Judges interpret Probate Code statute in favor of bank

Finding that a bank did not receive proper notice in order to file a claim against an estate, the Indiana Court of Appeals reversed summary judgment in favor of the estate of Samuel Tolley on the bank’s two claims.

Attorney James Berkshire notified by phone First Merchants Bank on Dec. 17, 2010, that Samuel Tolley died Nov. 17, that he was the attorney for the personal representatives of Tolley’s estate and had filed pleadings and other documents to open administration of the estate, and that proceedings were filed in Miami Superior Court II. First Merchants faxed to Berkshire a document that detailed Tolley’s customer information with a note that he had died in November.

Notice of administration was published Dec. 31, 2010, and Jan. 7, 2011, in the Peru Tribune, but First Merchants never received written notice from the estate. The bank filed two claims against the estate on July 26, 2011. Both parties filed for summary judgment. The estate argued the bank’s claims were untimely as a matter of law; the bank argued they were timely.

In granting summary judgment for the estate, the trial judge noted that First Merchants had actual knowledge of Tolley’s death and there’s no reason for the estate to serve the bank with actual written notice. The court found the bank’s claims untimely.

On appeal, the bank argued that Indiana Code 29-1-7-7(d) requires actual receipt of the notice, like by mail, and that the statute strongly implies the notice must be given in writing. Actual written notice is the bare minimum Due Process requires. The appellate judges agreed.

“Even though First Merchants had actual notice of the decedent’s death, the phone call from the attorney for the personal representatives did not meet the requirement of informing First Merchants of the time period for filing a claim.” Judge Elaine Brown wrote. “Based upon the designated evidence, we cannot say that First Merchants received proper notice. Accordingly, First Merchants’ claims filed on July 26, 2011 which occurred within nine months of Samuel’s death were timely filed.”

The case, In the Matter of the Estate of Samuel L. Tolley, Deceased; First Merchants Bank, N.A. v. Duane Earl Tolley, and Betty June Tolley, 52A02-1208-EU-671, is remanded for further proceedings.