This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. §. 480A.08, subd. 3 (1994).


Estate of Blanche S. Gile,

Filed August 20, 1996
Foley, Judge


Winona County District Court
File No. P6-91-828

Timothy A. Murphy, 110 East Main Street, Caledonia, MN 55921 (for Respondent Estate)

Timothy J. Guth, 505 King Street, Suite 135, La Crosse, WI 54601 (for Appellant Charles Gile)

Considered and decided by Parker, Presiding Judge, Short, Judge, and Foley, Judge.


FOLEY , Judge
Appellant Charles L. Gile claims the probate court erred by ordering him to reimburse the estate of Blanche S. Gile for attorney fees in the sum of $10,530.56, pay $2,260 in interest fees on the decedent's mortuary bill, and deposit $3,000 with the estate for potential future income tax liabilities. We affirm.

Two months before her death on November 5, 1989, Blanche Gile entered into a contract for deed as vendor with her sons as vendees. By September 1991, appellant had acquired the interests of his brothers in the contract for deed. The interest in the contract for deed constituted the only asset of significant value in Blanche Gile's estate.
Appellant was named personal representative in the last will of Blanche Gile. The will devised the residue of Blanche Gile's estate to her eight children. On October 25, 1991, appellant executed a personal representative's deed conveying the property to himself and stating that it was given in full satisfaction of the contract for deed. Appellant represented that he had paid off the contract for deed and that the funds due on the contract for deed were being held at the LaCrescent State Bank. Appellant, however, had not made payment of the amount owing on the contract for deed, nor were funds on deposit at the LaCrescent State Bank. Nevertheless, appellant then sold a portion of the property and mortgaged the remaining parcel to the LaCrescent State Bank.
The heirs of the estate hired an attorney and requested an accounting from appellant. On February 23, 1993, the parties presented a stipulation to the court, whereby appellant was to pay a certain sum to the heirs of the estate by April 15, 1993. Appellant failed to perform according to the stipulation. In June 1993, appellant was removed as personal representative and a new personal representative was appointed.
In March 1994, the heirs brought a collateral civil action against appellant to recover the balance owing the estate on the contract for deed. A stipulation in the collateral action was eventually signed by the parties on January 20, 1995; the issues of attorney fees, administration expenses, and taxes were reserved for probate proceedings. A probate hearing was held on August 28, 1995, after which the probate court ordered, in relevant part, that (1) appellant must pay the estate $10,530.56 in attorney fees, (2) appellant must pay the estate $2,260 in interest on the decedent's mortuary bill, and (3) appellant must deposit $3,000 in trust with the estate for potential future income tax liabilities. This appeal followed.

A probate court's determination of a factual question is not to be set aside unless clearly erroneous. Minn. R. Civ. P. 52.01; In re Conservatorships of T.L.R. , 375 N.W.2d 54, 58 (Minn. App. 1985). On appeal, facts are viewed in a light most favorable to the prevailing party. Theisen's, Inc. v. Red Owl Stores, Inc. , 309 Minn. 60, 66, 243 N.W.2d 145, 149 (1976). If a personal representative breaches the fiduciary duty to act in the estate's best interests, the beneficiaries may hold the representative responsible for damage or loss resulting from the breach. Minn. Stat. § 524.3-703(a), 712 (1994).

1. Attorney Fees

Appellant asserts the probate court erred by ordering appellant to reimburse the estate for $10,530.56 of the $14,129.75 in attorney fees incurred by the estate, arguing that (1)should only be required to reimburse the estate for $6,626 in attorney fees, as reflecting the estate's attorney fees and costs as of April 25, 1994, the date appellant alleges the dispute was brought to a "final resolution," (2) the $14,129.75 charge represented fees for work done and expenses incurred both in this probate matter and in the collateral civil action, and appellant alleges the civil action was "not for the benefit of the estate," and (3) $6,626 is a just and reasonable amount to award, considering the amount of the estate's recovery in the civil action was $34,000.

The probate court noted:

The estate of Blanche S. Gile has incurred substantial attorneys' fees and expenses as a result of the initial personal representative, [appellant's], mishandling of the estate affairs in various respects, including but not necessarily limited to:
A. Failure to establish the estate as a financial entity separate from himself resulting in the commingling and confusion of funds and a lack of accountability which has taken years to resolve.
B. Conveyance of estate real estate to himself without prior and proper compensation [to] the estate followed by acts of encumbering the real estate and selling part of it prior to compensation to the estate for the initial purchase of the real estate.
C. Failure to compensate the estate for the real estate in a timely manner and thereby depriving it of its ability to pay legitimate estate expenses such as the funeral bill and taxes.

Of the $14,040.75 in attorneys' fees and expenses incurred on behalf of the estate by others than [appellant], 75 percent, or $10,530.56, should be borne by [appellant] representing fees directly relating to his mishandling of the estate.

Based on the record, the probate court's findings are not clearly erroneous and its award of attorney fees was reasonable. See Minn. Stat. § 524.3-712 (1994) (a personal representative is liable for damage or loss resulting from breach of fiduciary duty). Moreover, contrary to appellant's allegations, the civil litigation was initiated for the benefit of the estate; the purpose of the civil action, according to the probate court's findings, was to seek a determination by the court that the estate owned certain real property that appellant allegedly conveyed to himself apparently in derogation of his duty as personal representative to the estate or, in the alternative, to seek money damages.
2. Interest
Appellant requests that this court modify the probate court's order directing appellant to reimburse the estate for $2260, which was paid as interest on the mortuary bill, by requiring that "all of the devisees pay that bill per the ratio of the share of the estate they held as named devisees," claiming (1) the "remaining devisees made no effort to pay the funeral bill" after appellant was removed as personal representative, (2) the probate court improperly failed to distinguish what portion of the interest on the funeral bill was accrued during his tenure as personal representative, and (3) appellant testified that he had made payments to the remaining devisees prior to his removal as personal representative. Appellant asserts that his obligation under the proposed modification would be $847.50, which equals appellant's 3/8ths share of the decedent's estate.

The probate court found:

[Appellant] had an obligation to pay the funeral bill in a timely manner, as personal representative. Where he had conveyed the real estate to himself, the estate was entitled to compensation and the money should have been there to pay legitimate estate expenses. Once removed as personal representative, he still had an obligation to compensate the estate for the real estate in order to invest the estate with the funds needed to pay such items as the funeral bill. To the extent that the bills went unpaid for lack of funds, this is the fault of [appellant] and it is his financial responsibility.

The probate court's decision on this issue was not in error. The probate court concluded: "By conveying real estate to himself without adequate compensation to the estate, [appellant] breached his fiduciary duty to the estate," and Minn. Stat. § 524.3-712 provides that a personal representative is liable for damage or loss resulting from breach of fiduciary duty. In this instance, the damage or loss was an interest charge on an unpaid funeral home bill.

3. Tax

Appellant requests that this court reverse and remand the probate court's order, requiring that appellant deposit the sum of $3,000 in trust with the estate for "potential future income tax liabilities." Appellant argues the probate court's order is without statutory authority (1) because that part of the court's order completely disregards the decedent's provisions in her testamentary document, and (2) because there was no evidence of any outstanding taxes due, let alone any penalties or interest assessed because of the delay.

The decedent's will does not designate a different outcome from what the probate court ordered here, and the probate court's order was not erroneous. The amended final account filed August 23, 1995 shows that the estate owed $8,000 in federal taxes. Because appellant had already claimed his 3/8ths interest in the estate, he was ordered by the probate court to deposit the sum of $3,000 in trust with the estate for "potential future income tax liabilities" or 3/8ths of the estate's federal tax obligation.

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Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.