Estate of Pegg, Matter of

• Decision Date: 03 April 1984
• Docket Number: No. 83-142,83-142
• Citation: 41 St.Rep. 558,680 P.2d 316,209 Mont. 71
• Parties: In the Matter of the ESTATE OF Walter L. PEGG, Deceased.
• Court: Montana Supreme Court

Page 316

680 P.2d 316

209 Mont. 71

In the Matter of the ESTATE OF Walter L. PEGG, Deceased.

No. 83-142.

Supreme Court of Montana.

Submitted Dec. 8, 1983.

Decided April 3, 1984.

[209 Mont. 72] Jock B. West argued, Billings, for appellant.

Elmer J. Dolve and Russell K. Fillner, Russell K. Fillner argued, Billings, for respondent.

GULBRANDSON, Justice.

This appeal stems from orders of the District Court of the Fourteenth Judicial Circuit, Musselshell County, denying a motion to remove the personal representative of the estate of Walter L. Pegg and granting a motion to approve settlement of a wrongful death action pursued by the same personal representative. For the reasons stated below, we affirm in part, reverse in part, and remand the case to the District Court of the Thirteenth Judicial District Walter L. Pegg was killed in a helicopter crash approximately twenty miles southeast of Williston, North Dakota, on May 1, 1981. According to the death certificate filed with the North Dakota Department of Health, the interval between the crash and Walter Pegg's death was seconds. There were no survivors among the other passengers, including the pilot.

Yellowstone County, for further proceedings.

At the time of his death, Walter Pegg was domiciled in Montana and was married to his third wife, Virginia Fidel Pegg. In addition to Virginia, Walter was survived by children from his previous marriages: Sean and Tom, the issue of Walter and his first wife, Karen Pegg Symonds, and Ian, the issue of Walter and his second wife, Carol Pegg. Tom resided with his father and Virginia briefly in 1979, but now lives with his mother and other brother in Florida. Ian and his mother reside in Oregon.

Walter died intestate. Virginia sought appointment as the personal representative of his estate, and an order to that effect was granted on April 28, 1982, by the District Court of the Fourteenth Judicial District, Musselshell County. Notice of her appointment was sent to all potential heirs. At approximately the same time, Virginia was involved in negotiations with the insurance company of Blain Helicopters, the owner of the aircraft in which her husband was killed. She also filed a wrongful death action against Blain in April of 1982, in the District Court of the Thirteenth Judicial District, Yellowstone County. Although negotiations with the insurance company were proceeding successfully, the complaint was filed within the two-year statute of limitations to protect the interests of Walter's heirs in the event negotiations proved fruitless.

By late 1982, Virginia received an offer from the company to settle the wrongful death claim for $450,000, under the conditions that a court approve the settlement and that the wrongful death action be dismissed. Virginia filed a petition with the District Court of the Fourteenth Judicial District to have the settlement approved and the other action dismissed. In the petition, Virginia proposed that $100,000 of the settlement be distributed among the children in equal shares undiminished by attorney's fees, court costs and expenses. The remaining $350,000 would be allocated to Virginia, and she would be responsible for her own attorney's fees, court costs and expenses. During the negotiations, the ex-wives, as guardians and next friends of their children, were represented by attorney Jock West. Virginia was represented by attorneys Russell Fillner and Elmer Dolve.

The ex-wives were dissatisfied with the proposed distribution, and decided to contest it. The hearing on the proposed settlement had been set for December 28th, but one day before the hearing, the attorney for the ex-wives filed other petitions with the court requesting that Virginia be removed as personal representative. One petition was filed on behalf of Karen's children, and the other on behalf of Carol's child. In the petitions, the ex-wives maintained that Virginia had intentionally misrepresented material facts and had engaged in fraudulent acts with respect to settlement of the wrongful death claim. Specifically, the ex-wives contended that Virginia (1) had never married Walter, and therefore could not serve as personal representative; (2) had assisted in a fraudulent divorce action filed by Walter against his first wife, Karen, in 1979; and (3) had deceitfully refused to file a survivorship claim against Blain Helicopters because she allegedly had more to gain financially from a wrongful death suit. On the same day these petitions were filed, the ex-wives' attorney filed a wrongful death action against Blain Helicopters on behalf of the children. This suit was filed in the Thirteenth Judicial District, Yellowstone County.

A hearing on the petitions to remove was held on December 30, 1982. Counsel for Virginia waived notice requirements, and the ex-wives' attorney was allowed to press arguments for Virginia's removal. The Counsel for the ex-wives also attempted to impute fraud on Virginia for failing to file a survivorship claim against the helicopter company. Any recovery from a survivorship action or related settlement would become part of the decedent's estate, and therefore pass to Virginia and the minor children under the intestacy statutes, with Virginia receiving one third of the settlement and the children the remainder. See Section 72-2-202(2), MCA. Because the proceeds of a wrongful death recovery would not become part of the estate, and could therefore be allocated differently, Virginia was allegedly in a position to increase unfairly her portion of any settlement from the insurance company. There was no evidence produced in support of this claim other than the coincidence that Virginia could, by law, benefit more from a wrongful death recovery. Counsel for Virginia responded that a survivorship action had been contemplated, but had not been pursued for fear that Walter's instantaneous death would prohibit recovery. The wrongful death theory of relief was deemed a more effective course of action.

first contention--that Virginia had never married Walter--proved false, as Virginia's counsel produced a marriage certificate indicating that the couple had been married in Las Vegas in February of 1980. Counsel for the ex-wives then concentrated his attention on the remaining grounds. Counsel insisted that, in [209 Mont. 75] a 1979 divorce action filed by Walter against Karen, Walter claimed that no children had been born of the marriage. Of course, the couple had two children, and the ex-wives contended that Virginia was aware of Walter's apparent misrepresentation to the court. The only witness to testify about these matters was Virginia. She testified that she knew that Tom and Sean were Walter's children by a former marriage, and that Tom had lived with them in Montana for a time, but that she did not know they were the children of Karen. In fact, she testified that she knew nothing about Karen Pegg or the divorce action filed by Walter against Karen in 1979.

The District Court concluded that there was no evidence to support removal of Virginia as personal representative, and denied the ex-wives' petitions. Orders to that effect were signed on the day of the hearing, December 30, 1982, and notices of entry of order were entered and served that same day. The hearing on the proposed settlement offer was reset for January 10, 1983.

At the January 10th hearing, the attorney for the ex-wives again filed a petition for removal of Virginia as the personal representative. This petition alleged that another pleading had been simultaneously filed in the court that had entertained Walter's divorce action in 1979. This petition alleged that service upon Karen Pegg Symonds had been improper, and that the final decree in that action was void. If the marriage of Karen and Walter was not dissolved, then the marriage of Virginia and Walter was void. Thus, Virginia could not serve as personal representative.

The District Court orally denied the ex-wives petitions. In a memorandum issued after the hearing, the court indicated that the petitions were "frivolous [and] brought for purpose of delay and as an impermissible collateral attack on a final decree in another court." In the court's view, the ex-wives and their counsel were aware of all the facts necessary to support the latest petition during the first hearing; the doctrine of res judicata thus barred any consideration of these grounds. Moreover, the divorce decree could not be shown to be void on its face. Thus, collateral attack was impermissible.

After the petition was denied, the court proceeded to hear testimony concerning the proposed settlement. Counsel for the ex-wives refused to participate in this portion of the hearing. His position was that the court, acting as a court of probate, had no jurisdiction over settlement of a wrongful death claim. To take part in the hearings would have been, in counsel's view, recognition that the court had jurisdiction over the parties and the subject matter. The hearing proceeded without involvement of On February 7, 1983, counsel for the ex-wives filed a notice of appeal "from the final orders entered by the [trial court] on the 10th of January, 1983 ...", including the denial of the petitions to remove Virginia as personal representative. For the purposes of this opinion, the ex-wives will be referred to as appellants, and Virginia as the respondent.

the ex-wives or their attorney. The court adopted the proposed distribution of the wrongful death recovery and issued an order to that effect. Counsel for the ex-wives renewed his objection to jurisdiction for the record.

The issues presented for review are:

(1) Whether the District Court erred by denying the motions to remove the personal representative?

(2) Whether the District Court, acting as a court of probate, lacked jurisdiction to approve settlement of a wrongful death claim filed by the personal representative in another Montana judicial district?

Before...