Appeal from the Superior Court of the District of Columbia (Admin. No. 353-95) (Hon. Kaye K. Christian, Trial Judge)
Before Schwelb, Reid and Glickman, Associate Judges.
The opinion of the court was delivered by: Glickman, Associate Judge
This appeal concerns the duties that the personal representative of the estate of a partner in a general partnership owes to a creditor of the partnership. Appellant Topel Blueprinting Corporation ("Topel") sued appellee Shirley M. Bryant, the personal representative of the Estate of her husband, Robert E. Bryant, seeking to hold her liable for an obligation of Mr. Bryant's partnership and, derivatively, of the Estate. The trial court granted summary judgment to Ms. Bryant. We affirm. We do not agree with the trial court that Topel's claim was time-barred as a consequence of Topel's failure to present it within six months after Ms. Bryant published notice of her appointment as personal representative. Ms. Bryant did not provide Topel with actual notice of her appointment, and she did not establish as a matter of law that constructive notice by publication was sufficient. We do agree with the trial court, however, that Ms. Bryant did not breach her duties as personal representative when she returned money to the surviving partner which he had paid her to purchase Robert Bryant's interest in the partnership. Returning that money was proper, even though it rendered Ms. Bryant unable to pay Topel's claim herself from assets of Robert Bryant's Estate, because it comported with a statutory duty of the surviving partner to pay partnership creditors ahead of the Estate of the deceased partner.
Robert Bryant and his brother, Charles Bryant, were partners in an architectural firm, Bryant and Bryant. On February 2, 1995, Robert Bryant died. Shortly thereafter, Charles Bryant received an insurance check in the amount of $391,632.56, representing the proceeds of a "key man" insurance policy that he held on Robert Bryant's life. By the terms of a cross purchase agreement that was incorporated in the Bryant and Bryant partnership agreement, Charles Bryant was obligated to use the insurance proceeds to purchase Robert Bryant's interest in the partnership from his Estate. To fulfill that obligation, Charles Bryant endorsed the insurance check and turned it over to Shirley Bryant on February 28, 1995. Ms. Bryant accepted the check on behalf of her husband's Estate, as its "personal representative," although this was before her appointment by the court to serve in that capacity (which occurred about two months later).
Ms. Bryant deposited the insurance check into a bank account that she opened in the Estate's name, and then immediately transferred almost all the money, $390,000, to a partnership bank account under the control of Charles Bryant, who was continuing the business as a sole proprietorship. *fn1 A portion of this payment was treated as reversing a negative balance of $155,027 in Robert Bryant's capital account, and the rest was treated as a loan of $234,973 to be used by Charles Bryant to pay the partnership's creditors. *fn2 As Ms. Bryant subsequently testified in connection with her summary judgment motion in this case, she knew from conversations with her late husband that the partnership was "heavily in debt," though she did not know, and (until Topel sued her) never tried to learn, the identities of the creditors other than the IRS. Instead, since she "didn't have anything to do with the day-to-day operations" of the partnership, Ms. Bryant entrusted the insurance money to Charles Bryant; he "was running the affair" and she thought he "was going to take care of it." Ms. Bryant testified that although she was advised by counsel throughout the probate proceedings, she was not aware that she had any duty as personal representative to "try to run down and track down every person [to whom Bryant and Bryant] owed" money.
One creditor whose identity Shirley Bryant did not know was Topel Blueprinting Corporation. As of February 1995, Bryant and Bryant allegedly owed Topel over $39 thousand for blueprinting services Topel had rendered.
On May 9, 1995, the Superior Court formally appointed Ms. Bryant to serve as personal representative of her husband's Estate. Beginning on May 25, 1995, Ms. Bryant published notice of her appointment in two publications for three successive weeks. The notice advised creditors of Robert Bryant to present their claims within six months, i.e., by November 25, 1995, or the claims would be unenforceable. Ms. Bryant did not mail a copy of the notice to Topel or otherwise provide Topel with actual notice of the probate proceedings.
Topel apparently was unaware for some time of Robert Bryant's demise and the administration of his Estate. Not until November 1996, a year and a half after the published notice, did Topel present its claim against the Estate. At that same time, Topel sued Shirley Bryant in the Probate Division of the Superior Court for the $39 thousand owed it by Bryant and Bryant, charging that she improperly had distributed assets of Robert Bryant's Estate that could have been used to pay the debt.
In due course, Topel and Shirley Bryant filed cross motions for summary judgment addressing whether Topel's claim was time-barred and, if not, whether Ms. Bryant was liable to Topel as either sole legatee under her husband's will or personal representative of his Estate. The trial court held a hearing on the motions, at which it received testimony from Ms. Bryant, Charles Bryant, and Topel vice-president Blaine Topel. *fn3 Awarding summary judgment for Ms. Bryant and against Topel, the trial court held that Topel's claim was untimely because it was not "presented within 6 months after the date of the first publication of notice of the appointment of a personal representative," as required by D.C. Code § 20-903 (a) (1981 and 1989 Repl.). *fn4 The court rejected Topel's argument that Ms. Bryant should have ascertained its identity as a creditor and given it actual notice of the probate proceedings by mail or other equally reliable means. The court concluded that constructive notice by publication was sufficient in this case because Ms. Bryant had "made reasonably diligent efforts to ascertain the identities of creditors and meet any debt owed" when she transferred $390,000 to Charles Bryant for payment of creditors' claims.
The trial court also ruled that Shirley Bryant was not liable to Topel in any event, either as a legatee or as a personal representative. Ms. Bryant had no liability as a legatee because she did not receive a distribution of any Estate property. *fn5 She had no liability as a personal representative, the court held, because she fulfilled her obligations to creditors when she transferred the $390,000 back to Charles Bryant to pay the creditors' outstanding claims.
Topel filed a motion to alter or amend the trial court's judgment pursuant to Super. Ct. Civ. R. 59 (e). *fn6 Denying that motion, the court issued a written opinion reaffirming its ruling that Topel's claim was untimely and further explaining its ruling that Shirley Bryant fulfilled her duties as personal representative. In that opinion, the court acknowledged that Robert Bryant's Estate was liable for the debts of his partnership, and that Ms. Bryant therefore owed a fiduciary duty to Topel in her role as personal representative of the Estate. As surviving partner, Charles Bryant too was liable to Topel. Additionally, the court stated, Charles Bryant owed a fiduciary duty to Ms. Bryant with respect to the disclosure and disposition of partnership assets and liabilities. As a result, the court reasoned, Charles Bryant "was to act appropriately as a co-fiduciary with Shirley Bryant" vis-a-vis Topel and other partnership creditors. Given that relationship, the court found, Ms. Bryant made a good faith effort to fulfill her fiduciary obligations when she returned the ...