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In January, 1897, the Black River National Bank of Lowville brought an action in the circuit court of the United States for the district of Minnesota against the Security Trust Com- [187 U.S. 211, 212] pany of St. Paul, as administrator of the estate of Sumner W. Matteson, deceased. The complaint alleged that the plaintiff was a corporation duly organized under the national banking laws of the United States, having its place of business at Lowville, Lewis county, and state of New York; that the defendant was a corporation created by the laws of the state of Minnesota, having its place of business at the city of St. Paul and state of Minnesota, and had been duly appointed administrator of the estate of Sumner W. Matteson, deceased, by the proper probate court of Ramsey county, Minnesota, on or about the 3d day of September, 1895; tha the said Matteson had been during his lifetime a resident and citizen of the state of Minnesota.
For a cause of action the complaint averred that on the 27th day of February, 1894, the said Matteson had executed his two promissory notes, wherein for value received he promised to pay to the order of James H. Easton & Company, at the First National Bank of Decorah, Iowa, the sum of $ 2,500, four months after date, with interest thereon at the rate of 8 per cent per annum from date until paid; that thereafter, on March 22, 1894, and before the maturity of said notes, the said James H. Easton & Company, for value received, sold and assigned the same to the plaintiff; that said James H. Easton & Company was a copartnership doing business at Decorah, and that all the members thereof were residents and citizens of the state of Iowa; that no part of said notes has ever been paid except the interest thereon to the 24th day of November, 1894
The complaint further alleged that the defendant, as administrator of the estate of Sumner W. Matteson, had in its hand and under its control property, money, and effects which belonged in his lifetime to said Matteson, more than sufficient to pay the amount due the plaintiff; that the estate of said Matteson was in process of settlement in the probate court of Ramsey county, state of Minnesota, and had not been fully and finally settled and probated, and that said administrator had never been discharged and was still the administrator of the estate of said Matteson, deceased; and plaintiff demanded judg- [187 U.S. 211, 213] ment against the defendant in the sum of $5,000 and interest thereon from the 24th day of November, 1894.
On February 12, 1897, the defendant appeared and answered, admitting those allegations of the complaint which alleged the making and transfer of said notes, and that the same remained unpaid in the hands of the plaintiff, but denying that the defendant had in its hands as administrator of said Matteson any money or property applicable to the payment of said notes. The answer also alleged that the estate of said Matteson had been fully settled, probated, and administered upon and discharged from the probate court long prior to the commencement of plaintiff's action, and that the defendant had long before the commencement of this action turned over all property, money, and effects of said estate remaining in its hands, to the persons entitled thereto, and that defendant long before the commencement of this action had been discharged as such administrator, and was not when said action was brought, and is not now, administrator of the estate of said decedent.
On March 20, 1897, the plaintiff filed a reply, traversing the allegations of the answer. Thereafter and on the 18th day of January, 1899, a stipulation of facts and waiver of jury trial were filed. In the stipulation of facts it appeared that the estate of Matteson had been settled, administered upon, and discharged from the probate court prior to the commencement of plaintiff's action in the circuit court of the United States.
On April 17, 1899, the cause came on to be heard, on the pleadings and stipulation of facts, and judgment was entered in favor of the plaintiff in the sum of $6,782.89, to be paid and enforced out of the property and effects of the intestate, Sumner W. Matteson, deceased; and it was ordered further that this judgment be duly certified by this court to the probate court of Ramsey county as a claim duly approved, established, and allowed against the estate of Sumner W. Matteson, deceased.
Subsequently the cause was taken to the United States circuit court of appeals for the eighth circuit, where, on October 17, 1900, the judgment of the circuit court was affirmed, on authority of the case of Security Trust Co. v. [187 U.S. 211, 214] Dent, reported in 43 C. C. A. 594, 104 Fed. 380.
Whereupon a writ of certiorari was prayed for and allowed, and the cause was brought to this court.
Messrs. Edmund S. Durment and Albert R. Moore for petitioner.
Messrs. Edward C. Stringer and McNeil V. Seymour for respondent.
Mr. Justice Shiras delivered the opinion of the court:
This was a suit brought in January, 1897, in the circuit court of the United States for the district of Minnesota, by the Black River National Bank of Lowville, incorporated under the national banking laws of the United States, and doing business in the county of Lewis and state of New York, against the Security Trust Company of St. Paul, Minnesota, as administrator of the estate of Sumner W. Matteson, deceased, seeking to recover the sum of $5,000 and interest thereon, due on certain promissory notes made by said Matteson in his lifetime, and which were alleged to be the property of the said national bank.
No defense was interposed as respected the execution of the notes or the ownership of the same by the bank. It was admitted that the Security Trust Company had been, on September 3, 1895, duly appointed by the probate court of Ramsey county, Minnesota, administrator of the estate of said Matteson. The defendant, however, alleged in its answer that, as the action was not brought until after the time limited by the order of the probate court for the filing, examination, and allowance of claims against Matteson's estate, nor until after the examination and allowance of the administrator's final account, under the laws of the state of Minnesota, the official existence of the defendant company as administrator had ceased, and therefore no action could be maintained against it, and also [187 U.S. 211, 215] that the right to a judgment on the notes in suit was, by the laws of Minnesota, forever barred, although they were owned by a nonresident of the state, and a recovery was sought in a Federal court.
Two inquiries are presented to us: First, whether, by virtue of the state statutes, the estate of Matteson had been so fully settled and administered, before the present action was brought, as to operate as a discharge of the administration, and as a bar to a right of the plaintiff to recover against the estate in the state courts; and, second, if the first question must be affirmatively answered, whether, notwithstanding such a condition of the statutory law of the state, an action can be successfully maintained by a citizen of another state in the circuit court of the United States on a cause of action not barred by the general statute of limitations of the state.
It is scarcely necessary to say that, as respects the first of these inquiries, we must find an answer in the provisions of the Constitution and statutes of Minnesota as interpreted and construed by the supreme court of the state.
The state Constitution and statutory provisions bearing upon the question involved are the following:
Const. art. 6, ' 7. There shall be established in each organized county in the state a probate court, which shall be a court of record, and be held at such time and places as may be prescribed by law. . . . A probate court shall have jurisdiction over the estates of deceased persons and persons under guardianship, but no other jurisdiction, except as prescribed by this Constitution.'
Gen. Stat. 1894:
Section 4471 provides that real estate shall descend subject to the debts of the intestate.
Section 4665 provides for an appeal to the district court.
Section 4668 provides for serving notice of appeal.
Section 4672 provides that the district court shall try the case as if originally commenced in that court.
Section 4673 provides that pleadings shall be made up as in civil actions, and the issues of fact tried as in other actions. [187 U.S. 211, 219] Section 4676. In case of a reversal or modification of the order appealed from the district court makes such order as the probate court should have made, and certifies its judgment to the probate court.
state ex rel. Lindckugel v. Sibley County Probate Ct. 33 Minn. 94, 22 N. W. 10, was an application to the district court for a writ of prohibition to the probate court, the latter court having granted a petition to set aside a sale of real estate confirmed by the probate court, and it was held by the supreme court of the state that there was no jurisdiction in the probate court, saying:
In State ex rel. Dana v. Ramsey County Probate Ct. 40 Minn. 296, 41 N. W. 1033, where, upon an application for the final settlement of his accounts by the administrator of an estate and for a final discharge, the probate court made an order allowing the account and discharging the administrator, such order was held by the supreme court to be a final order discharging the administration of the estate, and that, as a final decree discharging the administration, it operated to discharge the lien of creditors upon real estate which might have been previously sold to pay debts. The opinion of the court was thus expressed:
In Schmidt v. Stark, 61 Minn. 91, 63 N. W. 255, it was held that where the estate of a deceased person has been fully administered, and a decree of distribution has been made, assigning the residue of the estate in the hands of the personal representative to the parties entitled thereto, the jurisdiction of the probate court is ended; and, if the personal representative does not deliver the property to the distributees, they may bring an action against him in the district court. It was said, per Mitchell, J.:
State ex rel. Matteson v. Ramsey County Probate Ct. 84 Minn. 289, 87 N. W. 783, the last expression of the supreme court of Minnesota on this subject to which we have been referred. The syllabus, prepared by the court, is as follows:
The facts and law of the case were then stated in the opinion of the court:
The court then proceeded to cite and approve previous de- [187 U.S. 211, 225] cisions, and particularly the language of Mitchell, J., in the case of Schmidt v. Stark, 61 Minn. 91, 63 N. W. 255, hereinbefore quoted. Other observations were made by the court pertinent to the case before us, as follows:
Some criticism is made, in the brief of the defendant in error, of the decision of the supreme court of Minnesota in this case; that the issue was feigned and an imposition upon the supreme court, and that the purpose of the decision was to forestall the decision of this court.
If, indeed, the judgment of the supreme court in that case were relied on as adjudging a case which had already passed into judgment in the circuit court of the United States, we might readily agree, as urged by the defendant in error, that the decision of the supreme court of Minnesota 'should receive little, if any, weight, by this court in the consideration of this case.' But that decision is cited and relied on by the plaintiff in error, not as an adjudication of the facts in controversy here, but as an interpretation of the statutes of the state. Cases may be found of decisions made by a state supreme court, even in exposition of state statutes, after the institution of litigation in a Federal court, wherein this court has refused to follow such a decision, if in it the state court has departed from its previous decisions, which were in force and relied upon by the Federal suitor. Burgess v. Seligman, 107 U.S. 33 , 27 L. ed. 365, 2 Sup. Ct. Rep. 10; Carroll County v. Smith, 111 U.S. 556 , 28 L. ed. 517, 4 Sup. Ct. Rep. 539.
Here, however, the supreme court of Minnesota, in its last opinion, did not depart from or modify its previous decisions [187 U.S. 211, 227] on the subject. On the contrary, it based its reasoning and conclusions upon its frequent previous decisions.
Nor are we permitted on the record in that case to impute to the parties therein an attempt to mislead the court or to improperly invoke its jurisdiction. The case seems to have gone before the probate court, the district court, and the supreme court, in the usual course of procedure, and the decision finally rendered by the supreme court must be received by us as a valid exposition of the law.
The conclusion to which we are brought, by an examination of the statutes of the state of Minnesota and of the decisions of the courts of that state in construing and applying them, is, that had a suit against an administrator of an estate been brought in the courts of that state, after the expiration of the period limited by the order of the probate court, in which creditors may present claims against the deceased for examination and allowance, and after an allowance of the administrator's final account, and a final decree of distribution, such suit could not have been maintained.
We are now to consider whether such a suit can be successfully maintained in a Federal court by a nonresident owner of a claim against the estate of a decedent.
Some general principles have become so well settled as to require only to be stated. One of these is that a foreign creditor may establish his debt in the courts of the United States against the personal representative of a decedent, notwithstanding the fact that the laws of the state relative to the administration and settlement of decedents' estates do in terms limit the right to establish such demands to a proceeding in the probate courts of the state. Union Bank v. Vaiden, 18 How. 503; 15 L. ed. 472; Lawrence v. Nelson, 143 U.S. 215 , 36 L. ed. 130, 12 Sup. Ct. Rep. 440; Byers v. McAuley, 149 U.S. 608 , 37 L. ed. 867, 13 Sup. Ct. Rep. 906.
Another principle, equally well settled, is that the courts of the United States, in enforcing claims against executors and administrators of a decedent's estate, are administering the laws of the state of the domicil, and are bound by the same rules that govern the local tribunals. Aspden v. Nixon, 4 How. 498, 11 L. ed. 1074. [187 U.S. 211, 228] 'The circuit courts of the United States, with full equity powers, have jurisdiction over executors and administrators, where the parties are citizens of different states, and will enforce the same rules in the adjustment of claims against them that the local courts administer in favor of their own citizens.' Walker v. Walker, 9 Wall. 745, sub nom. Walker v. Beal, 19 L. ed. 814.
In Yonley v. Lavender, 21 Wall. 276, 22 L. ed. 536, it was decided that while a nonresident creditor may get a judgment in a Federal court against a resident administrator, and come in on the estate according to the law of the state for such payment as that law, marshaling the rights of creditors, awards to debtors of his class, yet he cannot, because he has obtained a judgment in a Federal court, issue execution and take precedence of other creditors who have no right to sue in the Federal courts, and if he do issue execution and sell lands, the sale is void.
The reasoning of this case is worthy of quotation:
In Morgan v. Hamlet, 113 U.S. 449 , 28 L. ed. 1043, 5 Sup. Ct. Rep. 583, it was held that the statute of Arkansas, that 'all demands not exhibited to the executor or administrator, as required by this act, before the end of two years from the granting of letters, shall be forever barred,' begins, on the granting of letters of administration, to run against persons under age out of the state.
The doctrine of the case of Yonley v. Lavender, 21 Wall. 276, 22 L. ed. 536, was approved in Byers v. McAuley, 149 U.S. 615 , 37 L. ed. 871, 13 Sup. Ct. Rep. 906, wherein it was held that the administration laws of a state are not merely rules of practice for the court, but laws limiting the rights of parties, to be observed by the Federal courts in the enforcement of individual rights.
In Pulliam v. Pulliam, 10 Fed. 55, 78, the distinction between ordinary statutes of limitation and statutes of administration of the estates of decedents, limiting the time within which creditors must prove their claims, is pointed out in respect that the latter are rules of property as well as statutes of limitation, and it was said by Hammond, J., after citing Union Bank v. Vaiden, 18 How. 504, 15 L. ed. 473; Payne v. Hook, 7 Wall. 430, 19 L. ed. 261, and other cases:
In Dodd v. Ghiselin, 27 Fed. 405, involving the administration of a decedent's estate, and where it was contended that nonresident minors had a right to have the laws of the state of Missouri regulating the matter disregarded in the Federal court, but it was held otherwise, per Brewer, J .: That the law of the state providing for the settlement of a deceased person's estate is binding upon the Federal as well as upon the state courts.
In Miner v. Aylesworth, 18 Fed. 199, it was held by the circuit court of the United States for the district of Rhode Island, as against nonresident complainants, that, under the Rhode Island statute, no suit can be commenced against an administrator, as such, after three years from the time he gave public notice of his appointment. Bauserman v. Blunt, 147 U.S. 652 , 37 L. ed. 318, 13 Sup. Ct. Rep. 466.
Applying these principles to the present case, it would seem clear that the defendant in error, as a citizen of the state of New York, and having a legal claim against the estate of S. W. Matteson, deceased, had a right to elect to proceed to establish his claim by bringing a suit in the circuit court of the United States; and if he had brought his action against an existing administrator the administration of the estate not having been closed under the statutory proceedings, and obtained a judgment, undoubtedly such a judgment, when presented to the probate court within the time fixed by its order, must have been received by that court as a claim against the unadministered estate.
But can it be said that, if the foreign creditor delayed proceedings in the Federal court until after the time fixed by the [187 U.S. 211, 231] order of the probate court for the presentment of claims had expired and after the final distribution of the estate had been effected, and after the final account of the administrator had been allowed and his office had become functus officio, and after all claims of local creditors had thus been precluded, he can use the Federal process to devolve a new responsibility upon the person who had acted as administrator, and to interfere with the rights of other parties, creditors or distributees, which had become vested under the regular and orderly administration of the estate under the laws of the state?
It is the policy of the state of Minnesota, like that of many of the states, to prescribe a shorter term of limitations to claims against the estates of decedents than claims against living persons. Can that policy be defeated by a ruling of the Federal courts that the provisions of the state in that regard do not apply to parties bringing suit in those courts? In that event, the very mischief pointed out and deprecated in Yonley v. Lavender would ensue, that 'the rights of those interested in the estate who are citizens of the state where the administration is conducted are materially changed, and the limitation which governs them does not apply to the fortunate creditor who happens to be a citizen of another state.' The answer given to such a proposition by this court in the case just cited was: 'This cannot be so. The administration laws of Arkansas are not merely rules of practice for the courts, but laws limiting the rights of parties, and will be observed by the Federal courts in the enforcement of individual rights.'
Let us now examine the reasoning employed by the circuit court of appeals in reaching its conclusion in the present case. Having correctly held that, so far as the administration law of the state of Minnesota attempts to compel citizens of other states to establish demands against the estates of decedents only by a proceeding in the probate court of the state, it is ineffectual to accomplish that object, the court proceeded to say:
The validity of this reasoning depends, of course, upon the correctness of the construction put by the learned court on the state statutes; and, as we have seen, in the cases cited, the supreme court of the state has placed an altogether different meaning on those statutes. They hold that the Probate Code of the state makes no provision for the formal discharge of an administrator, but the necessary legal effect of an order of the probate court, allowing the final account of the administrator and its final decree of distribution, assigning the whole of the estate to the heirs and distributees, is to remove the estate of the deceased from the jurisdiction of the court, and to render the office of administrator, which depends upon such jurisdiction, functus officio; and that, after the estate has been so settled and assigned, and while the final decree of distribution remains unreversed and unmodified, the probate court has no jurisdiction to entertain a petition to issue a citation to the administrator requiring him to further account for the property belonging to the estate, which is in his possession, or came into his possession.
Adopting, then, the construction put upon the administration laws of Minnesota by the supreme court of the state, we have only to consider the force of certain other suggestions of the court below, which are, in some measure, independent of those already considered.
It is argued, in the opinion of the circuit court of appeals, that, because 4523 confers upon the probate court the [187 U.S. 211, 235] power to determine when the final settlement of an estate shall be made, and to allow as much as one year and six months for that purpose, the Federal court must be conceded the same power as respects the claim of a nonresident creditor, to allow it with the eighteen months, which is conferred upon the probate courts of the state. This suggestion is manifestly based on a misconception of the language and legal purport of 4523. That language is as follows: 'The probate court at the time of granting letters testamentary or of administration shall make an order allowing to the executor or administrator a reasonable time, not exceeding one year and six months, for the settlement of the estate.'
So that, expressly the time for the settlement of the estate must be fixed by the probate court at the time when the letters of administration are granted, and it is provided, by the following section, that 'the probate court may, upon good cause shown by the executor or administrator, extend the time for the settlement of the estate not exceeding one year at a time, unless, in the judgment of the court, a longer time be necessary.' [ 4524.]
These sections have nothing to do with the limitation prescribed for the proof of presentation of the claims of creditors, which is found in 4509. Moreover, in the present case, the court having fixed the period of six months within which the estate should be settled, the administrator, accordingly, having no good cause to show to the contrary, filed his final account of the settlement of the estate within the time so limited, and the account was allowed and the final decree of distribution made before the institution of the present suit.
Section 4509 provides that, at the time of the granting letters testamentary or of administration, the court shall make an order limiting the time in which creditors may present claims against the deceased for examination and allowance, which shall not be less than six months nor more than one year from the date of such order, and that no claim or demand shall be received after the expiration of the time so limited, unless, for good cause shown, the court may, in its discretion, receive, hear, and allow such claim upon notice to the executor or administrator. [187 U.S. 211, 236] But it should be observed that such power to extend the time limit must be exercised, on good cause shown, 'before final settle ment,' and, in the present case, no such good cause was shown, either to the probate court or to the circuit court of the United States, before final settlement. It is evident that the discretion to extend the time for proof of claims was to be appealed to for some good reason, that is, reason showing why the claim was not made or the suit brought before the expiration of the time fixed in the original order.
The circuit court of appeals admits that 'there is much reason, perhaps, for saying that citizens of other states ought not to be allowed to maintain an action in the Federal court against a local administrator or executor after the expiration of a period when, by the express command of the legislature, no such action can be maintained in the local courts, provided the period fixed by the legislature is reasonable, but the right of a nonresident creditor to bring his action in the national courts ought not to be conditioned or made to depend upon the time that a local court chances to approve a final settlement when the time of such approval rests in its discretion, and is largely a matter of convenience.' But the legislation of Minnesota does not make the limit within which claims must be made against the estates of decedents to depend on the exercise of discretionary power by the courts. It does provide that the probate court shall fix a time within which claims must be presented, to wit, not less than six nor more than eighteen months. Between those limits of six and eighteen months the probate court may have power of discretionary action on good cause shown. But having once exercised that power, as in the present case, by fixing the term of probation at six months, any extension of that term could only be had, upon good cause shown, 'before final settlement.'
We are not called upon by the facts of the present case to determine whether a Federal court might or might not, on good cause shown, extend the time in which a claim might be asserted against a decedent's estate beyond the term previously fixed by the probate court. But it is sufficient to say that, in the present case, no application was made to the Federal court to exercise such a power, either before or after the limitation prescribed [187 U.S. 211, 237] under the state statute had expired. All that was before the circuit court of the United States was an action at law upon a cause of action against a decedent's estate, which, under the laws of the state of Minnesota, could not be maintained in the courts of that state, because barred by the operation of the laws of the state regulating the administration of the estates of deceased persons. Moreover, it is obvious, and it has always been held, that the circuit court cannot, in the trial of an action at law, exercise the power of a court of equity. An application to the Federal court to decree an extension of time beyond the period previously prescribed by the probate court would have to be made by a bill in equity, showing good cause. Scott v. Armstrong, 146 U.S. 499 , 36 L. ed. 1059, 13 Sup. Ct. Rep. 148.
Following our previous and repeated decisions, that the courts of the United States, when exercising jurisdiction over executors and administrators of the estates of decedents within a state, are administering the laws of that state, and are bound by the same rules which govern the local tribunals, we conclude, in the present case, that--
The judgment of the Circuit Court of Appeals must be reversed; the judgment of the Circuit Court is also reversed, and the cause is remanded to that court, with directions to enter judgment in conformity with the opinion of this court.
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Citation: 187 U.S. 211
Docket No: No. 39
Decided: December 01, 1902
Court: United States Supreme Court
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