Whitaker v. Estate of Whitaker

• Decision Date: 26 June 1995
• Docket Number: No. 94CA2018,94CA2018
• Citation: 663 N.E.2d 681,105 Ohio App.3d 46
• Parties: WHITAKER, Appellant, v. ESTATE OF WHITAKER; Reed, Appellee.
• Court: Ohio Court of Appeals

Page 46

105 Ohio App.3d 46

663 N.E.2d 681

WHITAKER, Appellant, v. ESTATE OF WHITAKER; Reed, Appellee.

No. 94CA2018.

Court of Appeals of Ohio,

Fourth District, Ross County.

Decided June 26, 1995.

Carlile, Patchen & Murphy, Robert B. Barnett and Laurence E. Sturz, Columbus, for appellant.

Teaford, Rich, Coffman & Wheeler, J. Gary Coffman and Timothy G. Crowley, Columbus, Barrington Law Offices and James E. Barrington, Chillicothe, for appellee.

HARSHA, Judge.

This is an appeal from a judgment of the Ross County Court of Common Pleas, Probate Division, regarding the executor's seventh and final fiduciary's account in the estate of Patricia J. Whitaker.

Appellant raises the following assignments of error:

Assignment of Error No. 1:

"The trial court erred in depriving appellant of his property without due process of law."

Assignment of Error No. 2:

"The trial court erred in surcharging appellant for certain expenditures made from the estate."

Assignment of Error No. 3:

"The trial court erred in denying appellant the reasonable and necessary estate expenses."

The Ross County Court of Common Pleas, Probate Division, appointed appellant Michael D. Whitaker executor of the estate of Patricia J. Whitaker in November 1984. Appellant and Catharine Reed, appellee, are residual beneficiaries of the estate. ¹ On August 13, 1993, appellee filed a motion to vacate entries settling fiduciary accounts and objections to fiduciary's accounts, pursuant to R.C. 2109.33. This motion contained objections to the appellant's first through sixth accounts. On September 17, 1993, appellee filed a motion to remove and surcharge the executor and a motion to appoint a commissioner. The court held a hearing on appellee's objections on September 30, 1993. Appellant tendered his resignation as executor on October 1, 1993, and the court appointed two individuals to serve the estate as coadministrators.

Following the September 30, 1993 hearing, the court issued an October 4, 1993 journal entry, wherein it found that appellant had conducted unauthorized transactions in violation of his fiduciary duties to the estate and that there were grounds to remove appellant as executor. The court also ordered appellant to file a final fiduciary's account. Subsequently, appellant filed his seventh and final fiduciary's account. Appellee, Catharine Reed, filed objections to this account. The first of these objections stated, "The objections filed herein on August 13, 1993, as to the First through Sixth Fiduciary's Accounts, are hereby reiterated and incorporated by reference as if fully herein rewritten."

The probate court scheduled the hearing on the fiduciary's seventh account for March 31, 1994, in a notice stating that the sole subject matter of the hearing would be appellee's objections to the seventh fiduciary's account. At the March 31 hearing, appellant stipulated to appellee's objections to the seventh fiduciary's account. ² The court then proceeded to a hearing on appellee's motion to surcharge the executor. Appellant objected that he was not prepared to defend against this motion. However, the court heard testimony and took evidence. The court then continued the matter until April 13, 1994, and issued an interlocutory order, which, among other things, disallowed certain expenditures made by appellant as executor of the estate and instructed the estate's coadministrators to prepare a final listing of suspect expenditures. At the April 13, 1994 hearing, appellant presented additional evidence, which he had been unprepared to offer at the March 31 hearing. On May 23, 1994, the court entered an order surcharging appellant in the amount of $139,998.74. This case is now before us by virtue of appellant's timely appeal.

Appellant's first assignment of error contends that he was denied due process of law. He argues that he did not have reasonable notice that the hearing on the appellee's objections to the seventh fiduciary's account would expand into a final hearing on appellee's motion to surcharge appellant for expenditures made during appellant's executorship of the estate.

Both the Fourteenth Amendment to the United States Constitution and Section 16, Article I of the Ohio Constitution affirm that no person shall be deprived of life, liberty, or property without due process of law. The concept of due process has been deemed to encompass both substantive and procedural rights. In this case, we deal with the question of procedural due process. The essence of procedural due process is the right to receive reasonable notice and a reasonable opportunity to be heard. Mullane v. Cent. Hanover Bank & Trust Co. (1950), 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865, 873, and State ex rel Allstate Ins. Co. v. Bowen (1936), 130 Ohio St. 347, 4 O.O. 427, 199 N.E. 355. We therefore examine the record to determine whether, as a matter of law, appellant received reasonable notice and a reasonable opportunity to be heard. Ohio Valley Radiology Assoc., Inc. v. Ohio Valley Hosp. Assn. (1986), 28 Ohio St.3d 118, 123, 28 OBR 216, 220-221, 502 N.E.2d 599, 603-604.

Appellant received a notice regarding the March 31 hearing which made him aware that the objections to the seventh fiduciary's account would be addressed at that hearing. Those objections included an objection to all accounts filed by appellant. The information appellant needed to defend against the motion to surcharge him as executor and to defend against the objections to accounts one through six is essentially the same. Technically, appellant did not have notice that the court would hear the motion to surcharge him as executor on March 31, but it is difficult to assert that appellant should not have been prepared for such a hearing on March 31.

However, even assuming it was unreasonable for appellant to be prepared to address the motion to surcharge the executor at the March 31 hearing, the probate court continued the hearing until April 13, 1994. Appellant was given nearly two additional weeks to prepare evidence on the motion to surcharge him. Indeed, appellant came to the April 13 hearing with numerous additional documents. Moreover, appellant presented evidence that he had not had at the March 31 hearing. Both the court and counsel for appellee asked appellant if he had any additional information to submit at the April 13 hearing. Appellant clearly had an opportunity to present any evidence he could not have presented earlier. We therefore find that appellant had reasonable notice of the court's consideration of the motion to surcharge and a reasonable opportunity to be heard due to the court's continuation of the March 31 hearing. See, generally, Rossman v. Conran (1988), 61 Ohio App.3d 246, 250, 572 N.E.2d 728, 730. Accordingly, appellant's first assignment of error is overruled.

Appellant's second assignment of error asserts that the probate court erred in surcharging appellant for certain of appellant's expenditures from estate funds. Under R.C. 2109.01, appellant, as executor of Patricia J. Whitaker's estate, was a fiduciary. "A fiduciary relationship is one in which special confidence and trust is reposed in the integrity and fidelity of another and there is a resulting position of superiority of influence, acquired by virtue of this special trust." In re Employment of Pratt (1974), 40 Ohio St.2d 107, 115, 69 O.O.2d 512, 517, 321 N.E.2d 603, 609. It is well established that " '[w]here the law creates fiduciary relations, it seeks to prevent the abuse of confidence, by ensuring the disinterestedness of its agents. * * * ' " Magee v. Troutwine (1957), 166 Ohio St. 466, 468-469, 2 O.O.2d 471, 472, 143 N.E.2d 581, 583, quoting Armstrong v. Heirs of Huston (1838), 8 Ohio 552. ³

The powers of executors who serve as fiduciaries are outlined in the Revised Code. See, e.g., R.C. Chapters 2109 and 2111. A fiduciary who exceeds his statutorily granted powers does so at his own risk. In fact, when objections are taken to an executor's account, the burden of establishing the validity of the account is upon the executor. In re Estate of Butler (1940), 137 Ohio St. 96, 17 O.O. 432, 28 N.E.2d 186, paragraph three of the syllabus.

The present dispute involves surcharges against appellant arising from exceptions to the following charges appellant allegedly incurred on behalf of the estate ⁴:

Regarding factual determinations, a trial court will not be reversed where there is some competent, credible evidence going to all essential elements of the case. Sec. Pacific Natl. Bank v. Roulette (1986), 24 Ohio St.3d 17, 20, 24 OBR 14, 16-17, 492 N.E.2d 438, 440-441, and C.E. Morris Co. v. Foley Constr. Co. (1978), 54 Ohio St.2d 279, 8 O.O.3d 261, 376 N.E.2d 578. Under this highly deferential standard of review, any evidence is sufficient to sustain the judgment and prevent a reversal if it applies to all the essential elements of the case. Chicago Ornamental Iron Co. v. Rook (1915), 93 Ohio St. 152, 112 N.E. 589.

The trial court's determination whether a violation occurred concerning the first three surcharges listed above is factual in nature. We therefore examine the record for competent, credible evidence to support the probate court's determination with regard to the first three surcharges.

Initially, we consider the $5,000 loan. At the April 13, 1994 hearing, the probate court questioned appellant regarding the $5,000 partial distribution he made to himself during the period of the estate's second account, October 1, 1985, to September 30, 1986. The appellant replied that this distribution was really a loan, which he repaid to the estate with interest in the amount of $7,000. Self-dealing by a fiduciary is generally prohibited. R.C. 2109.44 states that "[f]iduciaries shall not buy from or sell to themselves nor shall they * * * have any dealings with the estate, except as expressly authorized by the instrument * * * or with the approval of the probate court * * *." See, also, Mag...