Estate of Rains, Matter of

• Decision Date: 12 July 1991
• Docket Number: No. 65750,65750
• Parties: In the Matter of the ESTATE OF Gilbert R. RAINS, Deceased.
• Court: Kansas Supreme Court

Page 61

815 P.2d 61

249 Kan. 178

In the Matter of the ESTATE OF Gilbert R. RAINS, Deceased.

No. 65750.

Supreme Court of Kansas.

July 12, 1991.

Syllabus by the Court

1. The substitution of a deceased party's estate for a party dying during the pendency of an action, pursuant to K.S.A. 60-225, constitutes the revival of an action pursuant to K.S.A. 59-2238(1). When such revival is accomplished, a legal exhibition of the demand has been made. All that remains to be done in the probate proceeding is the filing of a certified copy of the final judgment in the action within 30 days of the judgment's entry.

2. Where an action is duly revived against an estate and judgment entered against the estate, which judgment is affirmed on appeal, the appellate decision is the final judgment, and a certified copy of that judgment must be filed in the probate proceeding within 30 days of its entry pursuant to K.S.A. 59-2238(3).

Mark W. McGrory of Morrison, Hecker, Curtis, Kuder & Parrish, Overland Park, argued the cause, and Susan G. Saidian, of the same firm, of Wichita, was with him on the briefs for appellant Federal Deposit Ins. Corp.

Edward G. Collister, Jr. of Collister & Kampschroeder, Lawrence, argued the cause and was on the brief for appellee Estate of Gilbert R. Rains.

McFARLAND, Justice:

This is an appeal from the district court's denial of a petition for allowance of demand filed by the Federal Deposit Insurance Corporation (FDIC) against the Estate of Gilbert R. Rains, deceased. The basis of the claim is a federal court judgment entered against the Estate. The district court held that the FDIC had failed to prove its claim in that it had not followed either of the statutory methods for doing so.

The facts may be summarized as follows. In 1985, Gilbert R. Rains filed an action in the district court of Reno County against the Boulevard State Bank (BSB) and others. BSB filed a counterclaim therein seeking repayment of two loans made to Rains. In the early part of 1987, BSB failed and was taken over by FDIC, which was substituted as a party defendant on June 3, 1987. Meanwhile, on March 27, 1987, Gilbert R. Rains died. Probate proceedings were commenced on April 15, 1987, with the wife, Pauline Rains, being appointed executrix. On September 1, 1987, FDIC caused the action to be removed to the federal district court. A dispute arose as to whether or not FDIC had properly substituted the Estate for the deceased individual pursuant to K.S.A. 60-225(a)(1).

On May 3, 1988, the federal district court held in favor of FDIC both on the timeliness of the substitution and on the merits of the counterclaim. After various post-judgment motions, an entry of judgment was filed on January 10, 1990. On January 17, 1990, an uncertified copy of the judgment was filed in the Estate attached to a petition for allowance of demand. The Estate appealed the federal judgment to the Tenth Circuit Court of Appeals. The federal district court opinion is Estate of Rains v. Federal Deposit Ins. Corp., 702 F.Supp. 1520 (D.Kan.1988), and may be referred to if additional information on this aspect of the facts is desired.

On June 26, 1990, the Reno County District Court denied FDIC's petition for allowance of demand on the ground the claim had not been properly proved by either statutory method. Specifically, the court held: The petition for allowance was not filed within the time fixed by law (K.S.A.1990 Supp. 59-2237 and K.S.A.1990 Supp. 59-2239); nor was a certified copy of the judgment filed within 30 days of its entry pursuant to K.S.A. 59-2238. FDIC filed its notice of appeal therefrom on September 21, 1990 (filed within 30 days after the denial of its motion for reconsideration). On February 25, 1991, the Tenth Circuit affirmed the federal district court in an unpublished opinion (1991 WL 35375 [10th Cir.Kan.]. A certified copy of the Tenth Circuit opinion was filed in Reno County in the proceedings herein on March 4, 1991. On May 13, 1991, the Tenth Circuit denied the Estate's motion for rehearing and certified copies of the same were filed in Reno County and with the Clerk of the Appellate Courts within 30 days of its entry. The Estate filed a motion before us to strike these filings relative to actions taken by the Tenth Circuit as being subsequent to and outside of the record herein. The motion was denied on June 17, 1991. For reasons to be hereinafter discussed, these filings are germane to the decision of the issues before us.

We turn now to the statutes relative to the exhibition of demands against an estate which provide, in pertinent part, as follows:

K.S.A.1990 Supp. 59-2237(a):

"Any person may exhibit a demand against the estate of a decedent by filing a petition for its allowance in the proper district court. Such demand shall be deemed duly exhibited from the date of the filing of the petition. The petition shall contain a statement of all offsets [to] which the estate is entitled. The person exhibiting the demand shall provide a copy of the demand, as filed, to the personal representative of the estate. The court shall from time to time as it deems advisable, and must at the request of the executor or administrator, or at the request of any creditor having exhibited demand, fix the time and place for the hearing of such demands. Notice of the time and place of the demand hearing shall be given in such manner and to such persons as the court shall direct."

K.S.A. 59-2238:

"(1) Any action pending against any person at the time of such person's death, which by law survives against the executor or administrator, shall be considered a demand legally exhibited against such estate from the time such action shall be revived. Such action shall be revived in the court in which it was pending and such court shall retain jurisdiction to try and determine said action.

"(2) Any action commenced against any executor or administrator after the death of the decedent shall be considered a demand legally exhibited against such estate from the time of serving the original process on such executor or administrator.

"(3) The judgment creditor shall file a certified copy of the judgment obtained in an action such as described in subsection (1) or (2) of this section in the proper district court within thirty (30) days after said judgment becomes final."

K.S.A.1990 Supp. 59-2239(1):

"All demands, including demands of the state, against a decedent's estate, whether due or to become due, whether absolute or contingent, including any demand arising from or out of any statutory liability of decedent or on account of or arising from any liability as surety, guarantor or indemnitor, and including the individual demands of executors and administrators, not exhibited as required by this act within four months after the date of the first published notice to creditors as herein provided, shall be forever barred from payment, except that the provisions of the testator's will requiring the payment of a demand exhibited later shall control. No creditor shall have any claim against or lien upon the property of a decedent other than liens existing at the date of the decedent's death, unless a petition is filed for the probate of the decedent's will pursuant to K.S.A. 59-2220 and amendments thereto or for the administration of the decedent's estate pursuant to K.S.A. 59-2219 and amendments thereto within six months after the death of the decedent and such creditor has exhibited the creditor's demand in the manner and within the time prescribed by this section, except as otherwise provided by this section."

K.S.A. 60-225(a)(1):

"If a party dies and the claim is not thereby extinguished, the court shall on motion order substitution of the proper parties. The motion for substitution may be made by any party or by the successors or representatives of the deceased party or by any party and, together with the notice of the hearing, shall be served on the parties as provided in K.S.A. 60-205, and upon persons not parties in the manner provided for the service of a summons. Unless the motion for substitution is made within a reasonable time after the death is suggested upon the record by service of a statement of the fact of the death as provided herein for the service of the motion, the action shall be dismissed as to the deceased party."

The federal district court decision (and the Tenth Circuit affirmance thereof) concerned, inter alia, some irregularities in the substitution of the Estate as a party. The two federal courts concluded these irregularities were primarily caused by the attorney for the Estate and held the substitution to be valid. What is the effect of this determination? As the federal district court properly stated:

"The party that wishes to maintain its claim against the estate of a deceased party must comply with several statutory steps. The litigant, like any other creditor of the estate, must make a demand against the estate.... The litigant makes the demand by reviving the cause of action. K.S.A. 58-2238(1). 'Substitution of parties and revivor of actions are different names for the same thing. The revivor of an action is in fact the substitution of new parties who have the right, under the substantive law, to go ahead with the prosecution or defense of the claim.' Livingston v. Bias, 7 Kan.App.2d 287, 289, 640 P.2d 362 (1982)." 702 F.Supp. at 1522-23.

In view of the fact the Reno County District Court referred to the procedure set forth in K.S.A.1990 Supp. 59-2237, some comment needs to be made relative to that statute. It sets forth how a demand is to be exhibited where litigation thereon is not pending against the deceased and where no separate litigation is to be commenced against the estate. If litigation is involved, then the demand is exhibited against the estate by the means set forth in K.S.A. 59-2238. In the case before us, the demand was legally exhibited against the Estate by the revival of the action ...