In re Estate of Murphy

598 P.2d 612, 183 Mont. 127, 1979 Mont. LEXIS 857
CourtMontana Supreme Court
DecidedAugust 9, 1979
DocketNo. 14347
StatusPublished
Cited by2 cases

This text of 598 P.2d 612 (In re Estate of Murphy) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Estate of Murphy, 598 P.2d 612, 183 Mont. 127, 1979 Mont. LEXIS 857 (Mo. 1979).

Opinion

MR. JUSTICE SHEA

delivered the opinion of the Court.

This is an appeal from a probate proceeding in the District Court, Daniels County. A number of Maurice D. Murphy’s creditors have appealed from a June 1, 1978 order, which authorized the personal representative of Maurice Murphy’s estate to take all cash and personal property in the personal representative’s possession and deliver the same to respondent, Northeast Montana Production Credit Association of Wolf Point (hereafter PCA).

Technically, this appeal only involves an order entered June 1, 1978; however, to understand why we must remand without a decision on the merits, it is necessary to briefly review the convoluted history of Maurice D. Murphy’s estate.

Maurice D. Murphy died testate on December 7, 1973. At the time of his death, Murphy was heavily in debt; his principal creditors were: (1) W. J. D. Graham, et al. — $464,392.28—this balance was due under a contract for deed executed by the decedent prior to his death; (2) PCA — $305,687.24—this was a secured debt incurred by decedent to finance his ranching operation; and (3) Citizen’s State Bank of Scobey, Montana (hereafter Bank)— $72,667.75 — this is an unsecured debt owed by decedent on a personal note to the Bank. Decedent also owed approximately $100,000 to other unsecured creditors.

On December 20, 1973, Ralph Shiell was appointed personal representative of Maurice D. Murphy’s estate. Shiell’s first act was to apply for authorization to continue the decedents ranching business; at the same time, Shiell applied for authority to borrow $91,077 from PCA for the estate and to be allowed to secure such a loan by executing mortgages on the estate’s livestock, equipment and feed. The District Court routinely granted all of Shiell’s re[129]*129quests and specifically found that such action “is in the best interests of the estate.”

On February 26, 1974, after all of the money from the first loan had been expended, Ralph Shiell petitioned the District Court for authorization to borrow an additional $138,500 from PCA to enable Shiell to continue operating the Murphy ranch and to allow him to pay off certain creditors of the estate. This request was also routinely granted. Thus, during the first three months after his death, Maurice Murphy’s estate became indebted to PCA for an additional $229,577 with all loans purportedly secured by mortgages on the estate’s livestock, machinery and feed.

On March 29, 1974, Ralph Shiell filed his notice of resignation with the District Court and requested that his accounts be approved and his responsibility to the estate terminated. A hearing on this matter was set for August 9, 1974, and at that time Shiell’s resignation was accepted, his accounts approved, and Gary Murphy, decedent’s son, was appointed to succeed Shiell as administrator.

Gary Murphy administered the estate from August 9, 1974 until September 20, 1976, the date he filed his resignation with the District Court. During his term as administrator, Murphy was authorized by the District Court to borrow the following sums from PCA:

AMOUNT DATE SECURITY GIVEN

$ 75,630 September 26, 1974 Mortgage on livestock, machinery and feed

Mortgage on livestock, $103,737 March 13, 1975 machinery, feed and real estate

$ 29,400 August 22, 1975 Mortgage on livestock, machinery and feed

Mortgage on livestock, machinery and feed $ 18,000 October 30, 1975

Mortgage on livestock, machinery and feed $ 85,000 December 10, 1975

[130]*130$ 25,000 March 10, 1976 Mortgage on livestock, machinery and feed

$336,767 TOTAL

On March 29, 1976, Loren O’Toole, one of the attorneys for the estate, petitioned the District Court for authority to sell 1,017 head of estate cattle (all of the cattle were pledged as security for the various PCA loans). The authorization to sell was granted by the District Court and O’Toole was able to sell the cattle to John Wycoff, James Wycoff, and Richard Redland for a consideration of $263,120.

Thereafter, O’Toole filed a second petition (August 9, 1976). This petition asked the District Court to determine which creditors should receive payment from the funds held for the estate. O’Toole’s petition stated that the estate currently had $286,545 on hand, and that ‘‘with the exception of $22,500.00 all of the sums above came from the sale of cattle, which were mortgaged to the Production Credit Association of Wolf Point, Montana.”

The District Court set O’Toole’s petition for hearing on September 3, 1976; however, because of various delays, the court did not hold the hearing until September 20, 1976. At that time, the court held an informal, unrecorded conference in the judge’s chambers. Apparently, the parties attending the informal conference agreed to submit written briefs detailing their theories on how the $286,545 should be distributed.

On November 22, 1976, after receiving a number of written briefs and after entertaining further arguments (also not recorded) the District Court entered the following order:

“Payments from the estate of the above named decedent are ORDERED as follows and in this order of priority:
“1. The contract for deed entered into on the 19th day of July, 1973 by and between W. J. D. Graham and Ruth M. Graham, husband and wife; William S. Graham and Lavere C. Graham, husband and wife, as sellers, and Lalon Fladager and Daryl Fladager, and the assignment made thereunder;
[131]*131“2. Secured and unsecured obligations owing to the Production Credit Association, Wolf Point, Montana that existed as of the date of death and any advances made upon petition and approved by specific court order after the date of death;
“3. Statutory Attorneys’ fees, and fees of the Personal Representatives, and Accountants’ fees as determined by the Court; (Public policy compels that attorneys fees must receive a priority in estates of questionable solvency or insolvent estates would not be properly administered with the advice of counsel. If there are insufficient funds for full payment of Paragraphs 1, 2 and 3, then the payment as provided in Paragraphs 2 and 3 will be pro-rata).
“4. Extraordinary fees of the attorneys, accountants, and the personal representatives as determined by the Court;
“5. Creditors as of the date of death;
“6. Any claim of the second personal representative, Gary Murphy, for monies expended, and determined to be necessary and reasonable, for the preservation of the estate assets;
“7. Beneficiaries under the terms of the Will or otherwise; and
“8. Any other funds advanced by the Production Credit Association after this date, for purposes necessary for the preservation of the estate assets, and approved by an Order of Court, will be paid in accordance with Paragraph 2 of this Order, and subject only to the Graham contract referred to in Paragraph 1 and, if necessary, pro-rated as provided in Paragraph 3.”

Gary Murphy, a party designated to receive payment in no. 6 of the November 22, 1976 order, filed a petition for writ of supervisory control with this Court.

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Bluebook (online)
598 P.2d 612, 183 Mont. 127, 1979 Mont. LEXIS 857, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-estate-of-murphy-mont-1979.