McKenney v. McNearney

• Decision Date: 21 December 1967
• Docket Number: No. 9861,9861
• Citation: 92 Idaho 1,435 P.2d 358
• Parties: Dennis McKENNEY, Plaintiff-Appellant, v. Mary McNEARNEY, Administratrix of the Estate of Charles T. McNearney, Deceased, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 358

435 P.2d 358

92 Idaho 1

Dennis McKENNEY, Plaintiff-Appellant, v. Mary McNEARNEY, Administratrix of the Estate of Charles T. McNearney, Deceased, Defendant-Respondent.

No. 9861.

Supreme Court of Idaho.

Dec. 21, 1967.

McNaughton & Sanderson, Coeur d'Alene, for appellant.

Lyons & Hofmeister, Sandpoint, for respondent.

SMITH, Justice.

Appellant appealed from a district court order reversing an order of the Boundary County probate court requiring sale of certain real property belonging to the estate of Charles T. McNearney, deceased, in order 'to secure the just rights or interests of the creditors of said estate' (I.C. § 15-712), including appellant, a creditor secured by a mortgage encumbering the realty. The trial court reversed the probate court order, after having found that appellant's claim had never been allowed or rejected by respondent administratrix nor reduced to judgment, and after having concluded that such probate court proceeding constituted an attempt to foreclose a mortgage in violation of I.C. § 6-101. ¹

Charles P. McNearney died August 4, 1956, leaving surviving his widow, Mary McNearney. The probate court of Boundary County appointed Mrs. McNearney and she qualified as administratrix of the estate. She gave prompt notice to creditors, the first publication being on January 10, 1957. She failed to file an inventory and appraisal although her petition for letters of administration reflected that the estate consisted of personalty, and an equity in certain real property.

At the time of decedent's death, Federal Deposit Insurance Corporation, as receiver of Bank of North Idaho, held two promissory notes of decedent, one dated April 12, 1955, unsecured, with an unpaid principal balance of $560.35, plus interest. The other note dated September 22, 1954, with an unpaid principal balance of $8,181.41, plus interest was secured both by a chattel mortgage, and by a mortgage, encumbering real property belonging to the estate found by the probate court to be the W 1/2 of the NE 1/4; the NE 1/4 of the NE 1/4, and the NW 1/4 of Section 34, Township 58, North of Range 1, East of the Boise Meridian, in Bonner County, Idaho.

February 23, 1957, Federal Deposit Insurance Corporation duly filed its creditor's claim for such indebtedness, and on the same day the probate judge approved the claim. Respondent administratrix never allowed or rejected the claim (I.C. § 15-607), nor acted upon it prior to commencement of this proceeding.

Shortly before October 30, 1962, appellant, by due assignment, became the holder and owner of the promissory notes and creditor's claim. October 30, 1962, appellant petitioned the probate court for an order requiring the administratrix to sell the real property 'in order to secure the just rights or interests of the creditors of said decedent.' November 9, 1962, respondent by motion sought dismissal of the petition, asserting as grounds therefor the statute of limitations, laches and lack of a valid claim.

After a hearing the probate court entered an order determining that appellant was the owner and holder of the two promissory notes, the larger being secured by mortgage encumbering real property belonging to decedent's estate, and ordered the administratrix to sell the property.

Respondent appealed to the district court from the probate court order upon 'questions of both law and fact.' The court, on review of the probate court record and without a trial de novo (I.C § 17-206) reversed the probate court order, and held that appellant is not a creditor whose claim had been approved and that he cannot required sale of the assets of the estate. The district court further held that the proceeding constituted an attempted mortgage foreclosure action. There having been no trial de novo in the district court, and the arguments on appeal containing no factual disagreement, this court will consider the questions of law raised on appeal.

Appellant assigns error of the trial court in reversing the probate court order directing decedent's personal representative to sell the mortgaged real property for the benefit of creditors and others interested in said estate.

Appellant's additional assignments raise the pertinent issues: first, whether the failure of decedent's administratrix to reject appellant's claim constituted a constructive allowance of the claim; and second, whether the proceeding at bar constitutes an attempted mortgage foreclosure action.

The legal effect of the failure of the administratrix to respond to appellant's creditor's claim controls the issue whether the claim should be deemed allowed.

Respondent maintains that the argument, that a decedent's personal representative allows a disputed claim by nonaction, is contrary to the whole fabric of the law regarding fiduciaries for the reason that the personal representative is appointed by the court to act for others; and the rights of others should not be prejudiced by non-feasance on the part of the representative. While we do not disagree with this fundamental contention, nevertheless it is also clear that the personal representative of the estate should not be permitted to profit because of the representative's own failure to reject a claim duly filed. See In re Heimberger's Estate, Ohio Prob., 2 Ohio Supp. 155 (1936). An administrator is required to exercise that degree of care and diligence which careful and prudent persons ordinarily exercise under like circumstances in their own personal affairs. Grodsky v. Sipe, 30 F.Supp. 656 (D.C.Ill. 1940); Swanberg v. National Surety Co., 86 Mont. 340, 283 P. 761 (1930); Montgomery v. Gilbert, 111 Mont. 250, 108 P.2d 616 (1940). Here, respondent is an heir of decedent as well as administratrix of the estate. It is a general rule of equity that a party will not be permitted to beneift by or take advantage of his own fault or neglect. See Gaskill v. Neal, 77 Idaho 428, 293 P.2d 957, 61 A.L.R.2d 501 (1956); Mashon v. Haddock, 190 Cal.App.2d 151, 11 Cal.Rptr. 865 (1961); Austin v. Hallmark Oil Co., 21 Cal.2d 718, 134 P.2d 777 (1943).

I.C § 15-607, as amended S.L. 1919, ch. 111, § 1, in part, reads:

'Allowance or rejection of claims.-When a claim, * * * is presented to the executor or administrator he must, within sixty days after its receipt, endorse thereon, his allowance or rejection, with the day and date thereof. If he allows the claim, he must within the same time present it to the probate judge for his approval, who must, in the same manner, endorse upon it his allowance or rejection. If the executor, administrator, or judge reject the claim, or disallow any part thereof, he shall within ten days thereafter notify the claimant, his agent or attorney, by mail or personal notice of such rejection or disallowance. * * *.'

Prior to 1919 such section of the statute, then C.L. § 5466, in part provided:

'When a claim, * * *, is presented to the executor or administrator, he must endorse thereon his allowance or rejection, with the day and date thereof. If he allows the claim, it must be presented to the probate judge for his approval, who must, in the same manner, indorse upon it his allowance or rejection. If the executor or administrator, or the judge, refuse or neglect to endorse such allowance or rejection for ten days after the claim has been presented to him, such refusal or neglect is equivalent to a rejection; * * *.' (Emphasis supplied.)

The omission of the emphasized portion from the 1919 amendment is indicative of the intention of the legislature to alter the law as it existed prior to 1919, regarding the effect of the neglect or refusal of a decedent's personal representative to act upon a claim filed against an estate, inasmuch as any material change in the language of the original act, as evidenced by the amendment, is presumed to have effected a change in the law. 'When a statute is amended, it is presumed that the legislature intended it to have a meaning different from that accorded to it before the amendment.' Wellard v. Marcum, 82 Idaho 232, 239, 351 P.2d 482, 486 (1960). '* * * whenever the Legislature declares that an existing statute is to be amended 'to read as follows,' etc., it thereby evinces an intention to make the new act a substitute for the old one and that so much only of the original act as is repeated in the new one is continued in force, and all portions omitted from the new act are repealed.' Continental Oil Co. v. Montana Concrete Co., 63 Mont. 223, 229, 230, 207 P. 116, 118 (1922). See also Employment Security Agency v. Joint Class 'A' Sch. Dist., 88 Idaho 384, 400 P.2d 377 (1965); State ex rel. Anderson v. Rayner, 60 Idaho 706, 96 P.2d 244 (1939); United Pacific Ins. Co. v. Bakes, 57 Idaho 537, 67 P.2d 1024 (1937); In re Segregation of School Dist. No. 58, etc., 34 Idaho 222, 200 P. 138 (1921); Sutherland, Statutory Construction, 3rd Ed., Vol. I, §§ 1930, 1932.

This court, in Wormward v. Brown, 50 Idaho 125, 130, 294 P. 331, 332 (1930), interpreted I.C. § 15-607 (after the 1919 amendment) to mean that the mere failure of a decedent's personal representative to act upon a filed claim within the prescribed time does not amount to a rejection of the claim. See also Flynn v. Driscoll, 38 Idaho 545, 223 P. 524, 34 A.L.R. 352 (1924); Cummings v. Langroise, D.C. 36 F.Supp. 174, 178 (1940).

Respondent argues in effect that the failure of decedent's administratrix to act on appellant's claim within the time specified by statute or within a reasonable time, should be balanced against laches of appellant who knew or should have known of the personal representative's non-action and did nothing for a considerable period of time.

It is noted that the third sentence of I. C. § 15-607 provides that the personal representative, if he or the judge rejects the claim or disallows any part thereof, 'shall within ten days thereafter notify the claimant, his agent or attorney, by mail or personal notice of such rejection or...