Barrett v. Macdonald, 38250

• Citation: 121 N.W.2d 165,264 Minn. 560
• Decision Date: 21 February 1963
• Docket Number: No. 38250,38250
• Parties: Susan P. BARRETT, Appellant, v. Alice P. MACDONALD, Respondent, Northern City National Bank of Duluth, Admr. C.T.A., Respondent, James B. Enochs, Executor, Respondent.
• Court: Supreme Court of Minnesota (US)

Page 165

121 N.W.2d 165

264 Minn. 560

Susan P. BARRETT, Appellant, v. Alice P. MACDONALD, Respondent Northern City National Bank of Duluth, Admr. C.T.A., Respondent James B. Enochs, Executor, Respondent.

No. 38250.

Supreme Court of Minnesota.

Feb. 21, 1963.

Rehearings Denied April 24, 1963.

Syllabus by the Court

1. After the time to appeal has elapsed, a final decree of distribution may be amended to give effect to a legatee's stipulation inadvertenty overlooked by the scrivener if the omission does not reflect the deliberate or considered judgment of the probate court.

2. In the absence of a clearly expressed agreement to treat the transaction as an advance, the actual number of shares of stock sold to pay a valid claim against the estate is not necessarily the number to be deducted from the distributive share of a beneficiary who has acknowledged an indebtedness to the estate in the amount of the claim.

3. If there is insufficient cash to adjust the disproportionate distribution of assets made necessary by the assignment to a legatee of her own debt to the estate, the value of property to be distributed in kind shall be determined as of the date of actual transfer to the legatees.

John D. Jenswold, Reavill, Jenswold, Neimeyer & Johnson, Duluth, Samuel S. Gill, Thelen, Marrin, Johnson & Bridges, Los Angeles, Cal., for appellant.

Wheeler, Burns & Buchanan, Duluth, for respondent Northern City Nat. Bank.

John G. Cedergren, Duluth, for respondent James B. Enochs.

Edwin A. Martini, Martini, Perkins, Harper & Gustafson, Duluth, for respondent Alice P. Macdonald.

OTIS, Justice.

Appellant, Susan P. Barrett, seeks review of a judgment allowing an amendment to a final decree of distribution entered in the probate court of St. Louis County whereby the sale of 1,594 shares of stock was treated by the administrator as an advance to appellant who was one of the residuary legatees.

The principal issues for determination are: (1) Whether the probate court's failure to give effect to a stipulation in entering its final decree of distribution was a clerical error or a judicial error, and (2) whether 1,594 shares of stock sold by the administrator to pay a claim against the estate, the amount of which a residuary legatee by stipulation agreed to have deducted from her share of the estate, constituted an advance to be deducted in kind from her one-half interest in the stock remaining for distribution.

The decedent, Clara E. Pastoret, died testate on May 28, 1956, leaving an estate which consisted principally of 6,662 shares of common stock in Minnesota Mining and Manufacturing Company, valued at the time of her death at an amount in excess of $878,500. By the terms of her will, dated July 31, 1950, she bequeathed the residue of her estate 'share and share alike' to her daughters, Susan P. Barrett, the appellant, and Alice P. Macdonald, one of the respondents.

It appears without dispute that in November 1954 Mrs. Barrett's husband received from Mrs. Pastoret a loan of $100,000, unsecured and not evidenced by any writing. The money paid to Mr. Barrett was borrowed by Mrs. Pastoret from the predecessor of Northern City National Bank of Duluth and was secured by 2,000 shares of common stock in Minnesota Mining and Manufacturing Company. The note was renewed in November 1955. Interest was paid to the bank by Mr. Barrett. While Mrs. Macdonald asserts that the court can give no effect to the contention that the loan was not made to Mrs. Barrett but was made to her husband, because that issue was not raised in the appeal from probate court to district court, we need not determine that question since our decision rests on other grounds.

A dispute having arisen over the selection of a representative, the court appointed the predecessor of Northern City National Bank of Duluth as administrator c.t.a. and James B. Enochs as executor. In the due course of administration the bank's claim against the estate for the $100,000 borrowed by Mrs. Pastoret was filed in the probate court. Objection to the claim was made by the executor on the ground that it was not a charge against Mrs. Pastoret but against Mrs. Barrett. To resolve this dispute, the following stipulation was entered into by Mrs. Barrett, Mr. Enochs, and the bank, on November 14, 1956:

'WHEREAS, The City National Bank of Duluth has heretofore filed its claim in the above entitled estate, stating that the above named decedent, Clara E. Pastoret, was indebted to it in the amount of $100,000.00 as evidenced by Promissory Note in such amount, dated November 9, 1955, due six (6) months after date, bearing five percent (5%) interest, signed by said decedent, and for which 2,000 shares of Minnesota Mining and Manufacturing Company common stock was pledged as collateral security thereto; and

'WHEREAS, an objection has been filed to the allowance of such claim; and

'WHEREAS, the undersigned, Susan P. Barrett, daughter of said decedent, has at all times acknowledged that she is liable for the full amount of such claim, to-wit: The sum of $100,000.00 plus interest to date of payment; has never disputed such fact; and now wishes further to confirm her liability.

'NOW, THEREFORE, it is hereby stipulated by and between the undersigned, Susan P. Barrett, and the undersigned representatives of the estate of the above named decedent that:

'1. Said claim of The City National Bank of Duluth, in the amount of $100,000.00 plus interest to date of payment, is a valid claim against the estate of said decedent and is to be allowed in full by the above named Court; and

'2. Said Susan P. Barrett is indebted to said estate in an amount equal to the allowed and paid claim of said bank, to the end that if said claim be allowed and paid, there shall be deducted from the share of said Susan P. Barrett as an heir of said decedent an amount equal to the claim as so allowed and paid.'

Thereafter, on December 13, 1956, Mrs. Barrett's attorney wrote counsel for the bank asking that the claim be paid to stop the running of interest. Meanwhile, the representatives had begun the liquidation of 5,800 shares of Minnesota Mining stock at approximately inventory value in anticipation of paying taxes, expenses of administration, and the $100,000 note. It is undisputed that the correct amount of the claim with accumulated interest was $103,111.10. The stock having been split 2-for-1 in June 1956, a total of 13,324 shares were thereafter available tot he estate. On December 30, 1957, the final account in Mrs. Pastoret's estate was heard and a decree of distribution entered. The decree included both the claim acknowledged by Mrs. Barrett in the sum of $103,111.10 and the remaining 7,524 shares of Minnesota Mining, and ordered the residue assigned to Mrs. Barrett and Mrs. Macdonald in equal shares. In April 1958 the probate court's attention was called to the fact that the decree failed to give effect to Mrs. Barrett's stipulation, in that the claim of $103,000 was not deducted from her share of the estate. No steps were taken to amend the decree until December 1958, when, in a petition to the probate court, Mrs. Macdonald asserted that she was entitled to 4,544 shares of Minnesota Mining and Mrs. Barrett 2,980 shares, and that the difference be treated as an advance to Mrs. Barrett by the representatives. The probate court amended the decree in the manner requested by Mrs. Macdonald and assigned to Mrs. Barrett the estate's claim against her for $103,000. From that decree Mrs. Barrett appealed to the district court which in effect affirmed the probate court, but assigned 4,559 shares to Mrs. Macdonald and 2,965 shares to Mrs. Barrett.

The question of whether or not 1,594 shares of Minnesota Mining (equivalent in value to $103,000 in December 1956) should be treated as an advance has now become a matter of substantial concern by virtue of the greatly enhanced value of that stock, which after an additional 3-for-1 split is now worth over $285,000.

1. It is undisputed that the first decree of distribution, dated December 30, 1957, completely overlooked and ignored the stipulation between Mrs. Barrett and the representatives of the estate. Whereas the stipulation agreed that the amount of the bank's claim would be deducted from Mrs. Barrett's share of the estate, the decree in effect merely assigned to Mrs. Macdonald half of the estate's claim against Mrs. Barrett, leaving Mrs. Macdonald to whatever remedies she had for collecting from Mrs. Barrett her half of the $103,000.

The first question for determination is whether the decree was a judicial error which the probate court lost jurisdiction to correct after the 6-month period in which to appeal expired (Minn.St. 525.712), or whether it was a clerical error, or misprision, governed by § 525.02(4).

There was testimony in the district court that the clerk having responsibility for auditing final accounts attached a memorandum to the file containing the following notation:

'Stipulation in kind to be filed so property can be properly decreed because of claim (which has to be decreed to Susan).'

The clerk who actually prepared the decree testified that she inadvertently overlooked the memorandum as well as the stipulation and drafted the decree without reference to either instrument. Although the record shows that at the hearing on the final account the probate judge inquired about a stipulation in kind to give effect to the assignment to Mrs. Barrett of the bank's claim, he testified that he had no recollection of actually reading the decree before he signed it, and stated that under ordinary circumstances he would have no occasion to do so. He expressed doubts that he either read it or directed the manner in which it should be prepared. He frankly stated that he relied on 'two very competent employees' who were experts in performing their particular duties, and he had no independent knowledge of what distribution had been specified when he signed...