ESTATE OF SPENCER

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No. 01-355 1N THE SUPREME COIJRT OF THE STATE OF MONTANA 2002 MT 304 IN THE MATTER OF THE ESTATE OF FD vff 4 83 L A & ;@ . PATRICIA ANN SPENCER. Deceased. APPEAL FROM: District Court of the Fourth judicial District, In and for the County of Missoula. Honorable Johil W. L,arson, Judge Presiding COIJNSEL. OF RECORD: For Appellant: Quentin hl.Rhoades, Sullivail, Tabaracci & Rhoades, Missoula, Montana For Respondent' Charles W. Schuyler, hlars~llo Schuyler. PLLC, M~ssoula, & Montana Submitted oil Rnefs Octobcr 18. 2001 Dended Filed: December 12,2002 iiisiicc Jim Rice delivered tI?c Opinion of the i'oiirt. ,' tI\ppclIar~t.Iexas Commerce Bank; N . : (i3:rnk), appeals fro13rhc dccret. ci~tcred by the District Court for tho Fo~~rtlr Judicial District, Wissoulir County, in the Esiaie of Patricia A n n Spencer (Estate). ~thicil found that tlie Bank's claini against tile Ectirte wars time-barred. LVc reverse and remand. 72 We restate the dispositivc issues on appeal as follows: 73 1. t h e s this Court lack jurisdiction because the Bank's appeal was untimcly'l 7,4 2. Was the Bank cnt~tled a notlee of hear~ngon the personal representati~e's to petition for ndjud~catlonof nitestacy. for cletermtnation of hem, and for settlement and ilistrihution of the estate'? fict~tolN e: 5 I I ProceiJurtrl ~ K(lckgvo!rrtrl The facts in this matter arc uncontested. On March 2 3 , 2000: blichael Z. Spencer (Spencer) filed an application for inforrnal appointment of personal representative in intestacy for the cstatc of his niotl~cr, Patricia Ann Spencer, with the \.Iissoula County-Clerk of ('oui-t's office. On the same day, tlie clerk of court perfunctor~lyissued 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 Heirs anci Devisees" and served a copy upon bferitech Mortgage Sewices. to 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 rcquircd cseiiitcirs ro fiie slairns withi11four inontlls of the date o f the first p~lklicaiion f t h e i~orics. o i ilc iidni\ d ~ not file a demand tor noricc as an lntcrestea pci-son d "r; Sin September 18,2000, the Bank filed a creditor's claim in the amount of S53.454.90. Despite the filing of the claim more than five months after March 23, 2000, Spcnccr considered the Bank's c l a ~ m allowed 535,031.59, d~sallourng rcrnalndcr and the ' 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 forth in tj 72-3set 805(1), MCA,' that the c l a ~ m nould be 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 the notlee. Sixt4-onc days later, on No\ ember 28,2000, the Bank filed of 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 an Intestate h a t e and a notlce of hearing on the petition. of vi hrch n a s set 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 of distribution, order acijudieating intestacy: order determ~ntng helrs, and order appro\ tng final account of an intestate estate. Further. the .-. Ihe possible untimely filing oi'thc Rank's initial claim is not an issue in this appeal, although the Bank iias challenged Spencer's publ~shing ofthe noticit to creditors in the ~'vti.s.soulirI~~depeii(letit, corrtending that this newspaper does not constiti~te --newspaper oi'generai circulation" requircd hy $ 72a 3-801(l). MC'A. "l:nlcss indicated otherwise. ail citations are to the 1900 version oi'the Montana ( o d e Annotated. .. .,.. (j, ~ LL discharged , i i Spencer from 'his office as pcrsor~al rcpresentat~~/i. Regardii~g Bank's tkc c!a!rn. rhe dccrce ~ t a t c d foiiou.;. as The Koticc of Disallowancc efkctivcly bars the di~allo-~\ed of part Texas Cotnniercc Bank N..A,, creditor's claim. hccause t!ic crctditor failed to commence a proceeding not later than November 27.20i)0, which dare is sixty (60) days after mailing of the notice of disallowance, on September 29,2000, and therefore the creditor's pct~tionfiled in a separate action, is barred b> I/IC/"~CC72-3-805(lj 18 No notice of entry of judgment pursuant to Rule 77(d), hl.R.C:iv.P., was filed or seried follouing entry of the decree. On Apr~l13. 2001, the Rank filed a notrcc of appeal from the decree. 19 Does this Court lack jurisdiction because the Rank's appeal was utltitnely? 710 Spellceri contends that 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~l13, 2001, over three months later. C'ittng our lroldnigs in ifunhe1bt.1-geiL I3lrrlitrgton hill-tlrerrz (1 994), 265 'Llont. 243, 876 P.2d. 21 8, and Cliulliiror v. Glacier iVcll. H n r ~ i z( 1 9 K ) , 283 blont. 342,943 P.2d 83, Spencer argues that the Rank's f a ~ l i ~toetile an r 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 the appeal of 12cspondcnt's connscl contends that Spencer is not a proper pa-iy to this appeal. 'oc.c:iusi. hi. was discharged iiom his duties by thc dccrcc. fJowev~r. I ) U ~ > ~ S Cof ih!s appeal, which challenges the Sor S validity of thc decree. Spcnccr remains the proper party. 4 11 Although Rule 5 provides f i a t thc thirty-day appeal period cornn?cnces upon the filing of a rlotice of entry ofjudgtncrit pursuant to Rulc 77jd), M.k.Civ.P.. Spclncer cunterids that he was not required to file and serve a notice of entry of judgliicnt ihllo\ving the ilistrict Court's entry of the decree. Citing $72- 1-207, MCA. which provides that ihc Rules of C'ivi! f'rocedure are applicable to formal proceedings, Spencer argues therefrom that, con~erscly, the Rules are not apphcable to ~nformalproceedings. Spencer explains that he protided nottce to the Bank reyuired by the statutes g o t c r ~ i ~ n g rnfonnal proceedings, that being publication of a notice to creditors, and also provided actual written notice of the 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 proceedings by Rulc 81(c); M.R.Civ.P., entitled "Rules incorporated into statutes." .4ltcrni1ti\!cly. the Bank argues that; in any event, Spcmcer7spetition for judicial 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, therefore, the izcciring on and ihi: petition hcijrc Judge Larson consriluied a forinai pioceeding lo which the Ru!ii ofCiivi1 Proccdure applied, and cntrq of a notlcc of entrq ofthe decree thereafter mas requrted under Rule 77(d) W~thotlt notrce of entry of the decree. thc Bank contends. thc thrrty-day appeal a period did not begin to run 1' 13 Rule S l(c), M.R.CI> states as folloas: .P., 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-nlto these rules: insofar as practicable. Rule 81(c) s~mply spphes the 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 elk11act~on" "as prok~ded any statute superseded" b) the Rules. Rule 8 l(c) doc? not or by 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 govented by tlie spcclfic proccciurai prokisrons set hrth in are 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. 1' 14 %~ Section 72-i-207, Mi'~4 (emphasis lidded). ,Although thc Bank's Rule 8 I(c) argumcnt is without merit, illat is not the cnd nf thc matter. The critical issue here is whether Spencer's rcyiiest for judicial approval of the settlement and distribution of the estate changed thc proceeding from informal to formal. Both partics concede that 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 one throughout the entire process, which concluded with the entry of thc District Court's decree. 7 15 l'he linifonn Probate Code ([.!PC) provides for a "Flexible System of '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~inationof testacy to be commcnced either for111ally or ~nformally an? mtercsted party. Further, the by I.lPC also envisions the use of formal and informal proceedings i n 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 inforfutally or after notice) may use an "in and out" relationship to the court so that any question or assumption relatingto the estate, including the status of an estate as testate or intestate, matters relating to one or Inore claims. disputed titles; accounts of persona! reprcscntativcs; and distribution, may bc resolved or established by adjudication after notice without necessarily sabjccting rhc estate to the necessitl- of judicial orders in rcgard to other or fi~rthcr questions or assumptions. Overall, the system accepts the premise that the court's role in regard and to probate and adn~inistration, 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 proceedings are the judge's involvement andnotice. :\s correctly argued by the Bank, formal proceedings are conducted by a judge 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 ofcourt and generally do not require notice to itlterested persons. Section 72-1103(,24), MCA. (See czl.~othe descriptiori in CPC, Official Comments, Ch. 3, of informal probate as "a nonadjudicative determination.") Consequently, Spencer's act of petitioning and forjudicial approval of his final account, and for the settlen~ent distribution of the estate, converted the proceeding, at that point and for those purposes, to a formal proceeding, 1' 16 As we have already stated, the Rules of Civil Procedure are applicable to forma! estatc proceedings. Further, this Court has specifically held that Rule 77(dj, M.R.Civ.P., 111ustbc applied to the entry o f a decree in a formal estate procei--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 a ijrmal cstatc decree for \\-hiell the 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 notrce of entry of the decree. becnusc "'de\rsce" tias iilclt~dcd to within the definition of "intercstcd person" for estates set forth in 6 72-1-103(25), 5lC.i. The Con13then concluded. TIIC effect 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 of orders 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. Tlte District C;ozrrdt (1978), 177 Mont. 50, 579 P.2d 700, 701-762; I-Iuj~>t:ood Secliilo (1975), 167 Mont. 101, 104, 535 P.2d 1014. v. 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 of the District Court has not yet begun to run. This is important in fonnal probate proceedings because the MUPC allows the District Court to modify or vacate orders in the proceedings within the time allowed for appeal. Section 72-3-1 18, MCA. E.~tiztc'O f f l o l ~ ~ ~ c s , 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 $ 72-1103(25), ClCA ('"[iJnterested person' includes heirs, devisees, children, spouses, creditors . h s such, the Bank was entitled to notice of ciitry of the formal estate decree. Although Rule 77(d) has been amended since Estarc (fHolr~rcs require the parties, instead to of thc clerk of court, to serve the notlee. the effect is the same, and Spencer's relrance on i)i~tiltrl/~ci-get- C%(zll111ot- misplaced. The th~rtl-dayappeal time enforced In those arid IS decisions did not begin to run here. 7 The Rank has filed zt timely appeal. and this Corrrt has jurisdictioii 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 has jurisdiction 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. The better procedure would have been for the Bank, prtor to filsng its appeal. ro ha\ e in~trated service ofthc notice of entry itself. Such service would have properly activated the postjudgment time frasnes established 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 of heirs, 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 of hearing 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 appear and contest Spencer's assertion that the Bank's claim was time-barred. The Bank also briefly avers a violation ofconstitutional due process, hut docs not develop the argument, anti the issue will not be addressed here. The Court will not consider unsupported issucs or arguments. h re Citirociy qy"Kru~rse, i M T 37, rl 31;-304 Vont, 202,8; 19 P.3d 81 1: i 200 32, 41 '1 Spencer argues that he ga\ e inore than suffic~ent notice to thc Bank ire notcs 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 of tile 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 an> further of 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 72-3-2 1 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 any personal representative of the decedent whose appointment has not been temiinated. (2) No other notice of informal probate is required. and by Spencer excuses 111sfailure to s e n e the Bank mitli the pet~tion notree of hear~ng agdrn arguing that this was an informal proceeding, and as such, was to he compleied w i t h a t notice to interested persons, because infoi-nmal proceedings are so defined 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 further notice to the Rank, citiiig tile jnstruction in j? 73-3- 21 1(2)*MCX, that "jnlo further notice of informal probate is required." "/23 Spencer's reliance on these statutoryprovisions is based on his flalved assumption that the proceeding remained an informal one, w e n though he had filed a petition for judicial appro~ial. As den~onstrated tinder Issue I, that assertion is erroneous, 'The filing of the petition, requesting intenention by a district court judge, changed the matter to a formal proceeding for purposes of the 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 of its claim, the Bank \?-asentitled to notice of the hearing under 5 72-1-805(3), MCA, wliich requires notice to be given to a claimant of a 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 of complete settlement. ( I ) A personal representative or any interested person may petition for an order ofcomplete settlement ofthe estate. The personal representative niay petition at any time, and any other interested person may petition after 1 year froin the appointment of the 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 heirs. and to accounting and distribution, to construe any will or dctern~inc adjudicate the final scttlcment and distribution of the estate. ( 3 ) /!tier itotice to iili intercsrcli ~icr.s-ioiis hearing, ihe court may iijrd 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 directing or approving distribution ofthe estate and 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 notice of tlre hearing and the opportunity to appear and contest the judicial adjudication sought by the personal representative. .I24 Addressing a similar issue in Estate cf/-I(?/~nes, Court held that. in a formal cstatc this proeceding, judicial "orders issued without notice are not binding on the parties that do not receive notice." Estate of Holnzcs, 183 Mont. 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~onof 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 reach these issues, deeming them appropriate for to resolution, if neccssarq, by the D ~ s t r ~Court foliow~ng 11en hearrng, dfter notlee. on the ct a personal reprcsentat~\e's petltlon. \I.R.App.P., sanctions We deny the Respondent's rcclriest for Rule 32, 7125 Rcvcrsc<i ar?d rcn~slndrci !i~ril~er for proceedings consislcnt herewith. \Ye concur:

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