Ivancovich v. Meier

• Decision Date: 27 March 1979
• Docket Number: No. 13951,13951
• Citation: 122 Ariz. 346,595 P.2d 24
• Parties: Byron IVANCOVICH, Appellant Cross-Appellee, v. John Ivan MEIER, Neal Ivan and Terry Ivan, Appellees Cross-Appellants.
• Court: Arizona Supreme Court

Page 24

595 P.2d 24

122 Ariz. 346

Byron IVANCOVICH, Appellant Cross-Appellee, v. John Ivan MEIER, Neal Ivan and Terry Ivan, Appellees Cross-Appellants.

No. 13951.

Supreme Court of Arizona, In Banc.

March 27, 1979.

Rehearing Denied May 8, 1979.

Murphy & Hazlett by James M. Murphy, Tucson, for appellant and cross-appellee.

Molloy, Jones, Donahue, Trachta & Childers by Peter Johnson, Tucson, for appellees and cross-appellants. STRUCKMEYER, Vice Chief Justice.

This is an appeal and cross-appeal from certain orders entered by the Superior Court of Pima County in the matter of the estate of John Ivancovich, deceased. Affirmed in part, reversed in part.

John Ivancovich died in Tucson, Arizona in 1944. He left surviving his wife, Hertha, and two sons, Byron and George. Hertha and Byron were named as co-executors in his will. They served until the estate was distributed by the Pima County Superior Court in 1947. The bulk of the estate passed to a testamentary trust and was administered by Hertha and Byron as co-trustees. Beneficiaries of the trust were Hertha, Byron and George. George died in 1960, leaving three sons, John Ivan Meier, Neal Ivan and Terry Ivan. Under the trust, the ultimate beneficiaries were Byron, who was to receive two-thirds of the trust estate on the death of Hertha, and George's three children, who were to receive the remainder. After Hertha's death in 1963, the Southern Arizona Bank and Trust Company was named as guardian of the estate of Terry and Neal Ivan, then minors. In 1966, the bank filed a petition requesting the Superior Court to remove Byron as the surviving trustee and to require him to submit a full and proper account of all probate and trust activities.

On June 6, 1967, 20 years after the approval of the final account and report of the co-executors and the decree of distribution distributing the estate to the testamentary trustees, the Superior Court ordered the final account and report and the decree of distribution set aside for the reason it believed the notice provisions of A.R.S. § 14-664 (§ 38-1311 A.C.A. 1939) were unconstitutional. This is the principal order in this appeal of which Byron Ivancovich complains.

A.R.S. § 14-664, prior to its amendment by Ch. 75, § 4, Session Laws of 1974, provided that when an account is rendered for settlement in an estate, notice of the day thereof shall be given by posting in at least three public places in the county, and on petition for final distribution of an estate, notice shall be given by posting or publication for such time as may be ordered by the court.

Arizona's probate code was derived from California. In re Estate of Lynch, 92 Ariz. 354, 377 P.2d 199 (1962); Shattuck v. Shattuck, 67 Ariz. 122, 192 P.2d 229 (1948). And see R.S. 1913 § 1008. As early as 1900, the Supreme Court of California, in Toland v. Earl, 129 Cal. 148, 61 P. 914, held that once distribution of an estate is decreed it is conclusive upon the whole world. We stated in Estate of Rose v. Transamerica Title Insurance Company, 108 Ariz. 101, 103, 493 P.2d 112, 114 (1972):

"It is well established that in probate proceedings (where the final decree of distribution is made in conformity with the law), the final decree of distribution, when approved by the court, is conclusive as to every matter involved and constitutes a bar to further proceedings concerning the same matter."

We express reservations as to the ruling of the Superior Court holding the distribution of the estate void because of the constitutional aspects of the notice, but we have concluded that it is unnecessary to reach this question because there are other substantial grounds which justified the setting aside of the final account and report and decree of distribution.

In Cross v. Tustin, 37 Cal.2d 821, 236 P.2d 142 (1951), the California Supreme Court held that the settled doctrine is that a court has the inherent power to set aside a decree procured by extrinsic fraud. Arizona has held that extrinsic fraud may consist of deception practiced by a successful party in purposely keeping his opponent in ignorance of the proceedings so that an appearance may not be made in court. Honk v. Karlsson, 80 Ariz. 30, 292 P.2d 455 (1956). We have not had since an occasion to examine into what fraud is extrinsic.

Fraud will generally be considered as extrinsic when it deprives an unsuccessful party of the opportunity to present his case in court. See, e. g., Stokely v. Stokely, 30 N.C.App. 351, 227 S.E.2d 131 (1976). But it is not confined only to cases of that nature. The doctrine of extrinsic fraud is much broader.

In Crow v. Madsen, 111 P.2d 7, 14 (Cal.App., 1941), the California law was summarized in this manner:

"(1) That where there exists between the parties a confidential relationship such as parent and child, or husband and wife, there is a duty imposed to deal fairly, not fraudulently; to disclose the true facts and not to deceive; that a breach of this duty may constitute extrinsic fraud.

(2) That where a fiduciary relation exists such as guardian and ward, administrator and heir, executor and legatee, trustee and beneficiary or principal and agent, there is also a duty imposed to deal fairly, not fraudulently, to disclose the true facts and not to deceive; that a breach of this duty may constitute extrinsic fraud.

(3) That when a person is appointed by the probate court as a guardian, an executor, an administrator or a trustee, he is an officer and agent of the court; that there is also a duty imposed to deal fairly, not fraudulently, with the court; to disclose the true facts and not to deceive the court; that a breach of this duty may constitute extrinsic fraud."

Later, in the case of Gale v. Witt, Cal.App., 180 P.2d 993, 996, Rev'd on other grounds, 31 Cal.2d 362, 188 P.2d 775 (1948), the court said:

"In other cases, the concealment of material matters and the suppression of the truth with the intent to mislead the court have been held to constitute extrinsic fraud on the general ground that they have in fact prevented the injured party from presenting, or fully presenting, his case in the original action. (Wingerter v. Wingerter, 71 Cal. 105, 11 P. 853; Wickersham v. Comerford, 96 Cal. 433, 31 P. 358; Curtis v. Schell, 129 Cal. 208, 61 P. 951, 79 Am.St.Rep. 107; Sohler v. Sohler, 135 Cal. 323, 67 P. 282, 87 Am.St.Rep. 98; Campbell-Kawannanakoa v. Campbell, 152 Cal. 201, 92 P. 184, 187.) In several of these cases confidential relations between the parties with a consequent duty to reveal the true facts was also relied on as supporting the theory of extrinsic fraud. In some of them the offending party had also acted as executor of the estate, and there had been a breach of the resulting duty to disclose the facts to the court."

We have in the present case, as a minimum, a failure to disclose facts to the court.

The Superior Court, after years of attempting to resolve the problems attendant upon distributing the assets held in the trust estate, finally on September 27, 1976, after extensive hearings entered its findings to the effect that Byron Ivancovich filed reports with the court which were prepared for the purpose of misleading "everyone, including the court" as to the true nature, extent and condition of the probate estate and that he "has demonstrated a lack of fiduciary responsibility to the remaindermen who are his nephews." It concluded in its findings that the accounts of Byron Ivancovich were "performed or not performed, as the case may be, with the intent to prevent all persons, including the other remaindermen and the court, from determining if the properties and funds of the probate estate were properly handled from the date of qualification of the co-executors April 17, 1944, through the end of the estate accounting period August 31, 1947 * * * ." The findings are abundantly supported by the evidence.

We said in In re Sullivan's Estate, 51 Ariz. 483, 494, 78 P.2d 132, 137 (1938):

"If it appears that the executors or administrators have been guilty of extrinsic fraud in securing the order approving the account, such order may be attacked directly and set aside at any time, * * * ."

We therefore conclude that the Superior Court did not err in setting aside the final account and report of the executors and decree of distribution distributing the estate of John Ivancovich to the testamentary trustees. Byron Ivancovich next questions whether John Ivancovich had the right by will to arbitrarily determine that certain of his real property was his sole and separate estate and that other real property was the community estate of his wife Hertha and himself. This question arises out of the ruling of the Superior Court in which, in a Petition for Partial Declaratory Judgment filed on the 4th day of September, 1969, Byron Ivancovich sought a declaration from the probate court that property described in the inventory as separate property of John Ivancovich, deceased, was in fact community property. The court ruled that any question as to the character of the property described in the will of John Ivancovich was barred by the statute of limitations, by laches, by estoppel, and by ratification.

The Superior Court was clearly correct. The Petition for Partial Declaratory Judgment was filed more than 15 years after the death of John Ivancovich. In the interim, Byron Ivancovich's mother, Hertha, had died. Byron was named in her will as her sole heir. It was therefore to Byron's interest to have the separate property of John Ivancovich determined to be community because one-half would under Arizona's law have been Hertha's. Lapse of time and changed circumstances plainly prohibit relief under these circumstances.

First, it is a common rule of law that one cannot claim an interest under an instrument without giving full effect to the instrument.

" 'The modern English cases do not, we apprehend, extend or enlarge the principle of election. That principle, as applicable to this...