Chittenden Trust Co. v. MacPherson

• Decision Date: 03 February 1981
• Docket Number: No. 58-80,58-80
• Parties: CHITTENDEN TRUST COMPANY, Executor of the Estates of Harlan J. Wilcox and Mary S. Levin v. Stephen J. MacPHERSON, Vermont Commissioner of Finance, Emory A. Hebard, Vermont State Treasurer, and State of Vermont.
• Court: Vermont Supreme Court

Page 356

427 A.2d 356

139 Vt. 281

CHITTENDEN TRUST COMPANY, Executor of the Estates of Harlan J. Wilcox and Mary S. Levin v. Stephen J. MacPHERSON, Vermont Commissioner of Finance Emory A. Hebard, Vermont State Treasurer, and State of Vermont.

No. 58-80.

Supreme Court of Vermont.

Feb. 3, 1981.

Clarke A. Gravel, Robert B. Hemley and John P. Cain of Gravel, Shea & Wright, Ltd., Burlington, for plaintiff.

M. Jerome Diamond, Atty. Gen., and Harriet A. King, Sp. Asst. Atty. Gen., Montpelier, and Brian J. Gallagher, John Hartje, and Lisa Goldberg Ozer of Kronish, Lieb, Shainswit, Weiner & Hellman, New York City, for defendants.

Before BARNEY, C. J., LARROW, BILLINGS and HILL, JJ., and SHANGRAW, C. J., (Ret.), Specially Assigned.

LARROW, Justice.

Chittenden Trust Company, as executor of two closed estates in the Chittenden Probate Court, brought a civil action in Chittenden Superior Court under 32 V.S.A. § 509, seeking recovery of probate distribution fees paid to the state under 32 V.S.A. § 1434(6). Those fees were paid before our decision in In re Estate of Eddy, 135 Vt. 468, 380 A.2d 530 (1977), adjudging the fee in reality a tax, and unconstitutional. Chittenden also sought class action status for its litigation under V.R.C.P. 23, as representative of other probate estates similarly situated. The trial court first accorded such status, then later revoked it. On undisputed facts, it awarded Chittenden summary judgment for the amounts paid, but without prejudgment interest. Cross-appeals resulted, with the Chittenden claiming denial of class action status and of interest to be error, and the State of Vermont claiming the action to be barred by res judicata. We consider first this latter contention, as potentially dispositive of both appeals.

A brief analysis of the two cases giving rise to this one is in order. In Eddy, supra, we struck down the charge labelled by the statute as a distribution fee, holding it in reality a tax, and violative of the proportional contribution clause (Ch. I, Art. 9) of the Vermont Constitution. That challenge was by direct appeal from the probate court. In In re Estate of Webb, 136 Vt. 582, 397 A.2d 81 (1978), we directed a refund of the portion of a fee already paid, again in an appeal from the probate court. Both cases were challenges mounted by direct appeal before final decree, in estates as yet undistributed. They differ significantly from the instant case, brought after decrees were entered and unappealed from. Collateral attack is here sought to be substituted for direct attack, by resort to 32 V.S.A. § 509.

By its terms, § 509 authorizes a person who has made overpayment to the state to recover such amount in an action of contract on the statute. Concededly, the applicable statute of limitations is the general one of six years (12 V.S.A. § 511), if § 509 applies. Thus Chittenden's argument, simply put, is that despite the probate decree adjudicating the amount of the fee and ordering distribution of the estate assets, the executor may, within six years, bring suit to recover the sums paid over to the state as directed by the decree. In opposition, the State argues that the executor passed up its chance to contest the distribution fee, that second thoughts prompted by Eddy are now unavailing, and that the claim is now foreclosed. We so hold.

In both the Wilcox and Levin estates, the subject of this action, the Chittenden Probate Court adjudicated the distribution fees and incorporated them in its decrees. It was bound by statute to make that determination and include it in its judgment order. In re Estate of Davis, 129 Vt. 162, 165, 274 A.2d 491, 494 (1971) (inheritance tax). Final distribution decrees are in rem, conclusively disposing of all estate assets, including those used to pay fees and taxes. Everett v. Wing, 103 Vt. 488, 492, 156 A. 393, 395 (1931). Absent a timely appeal, they become conclusive and have the same res judicata effect as final judgment of Vermont's other courts of record. Probate Court v. American Fidelity Co., 113 Vt. 418, 420, 35 A.2d 495, 496 (1944); In re Warner's Estate, 98 Vt. 254, 268, 127 A. 362, 368 (1925). Whether the decree is right or wrong does not affect this result, because the probate court has jurisdiction to make a wrong, as well as a right, decision. Hardenbergh v. Commissioner, 198 F.2d 63 (8th Cir.), cert. denied, 344 U.S. 836, 73 S.Ct. 45, 97 L.Ed. 650 (1952). Neither Eddy nor Webb dictate any contrary result; as above indicated they both involved open, not closed, estates, and the holdings were so limited. In re Estate of Webb, supra, 136 Vt. at 585, 397 A.2d at 84.

Chittenden urges, however, that two of our prior holdings tend to negate this result, at least implicitly. It cites Bassett v. Vermont Tax Department, 135 Vt. 257, 376 A.2d 731 (1977), and In re Estate of Mahoney, 126 Vt. 31, 220 A.2d 475 (1966), as examples of collateral attack on probate decrees. Both cases are clearly distinguishable. Bassett had to do with the proceeds of a wrongful death action. Such proceeds are not a part of the probate estate, and their distribution is specifically entrusted to the superior court. 14 V.S.A. § 1492(c)(6). And in Mahoney we held imposition of a constructive trust upon a killer inheriting from her victim was beyond the jurisdiction of the probate court. Both cases involve attack based upon lack of jurisdiction, an element not here present. Attempted here is an attack upon the merits, not upon the jurisdiction of the probate court. This is the sort of attack which res judicata precludes. When jurisdiction is present, error, if any, in the probate decree is the subject of an appeal. Without such appeal, issues which were or could have been raised in the probate court, are conclusively determined as between the parties, in the absence of fraud. Ward v. Congregational Church, 66 Vt. 490, 29 A. 770 (1894); Goff v....