Schurmeier v. Connecticut Mut. Life Ins. Co.

• Decision Date: 26 April 1909
• Docket Number: 2,753.
• Citation: 171 F. 1
• Parties: SCHURMEIER et al. v. CONNECTICUT MUT. LIFE INS. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

171 F. 1

SCHURMEIER et al. v. CONNECTICUT MUT. LIFE INS. CO.

No. 2,753.

United States Court of Appeals, Eighth Circuit.

April 26, 1909

Harris Richardson (Harold C. Kerr, on the brief), for appellants.

George W. Markham (James E. Markham, on the brief), for appellee.

Before SANBORN and HOOK, Circuit Juges, and PHILIPS, District Judge.

HOOK Circuit Judge.

The principal question in this case is whether the claim of the insurance company upon which it obtained a decree in the Circuit Court is barred by the limitations in the Minnesota statute (Gen. St. 1894, Secs. 4509 and 4511) relating to the presentation and allowance of claims against estates of deceased person. The statute provides that in granting letters testamentary or of administration the probate court shall make an order limiting the time for presentation of claims of creditors to not less than six months nor more than one year from the date of the order, that no claims shall be received after the time limited, except that 'for good cause shown the court may in its discretion' grant additional time not extending beyond eighteen months from the time notice of the original order is given, and that all claims arising upon contract not presented within the time prescribed shall be forever barred.

When letters testamentary were issued to Schurmeier's executors the probate court of Ramsey county, Minn., having cognizance of the matter, fixed six months as the period for presentation of claims, and notice of the order was duly given. The insurance company did not present its claim or sue thereon within the period so fixed, but later and within the additional year allowable for good cause brought an action at law in the circuit court. A judgment of that court in favor of the insurance company was reversed because no excuse for the delay appeared in the record. 124 F. 865, 60 C.C.A. 51. An amended complaint was then filed and another judgment obtained in the Circuit Court, which was also reversed. 137 F. 42, 69 C.C.A. 22. It was held upon the authority of Security Trust Co. v. Bank, 187 U.S. 211, 23 Sup.Ct 52, 47 L.Ed. 147, that, as no action was begun within the period first fixed by the probate court, the remedy thereafter was in equity, not at law. When the cause was remanded upon the second reversal the insurance company applied to the Circuit Court to transfer it to the equity side, the application was granted, and the complaint at law was reformed into a bill in equity. A final hearing in equity resulted in a decree for the insurance company, from which the executors took the appeal now before us.

As already observed, when the action at law was begun in the Circuit Court, the additional year allowable for good cause had not expired. The complaint of the insurance company contained no averments excusing its delay beyond the six months fixed by the order of the probate court. In the answer of the executors the Minnesota statute and the order were relied on, and it was averred that no cause for an extension of time existed. The company demurred to the answer, the demurrer was sustained, and, the executors declining to replead, judgment was rendered against them. It will thus be seen that the first judgment of the Circuit Court, reversed by this court, proceeded upon the assumption that the action could be brought and maintained after the six months had expired and without any ground or cause for an extension of the time. In the opinion of this court (124 F. 865, 60 C.C.A 51) Security Trust Co. v. Bank, 187 U.S. 211, 23 Sup.Ct. 52, 47 L.Ed. 147, is cited as controlling authority upon this question, but the other rule announced in that case, that after the first period fixed by the probate court had expired the remedy was in equity, was not definitely pointed out. On the contrary, this court said:

'As the record now stands, upon the authority of that case the judgment of the court below must be reversed and the demurrer overruled, but with leave to the plaintiff to reply to the answer or to amend its complaint, stating its cause of action at law or in equity, as it may be advised, and with leave to the defendants to answer or otherwise plead to such amended complaint.'

Thus three courses were suggested as being open to the insurance company: (1) A reply to the answer in the pending law action in which the executors averred that no cause for an extension existed, (2) an amendment of the complaint at law, or (3) a recasting of the complaint with appropriate amendments into a bill in equity. Acting upon this, an amended complaint at law was filed; and it is but fair to say that counsel, failing to examine the opinion of the Supreme Court in Security Trust Co. v. Bank, supra, may have been misled by the direction above quoted.

It is plainly disclosed in that opinion that the remedy was in equity. On the other hand, it is doubtful that prejudice could result, because when the judgment was reversed the eighteen months prescribed by the statute had already passed, and, if the delay in showing cause for an extension beyond the six months was fatal, it was fatal then, and the adoption of a wrong course afterwards added nothing to it.

The amended complaint at law, the second judgment in favor of the insurance company, the second reversal by this court, the transfer of the cause from the law to the equity side of the Circuit Court, the reformation of the pleadings, the final hearing, and the decree from which this appeal was taken, all occurred more than eighteen months after publication of the notice of the order for the presentation of claims. The reliance of the insurance company is upon the connection of these successive steps for the establishment of its demand with the action originally begun within the eighteen months, and upon the existence of sufficient cause for the delay beyond the first six months of that period. In approaching the situation so presented, it is important to notice some settled principles of law and some facts clearly shown in the case in hand. A foreign creditor may establish his claim in the courts of the United States against the personal representatives of a decedent though the laws of the state in terms limit such right to proceedings in the local probate courts. In such case, however, the courts of the United States administer the state laws and are bound by the same rules that govern the local tribunals. Security Trust Co. v. Bank, supra. In the case before us the requisite grounds of federal jurisdiction, diversity of citizenship, and amount in controversy are present, and, passing for the moment the matter of legal or equitable cognizance, the insurance company, therefore, had a lawful right to proceed in the Circuit Court. Under the Minnesota statute the probate court in which the administration of the estate was pending, having fixed six months for the presentation of claims, was authorized thereafter to grant an additional year for good cause shown. The Circuit Court of the United States sitting in equity was possessed of like authority. Schurmeier's Executors v. Insurance Co., 137 F. 42, 69 C.C.A. 22. The limitations of the Minnesota statute involved in this case relate to the time the claim is presented for allowance, not to the time of trial and judgment, nor to the time the court judicially determines whether good cause for an extension existed. In other words, if a claim is 'presented' within the six months or eighteen months, as the case may be, the proceeding takes its orderly judicial course, and it is not important that the questions connected with its allowance remain undetermined until after the time has expired. The bringing of an action upon a claim in a Circuit Court of the United States having jurisdiction has the same effect as a proceeding in the probate court, and is a 'presentation' of the claim to all intents and purposes as if it had been presented to the probate court. The estate of the deceased has not been closed.

When the action was brought in the Circuit Court the estate was in active course of administration; claims against it were allowed by the probate court months afterwards.

In this particular the case differs from that of Security Trust Co. v. Bank, supra. The claim of the insurance company is a just one. When the action was begun there was no substantial defense to it save in the failure to present it within the six months fixed by the probate court, and the question whether there was good cause for the delay.

The determination of the principal question stated at the outset, therefore, depends upon the existence of sufficient cause within the meaning of the statute for an extension of time for the presentation of the claim, the effect of the failure to set forth such cause in the pleadings within the eighteen months, and the effect of first proceeding at law and the subsequent transfer of the cause to the equity side of the court. The Minnesota statute, and a similar one of Wisconsin from which the former was doubtless taken, have been construed by the courts of those states very liberally in faver of creditors whose claims were just and whose delay had not worked hardship to others. In State ex rel. v. Probate Court, 67 Minn. 51, 54, 69 N.W. 609, 610, it was said:

'The sole object for limiting the time for the presentation of claims is to secure the prompt settlement of estates. In the present case there is not even a suggestion that the granting of relator's application would in any way delay or prejudicially interfere with the settlement of the estate, or cause it any possible injury, except to subject it to the chance of having to pay a just claim. Under the circumstances, to refuse relator the privilege of presenting its claim would be unreasonably harsh.'

And in State ex rel. v....