Schaefer v. Heaphy

Wilner, J., delivered the opinion of the Court. After suffering from the progressively debilitating effects of emphysema for several years, Maud Schaefer finally died on February 19,1978. She left no Will; and, on April 5,1978, her son William Schaefer was appointed by the Orphans’ Court of Anne Arundel County as personal representative of Maud’s Estate. On October 2,1978, Mrs. Schaefer’s sister, Margaret (May) Heaphy, filed a claim in the Estate for $24,050.

The claim was in two parts. The first was for $9,950, representing “Services rendered as Housekeeper and Companion” at $50.00 a week for the 199-week period from June, 1972, to March, 1976. The second part was for $14,100, for “Services rendered as Housekeeper, Companion and 24 hour nursing care” at $150.00 a week for the 94-week period from March, 1976, to February, 1978. Mr. Schaefer denied the claim, whereupon Mrs. Heaphy filed a written request with the Register of Wills for a hearing before the Orphans’ Court. 1 A bifurcated ¹⁴⁶ evidentiary hearing was, in fact, held on January 25 and April 10,1979, following which the court disallowed the first part of the claim — for services rendered during 1972-1976 — entirely, and allowed $2,000 on the remaining part of the claim.

The court did not explain how it arrived at its decision to allow the sum of $2,000. William has taken a direct appeal from that allowance to this Court (Courts article, § 12-501), contending that (1) the Orphans’ Court had no jurisdiction to entertain his aunt’s claim in the first place, (2) it erred in permitting Mrs. Heaphy to testify, and (3) Mrs. Heaphy did not overcome the presumption that such services as she rendered to her sister were gratuitous and without promise or expectation of payment. We disagree with appellant’s first claim, agree with his third, and need not consider his second. (1) Jurisdiction of the Orphans’ Court For 167 years, the law was quite well settled in this State that, although an orphans’ court had the authority to “allow” or “disallow” claims filed against a decedent’s estate, it had no “jurisdiction” to adjudicate their validity.

The precise issue before us is whether that was changed with the 1969 revisions to the testamentary article of the Code (then Art. 93, now Estates and Trusts article). The orphans’ courts have always been considered as courts of special and limited jurisdiction, exercising only those powers specifically conferred by law. See Crandall, Exec. v. Crandall, 218 Md. 598, 600 (1959). Their ability to render final judgments with respect to creditors’ claims therefore depends upon the scope of statutory authorization in that regard.

The first comprehensive enactment dealing with the State testamentary law, and thus with the functions and powers of the orphans’ courts, appears to have been Laws of Md., 1798, ch. 101. 2 In subchapter 9, § 13 of that Act, the General Assembly declared that: “... [N]o executor or administrator shall be obliged ¹⁴⁷ to discharge any claim, of which vouchers and proofs shall be exhibited as aforesaid, but may reject, and at law dispute the same, in case he shall have reason to believe that the deceased never owed the debt, or had discharged the same, or a part thereof, or had a claim in bar; but every executor or administrator shall be obliged to discharge the same, or paya just proportionable part thereof, if passed by the orphans court granting his letters, unless he shall appeal from the decision of the court in the manner hereafter directed.” (Emphasis supplied.) Provisions for appealing the decisions of the orphans’ court, to which the underscored language in § 13 undoubtedly referred, were set forth in subchapter 14, § 18 of the Act. Section 18, in relevant part, stated that “[a]ny person who may conceive him or herself aggrieved by any judgment, decree, decision or order, of the orphans’ court, shall have the liberty of appealing to the court of chancery, or to the general court of the shore whereon such orphans court is held____” This appeal was to be heard on the record made in the orphans’ court, with the appellate court either affirming the decision below or directing “in what manner it shall be changed or amended.” Although presumably subject to the superior authority of the appellate court, should an appeal be taken, provision was made in § 20 of subchapter 14 that “every judgment, decree, decision or order, of the said [orphans'] court, may be enforced by attachment and sequestration as aforesaid; and if the said judgment, decree, decision or order, be for paying money, the property sequestered may, at the discretion of the court, be applied to the purpose for which such judgment, decree, decision or order, was given.” ¹⁴⁸ Although the Court of Appeals had no opportunity to consider the nature and extent of an orphans’ court’s “jurisdiction” in this area under the 1798 Act, and thus no definitive statement of it appears, the combination of these provisions would seem to indicate that, under that Act, an orphans’ court could render a binding judgment, enforceable against the executor, with respect to creditors’ claims. Unless the executor or claimant successfully appealed an adverse decision, the order of the orphans’ court allowing or disallowing the claim would stand. If the claim were disallowed, it would not be paid; if allowed, the executor was “obliged to discharge the same.” This was significantly changed, however, by Laws of Md., 1802, ch. 101.

In section 9 of that Act, the General Assembly declared that, “... in no case shall the order made by the orphans court, or by the register of wills, that an account or claim will pass when paid, be deemed of validity to establish such account or claim, but in case the executor or administrator thinks fit to contest the same, such account or claim shall derive no validity from the order aforesaid, but shall be proved in the same manner as if no such order had been made.” This provision, in substantially the same form, remained part of the statutory law of Maryland until 1969; 3 and, during the period of its existence, it was given full effect by the Court of Appeals. That effect was first explained in Levering v. Levering, 64 Md. 399, 413-414 (1885), as follows: “The Orphans Court can pass upon claims against the estates of decedents, but its determination is not final or conclusive. If the claim is disallowed, the claimant is not precluded from seeking his remedy in a Court of law or equity. If the claim is allowed, the executor or administrator may refuse to pay it.

The decision of the Orphans Court is only prima ¹⁴⁹ facie, and if the claim is allowed, only operates as a protection extended to the executor in the event of its liquidation by a disbursement of the funds held by him in his representative capacity [citations omitted]. “The Orphans’ Court with its limited powers and circumscribed jurisdiction, cannot finally and conclusively determine any claim brought by a creditor against the estate of a decedent. “The adjudication and conclusive determination of matters in controversy between an executor or administrator and creditors, appertain ‘exclusively to the Courts of law and equity.’ ” The reasoning, and conclusion, of the Court, though eminently pragmatic, seem to have been somewhat indirect. There was no question about the authority of the orphans’ court to “pass upon” creditors’ claims; to that extent, at least, the court would have had subject matter “jurisdiction” over such claims. The nub of the matter was that because either party could ignore the decision of that tribunal and have the issue litigated de novo in another court, there was no way in which the orphans’ court could enforce its determination. What it seems to have lacked was not so much “jurisdiction,” in the traditional sense of the word, but rather the ability to render a final, binding, and enforceable judgment.

The court was competent to consider the matter, but not competent to effectively resolve it. The rationale underlying the conclusions reached in Levering became unimpeachable with the enactment of Laws of Md., 1920, ch. 674, which, as once amended and codified in 1957 Code, art. 93, § 120, provided that, “If a claim shall be asserted against or exhibited to an administrator or executor in any form, whether sworn to or passed by the orphans’ court or not, and he shall refuse payment thereof in writing, such claim shall be forever barred unless the creditor ¹⁵⁰ shall bring suit upon the same within six months [originally nine months] after such rejection.” This statute of limitation cemented the impotence of the orphans’ court in the area of creditors’ claims. Not only could the executor ignore the allowance of a claim by the orphans’ court, but if the “successful” creditor failed to file his action in the circuit court within the allotted time, his claim was extinguished, in absolute derogation of the orphans’ court order. Thus it was that the Court of Appeals could say in Montgomery Co., Etc. v. Donnally, 195 Md. 442, 446 (1950), “If a claim is filed against an estate being administered in the Orphans’ Court and the representative of that estate refuses payment, the Orphans’ Court has no jurisdiction to adjudicate the claim and the claimant must institute suit on the claim against the personal representative in a court of law.” 4 If this is still the law, we might be in a curious position of having to dismiss the appeal for want of a final judgment rather than reversing an invalid order of the orphans’ court because of its lack of jurisdiction.

Our lack of jurisdiction would be paramount over that of the orphans’ court. The question, however, is whether the Legislature conferred the requisite “jurisdiction” in the 1969 revision, and thus made moot the doctrines enunciated in Levering and its progeny. At first blush, the answer would seem to be “no.” The basic jurisdiction of the orphans’ court, in the revised article, is set forth in § 2-102 (a) (Estates and Trusts article, hereafter referred to as “ET” 5 ). This provides, in relevant part, “The court may conduct judicial probate, direct the conduct of a personal representative, and pass ¹⁵¹ orders which may be required in the course of the administration of an estate of a decedent____The court shall not, under pretext of incidental power or constructive authority, exercise any jurisdiction not expressly conferred.” The Comment to this section, as it was enacted in 1969, states that it was derived from former sections 259 and 289 of art. 93.

It states also that “ftjhe statute is not intended to change the existing powers of the Court except in two instances” not directly relevant here. (Emphasis supplied.) Read in context, it would appear that the phrase “[t]he statute” means the entire revised article, rather than just § 2-102, thus suggesting the continued vitality of the Levering-Donnally doctrine, 6 A clearly contrary intent, however, appears in Title 8 of the article, dealing specifically with creditors’ claims; and this, we believe, is controlling. ET, § 8-101 (b) states that, after appointment of the personal representative and until the estate is closed, “the procedures prescribed by § 8-104 shall be followed” in enforcing claims against the estate. Section 8-104 provides three methods of presenting claims: (1) delivery to the personal representative; (2) delivery to the register of wills; or (3) commencement of a lawsuit against the estate (or a distributee of estate property) within the time allotted for filing claims.

If the creditor chooses the third option — direct resort to a court of law or equity — his success or failure will, of course, depend upon the judgment rendered therein. Section 8-107 (d) provides that “[a] judgment in an action against a personal representative to enforce a claim against the estate of a decedent is an allowance of the claim.” ¹⁵² If the creditor uses either of the other options — as she did in this case — the process becomes governed by § 8-107 (a) and (b). Subsection (a) gives the personal representative three choices — one implict, two explicit. The implicit choice, of course, is to allow the claim in its entirety.

If he chooses not to do that, he must notify the claimant either (1) that the claim is disallowed in whole or in a stated amount, or (2) that he will petition the orphans’ court to determine whether the claim should be allowed. If the personal representative disallows the claim directly, as he did here, subsection (b) becomes operative. That indeed is the critical provision. It states, in relevant part: “If the claim is disallowed in whole or in a stated amount, the claimant is forever barred to the extent of the disallowance unless he files a petition for allowance in the [orphans'] court or commences an action against the personal representative or against one or more of the persons to whom property has been distributed.” (Emphasis supplied.) A significant change was made with the enactment of this section.

Under former §§ 119 and 120 of art. 93, the creditor’s only recourse upon disallowance of the claim by the personal representative was to “commence a suit for recovery” in the circuit court. Failure to “bring suit” upon the claim within six months after rejection by the personal representative barred the claim. No resort to the orphans’ court was possible, for, as noted, the personal representative was not at all bound by the determination of that tribunal. If the one available recourse — an action in the circuit court — was not followed,