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Keywords

attorneynegligenceliabilityfiduciarysustainedfiduciary dutyrespondent

attorneynegligencemotionsustainedrespondentappellantmotion to dismiss

Related Cases

Estate of Spirtos, 34 Cal.App.3d 479, 109 Cal.Rptr. 919

Facts

George N. Spirtos died intestate, leaving behind his wife Tulla and four children. Tulla was appointed as the special administratrix of the estate and sold her husband's medical practice to Dr. Cuilty for $122,000 without obtaining court approval or notifying the public. After receiving a down payment and some monthly payments, Dr. Cuilty went bankrupt, leading to a loss of $78,468 for the estate. Tulla's failure to follow legal procedures for the sale resulted in her being surcharged for the losses incurred.

George N. Spirtos died intestate 1 on August 8, 1966, survived by his wife, Tulla, and four children. On August 10, 1966, appellant filed her petition for letters of administration, alleging that she was decedent's wife; that four children issued from the marriage; and that the total estimated assets of decedent consisted of cash ($5,000), personal property (consisting mainly of decedent's medical practice) ($59,000), and annual income from other sources ($1,000), amounting to $65,000.

Issue

Did Tulla Spirtos, as administratrix, act negligently by failing to secure court approval for the sale of estate property, thereby incurring a surcharge for the losses sustained by the estate?

Rule

An administratrix has a primary duty to manage the estate's assets and must secure court approval for the sale of property to protect the interests of the estate and its beneficiaries. Failure to comply with statutory requirements can result in personal liability for losses incurred.

To assure that this protection is given the creditors and beneficiaries of the estate, there is a legal requirement that the administratrix file a bond to insure the integrity of administration.

Analysis

The court determined that Tulla Spirtos was aware of the need to inform the court about the sale of the medical practice but chose to rely on her attorney's advice to expedite the sale. This reliance constituted a breach of her fiduciary duty as administratrix. The court found that her actions directly led to the financial loss suffered by the estate when the buyer defaulted, and thus she was properly surcharged for the loss.

The record thus clearly reflects the fact that appellant was apprised of the need to inform the court of the sale; yet, in spite of this knowledge, appellant chose to rely upon her attorney's practical opinion of urgency and to bypass petitioning the court.

Conclusion

The court affirmed the surcharge against Tulla Spirtos for the losses incurred due to the unapproved sale of estate property, but remanded the case to adjust the surcharge amount concerning uncompromised claims.

The motion to dismiss is denied; the judgment is affirmed except as to the surcharge to appellant for the amount of the uncompromised claims; the cause is remanded with direction to correct the order of surcharge in accordance with this opinion.

Who won?

The prevailing party was the respondent, Lindsay, as the court upheld the surcharge against Tulla Spirtos for her negligence in managing the estate.

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Sligh v. First Nat. Bank of Holmes County, 735 So.2d 963

In re Estate of Adams, 257 Mich.App. 230, 667 N.W.2d 904

S.E.C. v. Bilzerian, 29 F.3d 689, 308 U.S.App.D.C. 43, 63 USLW 2080, Fed. Sec. L. Rep. P 98,325

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Ginther v. Zimmerman, 195 Mich.App. 647, 491 N.W.2d 282