CONTINENTAL COFFEE v. EST. OF CLARK

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Docket Number

No. 5398

Attorney(S)

Wiener, Goldwater Galatz and J. Charles Thompson, of Las Vegas, for Appellant. Foley Brothers, of Las Vegas, for Respondent.

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Smart Summary

Factual and Procedural Background

Wilbur I. Clark, a resident of Nevada, died testate in California on August 27, 1965, owning property primarily in Nevada. During his lifetime, Clark had guaranteed payment on four promissory notes payable to Continental Coffee Company, an Illinois corporation, with the notes totaling approximately $72,000. Primary probate and administration of Clark's estate were initiated in Clark County, Nevada, with notice to creditors published beginning September 17, 1965 pursuant to Nevada Revised Statutes (NRS) 147.010(1). The deadline for filing creditor claims in Nevada expired on December 17, 1965, and none of the claims in issue were filed within this period.

Ancillary probate proceedings were later initiated in San Diego, California, on October 15, 1966, where the foreign will was admitted and notice to California creditors was given. The four claims at issue were timely filed in the California proceeding but were rejected, prompting suit in California courts.

Continental Coffee Company filed its creditor claims in the Nevada probate proceeding on October 27, 1966, approximately 13 months after the first notice and 10 months after the filing deadline. The claims were rejected by the executors for being late. A motion to allow the late filing, supported by an affidavit from Stanley Owens, vice-president of Continental Coffee Company, was denied by the lower court. The court found no adequate basis to permit the late filing, and Continental Coffee Company appealed.

Legal Issues Presented

Whether NRS 147.040(2) permits a non-resident creditor corporation without actual notice of estate administration proceedings in Nevada to file a late creditor's claim.
Whether the appellant is entitled to file its claim as the holder of a contingent obligation of Wilbur Clark.
Whether the statutory provisions for notice to creditors violate constitutional due process.

Arguments of the Parties

Appellant's Arguments

The statute allowing late claims filing (NRS 147.040(2)) applies not only to nonresidents but to all persons without notice as provided in the probate statutes, and appellant has shown to the satisfaction of a reasonable mind that it lacked notice.
The obligation guaranteed by Clark was contingent until April 5, 1966, after the filing deadline, and under the precedent of Pruett v. Caddigan, late filing should be allowed.
The notice provisions under NRS 147.010 violate constitutional due process because appellant did not receive adequate notice of the probate proceedings, thus the trial court erred in denying the claim.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Pruett v. Caddigan, 42 Nev. 329, 176 P. 787 (1918)	Late filing of contingent claims may be allowed under certain circumstances.	The court referenced this case but held the appellant's claim was resolved by more recent decisions, declining to extend the rule to allow late filing here.
Gardner Hotel Supply of Houston v. Estate of Clark, 83 Nev. 388, 432 P.2d 495 (1967)	Non-claim statutes apply to contingent and non-contingent claims, residents and nonresidents alike; trial court discretion governs late claim filings.	The court relied heavily on this precedent to affirm the lower court's discretion in denying the late filing due to lack of good cause.
Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306 (1950)	Constitutional due process requirements for notice.	The court rejected appellant's due process challenge, finding Mullane inapplicable to the Nevada non-claim statute.
New York Merchandise Co., Inc. v. Stout, 264 P.2d 863 (Wash. 1953)	Due process considerations in probate notice statutes.	Used to support the court's rejection of appellant's due process argument.
Chalaby v. Driskell, 390 P.2d 632 (Ore. 1964)	Due process and notice requirements in probate proceedings.	Also cited to uphold the constitutionality of the Nevada notice statute.

Court's Reasoning and Analysis

The court analyzed the appellant's failure to timely file creditor claims in the Nevada probate proceeding. It noted that the Nevada non-claim statute (NRS 147.040) requires claims to be filed within three months after the first publication of notice and that the statute applies equally to contingent claims and to residents and non-resident claimants.

The court emphasized that the trial judge has discretion to allow or deny late claims upon a showing of good cause. It found that knowledge of the decedent's death or the estate proceedings, coupled with failure to act, supports denial of late filings. The appellant had knowledge of Clark's death soon after it occurred but failed to make any inquiry or act during the claims period.

The sole affidavit submitted by the appellant stated lack of notice during the three-month filing period but did not explain the subsequent ten-month delay before filing. The court found this insufficient to justify excusing the late filing.

Regarding the contingent nature of the claim, the court referred to its prior decision in Gardner Hotel Supply, which resolved the issue against the appellant. On the constitutional due process challenge, the court rejected the argument, finding the Nevada notice statute constitutionally adequate and not in conflict with Mullane or related precedents.

Accordingly, the court concluded there was no abuse of discretion by the lower court in denying late filing of the creditor's claim.

Holding and Implications

The judgment of the lower court refusing to allow the late filing of creditor's claims was affirmed.

The decision directly upholds the strict application of Nevada's non-claim statute and the trial court's discretion in probate matters. It confirms that knowledge of death and failure to act within the statutory period justify denial of late claims, regardless of contingent status or non-residency. The court rejected constitutional due process challenges to the statutory notice scheme, thereby reinforcing the statute's validity. No new precedent was established beyond affirming existing principles and prior decisions.

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CONTINENTAL COFFEE COMPANY, APPELLANT, v. THE ESTATE OF WILBUR I. CLARK, RESPONDENT.

OPINION

By the Court, COLLINS, J.:

This appeal is from a judgment of the lower court refusing to allow filing of a late creditor's claim in a probate proceeding. We hold that there was no abuse of discretion in the ruling and affirm the judgment.

The late Wilbur I. Clark had, during his lifetime, guaranteed payment upon demand of four promissory notes payable to Continental Coffee Company, an Illinois corporation. The different corporate makers of those four promissory notes were business associates of Clark. The sums due on the notes totaled approximately $72,000.

Clark, a resident of Nevada, died testate in California on August 27, 1965. He owned property in both states. The bulk of it however was located in Nevada.

Primary probate of his will and administration of his estate were initiated in Clark County, Nevada. Notice to creditors was published commencing September 17, 1965 pursuant to NRS 147.010(1). The time within which claims could be filed as limited in 147.040 expired December 17, 1965. None of the claims in issue was filed within that time.

147.010(1). "1. Immediately after his appointment, every executor or administrator shall:
"(a) Cause to be published a notice of his appointment as executor or administrator in some newspaper published in the county, if there be one; if not, then in such newspaper as may be designated by the court or judge.
"(b) Post a copy of the notice at the courthouse of the county. The notice shall be published at least once a week for 4 weeks."

147.040. "1. All persons having claims against the deceased must, within 3 months after the first publication of the notice specified in NRS 147.010, file the same, with the necessary vouchers, with the clerk of the court, who shall file and register each claim."

Ancillary administration of Clark's estate was initiated in San Diego, California, October 15, 1966. The foreign will was admitted to probate and notice to California creditors given in accordance with the requirements of the law of that jurisdiction. The four claims in issue here were timely filed in the California proceeding. The claims were rejected and suit was filed on them in the courts of that state.

On October 27, 1966, some 13 months after the first notice to creditors was published and 10 months after the time to file claims had ended, Continental Coffee Company filed its creditor's claims in the Nevada probate proceeding. They were rejected by the executors as coming too late. Thereafter, on December 30, 1966, a motion supported by the affidavit of Stanley Owens, was filed with the court seeking permission to file the late claims. The motion was denied and suit was commenced. The lower court ruled in favor of the estate, and said in pertinent part:

"I, STANLEY OWENS, being first duly sworn, deposes and states as follows:
"1. I am a vice-president of Continental Coffee Company, the claimant herein. Claimant is an Illinois corporation.
"2. Wilbur B. (sic) Clark, the deceased, prior to his death guaranteed the certain promissory notes more particularly described in the Creditor's Claim, filed concurrently herewith. Copies of each of the guarantees of the deceased are also attached as exhibits to said Creditor's Claim.
"3. Each of said guarantees were contingent in nature, in that the payment by the deceased pursuant to said guarantees was contingent upon the corporations referred to in the Creditor's Claim not paying the promissory notes described therein. Affiant is informed that the first notice to creditors in the above-captioned proceedings was published on September 14, 1965. It was not until April 5, 1966 that claimant made the demand upon the guarantors to pay the aforesaid promissory notes.
"4. During the three month period subsequent to September 14, 1965, Continental Coffee Company, did not have notice of the Nevada proceedings involving the administration of the Estate of Wilbur B. (sic) Clark.
"Dated: September 16th, 1966.
s/ Stanley Owens"

"The document filed in support of the pending motion is an affidavit of Stanley Owens, vice president of the claimant. Said affidavit merely recites that `during the three month period subsequent to September 14, 1965, Continental Coffee Company did not have notice of the Nevada proceedings involving the administration of the Estate of Wilbur B. (sic) Clark.' The date when such notice was obtained does not appear, nor is there any explanation for the additional delay of 10 months after the time for filing claims had expired.

* * * * *

"The court finds that the record fails to show any basis for granting permission to file the late creditor's claim." Appeal was then taken to this court.

Appellant creditor assigns three errors:

1. The Nevada Revised Statute 147.040(2) allows the filing of a late claim by a non-resident creditor corporation who has no actual knowledge of estate administration proceedings in the State of Nevada.

2. Appellant is entitled to file its claim as the holder of a contingent obligation of Wilbur Clark.

3. The statutory provisions for notice to creditors violates constitutional due process.

On those issues appellant contends the following:

(1) The benefits of the statute (NRS 147.040(2)) providing for the filing of late claims were extended not only to nonresidents but to all persons who do not have notice as provided in the probate statutes and that as a matter of law, it has been shown "to the satisfaction of a reasonable, fair and impartial mind" that there was no notice.

(2) That, as a matter of law, the obligation of Wilbur I. Clark presented to the estate should be considered contingent until April 5, 1966, some 3 1/2 months subsequent to the last day for filing claims and under the rule of Pruett v. Caddigan, 42 Nev. 329, 176 P. 787 (1918), a late filing allowed.

(3) That NRS 147.010, as applied to appellant, violates constitutional due process, in that appellant did not receive the notice to creditors required by due process, thus the trial court could not deny the filing of the claim.

In companion cases recently decided by this court (Gardner Hotel Supply of Houston v. Estate of Clark and Southern National Bank of Houston v. Estate of Clark, 83 Nev. 388, 432 P.2d 495 (1967)), we had occasion to deal with some of the same issues presented here. In them we decided our non-claim statute intended efficient and expedient administration of estates and that it applied to contingent and non-contingent claims alike; that it applies equally to residents and non-resident claimants; that the trial judge is vested with discretion upon good cause shown to allow the filing of a late claim or to deny it for lack of such showing. We further ruled that knowledge of death or any knowledge of the estate proceedings, coupled with failure to act after such knowledge, are enough to support the lower court's discretion in denying a late filing.

The record shows that the claimant had knowledge of the death of Clark soon after it occurred. With such knowledge it was incumbent upon the claimant to inquire about estate proceedings. There is no showing that the claimant did anything at all in this regard. It failed to act, to inquire, to investigate.

The burden is upon him who seeks to file a late creditor's claim in a probate proceeding to present facts to the trial court which justify favorable exercise of discretion.

The only proof offered by appellant to the lower court was the affidavit of Stanley Owens, vice-president of Continental Coffee Company, which states that, "During the 3 month period subsequent to September 14, 1965, Continental Coffee Company, did not have notice of the Nevada proceedings involving the administration of the Estate of Wilbur B. (sic) Clark." The lower court concluded this was not adequate showing to persuade it to exercise its discretion in allowing the late filing of the claim in view of all the other circumstances. In line with Gardner Hotel, supra, knowledge of death coupled with the failure to act will support the lower court's discretion in denying a late filing. We are not prepared to say as a matter of law that the lower court abused its discretion requiring our reversal.

Counsel for appellant urged in their brief there was nothing in the California probate proceedings to indicate it was ancillary or that primary proceedings were underway in Nevada, Clark's legal residence. The record clearly indicates the contrary.

Appellant's second contended error regarding the contingency of its claim against Clark's estate was disposed of in our Gardner Hotel Supply of Houston v. Estate of Clark decision, supra.

Appellant's final contention that NRS 147.010 violates constitutional due process requirements as set down in Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306 (1950), is without merit. We are not convinced that doctrine has applicability to our non-claim statute. New York Merchandise Co., Inc. v. Stout, 264 P.2d 863 (Wash. 1953); Chalaby v. Driskell, 390 P.2d 632 (Ore. 1964).

The judgment is affirmed.

THOMPSON, C.J., ZENOFF, BATJER, JJ., and YOUNG, D.J., concur.

MOWBRAY, J., being disqualified, the Governor designated Honorable Llewellyn A. Young, of the Sixth Judicial District Court, to sit in his place.