That of course is the majority's opinion. Nothing in the legislature's language indicates it is "clarifying" pre-existing law. Rather, we note that section 30 of the 1995 Act provides: "The change
in law made by this Act applies only to the estates of persons who die on or after the effective date of this Act. An estate of a person who dies before the effective date of this Act is covered by the law in effect when the person died, and the former law continues in effect for that purpose." Act of May 27, 1995, 74th Leg., R.S., ch. 1054, § 30, 1995 Tex. Sess. Law Serv. 5207, 5216 (emphasis added). Accordingly, I am convinced the legislature changed, not "clarified," the law. Why else would it have concluded that thechanges should apply only to persons that died after the effective date of the amendments?
It is the Fischer and Bunting courts' reasoning that forces my conclusion that section 306 does not apply to independent administrations. Consequently, because this estate was an independent administration until the bankruptcy court allowed TCB to sell the property at foreclosure, TCB had no reason to follow the procedures of section 306. If TCB was not required to follow the section 306 procedures, it never had to make the election under section 306. Therefore, section 306(c) cannot bar its deficiency claim. I would sustain TCB's fourth point of error.
I would reverse the probate court's judgment and render judgment declaring that section 306 does not apply to independent administrations and allowing TCB's deficiency claim. I would then remand this cause to *Page 219 
the probate court solely on the issue of TCB's attorney's fees.
1 See TEX. PROB. CODE ANN. § 306 (Vernon 1980). All references in this opinion to any statutes are to the probate code in effect at the time of decedent's death unless otherwise noted.
2 See TEX.PROB.CODE ANN. § 306(c) (Vernon 1980). In Geary's application to convert from an independent to a dependent administration, he stated: "In order that each creditor may be satisfied in proportion to its claim in accordance with law, and in accordance with all of the procedures applicable to a dependent administration, as well as all of the rules governing the classification, payment and priority of claims, Applicant requests the Court to convert this Estate to a dependent administration and cause Applicant to become the dependent administrator of this Estate." This language indicates that Geary either did not always believe that section 306 applied to independent administrations, or he was willing to ignore 306 until he deemed it advantageous to recognize its applicability.
3 See Texas Commerce Bank — Austin, N.A. v.Estate of Cox, 783 S.W.2d 16 (Tex.App. — Austin 1989, writ denied); Joffrion v. Texas Bank, 780 S.W.2d 451
(Tex.App. — Texarkana 1989), vacated persettlement, 792 S.W.2d 456 (Tex. 1990); GibraltarMortgage Loan Corp. v. Lerman, 346 S.W.2d 487
(Tex.Civ.App. — Waco 1961, no writ). But see GrossNat'l Bank v. Merchant, 459 S.W.2d 483 (Tex.Civ.App. — San Antonio 1970, no writ).
4 Fischer was an executor of the deceased's estate.
5 Section 313 requires that suit be brought within ninety days after a claim is rejected.