Lecic's Estate, Matter of, 80-1489
| Decision Date | 01 December 1981 |
| Docket Number | No. 80-1489,80-1489 |
| Citation | 312 N.W.2d 773,104 Wis.2d 592 |
| Court | Wisconsin Supreme Court |
| Parties | In the Matter of the ESTATE OF George LECIC, Deceased: Dobrila LECIC, Personal Representative of the Estate of George Lecic, Deceased, Appellant-Petitioner, v. The LANE COMPANY and Schweiger Industries, Respondents. |
William T. Schmid, Wauwatosa (argued), for appellant-petitioner; Jerome E. Randall, Wauwatosa, on brief.
Robert L. Mann, Milwaukee (argued), for the Lane Co.; Kohner, Mann & Kailas, S. C., Milwaukee, on brief.
Kevin D. Mathews, Milwaukee (argued), for the Schweiger Industries; Howard, Peterman & Eisenberg, S. C., Milwaukee, on brief.
This is a review of a decision of the court of appeals which affirmed orders of the circuit court for Milwaukee county, Elliot N. Walstead, reserve circuit judge. 1 The circuit court concluded that the personal representative of the estate of George Lecic, deceased, had fraudulently induced certain creditors of the estate to forgo filing claims within the prescribed statutory time limit; that the time for filing claims for those creditors who had been defrauded should be extended to include the date on which the defrauded creditors filed their claims; and that the personal representative was estopped from asserting the statutory time limit against the defrauded creditors. The circuit court ordered that the claims of the defrauded creditors be deemed properly and timely filed. The court of appeals modified the amount of one of the claims and affirmed the orders of the circuit court. We reverse the decision of the court of appeals.
The facts are undisputed. The decedent, George Lecic, died on April 30, 1978. The decedent was the sole proprietor of a furniture store known as George's Shopping Center.
On May 4, 1978, pursuant to sec. 867.07, Stats. 1979-80, Dobrila Lecic, the widow, was, without notice of hearing, appointed Special Administrator of the Estate by the circuit court exercising probate jurisdiction. The order appointing Mrs. Lecic Special Administrator granted her the power: "to conserve and manage the estate and to conduct the business of the decedent pending the appointment of the Personal Representative." The circuit court, pursuant to sec. 859.05, Stats., fixed August 4, 1978, as the final day for filing claims against the estate of the decedent. The circuit court ordered that notice of the time for filing claims and the hearing on claims be published, and such notice was published on May 9, 16, and 23 of 1978.
On May 5, 1978, Special Administrator Lecic sent a letter to all of the suppliers of George's Shopping Center, including the respondents herein, the Lane Company and Schweiger Industries. Special Administrator Lecic's letter informed the suppliers of the death of George Lecic and of her appointment as Special Administrator to "conduct the business of George's Shopping Center." The letter stated: "I will as Special Administrator be responsible for the continuation of the business and the payments of all accounts payable." 2
On June 12, 1978, Mrs. Lecic was appointed Personal Representative of her husband's estate. On July 13, 1978, Mrs. Lecic received a mailgram from Lane which said that it was "imperative that (they) receive payment." The attorney for the estate replied by letter dated July 17, 1978, stating: By letter dated July 28, 1978, Lane wrote Mrs. Lecic's attorney advising her that the company would not approve further orders while the account was delinquent. Although correspondence after the filing date may have little if any bearing on whether Lane was fraudulently induced to forgo filing a claim before the deadline, there was further correspondence between Lane and the estate after the August 4, 1978 deadline for filing claims. On August 18, 1978, Lane wrote the attorney asking when payment could be expected. On August 23, 1978, the attorney responded that Lane's invoices would be paid as soon as money became available. It appears that Schweiger may have received only the initial May 5, 1978 letter from Mrs. Lecic in her capacity as Special Administrator.
Neither Lane nor Schweiger filed their claims by the August 4, 1978 deadline. 3 On February 23, 1979, Schweiger petitioned the circuit court for an extension of the time for filing claims, and with the permission of the circuit court it filed a claim on January 31, 1980. The grounds for the extension requested by Schweiger are not spelled out clearly in the petition, but it appears to allege that some type of fraud was committed by Mrs. Lecic. On July 12, 1979, Lane petitioned the circuit court for an extension of the time for filing claims, and with the permission of the circuit court it filed a claim on February 21, 1980. Lane's petition is more specific than Schweiger's and alleges that Mrs. Lecic's letter as special administrator dated May 5, 1978, and the letter from the personal representative's attorney dated July 17, 1978, fraudulently induced Lane to forgo filing its claim on or before August 4, 1978.
At the hearing on Lane's and Schweiger's claims, the principal witness was the treasurer of the Lane Company. He testified that when Lane receives notice that one of its debtors has died it generally turns that account over to a collection agency within 30 days if it has not received any money. He further testified that because of the letters from the Special Administrator and from the attorney for the estate, Lane did not turn the account over to a collection agency, did not file a claim before August 4, 1978, and did not seek legal advice about the probate laws of Wisconsin.
The circuit court ruled that when Mrs. Lecic wrote the May 5th letter to creditors as special administrator she had a duty to inform the creditors of the August 4, 1978 deadline for filing claims. The circuit court held that The circuit court further found that Lane acted in reliance on the letter and expected the claim to be paid without its doing anything further. The circuit court also concluded that the creditor was misled by the correspondence of the personal representative's lawyer. This "passive fraud," the circuit court held, was grounds to permit Lane to file its claim. 4 The circuit court based its conclusion that fraud by the personal representative will operate to estop the personal representative from asserting the non-claim statute as a defense or will empower the circuit court to extend the statutory time for filing claims on decisions of this court which involve the probate court's powers in the event of fraud on the court. 5 The case at bar, however, is not a case of fraud on the court.
The court of appeals affirmed the orders of the circuit court, concluding that the personal representative had committed passive fraud and was estopped from asserting the defense that the claims were not filed in a timely fashion. The court of appeals explained this holding as follows:
Furthermore, the court of appeals, relying on Estate of Kennedy, 74 Wis.2d 413, 419, 247 N.W.2d 75 (1976), a case involving fraud on the court, and relying on cases from other jurisdictions, rejected the estate's argument that the time limit prescribed by the statutes for filing claims against an estate is absolute and that the circuit court had no authority to extend the time for filing claims.
Because we hold that Mrs. Lecic did not commit passive fraud, either as special administrator or as the personal representative, we do not reach the dual issue of whether, in the event there was fraud, the estate may be estopped from asserting the defense of the non-claim statute or whether the circuit court has the authority to extend the time for filing claims beyond the original date. Even though we do not reach this issue we note that there appears to be a conflict of authority in the states as to whether fraud by the personal representative is ground for estopping the estate from asserting the defense of the non-claim statute or the court's extending the time for filing claims. In some states, the courts have held that fraud does not estop the executor from asserting the defense that the claim was not filed on time. 6 In other states, a statutory provision allows payment of late claims in cases of hardship or the courts have relaxed the rule of strict enforcement of the non-claim statute where the creditor was, by reason of misrepresentation, lulled into not filing. 7
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