Hendrickson's Estate v. Warburton

• Decision Date: 16 December 1976
• Citation: 557 P.2d 224,276 Or. 989
• Parties: The ESTATE of J. Frank HENDRICKSON, Deceased, by Douglas M. Fellows, personal representative, Respondent, v. Cora Lee WARBURTON, Appellant.
• Court: Oregon Supreme Court

Page 224

557 P.2d 224

276 Or. 989

The ESTATE of J. Frank HENDRICKSON, Deceased, by Douglas M.

Fellows, personal representative, Respondent, v. Cora Lee WARBURTON, Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted Oct. 7, 1976.

Decided Dec. 16, 1976.

George Van Natta, St. Helens, argued the cause for appellant. With him on the brief were Van Natta & Petersen, St. Helens.

Douglas M. Fellows of Hedrick, Fellows, McCarthy & Zikes, P.C., Portland, argued the cause and filed a brief for respondent.

Before DENECKE, C.J., and McALLISTER, O'CONNELL and TONGUE, JJ.

TONGUE, Justice.

This is a suit by the personal representative of a decedent's estate to set aside a deed executed by the decedent. Defendant demurred to the complaint and that demurrer was overruled. The case was then tried and a decree entered in favor of plaintiff.

In appealing, defendant contends that it was error to overrule her demurrer because the personal representative of a decedent's estate has no power to set aside a deed executed by the decedent unless the estate is insolvent and the property is needed to pay creditors, as provided by ORS 114.435, and that these facts do not appear from the allegations of plaintiff's complaint. ¹

Plaintiff responds with the contention that the deed sought to be set aside was void because the decedent was incompetent and that in such cases title to the property was in the decedent at the time of his death and the personal representative of his estate had power to bring such a suit under ORS 114.215, 114.225 and 114.305(19), without regard to whether the estate is insolvent and the property is needed to pay creditors. ²

Plaintiff's complaint alleged that he is the personal representative of decedent's estate; that defendant was decedent's niece and had a fiduciary relationship with him; that defendant had a deed purporting to convey to her the real property in dispute; and that at the time the deed was executed decedent was incompetent. In separate counts plaintiffs alleged, in the alternative, that decedent was the subject of undue influence by defendant; that he 'did not intend that defendant should acquire ownership thereof,' and, as a final count, that decedent was a recipient of public welfare and that the deed would 'prevent, hinder and delay the State of Oregon Division of Public Welfare from recovering on its claim against the estate.'

Under the terms of the 1969 Probate Code, as under previous Oregon statutes, title to the real property of a decedent vests upon his death in his heirs, in the absence of a will, subject to the support of his spouse and children and the 'rights of creditors, administration and sale by the personal representative.' ORS 114.215(1).

In the early case of King v. Boyd, 4 Or. 326 (1873), this court recognized that because at common law an executor or administrator had no authority over the real property of a decedent, any such authority is limited to his 'rights and powers as enacted and defined by statute.' This court then held as follows (at 330--31):

'And we think it would be an unwise and unwarranted construction of the authority of executors or administrators to infer from any language found in the statute on that subject that they might, upon their own motion, institute suits to set aside conveyances, or remove clouds from titles to real estate, without any showing as a condition precedent, that the possession of the same was wrongfully withheld, or that there was any necessity for selling the same, or any part thereof, to satisfy claims against the estate.

'The Rule, as declared by our Practice Act, and conclusively sustained by reason, is that all actions or suits shall be prosecuted in the name of the real party in interest. There can be no question about the wisdom of this rule, and it should be strictly adhered to in all cases which do not come within the exceptions to it, as declared by statute.

'No one is better qualified to litigate the title to real estate than the person who owns it. An administrator who has no direct interest in the result of a suit, who personally loses nothing if the suit be injudiciously instituted and adversely determined, is not as safe a person to entrust with the right to litigate as he who is the owner of the property which is the subject of litigation and the one who must suffer if the determination of the cause be adverse to him. A due regard for the rights of both heirs and creditors of estates, we think, demands that the limitations of our statute, on the authority of executors and administrators, to institute suits, affecting the title to real estate, should be carefully guarded so that estates may not be subject to be consumed by the costs and expenses of ill-advised lawsuits.' (Emphasis theirs)

To the same effect, See Clark v. Bundy, 29 Or. 190, 194--99, 44 P. 282 (1896). See also Humphreys v. Taylor, 5 Or. 260, 262 (1874); Hillman v. Young, 64 Or. 73, 81, 127 P. 793, 129 P. 124 (1913); 2 Jaureguy and Love, Oregon Probate Law and Practice 18--19, § 555 (1958); and Administering Oregon Estates, Oregon State Bar Continuing Legal Education § 23.58(e) (1970). Cf. Malagamba v. McLean, 89 Or. 307, 312, 173 P. 1175 (1918); and Borge v. Traaen, 158 Or. 454, 459, 75 P.2d 939, 76 P.2d 1127 (1938). ³

Plaintiff cites no court decisions or other authorities to the contrary, but relies solely upon provisions of the 1969 Oregon Probate Code as stated in ORS 114.215, 114.225 and 114.305(19). ⁴ Our examination of the legislative history of the 1969 Probate Code leads us to the conclusion, however, that the legislature did not intend by the adoption of those provisions to confer upon the personal representatives of decedents' estates the powers claimed by this plaintiff but that, to the contrary, the drafters of that code intentionally omitted provisions of the then-proposed Uniform Probate Code which would have conferred such powers upon the personal representatives of decedents' estates.

The 1969 Oregon Probate Code was prepared by the Advisory Committee on Probate Law Revision of the Oregon Law Improvement Committee. The preliminary draft of that proposed code, dated August 1968, with 'Advisory Committee Comments,' contains no discussion of this problem under §§ 115, 116 or 127, the proposed provisions which were adopted as ORS 114.215, 114.225 and 114.305. Those 'Comments' make frequent reference to the 'Uniform Probate Code,' which, at that time, was the Third Working Draft of the proposed Uniform Probate Code, dated November 1967.

The Advisory Committee in proposing § 116 (now ORS 114.225) Omitted the last sentence of § 3--409 of the Proposed Uniform Probate Code, which would have specifically authorized the personal representative of an estate to 'maintain an action to recover possession of any property or to determine the title thereto,' without regard to its need 'for purposes of administration.'

Section 3--412 of the proposed Uniform Probate Code was also Omitted by the Advisory Committee in the proposed 1969 Oregon Probate Code. That section was as follows:

'Until termination of his appointment A personal representative has the same power over the title to property of the estate as an absolute owner would have, in trust however, for the benefit of the creditors and others interested in the estate. This power may be exercised without notice, hearing, or order of court.' (Emphasis added)

It is true that the Advisory Committee included in § 127 as subsection (19), now ORS 114.305(19), the following provisions of subsection (17) of § 3--416 of the proposed Uniform Probate Code:

'Prosecute or defend actions, claims or proceedings in any jurisdiction for the protection of the estate and of the personal representative in the performance of his duties.'

But without adoption of the specific powers which would have been conferred upon personal representatives by § 3--409 and § 3--412 of the proposed Uniform Probate Code, this subsection alone is not, in our opinion, sufficient to confer such powers upon personal representatives. ⁵

Assuming, as contended by plaintiff, that the deed to the defendant was void and that decedent held title to the property at the time of his death, ORS 114.215 provides, as previously noted, that title to the real property of a decedent vests upon his death in his heirs, in the absence of a will. Although that title is subject to the 'right of creditors, administration and sale by the personal representative,' it does not follow that this confers upon a personal representative the power to bring a suit to set aside even a void deed except to the extent that such a suit may be necessary to protect the rights of creditors or may be otherwise necessary or appropriate in the administration of the estate. No such facts are alleged in this complaint other than that decedent was a welfare recipient and that the deed would 'prevent, hinder and delay' recovery by the state Division of Public Welfare of its claim against the estate.

It is clear from the provisions of ORS 114.435, however, that a suit by the personal representative of an estate to set aside transfers of property needed for payment of the claims of creditors is limited to such suits as are 'necessary' for the payment of such claims. Indeed, it is well established by our prior decisions that such suits can only be brought by the personal representative of a decedent's estate when the assets of the estate are insufficient to pay such claims. Humphreys v. Taylor, supra 5 Or. at 262. Cf. Hillman v. Young, supra, 64 Or. at 81, 127 P. 793. See also Clark v. Bundy, supra 29 Or. at 195, 44 P. 282, and Oregon Probate Law and Practice, Supra at 85, § 635.

The complaint makes no such allegation. The allegation that decedent was a welfare recipient and that the deed would 'prevent, hinder and delay' the welfare division from 'recovering its claim,' in some unspecified amount, was not sufficient, at least on demurrer prior to...