Opinion
No. C8-02-952.
Filed November 26, 2002.
Appeal from the District Court, Otter Tail County, File No. P4011665.
Steven E. McCullough, Brenda R. Rosten, Ohnstad Twichell, P.C., (for appellant)
Stephen F. Rufer, (for respondent)
Considered and decided by Schumacher, Presiding Judge, Randall, Judge, and Hudson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
On appeal from the appointment of a personal representative in this probate proceeding, appellant Carl Schorr argues that he should have been appointed because (a) under Minn. Stat. § 524.3-414(b), he had priority to be appointed; (b) the district court did not make a finding that he was unsuitable to be appointed; and (c) the record cannot support a determination that he is unsuitable to be appointed. We affirm.
FACTS
Louise Schorr (Schorr), the decedent, executed a will in October 1996 while admitted to a New Jersey hospital, after a fall when she hit her head. Her son, Carl Schorr, traveled from Minnesota to New Jersey to be with her, and it was during that time period when she made the will. The will named her son, Carl Schorr, the sole beneficiary of her estate; it made no provision for her daughter, Joan Alt. While in the hospital, she also signed a document giving her son power of attorney.
At the time she was hospitalized, Schorr was diagnosed with ataxia, probably due to a small brain stem stroke, which caused balance problems. A consulting neurologist reported that her orientation, memory, intellect, and cognitive functions were well preserved for her 84-year-old age, but hospital staff notations indicated that she was forgetful. Schorr was discharged from the hospital to the care of her son, who drove her back to Fergus Falls, Minnesota, and placed her in an assisted-living home and finally a nursing home. Medical records indicate that Schorr gradually lost her memory over the next few years. In 1998, she was diagnosed with dementia. In September 2000, Carl Schorr was appointed as the general guardian of her person. Schorr died in November of that year.
In March 1998, at Carl's suggestion, Schorr opened a brokerage account with Edward Jones. During this period, she made substantial gifts to her son, including a Corvette worth about $50,000. She also gave him her General Motors stock, worth about $37,000, to help him purchase a house.
In 1999, using his power of attorney, Carl Schorr started withdrawing fairly substantial sums from the Edward Jones account for nursing-home expenses. He also sold stock to cover capital-gains taxes and incurred margin loans on the account. The Edward Jones account statements reflected balances of $962,405 in July 1998, $1,060,608 in July 1999, and $456,868 when Schorr died in November 2000. At the time of her death, the average loan balance on the margin account with Edward Jones was $85,096.
No probate proceeding was initially commenced because, at Schorr's death, all her assets were in transfer-on-death or joint accounts with Carl Schorr. Joan Alt filed a petition for adjudication of intestacy and determination of heirs, requesting that a neutral third party serve as personal representative. Carl Schorr filed an objection and cross-petition, seeking formal probate of the 1996 will and his own appointment as personal representative. Joan Alt then objected to probate of the will on the basis of undue influence and lack of testamentary capacity, as well as to the appointment of Carl Schorr. Alt claimed that her brother should not be the personal representative of their mother's estate because the estate might have a claim against Carl Schorr to recover substantial money and property if he had made improper transfers from the estate to himself. At the same time, Alt withdrew her petition for formal adjudication of intestacy, basically agreeing that there was a valid will in existence.
The district court found that Joan Alt and Carl Schorr did not agree who should be the personal representative of Schorr's estate and that until the time set for trial, the estate needed to have a personal representative. The court formally appointed a third-party neutral as the personal representative; that person, however, declined to serve. At a later telephone conference call, the court noted that the estate had business that needed attention before trial "and so it is the Court's view that Mr. Schorr is not now the best choice and that I need to have someone else who is a disinterested person appointed." Consequently, the court issued a further order appointing Jay Myster, a third-party neutral, as personal representative. This appeal followed.
DECISION
A probate court's determination of factual questions will not be set aside unless clearly erroneous. Minn.R.Civ.P. 52.01; In re Conservatorships of T.L.R., C.A.R., D.M.R., Conservatees, 375 N.W.2d 54, 58 (Minn.App. 1985). The district court has discretion to determine suitability of a personal representative, and that determination will not be reversed absent an abuse of discretion. In re Estate of Crosby, 218 Minn. 149, 157, 15 N.W.2d 501, 506 (1944).
Carl Schorr contends that because the district court did not expressly find him unsuitable to act as personal representative of Schorr's estate under Minn. Stat. § 524.3-203 (2000), the court erred in failing to name him personal representative. Minn. Stat. § 524.3-203 states the priority order for appointment as personal representative "for persons not disqualified." Carl Schorr argues that according to this statute, he has priority for appointment: first, as the person nominated by a power conferred in the will, and second, as another devisee of the decedent, because the will made no provision for Joan Alt. See Minn. Stat. § 524.3-203(a)(1), (3). Minn. Stat. § 524.3-203(f) provides:
No person is qualified to serve as a personal representative who is:
under the age of 18;
a person whom the court finds unsuitable in formal proceedings;
* * * .
Minn. Stat. § 524.3-203(f)(1), (2). If there is an objection to appointment of a person "other than one whose priority is determined by will by an heir or devisee appearing to have a substantial interest in the estate," the court may appoint another person acceptable to heirs and devisees, or if there is no agreement, "any suitable person." Minn. Stat. § 524.3-203(b)(2).
In this case, after Carl Schorr's objection to the first third-party neutral, and after the parties could not agree, the court exercised its option under Minn. Stat. § 524.203(b)(2) to appoint another "suitable person," a disinterested third party. Suitability is determined by a person's
temperament, experience, and sagacity to discharge the trust with fidelity, prudence, and promptness[,] * * * having regard to the special conditions of each estate and those interested in it as creditors, legatees, and next of kin.
Estate of Crosby, 218 Minn. at 157, 15 N.W.2d at 506 (quotation omitted). The Minnesota Supreme Court has stated that the representative of an estate should be "entirely free from adverse interests or partiality." Corey v. Corey, 120 Minn. 304, 310, 131 N.W. 509, 511 (1913). A person is not deemed unsuitable merely because that person has a pecuniary interest in the estate or because some hostility exists between the parties. Id.; In re Estate of Healy, 247 Minn. 205, 209, 76 N.W.2d 677, 680 (1956). But if a person has engaged in self-dealing while acting in a fiduciary capacity, he may be deemed to be unsuitable. See, e.g., In re Estate of Ragan, 541 N.W.2d 859, 862 (Iowa 1995) (holding that petitioner, nominated in decedent's will as trustee, was unsuitable when he had engaged in self-dealing while acting as decedent's attorney in fact by writing several checks to himself and companies in which he had an interest).
Carl Schorr argues that because the district court did not make an express finding that he was unsuitable, the court was compelled to appoint him as personal representative. We conclude the district court's failure to use the express word "unsuitable" does not control. The court's statements on the record indicating Carl Schorr's unsuitability supports the district court's conclusion that a neutral party should best oversee the estate. Joan Alt has alleged that the estate has a number of potential claims against Carl Schorr for self-dealing that may reach $400,000. Carl Schorr is not prejudiced by the court appointing a neutral third party as representative. The court did not, for instance, select Joan Alt over Carl Schorr to be the personal representative; the court did not make any determination on the provisions of the will; the court did not take any funds due Carl Schorr and turn them over to Joan Alt. The court merely appointed a neutral party to oversee the proper distribution of a large estate in circumstances where the record discloses a serious issue. The appointment of a neutral representative does not impinge on Carl Schorr's right to defend against these claims. It does not impinge in any way his right to claim under the will. The appointment of a neutral representative simply preserves the estate until these matters are resolved. On this record, the district court's action in selecting a third-party neutral to oversee the administration of the estate was easily within the district court's discretion.