Roberts v. Roberts

• Citation: 286 F.2d 647
• Decision Date: 08 February 1961
• Docket Number: No. 16645.,16645.
• Parties: Loretto Lohman ROBERTS, Appellant, v. Franklin H. ROBERTS, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

286 F.2d 647 (1961)

Loretto Lohman ROBERTS, Appellant, v. Franklin H. ROBERTS, Appellee.

No. 16645.

United States Court of Appeals Ninth Circuit.

February 8, 1961.

H. Cleveland Hall, John C. Hall, Great Falls, Mont., for appellant.

J. J. Wuerthner, John P. Wuerthner, Great Falls, Mont., for appellee.

Before STEPHENS, POPE and MERRILL, Circuit Judges.

POPE, Circuit Judge.

On November 7, 1945, George W. Roberts, a resident of Montana, purchased 375.094 shares of Investors Stock Fund, Inc., a Nevada corporation, licensed to do business and sell its securities in Montana. These shares were evidenced by certificate No. 1738 dated November 13, 1945. The certificate recited that George W. Roberts, as trustee for Franklin H. Roberts, was the owner of the shares mentioned in the certificate.

At the time of his purchase of the stock, George W. Roberts executed under the heading of "Declaration of Trust — Revocable", an instrument reciting that he had directed that this certificate be issued in his name as trustee for Franklin H. Roberts as beneficiary, and declaring and setting forth the terms and conditions upon which he should hold said stock in trust and any additional stock resulting from any reinvestment of cash dividends upon the original shares.

Among the stated terms were that during his lifetime all cash dividends on the stock were to be paid to George W. Roberts individually for his own account, and that all additional stock purchased under an authorized reinvestment of cash dividends should be made a part of and subject to the trust. It recited that upon the settlor's death the title to the stock and the right to any subsequent payments or distributions should be vested absolutely in the beneficiary. During his lifetime the settlor reserved the right as trustee to vote, sell, redeem, or otherwise deal in or with the stock; upon any sale or redemption of stock the trust should terminate as to the stock sold or redeemed, and George W. Roberts should be entitled to obtain the proceeds of the sale or redemption. He reserved the right at any time to change the beneficiary or revoke the trust; and upon revocation or termination of the trust, the stock and all rights thereunder should belong to and be exercised by George in his individual capacity.

Franklin H. Roberts, the named beneficiary, was a brother of George W. Roberts. George died testate on November 9, 1954 and his will was admitted to probate. The inventory of the estate listed these shares among other assets of the estate by describing them as "Issued to George W. Roberts as Trustee for Franklin H. Roberts" and they were appraised by the appraisers for the estate as of the value of $7974.50. Thereafter, and following the petition for distribution of the estate, the district court of Blaine County, Montana, in which the probate proceedings were had, issued and filed on May 8, 1956, a decree of distribution under which there was ordered and decreed to be distributed to Loretto Lohman Roberts, as the widow and sole heir of George W. Roberts, deceased, other described property, and also the "375.094 shares of Investors Stock Fund, Inc., evidenced by certificate No. 1738 dated November 13, 1945". Although George W. Roberts left a will, the widow, appellant here, had renounced the provisions of the will.

On July 13, 1956, Franklin H. Roberts filed in the same court in the matter of the estate of George W. Roberts, deceased, a motion to set aside the decree of distribution. The court, after hearing, denied the motion.

Prior to the filing of the petition for distribution and the other proceedings which followed it, it had come to the attention of Investors Stock Fund, Inc., that both Loretto Lohman Roberts, as executrix and heir of the estate of George W. Roberts, and Franklin H. Roberts were claiming the certificate and the stock. Accordingly, it initiated the action below by filing a complaint in interpleader against Franklin H. Roberts, Loretto Lohman Roberts, and Oswald M. Johnson, executrix and executor of the estate of George W. Roberts, and Loretto Lohman Roberts as widow and sole heir at law of George W. Roberts. This resulted in an interlocutory decree entered May 9, 1956, whereby the plaintiff corporation was released and discharged from all claim or liability to the defendants except for the reissuance of the stock to whomsoever should be found in the action to be the owner thereof, and defendants were required to interplead and settle their claims, demands and matters in controversy; Loretto to file her answer within 30 days and Franklin to file his responsive pleading 30 days thereafter. Johnson, the co-executor filed a disclaimer of interest; Loretto Lohman Roberts filed a complaint in interpleader directed against Franklin H. Roberts. Franklin H. Roberts answered and following the reply of Loretto Lohman Roberts and the filing of a supplemental complaint on her part, which was answered, the cause was submitted to the court below upon motions for summary judgment made on behalf of each party. Both motions were based upon the admissions made in the several pleadings, the answers to requests for admissions and the stipulations set forth in a pretrial order.

The trial court filed its order and opinion (179 F.Supp. 185) directing that the motion for summary judgment of Loretto Lohman Roberts be denied and sustaining the motion for summary judgment on behalf of Franklin H. Roberts. Judgment was entered accordingly, holding that the declaration of trust created a valid inter-vivos trust under which Franklin H. Roberts became the owner of the stock mentioned at the death of George W. Roberts and directing the plaintiff in interpleader, Loretto Lohman Roberts, to surrender the stock certificate to Franklin H. Roberts.

Upon this appeal two principal questions are presented which are stated in the trial court's opinion, as follows: "First, is the decree of distribution entered by the probate court in the estate of George W. Roberts, deceased, conclusive as to the ownership of said certificate of stock, and Second, did the `Declaration of Trust — Revocable,' executed by George W. Roberts at the time he purchased the stock, create a valid inter vivos trust, or is the same void as an attempted testamentary disposition of the stock certificate, it being conceded that the declaration of trust was not executed in conformity with the Montana statutes on wills?"

In answering the first of these questions in the negative the district court quoted from In re Dolenty's Estate, 53 Mont. 33, 161 P. 524, at page 529, as follows: "A district court sitting in probate has only the special and limited powers conferred by statute, and has no power to hear and determine any matters other than those which come within the purview of the statute or which are implied as necessary to a complete exercise of those expressly conferred. (Citing cases.) Among the powers conferred by the part of the Codes relating to probate proceedings * * * we do not find any provision authorizing the court, in connection with the settlement of estates, to determine questions of title between the estate and persons claiming adversely to it. These questions must be determined in proper proceedings instituted for that purpose (Citing cases)."

The court also quoted from In re Day's Estate, 119 Mont. 547, 177 P.2d 862, 865, as follows: "It is also well settled in this state that a district court sitting in probate cannot try questions of title or ownership of property alleged to belong to an estate." In support of the rules there stated the court cited the following: In re Tuohy's Estate, 33 Mont. 230, 83 P. 486; In re Jennings' Estate, 74 Mont. 449, 241 P. 648; In re Davis' Estate, 27 Mont. 490, 71 P. 757; In re Vincent's Estate, 133 Mont. 424, 324 P.2d 403.

This limitation on the authority and jurisdiction of a Montana district court sitting in probate which found its most recent expression in In re Vincent's Estate, supra, and which has always been a recognized rule in Montana, follows similar decisions in California where the state constitutional provisions and probate statutes are substantially the same as those in Montana. This was noted in another fairly recent case in Montana, Hustad v. Reed, 133 Mont. 211, 321 P.2d 1083, 1092, where the court quoted with approval from a number of California decisions which hold that a probate court has no authority to determine rights between distributees and other persons not claiming in their capacities as heirs, devisees or legatees in a case such as this one.

This court has had occasion heretofore to note the same rule with respect to probate proceedings in Montana. Thus in Barker v. Edwards, 9 Cir., 259 F. 484, 486, this court, speaking of probate proceedings in Montana, said: "* * * the court had no power to adjudicate and finally determine questions of title between the estate and third persons, as that could only be done by action in which the parties could have a trial in the ordinary way."

This court again made the same statement with respect to the power of a Montana district court sitting in probate in the case of Maury v. Jones, 9 Cir., 25 F.2d 412, 415. See also reference to California probate proceedings in Tooley v. Commissioner, 9 Cir., 121 F.2d 350, 357.

Despite this long list of decisions, the appellant argues that the state court in this case did in fact undertake to determine title of the stock certificate here involved to belong to the appellant, and did determine its own jurisdiction to do so, and that since no appeal was taken from the orders of the probate court, those orders are now final and res judicata both as to ownership of the shares and as to the court's own jurisdiction to make such an order.

We think that the trial court was correct in holding that none of the orders of the probate court operated as a determination or adjudication of any of the issues between appellant and appelle...