Reprise: Handling the Insolvent Estate

March 22, 2019 § Leave a comment

Reprise replays posts from the past that you might find useful today.

INSOLVENT ESTATES

January 13, 2011 § 4 Comments

When the debts and expenses of the estate exceed the value of its assets, the estate is said to be insolvent, and there is a procedure for adjudication of insolvency, satisfaction of creditors, and payment of administration expenses that is spelled out in MCA § 91-7-261 through -268.

The estate is insolvent when its debts and the expenses of administration exceed the value of the real property and the other property that is not exempt.  You can find out more about exempt property here.

Either the administrator or a creditor may petition the court to adjudicate its insolvency.

MCA § 91-7-261 sets out the procedure to determine insolvency.  The administrator is required to “take proper steps speedily to ascertain whether the estate be solvent or insolvent.”  If the administrator finds that the estate is insolvent, she files a “true account” itemizing all of the personal estate, assets of every description, the land of the deceased, and all of the deceased’s debts.  Notice is given to the devisees or heirs, and the matter is presented to the court for hearing.  If the court determines from the account that the estate is indeed insolvent, the chancellor will order that the assets be sold and that the expenses of ” … the last sickness, the funeral, and the administration, including the commissions …” are first paid out of the proceeds,” and that any remaining proceeds be divided among the creditors ” … in proportion to the sums due and owing them respectively …”

The procedure for distribution of remaining proceeds among the creditors is provided in MCA § 91-7-269.  After the time to probate claims has elapsed, a notice is published for three consecutive weeks in a newspaper published in the county that the claims against the estate will be taken up by the court on a day and at a time certain, that any and all claims not required by law to be probated shall be filed with the clerk by a stated date, and that all creditors may attend.  A hearing is held at which the administrator may object to any claim, evidence is presented pro and con, and the court may either allow it in whole or in part, or reject it in whole or in part.  The administrator may file a verified application to be reimbursed for claims paid prior to the adjudication of insolvency, and the court shall treat them as if they had been properly probated.

MCA § 91-7-271 provides that the allowed claims shall be paid pro rata, and any creditor not paid within ten day of the court’s order shall have execution against the executor or administrator and the sureties on his bond.

Any suit pending against the executor or administrator at the time of insolvency does not abate, but may be prosecuted to final judgment, according to MCA § 91-7-273, but -274 bars suits from being filed after the estate is declared insolvent.  You should read -273 carefully for the effect of and payment of a judgment against the estate for suits that were pending when the insolvency is determined.

Changing Rule 81

March 15, 2019 § 5 Comments

As I did last month, I invite your comments and suggestions as to how MRCP 81 might be amended to improve its performance. Or maybe you think it’s fine as is. Please comment and let me know your thoughts.

The MSSC Advisory Committee on Civil Rules is combing through the MRCP to suggest amendments. Your thoughts as practitioners and judges will be helpful in the process.

Adequate Proof of the Thalweg

March 4, 2019 § 1 Comment

The Revettes filed suit to confirm title, and the Fergusons counterclaimed alleging ownership by adverse possession. After hearing the evidence, the chancellor ruled that the Fergusons did, indeed, have title by adverse possession. Before entering a final judgment, however, the chancellor ordered the Fergusons to obtain a survey of the disputed property. When they did so, producing a survey by Mr. Saul, the chancellor attached it as “Exhibit A” to the final judgment without further hearing. The Revettes appealed.

In Revette v. Ferguson, handed down December 11, 2018, the COA affirmed the chancellor’s decisions on the issues of adverse possession and damages, but reversed and remanded for further evidence on the survey. Judge Greenlee wrote the majority opinion:

¶29. The Revettes argue that the chancellor should not have considered the Saul survey, “Exhibit A,” in his final judgment because they did not have the opportunity to challenge that survey at a hearing or cross-examine the surveyor and it was not admitted as evidence. Although the Fergusons argue that the Revettes waived this issue, we find the Revettes preserved their objection by responding to the Saul survey and attaching their own competing survey, the Walker survey. We hold that it was error for the chancellor to consider a survey without proof being taken and upon the Revettes’ objection; therefore, we reverse and remand this issue to the chancery court. [Fn omitted]

¶30. In order to have a survey properly admitted into evidence, the surveyor needs to be called to explain and be subject to cross-examination. White v. Usry, 800 So. 2d 125, 131 (¶26) (Miss. Ct. App. 2001). In Abercrombie v. Carter, 73 So. 3d 561, 562-63 (¶¶8-11) (Miss. Ct. App. 2011), we held it was error for a chancellor to consider a survey that was properly excluded at a hearing as hearsay under Mississippi Rule of Evidence 802, noting that the parties were not allowed to challenge the survey at the hearing or cross-examine the surveyor. We find the chancellor committed error in this case for similar reasons. The Revettes did not have the opportunity to cross-examine the Fergusons’ surveyor, and the survey was not admitted into evidence for the chancellor’s consideration. Further, a comparison of “Exhibit A” with Exhibit 7, which the parties stipulated to, reveals inconsistencies. Notably, the thalweg of the Chickasawhay River and the approximate water line differ in both exhibits; as do the call lines of the land adversely possessed. We therefore reverse and remand this matter to the chancellor so that the Revettes may challenge the survey in “Exhibit A,” may cross-examine the surveyor, and may offer their Walker survey for use by the court.

For those of us who are ignorant of some nuances of property law, thalweg (pronounced “tal-veg,” from the German), according to a definition I found via Google, is “In geography and fluvial geomorphology … the line of lowest elevation within a valley or watercourse. Under international law, a thalweg is the middle of the primary navigable channel of a waterway that defines the boundary line between states.” Well, that’s a new one on me. In all my years at the bar, I have never stumbled upon that concept. But it should not surprise. It’s yet another instance of how the law can be so gnostic sometimes, especially in property law, where the Druids of Feoffments (practitioners of the alchemy of fee simple) zealously guard their esoteric spells and incantations from us generalists.

A similar case involving necessity of the sponsoring witness is the subject of a post at this link.

“Quote Unquote”

March 1, 2019 § Leave a comment

“We, each of us, need so much to be affirmed. For each of has — gnawing away at the center of our being — a sense of insecurity, some more than others. And frequently, the more insecure, the more aggressive we become. The more we throw our weight about and say people should recognize us.”  —  Desmond Tutu

“If your compassion does not include yourself, it is incomplete.”  —  Jack Kornfield

“People have a hard time letting go of their suffering. Out of a fear of the unknown, they prefer suffering that is familiar.”  —  Thich Nhat Hanh

“Some things cannot be fixed. They can only be carried.”  —  Megan Devine

The Flawed Tax Sale

February 27, 2019 § Leave a comment

It can only take a minimal flub in the steps leading up to a tax sale for the whole thing to be thrown out.

That’s the lesson you can take from the COA decision in Rebuild America, Inc. v. Drew, handed down January 22, 2019. In that case the chancellor had ruled that Jane Drew never got actual notice of the three tax sales that resulted in forfeiture of her property in Diamondhead, and the failure to notify her in compliance with the statutes rendered the sales — all three — completely ineffective and void. Here is how the COA concluded its unanimous ruling (Tindell not participating):

¶31. Drew was never given proper statutory notice that her property had been sold for taxes or of her right to redeem the property. As our Supreme Court recently reiterated, Mississippi law takes “a hard-line approach” to this issue: “the redemption-notice statute must be followed strictly.” Campbell Props., 2018 WL 6381141, at *4 (¶15). When the statute is not followed strictly, the tax sale is void ab initio—it has no legal effect whatsoever, and it is as if the sale never happened. City of Horn Lake, 2018 WL 2731592, at *3 (¶13). Because each successive tax sale in this case was void ab initio, Drew remains the rightful owner of the property. Accordingly, the judgment of the chancery court is AFFIRMED.

The two important principles are: (1) Mississippi tax sale notice laws must be strictly complied with; and (2) failure to follow the statutes strictly renders the sale void ab initio, meaning it is as if it never happened.

When you are considering whether to take a tax sale case, look at every single stage of the proceedings, and look carefully. It is not enough that there was substantial compliance with the statutes; the cases, of which there are many, demand a strict compliance with the notice and redemption provisions.

Reprise: The Case for General Relief

February 22, 2019 § Leave a comment

Reprise replays posts from the past that you may find useful today.

Demoting General Relief

July 28, 2015 § 4 Comments

One of the chief distinctions between chancery and the law courts is that chancery is often called upon to be a problem-solving venue, as opposed to a place where one goes to obtain a money judgment against another.

And the chancellor’s authority to fix the situation can extend beyond the specific relief spelled out in the pleadings.

Many, many cases can come to mind to illustrate what I am talking about, but here are a couple:

  • A case in which there is an acrimonious battle over child custody. In the course of the trial, the proof develops that both of the parties are using the children as pawns and spies, and are downgrading the other parent to the children. The pleadings filed by each party asked only for custody. Is the chancellor precluded from addressing the deleterious conduct in her final judgment? Of course not. Chancellors often add an injunction against conduct like that, whether asked for in pleadings or not. That has been the practice in chancery as long as I have been around, and it should be.
  • Another example could arise in a land-line case. That type case is often characterized by property damage and atrocities, threats, and breaches of the peace (as, for instance in this COA case). Faced with evidence of such misconduct, can the chancellor deal with it even in the absence of an express prayer for relief? I think she should.

The principle embodied in those cases is why pleadings in chancery court typically include the ending phrase ” … and (s)he prays for general relief.” General relief flows out of the reservoir of equitable power that a chancellor can draw on to solve the problem, not just award money judgments. That is, after all, what equity was created for in the first place.

In the case of Redmond v. Cooper, 151 Miss. 771, 119 So. 592 (1928), the court had this to say about general relief:

“A prayer for general relief is as broad as the equitable powers of the court. Under it, the court will shape its decree according to the equities of the case, and, broadly speaking, will grant any relief warranted by the allegations of the bill, whether it is the only prayer in the bill, or whether there is a special prayer for particular and different relief; and defects in the special prayer are usually cured by a general prayer. If the facts alleged are broad enough to warrant relief, it matters not how narrow the specific prayer may be, if the bill contains a prayer for general relief. The prayer for general relief serves to aid and supplement the special prayer by expanding the special relief sought, so as to authorize further relief of the same nature. It may also serve as a substitute for the prayer for special relief, and authorize relief of a different nature when that specially prayed is denied.”

No doubt the above was what the chancellor had in mind in the course of legal proceedings between Denise Pratt and Darlene Nelson. Pratt had been making threatening phone calls to Nelson, and had been driving by her home at night. On one day, over the course of a few hours, Pratt sent Nelson 78 text messages, 38 telephone messages, 38 phone calls, and numerous voicemail messages, both via landline and cell phones. Nelson testified that Pratt used profanity and threatened that she and members of her household “would burn alive.” Nelson’s daughter was awakened by one of the calls, became frightened by what she heard, and fell while running to her mother, suffering an injury that required stitches in an emergency room.

Nelson filed a petition for an ex parte emergency domestic relations order in municipal court. Later, she filed a petition for a domestic abuse protection order in chancery court. In both instances, she used the forms provided by the Mississippi Attorney General, pursuant to MCA 93-21-1 through 33.

Trial before the chancellor commenced, but could not be completed within the time allotted. The case had to be continued to another day. The chancellor found the evidence to that point sufficient to support an injunction against Pratt prohibiting her from going within 1,000 feet of any party to or witness in the proceeding until the hearing could be concluded. After the hearing had been reconvened and the proof was concluded, the chancellor ruled from the bench, in part [quoting from Fn 6 of the COA’s opinion cited below]:

“… people are entitled to be left alone. . . . I’m going to keep the restraining order that I set in place at the close of the plaintiff’s case. But I am going to up [the penalty] to $10,000 upon a . . . valid showing of violation of the restraining order that I entered against you, Mrs. Pratt. . . . I think that’s reasonable. . . . I see a pattern of how this has taken place. . . . It’s [been an] ongoing controversy . . . for quite some time.” When Pratt’s counsel asked if the order was granted under the Domestic Abuse Protection Act or under Rule 65, the chancellor responded that he was granting it under the “Chancery Court Rules, . . . a temporary restraining order [under Rule] 65(b), whether it is asked for or not, because that would be general relief.”

Pratt appealed, complaining that the chancellor had erred in issuing an injunction per MRCP 65 when a protective order under the statute should have been issued instead. The COA agreed with her and reversed and rendered in Pratt v. Nelson, decided July 21, 2015.

I can’t disagree with the COA’s conclusion that the chancellor in this particular case went beyond the scope of the domestic-violence statute and the limits of the relief that it allows. What gives me pause, though is that the underlying problem here remains unresolved. The chancellor was there to solve or at least address the problem, which appears from the record to have been serious. He tried to do that via general relief, and, from my reading of the case law, he was within the scope of that authority. The cases on general relief and its parameters are, for the most part, old cases, dating as far back as the 1880’s and into the 1970’s. But that does not indicate that the concept is dead. In Bluewater Logistics, LLC v. Williford, 55 So.3d 148 (Miss. 2011), the MSSC upheld a chancellor’s award of equitable relief against defendants where it had not been expressly pled, but the relief was justified and supported by the evidence.

It seems to me that, ever since the MRCP for the most part did away with entirely different procedures in chancery and the law courts, the appellate courts have been viewing equity in a more limited way, rather than in the expansive view that cases like Redmond employed. It seems that the appellate courts want equity to operate within rigid, prescribed parameters like the law courts, rather than in a more fluid, problem-solving fashion.

When we restrict a chancellor’s power to craft an adequate solution to a human situation in which lives, property, money, and relationships are involved, we can put all of those at risk in the name of proper procedure. Surely no reasonable person wants that kind of result. That’s why we have “general relief” and chancery courts in the first place.

February 18, 2019 § Leave a comment

State Holiday

Courthouse closed

Legislation of Interest to the Bench and Bar

February 6, 2019 § Leave a comment

In years past I have painstakingly gone through and edited the list of legislation sent to us judges by the AOC to provide readers of this blog with pending bills that might be of interest.

This year I am providing a link to the Clay Firm’s legislative list posted by the State Bar. The Clay Firm is the Bar’s lobbyist.

Click on this link to access the list.

You should be able to follow each bill as it makes its way through the legislative labyrinth.

 

“Quote Unquote”

February 1, 2019 § Leave a comment

“We have these immense possibilities of making something of ourselves, but we get sidetracked, by being a man, by being a woman, or being black, being white. All the dichotomies that Western thinking pushes us into.”  —  John Edgar Wideman

“Where, after all, do universal human rights begin? In small places, close to home — so close and so small that they cannot be seen on any map of the world. Yet they are the world of the individual person: the neighborhood he lives in; the school or college he attends; the factory, farm, or office where he works. Such are the places where every man, woman, and child seeks equal justice, equal opportunity, equal dignity without discrimination. Unless these rights have meaning there, they have little meaning anywhere.”  —  Eleanor Roosevelt

“The black, the white, the brown, the red, the yellow, the hetero, the homo, the trans, the poor, the rich, the literate, the illiterate, the weak, the strong — all are my sisters and brothers. My life is their life.”  —  Abhijit Naskar

Sign Language

January 25, 2019 § Leave a comment

 

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