Sears, Roebuck & Co. v. Plath
Sears, Roebuck & Co. v. Plath
Opinion of the Court
This case is before this court on certification from the court of appeals pursuant to sec. (Rule) 809.61, Stats. The appellant Sears, Roebuck & Company (Sears) appeals from an order denying its claim for $6,522.73 against the estate of Regina Barthel. The circuit court for Kenosha county, Judge Jerold W. Breitenbach, denied Sears' claim on the ground that it was not timely filed, and hence was barred
One issue is raised on appeal: Do secs. 859.01 and .07,
The appellant (Sears) was unaware of Barthel's death until December 12,1988. Sears alleged that it was informed on December 21, 1988 that Barthel had left no estate. On January 13, 1989, Barthel's daughter advised Sears that the time limit for filing claims against the estate had expired.
Sears filed a claim for $6,522.73 against the estate on February 20,1989.
The state attorney general was given an opportunity to participate in the May 3,1989 hearing, but declined to participate. At the May 3, 1989 hearing, Sears challenged the statutory notice procedure on the ground that publication notice did not satisfy the procedural due process protections of the fourteenth amendment. Sears based its argument on the United States Supreme Court
The circuit court refused to allow Sears' claim, on the ground that it was not filed before the time limit expired. The court recognized the inconsistency between Pope and this court's decision in In re Fessler, 100 Wis. 2d 437, 302 N.W.2d 414 (1981), but felt compelled by Fessler and the language of secs. 859.01 and .07, Stats. 1987-88, to deny the claim.
We conclude that secs. 859.01 and .07, Stats. 1987-88, violate Sears' right to due process of the law for three reasons. First, the statutes in this case operate similarly to the Oklahoma statutes which the Supreme Court in Pope found may adversely affect a creditor's protected property interest. Pope, 485 U.S. at 488. Second, the rationale which led to our conclusion in Fessler is no longer sound. Finally, while the statutory change does not control our decision today, it is significant that the state legislature subsequently amended ch. 859, Stats., in response to the Supreme Court's decision in Pope.
The Pope Court quoted Mennonite for the proposition that "actual notice is a minimum constitutional precondition to a proceeding which will adversely affect the liberty or property interests of any party ... if its name and address are reasonably ascertainable." Pope, 485 U.S. at 485 (quoting Mennonite, 462 U.S. at 800) (emphasis in original). The Supreme Court then applied this proposition in four stages: (1) Did a protected property interest exist?; (2) Did the proceeding involve state action?; (3) Did the proceeding adversely affect this protected property interest?; and (4) What effect would actual notice have on important state interests? See Mullane, 339 U.S. at 313-14.
The Court first held that the creditor's unsecured claim against the decedent's estate represented a property interest protected by the fourteenth amendment. Pope, 485 U.S. at 485. The Court relied on its decision in Logan v. Zimmerman Brush Co., 455 U.S. 422, 428 (1982), that a cause of action was a protected property interest. Id. Similarly, Sears' claim against Barthel's estate also represents a protected property interest.
The Pope Court next concluded that the Oklahoma statutes involved state action. Id. at 487. Unlike self-executing statutes of limitation, which do not involve sufficient state activity to implicate the due process clause, the Oklahoma statutes required actions by the state court to trigger the application of the statutes. Pope, 485 U.S. at 486-87. Here, also, the statutes were
Additionally, as in Pope, this action "adversely affected a protected property interest." Pope, 485 U.S. at 488. As the Supreme Court stated:
The entire purpose and effect of the nonclaim statute is to regulate the timeliness of such claims and to forever bar untimely claims, and by virtue of the statute, the probate proceedings themselves have completely extinguished appellant's claim. Thus, it is irrelevant that the notice seeks only to advise creditors that they may become parties rather than that they are parties, for if they do not participate in the probate proceedings, the nonclaim statute terminates their property interests.
Id. Here, as in Pope, the statutes in question effectively extinguish Sears' protected property interest.
Finally, the State undeniably has a legitimate interest in the "expeditious resolution of probate proceedings" as did the state of Oklahoma in Pope. Id. at 489. However, as the Court stated: "Providing actual notice to known or reasonably ascertainable creditors, however,
The second reason for our holding today is that the reasoning behind this court's holding in Fessler that secs. 859.01 and .07, Stats. 1977,
We concluded that Mullane did not control the outcome of that case. Id. at 445. We held that no due process violation had occurred in Fessler. Id. at 450. We reached this holding in part based on our conclusion that the creditor's claim was cut off by the operation of the statute of limitations, and not by the actions of a judicial body. Id. at 448.
We subsequently reconsidered the discovery rule in Hansen v. A.H. Robins, Inc., 113 Wis. 2d 550, 335 N.W.2d 578 (1983). In Hansen, a personal injury case, we cited Rod for the conclusion that using the date of injury as a benchmark for the accrual of a claim could lead to a harsh result. Hansen, 113 Wis. 2d at 556. We found that the public policy of allowing meritorious claims outweighed the threat of stale or fraudulent actions, and adopted the discovery rule for all tort actions not covered by a legislatively created discovery rule. Id. at 558-60.
As a result of our decision in Hansen, adopting the discovery rule, Rod no longer supports our conclusion in Fessler. As in Hansen, the public policy of allowing Sears (a known creditor) to bring a meritorious claim, outweighs the threat of stale or fraudulent actions. Sears did not discover its claim until one day before the time limit for filing claims had expired, and was diligent in attempting to file a claim thereafter. The threat of a stale action is minimal in this case. In light of Pope and
The final reason for our decision today is based on the fact that ch. 859, Stats., has since been amended by the legislature, reflecting its implementation of the Pope decision. See 1989 Wis. Act 96, sec. 8 Note.
NOTE: . . .. Subsection (2)(b) implements Tulsa Professional Collection Services v. Pope, 485 U.S. [478] (1988). It removes from the bar of the nonclaim statute claims of creditors known to the personal representative, or discoverable by reasonable diligence, unless notice of the time for presenting claims is given to such creditors, or unless they have actual timely notice of the pendency of the proceeding and thus are not prejudiced by not being given such notice. Subsection (2)(b). . . merely provides that some claims are not barred in certain circumstances.
By the Court. — The order of the circuit court is reversed.
Section 859.01(1), Stats. 1987-88, provides:
Limitation on filing claims against decedent's estates. (1) Except as provided in sub. (3) and s. 859.03, all claims against a decedent's estate including claims of the state and any subdivision thereof, whether due or to become due, absolute or contingent, liquidated or unliquidated, are forever barred against the estate, the personal representative and the heirs and beneficiaries of the decedent unless filed with the court within the time for filing claims.
Section 859.07, Stats. 1987-88, provides, in part:
Notice; publication. Notice of the time within which creditors may present their claims and of the time when the claims, as set by the court or probate registrar under informal administration proceedings, will be examined and adjusted by the court shall be given by publication, under s. 879.05(4), and may be given with the notice for granting letters . . .. The first insertion shall be made within 15 days of the date of the order setting the time.
Section 879.05(4), Stats. 1987-88, provides:
SERVICE BY PUBLICATION. Unless a statute provides otherwise, every court notice required to be given by publication shall be published as a class 3 notice in a newspaper published in the county, eligible under ch. 985, as the court by order directs.
"Actual notice" as we use the expression in this decision, refers to "[n]otice by mail or other means as certain to ensure actual notice." Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 800 (1983).
Sears originally filed this claim on January 20,1989, but the claim was rejected by the Kenosha county circuit court as untimely filed.
We note that the circuit court, relying on Fessler, upheld the constitutionality of these sections notwithstanding the Supreme Court's later holding in Pope. In Just v. Marinette County, however, we held that trial courts were competent to decide the constitutionality of a statute. Just, 56 Wis. 2d 7, 26, 201 N.W.2d 761 (1972).
These sections were amended after Pope pursuant to 1988 Okla. Laws sec. 21, ch. 228.
Neither Pope nor Mennonite requires actual notice to creditors who are not "known or reasonably ascertainable." See Pope, 485 U.S. at 491; Mennonite, 462 U.S. at 800. In Pope, the Court remanded the case for a determination whether the creditor was known or reasonably ascertainable. Id. Here, by contrast, the record reflects that the respondent was aware that Sears was a creditor of Barthel on the day that probate proceedings were commenced. Hence, Sears was clearly a "known or reasonably ascertainable" creditor.
The applicable language in these sections remained unchanged from the 1977 statutes through the 1987-88 statutes.
In light of the reasoning behind the Pope decision and its subsequent application to this case, we now conclude that sec. 859.01, Stats. 1987-88, does not represent a self-executing statute of limitations, but involve sufficient state action to invoke the due process clause.
1989 Wis. Act 96, sec. 8 Note provides, in part:
The respondent argues that she should have the benefit of the law in effect at the time the estate was probated, because she complied with its terms. However, since the nonclaim statutes, as applied, violate the due process rights of Sears, their operation is void and cannot be relied upon to bar Sears' claim against the estate. See State ex rel. Comm'ners of Pub. Lands v. Anderson, 56 Wis. 2d 666, 672, 203 N.W.2d 84 (1973).
Subsequent to the Pope decision, the legislature enacted sec. 857.31, Stats., which provides that the personal representative of an estate is immune from liability for not giving notice to a known claimant or to a claimant who should have been known through the exercise of reasonable diligence. Section 857.31(2). Section 865.17, Stats., however, allows Sears to pursue a cause of action against the distributees of an estate up to the value of their distribution, pursuant to sec. 865.19.
Reference
- Full Case Name
- IN the MATTER OF the ESTATE OF: Regina BARTHEL, SEARS, ROEBUCK & COMPANY v. Marge PLATH, Personal Representative
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- Published