In Re the Estate of Thompson

484 N.W.2d 258, 1992 Minn. App. LEXIS 455, 1992 WL 88799
CourtCourt of Appeals of Minnesota
DecidedMay 5, 1992
DocketC7-91-2257
StatusPublished
Cited by2 cases

This text of 484 N.W.2d 258 (In Re the Estate of Thompson) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re the Estate of Thompson, 484 N.W.2d 258, 1992 Minn. App. LEXIS 455, 1992 WL 88799 (Mich. Ct. App. 1992).

Opinion

OPINION

LANSING, Judge.

Anchor Realty challenges (1) the trial court’s determination that Doris Thompson conducted a reasonably diligent search for creditors under Minn.Stat. § 524.3-801(b)(l) (1990), and (2) the court’s refusal to allow a late claim against the estate.

FACTS

Robert Thompson died in August 1989. Doris Thompson, appointed personal representative in October 1989, performed a *260 search for creditors pursuant to Minn.Stat. § 524.3-801(b)(l), but did not uncover a contractual liability for the financing of commercial real estate in Blue Earth, Minnesota. The Blue Earth property was purchased by Robert Thompson, Albert Van Burén, Marlin Schoep, and Midwest 10, Inc. from Anchor Realty and Development in 1977. The purchase was financed with a contract for deed payable to Charles Pingry, one of three partners in Anchor, and the assumption of an existing mortgage with Midwest Federal.

Between 1978 and 1984, Thompson, Van Burén, and Schoep assigned the contract for deed to Midwest 10, Inc., who then assigned it to DARB Investors. Thompson was involved in both Midwest 10 and DARB, and remained in contact with Pin-gry about the property. However, in 1984, Thompson’s business and social relationship with Van Burén ended, and the partners apparently entered an agreement in which Van Burén got the Blue Earth'property. Pingry had no further contact with Thompson about the property, but did communicate with Van Burén.

The property encountered financial difficulties in the late 1980s and payment to Pingry on the contract for deed ceased in 1988. In January 1990, the holder of the primary mortgage, now Minnesota Federal, served Pingry with a summons and complaint to begin foreclosure proceedings on the property. Pingry was in contact with Van Burén about the foreclosure, but did not try to contact Thompson. Pingry did not see the notice to creditors of Thompson’s probate proceedings published in October 1989. In the spring of 1990, some months after the bank initiated foreclosure proceedings, Pingry discovered that Thompson had died.

In June of 1990, Anchor filed a written statement of claim against Thompson’s estate for the balance of the contract for deed and for any deficiency judgment due on the primary mortgage after the foreclosure sale. The Estate disallowed the claim because the statutory time for filing a claim had expired in January 1990, four months- after the publication of notice to creditors. In September the property was sold at a foreclosure sale, leaving a deficiency in the amount of $23,000.

Anchor filed a petition to proceed on the claim in August 1990. Anchor contended that Doris Thompson had not performed a “reasonably diligent search for creditors” as required by Minn.Stat. § 524.3-801(b)(l), but that if the search was found adequate, the court should still allow the claim for cause shown pursuant to Minn.Stat. § 524.3-803(c)(4)(ii). The trial court determined that Doris Thompson had performed a reasonably diligent search for creditors, and that Anchor had not shown good cause why the late claim should be allowed. Following denial of a motion for a new trial or amended findings, Anchor appeals.

ISSUES

1. Did the personal representative conduct a reasonably diligent search for creditors under Minn.Stat. § 524.3-801(b)(l)?

2. Did the trial court abuse its discretion in disallowing the late claim against the estate under Minn.Stat. § 524.3-803(c)(4)(ii)?

ANALYSIS

I

The Due Process Clause of the United States Constitution requires the personal representative of an estate to provide actual notice of probate proceedings to known or reasonably ascertainable creditors. Tulsa Professional Collection Servs., Inc. v. Pope, 485 U.S. 478, 489-90, 108 S.Ct. 1340, 1347, 99 L.Ed.2d 565 (1988). Consistent with that requirement, the Minnesota probate statute provides that within three months of publication of notice of probate proceedings, the personal representative must serve notice upon all known and identified creditors. Minn.Stat. § 524.3-801(b)(2). Further, the personal representative

may determine, in the personal representative’s discretion, that it is or is not advisable to conduct a reasonably diligent search for creditors of the decedent who are either not known or not identi *261 fied. If the personal representative determines that a reasonably diligent search is advisable, the personal representative shall conduct the search.

Minn.Stat. § 524.3-801(b)(l). Any creditors discovered in the search must then be served with notice. Minn.Stat. § 524.3-801(c).

Due process does not require “impracticable and extended searches.” Pope, 485 U.S. at 490, 108 S.Ct. at 1347 (quoting Múlleme v. Central Hanover Bank & Trust Co., 339 U.S. 306, 317-18, 70 S.Ct. 652, 658-59, 94 L.Ed. 865 (1950)). Rather, the personal representative must make “reasonably diligent efforts.” Id. (quoting Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798 n. 4, 103 S.Ct. 2706, 2711 n. 4, 77 L.Ed.2d 180 (1983)). No Minnesota case law has defined the scope of a “reasonably diligent search” for creditors. See generally Thomas L. Waterbury, Notice to Decedents’ Creditors, 73 Minn.L.Rev. 763 (1989).

If a reasonably diligent search for ascertainable creditors is interpreted to require an extensive search, the timely and efficient administration of estates will be impaired, while few additional creditors will be discovered. Id. at 782. A statute giving the personal representative discretion on whether to search suggests a corresponding duty to avoid an abuse of that discretion. Id. Thus, the personal representative must act with good faith and from proper motives, and within the bounds of reasonable judgment. Id. at 782-83 n. 97 (citing III A. Scott, The Law of Trusts, § 187, at 14-15 (4th ed. 1988)).

Doris Thompson retrieved her husband’s records from his secretary and his attorney. She reviewed the records of stores currently owned by herself and her husband, talked to his business associates, the board of directors of his company, and the partners and shareholders in his current business transactions. She paid off or served the required notice on all creditors she knew about or discovered. Nowhere in her search did Thompson encounter information about the contract for deed or mortgage.

Anchor contends that Thompson’s search was not reasonably diligent because she did not speak with all the employees of the stores owned by her husband or with all former business associates, and because the law firm that represented the Thomp-sons examined only files kept under Robert Thompson’s name and not files kept under the names of businesses in which Thompson was involved. Information about the contract for deed was contained in the files of Midwest 10, Inc.

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Cite This Page — Counsel Stack

Bluebook (online)
484 N.W.2d 258, 1992 Minn. App. LEXIS 455, 1992 WL 88799, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-estate-of-thompson-minnctapp-1992.