Battley v. Banks

KRAUSER, J. As personal representative of the Estate of Dorothy Battley, appellant Robert Battley appeals from three orders issued by the Circuit Court for Montgomery County, sitting as the Orphans’ Court, which respectively granted appellee Michael G. Banks, the former guardian of Ms. Battley’s property, guardianship commissions and attorney’s fees. The first order permitted Banks to pay himself, “from the former guardianship bank account,” his guardianship commissions before turning over Ms. Battley’s assets to the personal representative. The second order directed Banks “to write himself a check” from the same bank account for the probate fees he had paid in opening Ms. Battley’s estate. And the third order awarded Banks $300.00 in attorney’s fees for his efforts to open Ms. Battley’s estate and directed that a check in that amount be sent to Banks “immediately.” Appellant contends that in each instance, the orphans’ court erred.

For the most part we agree. Hence, we shall vacate in full the first and second orders, but as for the third order, we shall vacate it only to the extent that it instructed appellant to pay the funds immediately and not in accordance with the payment schedule in Md.Code (1974, 2001 Repl.Vol., 2006 Supp.), § 8-105(a) of the Estates and Trusts Article (“ET”). ⁶⁴³ Background In November 2002, Dorothy Battley executed a will. The will named appellant, who was Ms. Battley’s nephew, as the personal representative of her estate and bequeathed all of her property to Kimiko Battley, her deceased brother’s wife. In the event Kimiko did not survive Ms. Battley, the property was to go to appellant, as the residuary beneficiary.

On February 18, 2003, Ms. Battley, suffering from dementia, was admitted to the Woodside Center, a nursing home in Silver Spring, Maryland. Five months later, on July 28, 2003, the Montgomery County circuit court appointed Banks as the guardian of Ms. Battley’s property and appellant as guardian of her person. On July 3, 2004, Ms. Battley passed away. Thereafter, Banks filed a petition in the circuit court requesting termination of the guardianship and authorization to transfer “all assets at the time of the death of Dorothy Battley” to the personal representative of her estate, who had not as yet been appointed.

Banks further asked the court to order whomever was ultimately appointed the personal representative of Ms. Battley’s estate to investigate the value of Ms. Battley’s assets prior to July 9, 2003, the date on which he was appointed guardian of her property. With that petition, Banks submitted the final “Annual Fiduciary Report,” which consisted of a final accounting of Ms. Battley’s assets and a proposed distribution of them. The report also contained Banks’s claim for guardianship commissions in the amount of $861.47. On September 10, 2004, the circuit court approved Banks’s final accounting and proposed distribution, but specified that “the guardian’s commissions be limited to $550.25.” That same day, the court entered a separate order discharging Banks as the guardian of Ms. Battley’s property and directing him to transfer “all assets at the time of [her] death” to the person “to be appointed” personal representative of her estate.

But it denied Banks’s request that the personal repre ⁶⁴⁴ sentative investigate the value of Ms. Battley’s “assets prior to July 9, 2003.” 1 Over a year later, after no action had been taken by anyone to open the estate, Banks filed a petition for judicial probate in the orphans’ court, requesting, among other things, that he be appointed the personal representative of Ms. Battley’s estate. At that time, he also filed a notice of judicial probate and paid the register of wills $52.84 in probate fees to open Ms. Battley’s estate. In the probate petition Banks asserted that the “only known assets” were a Bank of America account containing $1286.24 and a “Representative Payee account” at Woodside Center with $255.59 in it, although he claimed that he had been informed by Woodside Center that, prior to Ms. Battley’s enrollment at that facility, she “appeared to have an account in excess of $70,000.” The petition concluded with Banks’s request for authorization to pay himself $550.25 in guardianship commissions previously approved by the circuit court. Approximately two weeks later, appellant filed Ms. Battley’s will, naming him as personal representative, with the register of wills.

In response, Banks filed an “Amended Petition for Judicial Probate” with the orphans’ court, requesting that appellant be removed as personal representative and that he, Banks, be appointed special administrator of the estate; that he, as special administrator, be authorized to distribute Ms. Battley’s personal property to Kimiko Battley, in accordance with the will; and that he further be authorized to pay himself the circuit court-approved $550.25 in guardianship commissions owed to him. As grounds for these requests, Banks claimed that, at no time during the fifteen months following Ms. Battley’s death, did appellant contact Banks or the nursing home; that appellant “did not claim [Ms. Battley’s] body”; and that appellant had neither provided “adequate information regarding the financial affairs of his Aunt, Dorothy Battley,” 2 ⁶⁴⁵ nor “provided information to the Court justifying his expenditures” as the former “[gjuardian of the [decedent’s] person and property.” 3 In response to Banks’s petition, appellant denied that he had ever abandoned his aunt’s body, pointing out that he had, in fact, paid for her funeral expenses and further insisting he had “provided financial information including [Ms. Battley’s] bank statements directly to Michael Banks.” He added that, notwithstanding Banks’s claims to the contrary, he had never been guardian of Ms. Battley’s property and hence had never made expenditures in that capacity; and that, in any case, “the Court [had] never requested information from him.” Finally, he asserted that Banks’s “defamatory allegations” had no foundation in fact and that Banks himself had “failed to conduct an investigation” into Ms. Battley’s assets while he was still the guardian of her property. On March 22, 2006, after a hearing, the orphans’ court ordered that Ms. Battley’s will be admitted to probate and appointed appellant, in accordance with the will, as personal representative of Ms. Battley’s estate. Following that decision, Banks filed a petition requesting the $550.25 in guardianship commissions previously authorized by the circuit court and for $300 in attorney’s fees 4 for the actions he took to open Ms. Battley’s estate.

On April 26, 2006, appellant, as personal representative, filed a petition to administer Ms. Battley’s estate as a small estate. 5 He listed Banks’s $550.25 in guardianship commissions as claims against the estate and sought reimbursement ⁶⁴⁶ of the $1223.95 in funeral expenses he had purportedly paid. The register of wills granted appellant’s petition and issued to him the necessary letters of administration. On June 20, 2006, the orphans’ court held a hearing on Banks’s request for both $550.25 in guardianship commissions and $300 in attorney’s fees. During the hearing, Banks asserted he had not paid himself guardianship commissions, in accordance with the circuit court’s earlier order authorizing him to do so, because of “an oversight.” When the hearing ended, the orphans’ court ruled that, since “Banks had a right” at the time the circuit court granted his request for guardianship commissions “to pay himself out of the remaining balance of [Ms. Battley’s] funds, the sum of $550.25,” he could “do it now since he did not do it before.” On June 22, 2006, the orphans’ court awarded Banks the $300 in attorney’s fees he had requested and ordered that a check in that amount “be sent to Michael G. Banks, Esq. immediately,” but the court was silent as to Banks’s requested guardianship commissions.

On July 5, 2006, Banks filed a claim against Ms. Battley’s estate for the $52.84 in probate fees he had paid to open the estate, but appellant, as personal representative, disallowed that claim. Thereafter, both parties requested that the orphans’ court issue a written order regarding Banks’s guardianship commissions. On July 25, 2006, the orphans’ court entered two orders: one directing Banks to “write himself a check” from Ms. Battley’s Bank of America account “in the amount of $52.84” for the probate fees and the other permitting Banks to “pay himself the commissions owed from the former guardianship bank account, pursuant to the previous order of court.” This appeal followed. 6 ⁶⁴⁷ Motion to Strike Appendix to Banks’s Brief Appellant moves to strike the appendix to Banks’s brief, which consists of a letter from Banks to appellant requesting “all asset information related to the Dorothy Battley Estate,” Banks’s petition for termination of guardianship in the circuit court, and a receipt from the register of wills for Banks’s payment of the sum of $52.84. Appellant argues that the documents were not introduced below, and hence should not be considered on appeal.

Banks has filed no opposition. Because the record confirms appellant’s assertion that neither of these two documents were introduced below and because ordinarily such documents will not be considered on appeal, we will grant this motion. See, e.g., Prince George’s County v. Local Gov’t Ins. Trust, 388 Md. 162 , 170 n. 6, 879 A.2d 81 (2005).

The Guardianship Commissions Appellant claims that the orphans’ court erred in permitting Banks to pay himself, from the former guardianship bank account, $550.25 in guardianship commissions before turning over that account to appellant as the personal representative of the estate. Even though the circuit court had previously approved the commissions, he argues that, once the guardianship was terminated, Banks, as guardian, was not permitted by law to do anything other than turn over that account to appellant without deducting any commissions. When that was done, Banks’s claim for guardianship commissions would then be treated as a general creditor’s claim, according to appellant, and paid in accordance with ET § 8-105(a) 7 , which ⁶⁴⁸ governs the order of payment of claims when the assets of a decedent’s estate “are insufficient to pay all claims in full.” Id. A person appointed as the “guardian of the property of ... a disabled person,” pursuant to ET § 13-201(a), becomes “vest[ed],” under ET § 13-206(c), with “title to all property of the ... protected person that is held at the time of appointment or acquired later.” His activities are overseen by the circuit court, which has “exclusive jurisdiction over protective proceedings for disabled persons,” under ET § 13-105(b).

A guardian of the property may, among other things, “pay or apply income and principal from the estate as needed for the clothing, support, care, protection, welfare, and rehabilitation of the disabled person,” under ET § 13-214(b)(2). In administering the disabled person’s estate, a guardian is required under ET § 13-212 to “exercise the care and skill of a man of ordinary prudence dealing with his own property.” And, for his efforts, the guardian is entitled, under ET § 13-218, “to the same compensation and reimbursement for actual and necessary expenses as the trustee of a trust.” 8 ■ ⁶⁴⁹ Unfortunately, there is no provision in the Estates and Trusts Article or in the Maryland Rules explaining exactly how and when this compensation is to be paid upon the death of the ward. Lacking a specific provision addressing this issue, we turn for guidance to the more general provisions of the applicable statutes and rules governing how a guardianship is to be terminated and how the property of the disabled ward is to be distributed after he or she dies. See, e.g., Corby v. McCarthy, 154 Md.App. 446, 492 , 840 A.2d 188 (2003) (“ ‘[I]n determining a statute’s meaning, courts may consider the context in which a statute appears, including related statutes (quoting Ridge Heating, Air Conditioning & Plumbing v. Brennen, 366 Md. 336, 350-51 , 783 A.2d 691 (2001))).

At the outset, we note that, under ET § 13-221, upon the death of a ward, “his personal representative, the guardian, or any other interested person may petition the court to terminate the guardianship proceedings” and that, under ET § 13-221(c) the “[tjermination and final distribution of [his] estate” is to “be made in compliance with the provisions of the Maryland Rules, applying to a fiduciary.” The principal Maryland Rule governing the termination of a guardianship and the final distribution of guardianship assets is Rule 10-710. Successive sections of that rule state that “[g]rounds for the termination of a fiduciary estate shall include ... the death of the minor or disabled person,” Rule 10-710(a); that “[w]ithin 45 days after the fiduciary discovers that the grounds for termination exist, the fiduciary shall file a petition requesting the court to terminate the estate,” Rule 10 — 710(b); that “the petitioner shall file with the petition a copy of the death certificate,” Rule 10 — 710(e)(4); and that the petitioner shall “give notice of the filing of the petition to the persons named as distributees in the proposed final distribution, to the other persons entitled to notice of annual accounts, ⁶⁵⁰ and to all other persons designated by the court,” Rule 10-710(g). The rule also provides that “[i]f the petitioner is the fiduciary, the petitioner shall file with the petition a final accounting containing the same information required in annual accountings by Rule 10-708, 9 together with the proposed final distribution of any remaining assets of the estate.” Rule 10-710(f). But, as for the disposition of the deceased ward’s assets, we must turn to a provision of the Estates and Trusts Article which governs the estates of decedents, regardless of their ante-mortem status.

And that is ET § l-301(a), which provides that “[a]ll property of a decedent shall be subject to the estates of decedents law, and upon the person’s death shall pass directly to the personal representative, who shall hold the legal title for administration and distribution.... ” Under ET §§ 2-101 and 2-102, any claims against that property fall under the jurisdiction of the “orphans’ court,” “or the court exercising the jurisdiction of the orphans’ court.” It is a basic canon of statutory construction and one to which we routinely subscribe that when statutes are in pari materia, “it is presumed that the [Legislature] ... intended ... [them] to blend into a consistent and harmonious body of law.” State v. Bricker, 321 Md. 86, 93 , 581 A.2d 9 (1990). “Therefore, various consistent and related enactments, although made at different times and without reference to one another, nevertheless should be harmonized as much as possible.” Id. The same canon applies to rules and statutes that are in pari materia. As we stated in Davis v. Mills: “When the Maryland Rules deal with the same subject matter as a statute, [the relevant rules and statutes] are to be ‘construed so as to harmonize with each other and not produce an ⁶⁵¹ unreasonable result.’ ” 129 Md.App. 675, 678-79 , 743 A.2d 806 (2000) (quoting Johnson v. State, 274 Md. 29, 41 , 333 A.2d 37 (1975)). Applying this venerable rule of interpretation to the above mentioned statutes under the Estates and Trusts Article, we conclude that, under ET § l-301(a), when a ward dies, all the ward’s property becomes the assets of his decedent estate, and where a personal representative has been appointed to the ward’s estate, title vests immediately, in that person.

In short, the ward’s assets, upon his death, become the assets of his decedent estate. The guardian’s duties are then reduced to filing a petition to terminate the estate together with a final accounting and proposed final distribution of the ward’s property, pursuant to Rule 10-710(b) and ET § 13-221, and thereafter to transfer to the personal representative all of the decedent’s property, as required by ET § l-301(a). Moreover, after death of the ward, the guardian may be awarded guardianship commissions. Rule 10-710(f) states that the guardian of the property who files a petition to terminate his guardianship upon the ward’s death “shall file with the petition a final accounting ... together with the proposed final distribution of any remaining assets of the estate.” This “proposed final distribution” does not exclude the guardian’s compensation.

But the circuit court’s right to approve guardianship commissions does not imply, in this instance, the authority to permit the guardian of the property to pay himself those commissions before handing the deceased ward’s property over to the personal representative. For, as we have previously pointed out, under ET § l-301(a), “[a]ll property of a decedent shall be subject to the estates of decedents law, and upon the person’s death shall pass directly to the personal representative, who shall hold the legal title for administration and distribution.... ” That means that, at the moment of the ward’s death, his assets under the guardianship immediately become assets of his estate. An order by the orphans’ court allowing the guardian to collect his commissions before hand ⁶⁵² ing his former ward’s assets over to the personal representative would then be, in effect, an order permitting a former guardian to invade the assets of the decedent’s estate. And Maryland law does not permit such an intrusion.

The orphans’ court may only allow the claim and direct the personal representative to pay that claim subject to the hierarchy of claims set forth in ET § 8-105(a). See Barter Systems, Inc. v. Rosner, 64 Md.App. 255, 264 , 494 A.2d 964 (1985) (citing Schaefer v. Heaphy, 45 Md.App. 144, 153-54 , 412 A.2d 107 (1980)). Indeed, ET § 13-214 specifies the distributions that a guardian may make “without court authorization or confirmation”: when a minor ward attains majority; when the disability of a ward ceases; and when a minor or disabled person dies. 10 In the first two situations, the guardian, according to ET § 13-214(c)(l)-(2), 11 “shall” first “meet[] all prior claims and expenses of administration” before distributing the estate to the former minor or disabled person. But in the third situation, that is, when the ward dies, the guardian has no statutory authority to meet all prior claims and expenses of administration (which would of course include guardianship commissions) before distributing the assets of the decedent to the personal representative of the decedent’s estate.

In fact, when the ward dies, the guardian is authorized, by ET § 13-214(c)(3), only to “deliver to the appropriate ⁶⁵³ probate court for safekeeping any will of the deceased person in his possession, inform the personal representative or a beneficiary named in it that he has done so, and retain the estate for delivery to an appointed personal representative of the decedent or other person entitled to it.” In sum, where the termination of a guardianship is due to a minor ward attaining majority or the cessation of a disabled ward’s disability, the guardian is permitted, without a prior court order, to meet all prior claims and expenses of administration before distributing the remainder of the person’s estate. But, where the termination of a guardianship is due to the death of the ward, the guardian has no such authority. Thus, Maryland clearly disfavors a former guardian paying any “prior claims and expenses of administration,” including guardianship commissions, from the assets of the former guardianship after the ward dies, in contrast to being directed to do so before distributing the property of the guardianship estate to a ward who attains majority or whose disability has ended. For Banks to pay himself his guardianship commissions upon the ward’s death, if it can be done at all, under ET § 13-214, requires a court order.

But, as we have pointed out, such a court order would, under ET § 1 — 301(a), wrongly permit the former guardian to invade the assets of the decedent’s estate. Other states with statutes that fail, as Maryland’s does, to directly address this issue have reached the same conclusion. See, e.g., State v. Estate of Taylor, 29 Colo.App. 231 , 484 P.2d 1262 , 1263 (1971) (“It is generally held, in the absence of statute ... that upon the death of a person under guardianship, the statutory scheme applicable to decedents’ estates becomes operative, and that debts incurred during the guardianship are to be classified in accordance with the law fixing priorities in the distribution of decedents’ estates.”); In re Bohnstedt, 125 A.2d 580, 582 (Del.Ch.1956) (“[Ajlmost but not all of the Courts which have considered our problem have concluded that after the death of the mentally ill person the trustee, absent statutory authority, has no power to pay ⁶⁵⁴ existing obligations. The creditors must file their claims in the estate proceedings.”) Moreover, those state courts that have taken the contrary-position, that is, that, upon the death of a ward, the guardian has the right to collect his commissions before distributing the ward’s assets to the personal representative, only underscore our point.

Those decisions were based on state statutes and rules that clearly granted the guardian the right to pay himself any commissions owed him after the death of the ward. See, e.g., Midland Nat’l Bank & Trust v. Comerica Trust Co. of Florida, 616 So.2d 1081, 1084 (Fla.Dist.Ct.App. 1993) (Florida Probate Rules permit guardians “to pay from guardianship funds the final costs of administration ... including guardian and attorney’s fees, which had been included in the final accounting as unpaid and which, either in the absence of objection or after objection and court resolution, would be paid by the guardian prior to distribution” of the remainder of the funds to the persons entitled to them.); Treadway v. Motague-Elliston, 138 Ariz. 133 , 673 P.2d 331, 333 (App.1983) (The Arizona statute authorizes a conservator to reimburse himself, from the conservatorship estate, the “expenses of administration,” including the “fees and expenses reasonably incurred in -winding up the affairs of the conservatorship estate,” before delivering the remaining estate to the personal representative of the deceased person’s estate.) No Maryland statute or rule grants comparable authority to a Maryland guardian of the property when the ward has died. 12 This lack of statutory authority is particularly ⁶⁵⁵ telling when orphans’ courts are involved, because they “are not courts of general jurisdiction” but “are courts of special and limited jurisdiction only.” Barter Sys., Inc. v. Rosner, 64 Md.App. 255, 262 , 494 A.2d 964 (1985) (quoting Crandall v. Crandall, 218 Md. 598, 600 , 147 A.2d 754 (1959)). Thus, they “cannot, under pretext of incidental or constructive authority, exercise jurisdiction not expressly conferred by law.” Barter Sys., Inc., 64 Md.App. at 262 , 494 A.2d 964 . The orphans’ court therefore erred in permitting Banks to pay himself $550.25 in commissions from the former guardianship account before turning over that account to appellant. 13 We are not unsympathetic to Banks’s position and the possibility that, because of the small size of the estate and the priorities laid out in ET § 8-105(a), as a general creditor, his claim may be relegated to the bottom of the statutory list of payment priorities and thus he may never be paid his court-approved commissions totaling $550.25.

We also recognize that there are sound reasons for allowing a guardian to collect his