Janice M. Cleland, Formerly Janice M. Godber, as of the Estate of Merlyn C. Godber, Deceased v. United States

874 F.2d 517, 1989 U.S. App. LEXIS 14594, 1989 WL 46086

• Court: Court of Appeals for the Eighth Circuit
• Decided: May 8, 1989
• Docket: 88-5213
• Status: Published

Opinions

LAY, Chief Judge.

Janice M. Cleland, executrix of her first husband’s estate, appeals from a judgment of the district court dismissing her wrongful death suit against the United States. The decedent, Merlyn C. Godber, died February 13, 1980, in an airplane crash near Hot Springs, South Dakota, when flying as a passenger in a plane piloted by Charles M. Largent, III. The airplane was owned by Fall River Feedlots, Inc. (Feedlots).

Cleland, serving as executrix, filed an administrative claim against the FAA under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680 (1982 & Supp. IV1986). This claim was denied on September 4, 1984. She subsequently settled the claim against Largent’s estate and Feedlots. In that settlement, she received $325,000 which was distributed to her and her three adult children. The government asserts that she executed a general release which compromised all claims against any and all parties arising out of the plane crash. The government claims this bars further litigation in her suit against the United States. The district court granted summary judgment for the government on this basis and Cleland now appeals. We reverse and remand the case to the district court for further proceedings.

Several months after the administrative claim had been denied, Cleland filed suit against the United States asserting that the FAA had been negligent in failing to properly warn the pilot of bad weather conditions. She alleged that the failure to warn was a contributing factor in the proximate cause of the plane crash. The personal representatives of Largent and another passenger, Altringer, have previously litigated this issue before this court. See Norwest Capital Management & Trust Co. v. United States, 828 F.2d 1330 (8th Cir.1987), on remand, Largent v. United States, No. 83-5020 (D. S.D. Mar. 30, 1988).¹

While the Norwest appeal was pending, the government and the executrix stipulated that they would be bound by the results of the appellate decision as to the findings of the government's negligence and proximate cause. Due to the stipulation, discovery was suspended on those issues.

On March 15, 1988, the United States moved to amend its answer to plead Cle-land’s November 5, 1984, release as an affirmative defense to its liability. Then, on March 22, 1988, the government moved for summary judgment, claiming that Cle-land’s release was framed in language which constituted a general release. The government asserted that Cleland had released not only Largent’s estate and Feedlots, but also

all persons, firms, corporations, administrators, and executors from each and every claim, demand, action or cause of action, either at law or in equity, of every kind and description, which [she], as Executrix, now [has] or hereafter may have arising out of an accident on the 13th day of February, 1980, in Fall River County, South Dakota, as a result of the operation of an airplane owned by Charles Marcus Largent, III and operated by him for and on behalf of Fall River Feedlots, Inc.

Record at 71.

Cleland responded by filing a cross motion for partial summary judgment on the issue of the United States’ liability to her, as Godber’s executrix. On May 6, 1988, a hearing was held on the motions before the district court.² The district court granted the United States’ motions to amend and for summary judgment, and dismissed Cle-land’s complaint. This appeal followed.

The government asserts that the language of the release discharges any other potential defendants including the United States. The executrix argues that the release was not intended to compromise her claim against the government and that the wording of the release manifests a clear expression of releasing only Feedlots and the Largent estate. She argues that under the South Dakota Uniform Contribution Among Joint Tortfeasors Act, S.D.Codified Laws Ann. § 15-8-17 (1984 & Supp.1988) that no other tortfeasors are to be released “unless the release so provides * *

This court reviewed a similar claim in Douglas v. United States Tobacco Co., 670 F.2d 791 (8th Cir.1982). There, the district court found that the operative language of the release discharging “all other persons, firms, corporations, associations or partnerships” constituted a release of all others under Arkansas law. This court agreed and barred plaintiff’s claims against other joint tortfeasors. 670 F.2d at 795. Our holding in Douglas requires us to hold that the language of Cleland’s release operates as a general release.

Therefore, under the terms of the release in issue, unless the release is held otherwise invalid, further claims against other joint tortfeasors are deemed barred.

The executrix asserts that she lacked authority under South Dakota law to release any party other than Largent and Feedlots. Under section 21-5-6 of the South Dakota statutes, unless all beneficiaries execute the release, a personal representative of an estate must seek approval of the appointing court for a wrongful death settlement. This statute reads:

Such personal representative may at any time before or after the commencement of a suit for wrongful death settle with the defendant the amount to be paid to him as damages for the wrongful death of the decedent. If such personal representative was appointed in this state and settlement is made before the commencement of a suit such settlement must have the approval of the court of the representative’s appointment. If settlement is made at any time after the commencement of suit, whether before or after judgment therein, such settlement must have the consent and approval of the court wherein the action is pending; provided, however, that if the personal representative was appointed in this state he may make such settlement upon the consent and approval of either the court wherein the action is pending or the court of his appointment. If all the statutory beneficiaries are of full age and competent and consent in writing to the proposed settlement the same may be made at any time, before or after suit, without the consent of either court.

S.D.Codified Laws Ann. § 21-5-:6 (1987 & Supp.1988).

The November 1, 1983, application to the court was executed not only by the executrix, but by the three adult beneficiaries (the decedent’s children).³ These four petitioned to confirm a settlement with the following language: “the estate of the above named decedent has a cause of action against Bobbie Fae Largent, Executrix of the estate of Charles Marcus Largent, III, deceased, and Fall River Feedlots, Inc. * * Record at 66. The petition went on to request an order authorizing the executrix’s settlement and “release [of] Bobbie Fae Largent, Executrix of the estate * * * and Fall River Feedlots, Inc., releasing them from all causes of actions, claims, and demands arising out of said wrongful death.” Id. at 67 (emphasis added).

In the judgment approving and confirming the settlement dated November 2,1984, the court authorized the settlement and gave judicial approval to the executrix to “release * * * any and all claims which might be asserted against the said Bobbie Fae Largent, Executrix of the estate of Charles Marcus Largent, III, deceased, and Fall River Feedlots, Inc. * * *.” Record at 70. In the same decree, the court recited:

the settlement made by the Executrix of the estate of Merlyn C. Godber, deceased with the defendants, Bobbie Fae Lar-gent, Executrix of the estate of Charles Marcus Largent, III, deceased, and Fall River Feedlots, Inc., for any and all claims, both known and unknown arising out of the death of said decedent, [is hereby] approved, confirmed and allowed.

Record at 69.

Thus, it is clear that the petition for the court’s approval for settlement specified only Largent’s estate and Feedlots. Similarly, the judgment authorizing and approving the settlement is not all inclusive of other parties as is the language of the release executed by the executrix.⁴

Under South Dakota law there is no question that an executrix, representing the estate and its beneficiaries, acts in a fiduciary capacity. In South Dakota it is well established that the executrix is an officer of the court which appoints her. She is thus subject to its control and direction. It is likewise clear that the powers of a personal representative are generally those imposed by statute. In addition to section 21-5-6, see, e.g., S.D.Codified Laws Ann. ch. 30-18 (1984 & Supp.1988) (management of decedents’ estates); S.D. Codified Laws Ann. § 30-18A-1 (1984 & Supp.1988) (hearing and court approval required for independent administration of estate by administrator); S.D.Codified Laws Ann. § 30-22-1 (1984 & Supp.1988) (court order required to sell estate property unless will directs otherwise); S.D.Codified Laws Ann. § 30-22-7 (1984 & Supp.1988) (court order otherwise required for sale of property); S.D.Codified Laws Ann. § 30-22-9 (1984 & Supp.1988) (sale of estate property must be justified by petition for order of sale of property). The state of South Dakota has patently sought to provide judicial process for the protection of estates and their beneficiaries. Accord Coe v. Covert, 214 Neb. 140, 144, 332 N.W.2d 699, 701 (Neb.1983) (construing South Dakota law).

Under section 21-5-6, the personal representative’s authority to compromise a claim exists only by statutory grant. This court has previously encountered a case with a very similar factual scenario. That case dealt with the settlement of an infant’s claim by his guardian. In Ruditis v. Gallop, 269 F.2d 50 (8th Cir.1959), speaking through the highly respected jurist Judge Harvey Johnsen, the court observed:

As to the release given by appellant’s guardian, this was one authorized by the Probate Court to be executed by the guardian for a payment of $3,000 in compromise and settlement of an alleged dispute with Fedo, his father, and their insurance carrier over whether the accident and death, with the damage resulting therefrom, were due solely to Fedo’s negligence, and with a discharge to be made of Fedo, his father and the insurance carrier from any and all claims which appellant or the guardian might have against these three parties “because of or arising out of the accident and death aforesaid”.

The release form, however, which the insurance carrier took from the guardian went beyond the authorization granted by the Probate Court’s order and purported to make release, not simply of Fedo, his father and their insurance carrier, but also of “all other persons, firms or corporations” from any claims which appellant or the guardian might have “because of said accident and death”.

Under Michigan law, a guardian is without capacity to compromise and settle claims except under orders of the Probate Court. Michigan Compiled Laws of 1948, § 708.19, provides: “Any fiduciary under order of the probate judge, * * * may adjust, settle or compromise any claim for or against the estate of a decedent or ward”. Such authorization by the court is not simply permissive but the order is “in effect, a judgment”. McMann v. General Acc. Assur. Corporation, 276 Mich. 108, 267 N.W. 601, 602; Heap v. Heap, 258 Mich. 250, 242 N.W. 252. Thus, a settlement made by a guardian is valid only to the extent that it is within the scope of the court’s authorizing order.

Here, under the court’s order, there was authorization only for the release or discharge of liability as to Fedo, his father and their insurance carrier. Insofar as a use of the words “all other persons, firms or corporations” could add any significance or effect to a release, this language would here have to be regarded as going beyond the extent of the guardian’s authorization and so be required to be ignored.

269 F.2d at 52-53. Although the case dealt with Michigan law, we find its reasoning germane. Courts in other jurisdictions have reached the same result. See, e.g. Caputo v. Holt, 217 Va. 302, 305, 228 S.E. 2d 134, 137 (1976) (absent court approval acquired in manner provided by law, release executed by first personal representative was not binding upon either successor personal representative or statutory beneficiaries). We find this rationale applicable in the instant case.

Although the South Dakota Supreme Court has not passed directly upon this same factual situation, that court has held in an analogous statutory situation that without court approval a personal representative of an estate has limited authority to act. In Shearn v. Fenton, 74 S.D. 355, 52 N.W.2d 830 (1952), the South Dakota Supreme Court was asked to determine the validity of an executor’s assignment of a judgment belonging to an estate. The applicable statute required that no sale of any property of an estate was valid unless approved by the county court. 74 S.D. at 356; 52 N.W.2d at 830. There, the executor had assigned the judgment to another, without first obtaining court approval. The assignee brought an action to recover the judgment, and the trial court dismissed the action on the basis that the assignment to the plaintiff was invalid. The Supreme Court of South Dakota affirmed, saying that the judicial approval mandated by the statute was clear, and it applied to personal property as well as to realty. Id. The court added: “ ‘Under the statute the representative of an estate has no authority to transfer property of a decedent, without authority of the probate court.’ ” Shearn, 74 S.D. at 357, 52 N.W.2d at 831 (quoting Bovard v. Dickenson, 131 Cal. 162, 63 P. 162 (1900)). The court found that “the judgment was property of the estate * * *.” As such, it was subject to the statute’s mandate, and no title could pass without court approval. 74 S.D. at 358, 52 N.W.2d at 831. We find that these decisions direct a result contrary to the government’s position. When the estate’s representative has invoked the judicial approval mechanism, the validity of the settlement terms depends upon the court’s approval. That which the judge has confirmed is valid; that which has not been confirmed is invalid.

The record we must review is that which was before the probate court. It thus follows in this case that Cleland’s release is valid only as to those parties enumerated in the documents which were approved by the South Dakota circuit court. An executrix acts in a fiduciary capacity and may do only that which the probate court authorizes. Here, the court authorized Cleland’s release only of Lar-gent’s estate and Feedlots. Cleland’s release of any other parties was thus unauthorized and is invalid.

Additionally, Cleland had no authorization from the other beneficiaries to release any of the estate’s claims besides those against Largent’s estate and Feedlots. Therefore, no argument can be made that Cleland’s release was authorized either by the court or by all the statutory beneficiaries.⁵

On this basis we find the release was invalid to the extent that any other parties, including the United States would be released. It is clear the executrix lacked authority to effect such a release.⁶

Judgment is hereby reversed and the cause is remanded to the district court for further proceedings not inconsistent with this opinion.

1 . On initial remand the district court awarded damages of one million dollars in favor of Al-tringer’s estate against the government. This was not appealed. The government appealed a similar award of damages in favor of the pilot’s estate. This case has been recently remanded for further proceedings. See Largent v. United States, 873 F.2d 1448 (8th Cir.1989).

2 . The Honorable Richard H. Battey, United States District Judge for the District of South Dakota.

3 . Two petitions dated November 1, 1984, were presented together to the court. One, entitled "Petition and Order for Distribution” was signed by all four beneficiaries. Record at 107-110. This instrument recited: "[t]hat settlement of the wrongful death claim * * * has been made as more fully appears in the attached judgment approving and confirming settlement." Record at 107. This petition requested approval of the beneficiaries’ proposed distribution of the settlement. The other instrument, entitled "Petition” was signed only by Cleland, acting as executrix. It is this second document which sought judicial approval of the settlement itself and which is quoted in the text of the opinion. See Record at 66-67.

4 . We note that only the executrix signed the release. It was not executed by any of the other statutory beneficiaries.

5 . It is obvious that petitioner did not seek to release any other parties. Cleland and the other parties knew they had claims pending against the United States, and did not seek to settle them.

6 . Where issues of law exist and the parties have briefed and argued the issue on appeal and where refusing to determine the issue "injustice might otherwise result * * * ” (Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 721, 85 L.Ed. 1037 (1941)), courts of appeals uniformly exercise their discretion to entertain the issue on appeal. See Metropolitan Life Ins. Co. v. United States, 874 F.2d 1234 (8th Cir.1989); Sanders v. Clemco Indus., 823 F.2d 214 (8th Cir.1987), appeal after remand, 862 F.2d 161 (8th Cir.1988); Struempler v. Bowen, 822 F.2d 40 (8th Cir.1987); Parker v. Corrothers, 750 F.2d 653 (8th Cir.1984); Wright v. Newman, 735 F.2d 1073 (8th Cir.1984). See also Culbertson v. Secretary of Health & Human Servs., 859 F.2d 319 (4th Cir.1988); Quinn v. Robinson 783 F.2d 776, 814 (9th Cir.) cert. denied, 479 U.S. 882, 107 S.Ct. 271, 93 L.Ed.2d 247 (1986); Stewart v. Hall, 770 F.2d 1267 (4th Cir.1985); B.B. Rider Corp. v. Commissioner of Internal Revenue Serv., 725 F.2d 945 (3d Cir.1984), appeal after remand sub nom. Stratmore v. Commissioner of Internal Revenue Serv., 785 F.2d 419 (3d Cir.1986). In re Howell, 731 F.2d 624 (98th Cir.1984), cert. denied sub nom. Howell v. State Bd. of Equalization of Cal., 469 U.S. 933, 105 S.Ct. 330, 83 L.Ed.2d 266 (1984). Cf. Animal Protection Institute of America v. Hodel, 860 F.2d 920 (9th Cir.1988); Rodriguez Rodriguez v. Munoz Munoz, 808 F.2d 138 (1st Cir.1986); Martinez v. Mathews, 544 F.2d 1233 (5th Cir.1976).

In Parker v. Corrothers, 750 F.2d 653 (8th Cir.1984) the district court neither inquired about nor addressed whether the state’s parole board regulations had created a protectible liberty interest. Despite this, our court stated:

[W]e do not believe that the district court's failure to examine the regulation precludes our consideration of it. Although we are reluctant to decide on appeal an issue not reached below, Singleton v. Wulff, 428 U.S. 106, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976), both parties at oral argument, and the government on brief, addressed the question of whether the regulation establishes a protected liberty interest in parole. This is primarily a legal question which we may address on appeal. See Lucas v. Hodges, 730 F.2d 1493, 1501 (D.C.Cir.1984).

Parker, 750 F.2d at 658.

Here, the government has confronted the issue on appeal and has not asserted that the issue was not addressed in the district court. The dissent raises the issue on its own. None of these parties has ever asserted the dissent’s contention at oral argument or in the briefs. In Warren v. City of Lincoln, 864 F.2d 1436 (8th Cir.1989) (en banc), this court decided an issue of law which not only was not raised in the trial court but also was not raised or briefed on appeal. There was no fundamental miscarriage of justice involved in the case. The issue involved in Warren was a routine issue of probable cause in a damage suit under 42 U.S.C. § 1983. Yet a majority of this court (which included Judge Fagg) had no difficulty in entertaining the new issue raised by the author judge as being within the exercise of the court’s discretion.

As indicated, in this case the government does not assert that this issue was waived because it was not presented to the district court. The issue is clearly one of law and without examining all the trial briefs and motions argued before the district court (which are not before us) this court has no knowledge regarding which arguments were made before the district court. In any event because the issue is one of law and because the release is clearly voidable, a grave injustice would ensue if the release were not set aside. The third argument used by the dissent is that the probate court may have received the general release before approving the settlement. This was denied at oral argument by the executrix and was not disputed by the government. The release was dated after the court-approved settlement.