J. FOX DEMOISEY, EXECUTOR OF THE ESTATE OF JEAN C. FOX DEMOISEY v. RIVER DOWNS INVESTMENT COMPANY
Annotate this Case
Download PDF
RENDERED:
February 11, 2005; 2:00 p.m.
TO BE PUBLISHED
MODIFIED: March 11, 2005; 2:00 p.m.
Commonwealth Of Kentucky
Court of Appeals
NO. 2003-CA-002458-DG
J. FOX DEMOISEY, EXECUTOR OF
THE ESTATE OF JEAN C. FOX DEMOISEY
APPELLANT
v.
ON DISCRETIONARY REVIEW FROM CAMPBELL CIRCUIT COURT
HONORABLE WILLIAM J. WEHR
ACTION NO. 03-XX-00011
RIVER DOWNS INVESTMENT COMPANY
AND
NO. 2004-CA-000370-MR
THE ESTATE OF JEAN C. DEMOISEY,
J. FOX DEMOISEY, EXECUTOR
v.
APPELLEE
APPELLANT
APPEAL FROM CAMPBELL CIRCUIT COURT
HONORABLE LEONARD L. KOPOWSKI, JUDGE
ACTION NO. 02-CI-01703
RIVER DOWNS INVESTMENT COMPANY
OPINION
AFFIRMING
APPELLEE
** ** ** ** **
BEFORE:
SCHRODER, TAYLOR, AND VANMETER, JUDGES.
VANMETER, JUDGE:
Under KRS 372.010, a promissory note issued to
cover an otherwise lawful horseracing debt is void and
unenforceable.
We are called upon to decide whether an
executor’s failure to disallow a claim based on such a note,
within the time period prescribed by statute, converted the void
debt into one required to be paid.
We hold that it did, and we
therefore affirm the decisions of the Campbell Circuit Court.
Prior to his death, Jean C. DeMoisey had a telephone
betting account with River Downs Investment Company.
Approximately two weeks prior to his death, DeMoisey signed a
promissory note in favor of River Downs for the $34,510.80
deficit in the account.
DeMoisey died on December 27, 1998.
J.
Fox DeMoisey (executor) was appointed executor of his father’s
will on February 4, 1999.
On March 15, 1999, River Downs sent a
written claim based on the promissory note to the executor, who
acknowledged receipt on March 22.
On June 28, 1999, the
executor sent a letter to River Downs, explicitly stating that
it was not a rejection of the claim, but requesting more
information concerning the note.
In November 2001, River Downs sent the executor a
letter inquiring about the status of the claim.
-2-
Nearly a year
later, on October 24, 2002, counsel for the executor sent a
letter to River Downs disallowing the claim as void pursuant to
KRS 372.010, and advising River Downs of the sixty-day time
period in which any action must be filed under KRS 396.055.
River Downs then filed concurrent collection actions
in the Campbell District Court (No. 02-C-1897) and the Campbell
Circuit Court (No. 02-CI-1703), each seeking to collect the
debt.
The circuit court’s order granting the executor’s motion
for summary judgment was not appealed.
In the district court
action, the court initially dismissed the claim as being in
excess of the court’s jurisdictional limit, but it subsequently
set that order aside and held the matter in abeyance pending a
probate hearing as to the claim and whether the executor had
ever disallowed the claim.
Following a June 2003 hearing in the probate matter
(No. 99-P-68), the Campbell District Court found that the
executor had allowed the claim by failure to timely disallow it,
that the attempt to disallow the claim in October 2002 was
ineffective, and that the executor had presented no evidence to
justify a late disallowance.
As a result, the district court
also dismissed the collection action (No. 02-C-1897) as being
moot.
River Downs then filed a motion in the circuit court
action (No. 02-CI-1703), requesting the court to set aside the
-3-
summary judgment in favor of the estate.
The Campbell Circuit
Court held the motion in abeyance pending its ruling on the
executor’s appeal of the district court probate decision (No.
99-P-68) regarding the timeliness of the disallowance of the
claim.
After the circuit court affirmed the probate decision,
it set aside its earlier judgment in No. 02-CI-1703 and
subsequently dismissed that action.
The executor filed a direct
appeal from the circuit court’s dismissal of action
No. 02-CI-1703, and this court granted discretionary review as
to the probate decision.
The executor’s first two arguments are related and
touch on the underlying transaction: 1) that the district court
erred in allowing a claim which is void, and 2) that the
district court erred in allowing a claim which also constitutes
illegal activity.1
The executor cites Kentucky Off-Track
Betting, Inc. v. McBurney,2 in support of his argument that the
debt and the note at issue in this case are void and therefore
uncollectible pursuant to KRS 372.010.3
1
The executor’s argument concerning illegality is based on both KRS 528.050,
concerning possession of gambling records, and Ohio Admin. Code 3769-3-32,
regulating telephone account wagering.
2
993 S.W.2d 946 (Ky. 1999)
3
Because we hold that the claim was allowed and payable under KRS Chapter
396, we need not decide the effect of the 2000 enactment of KRS 372.005 which
provides that KRS Chapter 372 does “not apply to betting, gaming or wagering
that has been authorized, permitted, or legalized, including . . . all
activities and transactions permitted under KRS Chapters 154A, 230, and 238.”
-4-
The executor’s argument fails to take into account the
effects of the overlay of KRS Chapter 396 on this case.
While
the executor makes a compelling argument that the transaction is
void, the fact remains that upon presentation of the claim, the
executor failed to disallow the claim in the time period
required.
Under KRS 396.011, claims must be presented within
six months after the appointment of the personal representative.
No question exists that River Downs timely presented its claim.
Under KRS 396.055(1), a personal representative has only two
options with respect to a claim: either allow it or disallow it.
If it is allowed, the claim is payable.4
If it is disallowed,
the claimant must commence a separate collection action against
the personal representative.5
A third possibility, inaction,
results in allowance:
Failure of the personal representative to
mail notice to a claimant of action on his
claim for sixty (60) days after the time for
original presentation of the claim has
expired has the effect of a notice of
allowance, except that upon petition of the
personal representative and upon notice to
the claimant, the court at any time before
payment of such claim may for cause shown
permit the personal representative to
disallow such claim.6
4
KRS 396.075.
5
KRS 396.055(1).
6
KRS 396.055(1).
-5-
In this case, the executor was appointed on February
4, 1999.
Claims were required to be presented within six months
following that date, i.e., by August 4, 1999.7
The executor was
required to either allow or disallow claims within sixty more
days, or by approximately October 3, 1999.
In this instance,
the executor requested more information concerning the claim, as
he was permitted to do.8
Doing so, however, did not relieve him
of the obligation to take some action on the claim by October
1999.
As he took no action, the passage of time resulted in an
allowance of the claim.
Only by petitioning the court, and
showing cause for not responding to the claim, could the
executor then disallow the claim.
In the recent case of Patterson v. Estate of Boone,9
the court discussed the meaning of KRS 396.055 and the
requirement that a personal representative must show cause for
failing to act on a claim.
The court stated in detail:
Our legislature, in contrast, has
specifically placed a limitation on the
discretion of a personal representative to
disallow a claim previously allowed by
reason of inaction. We agree with the
estate that the only time-limitation on the
discretion to disallow the claim is that it
7
KRS 396.011.
8
Under KRS 396.026, a personal representative may request formal information
regarding a claim. A personal representative may certainly make a more
informal request concerning a claim, as occurred in this case.
9
150 S.W.3d 58 (Ky. App. 2003).
-6-
must be done before payment. However, the
legislature later provided that when the
claim has been allowed by the personal
representative's inaction, in order to later
disallow the claim the representative is
required to petition the court and to "show
cause." Obviously, the legislature rejected
the absolute right to disallow a claim
previously allowed by the representative's
inaction.
The term "cause" is not defined in
KRS 396.055. Nor does the statute explicitly
state whether the showing of cause relates
to the reason that the representative did
not act on the claim before the expiration
of sixty days, or to the merits of the claim
itself. We find that when read in the
context of the entire statute, the "cause"
referred to in KRS 396.055(1) refers to a
reasonable cause for not responding to the
claim within the sixty-day period and not to
the merits of the claim.10
In Patterson, the claim presented was a contingent
liability of nearly $6,000,000.
The cause shown by the Boone
estate related to the size of the debt, the complexity of the
decedent’s financial dealings, and the need to accumulate a
number of documents before that estate could make an informed
decision as to allowance or disallowance.
This was held to be a
sufficient cause for the delay of slightly over one year in
seeking to disallow, and the Boone estate was permitted to
disallow the claim.
Here, by contrast, the Campbell District Court
specifically found that “[n]o evidence has been presented to
10
Id. at 61 (emphasis added).
-7-
justify or even to explain the failure to file a timely notice
of disallowance.”
Our review of the record confirms that the
sole ground for the executor’s argument that disallowance should
be permitted was the holding in Kentucky Off-Track Betting, Inc.
v. McBurney that a transaction of this type was void.
This
ground, however, which related to the merits of the claim had
nothing to do with any delay in disallowing the claim by the
executor.
Furthermore, the decision in McBurney was rendered in
June 1999, which was well before the October 1999 expiration of
the time period for the executor to take action.
The record
indicates that the executor exchanged correspondence, had
discussions with River Downs concerning the debt, and received
records relating to the underlying transactions.
Until October
2002, the executor took no steps to disallow the claim, and he
did not approach the district court for permission to disallow
the claim until June 2003.
However, as noted by this court in
Patterson and by the Campbell District Court below, the issue at
any hearing under KRS 396.055(1) is whether reasonable cause is
shown for failing to respond to the claim within the sixty-day
period, and not whether the claim has merit.
Once the claim was allowed, it was payable under KRS
396.075, which provides that if an allowed claim is not paid,
the claimant may apply to the court for an order directing the
personal representative to satisfy the claim to the extent that
-8-
funds in the estate are available.
The reference in KRS 396.075
to "the court" clearly pertains to the district court, as
probate matters fall within the exclusive jurisdiction of the
district court, and the allowance or disallowance of claims is
not designated as an adversarial proceeding.11
At the point in the proceeding that River Downs filed
the circuit court action (No. 02-CI-1703), the executor had
failed to disallow the claim, and the claim was then still
payable by an application and order from the district court.
Since the circuit court lacked subject matter jurisdiction,
River Downs's suit should have been dismissed.
“[A]ny attempt
of a court to adjudicate a case when it has no jurisdiction of
the subject matter of the action . . . is void and of no
effect.”12
Thus, the original summary judgment was not res
judicata, and any failure of the circuit court to permit further
pleadings was not error.
The executor’s final argument is that any payment of
the claim creates an absurd result, since the estate would have
an immediate claim for the recovery of gambling losses under KRS
11
KRS 24A.120(2), (3). The amount of money involved in the claim is
irrelevant. See e.g., Privett v. Clendenin, Ky., 52 S.W.3d 530, 532 (2001)
(amount in controversy in an action under the Uniform Transfers to Minors Act
(UTMA) is not dispositive, even if it exceeds the normal jurisdictional limit
of district court, since the UTMA statute grants exclusive jurisdiction to
district court).
12
Max Ams, Inc. v. Barker, 293 Ky. 698, 701, 170 S.W.2d 45, 47 (1943)
(emphasis original).
-9-
372.020.
This argument, however, was not advanced to the
Campbell District Court.
As such, we will not consider it on
this appeal.13
The judgments of the Campbell Circuit Court are
affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Richard W. Hill
Louisville, Kentucky
Richard L. Robinson
Paul Alley
Ft. Mitchell, Kentucky
13
Hibbitts v. Cumberland Valley Nat’l Bank & Trust Co., 977 S.W.2d 252, 253
(Ky. App. 1998)(court holding that “‘[t]he Court of Appeals is without
authority to review issues not raised in or decided by the trial court’”
(quoting Regional Jail Auth. v. Tackett, 770 S.W.2d 225, 228 (Ky. 1989)).
-10-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
