ESTATE OF SAUTER

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No. 80-88 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 IN THE MATTER OF THE ESTATE OF EMMA SAUTER, Deceased. leal from: District Court of the Ninth Judicial District, In and for the County of Glacier Honorable B. W. Thomas, Judge presiding. Counsel of Record: For Appellant: R. V. Bottomly, Great Falls, Montana For Respondent : Wilbur P. Werner, Cut Bank, Montana Barney Reagan, Cut Bank, Montana Submitted on briefs: July 11, 1980 Filed: ~ - ~ %@J 1 3 Mr. J u s t i c e John C. Sheehy d e l i v e r e d t h e Opinion of t h e C o u r t . he a p p e a l i s by JoAnn Palmer, t h e d a u g h t e r of Emma S a u t e r , d e c e a s e d , from a n o r d e r o f t h e D i s t r i c t C o u r t , N i n t h ~ u d i c i a l i s t r i c t , G l a c i e r County, denying JoAnn P a l m e r ' s D p e t i t i o n t o remove Wilbur Werner a s p e r s o n a l r e p r e s e n t a t i v e of h e r m o t h e r ' s e s t a t e , o r i n t h e a l t e r n a t i v e t o a p p o i n t a special administrator t o administer the e s t a t e . The s i n g l e i s s u e t o be r e s o l v e d i s whether Wilbur Werner, a n a t t o r n e y , may p r o p e r l y a c t a s p e r s o n a l r e p r e s e n t a t i v e of t h e e s t a t e when a p o t e n t i a l a s s e t of t h e e s t a t e i s a c l a i m a g a i n s t d e c e d e n t ' s o t h e r d a u g h t e r and h e r husband, M a r g a r e t and Wayne Simonson, and where W e r n e r ' s law p a r t n e r , James Nelson, was r e p r e s e n t i n g t h e Simonsons i n o p p o s i n g t h e c l a i m a t t h e t i m e of W e r n e r ' s a p p o i n t m e n t a s p e r s o n a l r e p r e sentative. JoAnn Palmer c o n t e n d s t h a t t h e D i s t r i c t C o u r t s h o u l d e i t h e r have r e q u i r e d Werner's removal o r else a p p o i n t e d a special administrator for the estate. W determine t h a t t h e e a p p o i n t m e n t of a s p e c i a l a d m i n i s t r a t o r i s n e c e s s a r y under t h e c i r c u m s t a n c e s of t h i s c a s e . The f a c t s g l e a n e d from t h e D i s t r i c t C o u r t r e c o r d s showed t h a t on J u l y 28, 1978, d u r i n g t h e l i f e t i m e of Emma S a u t e r , a p e t i t i o n f o r t h e a p p o i n t m e n t of a c o n s e r v a t o r of h e r a s s e t s w a s f i l e d by h e r d a u g h t e r , JoAnn Palmer, s e e k i n g t h e a p p o i n t m e n t of Dwaine I v e r s o n . The o n l y o t h e r n e x t of k i n o f Emma S a u t e r was a n o t h e r d a u g h t e r , M a r g a r e t Simonson. On September 2 0 , 1978, Dwaine I v e r s o n was a p p o i n t e d c o n s e r v a t o r of t h e e s t a t e of Emma S a u t e r , and t h e r e a f t e r l e t t e r s of c o n s e r v a t o r s h i p w e r e i s s u e d t o ~ w a i n eI v e r s o n . On October 4 , 1978, Dwaine J . I v e r s o n , a s c o n s e r v a t o r , e n t e r e d i n t o a c o n t i n g e n t f e e a r r a n g e m e n t w i t h R. V. ~ o t t o m l y , a Great F a l l s a t t o r n e y , concerning a l l e g e d claims of t h e e s t a t e of Emma S a u t e r a g a i n s t Margaret Simonson and Wayne Simonson, h e r husband. I t i s unnecessary t o d e t a i l t h e fac- t o r s of t h e a l l e g e d c l a i m h e r e , e x c e p t t o s t a t e t h a t t h e c o n s e r v a t o r s o u g h t $300,000 i n a c t u a l damages and $50,000 i n exemplary damages from t h e Simonsons. On November 1 8 , 1978, Emma S a u t e r d i e d . Her l a s t W i l l and Testament, e x e c u t e d A p r i l 17, 1962, nominated Wilbur P. Werner, a t t o r n e y , o f C u t Bank, Montana, a s h e r p e r s o n a l r e p r e s e n t a t i v e , and e x c e p t f o r two s m a l l d e v i s e s , d i s t r i b u t e d h e r e s t a t e t o h e r d a u g h t e r s , M a r g a r e t Simonson and JoAnn Palmer a s e q u a l d e v i s e e s and l e g a t e e s . The L a s t W i l l and Testament w a s o f f e r e d f o r p r o b a t e i n i n f o r m a l p r o c e e d i n g s on November 24, 1978, and Wilbur P . Werner was a p p o i n t e d p e r s o n a l r e p r e s e n t a t i v e of t h e decedent's estate. On December 8, 1978, Dwaine J . I v e r s o n , a s c o n s e r v a t o r , f i l e d h i s p e t i t i o n f o r f o r m a l p r o b a t e of t h e W i l l , d e t e r m i n a t i o n of h e i r s and t e s t a c y , and a p p o i n t m e n t o f p e r s o n a l representative. T h a t p e t i t i o n s o u g h t t h e removal o f Wilbur Werner a s p e r s o n a l r e p r e s e n t a t i v e and t h e a p p o i n t m e n t of Dwaine J. I v e r s o n as p e r s o n a l r e p r e s e n t a t i v e . The p e t i t i o n was based on t h e c o n t e n t i o n t h a t Werner w a s u n a b l e t o a c t a s p e r s o n a l r e p r e s e n t a t i v e b e c a u s e of a c o n f l i c t of i n t e r e s t . I n t h e c i v i l s u i t f i l e d by I v e r s o n , a s c o n s e r v a t o r , a g a i n s t t h e Simonsons, t h e Simonsons had r e t a i n e d a s t h e i r a t t o r n e y t o r e p r e s e n t them i n t h e m a t t e r , James Nelson, a law p a r t n e r of Wilbur Werner. M a r g a r e t Simonson and Wilbur Werner e a c h f i l e d o b j e c t i o n s t o t h e p e t i t i o n of Dwaine J. I v e r s o n t o be a p p o i n t e d a s personal representative. Eventually, t h e D i s t r i c t Court d i s m i s s e d I v e r s o n ' s p e t i t i o n f o r f o r m a l p r o b a t e and h i s appointment a s personal r e p r e s e n t a t i v e because of h i s l a c k of p e c u n i a r y i n t e r e s t i n t h e e s t a t e o f Emma S a u t e r . On J u l y 11, 1979, JoAnn Palmer f i l e d h e r p e t i t i o n f o r f o r m a l p r o b a t e o f t h e W i l l , f o r t h e removal of Werner a s p e r s o n a l r e p r e s e n t a t i v e , and f o r t h e a p p o i n t m e n t of a spec i a l a d m i n i s t r a t o r t o h a n d l e a l l of t h e a f f a i r s of t h e estate. She nominated Dwaine J. I v e r s o n a s s u c h s p e c i a l administrator . Wilbur Werner, a s p e r s o n a l r e p r e s e n t a t i v e , and M a r g a r e t Simonson, a s t h e o t h e r h e i r of t h e e s t a t e , o b j e c t e d to this petition. A f t e r a h e a r i n g , t h e D i s t r i c t C o u r t judge d e n i e d JoAnn P a l m e r ' s p e t i t i o n . I t i s from t h a t o r d e r o f d e n i a l , d a t e d November 5, 1979, t h a t JoAnn Palmer a p p e a l s . With r e s p e c t t o t h e s u i t commenced by t h e c o n s e r v a t o r a g a i n s t t h e Simonsons, i t a p p e a r s t h a t on October 2 5 , 1979, James Nelson, W e r n e r ' s law p a r t n e r , a p p e a r e d on b e h a l f of t h e Simonsons and moved t o d i s m i s s t h e c l a i m . w a s o v e r r u l e d on November 8 , 1978. Emma S a u t e r ' s d e a t h , a s we have s a i d , o c c u r r e d on November 1 8 , 1978. 24, The motion On November 1978, James Nelson, on b e h a l f o f t h e Simonsons, f i l e d a motion f o r e x t e n s i o n of t i m e t o f i l e a n answer, i n t h e c i v i l action. O n December 1 2 , 1978, a f t e r t h e f i l i n g o f t h e p e t i t i o n by I v e r s o n i n t h e e s t a t e p r o c e e d i n g s , t h e law f i r m o f Werner and Nelson withdrew from d e f e n s e of t h e c i v i l a c t i o n b r o u g h t by t h e c o n s e r v a t o r . Barney Reagan w a s sub- s t i t u t e d a s c o u n s e l o f r e c o r d f o r t h e Simonsons. A t t o r n e y James Nelson h a s a p p e a r e d i n t h e e s t a t e p r o ceedings representing t h e personal representative i n b r i e f s f i l e d i n o p p o s i t i o n t o JoAnn P a l m e r ' s p e t i t i o n and a s Werner's a t t o r n e y i n t h e h e a r i n g b e f o r e t h e c o u r t . I n t h e meantime, t h e b u s i n e s s of t h e e s t a t e i s s u f f e r ing. Beyond t h e a p p o i n t m e n t of t h e p e r s o n a l r e p r e s e n t a t i v e and t h e p u b l i c a t i o n of t h e n o t i c e t o c r e d i t o r s , n o t h i n g f u r t h e r h a s been done. The e s t a t e w i l l r e q u i r e a f e d e r a l e s t a t e t a x r e t u r n and t h e r e a r e b i l l s t o be p a i d , and subs t a n t i a l a s s e t s t o be a c c o u n t e d f o r . bond a s p e r s o n a l r e p r e s e n t a t i v e . Werner h a s p o s t e d a He t e s t i f i e d t h a t h e r e a l i z e d a c t i n g a s t h e p e r s o n a l r e p r e s e n t a t i v e h e was " s t e p p i n g i n t o something," and a d v i s e d t h e Simonsons t h a t he and Nelson c o u l d n o t c o n t i n u e t o r e p r e s e n t them i n t h e c i v i l a c t i o n i f t h e W i l l was o f f e r e d f o r p r o b a t e and h e was p e r sonal representative. However, Werner h a s no r e s e r v a t i o n s a b o u t h i s n e u t r a l i t y i n h a n d l i n g t h e pending c i v i l c l a i m a g a i n s t t h e Simonsons a s an a s s e t of t h e e s t a t e . The c o n s e r v a t o r h a s f i l e d a n i n v e n t o r y i n t h e c o n s e r v a t o r s h i p p r o c e e d i n g s acknowledging r e c e i p t of c e r t a i n i t e m s of p e r s o n a l p r o p e r t y , o u t l i n i n g t h e r e a l p r o p e r t y h e l d by t h e d e c e a s e d a t t h e t i m e of h e r d e a t h , and l i s t i n g a l s o a s a n a s s e t t o be a c c o u n t e d f o r by him, t h e c l a i m a g a i n s t t h e Simonsons. The o r d e r of t h e D i s t r i c t C o u r t d e n y i n g JoAnn P a l m e r ' s p e t i t i o n f o r t h e removal of Werner i s n o t w i t h o u t l o g i c . The c o u r t p o i n t e d o u t t h a t Werner w a s d e s i g n a t e d by t h e W i l l o f Emma S a u t e r a s p e r s o n a l r e p r e s e n t a t i v e and t h a t h e was a l o n g t i m e c o u n s e l o r and f r i e n d of t h e S a u t e r f a m i l y . T h e r e i s no q u e s t i o n a b o u t t h e v a l i d i t y of t h e W i l l nor t h e q u a l i f i c a t i o n s of Werner e x c e p t f o r t h e p o s s i b l e b i a s o r c o n f l i c t t h a t m i g h t e x i s t i n h i s h a n d l i n g of t h e c l a i m a g a i n s t t h e Simonsons, s a i d t h e c o u r t . The c o u r t f u r t h e r s t a t e d t h a t t h e r e w a s no c o n f l i c t which was s o a n t a g o n i s t i c t o the interests of t h e e s t a t e t h a t Werner would b e u n a b l e t o do j u s t i c e , and f u r t h e r s a i d t h a t i f JoAnn Palmer was d i s s a t i s f i e d w i t h t h e p e r s o n a l r e p r e s e n t a t i v e ' s e f f o r t s , h e r remedy w a s t o commence a n a c t i o n a g a i n s t t h e Simonsons and t h e p e r s o n a l r e p r e s e n t a t i v e , c i t i n g I n R e E s t a t e o f Graf ( 1 9 6 8 ) , 150 Mont. 577, 437 P.2d 371. The f a c t o r s which l e a d u s t o o v e r r u l e t h e November 5, 1979 o r d e r of t h e D i s t r i c t C o u r t a r e t h e s e : L e t t e r s were i s s u e d t o Wilbur Werner a s p e r s o n a l r e p r e s e n t a t i v e of t h e e s t a t e on November 24, 1978. On t h a t d a t e , and u n t i l December 1 2 , 1978, Werner's l a w p a r t n e r , James Nelson, was t h e a t t o r n e y o f r e c o r d i n t h e c i v i l a c t i o n d e f e n d i n g t h e Simonsons a g a i n s t a c l a i m which i s now p u r p o r t e d t o be an a s s e t o f t h e e s t a t e . Werner, i f no s p e c i a l a d m i n i s t r a t o r i s a p p o i n t e d , w i l l b e c a l l e d upon a s p e r s o n a l r e p r e s e n t a t i v e t o d e t e r m i n e what d i s p o s i t i o n s h o u l d be made of t h e c l a i m o f t h e Simonsons and whether t h e l i t i g a t i o n s h o u l d be c o n t i n u e d . The com- p e t i n g i n t e r e s t s of JoAnn Palmer, who would b e t h e b e n e f i c i a r y i f t h e c l a i m r e s u l t e d i n a judgment a g a i n s t t h e Simonsons and t h e Simonsons, whose i n t e r e s t i s t o d e f e a t t h e c i v i l l i t i g a t i o n , a r e a t stake. The s i t u a t i o n i s c o v e r e d by t h e Canons of P r o f e s s i o n a l E t h i c s , a d o p t e d by t h i s C o u r t on May 1, 1973, and a p p e a r i n g i n Vol. 160 of t h e Montana R e p o r t s , i n S e c t i o n DR 5-105. In pertinent part, that section provides : "(B) A lawyer s h a l l n o t c o n t i n u e m u l t i p l e employment i f t h e e x e r c i s e of h i s i n d e p e n d e n t p r o f e s s i o n a l judgment i n b e h a l f of a c l i e n t w i l l be o r i s l i k e l y t o be a d v e r s e l y a f f e c t e d by h i s r e p r e s e n t a t i o n of a n o t h e r c l i e n t , exc e p t t o t h e e x t e n t p e r m i t t e d under DR 5-105(C). I n t h e s i t u a t i o n c o v e r e d by DR 5-105 ( B ) , a lawyer may r e p r e s e n t m u l t i p l e c l i e n t s i f i t i s o b v i o u s t h a t he c a n a d e q u a t e l y r e p r e s e n t t h e i n t e r e s t of e a c h and i f e a c h consents to the representation a f t e r f u l l disclos u r e of t h e p o s s i b l e e f f e c t of s u c h r e p r e s e n t a t i o n on t h e e x e r c i s e of h i s i n d e p e n d e n t p r o f e s s i o n a l judgment on b e h a l f of e a c h . "(C) ... "(D) I f a lawyer i s r e q u i r e d t o d e c l i n e employment o r t o withdraw from employment under DR 5-105, no p a r t n e r o r a s s o c i a t e o f h i s o r h i s f i r m may a c c e p t o r c o n t i n u e such employment. " From t h e f a c t s f o r e g o i n g , i t i s c l e a r t h a t James Nelson, a t t h e t i m e of t h e a p p o i n t m e n t of t h e p e r s o n a l r e p r e s e n t a t i v e , c o u l d n o t have been a p p o i n t e d b e c a u s e of a c o n f l i c t of i n t e r e s t t h a t would a r i s e o u t of h i s r e p r e s e n t a t i o n of M a r g a r e t Simonson a g a i n s t t h e claimed i n t e r e s t of t h e e s t a t e i n t h e civil litigation. Under DR 5-105(D) above, i f one lawyer i s r e q u i r e d t o d e c l i n e employment b e c a u s e of such p o s s i b l e c o n f l i c t , no p a r t n e r o r a s s o c i a t e may a c c e p t o r c o n t i n u e such employment. A c c o r d i n g l y , Werner i s w i t h i n t h e r u l e and c a n n o t h i m s e l f a c t a s p e r s o n a l r e p r e s e n t a t i v e , e x c e p t upon f u l l d i s c l o s u r e and c o n s e n t of a l l i n t e r e s t e d p a r t i e s as t h e Rule p r o v i d e s . I t makes no d i f f e r e n c e t h a t h e r e Werner i s a c t i n g a s a p e r s o n a l r e p r e s e n t a t i v e r a t h e r t h a n a s an attorney. Even a s a p e r s o n a l r e p r e s e n t a t i v e , h i s a t t o r n e y i s James Nelson, and t h e problem p e r s i s t s u n a b a t e d . Nothing w e s a y h e r e impugns t h e i n t e g r i t y of Wilbur P . Werner. The i n t e n t of t h e Canons of P r o f e s s i o n a l E t h i c s i s n o t o n l y t o a v o i d i m p r o p r i e t y , b u t even t h e a p p e a r a n c e of i m p r o p r i e t y . Lawyers i n t h e c o n d u c t o f t h e i r b u s i n e s s , o r m a t t e r s r e l a t i n g t o t h e i r l e g a l b u s i n e s s must, l i k e Mrs. C a e s a r , be beyond s u s p i c i o n . T h i s i s n o t t o s a y t h a t Werner may n o t c o n t i n u e i n a l l o t h e r matters except with respect t o t h e claim a g a i n s t t h e Simonsons t o a c t as p e r s o n a l r e p r e s e n t a t i v e of t h e e s t a t e , and t o t a k e c a r e of i t s b u s i n e s s . was t h e i n t e n t of h i s d e c e a s e d c l i e n t . That obviously But i t i s p r o p e r here t h a t t h e D i s t r i c t Court appoint a s p e c i a l administrat o r f o r t h e purpose of h a n d l i n g t h e d i s p o s i t i o n of t h e claim against the Simonsons. No reason appears why Dwaine J. Iverson could not act in that circumscribed capacity, but who will be appointed special administrator is a matter for the discretion of the District Court. The situation presented here is contemplated by the provisions of the Uniform Probate Code. Section 72-3-701, MCA, provides for the appointment by the clerk in an informal proceeding of a special administrator or by the court in a . formal proceeding where the appointment is necessary to preserve the estate or to secure its proper administration, particularly where the general personal representative cannot or should not act. The matter of the fee for the attorney of the special administrator would be a subject for negotiation between the special administrator's attorney and JoAnn Palmer, the beneficiary of the alleged claim. If, however, the estate is benefited, and claim for attorney's fees is made against the estate, then the subject of the special administrator's attorney's fees would be a matter for determination by the District Court in accordance with section 72-3-631(5), MCA, and subject to the District Court's discretion. With the appointment of a special administrator, whose duties would be limited to the eventual disposition of the suit against the Simonsons, there is no reason why Wilbur Werner may not continue as the general personal representative of the estate. Since his law firm has withdrawn from the representation of the Simonsons, there is no reason why James Nelson may not serve as attorney representing Werner in matters pertaining to the general handling of the estate, exclusive of the claim against the Simonsons. The attorney who will represent the special administrator is a matter t o be d e c i d e d by t h e s p e c i a l a d m i n i s t r a t o r when he o r s h e i s appointed. The c a u s e i s t h e r e f o r e remanded t o t h e D i s t r i c t C o u r t with t h e following i n s t r u c t i o n s : 1. Wilbur P . Werner may c o n t i n u e a s t h e g e n e r a l p e r s o n a l r e p r e s e n t a t i v e of t h e e s t a t e , w i t h t h e e x c e p t i o n of t h e c l a i m a g a i n s t t h e Simonsons, and may e n t e r upon t h e performance of h i s d u t i e s o t h e r w i s e a s such p e r s o n a l r e p r e s e n t a t i v e . 2. The D i s t r i c t C o u r t s h a l l r e c o n s i d e r i t s o r d e r denying JoAnn P a l m e r ' s p e t i t i o n f o r f o r m a l p r o c e e d i n g s i n this estate. 3. The D i s t r i c t C o u r t s h a l l a p p o i n t a s p e c i a l admini- s t r a t o r , whose d u t i e s s h a l l be c i r c u m s c r i b e d t o t h e e v e n t u a l d i s p o s i t i o n of t h e a l l e g e d c l a i m of t h e e s t a t e a g a i n s t t h e Simonsons. 4. Each p a r t y s h a l l b e a r h i s o r h e r own c o s t s w i t h r e s p e c t t o t h i s l i t i g a t i o n r e l a t i n g t o t h e a p p o i n t m e n t of t h e s p e c i a l a d m i n i s t r a t o r and t h i s a p p e a l , e x c e p t t h a t t h e personal r e p r e s e n t a t i v e , i f t h e D i s t r i c t Court determines t h a t he i s p r o c e e d i n g i n good f a i t h , s h a l l b e e n t i t l e d t o r e c e i v e h i s n e c e s s a r y e x p e n s e s and d i s b u r s e m e n t s , i n c l u d i n g r e a s o n a b l e a t t o r n e y ' s f e e s a s p r o v i d e d under s e c t i o n 72-3632, MCA. Reversed and remanded w i t h i n s t r u c t i o n s . W e concur: YChiefdJ &t iue & A us c (J

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