Montgomery v. First Nat. Bank of Dillon

Citation114 Mont. 395
Decision Date03 May 1943
Docket NumberNo. 8259.,8259.
PartiesMONTGOMERY et al. v. FIRST NAT. BANK OF DILLON et al.
CourtUnited States State Supreme Court of Montana

OPINION TEXT STARTS HERE

Appeal from District Court, Fifth District, Beaverhead County; Albert Besancon, Judge.

Action by William G. Montgomery, as administrator with will annexed, and others, against First National Bank of Dillon, Montana, and others, for review of two orders in the probate of the estate of William Montgomery, deceased. From an adverse judgment, the plaintiffs appeal.

Judgment in accordance with opinion.

MORRIS, J., dissenting.

J. E. Kelly, of Dillon, S. P. Wilson, of Deer Lodge, and H. L. Maury and A. G. Shone, both of Butte, for appellants.

Gunn, Rasch & Gunn, of Helena, Poore & Poore, of Butte, and Gilbert & Gilbert and T. F. McFadden, all of Dillon, for respondents.

RUDOLPH NELSTEAD, District Judge (sitting in place of Chief Justice JOHNSON, disqualified).

Two orders of the district court of Beaverhead county in the probate of the estate of William Montgomery, deceased, are presented for review: (1) an order based on a petition of the First National Bank of Dillon and the Daly Bank and Trust Company of Anaconda, creditors of the deceased, directing the sale of the remainder of the decedent's real estate and personal property to pay their claims, and (2) an order settling the account of J. H. Gilbert as trustee of Montgomery's estate. The hearings on the petition for sale, the account and a petition for the appointment of William G. Montgomery as administrator with will annexed, as successor of Gilbert, were consolidated in the trial court, and the testimony in connection therewith constitutes one record in this court. Appellant George H. Montgomery first commenced suit in 1931 in the United States District Court of Montana against Gilbert, the First National Bank of Dillon, and others, attacking, upon the ground of fraud, certain orders and decrees of the district court of Beaverhead county in connection with the administration of the estate. A decree dismissing this action was affirmed in 1935 by the Circuit Court of Appeals on jurisdictional grounds. Montgomery v. Gilbert, 9 Cir., 77 F.2d 39. Thereupon the three appellants in the present proceedings, James K. Montgomery, George H. Montgomery, and William G. Montgomery, sons of the deceased, to whom was devised the real estate which the creditors now propose to sell, commenced separate suits against the same parties in the district court of Beaverhead county to recover the property of their father's estate, to quiet appellants' title thereto, and for an accounting. This litigation was finally terminated by a decision of this court in Montgomery v. Gilbert, 111 Mont. 250, 108 P.2d 616, in which remittitur to the district court was issued December 4, 1940. Pertinent facts previous to the commencement of the proceedings on which the present appeals are based appear in this court's opinion in Montgomery v. Gilbert, supra, including the material provisions of Montgomery's will and the findings of fact and conclusions of law by the trial judge. A statement of the facts essential to the determination of the issues presented in the present appeals entails to some extent repetition of the facts set forth at length in the opinion in the prior litigation.

William Montgomery died October 24, 1919. His will was admitted to probate November 25, 1919, and Gilbert was then appointed executor of his estate. The claim of the Daly bank against the estate was approved by the executor for $34,760, and allowed by the court September 9, 1920. Several claims by the First National Bank aggregating $94,518 were approved by the executor, and allowed by the court March 21, 1921. Between the date of the executor's appointment and the approval of his account in 1926 payments were made on these claims, but additional money was borrowed for expenses of administration and the ranching business. Montgomery's estate consisted of the three ranches devised to the appellants, unimproved lots in the town of Wisdom, livestock, farm machinery and implements, and $40,000 in life insurance. William G. Montgomery, the oldest son, was foreman of the ranches until 1924. The last payment of family allowance to the widow was made in 1925 by four checks of $300 each. Previously, on November 26, 1923, the widow had deeded to the executor as partial consideration for money paid for family allowance certain lands which had been set aside to her after she elected to take her dower in lieu of the legacy in the will. So far as the record discloses, none of the decedent's family had any connection with the estate property or received any benefit therefrom subsequent to 1925. In February, 1926, after the disposition of the greater part of the livestock, the assets consisted of the three ranches, the town lots, farm machinery and certain other personal property. For a period of years thereafter the ranching operations were conducted by the executor personally and, in the later years, preceding the filing of his account now presented for review on appeal, the ranches were leased on a yearly basis for a cash rental.

During the time the executor occupied that position-from November, 1919, to April, 1941, a period of over twenty-one years-he filed three accounts. The first was approved May 24, 1924; the second, which has been referred to in prior litigation as his final account, was approved February 23, 1926; and the third-designated first account of trustee-from which one of the present appeals is taken, was approved July 1, 1941. We deem it appropriate to here emphasize the statement which has been made time and again in decisions of this court, that probate proceedings must be conducted with dispatch to the end that an estate shall not be wasted by needless expense incident to delay. One who accepts appointment as executor or administrator of an estate occupies a position of trust, and particularly must be diligent in accounting so that the court, the heirs and other persons interested in the estate may be fully informed regarding the status of the estate property. The vigilance in this respect by one who assumes to act in such representative capacity must be greater where, by the terms of a will, particular confidence has been reposed by the testator and broad powers granted in the administration of the estate. It is true that circumstances over which the executor may have no control, such as adverse economic conditions, may prevent an early settlement of the estate. But by lapse of time without accounting, evidence disclosing the true nature of the executor's transactions and his conduct of the estate is obscured and it becomes increasingly difficult to determine the truth.

An error in the trial court's findings in Montgomery v. Gilbert, supra, which findings appear verbatim in the opinion, page 257 et seq. of 111 Mont., page 619 of 108 P.2d concerning which from an analysis of the record there can be no controversy, should be noted at this point. Finding 28 recites that Gilbert was discharged as executor and his final account approved on February 23, 1926. Finding 30 states that, after his discharge as executor, he continued in control as trustee of the estate's property as directed in Montgomery's will. The fact is that Gilbert was not released and discharged as executor of the estate until April 23, 1941, and that the estate property was never set aside to him as trustee. He never accepted the trust created by Montgomery's will, nor did he qualify as trustee. The document dated February 23, 1926, which is designated Decree of Settlement of Account and Order Discharging Executor did not discharge Gilbert as executor. This order merely approved the account filed February 9, 1926, and provided further (1) that the balance of cash remaining in the hands of the executor be applied by him as a payment on the debts due to the First National Bank of Dillon and the Daly Bank and Trust Company of Anaconda, and (2) that upon the payment of said sums the executor be discharged from his trust. No further proceedings were had in the probate of the estate until 1941. It is apparent from the record that both the executor and the two creditors considered the Montgomery estate closed in February, 1926, and that an account was filed in March, 1941, only by reason of the fact that this court in Montgomery v. Gilbert, supra, ordered the executor to file one.

In May, 1925, the executor made two fictitious probate sales of the ranches. See trial court's findings 19 to 23, inclusive, in Montgomery v. Gilbert, supra, 111 Mont. pages 263-265, 108 P.2d pages 622, 623. A portion of the land was ostensibly sold to Alfred N. Peterson for $82,665.20, and the remainder to George M. Clemow for $41,749. In August, 1925, Clemow deeded part of the land conveyed to him to Jules Wenger for $15,630.93, which sum was paid in cash to the executor, and listed among the receipts in his account. Peterson and Clemow thereupon mortgaged the remainder of the lands not conveyed to Wenger to the Federal Land Bank of Spokane for $50,000. The creditors acknowledge in their petition for sale of the property that $33,000 of this amount was applied on the claim of the First National Bank, and $15,000 on the claim of the Daly bank. The executor never received any consideration for the conveyances to Clemow and Peterson. From finding 23 in the prior litigation it appears that the executor followed this procedure in order to secure money by way of a loan to apply on the indebtedness to the two creditors. On October 15, 1925, Peterson and Clemow each signed deeds describing all estate lands excepting the parcel conveyed to Wenger, in which the names of the grantees were omitted and left blank, and delivered them to the executor. The lands were at no time reconveyed to appellants, who have been the owners thereof since their father's death. It is elementary that the real property of a...

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18 cases
  • Hosova's Estate, In re
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    ...v. Furnell, 20 Mont. 299, 51 P. 267; In re Clark's Estate, 105 Mont. 401, 74 P.2d 401, 114 A.L.R. 496; Montgomery v. First National Bank of Dillon, 114 Mont. 395, 136 P.2d 760; of upon the death of an intestate. In re William's Estate, 55 Mont. 63, 173 P. 790, 1 A.L.R. 1639; State ex rel. W......
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