Probate & Trust Litigation

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Creditor Claims (NH)

CREDITOR CLAIMS (NH LAW)

© Ralph F. Holmes, Esq.

ralph.holmes@mclane.com

Office: (603) 628-1409

Cell: (857) 278-0019

Updated January 2016

Creditor’s Deadlines

Within six months of the grant of administration, creditor must present a demand to the Administrator by registered mail setting forth “the nature and amount of the claim and a demand for payment.”  RSA 556:2.

Suit cannot be filed within six months and must be filed within one year of the grant of administration.  RSA 556:1, 5.

If creditor fails to meet six-month demand or one-year suit deadlines, he may apply to “the court having subject matter jurisdiction over the nature of the claim, by petition setting forth all the facts; and if the court shall be of the opinion that justice and equity require it, and that the claimant is not chargeable with culpable neglect in not bringing or prosecuting his or her suit or claim within the time limited by law, the court may extend the time for filing and prosecuting the claim to a date certain; however, no such extension or judgment entered upon the claim shall affect any payments or compromises made before the beginning of the proceedings.  RSA 556:28.  The petition should address facts relevant to the creditor’s right to recover as well as the purpose of RSA 556 to secure prompt settlement of estates.  Stewart v. Farrel, 131 N.H. 458, 463 (1989) (“the failure to present any facts bearing on one of the dual concerns relevant in determining what justice and equity require rendered the Stewarts’ petition inadequate.”). 

Notice to Creditors

Register of Probate arranges for public notice in newspaper of opening of Estate.  RSA 550:10.

Known and reasonably ascertainable creditors are entitled to actual notice of the opening of the estate and the deadlines for filing claims.  Tulsa Professional Collection Services v. Pope, 108 S. Ct. 1340 (1988); Stewart v. Farrel, 131 N.H. 458, 464 (1989).

Sample Tulsa Form

 [case caption]

NOTICE

 

[Date]

 

TO:                 [Creditor]

 

FROM:           [Counsel name & address]

 

By Order dated [date], the Court granted the Petition for Administration and, by Certificate of Appointment dated [date], the Court appointed [name] Administrator of the above Estate.

RSA 556:3 provides: No such action shall be sustained unless the demand was exhibited to the administrator within six months after the original grant of administration, exclusive of the time such administration may have been suspended.

RSA 556:5 provides: No suit shall be maintained against an administrator for any cause of action against the deceased, unless it is begun within one year next after the original grant of administration, exclusive of the time such administration may have been suspended, except in cases where he has retained estate in his hands for the payment of the claim by order of the judge, and cases provided for by RSA 556:7 and RSA 556:28. 

Cases

A creditor’s receipt of partial payments of a debt of the decedent before expiration of the twelve month deadline to file suit under RSA 556:5 may not be sufficient to bind the administrator to pay the claim.  In Skrizowski v. Chandler, 133 N.H. 502 (1990), it appears that the administrators set up the creditor for denial of the claim by timely paying making monthly payments on the promissory note and then promptly stopping on expiration of the one year limitations period of RSA 556:5.  The administrators then refused to honor the creditor’s demands for payment on grounds that the creditor had failed to file suit within the limitations period.  On appeal, the Court held that the creditor had to seek relief under RSA 556:28.  Counsel representing creditors should bear Skrizowski in mind and be careful in drawing comfort from installment payments.

            In In re Estate of Mills, 167 N.H. 125 (2014), the Court clarified that a mortgagee has no duty under RSA chapter 556 to exhibit a demand within six months or to file suit within one year of the grant of administration in order to foreclose.  The Court did not address whether the creditor must honor these deadlines to preserve the right to seek a deficiency judgment following foreclosure.

The Court held that the statutory deadlines for exhibition and suit did not apply because the mortgagee was exercising a vested title right under the mortgage and did not need judicial relief to enforce its claim.  Unlike most mortgages, the one in Mills was non-recourse, providing that the “Borrower shall have no personal liability for payment of the debt secured by this Security Instrument” and “Lender may enforce the debt only through the sale of the Property.” Id., p. 126.   The decision, thus, does not address the more common situation where the borrow is liable for any deficiency remaining after foreclosure.   Since this liability would be collectible through litigation, the exhibition and suit requirements of RSA chapter 556 arguably apply.  Note though that unless and until the foreclosure sale, whether a deficiency claim even exists will not be known.  The creditor may be wise to seek relief under RSA 556:6.

In Bourassa, 159 N.H. 344 (2009), the Court considered whether the Probate Court had authority under RSA 556:28 to grant relief to a plaintiff to pursue her late filed claim in Superior Court.  The plaintiff had brought suit to recover life insurance benefits she would have received but for claimed breaches by her father of her parents’ divorce decree.  At the time suit was filed, the Superior Court had exclusive jurisdiction over creditor claims against estates.  Given that RSA 556:28 requires that petition for late allowance of a claim be filed in “the court having subject matter jurisdiction over the nature of the claim,” the defendant argued plaintiff should have brought her petition in Superior Court.

On appeal, the Court held:

RSA 547:3 (Supp. 2008) provides:  ‘The probate court shall have exclusive jurisdiction over . . . [t]he granting of administration and all matters and things of probate jurisdiction relating to the composition, administration, sale, settlement, and final distribution of estates of deceased persons. . . .’  A person with a claim against the estate of a deceased person ‘may apply to the court having subject matter jurisdiction over the nature of the claim’ for an extension of time to file suit.’  RSA 556:28.  We agree with Desiree that the ‘nature of the claim’ at issue is a claim against her father’s estate for money owed in the amount of the life insurance policy, and that such a claim falls within the exclusive jurisdiction of the probate court pursuant to RSA 547:3.  Accordingly, the probate court has subject matter jurisdiction over the nature of the claim for purpose of the petition for an extension of time to file suit. 

Id. at pp. 347-48 (emphasis added).  The holding appears to say that the Probate Court had “exclusive” jurisdiction over the plaintiff’s claim and therefore authority to rule on the petition to allow late filing under RSA 556:28.  This construction is impossible to reconcile with the Probate Court’s statutory jurisdiction over creditor claims as well as the history of enactments of RSA 556:28 and the case law.

“By the Constitution, probate courts have jurisdiction in granting administration, to be exercised in such manner as the legislature may direct.” Robinson v. Carroll, 87 N.H. 114, 115 (1934).  “[T]hey “have such powers and only such powers as the legislature gives them.” Id. (citing Woodbury’s Appeal, 78 N.H. 50, 52 (1915)).  “Originally their powers were almost entirely administrative and ministerial, and in none of the statutes conferring additional and increased jurisdiction upon them, so far as our examination has extended, do[es] the legislature seem ever to have contemplated investing them with general law powers, as judicial tribunals.” Wood v. Stone, 39 N.H. 572, 575 (1859).

In the last twenty-five years, the legislature greatly expanded the jurisdiction and powers of the Probate Court.  Most important for this discussion, the legislature enacted RSA 547:3,III and RSA 547:3-l, effective July 27, 2008, granting the Probate Court “concurrent” jurisdiction with the Superior Court over so-called “ancillary matters,” including “claims for liquidated or non-liquidated damages… against an estate…,” RSA 547:3-l, that is, creditor claims.  No prior statute plainly granting Probate Court authority over such claims has been found.

Consistent with the Probate Court’s apparent lack of jurisdiction over creditor claims, the original version of RSA 556:28 required that petitions to allow a late creditor claim be filed in Superior Court. RSA 556:28 (1974).  The next version of the statute required that petitions be filed in the Superior Court, unless the plaintiff was “under the exclusive jurisdiction of the probate court,” presumably referring to an administrator, testamentary trustee, or guardian appointed by the Probate Court.  RSA 556:28 (1992).

In re Estate of Bennett, 149 N.H.496 (2003), is the only case before Bourassa that has been found in which the Probate Court exercised authority under RSA 556:28 and in that case the claim of the creditor was presented in the Probate Court as an objection to the administrator’s account, the approval of which is within that Court’s authority, RSA 554:26.  No issue appears to have been raised before the Probate Court over its authority to grant relief under RSA 556:28 and the Court on appeal did not comment on the jurisdictional issue.

Two months before the Bourassa plaintiff presented her RSA 556:28 petition to the Probate Court, 547:3,III and RSA 547:3-l became effective and the Probate Court then had concurrent (not exclusive) jurisdiction to adjudicate creditor claims.  Unfortunately, Bourassa does not cite either of these on-point statutes, even though it references the 2008 RSA Supplement which includes them.  Relying on these statutes, the Court could have affirmed the Probate Court’s exercise of jurisdiction on grounds that it had “concurrent,” not “exclusive” jurisdiction over the nature of the claim and, therefore, authority to grant relief under RSA 556:28.   This approach would have achieved the same result without creating discrepancies.

Although Bourassa might be construed to say that the Probate Court has exclusive jurisdiction over creditor claims (contrary to RSA 547:3,III and RSA 547:3-l), it seems clear that the Supreme Court did not intend that result.  After affirming that the Probate Court had authority to grant relief under RSA 556:28, the Court did not then vacate the Superior Court judgment, also on appeal before it, as beyond the Superior Court’s jurisdiction.