Editorial
Front Page - Friday, October 16, 2009
Jack Nelson Jones
McAlexander et al. v. King et al., 2009 Ark. App. 655, Oct. 7, 2009.
This appeal comes from the Prairie County Circuit Court, Honorable Robert Craig Hannah presiding.
When James E. McAlexander died in 1988, he was a resident of Shelby County, Tennessee. A domiciliary probate estate was opened in Tennessee and an ancillary estate was opened in Arkansas. None of the appellees, creditors of the estate, filed a claim against the ancillary estate. The known Arkansas assets consisted of a fractional mineral interest in 85 acres in Conway County. The Arkansas estate closed in 1990 after all known Arkansas assets were transferred to the domiciliary estate. In March 1991, a Tennessee probate court found the estate insolvent and approved a plan of distribution to the appellees as follows: the United States received 60 percent of assets, Farm Credit Bank of Texas received 20 percent, and the testator’s widow received 20 percent. Appellants, the testator’s five daughters, received nothing under this plan. After the remaining known assets were distributed, the estate closed in 1996.
The Arkansas ancillary estate was reopened, however, when it was discovered in 2006 that the testator had held a mineral rights interest in approximately 4800 additional acres in Conway County, Arkansas. Again, none of the appellees filed a claim against the ancillary estate. In May 2007, the trial court authorized the estate’s executor to execute an oil and gas lease that included a cash bonus in excess of $1,000,000. In June 2007, the executor filed a motion asking the trial court to determine the rights and interests of the creditors who had filed against the domiciliary estate. Motions for summary judgment on the motion were filed by both the testator’s widow and the appellants.
A consent order was presented to the trial court that would authorize the executor to distribute certain estate assets. In December 2007, the consent order was approved by the court and payments were made to the United States ($855,000), Farm Credit Bank ($301,000), the testator’s widow ($301,000), and to the five appellants ($20,000 each).
In September 2008, after a hearing on the motions, the trial court granted summary judgment in favor of appellees and ordered the distribution of the remaining known assets of the ancillary estate to the appellees. The order granted $267,000 interest to the United States, $108,272 interest to Farm Credit Bank, and the balance of both those claims was assigned to the
testator’s widow. The widow was also to receive all accrued interest and principal on her claim and all payments other than those provided to the United States and Farm Credit Bank. Under this plan, the appellants were to receive nothing. Appellants appealed the summary judgment award to the Arkansas Court of Appeals.
Summary judgment is granted only when it is clear that there are no genuine issues of fact to be litigated and a party is entitled to judgment as a matter of law. On review the Court of Appeals looks to see if an issue of material fact had been created and remains unresolved, viewing the evidence in the light most favorable to the party against whom the motion was filed and resolving doubts against the moving party.
Arkansas estate administration law generally applies to the administration of ancillary estates of nonresident decedents. Ancillary personal representatives may pay a claim against the estate only if the claim was presented and allowed within the period required for claims against a domiciliary estate, and thus are barred unless verified to the personal representative or
filed with the court within three months after the first publication of notice to creditors. A claim approved by the personal representative must be filed with the court within 30 days after the expiration of six months after first publication. If an estate is declared insolvent, however, that estate shall be disposed of in a way that grants, as far as possible, each creditor an equal proportion of their claim.
The record did not indicate that the appellees’ claims were properly presented in accordance with Arkansas law, and therefore the claims of the testator’s widow and Farm Credit Bank would generally not be allowed. The insolvency determination was made before the discovery of the additional Arkansas assets, requiring the trial court to make a factual finding as to the estate’s solvency before granting summary judgment. Therefore, the Court of Appeals found that the trial court’s grant of summary judgment was premature. Because additional findings of fact, such as a determination as to the solvency of the estate, were necessary, the Court of Appeals reversed and remanded.
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