Grimes v. Grimes

• Decision Date: 25 June 1931
• Docket Number: No. B-37.,B-37.
• Citation: 52 F.2d 171
• Parties: GRIMES et al. v. GRIMES et al.
• Court: U.S. District Court — District of Nevada

52 F.2d 171 (1931)

GRIMES et al. v. GRIMES et al.

No. B-37.

District Court, D. Nevada.

June 25, 1931.

COPYRIGHT MATERIAL OMITTED

S. C. Herren, of Barrington, Ill., and William McKnight, of Reno, Nev., for plaintiffs.

Cooke & Stoddard, of Reno, Nev., for defendants.

NORCROSS, District Judge.

This is a suit in equity brought by plaintiffs, who are heirs at law of W. C. Grimes, deceased, against Ellen R. Grimes, widow, devisee and trustee under the will of said decedent, and L. N. French, individually and as administrator with the will annexed.

Plaintiffs pray relief to the effect that defendants hold an undivided one-half of the estate of said decedent in trust for plaintiffs subject to the terms and conditions of said last will and testament; that the defendant L. N. French account to plaintiffs for one-half the sum of $3,300 allowed and paid to him as a claim against the estate; for the appointment of a receiver; and for general relief.

The relief prayed for is based mainly upon allegations of fraud upon the part of defendants in representing to the Second judicial district court of the State of Nevada, in proceedings before that court in the matter of the estate of W. C. Grimes, deceased, that all of the estate was community property, when in fact it was separate property. It is further alleged in an amendment to the original bill of complaint that the defendant French fraudulently induced one S. C. Herren, an attorney for plaintiffs who came to the state of Nevada from the state of Illinois to investigate matters concerning the estate, to desist from filing proceedings in the state court to obtain a modification of the final decree of distribution until after the time limit, six months, had expired in which such proceedings could be instituted. The answer denies all allegations of fraud.

The record discloses a number of hearings on motions to dismiss, for the appointment of a receiver, and for other purposes prior to taking testimony upon the original hearing. The case was finally tried and submitted, and was under consideration by Judge Farrington at the time of the latter's death. The case has subsequently been retried and submitted.

The defendant Ellen R. Grimes died November 15, 1928. Prior to her death she had assigned her interest in the estate to the defendant L. N. French as her agent and trustee, against whom the case is continued.

By the terms of the last will of W. C. Grimes, one-half of all the property of decedent was bequeathed to his wife absolutely. The remaining one-half was bequeathed to her in trust during her lifetime, she to have "all the income, interest, dividends and profits from the said property, and to retain said income, interest, dividends and profits for her own use and benefit during her life, and without the necessity of accounting to any person or court whatsoever as to the manner in which she may use or dispose of the same." The will further provided that upon her death "the property hereby bequeathed to her in trust, shall vest in and be equally divided between my brothers and sisters" or their descendants in the event of their death.

W. C. Grimes died March 24, 1920. On April 19, 1920, a petition for probate of his will was filed in the state court. The petition among other matters recited "that all of the estate of said deceased, both real and personal, is community property." At the time of the hearing upon the petition some testimony, particularly that of the surviving widow, was offered concerning the character of the estate as respecting any portion thereof being separate property. At the time of the hearing the court appointed an attorney to represent the absent heirs; all of the heirs at law, other than the widow, residing outside the state. On August 14, 1920, an inventory and appraisement was filed; the personal estate being appraised at $83,698.66 and the real property at the sum of $1,000. The inventory made no statement respecting the character of the property as being community or separate, as required by Nevada Compiled Laws, § 9687. On February 24, 1921, the first and final account together with a petition for distribution was filed in the state court. On April 1, 1921, pursuant to notice, a hearing was held before the state court, testimony taken, the account approved, and final decree of distribution entered. Respecting the character of the estate, the final decree contains the following statement: "And it further appearing that the whole of said estate is common property, it having been acquired by said deceased after his marriage to Ellen R. Grimes his surviving widow." The estate distributed to the surviving widow in her own right and in trust, consisted of the following: Cash, $17,823.76; promissory notes, $50,938.64; Liberty bonds, $3,109.97; realty, appraised value, $1,000 — a total of $72,872.37. Shortly following distribution, the notes were paid, and the proceeds, or major portion thereof, invested in various corporate stocks.

Throughout the proceedings in this case it has been the contention of defendants that plaintiffs are not entitled to maintain this suit for the reason that the fraud alleged respecting the character of the property constituting the Grimes estate concerned a matter presented for consideration and determination in the estate proceedings in the state court, and that the decree of distribution was a final judgment and not subject to collateral attack for such alleged intrinsic fraud. It is further contended that plaintiffs have wholly failed to establish the only extrinsic fraud alleged — the misleading of Attorney Herren in delaying to move to reopen the estate proceedings and to modify the decree of distribution until after the six months' limitation for such purpose had expired; and, further, that a fraud occurring after the entry of final decree cannot relate back so as to be made available for attack upon the decree itself.

While plaintiffs had knowledge of the probate proceedings, of the provisions of the will and the fact that the estate would approximate $70,000, shortly following the institution of such proceedings, no action appears to have been taken by any of them respecting the estate or its character pending administration, which continued for a period of nearly a year. It was not until some months following receipt of a copy of the decree of distribution that plaintiff John M. Grimes, learning that S. C. Herren, a Chicago attorney, was going to the state of Washington on legal business, requested the latter to stop also in Nevada, make some investigation of the Grimes estate matter, and attend to having the decree amended to include the name of a niece of the decedent which had been omitted from the list of heirs entitled to share in the estate subject to the trust provision of the will. Attorney Herren arrived in Nevada late in August, 1921. He first visited Fallon, the county seat of Churchill county, and made some examination of the records in the county recorder's office of that county. He then came to Reno, where he had an interview with defendant French. It is upon this interview that the allegation is made in an amendment to the complaint that the defendant French fraudulently assured Herren that no objection would be interposed if a petition to modify the decree of distribution in respect to the estate of the decedent being separate rather than community property was not filed within six months from the date of decree as prescribed in the rules of the state district courts.

In the view taken of the law controlling a case of the character under consideration, it is unnecessary to refer at length to the questions presented respecting the allegation of fraud committed subsequent to entry of final decree. Suffice it now to say that the testimony submitted upon the part of plaintiffs in support of this latter allegation even if not controverted would scarcely support a conclusion that plaintiffs had been fraudulently misled into delaying proceedings to reopen the decree. Conceding without deciding that such an alleged fraud if established would entitle plaintiffs to relief, the evidence submitted clearly would not justify such a finding.

If, as claimed by plaintiffs, the estate of W. C. Grimes, deceased, was clearly separate property, which would materially affect the amount properly distributable as trust estate, and defendants failed to present available essential facts to the court, then may plaintiffs by action in personam in this court obtain a decree to the effect that defendants, or either of them, hold in trust for their benefit a portion of the estate in excess of that so decreed by the state court? This question is answered in the affirmative by two comparatively recent decisions of the Circuit Court of Appeals of this circuit. Diamond v. Connolly, 251 F. 234; Id., 276 F. 87; Hewitt v. Hewitt, 17 F.(2d) 716. See, also, Laun v. Kipp, 155 Wis. 347, 367, 145 N. W. 183, 190, 5 A. L. R. 655.

As devisee, trustee, and executrix named in the will and as administrator with the will annexed, respectively, defendants, in their relation to the other heirs of the estate, held a position of trust and confidence imposing upon them a positive duty to fully advise the court respecting available material facts concerning the value and character of the estate, and particularly respecting property rights and interests at the time of decedent's marriage.

If in fact the estate was separate property of decedent, the value of the share subject to distribution in trust would approximate, in round figures, $36,500. If the estate was all community, as determined by the state court, the portion to be distributed in accordance with the trust provision of the will would only be one-half such amount. If the estate was in part separate and in part community, the distribution would vary accordingly.

If it were essential to find actual fraud in the estate proceedings, the court may not be justified in so...