In re Rinio's Estate

• Decision Date: 14 February 1933
• Docket Number: 6968.
• Citation: 19 P.2d 322,93 Mont. 428
• Parties: In re RINIO'S ESTATE. v. KESTER. RINIO
• Court: Montana Supreme Court

19 P.2d 322

93 Mont. 428

In re RINIO'S ESTATE.

RINIO v. KESTER.

No. 6968.

Supreme Court of Montana

February 14, 1933

Appeal from District Court, Pondera County; F. E. Stranahan, Judge.

In the matter of the Estate of Gottlieb B. Rinio, deceased. From an order denying a petition of Frederick Rinio to revoke letters of administration granted to C. H. Kester, petitioner appeals.

Reversed with direction.

Appeal from order denying petition to revoke letters of administration granted administrator of deceased partners' estates held not to present moot question because since perfecting of appeal district court had appointed another as trustee of partnership assets, where order appointing trustee showed necessity of removing administrator and appointing some competent person in his place.

Murch & Wuerthner, of Great Falls, for appellant.

D. W Doyle, of Conrad, and Wm. L. Bullock, of Valier, for respondent.

CALLAWAY Chief Justice.

Gottlieb B. Rinio and Hans Kristofferson were copartners under the firm name and style of People's Meat Market, engaged in the wholesale and retail meat business at Valier, Mont., when on December 2, 1929, they died, counsel say, simultaneously.

On December 2 the district court of Pondera county, upon the application of W. L. Bullock, an attorney at law residing at Valier, appointed C. H. Kester special administrator of the estates of the deceased partners. Mr. Bullock has acted as counsel for Mr. Kester throughout the entire proceeding. Kester qualified on December 4, 1929. The letters issued to him in the Rinio estate recited merely that "C. H Kester of Valier, Montana, is hereby appointed special administrator of the estate of G. B. Rinio, deceased."

On December 9, 1929, Frederick Rinio, brother of Rinio, deceased, signed a petition asking for the appointment of Kester as general administrator of the Rinio estate; Rinio signed this petition upon the recommendation of Mr. Bullock, but he would not have signed it had he known that he himself had the legal right to be appointed. No inference is to be drawn against Mr. Bullock with respect to this transaction; he undoubtedly thought he was acting for the best interests of the estate, and he also thought that Mr. Rinio was not a competent person to act as administrator. This petition was filed on December 11, 1929, and on December 24 the court made an order appointing Kester administrator. He took the oath of office on January 8, 1930, but letters of administration were not issued to him until March 11, 1930. Concurrently, it seems, similar steps were taken in the Kristofferson estate.

Kester was president of the First National Bank of Valier, and is a business man of long experience.

The situation was difficult. District Judge Hattersley, Mr. Bullock, and Mr. Kester thought it the part of wisdom to continue the business of the People's Meat Company, which was then a going concern, and the only meat market in the town of Valier. It was foreseen that, unless the business was continued, another meat market would be established (a threatened contingency), in which event the property of the People's Meat Market would deteriorate greatly in value, causing heavy loss to both estates.

At once, upon his appointment as special administrator, Kester began to carry on the business. When he took charge, the partnership property consisted of real estate and a large amount of personal property; 90 head of cattle, 75 head of sheep, 50 hogs, 50 turkeys, 400 chickens, 20 hides, between 80 and 100 tons of hay, between 50 and 70 tons of barley and wheat, screenings, machinery, trucks, and tools, and a considerable stock of groceries. On December 12, 1929, he filed a petition for and obtained an order in the Rinio estate permitting him to sell as depreciating personal property "hogs and cattle in which the deceased owned an interest at the time of his death." See sections 10111, 10200, Rev. Codes 1921.

Kester carried on as if the business were his private affair. Through employees he sold meat and other merchandise upon credit as well as for cash, purchased supplies necessary for continuing the business, and paid debts of the concern; some of which were in existence when the partners died. He fed the hay and grain to the live stock, some of which he sold, and to other live stock which he bought. While he sold cattle and hogs at different times at private sale, after the order of sale of December 12 was signed, no return of sales was ever made, although section 10247, Revised Codes 1921, required him to make return thereof within thirty days. Moreover, the law required him to sell the cattle and hogs at public auction, after ten days' notice, in the absence of authority, which he did not possess, to sell the same at private sale, or upon shorter notice. Although in contemplation of section 10111, supra, the function of a special administrator is to collect and preserve the estate of the decedent only until an executor or administrator is appointed, Kester, as special administrator of the two estates, carried on the business of the People's Meat Company until he qualified as administrator in March, 1930.

On April 5, 1930, he filed an account and report of his doings as special administrator of the Rinio estate, and asked to be discharged as such. Exhibit A attached thereto has this heading: "Report of C. H. Kester, as special administrator of the Estates of Hans Kristofferson and G. B. Rinio. (Covering his conducting of the business of the People's Meat Co.)" In this report he disclosed to the court that at the time he was appointed special administrator, there was cash on hand amounting to $670.27, and that he had received $13,130.57 from the sale of cattle, hogs, sheep, chickens, hides, and merchandise. He had collected also $669.70 from "accounts receivable." He had paid out $8,087.30, of which $5,587.30 was for live stock, and $487.41 for merchandise purchased. The rest was for carrying on the business; except $101.36 in payment of old accounts. He then had on hand 30 cattle, 50 hogs, 31 sheep, 10 hides, and a quantity of merchandise.

The account was approved, and an order made discharging him as special administrator. He continued to carry on the business of the People's Meat Company until September 15, 1930, when he sold the same to Frederick Rinio. He testified that the business as conducted by him had yielded a profit.

In the meantime he sold without authority an automobile belonging to the Rinio estate, but did not make any return of the sale. He published notice to creditors, commencing with March 13, in which he notified them to present their claims to him within ten months after the first publication of the notice; but he did not render to the court a full account and report of his administration within thirty days after the expiration of the time mentioned in the notice to creditors within which claims must be exhibited, as required by section 10294, Revised Codes of 1921. In fact he did not render any such account at any time. "Every account must exhibit all debts which have been presented and allowed during the period embraced in the account." Section 10294.

The record shows that the bank account of the Rinio estate was usually overdrawn, although the People's Meat Company account had an average balance approximating $6,500 throughout the year 1930, running well into the year 1931. No effort was made to pay creditors' claims in general; payments, without authority of the court, were made upon a few. He never did make to the court a statement of claims presented to him, designating the names of the creditors, the nature of each claim, when it became due or would become due, and whether it was allowed or rejected by him. See section 10193, Rev. Codes 1921.

During his operation of the People's Meat Company, Kester extended credit to customers to the extent of $1,500, and it appears that $500 of this is not collectible. He did not make an examination of the books to ascertain the condition of the accounts as between the partners; he did not know whether one estate was indebted to the other.

We agree that it was wise to avoid closing the business of the meat company; but this should have been a temporary affair. Immediate steps should have been taken to dispose of the property and good will of the People's Meat Company. Mr Kester did not possess legal authority at any time to carry on the business. We think he proceeded in accordance with his best judgment and in the exercise of good faith. He seems to have believed that his course had the approval of the district judge, and, seemingly, Mr. Bullock entertained a like opinion. In the anomalous situation in which they found themselves, it was necessary to act, and they acted. Mr. Bullock consulted with the district judge; but the extent to which that officer advised him is not ascertainable from the record. It does not appear that the judge gave any written authority for the procedure which was followed, and from his testimony it appears that he did not have any definite...